U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual report under Section 13 or 15 (d) of the Securities Exchange Act of
1934 for the fiscal year ended March 31, 1999
[ ] Transition report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the transition period from _____________ to ____________
Commission File Number 33-92894
PREFERRED VOICE, INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 75-2440201
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6500 GREENVILLE AVENUE
SUITE 570
DALLAS, TEXAS 75206
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(Address of Principal Executive Offices) (Zip code)
214-265-9580
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(Issuer's Telephone Number, Including Area Code.)
Securities registered under Section 12(b)
of the Exchange Act: Name of Each Exchange
Title of Each Class on Which Registered
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NONE N/A
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $0.001 PAR VALUE
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(Title of class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 past 90 days.
Yes No X
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Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $180,383.00
The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of November 17, 1999 was approximately
$9,750,926. For purposes of this computation, all executive officers, directors
and 10% stockholders were deemed affiliates. Such a determination should not be
construed as an admission that such executive officers, directors or 10%
stockholders are affiliates.
As of October 31, 1999, there were 11,440,990 shares of the common stock, $0.001
par value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format: Yes No X
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PREFERRED VOICE, INC.
Page
PART I
Item 1. Description of Business..................................... 1
Item 2. Description of Properties................................... 8
Item 3. Legal Proceedings........................................... 8
Item 4. Submission of Matters to a Vote of Security Holders......... 8
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.... 9
Item 6. Management's Discussion and Analysis or Plan of Operations.. 11
Item 7. Financial Statements........................................ 16
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.. 17
Item 10. Executive Compensation...................................... 18
Item 11. Security Ownership of Certain Beneficial
Owners and Management....................................... 18
Item 12. Certain Relationships and Related Transactions.............. 20
Item 13. Exhibits, List and Reports on Form 8-K...................... 22
SIGNATURES................................................................ 24
INDEX TO EXHIBITS......................................................... 25
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PART I
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in, or incorporated by reference into, this report.
ITEM 1: DESCRIPTION OF BUSINESS
Background of the Company
The Company integrates and markets speech recognition technologies to be
used by telecommunications providers, to enhance a provider's overall package of
voice services. The Company's key product, the Voice Integrated Platform ("VIP
System" or the "System"), successfully integrates the Philips Speech Pearl
Natural Dialog, Philips Speech Processing's speech recognition technology, with
the Company's proprietary software application. The System is designed to
utilize standard industrial grade hardware and a rack-mountable
microprocessor-based computing system, with a Windows NT operating system. The
System has been developed for collocation at the telecommunication provider's
central office switch. With the VIP System, a provider's subscriber can use
natural conversational speech to access a variety of enhanced service
applications. The Company believes that the Philips speech recognition
technology that its System incorporates is superior to other similar
technologies and that its VIP System's enhanced services will become standard
telephony options offered by telecommunications providers in the 21st century.
The Company was incorporated in Delaware in 1992 under the name of Direct
Connect, Inc. and began operations in the telecommunications industry under the
name of Preferred Telecom, Inc. in April 1995. The Company began as a long
distance telecommunications carrier with a variety of enhanced services,
however, in February 1997 the Company sold to Brite Voice Systems, Inc.
("Brite") a number of assets, including the Company's end-user customer base.
The Company elected to sell these assets because it believed that the growth
prospects of this aspect of the business were limited. The Company has since
focused on enhanced telephone services that feature speech recognition
technology, believing that there are larger market opportunities in offering
enhanced speech recognition services to telecommunications providers.
The Market and Market Strategy
Incumbent Local Exchange Carriers ("ILECs") comprise the largest market of
telecommunications providers. Of the approximate 1,700 ILECs in the United
States, 1,400 have less than 50,000 lines each. These ILECs comprise fifteen to
twenty percent of the ILEC market and approximately 40 million lines. ILECs
already have an existing subscriber base, and the Company believes that most of
them desire to add enhanced service options to increase revenue and deter
potential competition. The Federal Communications Commission reported that in
1998 alone, the local telephone common carriers spent over $12 billion on
upgrading to digital central office switches, which enable them to provide their
subscribers the latest enhanced services. Many ILECs have already begun to
utilize outboard platforms for certain call processing services, as well as
voice mail, however, the Company believes that the convenience of its System
will draw many ILECs to use its collocated Systems.
Wireless Communications Carriers ("WCCs") have an estimated 80 million
subscribers nationwide. The Federal Communications Commission ("FCC") has sold
spectrum for up to eight operators per market in each of the 722 FCC designated
wireless markets in the United States. A report from Cahners In-Stat Group
estimates that by the year 2002, medium and large businesses will spend over
$117 billion on wireless equipment and services, more than double the $54
billion they spent in 1998. The WCCs need to capitalize on this growth. The
Company believes that WCCs want to differentiate themselves from each other and
be
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competitive so that many are beginning to offer their subscribers enhanced
services, including voice messaging and voice activated services. In addition,
WCCs are under pressure from regulatory authorities to provide wireless phone
subscribers a safer method for using their phones while driving.
The Company's customers are telecommunications providers, primarily ILECs
and WCCs, with a greater marketing effort to be made to competitive local
exchange carriers ("CLECs") in the future. These companies are already offering
some enhanced services to their subscribers, such as voice mail, call
forwarding, call waiting and caller identification systems. In order to remain
competitive, however, ILECs, CLECs and WCCs are providing subscribers more
enhanced services. The Company believes that its VIP System, with its enhanced
speech recognition service, provides a solution to satisfy this need.
Government regulation requires telecommunications providers to look for new
solutions to provide disabled persons equal access to their systems. The
Company's System may be able to provide a solution for telecommunication
providers' obligations to the disabled. Section 255 of the Telecommunications
Act of 1996 requires a provider of telecommunications service to ensure that its
service is accessible to and usable by individuals with disabilities, if readily
achievable. The Company's VIP System with its voice activated services would
allow people with limited manual dexterity, limited reach or strength, limited
or no vision, or other disabilities to access the national telecommunication
network. The Texas legislature also passed an act "relating to expanding the
specialized telecommunications devices assistance program and contracts for
special features of the telecommunications relay access service." This act took
effect on September 1, 1999 and expands an existing voucher program, allowing
the Public Utilities Commission and the Texas Commission for the Deaf and Hard
of Hearing to issue vouchers and provide other financial assistance to
individuals with disabilities that impair the individuals' ability to
effectively access the telephone network. The act allows the vouchers to be used
to purchase certain specialized services. Originally, this law applied only to
the hearing disabled, but the legislature amended the original act so that
people with other disabilities, without the use of their hands or vision for
example, could also receive vouchers for qualifying services. The Company
intends to pursue authorization for the VIP System's services as qualifying
services. The Company believes that its System is the only economically feasible
voice dialing and activated service that many telecommunications providers can
make available to people with a disability.
There is also government regulation being proposed regarding the use of
wireless phones while driving. A report published by the National Conference of
State Legislatures in 1999 stated that at least 22 states since 1995 have
proposed bills concerning cellular telephones in automobiles. Although none of
the bills have passed, legislation is still pending at this time in Georgia,
Illinois, New Jersey, Pennsylvania and New York. All of these states, except for
New Jersey which prohibits use of a car phone while driving, have proposed
legislation that restricts the use of hand-held telephones while driving. In at
least one municipality, use of a cell phone while driving is prohibited unless
both hands are on the steering wheel. Legislation of this sort requires cellular
telephone companies to provide enhanced services so that they can keep
generating revenue from their subscribers who make many of their calls while on
the road. The Company believes that its voice activated dialing and message
services, along with the hands-free speaker phones and headsets available in the
market, will provide WCCs with a means of complying with the proposed
regulations and make WCCs using the Company's product and services leaders in
the industry.
Primary Markets
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THE ILECS. The Company believes that its revenue sharing market strategy is
the most economically viable method for many ILECs to provide speech recognition
enhanced services to their subscribers. The ILECs and WCCs are the two primary
markets in which the Company has focused its marketing efforts, offering these
telecommunications providers a revenue sharing opportunity. The Company focuses
on these markets because the providers in these markets have an existing
customer base. In the first phase of the marketing process, the Company has
identified and contacted 528 ILECs with more than 5,000 access lines. In phase
two, the Company intends to concentrate on those ILECs with 3,000 to 5,000
access lines and in phase three the Company will focus its marketing efforts on
those ILECs with 3,000 or fewer access lines. The Company does not intend to
market to the larger telephone companies until it establishes a strong market
presence in the medium and smaller telephone company market.
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The Company's VIP System platform is designed to work in the telephone
company's central office, collocated alongside an ILEC's central office switch.
Unlike many other enhanced service companies' boxes, the Company's VIP System is
connected to the ILEC's switch via industry standard T-1 circuits utilizing
direct inward dial trunks.
The Company will provide and install the VIP System without charge.
However, the Company enters into a revenue sharing arrangement with the ILEC
based upon the revenue generated through sales of the enhanced services. Most
contracts require that the ILEC generate at least $2,000 per month per System or
for the ILEC to pay the difference if that amount is not reached, otherwise the
contract may be terminated.
The ILECs are responsible for billing and collecting revenue generated from
the VIP System's enhanced services. However, the VIP System can produce customer
information for marketing or billing use. In addition, the Company will assist
each telecommunications provider to market the services by providing various
co-branded advertising materials the Company has designed and by training the
ILEC's sales force and customer service staff.
The Company has signed test agreements with Sleepy Eye Telephone Company in
Minnesota dated May 27, 1999 and Northeast Pennsylvania Telephone Company dated
May 18, 1999. These test agreements provide that the Company will provide a
System to each ILEC for a sixty day period during which time the Company will be
responsible for all testing and customer provisioning while the ILECs are
responsible for providing collocation space for the System and for billing and
collection services. At the end of the test period, the ILEC may choose to enter
into the Standard Contract as set forth below.
The Company has already executed agreements providing for a long-term
revenue sharing arrangement with the following companies on the following dates:
o Southwest Texas Telephone Company in Texas dated September
21, 1999 (4,000 subscribers)
o Kaplan Telephone Company in Louisiana dated October 13, 1999
(4,000 subscribers)
THE WCCS. Of the approximately 722 wireless markets in the United States,
there are 416 rural service areas and 306 metropolitan service areas that have
multiple providers serving the same markets. The Company believes that many
wireless providers want to offer the benefits of speech recognition services to
their subscribers in order to maintain their customer base, but the WCCs often
find such services to be cost prohibitive. As with the ILECs, the Company offers
WCCs the VIP System and installation without charge. The Company recoups its
costs in the revenue sharing arrangements it has negotiated with the WCCs. These
arrangements are based on the same percentages used with the ILECs. The WCCs,
like the ILECs, are responsible for the billing and collecting, and like the
ILECs they will also receive assistance from the Company in marketing the VIP
System enhanced services. The Company has already entered into revenue share
arrangements with the following companies:
o Rural Cellular Corporation dated September 25, 1999 (240,000
subscribers)
o Kaplan Telephone Company in Louisiana dated October 13, 1999
(6,000 subscribers)
o Midwest Wireless Communications dated November 8, 1999
(125,000 subscribers)
STANDARD ILEC/WCC CONTRACT. The Company uses the same standard form of
Software License Agreement and Marketing Agreement for each ILEC and WCC that it
services. The Software License Agreement grants each participating ILEC or WCC a
license to use the Company's software and all subsequent improvements in the
ILEC's or WCC's local calling areas. The Company retains title to the software
and requires that the ILEC's and WCC's keep
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all information related to the software confidential. The term of the Software
License Agreement coincides with that of the Marketing Agreement.
The Marketing Agreements have provisions to remain in effect for up to
ten years. In the Marketing Agreement, the Company agrees to install the VIP
System at the switch location for the participating ILECs and WCCs and commence
testing following installation. The participating ILECs and WCCs then have the
right to accept or reject the System after testing is completed. Once the
participating ILEC or WCC has accepted the System, it is required to use its
best efforts to promote the sale of the Company's services to subscribers. The
participating provider is responsible for billing and collection on the
services, but the pricing is jointly agreed upon by the Company and the
provider. The ILECs and WCCs agree that they will not install any system, for
testing or otherwise, that competes with the VIP System in the area designated
under the Marketing Agreement. The Company agrees to provide marketing
materials, technical support and training to the ILECs and WCCs and their
personnel. The Company also provides in the Marketing Agreement that it may use
the System to provide services directly to its own subscribers in the ILEC's or
WCC's designated area.
Secondary Markets
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The Company has also marketed its services to CLECs. CLECs face a
distinct challenge because they must rely on ILECs to provide the final link in
the communications path to subscribers or expend significant resources to build
their own network. The Company is not currently focusing on CLECs because most
CLECs do not currently have the customer base to support the Company's revenue
sharing agreement. The Company, however, has contracted to sell thirty-nine VIP
System boxes to KMC Telecom Holdings, Inc. ("KMC") for installation and use. In
exchange for an initial licensing fee for each market, the Company's contract
with KMC grants KMC a license to use the Company's software and all subsequent
improvements of the software in certain designated markets. The number of
markets covered by the agreement may be expanded up to a defined maximum number
on prior written notice to the Company. As with the ILEC and WCC agreements, the
Company agrees to install and test the System, after which time KMC can accept
or reject the System. The Company has agreed not to install VIP Systems or to
license such systems to others in the designated markets. The Company also has
agreed to provide KMC technical support and training for KMC personnel. Two
years after the Systems are accepted in a licensed market, KMC must begin paying
monthly fees for use of the Systems. Throughout the term of the agreement, KMC
may also be required to pay a support fee for training and related support done
by the Company in the designated markets. If the Company desires to provide
services directly to its own subscribers in the designated markets, the Company
must pay KMC $1.25 per month per subscriber.
In addition to its agreement with KMC, the Company has signed a
collocation agreement with NEXTLINK Texas, Inc. ("NEXTLINK") to place VIP System
platforms in their central office switch locations in the Dallas area. Under the
Company's agreement with NEXTLINK, the Company is granted a license to install,
operate and maintain its VIP System in a certain portion of NEXTLINK's switching
center in exchange for the Company's payment of certain initial and monthly fees
for such collocation. The Company has placed boxes in the Dallas area that
service direct subscribers of the Company's services.
In conjunction with the collocation agreements, the Company has signed
Master Distributor Agreements with several companies to market the Company's
services directly to the end user in six large metropolitan areas. The companies
and the markets they cover are Best Voice, Inc. in Miami, Florida; Voice
Retrieval, Inc. in Dallas, Texas; Answering Service Inc. in Detroit, Michigan;
Amerivoice Telecommunications, Inc. in Milwaukee, Wisconsin; In Touch Solutions,
L.L.C. in Myrtle Beach, South Carolina; Voicenet New Media, Inc. in Boston,
Massachusetts and Nomis Communications, Inc. in Houston, Texas. The Company has
not yet installed VIP Systems in these areas. The form of Master Distributor
Agreement that has been signed by all participating master distributors allows
the distributor to market and sell the Company's services directly to the end
user and through other distributors whom the master distributor is to identify
and contact. The master distributor receives certain marketing materials and
collateral support from the Company. The Company may authorize other
distributors in the master distributor's market area, but will direct those
distributors to work with the master distributor, who pays a fee to acquire the
right to sell the Company's services in a specific market. The Company provides
the master distributor with commissions for accounts acquired based upon the
revenues billed and collected for such accounts. These agreements typically have
an initial term of three years. The Company is not actively marketing directly
to subscribers.
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The Company has been engaged in Beta testing the VIP System in CLEC
environments for 18 months. In particular the Company had to work on systems
that would be able to readily produce billable call records. Although the
Company had received assurances from the CLECs with whom it was testing its
equipment that they would be able to produce call records, the Company
experienced various problems. In addition to working with the CLECs, the Company
has approached various switch manufacturers about solutions to such problems.
The Company believes that it has solutions for the billing problems and is now
completing the Beta testing phase. The Company expects to be able to roll out
pricing for its offerings to its master distributors in the first quarter of
2000 so that they may begin their selling efforts.
The Company utilizes direct mail, telemarketing, and personal sales
calls to contact and market its product and services to telecommunications
providers in the targeted markets:
Product and Services
The Company's proprietary speech-interaction software, a part of the
VIP System, is able to provide the ILECs and WCCs with a host of speech
recognition enhanced services to help comply with applicable regulations and
increase revenues.
The Product
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The Company has developed what it believes to be a unique system that
integrates Philips' Speech Pearl Natural Dialog speech recognition software and
the Company's proprietary software called the VIP System. The Company believes
that its new hardware and software system provides the wide variety of new
speech recognition enhanced services being sought by providers in a deregulated
telecommunications industry. With the VIP System, a telecommunications provider
can offer its subscribers a variety of speech recognition and call processing
services. The VIP System will work in conjunction with the switching platforms
of a number of commonly used technologies, including the Lucent 5ES(2), Nortel
DMS-100/500, and Siemens/Stromberg Carlson Switches.
The VIP System is an intelligent call processing system that is capable
of identifying subscribers. All access lines are connected in such a way as to
allow the VIP System to identify the provider. The System has the capability of
archiving call traffic information that may be retrieved and collected for
marketing and billing purposes. The VIP System is also equipped with technology
capable of monitoring, reloading and restarting the VIP System in the event of
system failure.
Traditional call processing systems engage at least two ports during an
entire call to process incoming and outgoing information while the conversation
takes place. The VIP System utilizes release link technology which allows the
call to be processed rapidly using speech recognition or dual tone
multi-frequency (DTMF) dialing. After dialing, the System drops off of the call
as the call is routed to the correct phone number by the telecommunication
provider's switch. The VIP System speech recognition software recognizes the
words of the caller and the Company's proprietary software looks up the
telephone number in that subscriber's directory and then hands the call back to
the switch for dialing and other call processing functions. With the release
link technology, the VIP System can process over 7,000 calls per hour in a
single 48 port system.
The VIP System's speech recognition software works in conjunction with
over 15 separate enhanced service applications the Company has created with its
own software, some of which are discussed below. The Company uses speech
recognition technology created by Philips Speech Processing to process natural
dialogue speech for the Company's operating and software systems. The speech
recognition software, which is based on phonetics, may be programmed to be
speaker dependent or speaker independent. The software recognizes spoken words
or sentences and completes the call as instructed. The speech recognition
software allows callers to use continuous digit speech without requiring users
to change the cadence of their speech or speak between beeps to fit a speech
recognition template or prompt. The Company has not yet signed a definitive
licensing agreement to use the Philips Speech Pearl Natural Dialog software, but
has signed a letter of intent regarding the terms of such an agreement.
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The Services
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The following speech recognition enhanced services are currently
available through the VIP System for delivery to subscribers by participating
providers:
EMMA THE PERFECT RECEPTIONIST. The Company's VIP System software
provides telephone subscribers with the first remote accessed automated
attendant service. Emma answers the subscriber's phone with a custom greeting
and listens as a caller speaks a name, department, or location listed in the
subscriber's voice dialing directory. Emma the Perfect Receptionist then routes
the call to the person, department or location requested.
SMART LINE. This application allows a subscriber to receive calls at
any phone. The subscriber must notify the System of a change in his or her
location by giving voice commands to the System. A name from the subscriber's
voice dialing directory can be used as the new "locate" phone number. Incoming
calls for the subscriber are routed to the pre-programmed "locate" phone number.
That phone number can be either local or long distance, as required. The Smart
Line may also be used to screen calls allowing the subscriber to take the
incoming call or forward it to voice mail.
MY ONE SPECIAL NUMBER. Using the "locate" technology that facilitates
the Smart Line, the Company's VIP System allows a child to reach his or her
parents, wherever they are, with one telephone number. Each child is given a tag
by the participating telecommunications provider or by the Company with "One
Special Number" on it. A teacher, daycare provider or the child can call that
number, and the call will immediately be routed to the parent without requiring
the child to remember multiple telephone numbers because the parent is able to
remotely program the "locate" phone number.
** TALK. Star Star Talk is a speech recognition service that may be
accessed by a residential or business telephone customer. First, a person
placing a call lifts the receiver and presses ** on the keypad to access the VIP
System. Then the subscriber speaks a name, number or location from his or her
personal directory or a common directory, such as the local telephone company's
directory. The System then routes the call to the appropriate party. There is
also an option for the disabled to access the VIP System. By lifting the
receiver or turning on the speakerphone and waiting three seconds, the telephone
switch will automatically activate the VIP System, and the System will prompt
the subscriber to speak a name, number or location to be dialed.
SAFETY TALK. With this service, a person placing a call on his or her
wireless phone presses the appropriate speed dial code to access the VIP System.
The customer then speaks a name, number or location from the personal directory
that he or she previously created. The System then routes the call to the
appropriate party. This service eliminates the need for the subscriber to look
up or dial a phone number while driving.
CORPORATE FAX. By pressing one button, multiple users of a subscriber's
fax will be able to speak the name of a person or entity to whom they wish to
fax a document. The speech recognition software will dial the appropriate number
listed in the Company's directory and complete the call.
CORPORATE DIRECT. This application is designed for subscriber companies
with multiple wireless phone users. A subscriber dials one number and speaks the
name of the person or location to which the caller wishes to be connected
initiating the voice activated dialing feature for completion of the call.
INTELLIGENT CALL SCREENING. The VIP System also provides call
screening, which gives the subscriber the name of the caller, not just a phone
number. The Company's technology informs the subscriber who is calling and
allows the subscriber to choose to accept or deny the call. If the call is
denied, the VIP System will forward the call to the subscriber's voice mail.
ELECTRONIC TALKING PHONE BOOK. This service allows a provider to load
its entire database of business and residential customers into the VIP System.
Any person making a call in a participating provider's area is able to press 411
or dial a local access number and speak the city and name of the business or
person listed. Like the current live directory assistance systems, the automated
system provides the caller with the number and gives them the option to be
connected. This application may be used as a substitute for an ILEC's, CLEC's or
WCC's current 411 service and provides the ILECs, CLECs and WCCs with a method
for reducing their costs for directory service operators. As with the 41l
service, the ILECs, CLECs and WCCs may also use the service to increase revenue
by charging a nominal fee
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for the connection of a call. In the Electronic Talking Phone Book, the ILECs,
CLECs and WCCs may also enter a list of the businesses in the Yellow Pages of
the phone book. If such a service is offered, a subscriber could ask for a list
of a certain type of business, such as airlines, and EMMA would read back the
appropriate names. As with the 411 service, the VIP System could then complete
the call for the customer for an extra charge.
SECURE CARD. The Secure Card is a speech recognition voice activated
long distance calling card. A Secure Card subscriber will be able to dial an 800
access number and speak a security code, and the System will place a call from
their personal voice directory. This card adds a low-cost long-distance service
to the list of options provided to subscribers.
Competition
The speech recognition services market is competitive with rapid
technological innovations. The Company expects competition to continue to
increase as ILECs, WCCs, and CLECs seek to offer their customers enhanced
services and to distinguish themselves from other telecommunications providers.
Many of the Company's current competitors have longer operating histories,
greater name recognition, established customer bases and substantially greater
financial, technical, marketing, sales and other resources than the Company. The
Company believes that the principal factors affecting competition in the speech
recognition services market are ease of use, overall technical performance,
price, and reliability. The Company believes that it competes effectively in
these areas.
Some of the Company's competitors are Wildfire Communications, Inc.
("Wildfire"), General Magic, Inc. ("General Magic"), and Webley Systems, Inc.
("Webley"). Wildfire and Webley, both private companies, market a virtual
assistant that uses voice activated and speech recognition software to track and
answer voice mail, e-mail and fax. General Magic has developed a similar
service, but it has used it to focus on providing voice services through the
Internet. Accessline Technologies, Inc., Call Sciences Ltd. and Intellivoice
Communications, Inc. are also voice service providers offering applications
primarily for use on the Internet and wireless phone systems. These companies
focus on marketing services directly to the end user.
Intervoice-Brite, Inc. ("Intervoice") is the leading supplier of
customer premise equipment that provides call processing and voice recognition
services. Intervoice has a significant market share and markets to businesses
and network operators. Intervoice's revenues have steadily increased over the
past several years. Intervoice markets directly to subscribers and to larger
ILECs. The Company, on the other hand, markets to small to medium ILECs and
WCCs; therefore, the Company does not believe that Intervoice is a significant
competitor at this time.
Other competitors offering voice recognition applications include
Glenayre Electronics, Inc., Centigram Communications, Periphonics Corporation,
Nortel Networks, Octel (a division of Lucent) and Aspect Communications, all of
which price their systems for marketing to larger telephone companies. Compaq,
IBM and Lucent also have voice and call processing systems that they market to
larger telephone companies, but it is a small portion of their respective
businesses. Companies such as AT&T, MCI/Worldcom, Inc., Sprint Corporation and a
number of wireless phone companies provide their customers with voice mail and
call forwarding features, applications that the Company will be marketing in
conjunction with its speech recognition applications. The Company does not
intend to market to the larger telephone companies until it establishes a strong
market presence in the medium and smaller telephone company markets.
The Company expects that additional competition will develop. That
competition may include large companies with substantially greater financial,
marketing and technical resources than those available to the Company. Such
competition could adversely affect the revenues and operating results of the
Company.
Customer Service
The Company has developed an automated customer service called "Help
Me" that can assist subscribers with their services. If a subscriber has a
question regarding any of the applications to which the subscriber has
subscribed, the automated "Help Me" has scripted instructions which tell the
subscriber how to use the different applications.
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"Help Me" will be programmed to pull up the particular scripted directions to
explain how to use the services which the subscriber has chosen.
In addition, the Company intends to train employees of the
participating telecommunication providers' customer service force to answer
certain questions related to the services. Therefore, the telecommunication
providers' employees, with the assistance of the "Help Me" service, would be
able to answer the common questions subscribers will have about their service.
The Company intends to assist the ILECs, CLECs and WCCs if there are
problems with the VIP System platform. The Company intends to have a 24 hour, 7
day a week customer service line for the ILEC and WCC customer service
representatives or other employees to call with service questions. In addition,
the Company has designed a monitoring system that will continuously poll the VIP
System to assure that it is operating correctly. If the monitoring system
detects any problems with the VIP System, it will set off an alarm that will
send a signal by modem, simultaneously paging and calling a representative of
the Company so the problem can be immediately corrected. In addition, the ILECs
and WCCs will be provided back-up components, such as the Dialogic cards that
help operate the System, to install in the event a System ceases to function
properly. The Company believes that this high level of customer service and
support will help them market the VIP System to a greater number of
telecommunications providers.
Employees
As of November 17, 1999, the Company had 15 employees, all of whom are
full time.
Patents, Trademarks and Copyright
The Company relies on a combination of trade secret, copyright and
non-disclosure agreements to protect its proprietary rights in its software and
technology. There can be no assurance that such measures are or will be adequate
to protect the Company's proprietary technology. Furthermore, there can be no
assurance that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technology.
The Company's software will be licensed to customers under license
agreements containing provisions prohibiting the unauthorized use, copying and
transfer of the licensed program. Policing unauthorized use of the Company's
products will be difficult, and any significant piracy of its products could
materially and adversely affect the Company's financial condition and results of
operations.
The Company relies on the Philips Speech Pearl Natural Dialog software.
The Company has not yet signed a definitive licensing agreement to use the
software, but has signed a letter of intent regarding the terms of such an
agreement. The Speech Pearl Natural Dialog software is integrated with
internally developed software and used in the Company's products to perform key
functions. There can be no assurances that the developers of such software will
otherwise continue to make the product available to the Company on commercially
reasonable terms, will enter into a definitive agreement with the Company or
will continue to remain in business. The inability to obtain and maintain any of
the Company's software licenses could result in delays or reductions in product
shipments until equivalent software can be developed, identified, licensed and
integrated, which could adversely affect the Company's business, operating
results and financial condition.
The Company is not aware that any of its software products infringe the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not claim infringement by the Company with respect to its
current or future products. The Company expects that software product developers
will increasingly be subject to infringement claims. Any such claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
8
<PAGE>
The Company has received registered trademarks from the United States
Patent and Trademark Office for the following: Preferred/telecom, Secure Card
and Use Your Voice.
Research and Development
The Company has spent the last two years developing its proprietary
software in conjunction with testing the Philips Speech Processing software to
create the VIP System. The Company estimates that it has spent $413,109 during
the last two fiscal years on such research and development activities.
ITEM 2: DESCRIPTION OF PROPERTIES
The Company's executive offices are located in Dallas, Texas. The
Company leases 6,123 square feet of space in a facility as a tenant. The term of
the lease is through December 31, 2003 and the rent is presently $6,662.67 per
month through December 31, 1999, after which point it will be increased each
year thereafter.
ITEM 3: LEGAL PROCEEDINGS
As of October 31, there were no material legal proceedings pending
against the Company.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters submitted for vote to the security holders,
through the solicitation of proxies or otherwise in the fourth quarter of the
fiscal year covered by this report.
9
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock is listed on the OTC Electronic Bulletin Board. The
following table indicates the quarterly high and low bid price for the Common
Stock on the OTC Electronic Bulletin Board for the fiscal year ending March 31,
1999 and March 31, 1998. Such inter-dealer quotations do not necessarily
represent actual transactions and do not reflect retail mark-ups, mark-downs or
commissions.
OTC ELECTRONIC
BULLETIN BOARD
BID PRICE
FISCAL 1998 HIGH LOW
1st Quarter $4.00 $0.875
2nd Quarter $2.25 $0.781
3rd Quarter $1.00 $0.510
4th Quarter $2.062 $1.25
FISCAL 1999
1st Quarter $3.25 $1.865
2nd Quarter $2.875 $1.00
3rd Quarter $1.25 $0.75
4th Quarter $2.75 $0.687
On November 17, 1999, the bid price of the Common Stock as reported on
the OTC Electronic Bulletin Board was $1.625.
As of September 30, 1999, there were approximately 830 holders of
record of the Common Stock.
The Company has not declared or paid any cash or other dividends on the
Common Stock to date for the last two (2) fiscal years and in any subsequent
period for which financial information is required and has no intention of doing
so in the foreseeable future.
Recent Sales of Unregistered Securities
The Company also hereby incorporates all the transactions listed in the "Certain
Relationships and Related Transactions" section as recent sales of unregistered
securities that should be listed as such pursuant to Item 701 of Regulation S-B.
On April 23, 1998, the Company issued Invest, Inc. a warrant to purchase 100,000
shares of common stock of the Company at an exercise price of $1.00 per share on
or before November 12, 1999. On October 5, 1999, Invest's warrants were extended
to November 12, 2000 and were repriced to $1.25.
On September 3, 1998, the Company issued Eugene Starr a warrant to purchase
2,500 shares of common stock of the Company at an exercise price of $3.00 per
share on or before September 3, 2000.
On September 3, 1998, George Michael and Tom Bolger, formerly MBRK, agreed to
convert $55,987.00 of the amount owed by the Company to them, as vendors, in
exchange for shares of the Company. The Company issued Mr. Michael 107,474
shares of common stock at $0.50 per share for the respective portion of the debt
owed to him. The Company issued Mr. Bolger 4,500 shares of common stock at $0.50
per share for the respective portion of the debt owed to him.
On September 30, 1998, the Company issued JMG Capital Partners a warrant to
purchase 25,000 shares of common stock of the Company at an exercise price of
$1.00 per share on or before September 30, 2001.
On September 30, 1998, the Company issued Triton Capital Investments a warrant
to purchase 25,000 shares of common stock of the Company at an exercise price of
$1.00 per share on or before September 30, 2001.
10
<PAGE>
On November 1, 1998, the Company issued J. Steven Emerson a warrant to purchase
50,000 shares of common stock of the Company at an exercise price of $1.00 per
share on or before November 1, 2001.
On December 30, 1998, the Company issued In Touch Solutions, L.L.C. a warrant to
purchase 25,000 shares of common stock of the Company at an exercise price of
$1.00 per share on or before December 30, 2000.
On December 30, 1998, the Company issued Answering Service, Inc. a warrant to
purchase 30,000 shares of common stock of the Company at an exercise price of
$1.00 per share on or before December 30, 2000.
On December 30, 1998, the Company issued Amerivoice Telecommunications, Inc. a
warrant to purchase 40,000 shares of common stock of the Company at an exercise
price of $1.00 per share on or before December 30, 2000.
On December 30, 1998, the Company issued Voicenet New Media, Inc. a warrant to
purchase 25,000 shares of common stock of the Company at an exercise price of
$1.00 per share on or before December 30, 2000.
On December 30, 1998, the Company issued Best Voice, Inc. a warrant to purchase
25,000 shares of common stock of the Company at an exercise price of $1.00 per
share on or before December 30, 2000.
On December 30, 1998, the Company issued Nomis Communications, Inc. a warrant to
purchase 25,000 shares of common stock of the Company at an exercise price of
$1.00 per share on or before December 30, 2000.
11
<PAGE>
On February 10, 1999, the Company issued Edwin G. Bowles a warrant to purchase
25,000 shares of common stock of the Company at an exercise price of $1.00 per
share on or before February 10, 2001.
On March 31, 1999, the Company issued Kathryn Jergens a warrant to purchase
25,000 shares of common stock of the Company at an exercise price of $0.84 per
share on or before March 31, 2004.
All of the transactions referred to in this section are exempt from registration
under the Securities Act pursuant to Section 4(2) of the Securities Act except
those securities that were sold to Capital Growth Fund, Ltd. ("Capital"), Bisbro
Investments, Ltd. ("Bisbro") or Universal Asset Fund, Ltd. ("Universal") which
were offered pursuant to Regulation S.
12
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following description of "Management's Plan of Operation"
constitutes forward-looking statements for purposes of the Securities Act and
the Exchange Act and as such involves known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. The words
"expect", "estimate", "anticipate", "predict", "believes", "plan", "seek",
"objective" and similar expressions are intended to identify forward-looking
statements or elsewhere in this report. Important factors that could cause the
actual results, performance or achievement of the Company to differ materially
from the Company's expectations include the following: 1) one or more of the
assumptions or other factors discussed in connection with particular
forward-looking statements or elsewhere in this report prove not to be accurate;
2) the Company is unsuccessful in increasing sales through its anticipated
marketing efforts; 3) mistakes in cost estimates and cost overruns; 4) the
Company's inability to obtain financing for general operations including the
marketing of the Company's products; 5) non-acceptance of one or more products
of the Company in the marketplace for whatever reason; 6) the Company's
inability to supply any product to meet market demand; 7) generally unfavorable
economic conditions which would adversely effect purchasing decisions by
distributors, resellers or consumers; 8) development of a similar competing
product at a similar price point; 9) the inability to negotiate a favorable
licensing agreement for the speech recognition technology or to adequately
protect the Company's intellectual property; 10) a failure by the Company or its
third party vendors to accurately assess and prepare for any problems that may
arise related to the year 2000; (11) if the Company experiences labor and/or
employment problems such as the loss of key personnel, inability to hire and/or
retain competent personnel, etc.; and 12) if the Company experiences
unanticipated problems and/or force majeure events (including but not limited to
accidents, fires, acts of God etc.), or is adversely affected by problems of its
suppliers, shippers, customers or others. All written or oral forward-looking
statements attributable to the Company are expressly qualified in their entirety
by such factors. The Company undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
The following discussion should be read in conjunction with the
Consolidated Financial Statements, including the notes thereto.
Overview
The Company began operations in April 1995 as a traditional 1+
long-distance reseller. The need to distinguish itself from other resellers led
it to concentrate on enhanced services utilizing voice recognition call
completion technology. The Company contracted with Brite to develop a switching
platform that incorporated its service applications with voice recognition
technology acquired through a licensing agreement with Voice Control Systems,
Inc.
Recognizing the declines in telecommunications service prices and the
decreasing margins being experienced in long distance sales, the Company decided
to sell its long distance customer base and assets in early 1997. The Company
also concluded that the underlying architecture used by Brite to develop its
services would not be flexible enough to continue to create a variety of
services in the future. Therefore, the Company reduced its staff and overhead
and began its focus on developing its own proprietary software.
From June of 1997 until April of 1998, all corporate activities were
focused on the development and testing of services to be deployed to the public
through a platform the Company calls the VIP System. In late April 1998 the
first operational VIP System was collocated in a switch environment. The initial
sales activity focused its efforts on introducing the concept of voice dialing
to prospective customers to gauge consumer response with respect to pricing,
features and viability of the services provided.
In December of 1998, the Company realized that the resources necessary
to sell and market its services directly to subscribers would require extensive
amounts of working capital and began researching venues which already had
inherent customer bases. The first distribution channel that the Company
explored was master distributors in various cities and states around the
country. The Company believes this will be a source of customer addition once
the Company is in the position to locate its VIP Systems in the master
distributor marketing areas. The second is through
13
<PAGE>
revenue sharing directly with ILECs, WCCs, and CLECs. This avenue is extremely
attractive to the Company because these entities already have customer bases and
the infrastructure to service large number of customers.
The Company is at a very early stage of implementing its business plan.
It is subject to risks inherent in the establishment and deployment of
technology with which the consumer has very little experience. As voice
recognition becomes more prevalent in everyday life, such as in computer
programs, reservation systems and telecommunications information systems, the
public will be more apt to accept and utilize its many features. In order for
the Company to succeed it must secure adequate financial and human resources to
meet its requirements; establish and maintain relationships with
telecommunications providers; facilitate integration with various switch
environments; establish a lead time for delivery of hardware; achieve user
acceptance for its services; generate reasonable margins on its services; deploy
and install VIP Systems on a timely and acceptable schedule; respond to
competitive developments; mitigate risk associated with obtaining patents and
copyrights and other protections of intellectual property; and continually
update its software to meet the needs of end users. Failure to achieve these
objectives could adversely effect the Company's business, operating results and
financial condition.
Results of Operations
The Company recorded a net loss of $690,598, or $0.10 per share, for
the year ended March 31, 1999, compared to a net loss of $381,991 or $0.07 per
share, for the year ended March 31, 1998, and a net loss of $1,708,672 or $0.33
per share, for the year ended March 31, 1997. The net loss per share for the
year ended March 31, 1997 included the loss for the period and a net loss from
the discontinued operations of $1,365,547 and gains of $527,181 and $253,694
from disposal of a business segment and extinguishment of debt respectively.
Excluding the effect of these adjustments, the loss per share for the year ended
March 31, 1997, would have been $0.22 per share.
Total Sales
Total revenue for the year ended March 31, 1999 was $180,383, compared
to $6,874 and $0 for the years ended March 31, 1998 and 1997 respectively. Total
revenues consisted of master distributor fees for specific marketing rights and
service fees for the Company's "Emma the Perfect Receptionist" and "Smart Line"
services. Revenues in 1998 consisted of service fees.
The Company anticipates that revenues from the sale of its services
will grow gradually in the first half of 2000 as it installs VIP Systems in the
ILECs and WCCs which have already signed revenue sharing agreements and as VIP
Systems are purchased and installed at KMC's switch locations. The Company does
not anticipate substantial revenues going forward from the sale of master
distributorships, as it has had in the past year. However, the Company does
anticipate significant revenue growth in the second half of the year as more
ILEC, WCC, and CLEC agreements are completed.
Cost of Sales
Cost of sales for the year ended March 31, 1999 was $15,033, compared
to $2,206 and $0 for the years ended March 31, 1998 and 1997, respectively. In
1999 and 1998, cost of sales consisted of service costs associated with
providing the Company's "Emma the Perfect Receptionist" and "Smart Line"
services.
Selling, General and Administrative
Selling, general and administrative expenses for the year ended March
31, 1999 were $768,024 compared to $425,304 and $954,213 for the years ended
March 31, 1998 and 1997, respectively. The increase from 1998 to 1999 was due to
staffing increases and additional marketing efforts of the Company's Emma
services. The decrease from 1997 to 1998 was due to the implementation of the
Company's 1997 restructuring plan, which resulted, among other things, in a
substantial decrease in number of employees, lease space and general overhead.
The Company expects that selling, general and administrative expenses
will increase in fiscal year 2000, such expenses to include costs related to the
number of employees, office space requirements and general overhead. However,
the Company believes that such expenses will not increase proportionately with
revenue from sales.
14
<PAGE>
Restructuring
In the first quarter of 1997, the Company began to implement a
restructuring plan designed to reduce operating expenses and allow it to
dedicate all of its cash flows to software and service development. Drastic
headcount reduction and overhead elimination allowed the Company the needed
resources to develop the VIP system and the services it is now marketing.
Research and Development
The Company has not expensed any research and development costs for the
years stated on its financial statements, but has capitalized cost of $413,109
for development of its software and hardware for the year ended March 31, 1999,
in comparison to $233,093 and $103,086 for the years ended March 31, 1998 and
1997 respectively.
Extraordinary Items
The Company has recognized income from the extinguishment of debt of
$88,828 for the year ended March 31, 1999 and $217,442 and $253,694 for the
years ended March 31, 1998 and 1997 respectively.
Income Taxes
As of March 31, 1999, the Company had cumulative federal net operating
losses of approximately $5.9 million, which can be used to offset future income
subject to federal income tax through the year 2019.
Liquidity and Capital Resources
Throughout fiscal 1998 and 1999, the Company has continued to sustain
operating losses that have resulted in the use of its cash reserves. The
Company's cash and cash equivalents at March 31, 1999 were $41,750 compared to
$82,284 and $64,858 respectively for the years ended March 31, 1998 and 1997.
In June of 1997, the Company conducted a Regulation S offering and sold
$480,000 of 12% convertible debentures due December 25, 1997. From this offering
$320,000 was received in cash and a note issued on November 12, 1996 with
accrued interest was converted into this offering. On February 19, 1998,
$160,000 of the debentures was converted into 183,908 shares of the Company's
common stock. On September 30, 1998, the remaining $320,000 was converted into
367,816 shares of the Company's common stock.
In March of 1998 and again in May of 1998, the Company entered into a
sale leaseback arrangement under which the Company sold two of its VIP Systems,
each for a $100,000 and leased them back for a period of three years. In
November 1998, the Company agreed to issue 579,971 shares of common stock to the
lessor in exchange for the release of the then past due lease payments and
release of the future liabilities.
In September of 1998, the Company borrowed $100,000 from a more than 5%
beneficial owner. The note is unsecured and bears interest at 10% per annum with
principal and interest due on various dates through October 16, 1999.
From June 1998 until January of 1999, three separate shareholders lent
the Company varying amounts totaling $193,000. On June 18, 1999, the full
$193,000 was converted into 386,000 shares of the Company's common stock.
From December of 1998 through March 31, 1999, the Company received
$170,000 from the sale of Master Distributorships to seven different entities.
On March 31, 1999, the Company borrowed $43,000 from a more than 5%
beneficial owner. The note is unsecured and bears interest at 12% per annum with
the principal and interest due on March 30, 2000. The note is convertible into
shares of common stock at a conversion price of $1.00 per share.
15
<PAGE>
In April 1999, the Company borrowed $200,000 from three separate
individuals. The loans accrue interest at 12% per annum due at various dates
between April 7, 2000 and April 23, 2000. On June 28, 1999, $100,000 of these
notes were used to exercise 200,000 warrant shares of the Company's common
stock. $25,000 of a remaining note plus interest of $1,381 was converted into
26,381 shares of the Company's common stock, and the remaining $75,000 plus
interest of $3,353.76 was repaid to the note holders.
On June 3, 1999, the Company entered into a software license agreement
with KMC Telecom Holdings, Inc. (KMC). Under the terms of the agreement, KMC
paid the Company an initial license fee of $570,000. The agreement is for a
period of 10 years and provides for a total of 39 installations and grants KMC
the ability to add up to 81 additional installations. The agreement also calls
for KMC to pay the Company a monthly license fee ranging from $1,000 to $3,500
per month for each software and hardware installation beginning in the 25th
month after each installation. The Company anticipates having the initial 39
installations completed by June 2000 which would obligate KMC to pay the Company
monthly license fees of $131,500, subject to certain adjustments, beginning July
2002 and continuing through July 2009.
On July 1, 1999 pursuant to Section 4(2), the Company conducted an
offering of 320,000 shares of the Company's common stock at $1.25 per share
providing the Company with $400,000 working capital.
The Company requires additional capital to meet its current and future
obligations. On November 4, 1999, the Company signed a finders agreement with a
Colorado securities firm whereby the firm on a non-exclusive basis will
introduce the Company to companies or other business opportunities which
represent potential investment dollars.
Future Obligations
During the next twelve months, the Company plans, subject to raising
adequate capital, to increase substantially the marketing of its VIP Systems, to
introduce new services, and to continue refining the services it currently
provides. Subject to the Company's ability to fund the cost, management expects
the Company to hire or contract with approximately 25 additional persons during
the next twelve (12) months, primarily to support its expanding marketing
activities and system installations. At November 17, 1999, the Company employed
fifteen (15) employees.
The ability of the Company to raise capital is, in the opinion of
management, the primary constraint on the implementation of its business plan.
Management estimates that during the next twelve (12) months, the Company will
require approximately $3,000,000 of equity and/or long term debt to finance its
costs of marketing, system deployment, and continued refinement of its services.
In addition, the Company will be required to obtain extensions of its current
debt or raise additional funds of approximately $943,000 to retire its debt.
There is no assurance that the Company will be able to secure any such financing
or extensions of its current debt.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, many companies' computer systems and/or
software may need to be upgraded or replaced to comply with such "Year 2000"
requirements. Significant uncertainty exists in the software industry concerning
the potential effects associated with such compliance.
The Company has reviewed its own software products and believes that
there will be no adverse impact with the Year 2000 date change. All of the
Company's products are designed to record, store, and process calendar dates
occurring before and after January 1, 2000 with the same full year accuracy
(i.e. four numeric characters instead of two).
An impact analysis has been conducted to identify the risk of failure
within the Company's in-house computer systems. The Company believes that there
will be no adverse impact with the Year 2000 date change. However, this risk to
the Company's business relates not only to the Company's computer systems, but
also to some degree to those
16
<PAGE>
of the Company's suppliers and customers. The Company has developed a policy to
ensure that all key customers, suppliers and strategic partners operate and
provide Year 2000 compliant systems and software. The Company is currently
collecting certifications from third parties on compliance. Also, there is a
risk that existing and potential customers may not purchase the Company's
products in the future if the computer systems of such existing or potential
customers are adversely impacted by the Year 2000 date change.
Based on the information to date, the Company has completed its Year
2000 compliance review and made necessary modifications. However, the issue is
complex and no business can guarantee that there will be no Year 2000 problems.
Some commentators have stated that a significant amount of litigation will arise
out of Year 2000 compliance issues, and the Company is aware of a growing number
of lawsuits against other software vendors. Because of the unprecedented nature
of such litigation, it is uncertain to what extent the Company may be affected
by it.
17
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report.................................................F-1
Financial Statements:
Balance Sheets .........................................................F-2
Statements of Operations ...............................................F-4
Statement of Stockholders' Deficit......................................F-5
Statements of Cash Flows................................................F-7
Notes to Financial Statements....................................F-9 - F-20
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
and Shareholders
Preferred Voice, Inc.
We have audited the accompanying balance sheets of Preferred Voice, Inc. as of
March 31, 1999 and 1998, and the related statements of operations, stockholders'
deficit and cash flows for each of the three years in the period ended March 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Preferred Voice, Inc. at March
31, 1999 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended March 31, 1999, in conformity with
generally accepted accounting principles.
PHILIP VOGEL & CO. PC
Certified Public Accountants
DALLAS, TEXAS
SEPTEMBER 15, 1999
F-1
<PAGE>
PREFERRED VOICE, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
MARCH 31, 1999 AND 1998
1999 1998
-------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 41,750 $ 82,284
Accounts receivable, net of allowance for doubtful
accounts of $-0- in 1999 and $86,166 in 1998 860 0
Employee receivables 2,500 0
----------- -----------
Total current assets $ 45,110 $ 82,284
----------- -----------
Property and equipment:
Computer equipment $ 223,046 $ 136,061
Furniture and fixtures 16,934 18,134
Office equipment 12,493 9,303
Computer software 190,063 97,032
----------- -----------
$ 442,536 $ 260,530
Less accumulated depreciation 161,049 83,218
----------- -----------
Net property and equipment $ 281,487 $ 177,312
----------- -----------
Other assets:
Prepaid expenses $ 761,018 $ 800,000
Deposits 81,535 84,410
Deferred debt issue costs - net 0 2,869
----------- -----------
Total other assets $ 842,553 $ 887,279
----------- -----------
$ 1,169,150 $ 1,146,875
=========== ===========
F-2
<PAGE>
1999 1998
-------------- ---------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 363,834 $ 361,187
Accrued payroll and payroll taxes 226,755 140,236
Accrued interest payable 248,967 316,940
Accrued operating expenses 13,041 13,004
Accrued vacation 6,570 4,812
Current maturities of long-term debt 53,000 1,160,000
Deferred gain on sale - leaseback transaction 0 23,375
Note payable 50,866 50,866
Notes payable - related parties 100,000 956,746
----------- -----------
Total current liabilities $ 1,063,033 $ 3,027,166
----------- -----------
Long-term liabilities:
Deferred gain on sale - leaseback transaction $ 0 $ 46,749
Notes payable - related parties 590,946 0
Long-term debt, net of current maturities 253,000 0
----------- -----------
Total long-term liabilities $ 843,946 $ 46,749
----------- -----------
Commitments and contingencies (Note I)
Stockholders' deficit:
Common stock, $0.001 par value;
20,000,000 shares authorized; shares
issued 9,695,681 and 6,134,330, respectively $ 9,695 $ 6,134
Additional paid-in capital 5,192,033 3,315,785
Accumulated deficit (5,937,689) (5,247,091)
----------- -----------
$ (735,961) $(1,925,172)
Treasury stock - 385,224 and 385,224
shares, respectively, at cost 1,868 1,868
----------- -----------
Total stockholders' deficit $ (737,829) $(1,927,040)
----------- -----------
$ 1,169,150 $ 1,146,875
=========== ===========
</TABLE>
F-3
<PAGE>
PREFERRED VOICE, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
Sales $ 180,383 $ 6,874 $ 0
Cost of sales 15,033 2,206 0
---------- ---------- ------------
Gross profit $ 165,350 $ 4,668 $ 0
---------- ---------- ------------
Costs and expenses:
General and administrative expenses $ 768,024 $ 425,304 $ 954,213
Interest expense 176,752 178,797 169,787
---------- ---------- ------------
Total costs and expenses $ 944,776 $ 604,101 $ 1,124,000
---------- ---------- ------------
Loss from continuing operations before income taxes $ (779,426) $ (599,433) $ (1,124,000)
Provision for income taxes 0 0 0
---------- ---------- ------------
Loss from continuing operations before
extraordinary item $ (779,426) $ (599,433) $ (1,124,000)
Discontinued operations (Note L):
Loss from operations of discontinued business
segment (less applicable income taxes of $-0-) 0 0 (1,365,547)
Gain on disposal of business segment (less applicable
income taxes of $-0-) 0 0 527,181
Extraordinary item:
Gain from extinguishment of debt (less applicable
income taxes of $-0-)(Note M) 88,828 217,442 253,694
---------- ---------- ------------
Net loss $ (690,598) $ (381,991) $ (1,708,672)
========== ========== ============
Per share amounts:
Loss from continuing operations $ (0.11) $ (0.11) $ (0.22)
========== ========== ============
Loss from operations of discontinued business segment $ 0.00 $ 0.00 $ (0.26)
========== ========== ============
Gain on disposal of business segment $ 0.00 $ 0.00 $ 0.10
========== ========== ============
Gain from extinguishment of debt $ 0.01 $ 0.04 $ 0.05
========== ========== ============
Net loss $ (0.10) $ (0.07) $ (0.33)
========== ========== ============
</TABLE>
F-4
<PAGE>
PREFERRED VOICE, INC.
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
Shares of common stock
------------------------------------------------------------------
Authorized Issued Outstanding In treasury
------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C>
Balance - March 31, 1996 20,000,000 8,949,942 8,904,942 45,000
Issuance of common stock - June 3, 1996 0 400,000 400,000 0
Exercise of stock warrants - June 28, 1996 0 1,406,200 1,406,200 0
Conversion of 8.5% debentures - July 2, 1996 0 10,000 10,000 0
Exercise of stock options - September 8, 1996 0 45,000 45,000 0
Purchase of treasury stock 0 0 (280,000) 280,000
Conversion of 8.5% debentures - September 27, 1996 0 40,000 40,000 0
Exercise of stock options - November 27, 1996 0 9,000 9,000 0
Forgiveness of stockholder debt 0 0 0 0
One-for-two reverse stock split - February 24, 1997 0 (5,429,720) (5,267,220) (162,500)
Net loss for the year 0 0 0 0
---------- ---------- ---------- --------
Balance - March 31, 1997 20,000,000 5,430,422 5,267,922 162,500
Conversion of 8.5% debenture - June 12, 1997 0 20,000 20,000 0
Exercise of stock options - December 15, 1997 0 450,000 450,000 0
Issuance of common stock - December 30, 1997 0 50,000 50,000 0
Conversion of 12% debenture - March 5, 1998 0 183,908 183,908 0
Acquisition of treasury stock 0 0 (222,724) 222,724
Net loss for the year 0 0 0 0
---------- ---------- ----------- --------
Balance - March 31, 1998 20,000,000 6,134,330 5,749,106 385,224
Conversion of 7% debentures - June 24, 1998 0 11,259 11,259 0
Conversion of 8.5% debenture - June 30, 1998 0 27,881 27,881 0
Conversion of 7% debentures - July 31, 1998 0 209,587 209,587 0
Conversion of 7% debenture - August 31, 1998 0 10,450 10,450 0
Conversion of 10% debentures - August 31, 1998 0 869,276 869,276 0
Conversion of related party notes - September 30, 1998 0 48,975 48,975 0
Conversion of 12% debentures - September 30, 1998 0 367,816 367,816 0
Conversion of 7% debenture - October 20, 1998 0 11,373 11,373 0
Conversion of equipment lease agreement - November 5, 1998 0 579,971 579,971 0
Conversion of 7% debenture - December 29, 1998 0 79,662 79,662 0
Conversion of 7% debenture - December 30, 1998 0 159,323 159,323 0
Conversion of 7% debentures - December 31, 1998 0 603,142 603,142 0
Conversion of 7% debentures - January 4, 1999 0 156,554 156,554 0
Conversion of 7% debentures - January 7, 1999 0 119,199 119,199 0
Conversion of 7% debenture - January 8, 1999 0 20,930 20,930 0
Conversion of 7% debentures - January 11, 1999 0 130,060 130,060 0
Conversion of 7% debenture - January 22, 1999 0 43,919 43,919 0
Issuance of common stock in exchange for release
of trade liability - February 2, 1999 0 111,974 111,974 0
Net loss for the year 0 0 0 0
---------- ---------- ----------- --------
Balance - March 31, 1999 20,000,000 9,695,681 9,310,457 385,224
========== ========== =========== ========
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
AMOUNTS
--------------------------------------------------------------------------------------------
Common Additional Total
Stock $0.001 Treasury paid-in Accumulated stockholders'
par value stock capital deficit deficit
------------------- ---------- ---------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
$ 8,950 $ (135) $ 1,916,632 $ (3,156,428) $ (1,230,981)
400 0 799,600 0 800,000
1,406 0 107,647 0 109,053
10 0 14,990 0 15,000
45 0 90 0 135
0 (1,733) 0 0 (1,733)
40 0 59,960 0 60,000
9 0 36 0 45
0 0 110,000 0 110,000
(5,430) 0 5,430 0 0
0 0 0 (1,708,672) (1,708,672)
-------- --------- ----------- ------------ ------------
$ 5,430 $ (1,868) $ 3,014,385 $ (4,865,100) $ (1,847,153)
20 0 27,962 0 27,982
450 0 35,550 0 36,000
50 0 78,072 0 78,122
184 0 159,816 0 160,000
0 0 0 0 0
0 0 0 (381,991) (381,991)
-------- --------- ----------- ------------ ------------
$ 6,134 $ (1,868) $ 3,315,785 $ (5,247,091) $ (1,927,040)
11 0 22,626 0 22,637
28 0 41,794 0 41,822
210 0 290,663 0 290,873
10 0 11,380 0 11,390
869 0 347,431 0 348,300
49 0 16,275 0 16,324
368 0 319,632 0 320,000
11 0 22,737 0 22,748
580 0 219,809 0 220,389
80 0 30,988 0 31,068
159 0 61,977 0 62,136
603 0 234,623 0 235,226
157 0 60,900 0 61,057
119 0 49,945 0 50,064
21 0 8,979 0 9,000
130 0 56,062 0 56,192
44 0 24,551 0 24,595
112 0 55,876 0 55,988
0 0 0 (690,598) (690,598)
-------- --------- ----------- ------------ ------------
$ 9,695 $ (1,868) $ 5,192,033 $ (5,937,689) $ (737,829)
======== ========= =========== ============ ============
</TABLE>
F-6
<PAGE>
PREFERRED VOICE, INC.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
1999 1998 1997
-------------- -------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 179,510 $ 23,576 $ 810,759
Cash paid to suppliers and employees (500,572) (189,734) (3,540,302)
Interest received 0 2,376 0
Interest paid 0 (4) (37,356)
---------- ----------- ------------
Net cash used by operating activities $ (321,062) $ (163,786) $ (2,766,899)
---------- ----------- ------------
Cash flows from investing activities:
Capital expenditures $ (151,772) $ (138,621) $ (18,955)
Proceeds from sale of assets 1,300 5,683 743,000
---------- ----------- ------------
Net cash provided (used) by investing activities $ (150,472) $ (132,938) $ 724,045
---------- ----------- ------------
Cash flows from financing activities:
Proceeds from sale of stock $ 0 $ 0 $ 1,111,733
Proceeds from notes payable 351,000 314,850 1,422,831
Note principal payments (20,000) (700) (392,665)
Increase in loan costs 0 0 (75,028)
Purchase of treasury stock 0 0 (1,733)
Proceeds from sale - leaseback transaction 100,000 0 0
---------- ----------- ------------
Net cash provided by financing activities $ 431,000 $ 314,150 $ 2,065,138
---------- ----------- ------------
Net increase (decrease) in cash and cash equivalents $ (40,534) $ 17,426 $ 22,284
Cash and cash equivalents:
Beginning of year 82,284 64,858 42,574
---------- ----------- ------------
End of year $ 41,750 $ 82,284 $ 64,858
========== =========== ============
F-7
<PAGE>
1999 1998 1997
-------------- -------------- -------------
Reconciliation of net loss to net cash used
By operating activities:
Net loss $ (690,598) $ (381,991) $ (1,708,672)
---------- ---------- ------------
Adjustments to reconcile net loss to net cash
Used by operating activities:
Depreciation $ 80,113 $ 45,945 $ 47,636
Amortization 2,869 1,900 130,026
(Gain) loss on sale of assets (186) 4,937 (600,483)
Provision for losses on accounts receivable 0 446 88,630
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (860) 18,207 (49,808)
(Increase) decrease in employee receivables (2,500) 1,500 11,685
Increase in other receivables 0 (25,854) 0
(Increase) decrease in certificate of deposit 0 52,376 (1,922)
(Increase) decrease in deposits 2,875 7,359 (76,917)
(Increase) decrease in prepaid expenses 38,982 1,676 (770,759)
Decrease in deferred contract costs 0 50,000 0
Increase in patents and trademarks 0 0 (10,162)
Decrease in accounts payable 58,635 (46,129) (40,723)
Increase in accrued expenses 189,608 35,718 214,580
Increase (decrease) in deferred gain on sale - leaseback 0 70,124 0
---------- ---------- ------------
Total adjustments $ 369,536 $ 218,205 $ (1,058,217)
---------- ---------- ------------
Net cash used by operating activities $ (321,062) $ (163,786) $ (2,766,889)
========== ========== ============
Schedule of non-cash investment and financing activities:
Issuance of common stock in exchange for debt $1,879,809 $ 304,122 $ 0
========== ========== ============
</TABLE>
F-8
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - GENERAL ORGANIZATION:
Preferred Voice, Inc. (the "Company") is a Delaware corporation
incorporated in 1992. On February 25, 1997, the Company's stockholders approved
changing the name of the Company to better reflect the nature of the Company's
business. The Company commenced business on May 13, 1994, and was in the
development stage until August 1, 1995. The Company provides products and
services to the telecommunications industry throughout the United States and
maintains its principal offices in Dallas, Texas. The Company has not presented
financial statements for the period from incorporation in 1992 through May 13,
1994, as the Company did not begin its planning and organizational activities
until May 13, 1994. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates. Certain
prior year amounts have been reclassified for comparison purposes.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
- - -------------------------
For purposes of reporting cash flows, cash and cash equivalents include
amounts due from banks.
ACCOUNTS RECEIVABLE
- - -------------------
In the normal course of business, the Company extends unsecured credit to
its customers with payment terms generally 30 days. Because of the credit risk
involved, management has provided an allowance for doubtful accounts which
reflects its opinion of amounts which will eventually become uncollectible. In
the event of complete nonperformance by the Company's customers, the maximum
exposure to the Company is the outstanding accounts receivable balance at the
date of nonperformance.
DEPRECIATION
- - ------------
The cost of property and equipment is depreciated over the estimated useful
lives of the related assets. Depreciation is computed on the straight-line
method for financial reporting purposes and the double declining method for
income tax purposes.
Maintenance and repairs are charged to operations when incurred.
Betterments and renewals are capitalized.
The useful lives of property and equipment for purposes of computing
depreciation are as follows:
Computer equipment 5 years
Furniture and fixtures 5 years
Office equipment 5 years
Software development 3 years
INCOME TAXES
- - ------------
Income taxes are accounted for using the liability method under the
provisions of SFAS 109 "Accounting for Income Taxes".
F-9
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
- - -----------------------------------
The Company defines the fair value of a financial instrument as the amount
at which the instrument could be exchanged in a current transaction between
willing parties. Financial instruments included in the Company's financial
statements include cash and cash equivalents, trade accounts receivable, other
receivables, other assets, notes payable and long-term debt. Unless otherwise
disclosed in the notes to the financial statements, the carrying value of
financial instruments is considered to approximate fair value due to the short
maturity and characteristics of those instruments. The carrying value of
long-term debt approximates fair value as terms approximate those currently
available for similar debt instruments.
REVENUE RECOGNITION
- - -------------------
The Company is engaged as a provider of telecommunication products and
services. Generally, the Company recognizes revenue under the accrual method
when their services and products are provided. During the current year, however,
a majority of the Company's revenue consisted of distributor fees. A one-time
only distributor fee is paid by master distributors in order to obtain
distribution rights to the Company's products and services. The distributor fee
income was derived from six major customers and was recognized when the contract
became final. The distributor fee income for the years ended March 31, 1999,
1998 and 1997 was $170,000, $-0- and $-0-, respectively.
ADVERTISING EXPENSE
- - -------------------
The Company expenses advertising costs when the advertisement occurs. Total
advertising expense amounted to $42,269, $-0- and $19,182 for the years ended
March 31, 1999, 1998 and 1997, respectively.
LOSS PER SHARE
- - --------------
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share, during the year ended March 31,
1998. SFAS No. 128 reporting requirements replace primary and fully-diluted
earnings per share (EPS) with basic and diluted EPS. Basic EPS is calculated by
dividing net income (available to common stockholders) by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. The adoption of SFAS
128 did not affect per share amounts for 1997 as previously reported.
Loss per share is based on the weighted average number of shares
outstanding of 7,205,065 and 5,219,890 and 5,102,314 for the years ended March
31, 1999, 1998 and 1997, respectively. The weighted average share amounts have
been restated for the one-for-two reverse stock split approved by the Company's
Board of Directors on February 24, 1997 (see Note E).
AMORTIZATION
- - ------------
Fees and other expenses associated with the issuance of subordinated
convertible debentures are being amortized on the straight-line method over the
term of the debentures beginning in April, 1995. Amortization expense was
$2,869, $1,900 and $4,333 for the years ended March 31, 1999, 1998 and 1997,
respectively.
The cost of patents and trademarks was being amortized on the straight-line
method over a period of 15 years. During the year ended March 31, 1997, the
Company charged off the remaining unamortized cost of its patents and
trademarks in connection with the disposal of its long distance
telecommunications services business. Amortization expense charged to operations
in 1999, 1998 and 1997 was $-0-, $-0- and $26,370, respectively.
F-10
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENT OF LIABILITIES
- - -----------------------------------------------------------------------------
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities. SFAS No. 125 is effective for transfers and servicing of financial
assets and extinguishment of liabilities occurring after December 31, 1996, and
is to be applied prospectively. This statement provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishment of
liabilities based on consistent application of a financial-components approach
that focuses on control. It distinguishes transfers of financial assets that are
sales from transfers that are secured borrowings. Adoption of this statement did
not have a material impact on the Company's financial position, results of
operations or liquidity.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
- - -----------------------------------------------------------------------
The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, on
April 1, 1997. This statement requires that long-lived assets and certain
identified intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison on the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell. Adoption of this statement did not have a material impact on the Company's
financial position, results of operations or liquidity.
COMPREHENSIVE INCOME
- - --------------------
The Company adopted the provisions of SFAS No. 130, Reporting Comprehensive
Income on April 1, 1998. SFAS No. 130 requires that an enterprise report, by
major components and as a single total, the change in its net assets during the
period from nonowner sources. Adoption of this statement did not have a material
impact on the Company's financial position, results of operations or cash flows,
as the Company did not have any changes in net assets resulting from nonowner
sources during the periods covered by the accompanying financial statements.
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
- - -------------------------------------------------
The Company adopted the provisions of SFAS No. 131, Disclosure about
Segments of an Enterprise and Related Information on April 1, 1998. SFAS No. 131
establishes annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services, geographic areas
and major customers. Adoption of this statement did not have a material impact
on the Company's financial position, results of operations or cash flows, as any
effects are limited to the form and content of its disclosures.
NEW ACCOUNTING PRONOUNCEMENTS
- - -----------------------------
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No.1-33
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Adoption of this statement is not expected to impact the
Company's financial position, results of operations or cash flows. This
statement is effective for fiscal years beginning after June 15, 1999.
NOTE C - NOTES PAYABLE:
Notes payable consist of the following at March 31, 1999 and 1998:
F-11
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Outside interests $ 50,866 $ 50,866
Related parties 690,946 956,746
---------- -----------
$ 741,812 $ 1,007,612
========== ===========
Note payable to outside interests include:
Note payable, Brite Voice Systems, Inc., dated January 31, 1997. Note is
unsecured and payable in monthly installments of $8,112, including interest
at the rate of prime + 2 (8.5% at March 31, 1999 and 1998) through January
1, 1998. $ 50,866 $ 50,866
========== ===========
The note to Brite Voice Systems, Inc. is currently in dispute and beginning
April 1996, the Company has discontinued the accrual of interest expense.
Interest expense charged to operations related to the note payable to
outside parties was $-0- for each of the years ended March 31, 1999, 1998
and 1997, respectively.
Notes payable to related parties include: 1999 1998
---------- ----------
Note payable to a director and officer, dated September 1, 1994, due on
December 31, 1998, and unsecured, interest was payable semi-annually at the
rate of prime +2 (8.5% at March 31, 1998). This note was converted into
15,000 shares of common stock on September 30, 1998. $ 0 $ 7,500
Notes payable to Pegasus Settlement Trust (PST), a stockholder of the
Company. The beneficiary and a trustee of PST are officers of the Company.
The notes are unsecured and bear interest at rates ranging from 9% to 10%
and prime rate (8.5% at March 31, 1999 and 1998) with the principal and
accrued interest payable at maturity on various dates through December 31,
1998. Subsequent to the balance sheet date, the notes were converted into
787,928 shares of common stock on April 6, 1999. 590,946 590,946
Notes payable to a stockholder of the Company and several affiliated trusts
of which the stockholder is the trustee. The notes were unsecured and bore
interest at rates ranging from 9% to 10% and prime (8.5% at March 31, 1998)
with principal and accrued interest payable at various dates through
December 31, 1998. These notes were converted into 869,276 shares of common
stock on September 3, 1998. 0 348,300
Note payable to an officer dated May 20, 1996, secured by common stock with
principal and accrued interest due at maturity on May 20, 1998. This note
was converted into 33,975 shares of common stock on
September 30, 1998. 0 10,000
Notes payable to a stockholder of the Company. The notes are unsecured
and bear interest at 10% per annum with the principal and interest due
on various maturity dates through October 16, 1999. 100,000 0
---------- ----------
Total related party notes payable $ 690,946 $ 956,746
Less current portion 100,000 956,746
---------- ----------
Long-term portion $ 590,946 $ 0
========== ==========
</TABLE>
F-12
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
Related party notes payable that were converted into common stock
subsequent to the balance sheet date have been classified as long-term
liabilities in the accompanying 1999 balance sheet.
Interest expense charged to operations related to the related party notes
payable was $64,199, $86,172 and $83,257 for the years ended March 31, 1999,
1998 and 1997, respectively.
NOTE D - LONG-TERM DEBT:
<TABLE>
<CAPTION>
Long-term debt consisted of the following at March 31, 1999 and 1998:
1999 1998
---------- ----------
<S> <C> <C>
8.5% convertible debentures due September 27, 1996, convertible into shares
of common stock at a conversion price of $1.50 per share, interest was
payable on December 27, 1995, and at maturity. This note was converted into
27,881 shares of common stock on June 30, 1998. $ 0 $ 35,000
12% convertible debentures due December 25, 1997, convertible into shares
of common stock at a conversion price of $.87 per share. Principal and
interest were payable on demand at maturity. Convertible debentures were
secured by a media purchase credit (see Note J). These notes were converted
into 367,816 shares of common stock on September 30, 1998. 0 320,000
Notes payable dated various dates from May 20, 1996 through September 9,
1996, secured by common stock with principal and accrued interest due at
maturity on various dates through September 9, 1998. 216,250 warrants to
purchase shares of common stock at $3.00 per share expiring on various
dates through September 9, 1998 were issued to the note holders. These
notes were converted into 1,555,458 shares of common stock on various dates
through March 31, 1999. 60,000 805,000
Notes payable to Bisbro Investments Co., Ltd. The notes are unsecured and
bear interest at 10% per annum with the principal and interest due on
various maturity dates through January 5, 2000. These notes are convertible
into shares of common stock at a conversion price of $.50 per share.
Subsequent to the balance sheet date, the notes were converted into 120,000
shares of common stock on June 18, 1999. 60,000 0
F-13
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
Notes payable to Universal Asset Fund, Ltd. The notes are unsecured and
bear interest at 10% per annum with the principal and interest due on
various maturity dates through November 25, 1999. These notes are
convertible into shares of common stock at a conversion price of $.50 per
share. Subsequent to the balance sheet date, the notes were converted
into 80,000 shares of common stock on June 18, 1999. 40,000 0
Notes payable to Capital Growth Fund, Ltd. The notes are unsecured and bear
interest at 10% per annum with the principal and interest due on various
maturity dates through August 14, 1999. These notes are convertible into
shares of common stock at a conversion price of $.50 per share. Subsequent
to the balance sheet date, the notes were converted into 186,000 shares of
common stock on June 18, 1999. 93,000 0
Note payable to Equity Communication. This note is unsecured, non-interest
bearing, and due upon demand. 10,000 0
Note payable to an individual. This note is unsecured and bears interest at
12% per annum with the principal and interest due on March 30, 2000. This
note is convertible into shares of common stock at a conversion price of
$1.00 per share. 43,000 0
---------- ----------
$ 306,000 $1,160,000
Less current portion 53,000 1,160,000
---------- ----------
Total $ 253,000 $ 0
========== ==========
</TABLE>
Current maturities of long-term debt obligations that were converted into
common stock subsequent to the balance sheet date have been classified as
long-term liabilities in the accompanying 1999 balance sheet.
Interest expense charged to operations related to the long-term debt was
$112,553, $92,625 and $86,530 for the years ended March 31, 1999, 1998 and 1997,
respectively.
During the year ended March 31, 1997, $75,000 of 8.5% convertible
debentures were converted into 50,000 shares of common stock. During the year
ended March 31, 1998, $30,000 of 8.5% convertible debentures were converted into
20,000 shares of common stock and $160,000 of 12% convertible debentures were
converted into 183,908 shares of common stock. During the year ended March 31,
1999, $348,300 of 10% notes payable were converted into 869,276 shares of common
stock, $35,000 of 8.5% convertible debentures were converted into 27,881 shares
of common stock, $320,000 of 12% convertible debentures were converted into
367,816 shares of common stock, $745,000 of 7% notes payable were converted into
1,555,458 shares of common stock and $17,500 of notes payable to officers of the
Company were converted into 48,975 shares of common stock.
NOTE E - COMMON STOCK:
STOCK PURCHASE WARRANTS
- - -----------------------
At March 31, 1999, the Company had outstanding warrants to purchase 2,605,500
shares of the Company's common stock at prices which ranged from $0.20 per share
to $4.88 per share. The warrants are exercisable at any time and
F-16
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
expire on dates ranging from August 31, 1999 to March 31, 2004. At March 31,
1999, 2,605,500 shares of common stock were reserved for that purpose.
COMMON STOCK RESERVED
- - ---------------------
At March 31, 1999, shares of common stock were reserved for the following
purposes:
Exercise of stock warrants 2,605,500
Exercise and future grants of stock
options and stock appreciation rights 423,000
---------
3,028,500
=========
NOTE F - INCOME TAXES:
The Company uses the liability method of accounting for income taxes under
the provisions of Statement of Financial Accounting Standards No. 109. Under the
liability method, a provision for income taxes is recorded based on taxes
currently payable on income as reported for federal income tax purposes, plus an
amount which represents the change in deferred income taxes for the year.
Deferred income taxes are provided for the temporary differences between
the financial reporting basis and the tax reporting basis of the Company's
assets and liabilities. The major areas in which temporary differences give rise
to deferred taxes are accounts receivable, accrued liabilities, start-up
expenditures, accumulated depreciation, and net operating loss carryforwards.
Deferred income taxes are classified as current or noncurrent depending on the
classification of the assets and liabilities to which they relate. Deferred
income taxes arising from temporary differences that are not related to an asset
or liability are classified as current or noncurrent depending on the years in
which the temporary differences are expected to reverse.
The provision for income taxes consists of:
1999 1998 1997
----------- ----------- -------------
Current income taxes $ 0 $ 0 $ 0
Change in deferred income taxes due
to temporary differences $ 0 $ 0 $ 0
----------- ----------- -------------
$ 0 $ 0 $ 0
=========== =========== =============
F-15
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
Deferred tax (liabilities) assets consist of the following:
1999 1998
--------------- ------------
Accumulated depreciation $ (30,000) $ (22,000)
--------------- ------------
Gross deferred tax liabilities $ (30,000) $ (22,000)
--------------- ------------
Accounts receivable $ 0 $ 29,000
Accrued liabilities 2,000 2,000
Start-up expenditures 7,000 18,000
Net operating loss carryforward 2,010,000 1,727,000
--------------- ------------
Gross deferred tax assets $ 2,019,000 $ 1,776,000
Valuation allowance (1,989,000) (1,754,000)
--------------- ------------
Net deferred tax assets $ 30,000 $ 22,000
--------------- ------------
$ 0 $ 0
=============== ============
<TABLE>
<CAPTION>
1999 1998 1997
--------------- -------------- -------------
<S> <C> <C> <C>
The increases in the deferred
tax valuation allowance are as follows: $ 235,000 $ 128,000 $ 566,000
=============== ============== =============
</TABLE>
The Company has recorded a valuation allowance amounting to the entire
deferred tax asset balance because of the Company's uncertainty as to whether
the deferred tax asset is realizable. However, if the Company is able to utilize
the deferred tax asset in the future, the valuation allowance will be reduced
through a credit to income.
The Company has available at March 31, 1999, a net operating loss
carryforward of approximately $5,910,000 which can be used to offset future
taxable income through the year 2019.
NOTE G - STOCK OPTION PLAN:
On November 1, 1994, the Company adopted a stock award and incentive plan
which permits the issuance of options and stock appreciation rights to selected
employees and independent contractors of the Company. The plan reserves 450,000
shares of common stock for grant and provides that the term of each award be
determined by the committee of the Board of Directors (Committee) charged with
administering the plan.
F-16
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
Under the terms of the plan, options granted may be either nonqualified or
incentive stock options, and the exercise price, determined by the Committee,
may not be less than the fair market value of a share on the date of grant.
Stock appreciation rights granted in tandem with an option shall be exercisable
only to the extent the underlying option is exercisable and the grant price
shall be equal to the exercise price of the underlying option. During the year
ended March 31, 1997, options to purchase 27,000 shares were exercised at a
price of $0.01 per share. At March 31, 1999, options to purchase 382,750 shares
at exercise prices of $0.20 to $1.25 per share had been granted. No stock
appreciation rights had been granted at March 31, 1999.
NOTE H - STOCK OPTIONS:
The per share weighted-average fair value of stock options granted during
the year ended March 31, 1999 was $0.98, on the date of grant, using the Black
Scholes Option-Pricing Model. All stock options granted during the year ended
March 31, 1997 were subsequently forfeited. The following weighted-average
assumptions were used in the pricing model:
1999 1998
---------------------- ------------------------
Expected dividend yield 0.00% 0.00%
Risk-free interest rate 5.06% - 5.09% 5.62% - 5.65%
Expected life 2.5 years to 3.5 years 1.5 years to 2.5 years
The Company applies APB Opinion No. 25 in accounting for its plan and,
accordingly, has recognized no compensation expense for stock options granted at
exercise prices at least equal to the market value of the Company's common
stock. Had the Company determined compensation cost based on the fair value at
the grant date for its stock options under SFAS No. 123, the Company's net loss
and loss per share would have been increased to the proforma amounts indicated
below:
1999 1998 1997
-------------- --------------- --------------
Net loss:
As reported $ (690,598) $ (381,991) $ (1,708,672)
============== ============== ============
Proforma $ (841,514) $ (424,637) $ (1,708,672)
============== ============== ============
Loss per common share:
As reported $ (0.10) $ (0.07) $ (0.33)
============== ============== ============
Proforma $ (0.12) $ (0.08) $ (0.33)
============== ============== ============
F-19
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE I - COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS
- - -----------------
The company has entered into a non-cancelable operating lease for office
facilities under a lease arrangement commencing on February 3, 1998 and expiring
on December 31, 2003.
Minimum future rentals to be paid on non-cancelable leases as of March 31,
1999 for each of the next five years and in the aggregate are:
YEAR ENDING
MARCH 31, AMOUNT
--------------- ----------------
2000 $ 73,766
2001 101,060
2002 103,540
2003 104,856
2004 80,364
--------------
$ 463,586
==============
Total rent expense charged to operations was $27,416, $64,463 and $128,475
for the years ended March 31, 1999, 1998 and 1997, respectively.
NOTE J - BARTER TRANSACTION:
On June 3, 1996, the Company entered into a media purchase agreement for
the promotion of its products and services with Proxhill Marketing, Ltd.
(Proxhill). Under the terms of the agreement, the Company committed to purchase
$1,200,000 of media advertising time in exchange for 200,000 shares of common
stock at a value of $4.00 per share, and $400,000 in cash. The agreement is for
a period of five years. For each purchase of media advertising time, the Company
will receive a barter credit equal to 66.67% of the transaction value with the
remaining balance payable in cash. A prepaid barter credit in the amount of
$761,018 and $800,000 is included in other assets in the accompanying balance
sheet as of March 31, 1999 and 1998, respectively. In connection with this
agreement, the Company issued to Proxhill 50,000 warrants to purchase the
Company's common stock at a price of $4.00 per share. The options expire June 3,
2001.
NOTE K - SALE - LEASEBACK TRANSACTION:
The Company entered into a sale-leaseback arrangement during each of the
years ended March 31, 1999 and 1998. Under these arrangements, the Company sold
telecommunications equipment and leased it back for a period of three years.
Both leases were originally accounted for as operating leases. The gain of
$66,119 and $70,124 realized in these transactions had originally been deferred
and amortized to income in proportion to rental expense over the term of the
lease. In November 1998, the Company agreed to issue 579,971 shares of common
stock to the lessor in exchange for the release of the liability for all future
and past due lease payments.
F-18
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE L - DISCONTINUED OPERATIONS:
On February 4, 1997, the Company entered into an agreement with Brite Voice
Systems, Inc. (BVS) to sell to BVS its long distance telecommunications services
business. The assets sold consisted of property and equipment and intangible
assets. The selling price was $743,000. Accordingly, the operating results of
the long distance telecommunications services business have been segregated from
continuing operations and reported separately in the accompanying statement of
operations. The Company has restated its prior financial statements to present
the operating results of the long distance telecommunications services business
as a discontinued operation.
Operating results (exclusive of any corporate charges or interest expense)
from discontinued operations are as follows:
1999 1998 1997
----------- ----------- -----------
Net sales $ 0 $ 0 $ 771,937
----------- ----------- -----------
Costs and expenses:
Cost of sales $ 0 $ 0 $ 899,192
Sales and marketing expenses 0 0 661,206
General and administrative
expenses 0 0 577,086
----------- ----------- -----------
Total costs and expenses $ 0 $ 0 $ 2,137,484
----------- ----------- -----------
Loss before income taxes $ 0 $ 0 $(1,365,547)
Provision for income taxes 0 0 0
----------- ----------- -----------
Loss from operations $ 0 $ 0 $(1,365,547)
=========== =========== ===========
NOTE M - EXTINGUISHMENT OF DEBT:
During the years ended March 31, 1999, 1998 and 1997, the Company
negotiated settlements of amounts owed to certain of its vendors and employees.
The negotiated settlements resulted in a reduction of the Company's accounts
payable and accrued operating expenses in the amount of $88,828, $217,442 and
$253,694, respectively, which has been reported as an extraordinary item in the
accompanying statements of operations.
NOTE N - GOING CONCERN:
The Company has incurred substantial operating losses to date. In June
1995, the Company issued 600,000 shares of its common stock to Star Resources,
Inc. (Star), a public company, for $24,000. The Company then filed a
registration statement with the Securities and Exchange Commission to allow Star
to distribute to its stockholders the 600,000 shares of common stock. Upon
completion of the Star distribution, the Company became a separate public
company. The Company has raised, and intends to continue to raise, additional
capital through subsequent offerings of its common stock in over-the-counter
securities markets.
On June 3, 1999, the Company entered into a software license agreement with
KMC Telecom Holdings, Inc. (KMC). Under the terms of the agreement, KMC paid the
Company an initial license fee of $570,000. The agreement is for a period of 10
years and provides for a total of 39 installations and grants KMC the ability to
add up to 81
F-19
<PAGE>
PREFERRED VOICE, INC.
NOTES TO FINANCIAL STATEMENTS
additional installations. The agreement also calls for KMC to pay the Company a
monthly license fee ranging from $1,000 to $3,500 per month for each software
and hardware installation beginning in the 25th month after each installation.
The Company anticipates having the initial 39 installations completed by June
2000 which would obligate KMC to pay the Company monthly license fees of
$131,500, subject to certain adjustments, beginning July 2002 and continuing
through July 2009.
In view of these matters, realization of a major portion of the assets in
the accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements, and the success of its future operations. Management
believes that actions presently being taken to meet the Company's financial
requirements will provide the Company the opportunity to continue as a going
concern.
F-20
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Board of Directors currently consists of two (2) persons, G. Ray
Miller and Mary G. Merritt. The following table sets forth information about all
Directors and executive officers of the Company and all persons nominated or
chosen to become such:
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS AGE OFFICE YEAR FIRST ELECTED
- - ------------------------- --- ------ DIRECTOR
--------
<S> <C> <C> <C>
G. Ray Miller 60 Director, Chief Executive
Officer and President 1994
Mary G. Merritt 42 Director, Vice President- 1994
Finance and
Secretary/Treasurer
Richard K. Stone 39 Vice President-Sales and N/A
Marketing
Robert R. Williams 50 Vice President-Software N/A
Development
</TABLE>
Mr. Miller is a founder of the Company. He has served as an Officer and
Director of the Company since May, 1994; he has been Chief Executive Officer
since June, 1994 and President since April 1997. Prior to the founding of the
Company, Mr. Miller founded United Medicorp Inc. ("United Medicorp") in 1989 and
served through February, 1992 as Chairman of the Board and Chief Executive
Officer. United Medicorp is a publicly-held corporation which manages medical
insurance claims. Prior to that time, Mr. Miller served in executive capacities
with International Telecharge, Inc., an operator services company; Automatic
Radius Management, Inc. ("ARM"), a security alarm service company; and U.S.
Telephone, Inc., a long distance carrier. After leaving United Medicorp, Mr.
Miller managed personal investments until he began work at the Company.
Ms. Merritt is a founder of the Company and has been a director since
May, 1994. She has served as Vice President - Finance and Secretary/Treasurer
since inception. She served as President of Star of Texas, Inc., a trust
management account service from 1989 to May 1994. She served as Controller of
United Medicorp for several months during 1992. Ms. Merritt is a certified
public accountant and was employed by Ernst & Whinney from 1981 to 1989, her
last position being senior manager for entrepreneurial services.
Mr. Stone joined the Company in December 1998 as Vice President of
Sales and Marketing after serving for two years as a Vice President of Sales and
Marketing for US Metrolines and Director of National Accounts at Matrix, both
Jensen UICI Companies. Before that from June 1994 to March 1996, he served as
Co-Founder/President of Telecable Communications, Inc. and from February 1991 to
June 1994 Director of Sales at Value Added Communications. All of the businesses
in which Mr. Stone has worked are telecommunications providers servicing a
customer base similar to that which the Company currently serves.
Mr. Williams joined the Company in January 1998 as Vice President of
Software Development bringing 25 years experience in system design and
development. During 1990, Mr. Williams worked with Voice Control Systems, Inc.,
a company in the speech recognition field, as a software programmer. After that
he served as Vice President of Engineering for ActionFax, Inc. for 5 years, a
company that designed multi-dialing and other fax related services. From 1995 to
1998, Mr. Williams owned and operated Business Hotlines, a software development
company
19
<PAGE>
headquartered in Dallas, Texas. He also worked in the Central Research
Laboratory at Texas Instruments on the development team that delivered the
world's first commercially available voice-mail system for VMX, Inc.
The Company is not aware of any "family relationships" (as defined in
Item 401(c) of Regulation S-B promulgated by the Commission) among directors,
executive officers, or persons nominated or chosen by the Company to become
directors or executive officers.
Except as set forth above, the Company is not aware of any event (as
listed in Item 401(d) of Regulation S-B promulgated by the Commission) that
occurred during the past five years that are material to an evaluation of the
ability or integrity of any director, person nominated to become a director,
executive officer, promoter or control person of the Company.
ITEM 10. EXECUTIVE COMPENSATION
The following tables set forth the compensation paid by the Company to
its Chief Executive Officer during the fiscal year ended March 31, 1999. No
other executive officer earned in excess of $100,000.
ANNUAL COMPENSATION
NAME/PRINCIPAL YEAR ENDING WARRANTS
POSITION MARCH 31 SALARY GRANTED
- - -------- -------- ------ -------
G. Ray Miller-Chief 1999 $47,333 250,000
Executive Officer 1998 $6,000 200,000
1997 $30,000
No other stock options were granted to the aforementioned executive officer.
<TABLE>
<CAPTION>
OPTIONS GRANTED IN LAST FISCAL YEAR
NUMBER OF
SECURITIES % OF TOTAL OPTIONS EXERCISE OR
UNDERLYING GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME OPTIONS GRANTED(#) IN FISCAL YEAR ($/SH) DATE
- - ---- ------------------ -------------------- ----------- ----
<S> <C> <C> <C> <C>
G. Ray Miller 250,000(1) 33.6% $0.84 3/31/2004
<FN>
1 All warrants are currently exercisable.
</FN>
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the close of business on October
31, 1999, information as to the beneficial ownership of shares of the Company
Common Stock for all directors, each of the named executive officers (as defined
in Item 402(a)(2) of Regulation S-B promulgated by the Commission), for all
directors and executive officers as a group, and any person or "group" (as that
term is defined in Item 403 of Regulation S-B promulgated by the Commission) who
or which is known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of Company Common Stock. In addition, except as set forth
below, the Company does not know of any person or group who or which owns
beneficially more than 5% of its outstanding shares of Company Common Stock as
of the close of business on October 31, 1999.
20
<PAGE>
BENEFICIAL OWNERSHIP (1), (2)
NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE
- - ------------------------ ------ ----------
Pegasus Settlement Trust (3) 2,715,667 23.74%
G. Ray Miller (4) 630,250 5.30%
Mary G. Merritt(5) 3,480,642 29.52%
Lawrence E. Steinberg(6) 1,419,276 12.30%
G. Tyler Runnels(7) 662,421 5.77%
Capital Growth Fund Ltd(8) 778,971 6.60%
All Directors, and executive
officers as a group (four
persons)(9) 4,110,892 34.65%
1) The rules of the SEC provide that, for purposes hereof, a person is
considered the "beneficial owner" of shares with respect to which the
person, directly or indirectly, has or shares the voting or investment
power, irrespective of his economic interest in the shares. Unless
otherwise noted, each person identified possesses sole voting and
investment power over the shares listed, subject to community property
laws.
2) Based on 11,440,990 shares outstanding on October 31, 1999. Shares of
Common Stock subject to options that are exercisable within 60 days of
November 19, 1999, are deemed beneficially owned by the person holding such
options for the purposes of calculating the percentage of ownership of such
person but are not treated as outstanding for the purpose of computing the
percentage of any other person.
3) Pegasus Settlement Trust is a Channel Islands Trust of which SG Hambros
Trust Company (Jersey) Limited of 7 the Esplanade, St. Helier, Jersey,
Channel Islands is Trustee, and Mary Merritt is protector, with shared
voting and dispositive power. G. Ray Miller is the sole beneficiary of the
Trust. Pegasus Settlement Trust's address is % SG Hambros Trust Company
(Jersey) Limited, 7 The Esplanade, St. Helier, Jersey, Channel Islands JE4
8RT.
4) Includes 450,000 shares issuable upon exercise of warrants. Mr. Miller is
the sole beneficiary of the Pegasus Settlement Trust but is not the
beneficial owner of the common stock owned by the Trust because Mr. Miller
does not exercise voting or investment power over such shares. Mr. Miller's
address is 6500 Greenville, Suite 570, Dallas, Texas 75206.
5) Includes 350,000 shares issuable upon exercise of warrants, 6,000 shares
held by her minor children, and 2,715,667 shares held by Pegasus Settlement
Trust. Ms. Merritt's address is 6500 Greenville, Suite 570, Dallas, Texas
75206.
6) Includes 100,000 shares issuable upon exercise of warrants held by Mr.
Steinberg and 228,140 shares in trusts of which he is the Trustee, two of
which his children are beneficiaries. Mr. Steinberg's address is 5420 LBJ
Freeway, LB 56, Dallas, Texas 75240.
7) Includes 43,000 shares issuable upon exercise of warrants. Mr. Runnels'
address is 1999 Avenue of the Stars, Suite 2530, Los Angeles, CA 90067.
8) Does not include 120,000 shares and 360,000 warrants held by Bisbro or
80,000 shares and 160,000 warrants held by Universal who have the same
Chief Financial Officer, Badar Al-Rezaihan, who the Company understands
exercises voting and investment power with respect to such shares and
warrants held by Bisbro, Universal and Capital. The number of shares owned
by Bisbro includes 20,000 shares issued in the name of Bisbro upon exercise
of the warrants held by Mr. Al-Rezaihan individually. Includes 360,000
shares issuable upon exercise of warrants.
9) Includes the shares described in footnotes 4 and 5.
21
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 2, 1995, Badar Al-Rezaihan was issued a warrant to purchase 20,000
shares of common stock at an exercise price of $0.20 per share with an
expiration date of October 1, 1998. The Company extended the warrant to October
1, 1999 before which time Mr. Al-Rezaihan exercised his warrant to purchase
20,000 shares and the shares were issued in the name of Bisbro. Mr. Al-Rezaihan
received the warrant in consideration of his assistance to the Company in
creating and maintaining international market contacts to provide the Company
with capital investment.
On April 23, 1998, the Company issued two new warrants, a warrant to purchase
200,000 shares of common stock of the Company at an exercise price of $1.00 per
share on or before November 12, 1999 to Bisbro and a warrant to purchase 100,000
shares of common stock of the Company at an exercise price of $1.00 per share on
or before November 12, 1999 to Invest. On October 5, 1999, Bisbro exercised
22,000 of the warrant shares and a new warrant was issued for 178,000 shares of
common stock. Also on October 5, 1999, both Bisbro's and Invest's warrants were
extended to November 12, 2000 and repriced from $1.00 to $1.25. The previous
warrants were granted in connection with a Regulation S offering made by the
Company in 1995.
On May 1, 1998, the Company entered a sale lease back agreement with Capital, a
beneficial owner of 5% or more of the Company's stock, whereby it sold a VIP
System to Capital for $100,000 and then leased it back for 36 months.
On August 3, 1998, Capital agreed to lend $83,000 to the Company. In return, the
Company issued Capital its promissory note in the amount of $83,000 bearing
interest at a rate of 10% per annum due on August 3, 1999. On August 14, 1998,
Capital agreed to lend $10,000 to the Company. In return, the Company issued
Capital its promissory note in the amount of $10,000 bearing interest at a rate
of 10% per annum due on August 14, 1999. Both of those notes were converted into
shares of common stock at a conversion price of $0.50 per share for a total of
186,000 shares on June 18, 1999.
On September 3, 1998, the Company issued Lawrence E. Steinberg, a beneficial
owner of 5% or more of the Company's stock, 751,136 shares of common stock at
$0.39 per share for $302,100 that the Company owed to him on outstanding
promissory notes.
On September 3, 1998, the Company issued the Lawrence E. Steinberg Charitable
Remainder Trust, a Texas trust of which Lawrence E. Steinberg is a trustee,
75,180 shares of common stock at a $0.39 per share for $29,400 that the Company
owed to the trust on outstanding promissory notes.
On September 3, 1998, the Company issued the Ilana S. Steinberg Trust A, a Texas
trust for the benefit of one of Lawrence E. Steinberg's children of which Mr.
Steinberg is a trustee, 21,480 shares of common stock at $0.39 per share for
$8,400 that the Company owed to the trust on outstanding promissory notes.
On September 3, 1998, the Company issued the Adam J. Steinberg Trust A, a Texas
trust for the benefit of one of Lawrence E. Steinberg's children of which Mr.
Steinberg is a trustee, 21,480 shares of common stock at $0.39 per share for
$8,400 that the Company owed to the trust on outstanding promissory notes.
On September 3, 1998, Lawrence E. Steinberg agreed to loan $100,000 to the
Company. In return, the Company issued Mr. Steinberg its promissory note in the
amount of $50,000 bearing interest at a rate of 10% per annum due on September
3, 1999, and its promissory note in the amount of $50,000 bearing interest at a
rate of 10% per annum due on October 16, 1999 and a warrant to purchase 100,000
shares of common stock at a price of $1.00 per share on or before October 16,
2001. The notes due on September 3, 1999 and October 16, 1999 are currently
delinquent.
On October 1, 1998, Bisbro agreed to loan $20,000 to the Company. In return, the
Company issued to Bisbro its promissory note in the amount of $20,000 bearing
interest at a rate of 10% per annum due on October 1, 1999. This note was
converted into shares of common stock at a conversion price of $0.50 per share
for 40,000 shares on June 18, 1999.
22
<PAGE>
On October 1, 1998, Universal agreed to loan $20,000 to the Company. In return
the Company issued to Universal its promissory note in the amount of $20,000
bearing interest at a rate of 10% per annum due on October 1, 1999. This note
was converted into shares of common stock at a conversion price of $0.50 per
share for 40,000 shares on June 18, 1999.
On November 10, 1998, Bisbro agreed to loan $30,000 to the Company. In return
the Company issued to Bisbro its promissory note in the amount of $30,000
bearing interest at a rate of 10% per annum due on November 10, 1999. This note
was converted into shares of common stock at a conversion price of $0.50 per
share for 60,000 shares on June 18, 1999.
On November 5, 1998 Capital converted the amounts owed to it by the Company
under the Company's outstanding lease obligations under Equipment Lease
Agreements dated March 18, 1998 and May 1, 1998 into 579,971 shares of the
Company's common stock.
On November 25, 1998, Universal agreed to loan $20,000 to the Company. In return
the Company issued to Universal its promissory note in the amount of $20,000
bearing interest at a rate of 10% per annum due on November 25, 1999. This note
was converted into shares of common stock at a conversion price of $0.50 per
share for 40,000 shares on June 18, 1999.
On January 5, 1999, Bisbro agreed to loan $10,000 to the Company. In return the
Company issued to Bisbro its promissory note in the amount of $10,000 bearing
interest at a rate of 10% per annum due on January 5, 2000. This note was
converted into shares of common stock at a conversion price of $0.50 per share
for 20,000 shares on June 18, 1999.
On March 30, 1999, G. Tyler Runnels, a beneficial owner of 5% or more of the
Company's stock, agreed to lend $43,000 to the Company. In return, the Company
issued to Mr. Runnels its promissory note in the amount of $43,000 bearing
interest at a rate of 12% per annum due on March 30, 2000. The note was repaid
with interest on June 16, 1999. On March 31, 1999, the Company issued Mr.
Runnels a warrant to purchase 43,000 shares of common stock of the Company at an
exercise price of $0.50 per share on or before March 31, 2004.
On March 31, 1999, the Company issued G. Ray Miller, the Chief Executive Officer
and a director of the Company, a warrant to purchase 250,000 shares of common
stock of the Company at $0.84 per share on or before March 31, 2004. The warrant
was issued for Mr. Miller's past work for the Company.
On March 31, 1999, the Company issued Mary Merritt, the Vice President of
Finance and a director of the Company, a warrant to purchase 250,000 shares of
common stock of the Company at an exercise price of $0.84 per share on or before
March 31, 2004. The warrant was issued for Ms. Merritt's past work for the
Company.
23
<PAGE>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit
- - ------- ----------------------
3.1 Certificate of Incorporation of Preferred/telecom, Inc. filed on August 3,
1992 with the Secretary of State of Delaware (Incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1,
registration no. 33-92894)
3.2 Certificate of Amendment, filed on May 2, 1994 with the Secretary of State
of Delaware (Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, registration no. 33-92894)
3.3 Certificate of Amendment, filed on March 21, 1995 with the Secretary of
State of Delaware (Incorporated by reference to Exhibit 3.3 to the
Company's Registration Statement on Form S-1, registration no. 33-92894)
3.4 Certificate of Amendment, filed on July 27, 1995 with the Secretary of
State of Delaware (Incorporated by reference to Exhibit 3.5 to Amendment
No. 1 to the Company's Registration Statement on Form S-1, registration no.
33-92894)
3.5* Certificate of Amendment, filed on March 7, 1997 with the Secretary of
State of Delaware
3.6 Bylaws of Preferred/telecom, Inc. (Incorporated by reference to Exhibit 3.4
to the Company's Registration Statement on Form S-1, registration no.
33-92894)
4.1 Specimen Certificate evidencing Common Stock of Preferred/telecom, Inc.
(Incorporated by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-1, registration no. 33-92894)
10.1*Form of Warrant Certificate and Schedule of Warrant Certificates
10.2*Office Building Lease between Greenville Avenue Properties, Ltd. And
Preferred Voice, Inc.
10.3*Collocation License Agreement between NEXTLINK Texas, Inc. and Preferred
Voice, Inc.
10.4*Promissory Note to Capital Growth Fund Ltd., in original principal amount
of $83,000.00, dated as of August 3, 1998
10.5*Promissory Note to Capital Growth Fund Ltd., in original principal amount
of $10,000.00, dated as of August 14, 1998
10.6*Promissory Note to Lawrence E. Steinberg, in original principal amount of
$50,000.00, dated as of September 3, 1998
10.7*Promissory Note to Bisbro Investments Co., Ltd., in original principal
amount of $20,000.00, dated as of October 1, 1998
10.8*Promissory Note to Universal Asset Fund Ltd., in original principal amount
of $20,000.00, dated as of October 1, 1998
10.9*Promissory Note to Lawrence E. Steinberg, in original principal amount of
$50,000.00 dated as of October 16, 1998
10.10*Promissory Note to Bisbro Investments Co., Ltd., in original principal
amount of $30,000.00, dated as of November 10, 1998
10.11*Promissory Note to Universal Asset Fund Ltd., in original principal amount
of $20,000.00, dated as of November 25, 1998
10.12*Promissory Note to Bisbro Investments Co. Ltd., in original principal
amount of $10,000.00, dated as of January 5, 1999
10.13*Software License Agreement between KMC Telecom Holdings, Inc. and
Preferred Voice, Inc.+
10.14*Promissory Note to G. Tyler Runnels, in original principal amount of
$43,000.00, dated as of March 30, 1999
10.15*Equipment Lease between Capital Growth Fund, Ltd. and Preferred Voice,
Inc. and Amendment No. 1 to Lease Agreement+
10.16*Equipment Lease between Capital Growth Fund, Ltd. and Preferred Voice,
Inc. and Amendment No. 1 to Lease Agreement+
10.17*First Amendment to Lease between Dallas Office Portfolio, L.P. as
successor in interest to Greenville Avenue Properties, Ltd. and Preferred
Voice, Inc.
10.18*Master Distributor Agreement between In Touch Solutions, L.L.C. and
Preferred Voice, Inc.
24
<PAGE>
10.19*Master Distributor Agreement between Answering Service, Inc. and Preferred
Voice, Inc.
10.20*Master Distributor Agreement between Amerivoice Telecommunications, Inc.
and Preferred Voice, Inc.
10.21*Master Distributor Agreement between Voicenet New Media, Inc. and
Preferred Voice, Inc.
10.22*Master Distributor Agreement between Best Voice, Inc. and Preferred Voice,
Inc.
10.23*Master Distributor Agreement between Nomis Communications, Inc. and
Preferred Voice, Inc.
10.24*Master Distributor Agreement between Florida Wireless and Preferred Voice,
Inc.
10.25*Master Distributor Agreement between Voice Retrieval, Inc. and Preferred
Voice, Inc.
10.26*Software License Agreement between Rural Cellular Corporation and
Preferred Voice, Inc.
10.27*Marketing Agreement between Rural Cellular Corporation and Preferred
Voice, Inc.+
10.28*Software License Agreement between Southwest Texas Telephone Company and
Preferred Voice, Inc.
10.29*Marketing Agreement between Southwest Texas Telephone Company and
Preferred Voice, Inc.+
10.30*Software License Agreement between Kaplan Telephone Company and Preferred
Voice, Inc.
10.31*Marketing Agreement between Kaplan Telephone Company and Preferred Voice,
Inc.+
10.32*Software License Agreement between Midwest Wireless Communications, L.L.C.
and Preferred Voice, Inc.
10.33*Marketing Agreement between Midwest Wireless Communications, L.L.C. and
Preferred Voice, Inc.+
27* Financial Data Schedule
*Filed herewith
+Confidential materials deleted and filed separately with the Securities and
Exchange Commission
(b) Reports on Form 8-K
None.
25
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this annual report on Form 10-KSB to be
signed on its behalf by the undersigned thereto duly authorized.
Preferred Voice, Inc.
(Registrant)
Date: November 29, 1999 By: /s/ G. Ray Miller
------------------------
G. Ray Miller, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report on Form 10-KSB has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE OFFICE DATE
--------- ------ ----
<S> <C> <C>
/s/ G. Ray Miller
- - --------------------------- President, Chief Executive Officer and November 29, 1999
G. Ray Miller Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Mary G. Merritt Secretary, Treasurer and Vice President November 29, 1999
- - --------------------------- of Finance
Mary G. Merritt
</TABLE>
26
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- - ------- ----------------------
3.1 Certificate of Incorporation of Preferred/telecom, Inc. filed on August 3,
1992 with the Secretary of State of Delaware (Incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1,
registration no. 33-92894)
3.2 Certificate of Amendment, filed on May 2, 1994 with the Secretary of State
of Delaware (Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, registration no. 33-92894)
3.3 Certificate of Amendment, filed on March 21, 1995 with the Secretary of
State of Delaware (Incorporated by reference to Exhibit 3.3 to the
Company's Registration Statement on Form S-1, registration no. 33-92894)
3.4 Certificate of Amendment, filed on July 27, 1995 with the Secretary of
State of Delaware (Incorporated by reference to Exhibit 3.5 to Amendment
No. 1 to the Company's Registration Statement on Form S-1, registration no.
33-92894)
3.5* Certificate of Amendment, filed on March 7, 1997 with the Secretary of
State of Delaware
3.6 Bylaws of Preferred/telecom, Inc. (Incorporated by reference to Exhibit 3.4
to the Company's Registration Statement on Form S-1, registration no.
33-92894)
4.1 Specimen Certificate evidencing Common Stock of Preferred/telecom, Inc.
(Incorporated by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-1, registration no. 33-92894)
10.1*Form of Warrant Certificate and Schedule of Warrant Certificates
10.2*Office Building Lease between Greenville Avenue Properties, Ltd. And
Preferred Voice, Inc.
10.3*Collocation License Agreement between NEXTLINK Texas, Inc. and Preferred
Voice, Inc.
10.4*Promissory Note to Capital Growth Fund Ltd., in original principal amount
of $83,000.00, dated as of August 3, 1998
10.5*Promissory Note to Capital Growth Fund Ltd., in original principal amount
of $10,000.00, dated as of August 14, 1998
10.6*Promissory Note to Lawrence E. Steinberg, in original principal amount of
$50,000.00, dated as of September 3, 1998
10.7*Promissory Note to Bisbro Investments Co., Ltd., in original principal
amount of $20,000.00, dated as of October 1, 1998
10.8*Promissory Note to Universal Asset Fund Ltd., in original principal amount
of $20,000.00, dated as of October 1, 1998
10.9*Promissory Note to Lawrence E. Steinberg, in original principal amount of
$50,000.00 dated as of October 16, 1998
10.10*Promissory Note to Bisbro Investments Co., Ltd., in original principal
amount of $30,000.00, dated as of November 10, 1998
10.11*Promissory Note to Universal Asset Fund Ltd., in original principal amount
of $20,000.00, dated as of November 25, 1998
10.12*Promissory Note to Bisbro Investments Co. Ltd., in original principal
amount of $10,000.00, dated as of January 5, 1999
10.13*Software License Agreement between KMC Telecom Holdings, Inc. and
Preferred Voice, Inc.+
10.14*Promissory Note to G. Tyler Runnels, in original principal amount of
$43,000.00, dated as of March 30, 1999
10.15*Equipment Lease between Capital Growth Fund, Ltd. and Preferred Voice,
Inc. and Amendment No. 1 to Lease Agreement+
10.16*Equipment Lease between Capital Growth Fund, Ltd. and Preferred Voice,
Inc. and Amendment No. 1 to Lease Agreement+
10.17*First Amendment to Lease between Dallas Office Portfolio, L.P. as
successor in interest to Greenville Avenue Properties, Ltd. and Preferred
Voice, Inc.
10.18*Master Distributor Agreement between In Touch Solutions, L.L.C. and
Preferred Voice, Inc.
27
<PAGE>
10.19*Master Distributor Agreement between Answering Service, Inc. and Preferred
Voice, Inc.
10.20*Master Distributor Agreement between Amerivoice Telecommunications, Inc.
and Preferred Voice, Inc.
10.21*Master Distributor Agreement between Voicenet New Media, Inc. and
Preferred Voice, Inc.
10.22*Master Distributor Agreement between Best Voice, Inc. and Preferred Voice,
Inc.
10.23*Master Distributor Agreement between Nomis Communications, Inc. and
Preferred Voice, Inc.
10.24*Master Distributor Agreement between Florida Wireless and Preferred Voice,
Inc.
10.25*Master Distributor Agreement between Voice Retrieval, Inc. and Preferred
Voice, Inc.
10.26*Software License Agreement between Rural Cellular Corporation and
Preferred Voice, Inc.
10.27*Marketing Agreement between Rural Cellular Corporation and Preferred
Voice, Inc.+
10.28*Software License Agreement between Southwest Texas Telephone Company and
Preferred Voice, Inc.
10.29*Marketing Agreement between Southwest Texas Telephone Company and
Preferred Voice, Inc.+
10.30*Software License Agreement between Kaplan Telephone Company and Preferred
Voice, Inc.
10.31*Marketing Agreement between Kaplan Telephone Company and Preferred Voice,
Inc.+
10.32*Software License Agreement between Midwest Wireless Communications, L.L.C.
and Preferred Voice, Inc.
10.33*Marketing Agreement between Midwest Wireless Communications, L.L.C. and
Preferred Voice, Inc.+
27* Financial Data Schedule
*Filed herewith
+Confidential materials deleted and filed separately with the Securities and
Exchange Commission
28
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
OF PREFERRED/TELECOM, INC.
Preferred/telecom, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: ARTICLE FIRST of the Certificate of Incorporation is amended by
changing the name of the Corporation to Preferred Voice, Inc."
Accordingly, ARTICLE FIRST of the Certificate of Incorporation as
amended is deleted and the following new ARTICLE FIRST is submitted in lieu
thereof:
"ARTICLE FIRST
The name of the Corporation is Preferred Voice, Inc. (the
"Corporation")."
SECOND: That upon effectiveness of this Certificate of Amendment (i)
each two shares of Common Stock, par value $0.001 per share of the Corporation,
previously issued and outstanding or held in treasury at the effective time of
this Certificate of Amendment shall be deemed to have been reclassified into and
exchanged for one (1) new share of outstanding Common Share, par value $0.001
per share, of the Corporation; and (ii) fractional shares shall be rounded up to
the nearest whole share.
THIRD: That the Certificate of Amendment has been approved by the
Corporation pursuant to a resolution of its Board of Directors and a consent in
writing signed by the holders of in excess of a majority of the outstanding
shares of Common Stock, par value $.001 per share, of the Corporation, which was
not less than the minimum number of votes necessary to authorize the Certificate
of Amendment at a meeting at which all stockholders of the Corporation having
the right to vote thereon were present and voted, and written notice of such
action has been sent to all other stockholders who have not consented in writing
to such action.
FOURTH: That the Certificate of Amendment was duly adopted in
accordance with the provisions of Section 228 and Section 242 of the General
Corporation Laws of the State of Delaware.
FIFTH: That the Certificate of Amendment shall become effective at
5:00 p.m. (EST) on the date this Certificate of Amendment is duly filed with the
Secretary of State of the State of Delaware.
IN WITNESS WHEREOF this Certificate of Amendment has been executed for
Preferred/telecom, Inc., by Dennis Lee Gundy, its President, this 5th day of
March, 1997.
/s/ Dennis Lee Gundy
-----------------------------------
Dennis Lee Gundy, President
EXHIBIT 10.1
These Warrants have not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be sold, transferred,
assigned or otherwise disposed of unless the person requesting the
transfer of the Warrants shall provide an opinion of counsel to
Preferred Voice, Inc. (the "Company") (both counsel and opinion to be
satisfactory to the Company) to the effect that such sale, transfer,
assignment or disposition will not involve any violation of the
registration provisions of the Act or any similar or superseding
statute.
No. Warrants
-------------- ----------------
PREFERRED VOICE, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for
value received ____________ (the "Initial Warrant Holder") or registered assigns
is the owner of the number of warrants specified above, each of which entitles
the holder thereof to purchase, at any time on or before the Expiration Date
hereinafter provided, one fully paid and non-assessable share of common Stock,
$0.001 par value per share, of Preferred Voice, Inc., a Delaware corporation
(the "Company"), at a purchase price of $____ per share of Common Stock payable
in lawful money of the United States of America, in cash, by official bank or
certified check, or by wire transfer ("Warrants").
1. Warrant; Purchase Price
Each Warrant shall entitle the holder thereof to purchase one share of
Common Stock, $0.001 par value per share, of the Company ("Common Stock") during
the period commencing on the date hereof and ending on the Expiration Date. The
purchase price payable upon exercise of a Warrant shall be $____ (the "Purchase
Price"). The Purchase Price and number of Warrants evidenced by this Warrant
Certificate are subject to adjustment as provided in Article 7. Common Stock
purchased or subject to purchase pursuant to the Warrants shall be called
"Warrant Shares" herein.
2. Exercise; Expiration Date
2.1 Each Warrant is exercisable, at the option of the holder, at any
time after issuance and on or before the Expiration Date. In the case of
exercise of less than all the Warrants represented by a Warrant Certificate, the
Company shall cancel the Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate for the balance of such
Warrants.
2.2 The term "Expiration Date" shall mean 5:00 p.m. Dallas time on ____
__, _____, or if such date shall in the State of Texas be a holiday or a day on
which banks are authorized to close, then 5:00 p.m. Dallas time the next
following day which in the State of Texas is not a holiday or a day on which
banks are authorized to close.
<PAGE>
3. Registration and Transfer on Company Books
3.1 The Company shall maintain books for the registration and transfer
of Warrant Certificates.
3.2 Prior to due presentment for registration of transfer of this
Warrant Certificate, the Company may deem and treat the registered holder as the
absolute owner thereof.
3.3 The Company shall register upon its books any transfer of a Warrant
Certificate upon surrender of same to the Company accompanied (if so required by
the Company) by a written instrument of transfer duly executed by the registered
holder or by a duly authorized attorney. Upon any such registration of transfer,
new Warrant Certificate(s) shall be issued to the transferee(s) and the
surrendered Warrant Certificate shall be cancelled by the Company. A Warrant
Certificate may also be exchanged, at the option of the holder, for new Warrant
Certificates representing in the aggregate the number of Warrants evidenced by
the Warrant Certificate surrendered.
4. Securities Law Registration
4.1 The Warrant Shares will not be registered under the Securities Act
or any state securities law and shall not be transferrable unless registered or
an exemption from registration is available. A legend to the foregoing effect
will be placed on any certificate representing such shares.
4.2 If, at any time ____________________, the Company proposes for any
reason to register any of its securities under the Securities Act other than a
registration on Form S-8 relating solely to employee stock option or purchase
plans, on Form S-4 relating solely to an SEC Rule 145 transaction or on any
other form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Warrant Shares, it shall each such time give written notice to the holder of
these Warrants or the Warrant Shares ("Holder" for purposes of this Section 4)
of the Company's intention to register such securities, and, upon the written
request, given within thirty (30) days after receipt of any such notice, of the
Holders of the Warrants and Warrant Shares outstanding, to register any of the
Warrant Shares, the Company shall cause the Warrant Shares so requested by the
Holder to be registered, whether such Warrant Shares are outstanding or subject
to purchase hereby, to be registered under the Securities Act, all to the extent
requisite to permit the sale or other disposition by the Holder of the Warrant
Shares so registered; provided, however, that the Warrant Shares as to which
registration had been requested need not be included in such registration if in
the opinion of counsel for the Company and counsel for the Holder the proposed
transfer by the Holder may be effected without registration under the Securities
Act and any certificate evidencing the Warrant Shares need not bear any
restrictive legend. In the event that any registration pursuant to this Section
4.2 shall be, in whole or in part, an underwritten offering of securities of the
Company, then (i) any request pursuant to this Section 4.2 to register Warrant
Shares may specify that such shares are to be included in the underwriting on
the same terms and conditions as the shares of the Company's capital stock
otherwise being sold through underwriters under such registration, (ii) if the
managing underwriter of such offering determines that the number of shares to be
offered by
-2-
<PAGE>
all selling shareholders must be reduced, then the Company shall have the right
to reduce the number of shares registered on behalf of the Holder, provided that
the number of shares to be registered on behalf of the Holder shall not be
reduced to such an extent that the ratio of the shares which the Holder is
permitted to register to the total number of shares the Holder owns is less than
that ratio for any other selling shareholder, and (iii) the Holder will be bound
by the terms of the underwriting agreement and the conditions imposed by the
underwriter on selling shareholders.
4.3 If and whenever the Company is under an obligation pursuant to the
provisions of this Warrant Certificate to register any Warrant Shares, the
Company shall, as expeditiously as practicable:
(a) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to
such shares and use its best efforts to cause such registration
statement to become and remain effective for at least nine (9) months;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least nine months and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all Warrant Shares covered by such registration
statement;
(c) furnish to the Holder a suitable number of copies of all
preliminary and final prospectuses to enable the Holder to comply with
the requirements of the Securities Act, and such other documents as the
Holder may reasonably request in order to facilitate the public sale or
other disposition of the Warrant Shares;
(d) use its best efforts to register or qualify the Warrant
Shares covered by such registration statement under such securities or
blue sky laws of such jurisdictions as the Holder shall reasonably
request and where registration or qualification will not involve
unreasonable expense or delay and provided, however, that the Company
will not have to register or qualify in any state in which solely
because of such registration or qualification it would have to qualify
to do business; and the Company shall do any and all other reasonable
acts and things which may be necessary or advisable to enable the
Holder to consummate the public sale or other disposition of the
Warrant Shares in such jurisdiction;
(e) notify the Holder, at any time when a prospectus relating
to the Warrant Shares is required to be delivered under the Securities
Act within the appropriate period mentioned in clause (b) of this
Section 4.3, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and at the request of the Holder prepare and furnish to
the Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of the Warrant Shares, such prospectus
shall not include an untrue statement of a material fact or
-3-
<PAGE>
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing; and
(f) exercise its best efforts to furnish, at the request of
the Holder on the date that the Warrant Shares are delivered to the
underwriters for sale pursuant to such registration or, if the Warrant
Shares are not being sold through underwriters, on the date that the
registration statements with respect to such Warrant Shares are
declared effective, (1) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration,
addressed to the Holder, stating that such registration statement has
become effective under the Securities Act and that (i) to the best of
the knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
Securities Act; (ii) the registration statement, the related
prospectus, and each amendment or supplement thereto, comply as to form
in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder
(except that such counsel need express no opinion as to financial
statements and other financial data contained therein); and (iii) such
counsel has no reason to believe that either the registration statement
or the prospectus, or any amendment or supplement thereto, contains any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and (2) a letter dated such date, from the
independent certified public accountants of the Company, stating that
they are independent certified public accountants within the meaning of
the Securities Act and the rules and regulations of the Commission
thereunder and that in the opinion of such accountants, the financial
statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereof, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the rules
and regulations of the Commission thereunder. Such letter from the
independent certified public accountants shall additionally cover such
other financial matters (including information as to periods ending not
more than five business days prior to the date of such letter) as the
Holder may reasonably request.
If the Holder exercises its rights to have the Warrant Shares
registered, it is understood that the Holder shall furnish to the Company such
information regarding the securities held by it and the intended method of
disposition thereof as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
4.4 All Registration Expenses incurred in connection with any
registration pursuant to this Warrant Certificate shall be borne by the Company.
All Selling Expenses in connection with any registration pursuant to this
Warrant Certificate shall be borne by the Holder.
For purposes of Section 4.4, all expenses incurred by the company in
complying with Section 4.3, including, without limitation, all registration and
filing fees, fees and expenses of complying with securities and blue sky laws,
printing expenses, and fees and disbursements of counsel and of independent
public accountants for the Company (including the expense of any special audits
in connection with any such registration), are herein called "Registration
Expenses",
-4-
<PAGE>
and all underwriting discounts and selling commissions applicable to the Warrant
Shares covered by any such registration and all fees and disbursements of
counsel for the Holder are herein called "Selling Expenses".
4.5 In the event of any registration of any Warrant Shares under the
Securities Act pursuant to this Warrant Certificate, the Company shall indemnify
and hold harmless the Holder, each underwriter of such shares, if any, each
broker, and any other person, if any, who controls any of the foregoing persons
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which the Warrant Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document incident to registration or qualification of any Warrant Shares
pursuant to paragraph 4.3(d) above, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act or state securities or blue sky
laws applicable to the Company and relating to action or inaction required of
the company in connection with such registration or registration or
qualification under such state securities or blue sky laws; and shall reimburse
the Holder and such underwriter, broker or other person acting on behalf of the
Holder and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished to the Company in an
instrument duly executed by the Holder or such underwriter specifically for use
in the preparation thereof. The indemnity agreement set forth in this Section
4.5, insofar as it relates to any such omission, alleged omission, untrue
statement or alleged untrue statement made in a preliminary prospectus but
eliminated or remedied in the final prospectus, shall not inure to the benefit
of any of the beneficiaries named in this Section 4.5 whose responsibility it
was to send, furnish or give a copy of the final prospectus to a person
asserting a claim for which indemnification is sought (the "Claimant") unless a
copy of the final prospectus was so sent, furnished or given to the Claimant at
or prior to the time such action is required by the Act.
Before Warrant Shares held or purchasable by the Holder shall be
included in any registration pursuant to this Warrant Certificate, the Holder
and any underwriter acting on its behalf shall have agreed to indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
preceding paragraph) the Company, each director of the Company, each officer of
the Company who shall sign such registration statement and any person who
controls the Company within the meaning of the Securities Act, with respect to
any failure of the Holder or such underwriter to comply with all laws, rules and
regulations in connection with the offer and sale of Warrant Shares, or any
statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
-5-
<PAGE>
thereto, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company in an instrument
duly executed by the Holder or such underwriter specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus or amendment or supplement.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 4.5, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the indemnifying party of the commencement of such action. In case any such
action is brought against an indemnified party, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof.
5. Reservation of Warrant Shares
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of the Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall be duly and validly issued and fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof.
6. Loss or Mutilation
Upon receipt by the Company of reasonable evidence of the ownership of
and the loss, theft, destruction or mutilation of any Warrant Certificate and,
in the case of loss, theft or destruction, of indemnity reasonably satisfactory
to the Company, or, in the case of mutilation, upon surrender and cancellation
of the mutilated Warrant Certificate, the Company shall execute and deliver in
lieu thereof a new Warrant Certificate representing an equal number of Warrants.
7. Adjustment of Purchase Price and Number of Warrant Shares Deliverable
7.1 The Purchase Price and the number of shares of Common Stock
purchasable pursuant to this Warrant shall be subject to adjustment from time to
time as hereinafter set forth in this Article 7. Whenever reference is made in
this Article 7 to the issue or sale of shares of Common Stock, or simply shares,
such term shall mean any stock of any class of the Company other than preferred
stock with a fixed limit on dividends and a fixed amount payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company. The shares issuable upon exercise of the Warrants shall however be
shares of Common Stock of the Company, par value $0.001 per share, as
constituted at the date hereof, except as otherwise provided in Sections 7.3 and
7.4.
-6-
<PAGE>
7.2 In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares into a different number of shares, with or
without par value, (i) the number of shares which immediately prior to such
change the holder of each Warrant shall have been entitled to purchase pursuant
to this Warrant shall be increased or decreased in direct proportion to the
increase or decrease, respectively, in the number of shares outstanding
immediately prior to such change, and (ii) the Purchase Price in effect
immediately prior to such change shall be increased or decreased in inverse
proportion to such increase or decrease in the number of such shares outstanding
immediately prior to such change. For the purpose of this Section 7.2, the
number of shares outstanding at any given time shall not include shares in the
treasury of the Company.
7.3 In case of any capital reorganization or any reclassification of
the capital stock of the Company or in case of the consolidation or merger of
the Company with another corporation, or in case of any sale, transfer or other
disposition to another corporation of all or substantially all the property,
assets, business and good will of the Company, the holder of each Warrant shall
thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition that appropriate provision shall be
made so that such holder shall thereafter be entitled to purchase) the kind and
amount of shares of stock and other securities and property receivable in such
transaction which a shareholder receives who holds the number of shares which
the Warrant entitled the holder to purchase immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger, sale,
transfer or other disposition; and in any such case appropriate adjustments
shall be made in the application of the provisions of this Article 7 with
respect to rights and interests thereafter of the holder of the Warrants to the
end that the provisions of this Article 7 shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares or other property
thereafter purchasable upon the exercise of the Warrants.
7.4 In the event the Company shall declare a dividend upon the Common
Stock payable otherwise than out of earnings or earned surplus or otherwise than
in shares of Common Stock or in stock or obligations directly or indirectly
convertible into or exchangeable for such shares, the holder of each Warrant
shall, upon exercise of the Warrant, be entitled to purchase, in addition to the
number of shares deliverable upon such exercise, against payment of the Warrant
Price therefor but without further consideration, the cash, stock or other
securities or property which the holder of the Warrant would have received as
dividends (otherwise than out of such earnings or earned surplus and otherwise
than in shares or in obligations convertible into or exchangeable for Common
Stock) if continuously since the date hereof such holder (i) had been the holder
of record of the number of shares deliverable upon such exercise and (ii) had
retained all dividends in stock or other securities (other than shares or such
convertible or exchangeable stock or obligations) paid or payable in respect of
said number of shares or in respect of any such stock or other securities so
paid or payable as such dividends.
7.5 No certificate for fractional shares shall be issued upon the
exercise of the Warrants, but in lieu thereof the Company shall purchase any
such fractional interest calculated to the nearest cent.
-7-
<PAGE>
7.6 Whenever the Purchase Price is adjusted as herein provided, the
Company shall forthwith deliver to each Warrant holder a statement signed by the
President of the Company and by its Treasurer or Secretary stating the adjusted
Purchase Price and number of shares determined as herein specified. Such
statement shall show in detail the facts requiring such adjustment, including a
statement of the consideration received by the Company for any additional stock
issued.
7.7 In the event at any time:
(i) The Company shall pay any dividend payable in stock upon
its Common Stock or make any distribution (other than cash
dividends) to the holders of its Common Stock; or
(ii) The Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of
any class or any other rights; or
(iii) The Company shall effect any capital reorganization or
any reclassification of or change in the outstanding capital
stock of the Company (other than a chance in par value, or a
change from par value to no par value, or a change from no par
value to par value, or a change resulting solely from a
subdivision or combination of outstanding shares), or any
consolidation or merger, or any sale, transfer or other
disposition of all or substantially all its property, assets,
business and good will as an entirety, or the liquidation,
dissolution or winding up of the Company; or
(iv) The Company shall declare a dividend upon its Common
Stock payable otherwise than out of earnings or earned surplus
or otherwise than in Common Stock or any stock or obligations
directly or indirectly convertible into or exchangeable for
Common Stock;
then, in any such case, the Company shall cause at least thirty days' prior
notice to be mailed to the registered holder of each Warrant at the address of
such holder shown on the books of the Company. Such notice shall also specify
the date on which the books of the Company shall close, or a record be taken,
for such stock dividend, distribution or subscription rights, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, winding up or dividend, as the
case may be, shall take place, and the date of participation therein by the
holders of shares if any such date is to be fixed, and shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the rights of the holders of the Warrants.
-8-
<PAGE>
8. Governing Law
8.1 This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed by its officers thereunto duly authorized and its corporate
seal to be affixed hereon as of the ___ day of _________, ____.
PREFERRED VOICE, INC.
BY:
---------------------
Chairman of the Board
Attest:
- - ------------------------
Secretary
-9-
<PAGE>
<TABLE>
<CAPTION>
Schedule to Exhibit 10.1
WARRANT Piggyback Registration
NO. Warrant Holder Price Shares Expiration Date Rights Terminology
- - ------- -------------- ----- ------ --------------- -----------------------
<S> <C> <C> <C> <C> <C>
71 Bisbro Investments Company, Ltd. $1.25 200,000 November 12, 2000 Before November 12, 2000
72 Invest, Inc. $1.25 100,000 November 12, 2000 Before November 12, 2000
74 Eugene Starr $3.00 5,000 July 19, 2000 Before July 19, 2000
75 JMG Capital Partners, L.P. $1.00 25,000 September 30, 2001 Within Five (5) Years
76 Triton Capital Investment, Ltd. $1.00 25,000 September 30, 2001 Within Five (5) Years
77 Lawrence E. Steinberg $1.00 100,000 October 16, 2001 Within Five (5) Years
78 J. Steven Emerson $1.00 50,000 November 25, 2001 Within Five (5) Years
79 In Touch Solutions, LLC $1.00 25,000 December 30, 2000 Within Four (4) Years
80 Answering Service, Inc. $1.00 30,000 December 30, 2000 Within Four (4) Years
81 Amerivoice Telecommunications, Inc. $1.00 40,000 December 30, 2000 Within Four (4) Years
82 Voicenet New Media, Inc. $1.00 25,000 December 30, 2000 Within Four (4) Years
83 Best Voice, Inc. $1.00 25,000 December 30, 2000 Within Four (4) Years
84 Nomis Communications $1.00 25,000 December 30, 2000 Within Four (4) Years
85* Edwin G. Bowles d/b/a Data Management $1.00 25,000 February 10, 2001 Within Five (5) Years
Services
86 G. Tyler Runnels $0.50 43,000 March 31, 2004 Within Five (5) Years
87 John B. Davies $0.50 50,000 March 31, 2004 Within Five (5) Years
88 Jacqueline Knapp $0.50 75,000 March 31, 2004 Within Five (5) Years
89 Larry Kupferberg $0.50 75,000 March 31, 2004 Within Five (5) Years
90 G. Ray Miller $0.84 250,000 March 31, 2004 Within Five (5) Years
91 Mary Merritt $0.84 250,000 March 31, 2004 Within Five (5) Years
92 Kathryn Jergens $0.84 25,000 March 31, 2004 Within Five (5) Years
<FN>
* The Warrant Certificate contains an extra provision (Section 2.3) which
provides that the Warrant Holder may only use funds designated from
such Warrant Holder's deferred compensation pool as indicated on the
books and records of the Company at the time of exercise.
</FN>
</TABLE>
EXHIBIT 10.2
OFFICE BUILDING LEASE
between
GREENVILLE AVENUE PROPERTIES, LTD.
"Landlord"
and
PREFERRED VOICE, INC.
"Tenant"
<PAGE>
OFFICE BUILDING LEASE
---------------------
In consideration of the mutual covenants and upon the terms and
conditions set forth in Part One "Fundamental Lease Provisions", Part Two
"Supplemental Lease Provisions", and other attachments and exhibits numerated in
the Table of Contents to this Office Building Lease ("Lease"), GREENVILLE AVENUE
PROPERTIES, LTD. ("Landlord") hereby leases to the Tenant named below and Tenant
hereby leases from Landlord, certain premises described below.
PART ONE
FUNDAMENTAL LEASE PROVISIONS
1. Tenant: Preferred Voice, Inc., a corporation organized under the
laws of the State of Delaware.
2. Premises: Designated as "Suite 570", outlined and crosshatched on
Exhibit B hereof and containing approximately 1,707 square feet of Rentable Area
on the fifth floor(s) of the Tower.
(Part Two, Article 1)
3. Term: Beginning on Commencement Date (contemplated to be February 5,
1998) and ending on the last day of February, 1999. (Part Two, Article 2)
4. Monthly Installment of Base Annual Rent: Two Thousand Two Hundred
Four and 88/100 Dollars ($2,204.88). (Part Two, Section 3.1)
5. Landlord's Annual Operating Cost Contribution: Actual Expenses for
Calendar Year 1998 and ____/100 Dollars ($____) per square foot of Rentable Area
of Premises times the number of square feet of Rentable Area. [Part Two, Section
3.2(b)]
6. Security Deposit: Four Thousand Four Hundred Nine and 75/100 Dollars
($4,409.75). (Part Two, Section 3.6)
7. Prepaid Rent: Two Thousand Two Hundred Four and 88/100 ($2,204.88)
the Base Annual Rent for the First Month of the Term. (Part Two, Section 3.5)
8. Premises Use: Office space. (Part Two, Article 6)
9. Commercial General Liability Insurance: Two Million and No/100
($2,000,000.00) (Part Two, Article 8)
10. Addresses For Notices and Payment of Rent and Other Charges
(Article 16):
Part One - Page 1
<PAGE>
TO TENANT: TO LANDLORD:
To the Premises 6500 Greenville Avenue
Suite 110
Dallas, Texas 75206
Attention: Property Manager
11. Broker (Article 17): Carrie Arrington of Swearingen Realty Group,
Inc.
12. Parking Spaces: Number of spaces: One (1) unreserved Garage space*.
Monthly Charge: $0 per space. Four (4) unreserved surface Lot parking spaces.
Monthly Charge: $0 per space. ALL PARKING SHALL BE ON A FIRST COME FIRST SERVE
BASIS.
*LANDLORD WILL ALLOW TENANT TO UTILIZE, AS AN ALTERNATIVE TO ONE (1) OF
THE UNRESERVED SURFACE LOT PARKING SPACES, ONE (1) ADDITIONAL UNRESERVED GARAGE
SPACE, ON A MONTH TO MONTH FIRST COME FIRST SERVE BASIS, HOWEVER, UPON TEN (10)
DAYS PRIOR WRITTEN NOTICE FROM LANDLORD, TENANT SHALL RELINQUISH SAID UNRESERVED
GARAGE SPACE AND SHALL SUBSEQUENTLY PARK THAT VEHICLE ON THE SURFACE LOT.
ADDITIONAL UNRESERVED GARAGE SPACE MONTHLY GARAGE: $0 PER MONTH.
13. Riders: The following numbered Riders are attached to this Lease
and made a part of this Lease for all purposes:
Rider 1: Work Letter
--------------------------------------------------------------
Rider 2:
--------------------------------------------------------------
Rider 3:
--------------------------------------------------------------
Rider 4:
--------------------------------------------------------------
Rider 5:
--------------------------------------------------------------
14. Incorporation of Other Provisions: All of the provisions, covenants
and conditions set forth in Part Two and all other exhibits and riders described
in the attached Table of Contents and the preceding paragraph, are by this
reference incorporated into the Fundamental Lease Provisions as fully as if the
same were set forth at length in the Fundamental Lease Provisions. Each
reference in Part Two and exhibits and riders to any provision in the
Fundamental Lease Provisions will be construed to incorporate all of the terms
provided under the referenced provision in the Fundamental Lease Provisions. In
the event of any conflict between a provision in the Fundamental Lease
Provisions, on the one hand, and a provision in Part Two or exhibits or riders,
on the other hand, the latter will control.
Part One - Page 2
<PAGE>
This Lease has been executed by Landlord and Tenant as of the 3rd day
of February, 1998.
TENANT: LANDLORD:
PREFERRED VOICE, INC. GREENVILLE AVENUE PROPERTIES,
LTD.
By: LHTE Properties, Inc.,
General Partner
By:/s/ Mary G. Merritt By:/s/ Graham McFarlane
-------------------------- --------------------------
Name:Mary Merritt Name:Graham McFarlane
------------------------ ------------------------
Title: VP Finance/Secretary Title:Vice President
---------------------- ------------------------
ATTEST:
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
[THE LEASE MUST BE EXECUTED FOR TENANT, IF A CORPORATION, BY THE PRESIDENT OR
VICE-PRESIDENT AND ATTESTED BY THE SECRETARY OR ASSISTANT SECRETARY, UNLESS THE
BY-LAWS OR A RESOLUTION OF THE BOARD OF DIRECTORS OTHERWISE PROVIDE, IN WHICH
EVENT A CERTIFIED COPY OF THE BYLAWS OR RESOLUTION, AS THE CASE MAY BE, MUST BE
FURNISHED.]
Part One - Page 3
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART TWO
<S> <C> <C>
1. PREMISES, COMMON AREAS, SERVICE AREAS....................................................................1
-------------------------------------
1.1. Building........................................................................................1
--------
1.2. Computation of Rentable Area....................................................................1
----------------------------
1.3. Minor Variations in Area........................................................................1
------------------------
1.4. Ceiling, Walls..................................................................................1
--------------
1.5. Condition of Premises...........................................................................1
---------------------
1.6. Common and Service Areas........................................................................2
------------------------
2. TERM.....................................................................................................2
----
2.1. Term............................................................................................2
----
2.2. Delay in Commencement...........................................................................2
---------------------
2.3. Holding Over....................................................................................2
------------
3. MONETARY PROVISIONS......................................................................................3
-------------------
3.1. Base Annual Rent................................................................................3
----------------
3.2. Tenant's Share of Certain Costs.................................................................3
-------------------------------
3.3. Personal Property Taxes.........................................................................4
-----------------------
3.4. Taxes for Leasehold Improvements................................................................4
--------------------------------
3.5. Prepaid Rent....................................................................................5
------------
3.6. Security Deposit................................................................................5
----------------
3.7. Late Payments...................................................................................5
-------------
3.8. Interest........................................................................................5
--------
3.9. Administrative..................................................................................6
--------------
3.10. Additional Rent.................................................................................6
---------------
4. CONSTRUCTION.............................................................................................6
5. SERVICES AND UTILITIES...................................................................................6
----------------------
5.1. Services by Landlord............................................................................6
--------------------
5.2. Tenant's Obligations............................................................................7
--------------------
5.3. Tenant's Additional Service Requirements........................................................7
----------------------------------------
5.4. Interruption of Utility Service.................................................................8
-------------------------------
6. OCCUPANCY AND CONTROL....................................................................................9
---------------------
6.1. Use.............................................................................................9
---
6.2. Rules and Regulations...........................................................................9
---------------------
6.3. Additional Covenants of Tenant..................................................................9
------------------------------
6.4. Access by Landlord.............................................................................10
------------------
6.5. Control of Building and Common Areas...........................................................10
------------------------------------
6.6. Minimization of Disruption.....................................................................10
--------------------------
(i)
<PAGE>
7. REPAIRS, MAINTENANCE AND ALTERATIONS....................................................................10
------------------------------------
7.1. Landlord's Repair Obligations..................................................................10
-----------------------------
7.2. Tenant's Repair Obligations....................................................................11
---------------------------
7.3. Rights of Landlord.............................................................................11
------------------
7.4. Surrender......................................................................................11
---------
7.5. Alterations by Tenant..........................................................................12
---------------------
7.6. Liens..........................................................................................13
-----
8. INSURANCE...............................................................................................13
---------
8.1. Insurance Required of Tenant...................................................................13
----------------------------
8.2. Policy Form....................................................................................13
-----------
8.3. Waiver of Subrogation..........................................................................14
---------------------
8.4. Damage to Property or Persons..................................................................14
-----------------------------
8.5. Proceeds from Property Insurance...............................................................14
--------------------------------
8.6. Landlord's Insurance...........................................................................15
--------------------
9. DAMAGE OR DESTRUCTION...................................................................................15
---------------------
9.1. Repair by Landlord.............................................................................15
------------------
9.2. Landlord's Rights Upon The Occurrence of Certain Casualties....................................15
-----------------------------------------------------------
9.3. Repairs by Tenant..............................................................................16
-----------------
10. EMINENT DOMAIN..........................................................................................17
--------------
10.1. Total Taking...................................................................................17
------------
10.2. Partial Taking.................................................................................17
--------------
10.3. Award..........................................................................................17
-----
11. ASSIGNMENT AND SUBLETTING...............................................................................18
-------------------------
11.1 Consent........................................................................................18
-------
11.2. Landlord's Option..............................................................................18
-----------------
11.3. Definition of Assignment.......................................................................18
------------------------
11.4. Legal Fees.....................................................................................19
----------
11.5. Bankruptcy Insolvency..........................................................................19
---------------------
12. DEFAULT, REMEDIES.......................................................................................19
-----------------
12.1. Defaults by Tenant.............................................................................19
------------------
12.2. Remedies.......................................................................................20
--------
12.3. Remedies Cumulative............................................................................21
-------------------
12.4. Attorneys' Fees................................................................................21
---------------
12.5. Waiver.........................................................................................22
------
12.6. Landlord's Lien................................................................................22
---------------
12.7. Force Majeure..................................................................................22
-------------
13. ESTOPPEL CERTIFICATES...................................................................................22
---------------------
13.1. Acknowledgment of Commencement Date............................................................22
-----------------------------------
13.2. Certificates...................................................................................22
------------
(ii)
<PAGE>
13.3. Financial Statements...........................................................................23
--------------------
14. SUBORDINATION AND ATTORNMENT............................................................................23
----------------------------
15. LANDLORD'S INTEREST.....................................................................................23
-------------------
15.1. Liability of Landlord..........................................................................23
---------------------
15.2. Notice to Mortgagee............................................................................23
-------------------
15.3. Sale of Building...............................................................................24
----------------
16. NOTICES.................................................................................................24
-------
17. BROKERS.................................................................................................24
-------
18. INDEMNITY...............................................................................................24
---------
19. SUBSTITUTION OF SPACE...................................................................................25
---------------------
19.1. Substitute Space...............................................................................25
----------------
19.2. Maximum Base Annual Rent.......................................................................25
------------------------
19.3. Condition of Premises..........................................................................25
---------------------
19.4. Commencement of Rent...........................................................................25
--------------------
20. PARKING.................................................................................................25
-------
20.1. Parking Spaces.................................................................................25
--------------
20.2. Control of Parking.............................................................................26
------------------
20.3. Liability......................................................................................26
---------
20.4. Default Remedies...............................................................................27
----------------
21. HAZARDOUS SUBSTANCES....................................................................................27
--------------------
22. INTERPRETATIVE..........................................................................................27
--------------
22.1. Captions.......................................................................................27
--------
22.2. Attachments....................................................................................27
-----------
22.3. Number, Gender, Defined Terms..................................................................27
-----------------------------
22.4. Entire Agreement...............................................................................28
----------------
22.5. Amendment......................................................................................28
---------
22.6. Severability...................................................................................28
------------
22.7. Time of Essence................................................................................28
---------------
22.8. Best Efforts...................................................................................28
------------
22.9. Binding Effect.................................................................................28
--------------
22.10. Subtenancies...................................................................................28
------------
22.11. No Reservation.................................................................................28
--------------
22.12. Consents.......................................................................................28
--------
22.13. Legal Authority................................................................................29
---------------
22.14. Choice of Law..................................................................................29
-------------
(iii)
<PAGE>
EXHIBIT A.........................................................................................Exhibit A, Page 1
LEGAL DESCRIPTION.................................................................................Exhibit A, Page 1
EXHIBIT B.........................................................................................Exhibit B, Page 1
FLOOR PLAN........................................................................................Exhibit B, Page 1
EXHIBIT C.........................................................................................Exhibit C, Page 1
OPERATING COST COMPUTATION........................................................................Exhibit C, Page 1
EXHIBIT D.........................................................................................Exhibit D, Page 1
RULES & REGULATIONS...............................................................................Exhibit D, Page 1
EXHIBIT E.........................................................................................Exhibit E, Page 1
CERTIFICATE OF ACCEPTANCE OF PREMISES.............................................................Exhibit E, Page 1
</TABLE>
(iv)
<PAGE>
PART TWO
SUPPLEMENTAL LEASE PROVISIONS
1. PREMISES, COMMON AREAS, SERVICE AREAS
-------------------------------------
1.1. Building. The term "Building" in this Lease will refer to "6500
Greenville Place", an office building situated on a tract of land in the City of
Dallas and County of Dallas, Texas, described in Exhibit A of this Lease, and
having a postal address of 6500 Greenville Avenue, Dallas, Texas 75206.
1.2. Computation of Rentable Area.
(a) Single Tenant Floor. With respect to a single tenant
floor, "Rentable Area" will mean the sum of (i) the floor area (in square feet)
bounded by the inside surfaces of the exterior glass walls of the Building,
excluding standard openings in the floor stab used, for example, for Building
stairs, elevator and other shafts and vertical ducts (collectively, the
"Excluded Spaces"), and (ii) an allocation of the floor area of Common Areas and
Service Areas located in or serving the Building.
(b) Multiple Tenant Floor. With respect to a multiple tenant
floor, "Rentable Area" will mean the sum of (i) the floor area (in square feet)
bounded by the inside surfaces of the exterior glass walls, the outside surfaces
of partitions separating the Premises from corridors and other Common Areas and
Service Areas, and the center line of partitions separating the Premises from
adjoining leasable spaces, less any Excluded Spaces located within such
boundaries, and (ii) an allocation of the floor area of the Common Areas and
Service Areas on such floor, and (iii) an allocation of the floor area of Common
and Service Areas located in or serving the Building.
(c) Columns and Non-Standard Openings. No deductions will be
made in either Section 1.2(a) or Section 1.2(b) for (i) columns and projections
necessary to the structural support of the Building or (ii) for openings in the
floor slab which were made at the request of Tenant or to accommodate items
installed at the request of Tenant.
1.3. Minor Variations in Area. The Rentable Area of the Premises
contained in the Fundamental Lease Provisions has been calculated in accordance
with the foregoing definitions and is agreed to be the Rentable Area of the
Premises regardless of minor variations resulting from construction of the
Building and/or tenant improvements.
1.4. Ceiling, Walls. Tenant acknowledges that pipes, ducts, conduits,
wires and equipment serving other parts of the Building may be located above
acoustical ceiling surfaces, below floor surfaces or within walls in the
Premises.
1.5. Condition of Premises. The taking of possession of the Premises by
Tenant will establish conclusively that the Premises and the Building were at
such time in satisfactory order and condition except for (i) minor matters of
structural, mechanical, electrical, and finish adjustment in the Premises
(commonly referred to as "punchlist items") specified in reasonable detail on a
list delivered by Tenant to Landlord within fifteen (15) days after the date on
which Tenant takes
1
<PAGE>
possession of the Premises and (ii) defects not discoverable upon inspection and
about which Tenant notifies Landlord within one (1) year after taking possession
of the Premises.
1.6. Common and Service Areas. Tenant is hereby granted a nonexclusive
right to use the Common Areas during the term of this Lease for their intended
purposes, in common with others, subject to the terms and conditions of this
Lease, including, without limitation, the Rules and Regulations.
(a) Common Areas. "Common Areas" will mean all areas, spaces,
facilities, and equipment (whether or not located within the Building) made
available by Landlord for the common and joint use of Landlord, Tenant and
others, including, but not limited to, tunnels, walkways, sidewalks and
driveways necessary for access to the Building, Building lobbies, landscaped
areas, enclosed mall areas, loading areas, public corridors, public restrooms,
Building stairs and elevators, drinking fountains and such other areas and
facilities, if any, as are designated by Landlord from time to time as Common
Areas.
(b) Service Areas. "Service Areas" will refer to areas,
spaces, facilities and equipment serving the Building (whether or not located
within the Building) but to which Tenant and other occupants of the Building
will not have access, including, but not limited to, mechanical, telephone,
electrical and similar rooms, and air and water refrigeration equipment
2. TERM
----
2.1. Term. The Term of this Lease will commence on the date
("Commencement Date") set forth in a notice to be delivered by Landlord to
Tenant as the date on which Tenant may take possession of the Premises and will
terminate on the date set forth in the Fundamental Lease Provisions ("Expiration
Date") unless sooner terminated in accordance with the provisions of this Lease.
2.2. Delay in Commencement. If Landlord fails for any reason to tender
possession of the Premises to Tenant on the "Contemplated Commencement Date"
(herein so called) set forth in the Fundamental Lease Provisions, (i) Landlord
will not be liable to Tenant for any direct or consequential loss resulting to
Tenant from the delay, (ii) the validity of this Lease will not be affected, and
(iii) the term of this Lease will not be extended.
2.3. Holding Over. If Tenant or any party claiming rights to the
Premises through Tenant, retains possession of the Premises without the written
consent of Landlord after the Expiration Date or earlier termination of this
Lease, such possession will constitute a tenancy at will subject however, to all
the terms and provisions of this Lease except for (i) the Term and (ii) the Base
Annual Rent which Base Annual Rent will become an amount equal to two (2) times
the highest amount set forth in this Lease as Base Annual Rent, plus any
adjustments which have previously occurred. No holding over by Tenant and no
acceptance of rental payments by Landlord during a holdover period, whether with
or without consent of Landlord, will operate to extend this Lease.
2
<PAGE>
3. MONETARY PROVISIONS
-------------------
3.1. Base Annual Rent. Subject to the prepaid rent provisions of
Section 3.5, Tenant will pay as the monthly installment of "Base Annual Rent"
for each month of the Term, the sum set forth in the Fundamental Lease
Provisions, in advance on the first day of each calendar month of the Term,
without deduction, offset, prior notice, or demand, and in lawful money of the
United States. If the Commencement Date is not the first day of a calendar
month, Tenant will pay to Landlord on the Commencement Date a portion of the
monthly installment of Base Annual Rent prorated on the basis of a thirty (30)
day month.
3.2. Tenant's Share of Certain Costs. In addition to all other sums due
under this Lease, Tenant will pay to Landlord, in the mariner and at the times
set forth below, Tenant's Pro-rata Share of Operating Costs for each calendar
year or partial calendar year.
(a) Operating Costs. "Operating Costs" will mean all costs,
charges, and expenses incurred by Landlord in connection with owning, operating,
maintaining, repairing, insuring and managing the Building and the Common Areas
and Service Areas, computed on an accrual basis and including, without
limitation, costs, charges and expenses incurred with respect to the items
enumerated as "Operating Cost Examples" in Paragraph 2 of Exhibit C to this
Lease. Operating Costs will not include those items enumerated as "Operating
Cost Exclusions" in Paragraph 1 of Exhibit C to this Lease.
(b) Pro Rata Share Computation. "Tenant's Pro Rata Share" of
Operating Costs will be computed by multiplying the Operating Costs per square
foot by the number of square feet of Rentable Area in the Premises and
subtracting from such product the amount of Landlord's Operating Cost
Contribution set forth in Paragraph 5 of the Fundamental Lease Provisions.
(c) Estimated Costs. Tenant's Pro Rata Share of Operating
Costs for the remainder of the first calendar year (whether full or partial) and
for each subsequent calendar year of the Term will be estimated by Landlord, and
notice of such estimated amounts will be given to Tenant at least thirty (30)
days prior to the Commencement Date or the beginning of each calendar year, as
the case may be. If Commencement Date does not occur on January 1, for the
partial calendar year after the Commencement Date, Tenant will pay to Landlord
each month, at the same time the monthly installment of Base Annual Rent is due,
an amount equal to the Tenant's estimated Pro Rata Share of Operating Costs for
the remainder of such calendar year divided by the number of full months
remaining in such year. For each full calendar year of the Term, Tenant will pay
to Landlord each month, at the same time the monthly installment of Base Annual
Rent is due, an amount equal to one-twelfth (1/12) of the Tenant's estimated Pro
Rata Share of Operating due for such calendar year. If the Expiration Date does
not occur on December 31, for the partial calendar year preceding the Expiration
Date, Tenant will pay to Landlord, each month, at the same time the monthly
installment of Base Annual Rent is due, an amount equal to the amount of
Tenant's estimated Pro Rata Share of Operating Costs for such partial calendar
year divided by the number of full calendar months of such partial calendar
year.
(d) Estimate Revisions. At any time and from time to time
during the Term, Landlord will have the right by notice to Tenant, to change the
monthly amount then payable by
3
<PAGE>
Tenant for Tenant's estimated Pro Rata Share of Operating Costs to reflect more
accurately, in the reasonable judgment of Landlord, Tenant's actual Pro Rata
Share of Operating Costs for the then current calendar year. Tenant will begin
paying the revised estimated amount together with the next monthly payment of
Base Annual Rent due after receipt by Tenant of Landlord's notice.
(e) Annual Adjustments. On or before April 1 of each calendar
year, Landlord will prepare and deliver to Tenant a statement setting forth the
calculation of Tenant's actual Pro Rata Share of Operating Costs for the
previous calendar year. Within thirty (30) days after receipt of the statement
of Tenant's actual Pro Rata Share of Operating Costs, Tenant will pay to
Landlord, or Landlord will credit against the next rental or other payment or
payments due from Tenant, as the case may be, the difference between Tenant's
actual Pro Rata Share of Operating Costs for the preceding calendar year and
Tenant's estimated Pro Rata Share of Operating Costs paid by Tenant during such
year.
(f) Final Partial Year. If the Term will expire or this Lease
has been terminated prior to a final determination of the Tenant's's actual Pro
Rata Sham of Operating Costs, the amount of adjustment between Tenant's
estimated Pro Rata Share and Tenant's actual Pro Rata Share of Operating Costs
payable for the preceding calendar year and/or the final partial calendar year
of the Term will be projected by the Landlord based upon the best data available
to Landlord at the time of the estimate. Within thirty (30) days after receipt
of a statement from Landlord setting forth Landlord's projections, Tenant will
pay to Landlord, or Landlord will pay to Tenant as the case may be, the
difference between Tenant's projected actual Pro Rata Share of Operating Costs
for the period in question and Tenant's estimated Pro Rata. Share of Operating
Costs paid by Tenant for the period in question. The obligations set forth in
the preceding sentence will survive the Expiration Date or earlier termination
of this Lease.
(g) Adjustment for Occupancy. During any calendar year in
which the Building has less than full occupancy, Operating Costs will be
computed as though the Building had been completely occupied for the entire
calendar year.
3.3. Personal Property Taxes. Tenant agrees to pay, before delinquency,
all taxes, fees or charges, rates, duties and assessments, imposed, levied or
assessed directly against Tenant, or indirectly through Landlord, and payable
during the Term hereof, upon Tenant's equipment, furniture, movable trade
fixtures and other personal property located in the Premises. Tenant will also
pay, before delinquency, business and other taxes, fees or charges, rates,
duties and assessments imposed, levied or assessed because of the Tenant's
occupancy of the Premises or upon the business or income of the Tenant generated
from the Premises.
3.4. Taxes for Leasehold Improvements. If any authority levying real
and personal property taxes against the Building as a standard practice for
determining the value of the Building for tax purposes includes a component for
tenant improvement or nonmovable trade fixtures of individual tenants, Tenant
will pay to Landlord any portion of such taxes which is equal to the product of
(i) the total of such taxes multiplied by (ii) the fraction the numerator of
which is the cost of tenant improvements or nonmovable trade fixtures in the
Premises in excess of the Building standard or existing improvements
(collectively, "Above Standard Improvements") and the denominator of which is
the cost of all tenant improvements in the Building. Upon receipt of any such
tax statement,
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Landlord will compute Tenant's share of taxes attributable to Above Standard
Improvements, and submit a statement to Tenant evidencing the method of
calculation. Tenant will pay to Landlord together with the next monthly
installment of Base Annual Rent due after the receipt of Landlord's statement
the entire amount due under this Section 3.4. The method of calculation of the
share of taxes attributable to Above Standard Improvements will be subject to
adjustment by Landlord from time to time in order to reflect the method
currently utilized by taxing authorities to calculate taxes for Above Standard
Improvements. If Tenant is assessed for taxes for Above Standard Improvements
directly by the taxing authorities, Tenant will pay the same before delinquency
and deliver to Landlord copies of receipts for payment of such taxes and
assessments no later than ten (10) days prior to the deadline for payment
without imposition of penalty.
3.5. Prepaid Rent. Concurrently with Tenant's execution of this Lease,
Tenant will pay to Landlord the sum specified in Paragraph 7 of the Fundamental
Lease Provisions as "Prepaid Rent" which sum will be credited to Base Annual
Rent in the manner set forth in the Fundamental Lease Provisions.
3.6. Security Deposit. Contemporaneously with the execution of this
Lease, Tenant will pay Landlord the sum set forth in Paragraph 6 of the
Fundamental Lease Provisions as "Security Deposit" as security for the
performance by Tenant under this Lease. If Tenant defaults with respect to any
provision of this Lease, Landlord may, but will not be required to, use, apply
or retain all or any part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of Tenant's default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default. If any portion of the Security Deposit is so used or
applied, Tenant will, upon demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to the original amount. If
Tenant fully performs every provision of this Lease to be performed by Tenant
including surrender of the Premises in accordance with Section 7.4 the Security
Deposit will be returned to Tenant within thirty (30) days after the Expiration
Date. Tenant will not assign or encumber Tenant's interest in the Security
Deposit and neither Landlord nor Landlord's successors or assigns will be bound
by any such attempted assignment or encumbrance of the Security Deposit.
3.7. Late Payments. Should Tenant fail to pay when due any installment
of Base Annual Rent on or before the fifth (5th) day of each calendar month,
Interest will accrue from the date on which such sum is due and such Interest,
together with a "Late Charge" (herein so called) in an amount equal to five
percent (5%) of the installment then due, will be paid by Tenant to Landlord at
the time of payment of the delinquent stun. The Late Charge is agreed by
Landlord and Tenant to be a reasonable estimate of the extra administrative
expenses incurred by Landlord in handling such delinquency.
3.8. Interest. Whenever reference is made in this Lease to the accrual
of interest on sums due Landlord or whenever any amount owed to Landlord is not
paid when due, such sum will bear interest ("Interest") at an annual rate equal
to the lesser of (i) two percent (2%) over the "base" or "prime" rate published
from time to time by Citibank, N.A., or (ii) the maximum lawful rate.
3.9. Administrative. In the event Landlord performs construction,
maintenance, or repairs for Tenant under Sections 7.3, 8.5 or 12.2 of this
Lease, Tenant will reimburse Landlord within five
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(5) days after receipt of an invoice from Landlord for the cost of such
construction, maintenance or repairs plus an amount equal to twenty percent
(20%) of such costs ("Administrative Reimbursement") to reimburse Landlord for
administration and overhead.
3.10. Additional Rent. Any payments to be made by Tenant to Landlord
under this Lease in addition to the Base Annual Rent whether or not denominated
as rent will be deemed to be additional rent under this Lease for the purpose of
securing their collection and will constitute rent for purposes of Section 502
of the Bankruptcy Code. Landlord will have the same rights and remedies upon
Tenant's failure to make such payments as for the nonpayment of Base Annual Rent
4. CONSTRUCTION
------------
In the event any construction of tenant improvements is necessary for
the Premises, such construction will be accomplished and the cost of such
construction will be borne by Landlord and/or Tenant in accordance with a
separate Rider to this Lease ("Work Letter") between Landlord and Tenant. Except
as expressly provided in this Lease or in the Work Letter, if any, Tenant
acknowledges that Landlord has not undertaken to perform any modification,
alteration or improvement to the Premises.
5. SERVICES AND UTILITIES
----------------------
5.1. Services by Landlord. Provided Tenant is not in default under this
Lease, and subject to the conditions and standards set forth in this Lease and
to standards, limitations and guidelines imposed by governmental authorities and
utility companies, Landlord will furnish or cause to be furnished the following
services and utilities:
(i) Heat and air conditioning to the Premises during "Normal
Business Hours" (as defined in the Rules and Regulations), at such temperatures
and in such quantities as Landlord determines are reasonably necessary for the
comfortable use and occupancy of the Premises for general office purposes;
(ii) Water at the normal temperature of the supply of water to
the Building for and drinking purposes through fixtures installed by Landlord or
by Tenant with Landlord's consent;
(iii) Janitorial cleaning services to those portions of the
Premises which are used for office purposes five (5) days per week (except on
holidays observed by the Building);
(iv) Twenty-four (24) hour, nonexclusive passenger elevator
service and, when scheduled through the Building management nonexclusive freight
elevator service to the floor(s) on which the Premises are located;
(v) Routine maintenance in the Common Areas;
(vi) Replacement of Building standard light bulbs, fluorescent
tubes, and ballasts in the Premises, and
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(vii) Electric current to the Premises for Building standard
office lighting and office machines which consume electric current within the
parameters set forth in Section 5.3(a)(i) of this Lease.
5.2. Tenant's Obligations. Tenant will pay for, prior to delinquency,
all telephone charges and all other materials and services not expressly the
obligation of Landlord that are furnished to or used on or about the Premises
during the Term of this Lease.
5.3. Tenant's Additional Service Requirements.
(a) Additional Services Requiring Landlord Consent. Tenant will
not, without Landlord's prior consent, do the following:
(i) Install or use special lighting beyond Building
standard, or any equipment, machinery, or device in the
Premises which requires a nominal voltage of more than
one hundred twenty (120) volts single phase, or which
in Landlord's reasonable opinion exceeds the capacity
of existing feeders, conductors, risers, or wiring in
or to the Premises or Building, or which requires
amounts of water in excess of that usually furnished or
supplied for use in office space, or which will
decrease the amount or pressure of water or the
amperage or voltage of electricity Landlord can furnish
to other occupants of the Building;
(ii) Install or use any heat or cold-generating equipment,
machinery or device which affects the temperature
otherwise maintainable by the heat or air conditioning
system of the Building;
(iii)Use portions of the Premises for special purposes
requiring greater or more difficult cleaning work than
office areas, such as, but not limited to, kitchens,
reproduction rooms, interior glass partitions, and
non-Building standard materials or finishes; or
(iv) Accumulate refuse or rubbish (A) in excess of that
ordinarily accumulated in business office occupancy or
(B) at times other than Building standard cleaning
times.
(b) Providing Additional Services. It in the reasonable
opinion of Landlord, additional services to Tenant are necessary, Landlord will
have the following rights:
(i) Landlord may require that Tenant cease the activity or
remove the item (or refuse to permit the activity or
installation of the item), causing (or which will
cause) the need for such additional service, if
Landlord and Tenant are not able to agree upon a
mutually satisfactory method for providing such
additional services or, in the reasonable opinion of
Landlord, providing such additional service is not
operationally or economically feasible;
(ii) With respect to additional utility consumption,
Landlord may install and maintain separate metering
devices, or may cause periodic usage surveys to be
prepared by an engineer employed by Landlord for such
purpose. The cost of the additional utility consumption
plus, if Landlord installs and maintains separate
meters, the cost of such meters and their installation,
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maintenance and repair, or if Landlord orders usage
surveys, the cost of such surveys, will be the obliga-
tion of Tenant;
(iii)With respect to heat or cold generating equipment,
Landlord may furnish additional heat or air
conditioning to the Premises, or install supplementary
heating or air conditioning units in the Premises or
elsewhere in the Building, or modify the existing
heating or air conditioning system in the Premises. The
cost of additional heat or air conditioning,
supplementary units, or modifications to the existing
system will be the obligation of Tenant;
(iv) With respect to lighting beyond Building standard,
Landlord may purchase and replace, at the expense of
Tenant, light bulbs and ballasts and/or fixtures;
and/or
(v) With respect to additional cleaning work, Landlord may
instruct Landlord's janitorial contractor to provide
such services and the cost of such service will be the
obligation of Tenant;
(c) After Hours Heat or Air Conditioning. Landlord will, upon
request and at the cost of Tenant, provide after hours heat or air conditioning.
The cost of after hours heat or air conditioning will be determined from time to
time by Landlord and, upon request confirmed in writing to Tenant.
(d) Payment. Tenant will pay to Landlord the cost of any
additional service and any other cost for which Tenant is obligated under
Section 5.3(b) or (c) within five (5) days after receipt of an invoice with
respect to same from Landlord.
5.4. Interruption of Utility Service. Landlord will use Landlord's best
efforts to provide the services required of Landlord under this Lease. However,
Landlord reserves the right, without any liability to Tenant and without
affecting Tenant's covenants and obligations under this Lease, to stop or
interrupt or reduce any of the services listed in Section 5.1 or to stop or
interrupt or reduce any other services required of Landlord under this Lease,
whenever and for so long as may be necessary, by reason of (i) accidents or
emergencies, (ii) the making of repairs or changes which Landlord in good faith
deems necessary or is required or is permitted by this Lease or by law to make,
(iii) difficulty in securing proper supplies of fuel, water, electricity, labor
or supplies, (iv) the compliance by Landlord with governmental,
quasi-governmental or utility company energy conservation measures, or (v) the
exercise by Landlord of any right under Section 6.5. Landlord will, in the event
of an interruption of a utility service, use Landlord's best efforts to cause
such service to be resumed. However, no interruption or stoppage of any of such
services will ever be construed as an eviction of Tenant nor will such
interruption or stoppage cause any abatement of the rent payable under this
Lease or in any manner relieve Tenant from any of Tenant's obligations under
this Lease. Landlord will not be liable for any interruption or stoppage of any
of such services or for any damage to persons or property resulting from such
stoppage.
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6. OCCUPANCY AND CONTROL
---------------------
6.1. Use. The Premises will be used and occupied by Tenant for general
office purposes and for no other purposes. IN NO EVENT SHALL THE PREMISES BE
USED FOR AN EDUCATIONAL FACILITY, TELEMARKETING OR A PERSONNEL AGENCY. TENANT
MUST MAINTAIN AN OCCUPANCY RATIO OF NO MORE THAN ONE (1) PERSON FOR EVERY 333
SQUARE FEET LEASED, AT ANY GIVEN POINT IN TIME, WITHOUT LANDLORD'S PRIOR WRITTEN
CONSENT.
6.2. Rules and Regulations. Tenant's use of the Premises and the Common
Areas will be subject at all times during the Term to the "Rules and
Regulations" attached to the Lease as Exhibit D and to any modifications of such
Rules and Regulations and any additional Rules and Regulations from time to time
promulgated by Landlord. Additional Rides and Regulations will not become
effective and a part of this Lease until a copy of same has been delivered to
Tenant. The inability of Landlord to cause another occupant of the Building to
comply with the Rules and Regulations will neither excuse Tenant's obligation to
comply with such Rules and Regulations or any other obligation of Tenant under
this Lease nor cause the Landlord to be liable to Tenant for any damage
resulting to Tenant. Tenant will cause Tenant's employees, servants and agents
to comply with the Rules and Regulations.
6.3. Additional Covenants of Tenant.
(a) Laws, Statutes. Tenant will, at Tenant's sole cost,
promptly comply with all laws, statutes, ordinances, regulations, guidelines or
requirements now in force or hereafter enacted and with the requirements of any
governmental authority having jurisdiction over the Building, board of fire
underwriters, utility company serving the Building or other similar body now or
hereafter constituted, relating to or affecting the condition, use or occupancy
of the Premises, including without limitation, Title M of The Americans with
Disabilities Act of 1990, all regulations issued thereunder, and the
Accessibility Guidelines for Buildings and Facilities issued pursuant thereto,
and the Texas Architectural Barriers Act, as the same are in effect on the date
of this Lease and as hereafter amended. The judgment of any court of competent
jurisdiction or the admission of Tenant in any action against Tenant whether
Landlord is a party thereto or not, that Tenant has violated any of the
foregoing will be conclusive of that fact between Landlord and Tenant.
(b) Nuisance. Tenant will not do or permit anything to be done
in or about the Premises which will in any way obstruct or interfere with the
operation of the Building or Common Areas or with the rights of other tenants or
occupants of the Building or Common Areas or injure, disturb or annoy other
tenants or occupants of the Building or Common Areas.
(c) Building Reputation. Tenant will not use or permit the
Premises to be used for any objectionable purpose or any purpose which, in the
reasonable opinion of the Landlord, harms or tends to harm the business or
reputation of the Landlord or Building or reflects unfavorably on the Building,
or any part of the Building, or deceives or defrauds the public.
(d) Fire Hazards. Tenant will not cause, maintain or permit
anything to be done in the Premises nor keep anything in the Premises which
will, in the opinion of Landlord, increase the
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possibility of fire or other casualty or increase the then existing premiums for
or void the coverage of any insurance upon the Building or contents of the
Building.
(e) Recording. Tenant will not record this Lease or any
memorandum of this Lease without the prior written consent of Landlord. Tenant
will, upon request of Landlord, execute, acknowledge and deliver to Landlord a
short form or memorandum of this Lease for recording purposes.
6.4. Access by Landlord. Landlord reserves the right for Landlord and
Landlord's agents to enter the Premises at any reasonable time (i) to inspect
the Premises, (ii) to supply janitorial service or other services to be provided
by Landlord to Tenant under this Lease, (iii) to show the Premises to
prospective lenders, purchasers or tenants, (iv) to alter, improve, maintain or
repair the Premises or any other portion of the Building abutting the Premises,
(v) to install, maintain, repair, replace or relocate any pipe, duct, conduit
wire or equipment serving other portions of the Building but located in the
ceiling, wall or floor of the Premises, (vi) to perform any other obligation of
Tenant after Tenant's failure to perform same, or (vii) upon default by Tenant
under tins Lease. If Landlord enters the Premises for the purpose of performing
work, Landlord may erect scaffolding and store tools, material, and equipment in
the Premises when required by the character of the work to be performed.
6.5. Control of Building and Common Areas. The Building and Common
Areas will be at all times under the exclusive control, management and operation
of the Landlord. Landlord hereby reserves the right from time to time (i) to
alter or redecorate the Building (including the Common Areas or Service Areas)
or construct additional facilities adjoining or proximate to the Building; (ii)
to close temporarily doors, entry ways, public spaces and corridors and to
interrupt or suspend temporarily Building services and facilities in order to
perform any redecorating or alteration or in order to prevent the public from
acquiring prescriptive rights in the Common Areas; and (iii) to change the name
of the Building.
6.6. Minimization of Disruption. Landlord will attempt not to disrupt
Tenant's operations in the Premises during the exercise of Landlord's rights or
the performance by Landlord of Landlord's obligations under this Lease, but will
not be required to incur extra expenses in order to minimize such dissipation.
Tenant hereby waives all claims for damages or injuries or interference with
Tenant's business, loss of occupancy or quiet enjoyment and any other loss
resulting from the exercise by Landlord of any right or the performance by
Landlord of Landlord's obligations under this Lease. No exercise by Landlord of
any right or the performance by Landlord of Landlord's obligations under this
Lease will constitute actual or constructive eviction or a breach of any express
of implied covenant for quiet enjoyment.
7. REPAIRS, MAINTENANCE AND ALTERATIONS
------------------------------------
7.1. Landlord's Repair Obligations. Landlord will, subject to the
casualty provisions of Article 9, maintain the (i) the Common Areas and Service
Areas, (ii) roof, foundation, exterior windows and load bearing items of the
Building; (iii) exterior surfaces of walls; (iv) plumbing, pipes and conduits
located in the Common Areas or Service Areas of the Building, and (v) the
Building central heating, ventilation and air conditioning, electrical,
mechanical and plumbing systems. Landlord will not be required to make any
repair in connection with or resulting from (1) any
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alteration or modification to the Premises or to Building equipment performed
by, for or because of Tenant or to special equipment or systems installed by,
for or because of Tenant, (2) the installation, use or operation of Tenant's
property, fixtures and equipment, (3) the moving of Tenant's property in or out
of the Building or in and about the Premises, (4) Tenant's use or occupancy of
the Premises in violation of Article 6 or in a mariner not contemplated by the
parties at the time of execution of this Lease (e.g., subsequent installation of
special use rooms), (5) the acts or omissions of Tenant and Tenant's employees,
agents, invitees, subtenants, licensees or contractors, (6) fire or other
casualty, except as provided in Article 9 or (7) condemnation, except as
provided in Article 10. Depending upon the nature of repairs undertaken by
Landlord, the cost of such repairs will be borne solely by Landlord or
reimbursed to Landlord either by a particular tenant or tenants or by all
tenants as an Operating Cost.
7.2. Tenant's Repair Obligations. Except for janitorial services
provided by Landlord, Tenant at Tenant's expense, will maintain the Premises in
good order, condition and repair including, without limitation, the interior
surfaces of the windows, walls and ceilings; floors; wall and floor coverings;
window coverings; doors; interior windows; and all switches, fixtures and
equipment in the Premises. Upon receipt of reasonable notice from Tenant
Landlord will perform, at the expense of Tenant all repairs and maintenance to
plumbing, pipes and electrical wiring located within walls, above ceiling
surfaces and below floor surfaces resulting from the use of the Premises by
Tenant. In no event will Tenant be responsible for any plumbing, pipes and
electrical wiring, switches, fixtures and equipment located in the Premises but
serving another tenant or for portions of the central heat, ventilation and air
conditioning, electrical, mechanical and plumbing systems of the Building which
are located in the Premises, except for (i) repairs resulting from the acts of
Tenant and Tenant's employees, agents, invitees, subtenants, licensees or
contractors, (ii) modifications made to such systems by, for, or because of
Tenant, and (iii) special equipment installed by, for, or because of Tenant.
7.3. Rights of Landlord. In the event Tenant fails, in the reasonable
judgment of Landlord, to maintain the Premises in good order, condition and
repair, Landlord will have the right to perform such maintenance, repairs,
refurbishing or repairing at Tenant's expense.
7.4. Surrender. Upon the expiration or earlier termination of this
Lease, or upon the exercise by Landlord of Landlord's right to re-enter the
Premises without terminating this Lease, Tenant will surrender the Premises in
the same condition as received or as subsequently improved by Landlord or
Tenant, except for (i) ordinary wear and tear and (ii) damage by fire,
earthquake, acts of God or the elements for which damage Landlord has received
all insurance proceeds, and will deliver to Landlord all keys for the Premises
and combinations to safes located in the Premises. Tenant will, at Landlord's
option, remove, or cause to be removed, from the Premises or the Building, at
Tenant's expense and as of Expiration Date or earlier termination of this Lease,
all signs, notices, displays, millwork, non-movable trade fixtures, or, subject
to Subsection 7.5(d) of this Lease, any non-Building standard tenant
improvements placed in the Premises or the Building. Tenant agrees to repair, at
Tenant's expense, any damage to the Premises or the Building resulting from the
removal of any articles of personal property, movable business or trade
fixtures, machinery, equipment, furniture, movable partitions or non-Building
standard tenant improvements, including without limitation, repairing the floor
and patching and painting the walls where reasonably required by Landlord.
Tenant's obligations under this Section 7.4 will survive the expiration or
earlier termination
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of this Lease. If Tenant fails to remove any item of property permitted or
required to be removed at the expiration or earlier termination of the Term,
Landlord, may, at Landlord's option, (a) remove such property from the Premises
at the expense of Tenant and sell or dispose of same in such manner as Landlord
deems advisable, or (b) place such property in storage at the expense of Tenant.
Any property of Tenant remaining in the Premises ten (10) days after the
Expiration Date or earlier termination of this Lease will be deemed to have been
abandoned by Tenant.
7.5. Alterations by Tenant.
(a) Approval Required. Tenant will not make, or cause or
permit to be made, any additions, alterations, installations or improvements in
or to the Premises (collectively, "Alterations"), without the prior written
consent of Landlord. Unless Landlord has waived such requirement in writing,
together with Tenant's request for approval of any Alteration, Tenant must also
submit details with respect to the proposed source of funds for the payment of
the cost of the Alteration by Tenant, design concept, plans and specifications,
names of proposed contractors, and financial and other pertinent information
about such contractors (including without limitation, the labor organization
affiliation or lack of affiliation of any contractors), certificates of
insurance to be maintained by Tenant's contractors, hours of construction,
proposed construction methods, details with respect to the quality of the
proposed work and evidence of security (such as payment and performance bonds)
to assure timely completion of the work by the contractor and payment by the
contractor of all costs of the work. With respect to any Alteration which is
visible from outside the Premises, such proposed Alteration must, in the opinion
of Landlord, also be architecturally and aesthetically harmonious with the
remainder of the Building.
(b) Complex Alterations. If the nature, volume or complexity
of any proposed Alterations, causes Landlord to consult with an independent
architect, engineer or other consultant, Tenant will reimburse Landlord for the
fees and expenses incurred by Landlord. If any improvements will affect the
basic heat, ventilation and air conditioning or other Building systems or the
Building, Landlord may require that such work be designed by consultants
designated by Landlord and be performed by Landlord or Landlord's contractors.
(c) Standard of Work. All work to be performed by or for
Tenant pursuant hereto will be performed diligently and in a first-class,
workmanlike manner, and in compliance with all applicable laws, ordinances,
regulations and rules of any public authority having jurisdiction over the
Building and/or Tenant and Landlord's insurance carriers. Landlord will have the
right, but not the obligation, to inspect periodically the work on the Premises
and may require changes in the method or quality of the work.
(d) Ownership of Alterations. All Alterations made by or for
Tenant (other than the Tenant's movable trade fixtures), will immediately become
the property of the Landlord, without compensation to the Tenant; provided,
however, Landlord will have no obligation to repair, maintain or insure such
Alterations. Carpeting, shelving and cabinetry will be deemed improvements of
the Premises and not movable trade fixtures, regardless of how or where affixed.
Such Alterations will not be removed by Tenant from the Premises either during
or at the expiration or earlier termination of the Term and will be surrendered
as a part of the Premises unless such Alteration is not Building
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standard and Landlord has requested that Tenant remove same. All non-Building
standard improvements resulting from such Alteration will be subject to removal.
7.6. Liens. Tenant will keep the Premises and the Building free from
any liens arising out of work performed, materials furnished, or obligations
incurred by or on behalf of or for the benefit of Tenant. lf Tenant does not,
within ten (10) days following the imposition of any such lien, cause such lien
to be released of record by payment or posting of a proper bond or other
security, Landlord will have, in addition to all other remedies provided in this
Lease and by law, the option, to cause the same to be released by such means as
Landlord deems proper, including payment of the claim giving rise to such lien.
All sums paid and expenses incurred by Landlord in connection therewith,
including attorneys' fees and a reasonable amount for Landlord's administrative
time, will be payable to Landlord by Tenant on demand with Interest from the
date such sums are expended.
8. INSURANCE
---------
8.1. Insurance Required of Tenant. Tenant will at Tenant's sole cost
and expense, obtain and provide, on or before the Commencement Date, and will
keep in force at all times during the Tenn, the following insurance coverages
with respect to Tenant's operations and the Premises:
(i) Commercial general liability insurance, including broad
form contractual coverage, for bodily injury or death or property damage,
relating to the Premises and the appurtenances of the Premises on an occurrence
basis with a minimum combined single limit in the amount set forth in the
Fundamental Lease Provisions. Such policy will name Landlord and any other
parties designated by Landlord from time to time, as "additional insureds" and
will include a cross-liability clause.
(ii) Property insurance providing coverage on an all risks
basis, in an amount adequate to cover the replacement value of all property
owned by Tenant or for which Tenant is legally liable and which is located
within the Building, including without limitation, personal property,
decorations, trade fixtures, furnishings, equipment, and all fixtures,
alterations, leasehold improvements and betterments in the Premises made,
installed or purchased by or on behalf of Tenant. Such policy will be written in
the name of Tenant, Landlord, and any other parties designated by Landlord from
time to time, as their respective interests may appear.
(iii) Workers' compensation insurance insuring against and
satisfying Tenant's obligations and liabilities under the workers' compensation
laws of the State of Texas.
(iv) Such additional policy limits or different insurance
coverages on the Premises and Tenant's operation therein as may from time to
time be reasonably requested by Landlord.
8.2. Policy Form. All insurance required of Tenant will be in form and
written by one or more insurance companies reasonably satisfactory to Landlord.
All such insurance may be carried in a single policy or in a combination of
primary and umbrella policies or under a blanket policy covering the Premises
and any other of Tenant's offices. All such insurance will contain endorsements
that (i) such insurance may not be canceled or amended with respect to Landlord
or Landlord's designees except upon thirty (30) days' prior notice to Landlord
and Landlord's designees by the insurance
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company, (ii) Tenant will be solely responsible for payment of premiums and that
Landlord and Landlord's designees will not be required to pay any premiums for
such insurance, (iii) in the event of payment of any loss covered by such
policy, Landlord or Landlord's designees will be paid fast by the insurance
company for Landlord's loss, and (iv) Tenant's insurance is primary in the event
of overlapping coverage which may be carried by Landlord. The minimum limits of
the comprehensive general liability policy of insurance required by Section
8.1(i) will in no way limit or diminish Tenant's liability under this Lease.
Tenant will deliver to Landlord at least fifteen (15) days prior to the time
such insurance is first required to be carried by Tenant and thereafter at least
fifteen (15) days prior to the expiration of such policy, either a duplicate
original or a legally enforceable certificate of insurance on all policies
procured by Tenant in compliance with Tenant's obligations under this Lease,
together with evidence satisfactory to Landlord of the payment of the premiums
therefor.
8.3. Waiver of Subrogation. Landlord and Tenant agree that, in the
event of loss to either party due to any of the pails for which the party
incurring the loss has agreed to provide insurance, such party will look solely
to such party's insurance for recovery. Landlord and Tenant hereby grant to each
other, on behalf of any insurer providing insurance to either of them with
respect to the Premises, a waiver of any right of subrogation which any insurer
of one party may acquire against the other by virtue of payment of any loss
under such insurance. Tenant will deliver notice of this Section 8.3 to its
insurance carriers.
8.4. Damage to Property or Persons. Tenant hereby releases Landlord
from liability, including liability occasioned by the act, omission or
negligence of Landlord, its agents, servants and employees, for the following:
(i) any loss of or damage to property of Tenant or of others located in the
Premises or the Building, by theft or otherwise, (ii) any injury or damage to
persons or property or the interior of the Premises resulting from fire,
explosion, falling sheetrock, gas, electricity, water, rain, snow or leaks from
any part of the Premises or from the pipes, appliances, or plumbing works or
from the roof, street, or subsurface or from any other place or by dampness or
by any other cause of whatsoever nature, (iii) any injury or damage caused by
other tenants or any person(s) either in the Premises or elsewhere in the
Building, or by occupants of property adjacent to the Building or Common Areas,
or by the public or by the construction of any private, public, or quasi-public
work, or (iv) any latent defect in construction of the Building.
8.5. Proceeds from Property Insurance. In case of loss or damage, any
proceeds of Tenant's insurance for leasehold improvements will be and are hereby
assigned and made payable to the Landlord or Landlord's designee, and to the
extent that such proceeds of insurance have been paid to the Landlord or
Landlord's designee, such proceeds will, at Landlord's option, either be used by
Landlord to rebuild leasehold improvements or be released in monthly progress
payments to the Tenant (provided that the Tenant is not in default under this
Lease) upon receipt of Tenant's written certification, together with a
certificate of a third party architect engaged by Tenant and approved by
Landlord, stating that repairs to leasehold improvements for the previous month
have been satisfactorily completed free of liens by the Tenant's contractor. In
the event Tenant fails to cause repairs to be made, Landlord will have an option
to perform such repairs and apply such proceeds to the cost of repairs. If
insurance proceeds are inadequate to pay the full cost of such repairs
(including Administrative Reimbursement to Landlord in accordance with Section
3.9) Tenant will pay any deficiency resulting from such repairs to Landlord
within five (5) days after receipt of an invoice from Landlord.
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8.6. Landlord's Insurance. Landlord will, during the Term of this
Lease, procure and continue in force the following insurance:
(i) Commercial general liability insurance with a combined
single limit for bodily injury and property damage of not less than Two Million
and No/100 Dollars ($2,000,000.00) for each occurrence resulting from the
operations of the Landlord or Landlord's employees within the Building.
(ii) Building and personal property insurance covering the
Building and all machinery, equipment and other personal property used in
connection with the Building (but not property owned by any tenant of the
Building or for which any tenant of the Building is legally liable or
alterations, leasehold improvements, or betterments made, installed or purchased
by or on behalf of any tenant of the Building) against the perils covered by
fire and extended coverage insurance, in an amount not less than the full
insurable value of same.
9. DAMAGE OR DESTRUCTION
---------------------
9.1. Repair by Landlord. Tenant will immediately notify Landlord of
fire or other casualty in the Premises. If the Premises are damaged by fire or
other casualty and unless this Lease is terminated as hereinafter provided,
Landlord will proceed with reasonable diligence to repair the so-called "shell"
of the Premises and any leasehold improvements originally installed by Landlord.
Landlord's obligation to repair is subject to (i) delays which may arise by
reason of adjustment of loss under insurance policies, including, without
limitation, Tenant's policy for leasehold improvements and betterments described
in Section 8.1 of this Lease, and (ii) other delays beyond Landlord's reasonable
control. Landlord's obligation to repair will be limited to the extent of
insurance proceeds actually available to Landlord for repairs after the election
by the holder of any mortgage against the Building to apply a portion or all of
the proceeds against the debt owing to such holder. Until Landlord's repairs to
the Premises are completed, the Base Annual Rent and additional rent will abate
in proportion to the part of the Premises, if any, that is rendered
untenantable.
9.2. Landlord's Rights Upon The Occurrence of Certain Casualties. In
the event:
(i) either the Premises or the Building (whether or not the
Premises are affected) is totally or partially destroyed or damaged by fire or
other casualty and repairs cannot, in Landlord's reasonable judgment, be
completed within one hundred eighty (180) days after the occurrence of such
damage without the payment by Landlord of overtime or other premiums;
(ii) fifty percent (50%) or more of the Rentable Area of the
Building (wherever located) is damaged or destroyed by fire or other casualty
(whether or not the Premises are affected thereby);
(iii) damage is otherwise so great that Landlord, in
Landlord's absolute discretion, decides to demolish the Building, in whole or in
substantial part;
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(iv) insurance proceeds remaining after payment of any
proceeds required to be paid to the holder of any mortgage affecting the
Building are insufficient to repair or restore the damage or destruction;
(v) the Building or the Premises are damaged or destroyed as a
result of any cause other than the perils covered by Landlord's property
insurance and, in Landlord's judgment, the cost of repairs will exceed five
percent (5%) of the full insurable value of the Building; or
(vi) the Premises are materially damaged, in Landlord's
judgment by fire or other casualty during the last twenty-four (24) months of
the Term;
Landlord may elect (a) to the extent of the insurance proceeds actually received
by the Landlord, to proceed to repair, restore or rebuild the Building or the
Premises, in which event this Lease will continue in effect, or (b) to terminate
this Lease (effective as of the event of destruction) upon thirty (30) days'
prior notice to Tenant which notice will be given, if at all, within sixty (60)
days following the date of the occurrence of the destruction. In repairing or
restoring the Building or any part thereof, the Landlord may use designs, plans
and specifications, other than those used in the original construction of the
Building and the Landlord may alter or relocate, or both, any or all buildings,
facilities and improvements, including the Premises, provided that the Premises
as altered or relocated will be substantially the same size and will be in all
material respects reasonably comparable to the Premises. Upon any such
termination of this Lease, Tenant will surrender to Landlord the Premises and
deliver to Landlord all proceeds from Tenant's insurance attributable to tenant
improvements and other additions, improvements, and property items which Tenant
has no right to remove. Tenant will pay Base Annual Rent and all other sums
payable under this Lease prorated through the effective date of such termination
and Landlord and Tenant will be free and discharged from all obligations under
this Lease arising after the effective date of such termination, except those
obligations expressly stated in this Lease to survive the termination of this
Lease.
9.3. Repairs by Tenant. Landlord will not be required to repair any
injury or damage by fire or other cause, to restore or replace or to reimburse
Tenant for damage to any of the Tenant's property or any leasehold improvements
installed in the Premises by Tenant Landlord's obligations to repair leasehold
improvements originally installed by Landlord will be subject to, and limited to
the extent of receipt of adequate proceeds from Landlord's and/or Tenant's
insurance under Sections 8.1(ii) and 8.6. Tenant will be required to repair any
injury or damage to the Premises or to the contents of the Premises which
Landlord is not responsible for repairing. Except for abatement, if any, of Base
Annual Rent and additional rent in accordance with the provisions of this Lease,
Tenant will not be entitled to any allowance, compensation or damages from
Landlord for loss of use of all or any part of the Premises or Tenant's property
or for any inconvenience, annoyance, disturbance or loss or interruption of
business, or otherwise, arising from any damage to the Premises or the Building
by fire or any other cause, or arising from any repairs, reconstruction or
restoration, nor will Tenant have the right to terminate this Lease.
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10. EMINENT DOMAIN
--------------
10.1. Total Taking. If all of the Building will be taken or
appropriated for public or quasi-public use by right of eminent domain or
transferred by agreement with such public or quasi-public agency, this Lease
will terminate as of the date possession is taken by the condemning authority.
If less than all of the Premises or Building is taken or appropriated but in
Landlord's reasonable judgment, the balance will be rendered untenable, such
taking will constitute a total taking for purposes of this Section 10.1.
Landlord will notify Tenant of Landlord's decision that the remainder is
untenable within thirty (30) days of Landlord's receipt of notice of the taking
or appropriation and this Lease will terminate as of the date possession is
taken by the condemning authority.
10.2. Partial Taking. If only part of the Building (whether or not such
part includes the Premises) is taken or appropriated by a public or quasi-public
agency under the right of eminent domain or conveyed in agreement with a public
or quasi-public agency (whether or not the Premises are affected thereby) and,
(i) in Landlord's reasonable judgment, substantial alteration or reconstruction
of the Building is necessary as a result of such taking or conveyance, or (ii)
if Landlord decides to demolish or discontinue operating the Building as a
result of such taking or conveyance, or (iii) twenty-five percent (25%) or more
of the Rentable Area of the Building is so taken or conveyed or, in the
reasonable judgment of Landlord, the Building is rendered untenable as a result
or (iv) proceeds from such taking or conveyance remaining after payment of any
such proceeds required to be paid to the holder of any mortgage affecting the
Building are in-sufficient to restore the Building and the Premises to an
architectural whole, then, in any of such events, Landlord may, at Landlord's
option, terminate this Lease by giving Tenant notice of termination within
thirty (30) days after such taking or conveyance. In the event this Lease is not
terminated, Landlord will, to the extent of proceeds actually received after the
exercise by any mortgagee of the Building of an option to apply such proceeds
against Landlord's debt to such mortgagee, restore the Building to an
architectural whole.
10.3. Award. Any award for or proceeds from any partial or entire
taking or conveyance to a public or quasi-public agency will be the property of
Landlord, including, without limitation, any award or proceeds based on value of
the leasehold interest of Tenant. Nothing contained in this Section 10.3 will be
deemed to give Landlord any interest in or to preclude Tenant from seeking and
recovering for Tenant's account a separate award from the condemning authority
(but only to the extent such separate award does not reduce any award to
Landlord) for the taking of personal property and fixtures removable by Tenant,
for the interruption of or damage to Tenant's business or for Tenant's
unamortized cost of leasehold improvements paid for by Tenant. In the event of a
partial taking which does not result in a termination of this Lease, Base Annual
Rent and additional rent will be abated in the proportion which the Rentable
Area of the Premises rendered unusable bears to the total Rentable Area of the
Premises. No temporary taking of Tenant's Premises and/or of Tenant's's rights
therein or under this Lease will terminate this Lease or give Tenant any right
to any abatement of Base Annual Rent or additional rent under this Lease. Any
award made to Tenant by reason of any temporary taking will belong entirely to
Tenant and Landlord will not be entitled to share in such award.
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11. ASSIGNMENT AND SUBLETTING
-------------------------
11.1. Consent. Tenant will not assign this Lease or sublet all or any
portion of the Premises without the prior written consent of the Landlord, if
consent to any assignment or subletting is given by Landlord, such consent will
not relieve the Tenant or any guarantor of this Lease from any obligation or
liability under this Lease. If this Lease is assigned or any part of the
Premises is occupied by any person other than the Tenant without the consent of
Landlord, the Landlord may nevertheless collect Base Annual Rent and additional
rent from the assignee or occupant, and apply the net amount collected to the
Base Annual Rent and other amounts payable under this Lease but, in no event
will such collection be construed as a waiver of this covenant.
11.2. Landlord's Option. If the Tenant desires to assign this Lease or
sublet all or part of the Premises, Tenant will notify Landlord at least sixty
(60) days in advance of the date on which Tenant desires to make such assignment
or enter into such sublease. Tenant will provide Landlord with a copy of the
proposed assignment or sublease, and sufficient information concerning the
proposed sublessee or assignee to allow Landlord to make informed judgments as
to the financial condition, reputation, operations and general desirability of
the proposed assignee or subtenant(s). Within thirty (30) days after Landlord's
receipt of Tenant's proposed assignment or sublease and all required information
concerning the proposed subtenant(s) or assignee, Landlord will have the option
to:
(i) Cancel the Lease as to all of the Premises, if Tenant
proposes to assign the Lease or sublet more than fifty percent (50%) of the
Premises, or cancel the Lease as to the portion of the Premises proposed to be
sublet if Tenant proposes to sublet less than fifty percent (50%) of the
Premises; or
(ii) Consent to the proposed assignment or sublease, provided,
however, if the rent due and payable by any assignee or sublessee under any such
permitted assignment or sublease (or a combination of the rent payable under
such assignment or sublease plus any bonus or any other consideration for the
assignment or sublease or any payment incident to the assignment or sublease)
exceeds the rent payable under the Lease for such space, Tenant will pay to
Landlord all of such excess rent and other excess consideration within ten (10)
days following receipt of such excess rent and/or consideration by Tenant (if
the proposed sublessee or assignee is subject to compliance with additional
requirements under The Americans with Disabilities Act beyond those requirements
which are applicable to the Tenant desiring to sublet or assign, Landlord may
condition Landlord's consent upon receipt of plans and specifications acceptable
to Landlord for complying with the additional requirements and of security
acceptable to Landlord that such construction be completed timely and
lien-free); or
(iii) Refuse to consent to the proposed assignment or sublease
but allow Tenant to continue in the search for an assignee or sublessee that
will be acceptable to Landlord, which option will be deemed to be elected unless
Landlord gives Tenant notice providing otherwise.
11.3. Definition of Assignment. The use of the words "assignment",
"subletting", "assign", or "assigned" or "sublet" in this Article 11 will
include (i) the pledging, mortgaging or encumbering of Tenant's interest in this
Lease, or the Premises or any part thereof, (ii) the total or partial occupation
of all or any part of the Premises by any person, firm, partnership, or
corporation, or any
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groups of persons, firms, partnerships, or corporations, or any combination
thereof, other dm Tenant (iii) an assignment or transfer by operation of law,
and (iv) with respect to a corporation, partnership, or other business entity, a
transfer or issue by sale, assignment, bequest, inheritance, operation of law,
or other disposition, or by subscription, any part or all of the corporate
shares of or partnership or other interests in the Tenant, so as to result in
any change in the present effective voting control of the Tenant by the party or
parties holding such voting control on the date of this Lease. Upon the request
of Landlord, Tenant will make available to the Landlord or to Landlord's
representatives, for inspection all books and records of the Tenant's necessary
to ascertain whether there has, in effect, been a change in control of Tenant
Item (iv) of this Section 11. 3 will not apply to a corporation whose shares are
traded on a nationally recognized stock exchange.
11.4. Legal Fees. All legal fees and expenses incurred by the Landlord
in connection with the review by the Landlord of the Tenant's request pursuant
to this Article 11 together with any legal fees and disbursements incurred in
the preparation and review of any documentation, will be the responsibility of
the Tenant and will be paid by Tenant within five (5) days from receipt of an
invoice from Landlord, as additional rent.
11.5. Bankruptcy Insolvency. If this Lease is assigned to any person or
entity pursuant to the provisions of the Federal Bankruptcy Code, 11 U.S.C. ss.
101, et seq., as subsequently amended ("Bankruptcy Code"), any and all monies or
other considerations payable or otherwise to be delivered in connection with
such assignment will be paid or delivered to Landlord, will be and remain the
exclusive property of Landlord and will not constitute property of Tenant within
the meaning of the Bankruptcy Code. Any and all monies or other considerations
constituting Landlord's property under the preceding sentence not paid or
delivered to Landlord will be held in trust for the benefit of Landlord and be
promptly paid to or turned over to Landlord. For purposes of Section 365(f)(2)
of the Bankruptcy Code "adequate assurances of future performance" will include,
but not be limited to, a Security Deposit, net worth, and creditworthiness equal
to that of Tenant on the date of this Lease. Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code, will be
deemed without Anther act or deed to have assumed all of the obligations arising
under this Lease on and after the date of such assignment Any such assignee will
upon demand execute and deliver to Landlord an instrument confirming such
assumption.
12. DEFAULT, REMEDIES
-----------------
12.1. Defaults by Tenant. The occurrence of any of the following will
constitute a default under this Lease by Tenant:
(i) any failure by Tenant to pay an installment of Base Annual
Rent or to make any other payment required under this Lease when due [except
that the first time such failure occurs during each calendar year, Tenant will
not be in default unless Tenant fails to pay such sum within five (5) days after
notice from Landlord];
(ii) any failure by Tenant to observe and perform any other
provision of this Lease to be observed and performed by Tenant, where such
failure continues for twenty (20) days after notice by Landlord to Tenant;
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(iii) failure to take possession or delivery of the Premises
within ten (10) days after notice from Landlord that the Premises are ready for
occupancy, or abandonment of the Premises, i.e., the failure by Tenant or
Tenant's employees to occupy the Premises for ten (10) consecutive days;
(iv) Tenant's interest in this Lease or in all or a part of
the Premises is taken by process of law directed against Tenant, or becomes
subject to any attachment at the instance of any creditor of or claimant against
Tenant, and such attachment is not discharged within ten (10) days;
(v) Tenant or any guarantor of Tenant's obligations under this
Lease: (a) is unable to pay such party's debts generally as they become due; (b)
makes an assignment of all or a substantial part of such party's property for
the benefit of creditors; (c) convenes or attends a meeting of such party's
creditors, or any class thereof, for purposes of effecting a moratorium upon or
extension or composition of such party's debts; (d) applies for or consents to
or acquiesces in the appointment of a receiver, trustee, liquidator, or
custodian of such party or of all or a substantial part of such party's property
or of the Premises or of Tenant's interest in this Lease; or (e) files a
voluntary petition in bankruptcy or a petition or an answer seeking
reorganization under the Bankruptcy Code or any other law relating to
bankruptcy, insolvency, reorganization or relief of debtors or an arrangement
with creditors, or takes advantage of any insolvency law or files an answer
admitting the material allegations of a petition filed against such party in any
bankruptcy, relief, reorganization or insolvency proceedings;
(vi) Tenant or any guarantor of Tenant's obligations under
this Lease takes any corporate action to authorize any of the actions set forth
in Section 12.1(v); or
(vii) the entry of a court order, judgment or decree against
Tenant or any guarantor of Tenant's obligations under this Lease, without the
application, approval or consent of such party, approving a petition seeking
reorganization of such party or relief of debtors under the Bankruptcy Code or
any other law relating to bankruptcy, insolvency, reorganization, or relief of
debtors or granting an order for relief against it as debtor or appointing a
receiver, trustee, liquidator, or custodian of such party or of all or a
substantial part of such party's property or of the Premises or of Tenant's
interest in this Lease, or adjudicating such party bankrupt or insolvent and
such order, judgment or decree will not be vacated, set aside or dismissed
within sixty (60) days from the date of entry.
12.2. Remedies. Upon the occurrence of any event of default enumerated
in Section 12.1. Landlord will have the option of (i) terminating this Lease by
notice thereof to Tenant or (ii) continuing this Lease in full force and effect
and/or (iii) performing the obligation of Tenant.
(a) Termination of Lease. In the event Landlord elects to
terminate this Lease, upon notice to Tenant this Lease will end as to Tenant and
all persons holding under Tenant, and all of Tenant's rights will be forfeited
and lapsed, as fully as if this Lease had expired by lapse of time, and there
will be recoverable from Tenant: (i) the cost of restoring the Premises to good
condition, normal wear and tear excepted, (ii) all accrued, unpaid sums, plus
Interest and late charges, if in arrears, under the term of this Lease up to the
date of termination, (iii) Landlord's cost of recovering possession of the
Premises, and (iv) rent and other sums accruing subsequent to the date of
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termination pursuant to the holdover provisions of Section 2.3. Notwithstanding
any provision in this Lease to the contrary, if Tenant's default is by reason of
Tenant's failure to pay rents, Landlord will, at Landlord's option, be entitled
to liquidated damages equal to six (6) monthly installments of Base Annual Rent
and, if Tenant's default constitutes an anticipatory breach under Texas law,
Landlord shall also be entitled to collect all other damages permitted under
Texas law for anticipatory breach. The Landlord will at once have all the rights
of re-entry upon the Premises, without becoming liable for damages, or guilty of
a trespass.
(b) Continuation of Lease. In the event that Landlord elects
to continue this Lease in full force and effect Tenant will continue to be
liable for all rents. Landlord will nevertheless have all the rights of re-entry
upon the Premises without becoming liable for damages, or guilty of a trespass.
Landlord, after re-entry, may relet all or a part of the Premises to a
substitute tenant or tenants, for a period of time equal to or less or greater
than the remainder of the Term on whatever terms and conditions Landlord, at
Landlord's sole discretion, deems advisable. Against the rents and sums due from
Tenant to Landlord during the remainder of the Term, credit will be given Tenant
in the net amount of rent received from the new tenant after deduction by
Landlord for (i) the costs incurred by Landlord in reletting the Premises
(including, without limitation, remodeling costs, brokerage fees, and the like),
(ii) the accrued sums, plus Interest and late charges if in arrears, under the
terms of this Lease, (iii) Landlord's cost of recovering possession of the
Premises, and (iv) if Landlord elects to store Tenant's property in accordance
with Section 7.4 the cost of storing any of Tenant's property left on the
Premises after re-entry. Notwithstanding any provision in this Section 12.2(b)
to the contrary, upon the default of any substitute tenant or upon the
expiration of the term of such substitute tenant before the expiration of the
Term hereof, Landlord may, at Landlord's election, either relet to another
substitute tenant or terminate this Lease and exercise Landlord's rights under
Section 12.2(a) of this Lease.
(c) Performance for Tenant. In the event that Landlord elects
to perform the obligation(a) of Tenant, all sums expended by Landlord effecting
such performance (including Administrative Reimbursement under Section 3.9),
plus Interest thereon, will be due and payable with the next monthly installment
of Base Annual Rent. Such sum will constitute additional rental under tins
Lease, and failure to pay such sums when due will enable Landlord to exercise
all of Landlord's remedies under this Lease.
12.3. Remedies Cumulative. All rights and remedies of Landlord under
this Lease will be nonexclusive of and in addition to any other remedies
available to Landlord at law or in equity.
12.4. Attorneys' Fees. If legal action is necessary in order to enforce
or interpret this Lease, the prevailing party will be entitled to reasonable
attorneys' fees, costs and disbursements in addition to any other relief to
which such party is entitled.
12.5. Waiver. No covenant, term or condition or the breach thereof will
be deemed waived, except by written consent of the party against whom the waiver
is claimed and any waiver of the breach of any covenant, term or condition will
not be deemed to be a waiver of any preceding or succeeding breach of the same
or any other covenant, term or condition. Acceptance by Landlord of any
performance by Tenant after the time the same was due will not constitute a
waiver by Landlord
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of the breach or default of any covenant term or condition unless otherwise
expressly agreed to by Landlord in writing.
12.6. Landlord's Lien. To assure payment of all sums due under this
Lease and the faithful performance of all other covenants of the Lease, Tenant
hereby grants to Landlord an express contract lien on and security interest in
all property, chattels or merchandise owned by Tenant which may be placed in the
Premises and also upon all proceeds of any insurance which may accrue to Tenant
by reason of damage or destruction of any such property. Landlord will have all
the rights and remedies of a secured party under the Texas Business and Commerce
Code, and this lien and security interest may be foreclosed by process of law.
Upon request by Landlord, Tenant agrees to execute and to deliver a financing
statement in form sufficient to perfect the security interest of Landlord under
the Texas Business and Commerce Code. Tenant further agrees did Landlord may
file this Lease as a financing statement. The lien and security interest granted
in this Section 12.6 will be cumulative of and in addition to any statutory lien
rights in favor of Landlord, now or hereafter existing.
12.7. Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor (provided such inability does not arise from the
inability of Landlord to pay for same), governmental restrictions, governmental
regulations, governmental controls, enemy or hostile governmental action, civil
commotion, fire or other casualty, and other causes beyond the reasonable
control of the Landlord, will excuse the performance by Landlord for a period of
time equal to any such prevention, delay or stoppage, of any obligation Landlord
is obligated to perform under this Lease.
13. ESTOPPEL CERTIFICATES
---------------------
13.1. Acknowledgment of Commencement Date. Upon tender of possession of
the Premises to the Tenant and as often thereafter as may be requested by
Landlord, Tenant will, within ten (10) days after receipt of a request from
Landlord, execute, acknowledge and deliver to Landlord a statement in the form
of Exhibit E which will (i) set forth the actual Commencement Date and
Expiration Date of the Term, and (ii) contain acknowledgments that Tenant has
accepted the Premises and that the Premises and Building are satisfactory in all
respects.
13.2. Certificates. Tenant will, within ten (10) days after receipt of
a request from Landlord or any mortgagee of Landlord, execute, acknowledge and
deliver to Landlord or such mortgagee either a statement in writing or three
party agreement among Landlord, Tenant and such mortgagee (i) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect) and the date to which Base Annual Rent and other
charges are paid in advance, if any; (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord under this
Lease, or specifying such defaults if any are claimed, and (iii) specifying any
further information and agreeing to such notice provisions and other matters
reasonably requested by Landlord or such mortgagee. Any such statement may be
conclusively relied upon by a prospective purchaser or mortgagee of the
Premises. Tenant's failure to deliver such statement within ten (10) days will
constitute a default under this Lease.
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13.3. Financial Statements. Landlord will have the right to request
financial statements from Tenant for purposes of selling, financing or
refinancing the Building. Tenant will, within ten (10) days after receipt of a
request from Landlord setting forth the purposes for which such financial
statement will be used, deliver to Landlord a current financial statement
certified by Tenant's chief financial officer to be true and correct and to
fairly express Tenant's current financial condition. All such financial
statements will be received by Landlord in confidence and used only for the
purpose set forth in the request.
14. SUBORDINATION AND ATTORNMENT
----------------------------
This Lease is and will be subject and subordinate to all ground or
underlying leases which now exist or may hereafter be executed affecting the
Building and to the lien and provisions of any mortgages or deeds of trust now
or hereafter placed against the Building or against Landlord's interest or
estate in the Building or on or against any ground or underlying lease, and any
renewals, modifications, consolidations and extensions of such lease, without
the necessity of the execution and delivery of any further instruments on the
part of Tenant to effect subordination. If any mortgagee, trustee or ground
lessor elects to have this Lease prior to the lien of such mortgagee's,
trustee's or ground lessor's mortgage or deed of trust or ground lease, and
gives notice of such election to Tenant, this Lease will be deemed prior to the
lien of such mortgage or deed of trust or ground lease, whether this Lease is
dated prior or subsequent to the date of such mortgage, deed of trust, or ground
lease, or the date of the recording thereof. Tenant will execute and deliver
upon request from Landlord, such further instruments evidencing the
subordination of this Lease to any ground or underlying lease, and to any
mortgage or deed of trust. In the event any proceedings are brought for default
under any ground or underlying lease or in the event of foreclosure or the
exercise of the power of sale under any mortgage or deed of trust against the
Premises, Tenant will, upon request of any person or party succeeding to the
interest of Landlord as a result of such proceedings, attorn to such successor
in interest and recognize such successor in interest as Landlord under this
Lease.
15. LANDLORD'S INTEREST
-------------------
15.1. Liability of Landlord. If Landlord defaults under this Lease and,
if as a consequence of such default, Tenant recovers a money judgment against
Landlord, such judgment will be satisfied orgy out of the right, title and
interest of Landlord in the Building and Landlord will not be liable for any
deficiency. In no event will Tenant have the right to levy execution against any
property of Landlord or Landlord's partners other than Landlord's interest in
the Building. In no event will Landlord be liable to Tenant for consequential or
special damages.
15.2. Notice to Mortgagee. If Landlord defaults under this Lease and,
if as a consequence of such default Tenant will have the right to terminate this
Lease, Tenant will not exercise such right to terminate unless and until (i)
Tenant gives notice of such default (specifying the exact nature of such default
and how such default may be remedied) to any lessor under a ground lease or any
mortgagee of the Building whose name and address have been delivered to Tenant
prior to the time of default and (ii) such lessor and/or mortgagee fails to
cure, or to cause to be cured, such default within thirty (30) days after such
lessor's or mortgagee's receipt of notice.
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15.3. Sale of Building. The term "Landlord" will mean only the owner at
the time in question of the fee title or a tenant's interest in a ground lease
of the Premises. The obligations contained in this Lease to be performed by
Landlord will be binding on Landlord and Landlord's successors and assigns only
during their respective periods of ownership. In the event of a sale of the
Building or assignment of this Lease by Landlord, Landlord will have the right
to transfer the Security Deposit to Landlord's vendee or assignee, subject to
Tenant's rights therein, and Landlord will thereafter be released from any
liability to Tenant with respect to the return of the Security Deposit to
Tenant.
16. NOTICES
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Wherever in this Lease it is required or permitted that a request,
notice or demand be given or served or consent be obtained by either party to,
on, or from the other, such request, notice, demand, or consent must be in
writing and either personally delivered or mailed by certified or registered
United States mail, postage prepaid, to the addresses of the parties specified
in the Fundamental Lease Provisions. Any notice which is mailed will be deemed
to have been given on the regular business day next following the date of
deposit of such notice in a depository of the United States Postal Service.
Either party may change such address by notice to the other. Base Annual Rent
and other charges will be paid to Landlord at Landlord's address as set forth in
the Fundamental Lease Provisions, or as changed pursuant to a notice delivered
to Tenant in the mariner specified above.
17. BROKERS
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Tenant represents and warrants that Tenant has had no dealings with any
broker or agent [other than the broker(s) specified in Paragraph 11 of the
Fundamental Lease Provisions] in connection with the negotiation or execution of
this Lease.
18. INDEMNITY
---------
Tenant will indemnify and hold Landlord harmless from all claims
arising from or in connection with (i) the conduct or management of the Premises
or of any business therein, or any work or thing whatsoever done, or any
condition created in or about the Premises during the Term; (ii) any act
omission or negligence of Tenant or any of Tenant's subtenants or licensees or
the partners, directors, officers, agents, employees, invitees or contractors of
Tenant or of Tenant's subtenants or licensees, (iii) ANY ACCIDENT, INJURY OR
DAMAGE WHATSOEVER OCCURRING IN OR AT THE PREMISES, TENANT HEREBY EXPRESSLY
INDEMNIFYING LANDLORD FOR THE CONSEQUENCES OF ANY NEGLIGENT ACT OR OMISSION OF
LANDLORD, ITS AGENTS, SERVANTS AND EMPLOYEES, UNLESS SUCH ACT OR OMISSION
CONSTITUTES GROSS NEGLIGENCE OR INTENTIONAL CONDUCT; (iv) any breach or default
by Tenant in the full and prompt payment of any amount due Landlord under this
Lease and/or any breach, violation or nonperformance of any term, condition,
covenant or other obligation of Tenant under this Lease or any representation
made by Tenant's or any guarantor of Tenant's obligations in connection with
this Lease; (v) all damages sustained by Landlord as a result of any holdover by
Tenant in the Premises including, but not limited to, any claims by another
tenant resulting from a delay by Landlord in delivering possession of the
Premises to such tenant; (vi) any liens or encumbrances arising out of any work
performed or materials furnished by or for Tenant, including any work Landlord
may have performed or caused to be performed for Tenant for which
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Tenant has not paid Landlord; and (vii) commissions or other compensation or
charges claimed by any broker or agent [other than the broker(s) specified in
the Fundamental Lease Provisions], with respect to this Lease by, through, or
under Tenant. In the event Landlord, without fault on Landlord's part, is made a
party to any litigation commenced by or against Tenant then Tenant will protect
and hold Landlord harmless and will pay all costs, expenses and attorneys' fees
incurred or paid by Landlord in connection with such litigation.
19. SUBSTITUTION OF SPACE
---------------------
19.1. Substitute Space. Landlord reserves the right at any time prior
to tender of possession of the Premises to Tenant or during the Term of this
Lease after the Commencement Date and upon sixty (60) days' prior notice:
("Substitution Notice") to substitute other space ("Substitute Space") within
the Building for the Premises provided the Rentable Area of the Substitute Space
is approximately the same as the Rentable Area of the Premises.
19.2. Maximum Base Annual Rent. The Base Annual Rent for the Substitute
Space will be computed by multiplying the number of square feet of Rentable Area
in the Substitute Space by the per rentable square foot Base Annual Rent for the
Premises.
19.3. Condition of Premises. If relocation occurs after the
Commencement Date, Tenant will have the election to take the Substitute Space
"as is" or to have the Substitute Space improved in substantially the same
manner as the Premises, such election to be exercised by notice delivered to
Landlord within ten (10) days after Tenant's receipt of the Substitution Notice.
Failure by Tenant to notify Landlord of Tenant's election within the ten (10)
day period will be deemed to be an election to take the Substitute Space "as
is".
19.4. Commencement of Rent. Rental for the Substitute Space will
commence to accrue within fifteen (15) days after Landlord tenders possession of
the Substitute Space to the Tenant. Tenant's continued occupancy of the Premises
after such fifteen (15) day period will be treated as a holding over by Tenant
under Section 2.3 hereof.
20. PARKING
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20.1. Parking Spaces. Landlord hereby grants to Tenant and persons
designated by Tenant a license to use the number of parking spaces set forth in
Paragraph 12 of the Fundamental Lease Provisions in that certain parking
structure constructed within the Building Garage ("Garage") and on the surface
parking Lot ("Lot"). The term of such license will commence on the Commencement
Date and will continue until the earlier to occur of the Expiration Date under
the Lease or termination of the Lease or Tenant's abandonment of the Premises.
During the term of this license, Tenant will pay Landlord the monthly charges
established from time to time by Landlord for parking in the Garage and Lot,
payable in advance, with Tenant's payment of monthly installment of Base Annual
Rental. The initial charge for such spaces is set forth in Paragraph 12 of the
Fundamental Lease Provisions. No deductions from the monthly charge will be made
for days on which the Garage and Lot are not used by Tenant. However, Tenant may
reduce the number of parking spaces hereunder, at any time, by providing at
least thirty (30) days' advance written notice to Landlord, accompanied by any
key-card, sticker or other identification or entrance system provided by
Landlord or its parking
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contractor, such cancellation will be irrevocable. Tenant may, from time to
time, request additional parking spaces, and if Landlord provides the same, the
spaces will be provided and used on a month-to-month basis, and for such monthly
parking charges as Landlord establishes from time to time.
20.2. Control of Parking. Tenant shall at all times comply with all
applicable ordinances, rules, regulations, codes, laws, statutes and
requirements of all federal, state, county and municipal governmental bodies or
their subdivisions respecting the use of the Garage and Lot. Landlord reserves
the right from time to time to adopt, modify and enforce reasonable rules
governing the use of the Garage and Lot, including any key-card, sticker or
other identification or entrance system, and hours of operation. Landlord may
refuse to permit any person who violates such rules to park in the Garage and
Lot, and any violation of the rules will subject the car to removal from the
Garage and Lot.
20.3. Liability. The parking spaces hereunder will be provided on an
unreserved "first-come, first-served" basis. Tenant acknowledges that Landlord
has or may arrange for the Garage and Lot to be operated by an independent
contractor, not affiliated with Landlord. In such event, Tenant acknowledges
that Landlord will have no liability for claims arising through acts or
omissions of such independent contractor. Landlord will have no liability
whatsoever for any damage to property or any other items located in the Garage
and Lot, nor for any personal injuries or death arising out of any matter
relating to the Garage and Lot, and in all events, Tenant agrees to look first
to its insurance carrier and to require that Tenant's employees look first to
their respective insurance carriers for payment of any losses sustained in
connection with any use of the Garage and Lot. Tenant hereby waives on behalf of
Tenant's insurance carriers all rights of subrogation against Landlord or
Landlord's agents. Landlord reserves the right to assign specific spaces, and to
reserve spaces for visitors, small cars, handicapped persons and for other
tenants, guests of tenants or other parties, and Tenant and persons designated
by Tenant hereunder will not park in any such assigned or reserved spaces.
Landlord also reserves the right to close all or any portion of the Garage and
Lot in order to make repairs or perform maintenance services, or to alter,
modify, restripe or renovate the Garage and Lot, or if required by casualty,
strike, condemnation, act of God, governmental law or requirement or other
reason beyond Landlord's reasonable control. If, for any other reason, Tenant or
persons properly designated by Tenant, are denied access to the Garage and Lot,
and Tenant or such persons will have complied with this Section 20, Landlord's
liability will be limited to parking charges (excluding tickets for parking
violations) incurred by Tenant or such persons m utilizing alternative parking,
which amount Landlord will pay upon presentation of documentation supporting
Tenant's claims in connection therewith.
20.4. Default Remedies. If Tenant defaults under this Section 20,
Landlord will have the right to remove from the Garage and Lot any vehicles
hereunder which are involved or are owned or driven by parties involved in
causing such default without liability therefor whatsoever. In addition, if
Tenant defaults under this Section 20 Landlord will have the right to cancel
Tenant's parking spaces on ten (10) days' written notice. If Tenant defaults
with respect to the same term or condition under this Section 20 more than three
(3) times during any twelve (12) month period, the next default of such term or
condition during the succeeding twelve (12) month period, will, at Landlord's
election, constitute an incurable default Such cancellation right will be
cumulative and in addition to any other rights or remedies available to Landlord
at law or equity, or provided under this Lease.
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21. HAZARDOUS SUBSTANCES
--------------------
The term "Hazardous Substances", as used in this Lease will mean
pollutants, contaminants, toxic or hazardous wastes, or any other substances,
the removal of which is required or the use of which is restricted, prohibited
or penalized by any "Environmental Law", which term will mean any federal, state
or local law or ordinance relating to pollution or protection of the environment
Tenant hereby agrees that (i) no activity will be conducted on the Premises that
will produce any Hazardous Substances, except for such activities that are part
of the ordinary course of Tenant's business activities ("Permitted Activities")
provided the Permitted Activities are conducted in accordance with all
Environmental Laws; (ii) the Premises will not be used in any manner for the
storage of any Hazardous Substances except for any temporary storage of such
materials dud are used in the ordinary course of Tenant's business ("Permitted
Materials"), provided such Permitted Materials are properly stored in a manner
and location meeting all Environmental Laws; (iii) Tenant will not permit any
Hazardous Substances to be brought onto the Premises, except for the Permitted
Materials, and if so brought or found thereon, the same shall be immediately
removed, with proper disposal, and all required cleanup procedures shall be
diligently undertaken pursuant to all Environmental Laws. Tenant agrees to
indemnify and hold Landlord harmless from all claims, demands, actions,
liabilities, costs, expenses, damages and obligations of any nature arising from
or as a result of the violation of the provisions of this Section 21 by Tenant.
The foregoing indemnification will survive the termination or expiration of this
Lease.
22. INTERPRETATIVE
--------------
22.1. Captions. The captions of the Articles and Sections of this Lease
are for convenience only and will not affect the interpretation or construction
of any provision of this Lease.
22.2. Attachments. Exhibits, addenda, schedules and riders attached
hereto and listed in the Table of Contents of the Lease (and no other exhibits,
addendums, schedules and riders) are deemed by attachment to constitute part of
this Lease and are incorporated into this Lease.
22.3. Number, Gender, Defined Terms. The words "Landlord" and "Tenant",
as used in this Lease, will include the plural as well as the singular. Words
used in the neuter gender include the masculine and feminine and words in the
masculine or feminine gender include the other and the neuter. If more than one
person or entity constitutes Tenant; the obligations under this Lease imposed
upon Tenant will be joint and several.
22.4. Entire Agreement. This Lease, including any exhibits and
attachments hereto listed in the Table of Contents, constitutes the entire
agreement between Landlord and Tenant relative to the Premises. Landlord and
Tenant agree hereby that all prior or contemporaneous oral and written
agreements between and among themselves or their agents, including any leasing
agent, and representatives relative to the leasing of the Premises are merged in
or revoked by this Lease.
22.5. Amendment. This Lease and the exhibits and attachments may be
altered, amended or revoked only by an instrument in writing signed by both
Landlord and Tenant.
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22.6. Severability. If any term or provision of this Lease is, to any
extent, determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease will not be affected thereby, and
each remaining term and provision of this Lease will be valid and be enforceable
to the fullest extent permitted by law.
22.7. Time of Essence. Time is of the essence of this Lease and each
and every provision of this Lease.
22.8. Best Efforts. Whenever in this Lease or the Work Letter, if any,
there is imposed upon Landlord the obligation to use Landlord's best efforts or
reasonable efforts or diligence, Landlord will be required to exert such efforts
or diligence only to the extent the same are economically feasible and will not
impose upon Landlord extraordinary financial or other burdens.
22.9. Binding Effect. Subject to any provisions of this Lease
restricting assignment or subletting by Tenant and releasing Landlord upon sale
of the Building, all of the provisions of this Lease will bind and inure to the
benefit of the parties to this Lease and their respective heirs, legal
representatives, successors and assigns.
22.10. Subtenancies. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, will not work a merger of estates and
will, at the option of Landlord, operate as an assignment to Landlord of any or
all subleases or subtenancies.
22.11. No Reservation. Submission by Landlord of this instrument to
Tenant for examination or signature does not constitute a reservation of or
option for lease. This Lease will be effective as a lease or otherwise only upon
execution and delivery by both Landlord and Tenant.
22.12. Consents. If Tenant requests Landlord's consent under any
provision of this Lease and Landlord fails or refuses to give such consent,
Tenant's sole remedy will be an action for specific performance or injunction.
22.13. Legal Authority. In the event Tenant is a corporation (including
any form of professional association), then each individual executing or
attesting this Lease on behalf of such corporation hereby covenants, warrants
and represents (i) that he is duly authorized to execute or attest and deliver
this Lease on behalf of such corporation in accordance with a duly adopted
resolution of the corporation's board of directors and in accordance with such
corporation's articles of incorporation or charter and bylaws; (ii) that this
Lease is binding upon such corporation; (iii) that Tenant is a duly organized
and legally existing corporation in good standing in the State of Texas; and
(iv) the execution and delivery of the lease by Tenant will not result in any
breach of or constitute a default under any mortgage, deed of trust, lease,
loan, credit agreement partnership agreement or other contract or instrument to
which Tenant is a party or by which Tenant may be bound. If Tenant is a
corporation, Tenant will, within ninety (90) days from the date of this Lease,
deliver to Landlord a copy of a resolution of Tenant's board of directors
authorizing or ratifying the execution and delivery of this Lease, which
resolution will be duly certified to Landlord's satisfaction by the secretary or
assistant secretary of Tenant.
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In the event Tenant is a partnership (general or limited), then each
individual executing this Lease on behalf of the partnership hereby covenants,
warrants and represents (i) that he is duly authorized to execute and deliver
this Lease on behalf of the partnership in accordance with the partnership
agreement, or an amendment thereto, now in effect; (ii) that this Lease is
binding upon such partnership; (iii) that the Tenant is a duly organized and
legally existing partnership and has filed any and all certificates required by
law; and (iv) the execution and delivery of this Lease will not result in any
breach of or constitute a default under, any mortgage, deed of trust, Lease,
loan, credit agreement, partnership agreement, or other contract or instrument
to which Tenant is a party or by which Tenant may be bound.
22.14. Choice of Law. This Lease will be construed under, governed by
and enforced in accordance with the laws of the State of Texas.
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EXHIBIT A
LEGAL DESCRIPTION
"6500 GREENVILLE PLACE"
BEING a 2.734 acre tract of land situated in the JOHN C. COOK SURVEY, ABSTRACT
NUMBER 259, in the City of Dallas, DALLAS County, Texas and being a portion of
Lot 3, Block E/5191 of the CARUTH BYRD ADDITION #2, an addition to the City of
Dallas According to the plat recorded in Volume 81183, Page 2168 of the Deed
Records of DALLAS County, Texas (DRDCT) and being more particularly as follows:
BEGINNING at a 1/2 inch iron rod found for the Northeast corner of said Lot 3
and being located at the point of intersection of the Southerly Right-of-Way
line of Northwest Highway (a variable width right-of-way) with the Westerly
Right-of-Way line of a Dallas Power and Light Company Right-of- Way (a 60 foot
wide Right-of-Way);
THENCE departing the Southerly Right-of-Way line of said Northwest Highway and
following the Westerly Right-of-Way line of said Dallas Power and Light Company
tract South 10 degrees 30 minutes 52 seconds West a distance of 726.72 feet to
an "X" cut in concrete found for the Southeast corner of said Lot 3 and being
the Northeast corner of Lt 2, Block E/5191 of said Caruth Byrd Addition #2;
THENCE departing the Westerly Right-of-Way line of Dallas Power and Light
Company tract North 79 degrees 52 minutes 00 seconds West a distance of 102.13
feet to a 5/8 inch iron rod set for the Southwest corner of said Lot 3 and the
Northwest corner of said Lot 2 and being located in the Easterly Right-of-Way
line of Greenville Avenue (a 100 feet wide right-of-way) in a curve to the left
having a radius of 2,040.59 feet, a chord bearing of North 00 degrees 54 minutes
42 seconds West and a chord length of 232.91 feet;
THENCE along the Easterly Right-of-Way line of said Greenville Avenue as
follows:
Continuing along said curve to the left through a central angle of 06 degrees 32
minutes 36 seconds for an arc length of 233.04 feet to a 5/8 inch rod set for
the point of tangency;
North 04 degrees 11 minutes 00 seconds West a distance of 99.72 feet to a 5/8
inch iron rod set for the beginning of a curve to the right having radius of
830.85 feet, a chord bearing of North 02 degrees 19 minutes 08 seconds East and
chord length of 188.17 feet;
Continuing along said curve to the right through a central angle of 13 degrees
00 minutes 14 seconds for an are length of 188.57 feet to a 5/8 inch iron rod
set for the point of tangency;
North 08 degrees 49 minutes 15 seconds East a distance of 175.01 feet to a
concrete monument found for the most Southerly corner of a tract of land
described in a deed to the State of Texas recorded in Volume 91207, Page 505,
Deed Records, DALLAS County, Texas;
A - 1
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THENCE departing the Easterly Right-of-Way line of said Greenville Avenue and
following the Southerly line of said State of Texas tract of land North 81
degrees 14 minutes 03 seconds East a distance of 19069 feet to a 5/8 inch iron
rod set for corner located in the Southerly Right-of-Way line of said Northwest
Highway;
THENCE along the Southerly Right-of-Way line of said Northwest Highway North 89
degrees 55 minutes 20 seconds East a distance of 190.22 feet to the POINT OF
BEGINNING, CONTAINING within these metes and bounds 2.734 acres of 119, 101
square feet of land, more or less.
A - 2
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EXHIBIT B
[Graphic of Floor Plan]
A - 3
<PAGE>
EXHIBIT C
OPERATING COST COMPUTATION
1. Operating Cost Exclusions. The following are, without limitation,
examples of costs excluded from the computation of Operating Costs:
(a) leasing commissions, attorneys, fees, costs and disbursement and
other expenses incurred in connection with leasing, renovating or improving
space for tenants or prospective tenants of the Building;
(b) costs incurred by Landlord in the discharge of its obligations
under the Work Letter,
(c) costs (including permit, license and inspection fees) incurred in
renovating or otherwise improving or decorating, painting or redecorating space
for tenants or vacant space;
(d) Landlord's costs of any services sold to tenants for which Landlord
is entitled to be reimbursed by such tenants as an additional charge or rental
over and above the Base Annual Rent and Operating Costs payable under the lease
with such tenant or other occupant;
(e) any depreciation and amortization on the Building except as
expressly permitted herein;
(f) costs incurred due to violation by Landlord of any of the terms and
conditions of this Lease or any other lease relating to the Building;
(g) interest on debt or amortization payments on any mortgages or deeds
of trust or any other debt for borrowed money;
(h) all items and services for which Tenant reimburses Landlord outside
of Operating Costs or pays third persons or which Landlord provides selectively
to one or more tenants or occupants of the Building (other than Tenant) without
reimbursement;
(i) advertising and promotional expenditures;
(j) repairs or other work occasioned by fire, windstorm or other work
paid for through insurance or condemnation proceeds;
(k) repairs resulting from any defect in the original design or con-
struction of the Building.
2. Operating Cost Examples. The following are, without limitation,
examples of costs included within the computation of Operating Costs:
(i) garbage and waste disposal;
C - 1
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(ii) janitorial service and window cleaning for the Building
and the Common Areas and Service Areas (including materials, supplies, Building
standard light bulbs and ballasts, equipment and tools therefor and rental and
depreciation costs related to any of the foregoing) or contracts with third
parties to provide same;
(iii) security;
(iv) insurance premiums (including, without limitation,
property, rental value, liability and any other types of insurance carried by
Landlord with respect to the Building and the Common Areas and Service Areas,
the costs of which may include an allocation of a portion of the premium of a
blanket insurance policy maintained by Landlord);
(v) business or excise taxes payable on account of Landlord's
ownership or operation of the Building (excluding any inheritance, estate
succession, transfer, gift, franchise, corporation, income or profits tax
imposed upon Landlord);
(vi) real estate taxes, assessments, excises, and any other
governmental levies and charges of every kind and nature whatsoever, general and
special, extraordinary and ordinary, foreseen and unforeseen, which may during
the Term be levied or assessed against, or wising in connection with the use,
occupancy, operation or possession of, the Building and the Common Areas and
Service Areas, or any part thereof, or substituted, in whole or in part, for a
real estate tax, assessment, excise or governmental charge or levy previously in
existence, by any authority having the direct or indirect power to tax,
including interest on installment payments and all costs and fees (including
attorneys' fees) incurred by Landlord in contesting or negotiating with taxing
authorities as to same; provided, however, Landlord will have the option to pay
any of the foregoing as rentals under a ground lease arrangement with the fee
simple titleholder to the land upon which the Building is, or is to be,
constructed;
(vii) water and sewer charges and any add-ons;
(viii) operation, maintenance, and repair (to include
replacement of components) of the Building, including but not limited to all
floor, wall and window coverings and personal property in the Common Areas,
Building systems such as heat, ventilation and air conditioning system,
elevators, escalators, and all other mechanical or electrical systems serving
the Building and the Common Areas and Service Areas and service agreements for
all such systems and equipment;
(ix) charges for any easement maintained for the benefit of
the Building or the license, permit and inspection fees; Common Areas and
Service Areas;
(xi) compliance with any fire safety or other governmental
rules, regulations, laws, statutes, ordinances or requirements imposed by any
governmental authority or insurance company with respect to the Building during
the Term hereof;
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(xii) wages, salaries, employee benefits and taxes (or an
allocation of the foregoing) for personnel working full or part time in
connection with the operation, maintenance and management of the Building and
the Common Areas and Service Areas;
(xii) accounting and legal services (but excluding legal
services in connection with negotiations and disputes with specific tenants
unless the matter involved affects all tenants of the Building);
(xiv) administrative and management fees for the Building and
Landlord's overhead expenses directly attributable to Building management;
(xv) indoor or outdoor landscaping;
(xvi) depreciation (or amortization) of Required Capital
Improvements and Cost Savings Improvements. "Required Capital Improvements" will
mean capital improvements or replacements made in or to the Building in order to
conform to any law, ordinance, rule, regulation or order of any governmental
authority having jurisdiction over the Building, including, without limitations,
The Americans with Disabilities Act or Texas Architectural Barriers Act. "Cost
Savings Improvements" will mean any capital improvements or replacements which
are intended to reduce, stabilize or limit increases in Operating Costs. [The
cost of Cost Savings Improvements will be amortized by spreading such costs
uniformly over a term equal to the lesser of (a) the period of years over which
the amount by which Operating Costs are reduced would be equal to the cost of
such installation or (b) ten (10) years. The cost of Required Capital
Improvements and depreciable (or amortizable) maintenance and repair items
(e.g., painting of Common Areas, replacement of carpet in elevator lobbies),
will be amortized by spreading such costs uniformly over a term equal to the
lesser of (a) the period employed by Landlord for federal income tax purposes or
(b) ten (10) years.]
(xvii) Interest (as defined in Section 3.8 of the Supplemental
Lease Provisions) upon the undepreciated (or unamortized) balance of the
original cost of items which the Landlord is entitled to depreciate (or
amortize) as an Operating Cost;
(xviii) expenses and fees (including attorneys' fees) incurred
contesting of the validity or applicability of any governmental enactments which
may affect Operating Costs; and
(xix) the costs incurred by Landlord for (i) any and all forms
of fuel or energy utilized in connection with the operation, maintenance, and
use of the Building, Common Areas and Service Areas, (ii) sales, use, excise and
other taxes assessed by governmental authorities on energy sources, and (iii)
other costs of providing energy to the Building, Common Areas and Service Areas.
3. Landlord will credit against Operating Costs any refunds received as
a result of tax contests, after deduction for Landlord's costs in connection
with same.
4. The foregoing provisions of this Exhibit C will not be deemed to
require Landlord to furnish or cause to be furnished any service or facility not
otherwise required to be furnished by
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Landlord pursuant to the provisions of this Lease, although Landlord, in
Landlord's absolute discretion, may choose to do so from time to time.
C - 4
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EXHIBIT D
RULES & REGULATIONS
1. Except as specifically provided for in this Lease, no sign, placard,
picture, advertisement, name or notice will be inscribed, displayed or
printed or affixed on or to any part of the outside or inside of the
Building or the Premises without the written consent of Landlord first
having been obtained.
2. Any directory of the Building provided by Landlord will be exclusively for
the display of the name and location of tenants in the Building, and
Landlord reserves the right to exclude any other names therefrom and may
limit the number of listings per tenant. Tenant will pay Landlord's
standard charge for Tenants listing thereon and for any changes by Tenant.
3. Tenant will not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly
from outside the Premises. No awnings or other projections will be attached
to the outside walls and roof of the Building without prior written consent
of Landlord. No curtains, blinds, shades or screens will be attached to or
hung in or used in connection with any window or door of the Premises
without the prior consent of Landlord.
4. "Normal Business Hours" for purposes of Landlord's obligation to provide
air conditioning (both heating and cooling) will mean 7:00 a.m. to 6:00
p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturday except
for the following holidays: New Year's Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas.
5. The Premises will not be used for the manufacturing or storage of
merchandise except as such storage may be incidental to the use of the
Premises for the purposes permitted in this Lease. The Premises will not be
used for lodging or sleeping, or for any illegal purposes.
6. The sidewalks, halls, passages, exits, entrances, elevators and stairways
will not be obstructed by any of the tenants or be used by them for any
purpose other than for ingress to and egress from their respective leased
premises. The halls, passages, exits, entrances, elevators, stairways,
terraces and roof are not for the use of the general public, and Landlord
will in all cases retain the right to control and prevent access thereto by
all persons whose presence, in the judgment of Landlord, will be
prejudicial to the safety, character, reputation and interest of the
Building and its tenants, provided that nothing herein contained will be
construed to prevent such access to persons with whom Tenant normally deals
in the ordinary course of business, unless such persons are engaged in
illegal activities. No tenant and no employee or invitee of any tenant will
go upon the roof of the Building.
D - 1
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7. Except as expressly permitted in writing by Landlord, no additional locks
or bolts of any kind will be placed upon any of the doors or windows by
Tenant~ nor will any changes be made to existing locks or the mechanisms
thereof. Landlord will furnish two (2) keys for each lock it installs on
the Premises without charge to Tenant Landlord will make a reasonable
charge for any additional keys requested by Tenant and Tenant will not
duplicate or obtain keys from any other source. Tenant will upon the
termination of the Term of this Lease return to Landlord all keys so
issued. The Tenant will bear the cost for the replacing or changing of any
lock or locks due to any keys issued to Tenant being lost.
8. The toilets and wash basins and other plumbing fixtures will not be used
for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or foreign substances will be thrown therein.
9. No furniture, freight or equipment of any kind will be brought into the
Building without the consent of Landlord, and all moving of the same into
or out of the Building will be done at such time and in such manner as
Landlord will designate. No furniture, packages, supplies, equipment or
merchandise will be received in the Building or carried up or down in the
elevators except between such hours and in such elevators that will be
designated by Landlord. There will not be used in any space or in the
public areas of the Building, either by Tenant or others, any hand trucks
except those equipped with rubber tires and side guards.
10. No tenant will make or permit to be used any unseemly or disturbing noises,
or disturb or interfere with occupants of this or neighboring buildings or
leased premises, whether by the use of any musical instrument, radio,
phonograph, unusual noise or in any other way. No Tenant will throw
anything out of doors or down the passage ways.
11. Tenant will not use or keep in the Premises or the Building any kerosine,
gasoline, or any inflammable, combustible or explosive fluid, chemical or
substance or use any method of heating or air conditioning other than those
supplied or approved by Landlord.
12. Tenant will see that the windows and doors of the Premises are closed and
surely locked before leaving the Building. No tenant will permit or suffer
any windows to be opened in the Premises while the air conditioning is in
operation except at the direction of Landlord. Tenant must observe strict
care and caution that all water faucets and other apparatus are entirely
shut off before Tenant and Tenant's employees leave the Building, and that
all electricity, gas or air conditioning will likewise be carefully shut
off so as to prevent waste or damage; for any default or carelessness,
Tenant will make good all injuries sustained by all other tenants or
occupants or Landlord of the Building.
13. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who will in any manner do any act in
violation of any of the rules or regulations of the Building.
14. The requirements of Tenant will be attended to only upon application at the
office of Building. Employees of the Landlord will not perform any work or
do anything outside of
D - 2
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their regular duties unless under special instructions from Landlord, and
no employees will admit any person (Tenant or otherwise) to any office
without specific instructions from Landlord.
15. No tenant will disturb, solicit, or canvass any occupant of the Building,
nor will Tenant permit or cause others to do so, and Tenant will co-operate
to prevent same by others.
16. No vending machine or machines of any description will be installed,
maintained or operated upon the Premises without the written consent of
Landlord. Tenant will not permit in the Premises any cooking or the use of
apparatus for the preparation of any food or beverages (except where the
Landlord has approved the installation of cooking facilities as part of the
Tenants leasehold improvements), nor the use of any electrical apparatus
likely to cause an overload of the electrical circuits.
17. All persons entering and leaving the Building at any time other than during
normal business hours will register in the books kept by Landlord at or
near the night entrance or entrances, and Landlord will have the right to
prevent any persons entering or leaving the Building unless provided with a
key to the premises to which such person seeks entrance, and a pass in a
form to be approved by Landlord and provided at Tenant's expense. Any
persons found in the Building at such times without such keys or passes
will be subject to the surveillance of the employees and agents of
Landlord. Landlord will be under no responsibility for failure to enforce
this rule.
18. Tenant will not use any janitor closets or telephone or electrical closets
for anything other than their originally intended purposes. In the event
Tenant will purchase privately owned communications equipment for which
telephone closets were not installed in connection with initial occupancy
of Tenant, such equipment will not be installed in existing telephone
closets.
19. Tenants right to have heavy furnishings, equipment and files in the
Premises will be limited to items weighing less than the load-bearing
limits of floors within the Premises as established by Landlord. Heavy
items must be placed in locations approved in advance by Landlord. Upon
written demand from Landlord, Tenant will promptly remove from the Premises
any items which, in the judgment of Landlord, constitute a structural
overload on floors within the Premises. If Landlord approves the presence
of a heavy item for which reinforcement of the floor or other precautionary
measures are necessary, Tenant will bear the entire cost of such
reinforcement or other precautionary measures. If the services of a
structural engineer are, in the judgment of Landlord, necessary to
determine the location for and/or precautionary measures to be taken in
connection with any heavy load, Landlord will engage such engineer, but the
fees and expenses of such engineer will be paid by Tenant upon demand.
20. Tenant will not, without the prior written consent of Landlord, use the
name or any photograph, drawing or other likeness of the Building for any
purpose other than as the address of the business to be conducted by Tenant
in the Premises, nor will Tenant do or permit anything to be done in
connection with Tenant's business or advertising which, in
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the reasonable judgment of Landlord, might mislead the public as to any
apparent connection or relationship between Landlord, the Building and
Tenant.
21. TENANT, ITS INVITEES, AND EMPLOYEES SHALL BE ALLOWED TO SMOKE ONLY IN THOSE
DESIGNATED SMOKING AREAS OUTSIDE THE BUILDING.
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EXHIBIT E
CERTIFICATE OF ACCEPTANCES OF PREMISES
Re: Office Building Lease for space in 6500 Greenville Place executed on
the 3rd day of February, 1998, between Greenville Avenue Properties. Ltd. as
"Landlord", and Preferred Voice, Inc., as "Tenant".
Landlord and Tenant hereby agree that:
1. Except for those items shown on the attached "punch list" which Landlord
will use Landlord's best efforts to remedy within N/A ____ days from the
date of this Certificate, Landlord has fully completed the construction
work required under the terms of the Lease and the Work Letter.
2. The Premises are tenantable, the Landlord has no further obligation for
construction (except as specified above), and Tenant acknowledges that both
the Building and the Premises are satisfactory in all respects.
3. The Commencement Date of the Lease is the 5th day of February, 1998.
4. The Expiration Date of the Lease is be the 28th day of February, 1999.
All other terms and conditions of the Lease are hereby ratified and acknowledged
to be unchanged.
EXECUTED this 3rd day February, 1998.
TENANT: LANDLORD:
PREFERRED VOICE, INC. GREENVILLE AVENUE PROPERTIES, LTD.
By: LHTE Properties, Inc., General Partner
By: /s/ Mary G. Merritt By: /s/ Graham McFarlane
-------------------------- --------------------------------------
Name: Mary G. Merritt Name: Graham McFarlane
------------------------- ------------------------------------
Title: VP Finance/Secretary Title: Vice President
----------------------- -----------------------------------
ATTEST:
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
[GRAPHICS]
E - 1
<PAGE>
RIDER 1
WORK LETTER
TO
OFFICE LEASE AGREEMENT
BETWEEN
GREENVILLE AVENUE PROPERTIES, LTD.
AND
PREFERRED VOICE, INC.
This Rider sets forth the respective obligations of, and the procedures
to be followed by, Landlord and Tenant in the design and construction of those
improvements that will prepare the initial Premises described in Exhibit B of
the Lease for Tenant's use and occupancy.
1. The Work.
--------
The "Work" will consist of SHAMPOOING THE EXISTING CARPETS AND TOUCH UP
PAINTING TWO (2) WALLS WHERE PREVIOUS OCCUPANT REMOVED LOGO FROM THE WALL.
Rider I - 1
EXHIBIT 10.3
COLLOCATION LICENSE AGREEMENT
This Collocation License Agreement (the "Agreement") is made as of the
3rd day of February, 1998 (the "Effective Date"), by and between NEXTLINK Texas
Inc. with an office at 1300 Mockingbird Lane, Suite 200, Dallas, TX 75247
("NEXTLINK"), and (Preferred Voice Inc.) a (Delaware) corporation, with an
office at (6500 Greenville Avenue, Ste 570, Dallas, Texas 75206) ("Licensee").
In consideration of the mutual covenants and promises described herein, NEXTLINK
and Licensee agree as follows:
WHEREAS, NEXTLINK currently owns or leases certain premises (the
"Premises" described in the Collocation Schedule(s) and amendments thereto, if
any, identified herewith and made a part hereof; and
WHEREAS, Licensee desires access to a portion of the Premises to locate
therein certain telecommunications interconnection equipment (as defined below)
and cabling (the "Equipment") for the purpose of interconnecting the Equipment
with NEXTLINK's telecommunications network (the "NEXTLINK Network"); and
WHEREAS, NEXTLINK is willing to grant Licensee a license to occupy a
portion of the Premises upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Licensee and NEXTLINK (collectively the "Parties") hereby agree as
follows:
1. LICENSE TO OCCUPY AND PERMISSIBLE USE.
A. Subject to the terms provided below, NEXTLINK hereby grants to
Licensee a license (the "License") to Install, operate, maintain, and
repair a telecommunications system, associated equipment, lines and
cables connected thereto (collectively, the "Equipment') in a portion
of the Premises depicted in the Collocation Schedule attached hereto
(the "Equipment Space"). As defined herein, the term "Equipment" shall
mean only transmission equipment, such as optical terminating
equipment and multiplexes, and equipment being collocated by Licensee
to provide ATM, frame relay and other non-voice services to or for the
benefit of its customers. The term "Equipment" shall specifically not
include switching equipment or equipment used to provide voice
services. Licensee shall co-locate the Equipment with NEXTLINK's
telecommunications facilities and associated equipment (the
"Facilities") at the Premises.
B. Each Collocation Schedule shall have attached thereto the following
Exhibits: The Floor Plan for the Equipment Space, identified as
Exhibit A, General Terms and Conditions, identified as Exhibit B and
Dispatch Labor Charges, identified as Exhibit C. Each Collocation
Schedule shall only be effective upon its being dated and subscribed
to by the parties for identification purposes and together with the
terms hereof shall constitute the entire agreement between the parties
with respect to the Equipment Space (collectively the "Agreement");
1
<PAGE>
C. Licensee may use the Equipment Space only for purposes of
installing, maintaining and operating Equipment necessary to
support interconnection to the NEXTLINK Network.
D. If Licensee should interconnect the Equipment with equipment
or services of any other entity other than NEXTLINK without
obtaining the written consent of NEXTLINK, Licensee shall be
in breach of this Agreement and NEXTLINK may pursue any legal
or equitable remedy, including but not limited to the
immediate termination of the License pursuant to Paragraph 16
of Exhibit B hereto.
3. LICENSE FEE. Licensee shall pay NEXTLINK, at the office of the NEXTLINK or at
such other place as NEXTLINK may designate from time to time, a license fee(s)
set forth in the Collocation Schedule for Licensee's use of the Equipment Space
under the terms and conditions set forth herein (the "License Fee"). Licensee
shall pay the License Fee in equal monthly installments in advance on the first
day of each month. Licensee shall pay NEXTLINK interest at the rate of 11/2% per
month on all sums not paid when due hereunder or the highest monthly interest
rate legally permissible, whichever is less.
4. TERM. The term of the License to occupy each Equipment Space shall begin on
the Requested Service Date," set forth in paragraph 3 of each Individual
Collocation Schedule or, If applicable, on the date that NEXTLINK completes the
build-out of the Equipment Space, whichever is later. The minimum term of the
Licensee's license to occupy the Equipment Space shall be the period set forth
in each Collocation Schedule (the "Term"). In the event that NEXTLINK is delayed
in tendering possession of the Equipment Space to the Licensee for any reason
other than the acts or omissions of Licensee, Licensee shall not be obligated to
pay the Occupancy Fee or Service Fee set forth in the Collocation Schedule until
such time as NEXTLINK tenders possession of the Equipment Space to Licensee.
Except as provided herein, NEXTLINK shall not be liable to Licensee in any way
as a result of such delay or failure to tender possession.
5. RENEWAL. Licensee shall have an option to renew the Term for an additional 7
year period, subject to agreement by the parties on the License Fee for the
renewal period, which License Fee will be the higher of the License Fee at the
and of the initial 2 years or the then-current market rate for the License.
Licensee's option to renew the License for each Equipment Space shall be
contingent on the election by NEXTLINK to continue to own or lease the Promises
in which the Equipment Space is located for the duration of the Renewal
Period(s), such election to be exercised at the sole discretion of NEXTLINK
5. ACKNOWLEDGMENT OF UNDERSTANDING. The Parties acknowledge that they have read
the Agreement, understand it and agree to be bound by Its terms and conditions.
Further, the Parties agree that the Agreement is the complete and exclusive
statement of the agreement between the parties relating to the subject matter of
the Agreement, and supersedes all proposals, letters of intent or prior
agreements, oral or written, and all other communications and representations
between the parties relating to such subject matter.
2
<PAGE>
NEXTLINK Texas, Inc. Preferred Voice, Inc.
By: /s/ D. Blake Lee By: /s/ Mary Merritt
-------------------------------- ----------------------
Printed Name: D. Blake Lee Printed Name: Mary Merritt
--------------------- ---------------
Title: Account Representative Title: VP Finance
-------------------------- --------------------
Date: 2/5/98 Date:
-------------------------- --------------------
3
<PAGE>
COLLOCATION SCHEDULE NO. 1
THIS COLLOCATION SCHEDULE IS MADE ON THIS 3RD DAY OF FEBRUARY, 1999 AND SUBJECT
TO ALL DEFINITIONS, TERMS AND CONDITIONS OF THAT CERTAIN COLLOCATION LICENSE
AGREEMENT, DATED ________, 1999 (THE "AGREEMENT") BY AND BETWEEN NEXTLINK Texas,
Inc., with an office at 1300 Mockingbird Lane, Suite 200, Dallas, Texas 75247
("NEXTLINK"), and Preferred Voice, Inc., a Delaware corporation, with an office
at 6500 Greenville, Suite 570, Dallas, Texas 75206.
1) ADDRESS OF TERMINAL FACILITY 2. SPACE ALLOCATION
-------------------------------- ----------------------------
-------------------------------- ----------------------------
-------------------------------- ----------------------------
3. MINIMUM TERM: 2 YEARS 4. RENEWAL PERIOD
Requested service date: _______ (To be completed at time of
Renewal)
5. MONTHLY RECURRING SERVICE FEES
OCCUPANCY FEES $1,000.00 $50.00/mo. per foot -
$1,000.00/mo. per cabinet
CROSS-CONNECT FEES1 $___________ $100.00/DS-1 x _____
$500.00 DS-3x
POWER CHARGE $___________
AC (120 VOLT)2 $___________ $60.00/mo. per 120 Volt/20
amp "unprotected"
DC $ 200.00 $10.00/mo. per - 48 volt DC
amp "protected"
6. NON-RECURRING FEES
Build-Out Fees $ 2,000.00 $25.00 x ____ per foot or
$2,000 per cabinet
Cross-Connect Install $_________ $100.00 x___ (each DS-1 and
DS-3 installed)
Escort Services $_________ SEE EXHIBIT C
Misc. Labor Charges $_________ SEE EXHIBIT C
7. PRIVATE LINE ACCESS FEES ORDERS WILL BE PLACED ON
SEPARATE AGREEMENT
- - ------------------
(1)A "cross-connect" is an electrical connection made between two DS-1
circuits on a DSX-1 cross-connect panel or two DS-3 circuits on a DSC-3
cross-connect panel which interconnects the Equipment with other
telecommunications services. NEXTLINK shall provide appropriate cable facilities
(i.e., patch cords and cables required to connect DSX-N jacks) between the
Equipment and NEXTLINK common cross-connect panel located at the period beyond
the expiration of the Term of the Agreement.
(2)AC Power charges will be applied based on Customer connected Equipment
load based on an initial survey and adjusted annually based on surveys performed
on or about the anniversary of the original survey.
<PAGE>
DS-1 Service $ One Channel Term, Plus
----------------Fixed, Plus Mileage
DS-3 Service $ One Channel Term, Plus
----------------Fixed, Plus Mileage
Muxing Fees $ Marketing/Tariffed Rate
----------------
Private Line NRC $ One Channel Termination
----------------Charge
EXHIBIT A TO THIS SCHEDULE DEPICTS THE WORK LICENSEE SHALL PERFORM TO PREPARE
THE EQUIPMENT SPACE FOR LICENSEE OCCUPANCY AND USE.
LICENSEE: NEXTLINK:
By: By:
---------------------------- ------------------------------
Printed Name: Printed Name:
----------------------- -------------------------
Date: Date:
---------------------------- ------------------------------
[CAPITALIZED TERMS USED HEREIN BUT NOT DEFINED SHALL HAVE THE MEANINGS AS SET
FORTH IN THE AGREEMENT.]
EXHIBIT A to Collocation Schedule No.
<PAGE>
EXHIBIT A
TO COLLOCATION SCHEDULE NO. 1
THE FLOOR PLAN
<PAGE>
EXHIBIT B
TO COLLOCATION SCHEDULE NO. 1
STANDARD TERMS AND CONDITIONS
1. RESERVATION OF RIGHTS. NEXTLINK reserves the right to grant, renew or extend
similar licenses to others for locating equipment and facilities in the
Premises. Further, nothing contained herein shall be construed as granting to
Licensee any property or ownership rights in the Premises.
2. INTERCONNECTION. NEXTLINK shall allow Licensee to connect the Equipment to
the Facilities in accordance with industry accepted practices and procedures.
3. USE. Licensee shall use the Equipment Space and the Equipment installed
within the Premises solely to provide ATM, frame relay and other non-voice (THIS
PROVISION MAY OR MAY NOT PERTAIN TO YOUR CUSTOMER)telecommunications services to
or for the benefit of its customers. Licensee shall not prohibit or interfere
with the use of the Promises or any portion thereof, by NEXTLINK or other
tenants, licensees or occupants of the Premises. Licensee shall not sublicense,
lease, rent, share, resell or allow the use of the Equipment or Equipment Space,
In whole or In part, by any third party, including but not limited to other
providers of computer or telecommunications services, without NEXTLINK's prior
written consent.
4. ACCESS. Subject to the terms and limitations described herein, including
NEXTLINK's reasonable security measures. NEXTLINK shall provide Licensee
reasonable access to the Premises, including the Equipment Space, 24 hours a
day, 7 days a week, every day of each year, so that Licensee may perform
installation, operation, maintenance, replacement and repair functions. Ali such
access and other activities shall be subject to Licensee's providing NEXTLINK
with reasonable advance notice, and shall be at Licensee's expense. During such
access, Licensee must be accompanied at all times by NEXTLINK's designated
representative. Licensee shall provide full and free access to NEXTLINK to the
Equipment at all times.
5. UTILITIES AND INTERRUPTIONS.
A. During the Term, NEXTLINK shall furnish to Licensee electrical power
necessary to meet the reasonable requirements of Licensee, at the Promises. If
the power provided by NEXTLINK causes interference with the proper operation of
Licensee's Equipment, Licensee will be responsible for providing at Licensee's
sole expense any filtering or regulation devices within the Equipment Space, to
correct the interference.
B. Licensee shall pay all costs associated with installation of a
separate electrical panel and meter for the Equipment in the Equipment Space.
Licensee shall pay, and otherwise be responsible for and indemnify NEXTLINK
against all electrical, HVAC and other utility costs attributable to such
Equipment and all of Licensee's activities in the Promises. Licensee shall pay
for electrical, HVAC and other utility costs directly to the applicable
utilities and vendors, or Licenses's pro rata share of such costs to NEXTLINK if
NEXTLINK is billed therefor by the utilities.
<PAGE>
C. NEXTLINK shall use all reasonable efforts to notify Licensee in
advance of any planned utility or other interruptions or outages which may
interfere with Licensee's use. Further, the parties shall use their best efforts
to avoid any unnecessary interruptions and, where required, to work with each
other to plan and coordinate necessary service and utility interruptions so as
to minimize disruptions to Licensee's Equipment and NEXTLINK's Facilities.
However, NEXTLINK shall not be liable, including without limitation to Licensee
or any of its customers, for any damages, liabilities or expenses resulting from
or caused by such interruptions or outages.
6. INSTALLATION.
A. Prior to the commencement of any work at or around the Premises,
Licensee shall, at its cost and expense, prepare and deliver to NEXTLINK working
drawings, plans and specifications (the "Plans"), detailing the technical
characteristics, location and size of the Equipment and/or the Equipment Space,
specifically describing the proposed installation and related work, and
detailing the schedule for all installation activities related hereto. No work
shall commence until NEXTLINK, in its sole discretion, has approved the Plans in
writing. The Equipment shall be designed and constructed so as to prevent
electromagnetic and radio frequency signal leakage.
B. Licensee shall:
I. perform Such installation and related work in a safe
manner consistent with the Equipment manufacturers' specifications and other
requirements provided by NEXTLINK:
II. perform such construction and work so as to minimize
interference with the operation of the Premises and the occupants' activities
and businesses;
III. perform heavy construction or installation activities,
which would reasonably be considered as disruptive or noisy, before 8:00 a.m.
and after 5:00 p.m
IV. obtain necessary federal, state and municipal permits,
licenses and approvals, prior to the commencement of any installation and
related work;
V. conduct its installation activities with manufacturer-
certified technicians;
VI. be responsible for safety conditions in the areas of
work performance at all
times;
VII. keep the installation areas safe and orderly at all
times; and
VIII. upon completion of installation, leave the Premises
clean and free from all of its materials, tools, and equipment not required
after Installation and from all rubbish and debris which result from
installation.
C. NEXTLINK shall have the right to order Licensee to stop its
installation activities, without liability to NEXTLINK, it such activities are
interfering with the operation of the Promises or the occupants' activities and
quiet enjoyment thereof..
<PAGE>
7. LICENSEE'S COVENANTS AND WARRANTIES. LICENSEE HEREBY COVENANTS AND WARRANTS:
A. To keep the Equipment Space and the Equipment in good order, repair and
condition throughout the Term and to promptly and completely repair all damage
to the Premises caused by Licensee;
B. To comply with federal, state and municipal laws, orders, rules and
regulations applicable to its activities and the Equipment; and
C. Not to disrupt, adversely affect or interfere with other providers of
services in the Promises or with any occupant's use and enjoyment of its leased
premises or the common areas of the Premises.
8. EQUIPMENT OWNERSHIP AND MAINTENANCE.
A. The Equipment shall belong to Licensee and shall be located in the
Premises at the sole risk of Licensee, and NEXTLINK shall not be liable for
damage thereto or theft, misappropriation or loss thereof, except in the event
of NEXTLINK's gross negligence or willful misconduct. All Equipment supplied by
Licensee shall be labeled by the Licensee as such.
B. Licensee shall at its sole expense maintain and repair its Equipment,
including without limitation to avoid hazard or damage to the Facilities or
injury to NEXTLINK employees, agents and suppliers or to the public. In case
where additional protedon facilities are required, the same shall be provided by
Licensee, at Licensee's sole expense. NEXTLINK shall have no responsibility for
the maintenance and repair of the Equipment, except that NEXTLINK shall agree to
maintain the Equipment in accordance with the Equipment manufacturers'
specifications, subject to Licensee's payment to NEXTLINK of fees which would be
agreed upon by the parties in advance of NEXTLINK providing such Maintenance
services and subject to Licensee's providing training or arranging with the
Equipment manufacturers to provide NEXTLINK with training on maintaining the
Equipment. Licensee shall pay the costs for any such training received by
NEXTLINK.
C. At the expiration or termination of this Agreement, Licensee will remove
the Facilities and Licensee's personal property from the Premises In a neat and
orderly manner, and repair all damage caused by such removal, at Licensee's sole
cost and expense. Any property not so removed within 60 days after the
expiration or termination of this Agreement shall be deemed the property of
NEXTLINK and Licensee shall be liable for all costs incurred by NEXTLINK from
removing the Equipment which Licensee failed or refused to remove and from
repairing the Premises as a result thereof.
9. CONDITION OF EQUIPMENT SPACE AND PROMISES. NEXTLINK makes no warranty or
representation regarding the Premises, including without limitation that the
Equipment Space, the Facilities or the Promises are suitable for the License or
its Intended use thereof. Licensee has inspected the Equipment Space and the
Promises. accepts the same was is" and agrees that NEXTLINK is under no
obligation to perform any work or provide any materials to prepare the Equipment
Space or the Premises for Licensee.
<PAGE>
10. LIMITATIONS ON USE AND RELOCATION.
A. NEXTLINK may limit the use of the Equipment Space or any portion
thereof by Licensee hereunder when necessary because of conditions beyond its
control as set forth in 17.a and 17.n. In addition, NEXTLINK reserves the right
at all time during the Term to suspend any and all services and/or Facilities to
be provided hereunder, including, without limitation to furnishing of electrical
power, and remove, change or otherwise terminate the operation of
Licensee-supplied Equipment installed in the Equipment Space without notice, it
NEXTLINK deems, in its sole discretion, that such actions necessary to protect
the public or NEXTLINK personnel, agents, and NEXTLINK Facilities or services
from damages or injury of any kind. NEXTLINK may also effect such action after
notice to Licensee in accordance with Section 16.a hereof. Where possible,
NEXTLINK will notify Licensee promptly of such action and work in cooperation
with Licensee to effect such remedies so as to permit the Equipment to be
returned to operation in an acceptable manner.
B. NEXTLINK shall have the right to relocate or require the relocation
of the Equipment if such relocation was necessary or desirable, in NEXTLINK's
reasonable judgment, including without limitation due to damage to the Premises.
In such event, NEXTLINK shall provide Licensee with reasonable advance notice of
the need to relocate such Equipment, and the parties shall meet to agree upon
the activities required for such relocation. Licensee shall be responsible for
all costs resulting from such relocation of the Equipment. It Licensee and
NEXTLINK are unable to agree upon the terms of such relocation, Licensee can
terminate the Agreement, subject to Licensee's performing its obligations
resulting from termination.
11. INDEMNIFICATION. Licensee shall defend, indemnify. and hold NEXTLINK its
principals, officers, directors, agents, and employees harmless from and against
any loss, cost, damage, liability, claims and expenses of any kind arising
directly or indirectly from the installation, operation, maintenance and repair
of the Equipment or from Licensee's or any of Licensee's subcontractors' or
agents' acts or omissions including, but not limited to, reasonable attorneys'
fees and court costs, except to the extent such loss, damage, cost or expense is
due to the gross negligence or willful misconduct of NEXTLINK or its employees
or agents. The provisions of this Section 11 shall survive termination of this
Agreement.
12. INSURANCE.
A. Licensee shall maintain such insurance, including through a blanket
policy, as will fully protect both Licensee and NEXTLINK from any and all claims
by employees of Licensee under the Workers' Compensation Act or employees
liability laws, including any employers' disability insurance laws, and from any
and all other claims of whatever kind or nature for any and all damage to
property or for personal injury, including death to anyone whomsoever, that may
arise from Licensee's acts or omissions, including without limitation
installation, operations, maintenance or repair services, in or around the
Premises by Licensee or by anyone directly or indirectly engaged or employed by
Licensee. Licensee shall provide NEXTLINK with certificates evidencing the
required coverage before NEXTLINK begins any installation work or services in or
around the Premises and indicating that NEXTLINK shall be notified not less than
sixty (60) days prior to any cancellation or material
<PAGE>
change in any coverage. Such insurance shall also name NEXTLINK as an additional
insured party under the coverage.
B. Licensee's General Liability Insurance shall be a combined single
limit of $2,000,000.
C. Insurance described in subsections (a) and (b) of this Section 12
shall be maintained by Licensee throughout the term of this Agreement and any
period during which any claims arising from this Agreement are or may be
outstanding. Upon Licensee's default in obtaining or delivering any such policy
or certificate of insurance or Licensee's failure to pay the premiums therefor,
NEXTLINK may (but shall not be obligated to) secure or pay the premium for any
such policy and charge Licensee the cost of such premium, or NEXTLINK may
terminate this Agreement without liability to Licensee.
13. LIENS. Licensee shall be responsible for the satisfaction or payment of any
liens for any provider of work, labor, material or services claiming by, through
or under Licensee. Licensee shall also indemnify, hold harmless and defend
NEXTLINK against any such liens, including reasonable attorneys' fees. Such
liens shall be discharged by NEXTLINK within 30 days after notice of filing
thereof by bonding, payment or otherwise, provided that Licensee may contest any
such liens in good faith and by appropriate proceedings.
14. SUBCONTRACTORS. Licensee may subcontract any portion of work within the
Promises contemplated by this Agreement to any entity competent to perform such
work. Licensee must obtain NEXTLINK's written approval before utilizing any
subcontractor to perform any activities under this Agreement. In no event shall
such subcontract relieve Licensee of any of its obligations or liabilities under
this Agreement for its subcontractors.
15. CONFIDENTIALITY. The Parties agrees that all documentation and information
provided by the other shall be used solely in connection with the installation,
operation, maintenance, and repair of the Equipment, that all such documentation
and information shall be deemed proprietary to the disclosing party and shall be
received and maintained in confidence. The receiving party agrees to take such
precautions as may be necessary to protect the information from disclosure to
others or from use by itself or others for any purpose inconsistent with this
Agreement without the prior consent of the disclosing party.
16. TERMINATION.
A. Termination for Breach. Either party may terminate the Agreement if
the other party materially breaches any warranty. representation, agreement, or
obligation contained or referred to in the Agreement, provided the non-breaching
party has given the breaching party notice of such breach and there has been a
failure to cure such breach within a 30 calendar day cure period, unless another
cure period is noted below, after receipt of such notice.
B. Events of Material Breach. Events of material breach of a warranty,
agreement, representation, or obligation include, but are not limited to:
<PAGE>
I. Interference caused to Facilities or other equipment or
facilities at the Premises by the installation, operation, maintenance,
replacement or repair of the Equipment, which breach must be cured within 24
hours;
II. Failure by Licensee to pay the License Fee and interest as
and when due, which breach must be cured within a ten calendar day period;
III. Breach by either party of any material nonmonetary
provision of the Agreement;
IV. If Licensee abandons or deserts the Equipment during the
Term hereof or Licensee Effective Date.
V. Licensee's failure to complete all installation activities
within three months of the Effective Date.
17. GENERAL.
A. DAMAGES LIMITATION AND DISCLAIMER. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR TO THE OTHER PARTY'S CUSTOMERS FOR ANY INCIDENTAL,
INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING WITHOUT
LIMITATION ANY LOST PROFITS, LOST GOODWILL, OR LOST BUSINESS, ARISING UNDER OR
AS A RESULT OF THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. FURTHERMORE, IN NO EVENT WILL NEXTLINK BE LIABLE TO
LICENSEE FOR ANY DAMAGES, DIRECT OR INDIRECT, TO LICENSEE-SUPPLIED EQUIPMENT
ARISING OUT OF LICENSEE'S USE OF THE PREMISES OR THE SERVICES PROVIDED
HEREUNDER, UNLESS SUCH DAMAGES ARE THE DIRECT RESULT OF NEXTLINK IS GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
B. ASSIGNMENT. Licensee shall not assign, transfer or otherwise
encumber any Interest It has hereunder or may have in the Equipment Space, this
Agreement or delegate its duties hereunder without the prior, written consent of
NEXTLINK, which consent will not be unreasonably withhold or unduly delayed;
except that upon notice to the NEXTLINK, Licensee may, without obtaining
NEXTLINK's prior consent, make such assignment to: (a) an entity which Licensee
controls, is controlled by or is under common control with; or (b) an entity
which succeeds to all or substantially all of Licensee's assets whether by
merger, sale or otherwise, provided that the assignee assumes in full the
obligations of Licensee under this Agreement. This Agreement shall inure to the
benefit of and be binding on all successors and assigns. Any assignment in
contravention of these provisions shall be null and void.
C. NOTICE. Every notice required or permitted hereunder shall be in
writing and shall be delivered to the party's address set forth in the preamble
of the Agreement. Either Party May change its address for the purpose of notice
hereunder by providing the other party with notice of the now address.
<PAGE>
D. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Washington. Venue for any action between the
parties shall be in Seattle. Washington. and Licensee agrees to accept exclusive
personal jurisdiction of such courts.
E. SEVERABILITY. If any term or condition of the Agreement shall to any
extent be held invalid or unenforceable by a court of competent jurisdiction,
the remainder of the Agreement shall not be affected thereby, and each term and
condition shall be valid and enforceable to the fullest extent permitted by law.
F. NONWAIVER. Any failure or delay by either party to exercise or
partially exercise any right, power or privilege under the Agreement shall not
be deemed a waiver of any such right, power, or privilege under the Agreement.
G. MODIFICATIONS. No modifications or amendments to the Agreement and
no waiver of any provisions hereof shall be valid unless in writing and signed
by duly authorized representatives of the parties.
H. BINDING EFFECT. The Agreement binds the named parties and each of
their employees, agents, independent contractors, representatives and persons
associated with it.
I. AUTHORIZATION. Both parties have full power and authority to enter
into and perform this Agreement. The representatives signing this Agreement on
behalf of the parties have been properly authorized and empowered to enter into
this Agreement.
J. ACKNOWLEDGMENT OF UNDERSTANDING. The parties acknowledge that they
have read the Agreement, understand it and agree to be bound by its terms and
conditions. Further, the parties agree that the Agreement is the complete and
exclusive statement of the agreement between the parties relating to the subject
matter of the Agreement, and supersedes all proposals, letters of intent or
prior agreements, oral or written, and all other communications and
representations between the parties relating to the subject matter of the
Agreement.
K. NOTICE OF DELAYS. When either party has knowledge that any actual or
potential situation is delaying or threatens to delay the timely performance of
this Agreement, that party shall, within five working days, give notice thereof,
including all relevant information with respect thereto, to the other party.
L. ATTORNEYS' FEES AND COSTS. If any litigation is brought to enforce,
or arises out of, the Agreement or any term, clause, or provision hereof, the
prevailing party shall be awarded its reasonable attorneys' fees together with
expenses and costs incurred with such litigation, including necessary fees,
costs, and expenses for services rendered, as well as subsequent to judgment in
obtaining execution thereof.
M. INDEPENDENT CONTRACTOR RELATIONSHIP. Nothing contained herein shall
be construed to imply a joint venture, partnership, or employer and employee
relationship between the parties. Neither party shall have any right, power or
authority to create any obligation, express or implied, on behalf of the other
except as defined in this Agreement or as mutually agreed to under the terms
<PAGE>
of this Agreement. The employees or agents of one party shall not be deemed or
construed to be the employees or agents of the other party for any purpose
whatsoever.
N. FORCE MAJEURE. Neither party shall be liable or responsible for
delays or failures in performance resulting from events beyond the reasonable
control of such party. Such events shall include but not be limited to acts of
God, strikes, lockouts, riots, acts of war, epidemics, acts of government, fire,
power failures, nuclear accidents, earthquakes, unusually severe weather, or
other disasters, whether or not similar to the foregoing. Licenses shall not be
entitled to abate payment of the License Fee during the pendency of any delays
or failures in performance caused by or resulting from an event beyond the
reasonable control of a party.
O. AUTHORITY. Neither party shall have any authority to bind, obligate
or commit the other party by any representation or promise without the prior
written approval of the other party.
P. REMEDIES. Except as otherwise provided for herein, no remedy
conferred by any of the specific provisions of the Agreement is intended to be
exclusive of any other remedy. Each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder, now or hereafter
existing at law or in equity or by statute or otherwise. The election of any one
or more remedies by either party shall not constitute a waiver of the right to
pursue other available remedies.
Q. SURVIVAL. The terms, conditions and warranties contained in the
Agreement that by their sense and context are intended to survive the
performance hereof by the parties hereunder shall so survive the completion of
the performance, cancellation or termination of the Agreement.
<PAGE>
EXHIBIT C
to Collocation Schedule No. 1
DISPATCH LABOR CHARGES
The following charges shall be applied for Escort Services and any other labor
performed by NEXTLINK Texas-authorized personnel, employees, or contractors at
the request of the Customer.
1. Normal NEXTLINK Texas business hours. $100.00 for the first 1/2 hour
$50.00 for each additional 1/2
(Monday through Saturday 7:00 am until 7:00 pm, except NEXTLINK observed
holidays)
2. Off Hour NEXTLINK Texas business hours: $300.00 for the first 1/2 hour
$75.00 for each additional 1/2
(Monday through Saturday 7:00 pm until 7:00 am, except NEXTLINK observed
holidays)
3. Sunday and Holiday NEXTLINK Texas $300.00 for the first 1/2 hour
business hours: $75.00 for each additional 1/2
Note: Labor hours are billed in half hour increments. Sunday and Holiday hours
have a four hour minimum.
<PAGE>
NEXTLINK TEXAS [Graphic]
POLICY ON COLLOCATION:
THE MONTHLY RECURRING CHARGE FOR RACK COLLOCATION IS $1,000,000, PER MONTH, PER
CABINET. THIS ENTITLES THE CUSTOMER TO:
1) One 7"x23" relay rack or footprint of equivalent size. |_|YES |_| NO
2) Access to -48VDC power feeds. (One "A" and one "B" feed) |_|YES |_| NO
3) Amounts of additional -48DC power @ $10.00/amp |_|YES |_| NO
4) 24 Hour access to their equipment for maintenance. |_|YES |_| NO
5) Card access may be utilized. |_|YES |_| NO
6) Access to 110 VAC power for testing and equipment. |_|YES |_| NO
7) Transmission cabling to the space (non-terminated). |_|YES |_| NO
8) Relay rack grounding. |_|YES |_| NO
9) Environmental monitoring (HVAC, temperature and water) |_|YES |_| NO
10)Labor for Power feeds and relay rack monitoring. |_|YES |_| NO
Please note
IT IS ESSENTIAL FOR THE CUSTOMER TO HAVE -48VDC POWER REQUIREMENTS.
NEXTLINKpowers all equipment on a -48VDC plant with battery back up. In the
event of a local power failure, battery back up will engage. Customer will not
recognize loss of power.
If customer has AC requirements, NEXTLINK will have the customer purchase an
inverter to terminate to the NEXTLINK power plant. NEXTLINK requires the
customer to size inverter to allow forecasting of future growth. AC power is not
protected against disruption in service.
IF NECESSARY, A NON-RECURRING CHARGE BASED ON TIME AND MATERIALS WOULD BE
ASSESSED TO COVER:
1) The labor and hardware required to extend ladder racking.
2) -48VDC power in excess of 10 amps per relay rack being installed.
3) If the customer wishes to supply their own cabinet, the cabinet
will be subject to NEXTLINK approval along with any charges to
install the cabinet.
THE MONTHLY RECURRING CHARGE FOR FLOOR SPACE IS $50.00, PER MONTH, PER FOOT.
THIS ENTITLES THE CUSTOMER TO:
1) Caged Area 13 |_|YES |_| NO
2) Access to -48VOC power feeds. (one "A" and one "B" feed) |_|YES |_| NO
3) Amount -48VDC power required 0 $1 0.00/amp |_|______ AMPS
4) 24 Hour access to their equipment for maintenance. |_|YES |_| NO
5) Card access may be utilized. |_|YES |_| NO
6) 110 VolV20 amp AC Outlet placed inside Customer space |_|YES |_| NO
7) Additional unprotected" 110 Volt/20 amp 0 $60.00/each |_|__________
8) Transmission cabling to the space. (non-terminated) |_|YES |_| NO
<PAGE>
9) Relay rack grounding. |_|YES |_| NO
10) Environmental monitoring (HVAC, temperature and water) |_|YES |_| NO
11) Labor for Power feeds and relay rack monitoring. |_|YES |_| NO
Please note:
IT IS ESSENTIAL FOR THE CUSTOMER TO HAVE -48VDC POWER REQUIREMENTS.
NEXTLINK powers all equipment on a -48VDC plant with battery back up. In the
event of a local power failure, battery back up will engage. Customer will not
recognize loss of power.
If customer has AC requirements, NEXTLINK may have the customer purchase an
inverter to terminate to the NEXTLINK power plant. NEXTLINK requires the
customer to size inverter to allow forecasting of future growth.
IF NECESSARY, A NON-RECURRING CHARGE BASED ON TIME AND MATERIALS WOULD BE
ASSESSED TO COVER:
4) The labor and hardware required to extend ladder racking.
5) -48VDC power in excess of 10 amps per relay rack being installed.
6) If the customer wishes to supply their own cabinet, the cabinet will be
subject to NEXTLINK approval along with any charges to install the cabinet.
LOCAL CITY ISSUES FOR RESOLUTION
The customer's equipment is subject to the same environmental, grounding and
operational specifications as the equipment in the NEXTLINK network. Any
equipment that falls outside these parameters would be subject to denial in the
Collocation space. NEXTLINK Engineering would make this determination. All power
maintenance performed by NEXTLINK would be scheduled in such a manner as to
allow for the customer to "man" their equipment if necessary. The cost of
coverage will be at the sole expense of the customer.
____ (Licensee Initial)
<PAGE>
SUMMARY OF QUALITY STANDARDS FOR COLLOCATION CUSTOMERS
- - ------------------------------------------------------
EQUIPMENT MOUNTED IN RELAY RACK OR CABINET
A. Must be able to be mounted alone or with brackets supplied to fit into
relay racks or cabinets.
B. If equipment is not able to be mounted alone or with brackets a shelf or
shelves if provided.
CABLING
1. Cable and wire will always be secured with cord or twine. Nylon cable ties
are not acceptable on horizontal cable racks or any location where
personnel safety and cable sheath protection can not be assured.
2. All sewing operations will be ended with a square knot and excess cord
trimmed off.
3. All cables and wire will break off side of cable rack (not be run through
cable rack) to equipment.
4. Protect all cable at break-offs with formed fiber or sheet fiber cut to
size and secured.
5. Rubber or neoprene covered wire must be protected by sheet fiber when it is
secured with cord or nylon ties.
6. Nylon ties may not be used for the following applications: A. Securing
fiber optic cable. B. Securing cable or wire on cable racks and break-offs.
C. Securing power cable.
7. Cut nylon cable ties so that no sharp edges will protrude, they must be
flush or under flush.
8. All types of cable racks containing power wire and cable will have all
threaded rod supports protected with fiber tubing.
SAFETY
9. All reasonable precautions will be taken to avoid physical injury of
personnel, inter of service or damage to equipment. All rings, wrist
watches, metal bracelets, etc. removed for personal safety.
ELECTROSTATIC DISCHARGE (ESD)
10. ALL ESD PRECAUTIONS MUST BE TAKEN.
_____ (Licensee Initial)
EXHIBIT 10.4
PROMISSORY NOTE
$83,000.00 Dallas, Texas August 3, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Capital Growth Fund Ltd., at P.O. Box 3444, Road
Town, Tortola, British Virgin Islands, or at such other address as the holder
hereof may designate, the principal sum of Eighty Three Thousand Dollars
($83,000.00), together with interest on the unpaid principal balance from the
date hereof until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on August 3,
1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
- - -------------------------
G. Ray Miller
Its: President
EXHIBIT 10.5
PROMISSORY NOTE
$10,000.00 Dallas, Texas August 14, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Capital Growth Fund Ltd., at P.O. Box 3444, Road
Town, Tortola, British Virgin Islands, or at such other address as the holder
hereof may designate, the principal sum of Ten Thousand Dollars ($10,000.00),
together with interest on the unpaid principal balance from the date hereof
until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on August
14, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc
- - ----------------------
G. Ray Miller
Its: President
EXHIBIT 10.6
PROMISSORY NOTE
$50,000.00 Dallas, Texas September 3, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of the Lawrence E. Steinberg, at 5420 LBJ Freeway,
Suite 540, LB 56, Dallas, Texas 75240, or at such other address as the holder
hereof may designate, the principal sum of Fifty Thousand Dollars ($50,000.00),
together with interest on the unpaid principal balance from the date hereof
until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on September
3, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
- - ------------------------
G. Ray Miller
Its: President
EXHIBIT 10.7
PROMISSORY NOTE
$20,000.00 Dallas, Texas October 1, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Bisbro Investments Co., Ltd., at P.O. Box 3444,
Road Town, Tortola, British Virgin Islands, or at such other address as the
holder hereof may designate, the principal sum of Twenty Thousand Dollars
($20,000.00), together with interest on the unpaid principal balance from the
date hereof until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on October
1, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
- - ----------------------
G. Ray Miller
Its: President
EXHIBIT 10.8
PROMISSORY NOTE
$20,000.00 Dallas, Texas October 1, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Universal Asset Fund Ltd., at P.O. Box 3444,
Road Town, Tortola, British Virgin Islands, or at such other address as the
holder hereof may designate, the principal sum of Twenty Thousand Dollars
($20,000.00), together with interest on the unpaid principal balance from the
date hereof until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on October
1, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
- - -------------------------
G. Ray Miller
Its: President
EXHIBIT 10.9
PROMISSORY NOTE
$50,000.00 Dallas, Texas October 16, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of the Lawrence E. Steinberg, at 5420 LBJ Freeway,
Suite 540, LB 56, Dallas, Texas 75240, or at such other address as the holder
hereof may designate, the principal sum of Fifty Thousand Dollars ($50,000.00),
together with interest on the unpaid principal balance from the date hereof
until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on October
16, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc
- - ------------------------
G. Ray Miller
Its: President
EXHIBIT 10.10
PROMISSORY NOTE
$30,000.00 Dallas, Texas November 10, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Bisbro Investments Co, Ltd., at P.O. Box 3444,
Road Town, Tortola, British Virgin Islands, or at such other address as the
holder hereof may designate, the principal sum of Thirty Thousand Dollars
($30,000.00), together with interest on the unpaid principal balance from the
date hereof until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on November
10, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
- - -----------------------
G. Ray Miller
Its: President
EXHIBIT 10.11
PROMISSORY NOTE
$20,000.00 Dallas, Texas November 25, 1998
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Universal Asset Fund Ltd., at P.O. Box 3444,
Road Town, Tortola, British Virgin Islands, or at such other address as the
holder hereof may designate, the principal sum of Twenty Thousand Dollars
($20,000.00), together with interest on the unpaid principal balance from the
date hereof until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on November
25, 1999.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
- - -----------------------------
G. Ray Miller
Its: President
EXHIBIT 10.12
PROMISSORY NOTE
$10,000.00 Dallas, Texas January 5, 1999
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation
promises to pay to the order of Bisbro Investments Co. Ltd., at P.O. Box 3444,
Road Town, Tortola, British Virgin Islands, or at such other address as the
holder hereof may designate, the principal sum of Ten Thousand Dollars
($10,000.00), together with interest on the unpaid principal balance from the
date hereof until this note is paid in full at a rate of 10% per annum.
Principal and interest shall be payable in one installment on January
5, 2000.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Holder will have the right at any time to convert this note into shares
of common stock, $.001 par value per share, of Maker, at the conversion rate of
one share of common stock for each $.50 of principal and interest due on the
note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability,
MAKER:
Preferred Voice, Inc.
- - -----------------------
Ray Miller
Its: President
EXHIBIT 10.13
SOFTWARE LICENSE AGREEMENT
This Software License Agreement is made as of this 3rd day of June,
1999, between Preferred Voice, Inc., a Delaware corporation ("Licensor") and KMC
Telecom Holdings, Inc., a Delaware corporation, on behalf of itself and its
wholly owned subsidiaries and affiliates ("Licensee"). Licensor and Licensee are
collectively referred to in this Agreement as the "Parties."
Background Information
Licensor has developed a system (the "System") that when interconnected
with a telephone switching system is capable of performing the services
described in Exhibit A attached hereto and incorporated herein by reference (the
"Services"). Each System consists of the hardware described in Exhibit B
attached hereto and incorporated herein by reference (the "Designated
Hardware"), certain third party software (the "Third Party Software") and
certain proprietary application software developed by Licensor (the "Application
Software"). The Third Party Software and the Application Software are
collectively referred to in this Agreement as the "Software." Licensee is a
licensed competitive local exchange carrier that is currently providing
telecommunications service in 23 local calling areas (the "Current Markets")
serving a population of up to 750,000 persons ("Tier III Markets"). Licensee has
plans to enter 27 additional Tier III Markets and to deploy remote satellite
switching and offer services in up to 70 smaller local calling areas serving a
population of less than 100,000 persons, located within 60 miles of the Tier III
Markets ("Tier IV Markets"; together with Tier III Markets, the "Markets").
Licensee wishes to offer the Services to end users ("End Users") under its own
brand in conjunction with its telecommunications services.
In consideration of the mutual promises made in this Agreement,
Licensor and Licensee agree that the terms and conditions set forth as follows
will apply to the license of Application Software.
ARTICLE 1. LICENSE AND PROCUREMENT
1.01 License and Procurement. Pursuant to this Agreement, Licensor
hereby grants to Licensee a nontransferable, non-exclusive (except as otherwise
provided below) license to use the Application Software, together with all
subsequent improvements thereto in the 37 Tier III Markets set forth on Exhibit
C attached hereto, as such Exhibit C may be amended from time to time pursuant
to this Agreement, and two (2) Tier IV Markets (collectively, the "Licensed
Markets"). Licensee shall be permitted to replace a Licensed Market, other than
the Current Markets (which are designated on Exhibit C with an asterisk), with
another Market up to sixty (60) days prior to the scheduled installation of a
System in such Licensed Market. In the event that Licensee so replaces a Tier
III Market, Exhibit C shall be revised to reflect the change; and in the event
that Licensee so replaces a Tier IV Market, Licensee shall give Licensor at
least thirty (30) days' prior written notice thereof. Licensee also shall be
permitted to add up to 13 Tier III Markets and up to 68 Tier IV Markets to the
Licensed Markets on at least thirty (30) days' prior written notice thereof to
Licensor, provided, that Licensee adds a minimum of thirty (30) Markets to the
Licensed Markets on each occasion on which it adds Markets.
Licensor also shall procure for Licensee the Designated Hardware from
third party manufacturers, a list of which Licensor shall provide to Licensee.
**[Confidential Treatment] indicates portions of this document that have been
deleted from this document and have been seperately filed with the Securities
and Exchange Commission.
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1.02. Exclusivity. Licensor agrees that it will not install Systems or
license any third party to install Systems within Licensee's local calling areas
of the switch locations set forth in Exhibit C, as amended from time to time
pursuant to Section 1.01, or any Tier IV Markets that-Licensee designates as a
future location for a System, as those local calling areas are defined in
Licensee's network map as of March 29, 1999, and that it will not set up a
distributor or agent in those areas to sell Services competitive with those that
Licensee provides. This exclusivity provision will be limited with respect to
any Market that is added to Exhibit C after the date hereof to the extent of any
contractual obligation to which Licensor is subject on the date of the addition.
1.03. Specifications. Licensor may from time to time furnish Licensee
with specifications, the form of which is initially attached hereto as Exhibit
A-1 (the "Specifications"), relating to the use and servicing of the System. The
Specifications may include a detailed description of functionality and related
processes and procedures for the System provided by Licensor to Licensee,
including without limitation user manuals, diagrams, drawings, etc. and all
updates, revisions, new versions, and supplements to the Specifications, and any
test plans or performance criteria mutually agreed upon by the parties hereto
for purposes of determining the System's conformity to the Specifications during
the testing period.
ARTICLE 2. LIMITATIONS ON USE
2.01 General Use. Licensee agrees to use the Application Software
solely to provide the Services to End Users. Licensee may private brand the
Services it offers.
2.02 Location.
(a) Use of Application Software. The Application Software may
be used only on Designated Hardware at Licensee's switch location in the
Licensed Markets.
(b) Temporary Use of Non-Designated Hardware. Licensee may
temporarily install and use the Application Software on hardware other than
Designated Hardware, but only if the Designated Hardware cannot be used because
of hardware, software or other malfunction and only until the Designated
Hardware is returned to operation. Licensee shall not install or use the
Application Software on such replacement hardware without the prior verbal
consent of Licensor. Licensor shall not unreasonably withhold this consent if
the proposed replacement hardware meets or exceeds the Specifications for the
Designated Hardware.
2.03 Licensor's Use. Licensee shall permit Licensor to use its Systems
to provide Services to its own end users ("Licensor End Users") where efficient
networking would be promoted by such use by Licensor End Users. In exchange
therefor, Licensor shall pay Licensee a fee of $1.25 per month per Licensor End
User that is homed on Licensee's Systems. Such fee shall be payable monthly upon
invoice by Licensee to Licensor therefor, and shall be payable within thirty
(30) days following receipt of the applicable invoice.
2.04 Copies. Licensee may make one "backup copy" of the Application
Software for archival purposes at each location; any such archival copy may be
stored at the location where the products are installed and operational or at
any such reputable off-site storage facility or facilities, as
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the case may be, which Licensee, in its reasonable judgment, shall select to
maintain and protect such archival copy for purposes of disaster recovery.
Licensee shall not otherwise copy any portion of the Software. Licensee shall
reproduce and include Licensor's applicable copyright notice, patent notice,
trademark, or service mark on any copies of the Application Software.
2.05 Licensee's User Responsibilities. Licensee shall be ex-
clusively responsible for the supervision, management, and control of its use of
the Designated Hardware, including:
(a) Assuring proper configuration of the Designated Hardware,
related equipment and devices to provide the grade of service
determined by Licensee at its discretion;
(b) Maintaining, repairing and replacing Designated Hardware
as required, except as otherwise provided herein or agreed to by the
parties;
(c) Establishing adequate operating methods;
(d) Implementing procedures sufficient to satisfy its
obligations for security under this Agreement, including appropriate
control of its employees to prevent misuse, unauthorized copying,
modification, or disclosure of the Software.
2.06 Term. The initial term of this Agreement shall be ten (10) years,
subject to the provisions of Section 7.01 hereof. Upon expiration of the initial
term specified above, the Agreement shall automatically renew for successive one
(1) year terms unless either party gives the other notice of its intention not
to renew the license at least sixty (60) days prior to the expiration of the
then current term. As further described in Section 1.01 hereof, Licensee may
from time to time amend Exhibit C hereof, which amendment may include deletion
of certain Markets set forth on Exhibit C in lieu of termination of this
Agreement.
ARTICLE 3. PROPERTY RIGHTS
3.01 Title to Software. Title to the Application Software is reserved
for Licensor. Licensee acknowledges and agrees that Licensor is and shall remain
the owner of the Application Software and shall be the owner of all copies of
the Application Software made by Licensee.
3.02 Confidentiality of Software. Licensee acknowledges that the
Application Software is confidential in nature and constitutes a trade secret
belonging to Licensor. Licensee agrees to hold the Application Software in
confidence for Licensor and not to sell, rent, license, distribute, transfer, or
disclose the Application Software or its contents, including methods or ideas
used in the Application Software, to anyone except to employees of Licensee when
disclosure to employees is necessary to use the license granted in this
Agreement. Licensee shall instruct all employees to whom any such disclosure is
made that the disclosure is confidential and that the employee must keep the
Application Software confidential by using the same care and discretion that
they use with other data designated by Licensee as confidential. The
confidentiality requirements of this Section shall be in effect both during the
term of this Agreement and after it is terminated, provided, that the foregoing
restrictions shall not apply to information: (a) generally known to the public
or obtainable from public sources; (b) readily apparent from the keyboard
operations, visual display, or output reports of the
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Application Software; (c) previously in the possession of Licensee or
subsequently developed or acquired without reliance on the Application Software;
or (d) approved by Licensor for release without restriction.
3.03 Security. Licensee agrees to keep the Software in a secure place,
under access and use restrictions designated to prevent disclosure of the
Software to unauthorized persons. Licensee agrees to at least implement the
security precautions that it normally uses to protect its own confidential
materials and trade secrets.
3.04 Disclosure as Breach. Licensee agrees that any disclosure of the
Software to a third party constitutes a material breach of this Agreement,
entitling Licensor to the benefit of Section 7.01 hereof.
3.05 Removal of Markings. Licensee agrees not to remove, mutilate, or
destroy any copyright, patent notice, trademark, service mark, other proprietary
markings, or confidential legends placed on or within the Software.
ARTICLE 4. PAYMENT
4.01 License Initiation Fee. Licensee shall pay Licensor a license
initiation fee for each Licensed Market, including each Market that is added to
the Licensed Markets hereafter pursuant to the terms of Section 1.01, in
accordance with the schedule set forth in Exhibit D attached hereto and
incorporated herein by reference. Such fee will be due for the initial 39
Licensed Markets upon execution of this Agreement and will be due for Markets
that are added hereafter at the time notice is given adding the Markets.
4.02 Recurring License Fee. Licensee shall pay Licensor a recurring
license fee for each Licensed Market each month commencing 24 months following
acceptance of the System in that Licensed Market based on the schedule set forth
in Exhibit D. The recurring fee shall be paid monthly on the fifteenth day of
each month.
4.03 Support Fee. Licensee shall pay Licensor for training and other
support in accordance with charges set forth in Exhibit E attached hereto and
incorporated herein by reference.
4.04 Fee Payable by Licensor. As described in Section 2.03 hereof,
Licensor shall pay Licensee a fee for certain uses by Licensor of the Systems
installed hereunder.
ARTICLE 5. INSTALLATION AND SERVICE
5.01 Delivery of Software and Materials. Licensor shall deliver (a) one
copy of the Application Software in object code and one copy of Specifications
and any other documentation to the Licensee at each switch site in accordance
with a schedule on which the parties agree and (b) literature relating to the
Systems allowing Licensee to private brand the Services it offers relating to
the System.
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5.02 Source Code Escrow. Licensor will escrow the source code of the
Application Software under the terms of a Source Code Escrow Agreement
substantially in the form of Exhibit F attached hereto and incorporated herein
by reference.
5.03 Installation Services. The Designated Hardware will be shipped to
Licensor's site for assembly and installation of the Application Software and
preinstallation testing. Licensor will then bring the System to Licensee's site
for installation. Licensee shall prepare the site in accordance with the
Specifications for installation of the Designated Hardware by Licensor. Licensor
shall provide technical services in connection with the installation of the
Systems at Licensee's site for five (5) days. Installation of Systems in the
Current Markets will be completed within 120 days, and additional Systems shall
be installed concurrently with the installation of Licensee's switching systems,
in each case subject to Licensee's capabilities at the applicable site(s).
Licensor agrees that it will use best efforts to comply with all
Licensee's security, confidentiality and regulatory requirements in relation to
the System installed at any site. In addition, Licensor agrees to use all
reasonable efforts to install Systems so that they shall comply in all material
respects with all federal, state, and local laws and regulations in force on the
date hereof, which directly impose obligations upon Licensor or the applicable
manufacturer.
5.04 Testing. Licensor shall test the Systems to ensure that they meet,
without material deviation, the standards contained in the Specifications. The
testing period shall (i) commence promptly upon the completion of installation
of the System at the sites, but in no event later than five (5) days following
such completion of installation (the "Commencement Date"), and (ii) conclude
upon acceptance by Licensee's delivery to Licensor of the Acceptance Certificate
(defined below).
Should material deviations arise in the performance of the System
relative to the Specifications, Licensor agrees to inform Licensee promptly
thereof by submitting notice, including a written, reasonably detailed
description of each deviation from the Specifications, to Licensee. Licensor
shall then have the longer of (i) the remainder of the testing period, (ii)
thirty (30) days or (iii) some other period of time mutually agreed upon by the
parties to cure the noncompliance. Licensee shall use its best efforts to assist
Licensor in curing such noncompliance. Upon completion of such cure, Licensor
shall give notice to Licensee thereof. The total period of time that may be
spent on the testing period shall not exceed ninety (90) days from the
Commencement Date, after which time Licensee shall no longer be obligated to
accept such corrections from Licensor.
If Licensor, using commercially reasonable efforts, is unable to cure
any noncompliance of the System during the testing period, then following notice
thereof either party may give the other party thirty (30) days' written notice
of its election to terminate this Agreement and the reasons therefor. If either
party terminates this Agreement pursuant to this Section, Licensor shall refund
to Licensee any monies previously paid by Licensee relating thereto (less
one-sixtieth (1/60th) thereof for each month (or portion thereof) from the
installation to the date of termination pursuant hereto); and the license
granted hereunder shall be terminated.
5.05 Acceptance. Licensor shall inform Licensee in writing of the
completion of Licensor's testing under Section 5.04. Licensee will thereupon
commence testing of the System, and shall have ten (10) days in which to test
the functionality of the System with employees. Upon completion of
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the ten (10) day test period, Licensee shall either provide Licensor with
written notice of any problems revealed in its tests or deliver Licensor an
acceptance certificate, substantially in the form attached hereto as Exhibit G
(the "Acceptance Certificate"). In the event Licensee identifies any problems,
Licensor will have fifteen (15) days in which to resolve the problems and after
receiving notification that the problem is resolved, Licensee will have another
fifteen (15) day test period. The Software shall be deemed to have been accepted
by Licensee upon execution and delivery by Licensee to Licensor of an Acceptance
Certificate, executed by an authorized representative of Licensee or failure of
Licensee to provide written notice to Licensor of any problems Licensee
discovers within the ten (10) day period it is conducting tests.
5.06 Technical Support. During the term of this Agreement, Licensor
shall provide a technical support help desk that Licensee may call to report
System troubles twenty-four (24) hours per day, seven (7) days per week basis.
Licensor shall troubleshoot the problems and contact the appropriate vendor to
resolve problems that cannot be resolved by actions Licensee may take on
Licensor's instruction. During the term of this Agreement, Licensor shall
provide (i) remote, dial-up System support, on a twenty-four (24) hours per day,
seven (7) days per week basis, and (ii) packages, generally containing
corrections of known software defects and updates or patches to increase or
improve performance and occasionally also containing minor feature enhancements
of existing software, relating to a current Software platform. Licensee shall
provide permanent digital connectivity to each System for the purpose of
off-site software revision and maintenance. Licensor also shall provide
additional technical support services to Licensee on request and as available at
its then standard rates.
5.07 Training. Licensor shall, as described on Exhibit E attached
hereto by Licensor, provide Licensee's personnel with training and instruction
concerning the operation and use of the System by conducting training sessions
at a mutually convenient time at Licensee's facility. Ray Miller, the President
of Licensor, shall perform at least two (2) of the Voice Recognition Training
sessions. Licensee shall be deemed to be satisfied with each training session
unless written notice is otherwise sent to Licensor within five (5) days of the
end of such session. Any additional training services not described on Exhibit E
that are requested by Licensee shall be invoiced to Licensee in accordance with
Licensor's then prevailing hourly rates. Licensee shall be responsible for all
travel and other expenses of its personnel attending such training sessions.
ARTICLE 6. WARRANTY PROVISIONS
6.01 Warranties
(a) Designated Hardware. Licensee shall be entitled to the benefit of
all warranties provided by the manufacturers of the Designated Hardware.
Licensor shall provide Licensee with copies of all such warranties.
(b) Application Software.
i. General. Licensor warrants that (i) it has good title
to the Application Software and the right to license its use to Licensee free of
any proprietary rights, liens, or encumbrances of any other party, (ii) the
Application Software will permit the System to provide
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Services when properly interconnected to Licensee's functioning Lucent 5ESS
switch (provided, that ANY MODIFICATION OF THE APPLICATION SOFTWARE BY ANY
PERSONS OTHER THAN LICENSOR SHALL VOID THE WARRANTY IN THIS CLAUSE (ii)), (iii)
commencing on installation thereof, and for a period of ninety (90) days
thereafter, (1) the Software (A) shall conform in all material respects to the
Specifications and (B) shall be free of viruses, bugs or contaminants which may
cause damage to Licensee's systems or interrupt Licensee's utilization of a
System; and (2) the media in which the Software is contained shall be free of
material defects in materials or workmanship.
ii. Year 2000. Licensor warrants that the Application
Software delivered or modified by Licensor is, or will be, Year 2000 Compliant
(as defined below). Year 2000 Compliant Software that is intended to
interoperate with third party products (including Third Party Software) as
described in herein will be compatible and interoperate in such manner as to
process between them, as applicable, date related data correctly as described in
the definition of "Year 2000 Compliant." Except as set forth in the preceding
sentence, (i) Licensor assumes no responsibilities or obligations to cause third
party products (including Third Party Software) to function with the Application
Software; and (ii) Licensor will not be in breach of this warranty for any
failure of the Application Software to be Year 2000 Compliant if such failure
results from the inability of any software, hardware, or systems of Licensee or
any third party to be Year 2000 Compliant. "Year 2000 Compliant" means that (a)
neither the performance nor functionality of the Application Software will be
affected by dates prior to, during and after the year 2000, (b) no value for
current date will cause any interruption in the operation of the Application
Software; (c) the year 2000 is recognized as a leap year; (d) in all interfaces
and data storage the century, in any date, is specified either explicitly or by
unambiguous algorithms or inferencing rules; and (e) date-based functionality of
the Application Software behaves and will behave consistently for dates prior
to, during and after the year 2000.
6.02 Remedies. In the event of any nonconformity or defect in the
Application Software (or any other breach with respect to the condition or
operation of the Application Software) for which Licensor is responsible,
Licensor shall, during the foregoing respective warranty periods, (A) provide
reasonable efforts to correct or cure such nonconformity, defect, contaminant or
breach (which may include a workaround for system errors), (13) at Licensor's
option, replace the relevant part of the Application Software in lieu of curing
such nonconformity, defect, contaminant or breach, or (C) if Licensor determines
that neither of the foregoing is commercially practicable, refund all sums paid
to Licensor by Licensee with respect to nonconforming, defective or breaching
Application Software less one-sixtieth (1/60th) thereof for each month (or
portion thereof) that has ensued following acceptance of the Application
Software. In addition, with respect to any defect or nonconformity in the
Designated Hardware during the warranty period, Licensor shall cooperate with
Licensee in attempting to provide Licensee with the benefit, if any, of the
support commitment of any third-party manufacturers and suppliers of the
Designated Hardware.
6.05 Warranty Disclaimer. LICENSOR DOES NOT REPRESENT OR WARRANT
THAT ALL ERRORS WILL BE CORRECTED. LICENSEE AGREES THAT LICENSEE'S SOLE AND
EXCLUSIVE REMEDY FOR THE DEFECTS DESCRIBED IN THIS SECTION SHALL BE LIMITED TO
THE CORRECTIVE ACTION DESCRIBED IN THIS SECTION. THE EXPRESS WARRANTIES SET
FORTH IN THIS AGREEMENT ARE IN LIEU OF
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ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.06 Limitation of Remedies. LICENSEE AGREES THAT ITS EXCLUSIVE
REMEDIES, AND LICENSOR'S ENTIRE LIABILITY WITH RESPECT TO THE SOFTWARE IS AS SET
FORTH IN THIS AGREEMENT. LICENSEE FURTHER AGREES THAT LICENSOR SHALL NOT BE
LIABLE TO LICENSEE FOR ANY DAMAGES, INCLUDING ANY LOST PROFITS, LOST SAVINGS, OR
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF ITS USE OR INABILITY
TO USE THE SOFTWARE OR THE BREACH OF ANY EXPRESS OR IMPLIED WARRANTY.
6.07 Indemnification.
(a) Infringement. Licensor agrees to indemnify and hold
Licensee and its directors, officers, employees and agents, harmless against any
and all claims, demands, actions, losses, liabilities, judgments, settlements,
awards and costs (including reasonable attorneys' fees and expenses)
(collectively, "Liabilities") arising out of or related to any claim against
Licensee by a third party that Licensee's use or possession of the Application
Software (or the license granted to Licensee hereunder with respect thereto),
infringes or violates any United States patent, copyright or other proprietary
right of any third party; provided that Licensee gives Licensor prompt notice of
any such claim of which it has actual knowledge and cooperates fully with
Licensor in the defense of such claim. Licensor shall have the exclusive right
to defend and settle at its sole discretion and expense all suits or proceedings
arising out of the foregoing. Licensee shall not have the right to settle any
action, claim or threatened action without the prior written consent of Licensor
(at Licensor's sole and absolute discretion). In case use of the Application
Software is forbidden by a court of competent jurisdiction because of
proprietary infringement, Licensor shall promptly, at its option, (i) procure
for Licensee the rights to continue using the Application Software; (ii) replace
the infringing Application Software with non-infringing Application Software of
equal performance and quality which are materially the functional equivalent of
the infringing Application Software; (iii) modify the infringing Application
Software so it becomes non-infringing while materially maintaining the
functionality thereof, or (iv) if none of the foregoing are commercially
practicable, refund all sums paid to Licensor by Licensee with respect to the
infringing Application Software less one-sixtieth (1/60th) thereof for each
month or portion thereof that has ensued following acceptance of the infringing
Application Software. Licensor will then be released from any further obligation
whatsoever to Licensee with respect to the infringing part of the Application
Software. Nothing in this Section shall be deemed to make Licensor liable for
any patent or copyright infringement suits that arise in connection with (a)
designs, modifications, use, integration or data furnished by Licensee if
infringement would have been avoided by not using or combining the Application
Software with such other programs or data or (b) if infringement would have been
avoided by the use of an updated version made available to Licensee.
(b) Other. Licensor agrees to indemnify and hold Licensee
harmless against any and all Liabilities arising out of Licensor's negligent
acts or omissions, intentional torts, or material breach of this Agreement.
8
<PAGE>
ARTICLE 7. TERMINATION
7.01 Cause for Termination. The license granted in this Agreement shall
terminate automatically and without further notice upon the occurrence of
expiration of the term, specified in Section 2.06 or of any, renewal term in the
absence of a subsequent renewal in accordance with the terms of this Agreement.
Licensor may terminate this Agreement in the event that Licensee (a) discloses
the Software to a third party, whether directly or indirectly and whether
inadvertently or purposefully or (b) attempts to use, copy, license, or convey
the Software in any manner contrary to the terms of this Agreement or in
derogation of Licensor's proprietary rights in the Application Software, and in
either case fails to cure such breach within such five (5) day period following
notice by Licensor. Licensee may terminate this Agreement on any anniversary of
the date hereof upon at least ninety (90) days prior written notice. In
addition, either party may terminate this Agreement (and all licenses granted
hereunder) at any time if (a) the other party breaches any term hereof (other
than breaches by Licensee pursuant to the preceding sentence) and fails to cure
such breach, (b) the other party engages in any business activity that, in the
non-breaching party's reasonable determination, has or may have an adverse
effect upon the non-breaching party's business or reputation, (c) the other
party shall be or becomes insolvent, (d) the other party makes an assignment for
the benefit of creditors, (e) there are instituted by the other party
proceedings in bankruptcy or under any insolvency or similar law or for
reorganization, receivership or dissolution, (f) there are instituted against
the other party proceedings in bankruptcy or under any insolvency or similar law
or for reorganization, receivership or dissolution, which proceedings are not
dismissed within 60 days, or (g) the other party ceases to do business;
provided, however, that no party shall be deemed to be in breach until the
non-breaching party gives written notice to the breaching party and the
breaching party shall fail to remedy such breach within thirty (30) days (or ten
(10) days in the case of a failure to pay any sum due) after receipt of such
written notice. In the event that Licensor terminates this Agreement pursuant to
this Section, Licensor may (i) invoke all rights Licensor possesses upon
termination and (ii) if Licensee remains liable for any monetary obligation
created under this Agreement, accelerate and declare all obligations of Licensee
created under this Agreement to be immediately due and payable by Licensee.
7.02 Effect of Termination. Licensee agrees that on termination under
Section 7.01, it shall immediately destroy all copies of the Application
Software, certify (on Licensor's request) to Licensor that it has retained no
copies of the Application Software, and acknowledge that it may no longer use
the Application Software. Upon termination of the license, Licensor's
obligations under this Agreement shall cease. The termination or expiration of
this Agreement shall in no way relieve either party from its obligation to pay
the other any sums accrued hereunder prior to such termination or expiration.
Upon such termination or expiration, the provisions of Section 2.04 and Articles
3, 6, 7 and 9 shall survive.
ARTICLE 8. PERSONNEL & SUBCONTRACTORS; INSURANCE
8.01 Assignment and Substitution. Licensor reserves the right to
assign, reassign and substitute its personnel with personnel having comparable
qualifications at any time during the term of this Agreement, so long as no such
action results in an interruption of service.
9
<PAGE>
8.02 Subcontractors. Licensor reserves the right to subcontract any or
all services to qualified and experienced third parties and/or to use
independent consultants, so long as such use of subcontractors and/or
consultants does not cause any interruption of services to Licensee. Services
supplied by such third parties shall be subject to the terms and conditions of
this Agreement as if supplied directly by Licensor. Any such subcontracting
shall not relieve Licensor from liability (if any) or obligations under this
Agreement and Licensor shall be responsible for the services performed as well
as the acts of any subcontractor or Consultant (and any agents thereof) as fully
as if they were the acts of Licensor (or such agents). Licensor shall require
that its subcontractors comply with the provisions of this Agreement, insofar as
they apply to the subcontracted work. Should any subcontractor fail to perform
in a satisfactory manner work undertaken by it, Licensor shall investigate and
take any appropriate action. Nothing contained in this Agreement shall create
any contractual relationship between any subcontractor of Licensor and Licensee
and no subcontractor is intended to be or shall be deemed a third party
beneficiary of this Agreement.
8.03 Qualifications. Licensor represents that it and its subcontractors
performing services are and will continue to be experienced and qualified to
perform the services and all of their respective obligations under this
Agreement.
8.04 Licensee Rights. At Licensee's request, Licensor shall provide
Licensee with the resume of a subcontractor whom Licensor intends to designate
to perform onsite work. Licensee shall have the right to interview and approve
or reject the assignment by Licensor of any subcontractors to positions of
on-site work, provided that Licensee may not exercise its right to reject any
subcontractors on grounds unrelated to job performance or in a manner that
obligates Licensor to commit an unlawful act. If Licensee does not exercise its
right to interview and approve or reject any such assignment within fifteen (15)
days of submittal of a resume by Licensor to Licensee, then Licensee shall be
deemed to have agreed to such assignment. Licensee agrees not to make an offer
of employment to any subcontractor rejected by Licensee; and Licensee shall
treat the resume and any interview information as confidential information.
8.05 Acceptance. Licensee may notify Licensor when it finds any
Licensor onsite subcontractor unacceptable to provide services at a site for any
lawful reason, including Licensee's reasonable determination that subcontractor
is not qualified to perform the work to which subcontractor is assigned. Upon
receipt of such notice Licensor shall, within ten (10) business days (or earlier
if Licensee specifically so requests), review the matter with Licensee and take
appropriate action as necessary. Licensor shall have a reasonable time to
replace any such subcontractor.
8.06 Insurance. Each party hereto shall maintain, during the term of
this Agreement, the following insurance coverage as well as all other insurance
required by law in the jurisdictions where the work is performed: (a) worker's
compensation and related insurance as required by law; (b) employer's liability
insurance with a limit of at least five hundred thousand ($500,000) dollars for
each occurrence; (c) comprehensive general liability insurance, with a limit of
at least one million ($1,000,000) dollars per occurrence; and (d) comprehensive
motor vehicle liability insurance with limits of at least one million
($1,000,000) dollars for bodily injury including death, to any one person, three
hundred thousand ($300,000) dollars for each occurrence of property damage, and
one million ($1,000,000) dollars for each occurrence. Each party shall (i)
furnish the other prior to the start of the relevant work, if requested by the
other, certificates or adequate proof of the insurance required
10
<PAGE>
by this Section and (ii) notify the other in writing at least thirty (30) days
prior to cancellation of or any material change in the policy. Notwithstanding
the above, each party shall have the option where permitted by law to
self-insure any or all of the foregoing.
ARTICLE 9. MISCELLANEOUS
9.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, EXCEPT THAT ANY
CONFLICTS OF LAW RULES OR PRINCIPLES OF THE STATE OF NEW JERSEY THAT WOULD
REQUIRE REFERENCE TO THE LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
9.02 Headings. Headings used in this Agreement are to facilitate
reference only, are not a part of this Agreement, and will not in any way affect
the interpretation hereof The use herein of the word "including," when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not non-limiting
language (such as "without limitation," or "but not limited to," or words of
similar import) is used with references thereto, but rather shall be deemed to
refer to all other items and matters, that reasonably could fall within the
broadest possible scope of such general statement, term or matter.
9.03 Assignment. This Agreement, and all rights and obligations
hereunder, are personal as to the parties hereto and may not be assigned, in
whole or in part, by any of the parties to any other person, firm or corporation
without the prior written consent thereto by the other party hereto, which
consent will not be unreasonably withheld; except that either party may freely
assign any or all of its rights and obligations hereunder to any affiliate. An
affiliate is (a) an entity that owns all or substantially all of the outstanding
stock of the entity so assigning, (b) an entity all or substantially all of
whose stock is owned by the entity so assigning, or (c) an entity under common
ownership with the entity so assigning. Such assignee entity shall thereupon be
free to assign the rights and obligations under this Agreement to any other
affiliate. Any assignment contrary to the terms hereof shall be null and void
and of no force or effect.
9.04 Failure or Partial Exercises. No failure on the part of any party
to exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
9.05 Entire Agreement Amendments. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
Licensee did not rely on any representations or warranties of Licensor or its
employees or agents other than those set forth in this Agreement. This Agreement
may not be modified or amended except by a writing that states that it is an
amendment to this Agreement and which is signed by duly authorized
representative of the parties.
11
<PAGE>
9.06 Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be valid and sufficient if dispatched either (i)
by hand delivery, (ii) by telex, cable or facsimile transceiver, with confirming
letter mailed promptly thereafter by first class mail, postage prepaid, (iii) by
reputable overnight express courier or (iv) by certified mail, postage prepaid,
return receipt requested, deposited in any post office in t , he United States,
in any case, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided from time to time in the
manner set forth above. When sent by cable or facsimile as aforesaid, notices
given as herein provided shall be considered to have been received at the
beginning of recipient's next business day following their confirmed
transmission; otherwise, notices shall be considered to have been received only
upon delivery or attempted delivery during normal business hours.
9.07 Partial Invalidity. If any clause or provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
9.08 Attorneys Fees. The prevailing party in any litigation,
arbitration or other proceedings arising out of this Agreement shall be
reimbursed by the other party for all costs and expenses incurred in such
proceedings, including reasonable attorneys' fees.
9.09 Force Majeure. No party hereto shall be liable for delay or
default in performing hereunder, other than a delay or default in payment of any
monies due to the other party, if such performance is delayed or prevented by a
Force Majeure Condition. "Force Majeure Condition" shall mean any condition or
event beyond the reasonable control of the party affected thereby, including
fire, explosion, or other casualty, act of God, war or civil disturbance, acts
of public enemies, embargo, the performance or non-performance of third parties,
acts of city, state, local or federal governments in their sovereign,
regulatory, or contractual capacity, labor difficulties, and strikes, but
specifically excluding a party's failure to be Year 2000 Compliant. If a Force
Majeure Condition occurs, the party delayed or unable to perform shall give
prompt notice of such occurrence to the other party. The party affected by the
other party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
9.10 Consequential Damages. THE PARTIES HERETO AGREE THAT NEITHER PARTY
HERETO SHALL BE LIABLE TO THE OTHER PARTY HERETO FOR ANY DAMAGES, INCLUDING ANY
LOST PROFITS, LOST SAVINGS, OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES,
ARISING OUT OF THIS AGREEMENT.
12
<PAGE>
9.11 Independent Contractor. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement will be construed (a) to give either party the power
to direct and control the day-to-day activities of the other, (b) to constitute
the parties as partners, joint venturers, owners or otherwise as participants in
a joint or common undertaking, or (c) to allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.
PREFERRED VOICE, INC. KMC TELECOM HOLDINGS, INC.,
on behalf of itself and its wholly owned
subsidiaries and affiliates
By: By:
------------------------- -----------------------------------
Name: Name:
------------------------- -----------------------------------
Title: Title:
------------------------- -----------------------------------
6500 Greenville Avenue 1545 Route 206
Suite 570 Suite 300
Dallas, Texas 75206 Bedminister, New Jersey 07921
Fax No.: 214-265-9663 Fax No.: 908-719-8775
Phone: 214-265-9580 Phone: 908-719-2200
13
<PAGE>
EXHIBIT A
PREFERRED VOICE, INC.
Product Descriptions
VIP EMMA 888 Services
Each EMMA 888 service was specifically designed to combine all the following
existing Telco services with the convenience of speech independent dialing. Each
of these services offer specific benefits and features designed to satisfy the
communication needs of the end user.
1-888 Number dedicated to one user
Long Distance Calling Card
Selective Call Screening
One Number "Locate" EMMA
Voice Activated Dialing
Voice Directory
(1) EMMA. The "SMART" Business Line and EMMA PA (Personal Assistant):
The "SMART" Business Line has a local number on the front and can
receive calls dialed from the public switched telephone network. In
addition to the local number each subscriber may be assigned a
dedicated 888 number giving them not only local but national presence.
In addition unlike the traditional telephone line that is connected to
a specific telephone the SBL floats and can be pointed to ring at any
telephone the subscriber selects. This feature is usually referred as
"single number locate." This service may be offered as a supplement to
existing business lines.
One Number Locate:
The subscriber to this service is assigned his own personal
888 number. When that number is dialed the calling party is
greeted by a prompt. The call will then be sent to whatever
number the user has programmed in his Locate file (i.e.
cellular phone, hotel, pager, etc.) anywhere in the world.
Telephone Calling Card:
The subscriber can use the Sl3L as a telephone calling card.
During the forwarding prompt, the user touch-tones any key on
his phone and speaks his Personal Identification Number; at
the next prompt he may speak a name from his personal voice
directory. The Voice Directory may contain 100 names with
their corresponding numbers. For numbers not in the voice
directory, the subscriber simply says, "Dial Number" and SBL
will prompt "Number please". The user then may voice dial the
number or touch-tone using the DTMF pad.
1
<PAGE>
Intelligent Call Screening:
This feature can be turned on or off by the subscriber. When a
caller dials the subscriber's 888 number SBL will prompt for
the callers name and present the name to the subscriber. The
subscriber has the option of accepting the call or sending the
call to their voice mail.
(2) EMMA CD (corporate direct):
Businesses that have multiple, individuals with EMMA PA numbers can
avoid having to remember or look-up everyone's personal EMMA PA number
by using the EMMA CD. The caller dials the dedicated EMMA CD number and
simply speaks the called person's name and the call is quickly
forwarded to his current programmed locate number.
(3) EMMA VO (Virtual Office)
This service configuration was designed for the group that does not
have a single physical office or whose members are out of their offices
consistently. EMMA VO allows the group to have a single number. When
there is a call for a member, EMMA will forward the call to the
member's office. If he is out of the office, EMMA will locate a member
if so desired or will take a message. EMMA provides all of the SO/HO
type of business requirements including single number, Locate, personal
directory and access to voice mail.
(4) EMMA FF (Family and Friends):
This service was developed to allow anyone that has the subscriber's
dedicated 888 number to access the subscriber's Voice Directory. This
allows the subscriber to give their number to a son in college, a
daughter in a distant city, etc. At the subscriber's discretion, each
one of the callers can call anyone whose name is in the Voice
Directory.
EMMA FF. "Locate":
This service also allows the owner to program any number in
his Locate file. The caller speaks "Locate" and the call is
instantly sent to the owner's cell phone, pager, office, or
any number he desires.
EMMA FF. "Telephone Calling Card":
The owner turns the service into a fully functional Telephone
Calling Card by speaking "Dial Number". EMMA will prompt for a
PIN. Once the PIN has been verified, the service prompts
"Number please" and the user may then speak the number or use
DTMF from the telephone pad.
2
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VIP EMMA
Inbound Corporate extension directory - This directory stores the subscriber's
internal names and extensions. When Emma receives a call, she compares the
caller's request to the stored names and extensions and forwards the calls
accordingly. The directory is customized for each subscriber and can include
names, departments, and even branches at different locations.
Outbound corporate directory - (optional service) One or more outbound corporate
directories can be created to facilitate outbound calling. For example, a
company could create directories for branches, vendors, clients, etc. The user
accesses Emma through an extension number or DID and simply speaks the directory
listing and the call is connected, eliminating the need to look-up or dial the
number.
Outbound personal directory - (optional service) A personal directory is a
directory created for an individual user and is accessed with the use of an
authorization code or ANI. Individuals within the Company may want a directory
of their personal frequently called names.
Telephone Calling Card - Any company utilizing Emma can issue, track, and
terminate calling cards on a real-time basis. Calling cards are activated
instantaneously.
Effectively, an Emma user becomes a "virtual long-distance company." This
service can be restricted to specific users or specific phone numbers only.
This document and its attachments are confidential and proprietary information,
the exclusive rights to which are the sole property of Preferred Voice, Inc.
Upon receipt and acceptance of these materials, the recipient agrees not to
reproduce or distribute copies electronic, xerographic, verbal, or otherwise)
without the express written permission of Preferred Voice, Inc.
3
<PAGE>
EXHIBIT A-1
-----------
Specifications
--------------
4
<PAGE>
EMMA
[Graphic - Flow Chart of Call Flow]
<PAGE>
EMMA USER FLOW
[GRAPHIC - Flow Chart of Emma User Flow]
<PAGE>
SBL FUNCTIONAL CALL FLOW -
INCOMING CALL
[Graphic - Flow Chart of Smart Business Line Call Flow]
<PAGE>
OUTGOING CALL
[Graphic - Flow Chart of Outgoing Call Flow]
<PAGE>
REMOTE CALLING
CARD FUNCTION
[Graphic - Flow Chart of Remote Calling Card Function]
<PAGE>
"LOCATE" FUNCTION
[Graphic - Flow Chart of "Locate" Function]
<PAGE>
PROGRAM FUNCTION
[Graphic - Flow Chart of Program Function]
<PAGE>
Power Requirements
o -48v 40 amp DC Power terminating at the Rack Space.
o Power Inverter then wired to a dual plug AC junction box.
Terminating Connections
o T-1's will be terminated with a male RJ-45 Connector
o POTS lines will be terminated with a male RJ-11 Connector
o ISDN BRI will be terminated with a male RJ-45 Connector
Space Required
o The PFVI System requires a 19" Rack
o The Inverter Requires a 19" Rack
o The Master switch requires a 19" Rack
o All other components will be placed on a shelf
The Monitor Mouse and Keyboard will be connected to a intelligent switch box.
Rack Layout:
[Graphic of Rack Layout]
<PAGE>
EXHIBIT B
HARDWARE CONFIGURATION (24 PTS)
ITEM DESCRIPTION
FTU-2000A CUSTOM COMPUTER
PIIBX40P38 PENT 11 400MHz CPU
PIIBX33P38 PENT 11 333MHz CPU
64M040 64MB DIMM RAM
FD015 3.5" FDD, BLACK
HD91S 9.1GB HDD, SCSI
ALM-100B-H 4.3GB HDD, SCSI
CDKIT1 ALARM BOARD
CDT240A DUAL SLIM CD-ROM
SCSR03 SLIM LINE CD-ROM
MD566A JUMPERABLE FAX/MDM
MNT40 MS WIN NT 4.0
240SCT1 PORT RESOURCE
ANTARES VOICE RESOURCE
PRO 2V ALARM RESOURCE
PORT FEE VOICE REC RESOURCE
Optional Hardware Components
48v Inverter
Master Switch
Traffic Engineering
Users Ports
1000 11
2000 20
3000 26
Spare Kit
<PAGE>
EXHIBIT C
---------
Additional 13 Tier III & 70 1 Tier IV Licensee Markets and Switches
-------------------------------------------------------------------
[to be added]
-------------
EXISTING 23
- - -----------
Ann Arbor, MI*
Augusta, GA*
Baton Rouge, LA*
Brevard, FL*
Corpus Christi, TX*
Daytona Beach, FL*
Fayetteville, NC*
Fort Myers, FL*
Fort Wayne, IN*
Greensboro, NC*
Hampton Roads, VA*
Huntsville, AL*
Longview, TX*
Madison, WI*
Duluth, MN*
Pensacola, FL*
Roanoke, VA*
Sarasota, FL*
Savannah, GA*
Shreveport, LA*
Tallahassee, FL*
Topeka, KS*
Winston-Salem, NC*
Board Approved
- - --------------
Akron, OH
Charleston, SC
Dayton, OH
Toledo, OH
Lansing, MI
Monroe, LA
Spartanburg, SC
St. Petersburg/Clearwater, FL
Pending (subject to change)
- - ------------------------------
Beaumont, TX
Columbus, GA
Del Ray Beach, FL
Lakeland, FL
Macon, GA
Naples, FL
<PAGE>
EXHIBIT D
---------
License Fees
------------
License Initiation Fee
Tier III Market = [Confidential Treatment Requested]**
Tier IV Market = [Confidential Treatment Requested]**
Monthly Recurring License Fee
Tier III Market = [Confidential Treatment Requested]**
Tier IV Market = [Confidential Treatment Requested]**
<PAGE>
EXHIBIT E
---------
PVI Services Integration
1. Services Training - [Confidential Treatment Requested]**/day plus travel
and material expenses (Est. time 3 days).
o Target Audience
- Product Manager
- Product Marketing
o Contents
- Complete review of each PVI service description and application
- Market Position
- Target Market
2. Sales Training - [Confidential Treatment Requested]**/day plus travel and
material expenses. (Est. time 2 days).
o Service Descriptions
o Licensee Needs
o Sell to End User
- Business
- Residential
o Closing Techniques
o Role Playing
3. System Installation and Maintenance Training - [Confidential Treatment
Requested]**/day plus travel and material expenses (Est. time 4 days).
Installation
o Hardware Installation
o T-1 Configuration
o VIP Programming
- SCC
- DID
Maintenance
o Alarm Systems
o Hardware Replacement
o Hardware Expansion
4. Voice Recognition Training - [Confidential Treatment Requested]**/day plus
travel and material expenses. (Est. time 3 days).
o Voice Recognition Overview
o Cut Thru Sensitivity
o Speaker Dependent
o Speaker Independent
o Continues
o Discreet
o Phonetics
o Voice Print
o Product Design
o Limitations / Expectations
o Language
1
<PAGE>
5. Licensee Customer Provisioning - [Confidential Treatment Requested]**/hour
plus system access connection charges.
6. Technical Support Help Desk. On a time and materials basis.
2
<PAGE>
EXHIBIT F
SOURCE CODE ESCROW AGREEMENT
This Source Code Escrow Agreement is made as of this 3rd day of June,
1999, among Preferred Voice, Inc., a Delaware corporation ("Licensor"), KMC
Telecom Holdings, Inc., a Delaware corporation, on behalf of itself and its
wholly owned subsidiaries and affiliates ("Licensee"), and Chase Bank of Texas,
N.A. ("Escrow Agent").
The parties hereto hereby agree as follows:
1 Definitions.
(a) The "License Agreement" means the Software License
Agreement between Licensor and Licensee dated as of June 3, 1999.
(b) The "Source Code" means the source code listings in
magnetic media form and related programmer-level documentation for the computer
programs licensed to Licensee under the License Agreement and defined therein as
Software, together with any Updates as defined in this Agreement.
2. Escrow.
Pursuant to the terms of this Agreement, Licensor shall deposit the
Source Code in escrow with Escrow Agent to be released by Escrow Agent to
Licensee as authorized by this Agreement.
3. Ownership of Source Code.
Licensor warrants to Licensee that it possesses all of the rights in
the Source Code necessary to enter into this Agreement and to deposit the Source
Code with the Escrow Agent pursuant to its terms.
4. Initial Deposit of Source Code.
Licensor agrees to deposit with Escrow Agent, within ten (10) days of
the date the customer accepts the programs licensed to Licensee pursuant to the
License Agreement (collectively the "Licensed Software") a copy of the Source
Code corresponding to the Licensed Software.
5. Updates.
During the term of this Agreement, Licensor shall deposit with the
Escrow Agent the source code, listings, and related programmer-level
documentation for every update, correction, or new release of the Licensed
Software (collectively "Updates") released to Licensee in object code form.
Source code, listings and related programmer-level documentation shall be
deposited concurrently with each Update, but no more frequently than monthly nor
less frequently than quarterly (which quarterly deposits shall be made on or
about each January 1, April 1, July 1 and October 1 of each year during the term
of this Agreement).
1
<PAGE>
6. Title.
Title to the Source Code will remain in Licensor. The rights of Escrow
Agent and Licensee in the Source Code are limited to the rights specifically
granted in this Agreement and will remain subject to the terms and conditions of
this Agreement.
7. Release of Source Code to Licensee.
If Licensee concludes that Licensor has failed in any material respect
to comply with the License Agreement or to update the Source Code pursuant to
Section 5 of this Agreement (which failure may include Licensors failure to be
Year 2000 Compliant (as defined in the License Agreement) and failure to remedy
such breach), or upon Licensor's making of an assignment for the benefit of its
creditors, or the institution by or against Licensor of proceedings in
bankruptcy looking towards the liquidation of Licensor or under any insolvency
or similar law or for receivership or dissolution, or Licensor's cessation of
business, it may notify Licensor in writing, specifying in reasonable detail the
matters that Licensor has failed to perform. For a period of twenty (20) days
after receipt of the notice, Licensor will have the right to cure the identified
breaches. In the event that Licensee concludes that the identified breaches have
not been cured within that period of time, Licensee may notify both Licensor and
Escrow Agent and demand that Escrow Agent release the Source Code to Licensee.
If Licensor disagrees that its obligations have been and remain breached,
Licensor may, within fifteen (15) days after receipt of Licensee's notice and
demand for release, notify both Escrow Agent and Licensee that it objects to
release of the Source Code. The failure of Licensor to furnish timely notice
objecting to the immediate release of the Source Code will conclusively
establish its consent to the immediate release of the Source Code to Licensee,
and the copy of the Source Code deposited in escrow in accordance with this
Agreement shall be released to Licensee. In the event of Licensor's timely
objection to release of the Source Code, representatives of Licensor and
Licensee shall meet no later than five (5) days after delivery of the objection
to attempt to resolve the dispute. If Licensor and Licensee are unable to
resolve the dispute within the following five (5) days, then either party may
commence arbitration under Section 8 to resolve the dispute.
8. Arbitration
(a) Licensee and Licensor agree that all disputes arising
hereunder between them that cannot be resolved by negotiation shall be resolved
through binding arbitration. Such arbitration will be conducted in Dallas,
Texas, or such other place as may be agreed to by the parties. These parties
further agree that this agreement to arbitrate may be enforced by an application
to any court having jurisdiction over the parties and the controversy.
(b) Unless otherwise agreed, the arbitration shall be
conducted by a three (3) arbitrators, one (1) of whom shall be selected by
Licensor, one (1) of whom shall be selected by Licensee and one (1) of whom
shall be selected by the arbitrators chosen by Licensor and Licensee to agree
upon an arbitrator. If a party (including the designated arbitrators) does not
select an arbitrator within ten (10) days of election to arbitrate, the other
party or parties may apply to the American Arbitration Association ("AAA") to
select an arbitrator who is reasonably familiar with the computer industry.
(c) The arbitrators shall set a time for a hearing of the
dispute not later than 10 days after their appointment, and a decision shall be
rendered no later than 30 days after the last hearing date, unless the parties
agree otherwise.
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(d) The arbitration shall be conducted using the then
prevailing rules of the AAA for commercial arbitrations, including rules
relating to discovery; provided, however, that the arbitration will not be
conducted under the auspices of the AAA and the fee schedule of the AAA will not
apply unless AAA-appointed arbitrators are used or the parties agree to do so.
(e) The arbitrators will be limited to interpreting or
construing the applicable provisions of the License Agreement and this
Agreement, and will have no authority or power to alter, amend, modify, revoke
or suspend any condition or provisions of the License Agreement or this
Agreement.
(f) The arbitrators will be empowered to compel Licensor to
comply with its obligations under Sections 4 or 5 of this Agreement or to
prevent Licensor from wrongfully preventing or delaying the release of the
Source Code to Licensee.
(g) If the arbitrators find Licensor breached its obligations
but also find that it did so as part of a good faith dispute of its obligations
under the License Agreement or this Agreement, then the arbitrators shall order
Licensor to perform its obligations within fifteen (15) days, and may only order
release of the Source Code in the event Licensor does not so perform.
(h) The decision of the arbitrators will be binding on the
parties and will be enforceable in any court having jurisdiction over the
parties and the controversy.
(i) The arbitration costs shall be borne by the losing party,
and the prevailing party in the arbitration will be reimbursed for the
reasonable costs and expenses it incurs in the arbitration.
(j) In the event Escrow Agent institutes a petition for
interpleader in accordance with Section 12 or otherwise invokes the jurisdiction
of any court, then any party may petition such court to refer the dispute to
arbitration in accordance with this Section 8 and the court shall enforce the
decision of the arbitrator in disposing of such interpleader or other action.
9. License of Source Code.
Effective upon the delivery of the Source Code to Licensee in
accordance with the terms of this Agreement, Licensor grants to Licensee a
personal, nonexclusive, and nontransferable license only to use, modify,
maintain, and update the Source Code, solely for Licensee's internal business
and exclusively for the purpose of maintaining and updating the Licensed
Software. All modifications, enhancements, maintenance and updates to the
Licensed Software will be the property of Licensor, subject to Licensor
reimbursing Licensee for its costs of such work. Escrow Agent and Licensee shall
treat and preserve the Source Code as a trade secret of Licensor in accordance
with the same practices employed by Escrow Agent and Licensee to safeguard their
respective trade secrets against unauthorized use and disclosure. This Section
will survive the termination of this Agreement.
10. Scope of Understanding.
Escrow Agent's duties and responsibilities in connection with this
Escrow Agreement shall be purely ministerial and shall be limited to those
expressly set forth in this Escrow Agreement. Escrow Agent is not a principal,
participant or beneficiary in any transaction underlying this Escrow Agreement
and shall have no duty to inquire beyond the terms and provisions hereof. Escrow
Agent
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shall have no responsibility or obligation of any kind in connection with this
Escrow Agreement or the Source Code and shall not be required to deliver the
Source Code or take any action with respect to any matters that might arise in
connection therewith, other than to receive, hold and deliver the Source Code as
herein provided. Without limiting the generality of the foregoing, it is hereby
expressly agreed and stipulated by the parties hereto that Escrow Agent shall
not be required to exercise any discretion hereunder. Escrow Agent shall not be
liable for any error in judgment, any act or omission, any mistake of law or
fact, or for anything it may do or refrain from doing in connection herewith,
except for, subject to Section 11 herein, its own willful misconduct or gross
negligence. It is the intention of the parties hereto that Escrow Agent shall
never be required to use, advance or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or the exercise of
any of its rights and powers hereunder.
11. Reliance; Liability.
Escrow Agent may rely on, and shall not be liable for acting or
refraining from acting Upon, any written notice, instruction or request or other
paper furnished to it hereunder or pursuant hereto and believed by it to have
been signed or presented by the proper party or parties. Escrow Agent shall be
responsible for holding and delivering the Source Code pursuant to this Escrow
Agreement; provided, however, that in no event shall Escrow Agent be liable for
any lost profits, lost savings, or other special, exemplary, consequential, or
incidental damages in excess of Escrow Agent's fee hereunder and provided,
further, that Escrow Agent shall have no liability for any loss arising from any
cause beyond its control, including, but not limited to, the following: (a) act
of God, force majeure, including, without limitation, war (whether or not
declared or existing), revolution, insurrection, riot, civil commotion,
accident, fire, explosion, stoppage of labor, strikes and other differences with
employees; (b) the act, failure or neglect of either Licensor or Licensee or any
agent or correspondent or any other person selected by Escrow Agent; (c) any
delay, error, omission or default of any mail, courier, telegraph, cable or
wireless agency or operator; or (d) the acts or edicts of any government or
governmental agency or other group or entity exercising governmental powers.
Escrow Agent is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or Validity of the subject matter of this
Escrow Agreement or any part hereof or for the transaction or transactions
requiring or underlying the execution of this Escrow Agreement, the form or
execution hereof or for the identity or authority of any person executing this
Escrow Agreement or any part hereof or depositing the Source Code.
12. Right of Interpleader.
Should any controversy arise involving the parties hereto or any of
them or any other person, firm or entity with respect to this Escrow Agreement
or the Source Code, or should a substitute escrow agent fail to be designated as
provided in Section 17 hereof, or if Escrow Agent should be in doubt as to what
action to take, Escrow Agent shall have the right, but not the obligation,
either to (a) withhold delivery of the Source Code until the controversy is
resolved, the conflicting demands are withdrawn or its doubt is resolved or (b)
institute a petition for interpleader in any court of competent jurisdiction to
determine the rights of the parties hereto. In the event Escrow Agent is a party
to any dispute, Escrow Agent shall have the additional right to refer such
controversy to binding arbitration. Should a petition for interpleader be
instituted, or should Escrow Agent be threatened with litigation or become
involved in litigation or binding arbitration in any manner whatsoever in
connection with this Escrow Agreement or the Source Code, then, as between (a)
Licensor and Licensee on the one hand and (b) Escrow Agent on the other,
Licensor and Licensee hereby jointly
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and severally agree to reimburse Escrow Agent for its attorneys' fees and any
and all other expenses, losses, costs and damages incurred by Escrow Agent in
connection with or resulting from such threatened or actual litigation or
arbitration prior to any disbursement hereunder.
13. Indemnification.
Licensor and Licensee hereby jointly and severally indemnify Escrow
Agent, its officers, directors, partners, employees and agents (each herein
called an "Indemnified Party") against, and hold each Indemnified Party harmless
from, any and all expenses, including, without limitation, attorneys' fees and
court costs, losses, costs, damages and claims, including, but not limited to,
costs of investigation, litigation and arbitration, tax liability and loss on
investments suffered or incurred by any Indemnified Party in connection with or
arising from or out of this Escrow Agreement, except such acts or omissions as
may result from the willful misconduct or gross negligence of such Indemnified
Party. IT IS THE EXPRESS INTENT OF EACH OF LICENSOR AND LICENSEE TO INDEMNIFY
AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM THEIR OWN NEGLIGENT ACTS
OMISSIONS.
14. Compensation and Reimbursement of Expenses.
As between (a) Licensor on the one hand and (b) Licensee on the other,
Licensee hereby agrees to pay Escrow Agent for its services hereunder in
accordance with the Fee Schedule I attached hereto by Escrow Agent and to pay
all expenses incurred by Escrow Agent in connection with the performance of its
duties and enforcement of its rights hereunder and otherwise in connection with
the preparation, operation, administration and enforcement of this Escrow
Agreement, including, without limitation, attorneys' fees and related expenses
incurred by Escrow Agent. The foregoing notwithstanding, as between (a) Licensor
and Licensee on the one hand and (b) the Escrow Agent on the other, Licensor and
Licensee shall be jointly and severally liable to Escrow Agent for the payment
of all such fees and expenses.
15. Consultation with Legal Counsel.
Escrow Agent may consult with its counsel or other counsel satisfactory
to it concerning any question relating to its duties or responsibilities
hereunder or otherwise in connection herewith and shall not be liable for any
action taken, suffered or omitted by it in good faith upon the advice of such
counsel.
16. Choice of Laws; Cumulative Rights.
This Escrow Agreement shall be construed under, and governed by, the
laws of the State of Texas, excluding, however (a) its choice of law rules and
(b) the portions of the Texas Trust Code Sec. 111.001, et seq. of the Texas
Property Code concerning fiduciary duties and liabilities of trustees. All of
Escrow Agent's rights hereunder are cumulative of any other rights it may have
at law, in equity or otherwise.
17. Resignation.
Escrow Agent may resign hereunder upon ten (10) days' prior notice to
Licensor and Licensee. Upon the effective date of such resignation, Escrow Agent
shall deliver the Source Code to any substitute escrow agent designated by
Licensor and Licensee in writing. If Licensor and Licensee fail to designate a
substitute escrow agent within ten (10) days after the giving of such notice,
Escrow Agent may, at its option, institute a petition for interpleader. Escrow
Agent's sole
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responsibility after such 10-day notice period expires shall be to hold the
Source Code and to deliver the same to a designated substitute escrow agent, if
any, or in accordance with the directions of a final order or judgment of a
court of competent jurisdiction, at any which time of delivery Escrow Agent's
obligations hereunder shall cease and terminate.
18. Severability.
If one or more of the provisions hereof shall for any reason be held to
be invalid, illegal or unenforceable in any respect under applicable law, such
invalidity, illegality or unenforceability shall not affect any other provisions
hereof, and this Escrow Agreement shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein, and the remaining
provisions hereof shall be given full force and effect.
19. Assignment.
This Escrow Agreement shall not be assigned by either Licensor or
Licensee (except to affiliates thereof) without the prior written consent of
Escrow Agent, which consent shall not be unreasonably withheld.
20. Term of Agreement.
The term of this Agreement commences on its effective date and will
continue until the Source Code is delivered to Licensee pursuant its terms; or
if the transfer has not occurred, this Agreement will terminate and the Source
Code will be destroyed upon Licensee's termination of this Agreement or upon
termination of the License Agreement, whichever occurs first.
21. Notices.
All notices required or permitted to be given hereunder shall be in
writing and shall be valid and sufficient if dispatched either (i) by hand
delivery, (ii) by telex, cable or facsimile transceiver, with confirming letter
mailed promptly thereafter in accordance with clause (iv) hereof, (iii) by
reputable overnight express courier or (iv) by certified mail, postage prepaid,
return receipt requested, deposited in any post office in the United States, in
any case, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided from time to time in the
manner set forth above. When sent by cable or facsimile as aforesaid, notices
given as herein provided shall be considered to have been received when sent
during normal business hours; otherwise, notices shall be considered to have
been received only upon delivery or attempted delivery during normal business
hours.
22. General.
This Agreement contains the complete and exclusive agreement between
the parties, supersedes any and all prior or oral written communications,
proposals, and agreements, and may not be waived or modified except by the
parties' written agreement. The paragraph headings in this Agreement are for
convenience only; they form no part of the Agreement and will not affect its
interpretation. No delay or failure of any party in exercising any right under
this Agreement and no partial or single exercise of a right will be deemed to
constitute a waiver of that right or any other right under the agreement.
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IN WITNESS WHEREOF, the parties, by their duly authorized officers, have
executed this Escrow Agreement.
PREFERRED VOICE, INC. KMC TELECOM HOLDINGS, INC.
By: on behalf of itself and its wholly owned
---------------------------- subsidiaries and affiliates
Name: By:
---------------------------- -----------------------------------
Title: Name:
---------------------------- -----------------------------------
Title:
6500 Greenville Avenue -----------------------------------
Suite 570 1545 Route 206
Dallas, Texas 75206 Suite 300
Fax: 214-265-9663 Bedminister, New Jersey 07921
Phone: 214-265-9580 Fax: 908-719-8775
Phone: 908-719-2200
Chase Bank of Texas, N. A.
Escrow Agent
By:
----------------------------
Its:
----------------------------
Address:
----------------------------
----------------------------
Fax:
----------------------------
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EXHIBIT G
Form of Acceptance Certificate
The undersigned, an authorized representative of KMC Telecom Holdings, Inc., a
Delaware corporation, on behalf of itself and its wholly owned subsidiaries and
affiliates ('Licensed'), in his/her capacity as , does hereby certify that (a)
the testing period (as such term is defined in the Software License Agreement,
dated as of May ___, 1999 (the "Agreement"), by and between Preferred Voice,
Inc. ("Licensor") and Licensee with respect to the System (as defined in the
Agreement) purchased or licensed by Licensee has been successfully completed,
(b) the System satisfies the requirements of the Specifications (as defined in
the Agreement) and (c) the System is hereby accepted by Licensee.
Date: KMC TELECOM HOLDINGS, INC.
--------------------------
By:
-----------------------------------
Printed Name:
-----------------------------------
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SCHEDULE 1
ESCROW AGENT FEES
9
EXHIBIT 10.14
This Note has not been registered under the Securities Act of 1933, as amended
(the "Act"), and may not be sold, transferred, assigned or otherwise disposed of
unless the person requesting the transfer of the Note shall provide an opinion
of counsel to Preferred/telecom, Inc. (the "Company") (both counsel and opinion
to be satisfactory to the Company) to the effect that such sale, transfer,
assignment or disposition will not involve any violation of the registration
provisions of the Act or any similar or superseding statute.
PROMISSORY NOTE
$ 43,000.00 Dallas, Texas March 30, 1999
FOR VALUE RECEIVED, Preferred Voice, Inc., a Delaware corporation,
promises to pay to the order of G. Tyler Runnels at 1999 Avenue of the Stars,
Suite 2530, Los Angeles, CA 90067 or at such other address as the holder hereof
may designate, the principal sum of Forty Three Thousand Dollars ($ 43,000.00),
together with interest on the unpaid principal balance from the date hereof
until this note is paid in full at a rate of 12% per annum.
Principal and interest shall be payable as follows:
a. Upon funding of KMC Telecom agreement, or
b. Through payment of 50% of proceeds from sales of master
distributorships sold after this date, or
c. One year from issuance of this note,
whichever is earlier until note and-interest is fully paid.
All payments received shall be applied first to the payment of accrued
interest and then to the payment of principal.
Maker shall have the right to prepay any and all amounts due hereunder
without penalty for the privilege of doing so.
No payment shall be considered in default unless it is not paid within
ten (10) days after delivery of written notice of nonpayment.
Any time prior to repayment, Holder will have the right to convert this
note into shares of common stock, $.001 par value per share, of Maker, at the
conversion rate of one share of common stock for each $1.00 of principal and
interest due on the note on the date of conversion.
In the event default is made in the payment of this Note, the unpaid
balance on this Note shall at once become due and payable, without notice, at
the option of the Holder. Failure to exercise this option shall not constitute a
waiver of the right to declare the entire principal due and payable at once at
any subsequent time.
<PAGE>
All past due principal on this Note shall bear interest at a rate of
18% per annum from maturity until paid.
In the event default is made in the payment of this Note, then the
holder will have the right from and after such default to convert the unpaid
balance on this Note into the number of shares of common stock, $.001 par value
per share, of Maker (the "Stock"), derived from dividing the unpaid balance by
the conversion rate where the conversion rate equals one-half of the average
closing price of the Stock on the exchange on which it is traded for the 45 day
period prior to conversion or if the Stock is not then traded on an exchange,
one-half of the average of the last bid price for the 45 day period prior to the
conversion.
If, after default, this Note is placed in the hands of an attorney for
collection, or if collected through judicial proceeding, Maker shall pay, in
addition to the sums referred to above, a reasonable sum as a collection or
attorneys' fee and all other costs incurred by Holder in collection of the
unpaid amounts due hereunder.
Each maker, surety, guarantor, endorser or other party liable for the
payment of this Note, in whole or in part, hereby expressly waives presentment
and demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and nonpayment, bringing
of suit and diligence in taking any action to collect sums owing hereon, and
agree that this Note, and any payment hereunder, may be extended from time to
time without in any way affecting such liability.
MAKER:
Preferred Voice, Inc.
By: -----------------------
G. RAY MILLER
Chief Executive Officer
EXHIBIT 10.15
EQUIPMENT LEASE
This Equipment Lease, dated as of May 1, 1998, is made by and between
Preferred Voice, Inc., a Delaware corporation (hereinafter referred to as
"Lessee") and Capital Growth Fund Ltd. (hereinafter referred to as "Lessor").
In consideration of the mutual agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
LEASE OF EQUIPMENT
Lessor agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, a VIP System consisting of the items identified on Attachment "A" (the
"Equipment").
ARTICLE II
TERM
This Lease will commence on May 1, 1998, and will continue in effect for 36
months.
ARTICLE III
RENTAL PAYMENTS
3.1. Rentals. Lessee shall pay to Lessor $3,581.08 on the lst day of
each month during the term of this Lease as rental for the Equipment (the
"Monthly Rental Payment") . Provided Lessee is not then in default, Lessee has
the option to purchase the Equipment at any time during the term of this Lease
for a price determined in accordance with Attachment "B."
3.2. Past Due Interest. In the event Lessee fails to pay any Monthly
Rental Payment when due (or any other sum to be paid by Lessee under this
Lease), Lessee shall pay to Lessor interest on such monthly Rental Payment (or
other sum) from the due date thereof and after any grace period to the date of
payment, at the rate of eighteen percent (18%) per annum.
ARTICLE IV
USE OF EQUIPMENT
4.1. Rights of Lessee. Lessee has the right to the use, operation,
possession and control of the Equipment while the Lease is in effect. Lessee
will have absolute control, supervision and responsibility over the operators or
users of the Equipment, subject to the restrictions set forth below.
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4.2. Duties of Lessee. Lessee must use the Equipment in a careful and
proper manner, and will not permit any Equipment to be operated or used in
violation of any applicable federal, state or local statute, law, ordinance,
rule or regulation relating to the possession, use or maintenance of the
Equipment. Lessee shall use the Equipment in accordance with any applicable
vendor's or manufacturer's manuals or instructions, by competent and fully
qualified personnel only. Lessee shall reimburse Lessor in full for all damage
to the Equipment arising from any misuse or negligent act by Lessee, its
employees, and its agents. Lessee shall indemnify and hold Lessor harmless from
all liabilities, fines, forfeitures or penalties for violations of any statute,
law, ordinance, rule or regulation of any duly constituted public authority.
4.3. Location of Equipment. The Equipment will be located in the
offices of American Communications Services, Inc., 2323 Bryan Street, Ste 200,
Dallas, Texas, 75201 and may not be moved from that location without the prior
written consent of Lessor, which may not be unreasonably withheld.
4.4 Commercial Use Limitation. Lessee represents and warrants that the
Equipment will be used for commercial or business purposes only.
ARTICLE V
MAINTENANCE, REPAIRS AND ALTERATIONS PERFORMED BY LESSEE
5.1. Maintenance and Repairs. Lessee shall assume all obligations and
liability concerning possession of the Equipment, and for its use, operation,
condition and storage while this Lease is in effect. Lessee shall, at Lessee's
expense, maintain the Equipment in good mechanical condition and running order,
excepting reasonable wear and tear resulting from the ordinary use of the
Equipment. Lessee shall, at its own expense, provide all parts, mechanisms and
devices required to keep the Equipment in good repair, condition and running
order. Lessor is under no liability or obligation to provide service,
maintenance, repairs or parts for the Equipment.
5.2. Alterations and Additions. Without the prior written consent of
Lessor, which consent may not be unreasonably withheld, Lessee will not make any
alterations, additions or improvements to the Equipment, other than those
required to keep the Equipment in good condition and running order, as described
in Section 5.1.
ARTICLE VI
PASS THROUGH OF WARRANTIES
Lessor hereby assigns to Lessee (to the extent assignable) any and all
rights Lessor may have to enforce any warranty in respect of the Equipment and
agrees to enforce for the benefit of Lessee (but at Lessee's sole expense) every
such warranty that is not assigned hereby.
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ARTICLE VII
OPERATING EXPENSES
Lessee shall pay for all expenses of operating the Equipment and all
other charges in connection with the operation of the Equipment.
ARTICLE VIII
TAXES
Lessee is liable for, and required to pay on or before their due dates,
all sales, use, or personal property taxes imposed on the Equipment.
ARTICLE IX
OWNERSHIP
9.1. Warranty of Title. Lessor warrants that it has clear title to the
Equipment, free and clear of any liens, encumbrances or claims of third parties,
and Lessee is entitled to quiet possession of the Equipment. Lessor shall
indemnify and hold Lessee harmless from any damages, cost or expense Lessee may
suffer arising out of Lessor's breach of its warranty of title.
9.2. No Sale or Security Interest Intended. This agreement constitutes
a lease of the Equipment and not a sale or the creation of a security interest.
Unless and until lessee exercises its purchase option, Lessor retains sole
ownership and title of the Equipment subject to any liens it has granted, and
Lessee will not have any right, title, equity or other interest in the
Equipment, except the right to possession and use as provided for in this Lease.
9.3. Identification Markings. Lessor has the right to require Lessee to
place and maintain on the exterior or interior of each piece of Equipment a
reasonable label reflecting Lessor's ownership. Lessee may not remove, obscure,
deface or obliterate the inscription or permit any other person to do so.
9.4. No Liens. Lessee shall at all times keep the Equipment free and
clear from any liens or encumbrances of Lessee's creditors or other persons
having claims against (or otherwise claiming through) Lessee.
9.5. Personal Property. Lessor and Lessee hereby agree that the
Equipment will always remain and be deemed personal or moveable property, and
Lessee covenants not to enter into any agreement with any third party or take
any action inconsistent with the foregoing.
9.6. Sublease. Lessee may not sublease any item of Equipment or assign
this Lease to any other party without the prior written consent of Lessor,
provided Lessor does not unreasonably
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withhold such consent. No such sublease or assignment will in any way relieve
Lessee of its obligations hereunder. If Lessee subleases any item of Equipment
or assigns this Lease in accordance with the provisions of this Section 9.6,
Lessor may accept rental and other payments directly from such sublessee or
assignee, but no such acceptance will in any way constitute a release of Lessee
from its obligations under the Lease except to the extent that any such
sublessee or assignee actually makes such payment.
ARTICLE X
INSURANCE
10.1. Lessee's Obligation to Insure. Lessee shall provide fire, theft
and comprehensive insurance coverage for all Equipment at Lessee's expense, in a
commercially reasonable amount.
10.2. Excess Liability Indemnity. Lessee agrees to indemnify and hold
Lessor harmless from all loss, liability and expense, including reasonable
attorneys' fees, in excess of the limits of liability insurance for bodily
injury, death or property damage caused by or arising out of the ownership,
maintenance, use or operation of the Equipment, as provided for in this Article.
Lessee further agrees to indemnify and hold harmless Lessor from and against
loss, liability and expense, including reasonable attorneys' fees, because of
Lessee's failure to comply with any terms, provisions and conditions of any
insurance policy insuring Lessor and Lessee or because of Lessee's failure to
comply with the terms and provisions of this Article.
ARTICLE XI
INDEMNIFICATION AND LIABILITY
11.1. Risk of Liability Assumed by Lessee. Lessee assumes all risk and
liability for the loss of or damage to the Equipment, for the death of or injury
to any person or property of another and for all other risks and liabilities
arising from the use, operation, condition, possession or storage of the
Equipment. Nothing in this Lease authorizes Lessee or any other person to
operate any of the Equipment so as to impose any liability or other obligation
on Lessor.
11.2. Lessee's Duty to Indemnify. Lessee agrees to indemnify, defend
and hold harmless Lessor from all claims, loss or damage Lessor may sustain for
any of the following reasons:
(a) Loss of, or damage to, any Equipment by any cause;
(b) Injury to, or death of, any person, including but not
limited to agents or employees of Lessee arising from the use,
possession, selection, delivery, return, condition or operation of any
of the Equipment;
(c) Damage to any property arising from the use, possession,
selection, delivery, return, condition or operation of any of the
Equipment.
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Lessee shall reimburse Lessor for all expenses, losses, liabilities,
fines, penalties and claims of every type, including reasonable attorneys' fees,
imposed on or incurred by Lessor due to Lessee's use or operation of any
Equipment, or because of the failure by Lessee to perform any of the Lease
terms. Lessee shall also pay interest at the highest legal rate from the day any
such payment is made by Lessor until the date Lessor is reimbursed by Lessee.
ARTICLE XII
ACCIDENT, LOSS OF, OR DAMAGE TO EQUIPMENT
12.1. Notification to Lessor. If any Equipment is damaged, lost, stolen
or destroyed as a result of its operation, use, maintenance or possession,
Lessee shall promptly notify Lessor of the occurrence and shall file all
necessary accident reports, including those required by law and those required
by interested insurance companies.
12.2. Cooperation in Defense of Claims. Lessee and its employees and
agents shall cooperate fully with Lessor and all insurers providing insurance
under this Lease in the investigation and defense of all claims or suits. Lessee
shall promptly deliver to Lessor all papers, notices and documents served on, or
delivered to, Lessee or its employees and agents in connection with any claim,
suit, action or proceeding at law or in equity commenced or threatened against
Lessee or Lessor concerning the Equipment.
12.3. Options of Lessor. In the event of loss or damage of any kind to
any item of Equipment, Lessee, at its option, shall:
(a) Place such Equipment in good repair, condition and working
order; or
(b) Replace such Equipment with like Equipment in good repair,
condition and working order.
ARTICLE XIII
EVENT OF DEFAULT
The failure of Lessee to pay, within ten (10) days following receipt of
written notice from Lessee of non-payment on the due date, any rent or other
amount required to be paid to Lessor under this Lease or any other agreement
between Lessee and Lessor or to perform, within thirty (30) days after written
notice by Lessor specifying the default, any covenant, condition or obligation
required to be performed by Lessee under this Lease or any other agreement
between Lessee or Lessor will constitute an Event of Default.
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ARTICLE XIV
RIGHTS, REMEDIES AND OBLIGATIONS ON DEFAULT
14.1. Lessor's Rights and Remedies. In case of an Event of Default by
Lessee under the Lease, Lessor will have the right to exercise any one or more
of the following remedies:
(a) To terminate the Lease of the Equipment and Lessee's
rights thereunder as to any or all items of such Equipment;
(b) To repossess the Equipment without legal process. Lessee
agrees that, upon default, Lessor or Lessor's agent may enter upon any
premises where the Equipment is located and repossess and remove it.
Lessee specifically waives any right of action Lessee might otherwise
have arising out of the entry and repossession, and releases Lessor of
any claim for trespass or damage caused by reason of the entry,
repossession, or removal. Any repossession of a particular item of
Equipment will not constitute a termination of this Lease as to any
other items of Equipment, unless Lessor expressly so notifies Lessee in
writing;
(c) To exercise any other remedy permitted at law or in
equity.
14.2. Lessee's Obligation for Lessor's Costs and Attorneys' Fees. Upon
default, Lessee shall reimburse Lessor for all reasonable expenses of
repossession and enforcement of Lessor's rights and remedies, together with
interest at the rate of eighteen percent (18%) per annum. until the date of
payment. Notwithstanding any other provisions of this Lease, if Lessor places
all or any part of Lessor's claim against Lessee in the hands of an attorney for
collection, Lessee shall pay Lessor's reasonable attorneys' fees.
14.3. Remedies Cumulative. The remedies of Lessor set forth in this
Article are cumulative to the extent permitted by law and may be exercised
partially, concurrently, or separately. The exercise of one remedy may not be
deemed to preclude the exercise of any other remedy.
14.4. Failure to Enforce Not Waiver. Any failure or delay on the part
of Lessor to exercise any remedy or right under this Lease will not operate as a
waiver. The failure of Lessor to require performance of any of the terms,
covenants, or provisions of this Lease by Lessee will not constitute a waiver of
any of the rights under the Lease. No forbearance by Lessor to exercise any
rights or privileges under this Lease will be construed as a waiver, but all
rights and privileges shall continue in effect as if no forbearance had
occurred. No covenant or condition of this Lease may be waived except by the
written consent of Lessor. Any such written waiver of any term of this Lease
will be effective only in the specific instance and for the specific purpose
given.
6
<PAGE>
ARTICLE XV
PAYMENT BY LESSOR
In the event Lessee fails to procure, maintain or pay for any insurance
required to be procured, maintained and paid for by Lessee hereunder, or to make
any payment required to be made by Lessee hereunder (including, but not limited
to, the payment of any fees, assessments, charges or taxes), Lessor has the
right, but is not obligated, to obtain such insurance, or make such payment, on
behalf of Lessee. In the event Lessor does so, Lessee shall reimburse Lessor for
the cost thereof upon demand and the failure to make such reimbursement within
ten (10) days after demand will constitute an Event of Default hereunder as
defined in Article 13 hereof.
ARTICLE XVI
DISCLAIMER AND WARRANTIES
Lessor warrants that it owns the Equipment free and clear of any liens
or other encumbrances and is hereby transferring the Equipment with clear title.
LESSOR OTHERWISE LEASES THE EQUIPMENT AS IS WITHOUT WARRANTY OF ANY KIND
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE XVII
RETURN OF EQUIPMENT
In the event Lessee does not exercise its purchase option after written
notice from Lessor upon the termination of this Lease, Lessee shall return to
Lessor the Equipment free and clear of all liens or encumbrances of Lessee's
creditors or other persons having claims against or otherwise claiming through
Lessee; and in such condition, repair and working order as the Equipment was in
on the date of this Lease, ordinary wear and tear resulting from the proper use
thereof excepted.
ARTICLE XVII
NOTICES
All notices required or permitted to be given hereunder shall be in
writing and will be valid and sufficient if dispatched by (i) hand delivery,
(ii) by telex, cable or facsimile transceiver, with confirming letter mailed
promptly thereafter in accordance with clause (iv) hereof, (iii) by reputable
overnight express courier or (iv) by certified mail, postage prepaid, return
receipt requested, deposited in any post offices in the United States, as the
case may be, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided, from time to time. Either
party may change its address by notice given to the other party in the manner
set forth above. When sent by cable or facsimile as aforesaid, notices given
7
<PAGE>
as herein provided are considered to have been received when sent; otherwise,
notices are considered to have been received only upon delivery or attempted
delivery during normal business hours.
ARTICLE XVIII
AMENDMENT AND MODIFICATION
This Lease may not be amended, modified or altered in any manner except
in a writing signed by both parties.
ARTICLE XIX
ENTIRE AGREEMENT
This Lease constitutes the entire agreement between the parties
respecting the subject matter. No agreements, representations or warranties
other than those specifically set forth in this Lease are binding on any of the
parties unless set forth in writing and signed by both parties.
ARTICLE XX
GOVERNING LAW
This Lease has been executed and delivered in the State of Texas and
shall be interpreted under, and construed in accordance with, the law of Texas,
without regard to choice of law principles that may apply a different state's
substantive law. It is agreed that Texas law controls the validity of, and the
obligations created by, this Lease.
ARTICLE XXI
EFFECT OF PARTIAL INVALIDITY
Should any part of this Agreement for any reason be declared invalid,
such decision will not affect the validity of any remaining portions, which
shall remain in force and effect as if this Agreement had been executed with the
invalid portion thereof eliminated, and it is hereby declared the intention of
the parties hereto that they would have executed the remaining portion of this
Agreement without including therein any such part or portion which may for any
reason be hereafter declared invalid.
8
<PAGE>
ARTICLE XXII
HEADINGS
Headings used in this Agreement are to facilitate reference only, do
not form a part of this Agreement, and may not in any way affect the
interpretation hereof.
ARTICLE XXIII
NO WAIVER
No failure on the part of any party to exercise, and no delay in
exercising, any right or remedy hereunder will operate as a waiver thereof. Nor
will any single or partial exercise of any right or remedy hereunder exclude any
other or further exercise thereof or the exercise of any other right hereunder.
ARTICLE XXIV
ATTORNEYS' FEES
The prevailing party in any litigation, arbitration or other
proceedings arising out of this Agreement shall be reimbursed by the other party
for all costs and expenses incurred in such proceedings, including reasonable
attorneys' fees.
ARTICLE XXV
FORCE MAJEURE
No party hereto will be liable for delay or default in performing
hereunder if such performance is delayed or prevented by conditions or events
beyond such party's control. If a Force Majeure condition occurs, the party
delayed or unable to perform shall give immediate notice of such occurrence to
the other party. The party affected by the other party's inability to perform
may, after sixty (60) days, elect to either terminate this Agreement or continue
performance with the option of extending the terms of the Agreement up to the
length of time the Force Majeure conditions endure. The party experiencing the
Force Majeure condition must inform the other party in writing when such a
condition ceases to exist.
9
<PAGE>
LESSEE: LESSOR:
PREFERRED VOICE, INC. CAPITAL GROWTH FUND LTD.
By: /s/ G. Ray Miller By: /s/ Illegible
----------------- ---------------------
Its: Chairman Its:
6500 Greenville Avenue P. O. Box 3444
Suite 570 Road Town, Tortola
Dallas, Texas 75206 British Virgin Islands
(214) 265-9663
10
<PAGE>
Equipment Lease
Attachment "A"
19' rack mountable chassis
Intel pentium 200
64 MB Simm
Quantum Atlas 2.1 GB HDD #182710453776KT
48 Ports w/4 ports VCS continuous
4 Ports VCS phonetics
Modem/Fax 56K Class 2 Internal #217C2AM7PN8200084005 Dialogic Cards:
2 Antares 2000 X 50 MHS
3 160 SCLS 16 port card
14' Monitor
Microsoft serial mouse
Keyboard
1 copy Preferred VIP SRO software (object code only) 1 copy NT Workstation 1
copy PC anywhere
11
<PAGE>
Equipment Lease
Attachment "B"
After
Purchase
Price
98,085.59
96,139.27
94,160.51
92,148.77
90,103.50
88,024.15
85,910.14
83,760.89
81,575.83
79,354.34
77,095.84
74,799.69
72,465.27
70,091.94
67,679.06
65,225.97
62,731.99
60,196.44
57,618.63
54,997.86
52,333.41
49,624.56
46,870.55
44,070.65
41,224.08
38,330.07
35,387.32
32,396.54
29,355.40
26,263.58
23,120.23
19,924.48
16,675.48
13,372.32
10,014.11
6,600.00
12
<PAGE>
AMENDMENT NO. 1 TO LEASE AGREEMENT
The Lease Agreement dated May 1, 1998, between Preferred Voice, Inc. and Capital
Growth Fund Ltd. is hereby amended to include Article XXVI in its entirety as
follows:
ARTICLE XXVI
Lessor has the option at any time to convert its unpaid lease payments,
in this instance to be defined as Purchase Price in Attachment "B", into shares
of common stock, $.001 par value per share, of Lessee (the "Stock"), derived
from dividing the Purchase Price by the conversion rate where the conversion
rate is the smaller of:
(a) $1.00 or;
(b) One-half of the average closing price of the Stock on
the exchange on which it is traded for the 10 day
period prior to conversion or if the Stock is not
then traded on an exchange, one-half of the average
of the last bid price for the 10 day period prior to
the conversion.
Except as amended hereby, the Lease Agreement remains in full force and
effect in accordance with its terms.
Date: 10/15/98
Preferred Voice, Inc.
By: /s/ G. Ray Miller
-------------------------
G. Ray Miller
President
13
EXHIBIT 10.16
EQUIPMENT LEASE
This Equipment Lease, dated as of March 18, 1998, is made by and
between Preferred Voice, Inc., a Delaware corporation (hereinafter referred to
as "Lessee") and Capital Growth Fund Ltd. (hereinafter referred to as "Lessor")
.
In consideration of the mutual agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
LEASE OF EQUIPMENT
Lessor agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, a VIP System consisting of the items identified on Attachment "A" (the
"Equipment") .
ARTICLE II
TERM
This Lease will commence on March 18, 1998, and will continue in effect
for 36 months.
ARTICLE III
RENTAL PAYMENTS
3.1. Rentals. Lessee shall pay to Lessor $3,581.08 on the 1st day of
each month during the term of this Lease as rental for the Equipment (the
"Monthly Rental Payment") . Provided Lessee is not then in default, Lessee has
the option to purchase the Equipment at any time during the term of this Lease
for a price determined in accordance with Attachment
3. 2. Past Due Interest. In the event Lessee fails to pay any Monthly
Rental Payment when due (or any other sum to be paid by Lessee under this
Lease), Lessee shall pay to Lessor interest on such monthly Rental Payment (or
other sum) from the due date thereof and after any grace period to the date of
payment, at the rate of eighteen percent (18%) per annum.
1
<PAGE>
ARTICLE IV
USE OF EQUIPMENT
4. 1. Rights of Lessee. Lessee has the right to the use, operation,
possession and control of the Equipment while the Lease is in effect. Lessee
will have absolute control, supervision and responsibility over the operators or
users of the Equipment, subject to the restrictions set forth below.
4.2. Duties of Lessee. Lessee must use the Equipment in a careful and
proper manner, and will not permit any Equipment to be operated or used in
violation of any applicable federal, state or local statute, law, ordinance,
rule or regulation relating to the possession, use or maintenance of the
Equipment. Lessee shall use the Equipment in accordance with any applicable
vendor's or manufacturer's manuals or instructions, by competent and fully
qualified personnel only. Lessee shall reimburse Lessor in full for all damage
to the Equipment arising from any misuse or negligent act by Lessee, its
employees, and its agents. Lessee shall indemnify and hold Lessor harmless from
all liabilities, fines, forfeitures or penalties for violations of any statute,
law, ordinance, rule or regulation of any duly constituted public authority.
4.3. Location of Equipment. The Equipment will be located in the
offices of American Communications Services, Inc., 400 North Tampa Street, Suite
900, Tampa, Florida 33602-4707 and may not be moved from that location without
the prior written consent of Lessor, which may not be unreasonably withheld.
4.4 Commercial Use Limitation. Lessee represents and warrants that the
Equipment will be used for commercial or business purposes only.
ARTICLE V
MAINTENANCE, REPAIRS AND ALTERATIONS
PERFORMED BY LESSEE
5.1. Maintenance and Repairs. Lessee shall assume all obligations and
liability concerning possession of the Equipment, and for its use, operation,
condition and storage while this Lease is in effect. Lessee shall, at Lessee's
expense, maintain the Equipment in good mechanical condition and running order,
excepting reasonable wear and tear resulting from the ordinary use of the
Equipment. Lessee shall, at its own expense, provide all parts, mechani3ms and
devices recuired to keep the Equipment in good repair, condition and running
order. Lessor is under no liability or obligation to provide service,
maintenance, repairs or parts for the Equipment.
5.2. Alterations and Additions. Without the prior written consent of
Lessor, which consent may not be unreasonably withheld, Lessee will not make any
alterations, additions or improvements to the Equipment, other than those
required to keep the Equipment in good condition and running order, as described
in Section 5.1.
2
<PAGE>
ARTICLE VI
PASS THROUGH OF WARRANTIES
Lessor hereby assigns to Lessee (to the extent assignable) any and all
rights Lessor may have to enforce any warranty in respect of the Equipment and
agrees to enforce for the benefit of Lessee (but at Lessee's sole expense) every
such warranty that is not assigned hereby.
ARTICLE VII
OPERATING EXPENSES
Lessee shall pay for ail expenses of operating the Equipment and all
other charges in connection with the operation of the Equipment.
ARTICLE VIII
TAXES
Lessee is liable for, and required to pay on or before their due dates,
all sales, use, or personal property taxes imposed on the Equipment.
ARTICLE IX
OWNERSHIP
9.1. Warranty of Title. Lessor warrants that it has clear title to the
Equipment, free and clear of any liens, encumbrances or claims of third parties,
and Lessee is entitled to quiet possession of the Equipment. Lesscr shall
indemnify and hold Lessee harmless from any damages, cost or expense Lessee may
suffer arising out of Lessor's breach of its warranty of title.
9.2. No Sale or Security Interest intended. This agreement constitutes
a lease of the Equipment and not a sale or the creation of a security interest.
Unless and until Lessee exercises its purchase option, Lessor retains sole
ownership and title of the Equipment subject to any liens it has granted, and
Lessee will not have any right, title, equity or other interest in the
Equipment, except the right to possession and use as provided for in this Lease.
9.3. Identification Markings. Lessor has the right to require Lessee to
place and maintain on the exterior or interior of each piece of Equipment a
reasonable label reflecting Lessor's ownership. Lessee may not remove, obscure,
deface or obliterate the inscription or permit any other person to do so.
3
<PAGE>
9.4. No Liens. Lessee shall at all times keep the Equipment free and
clear from any liens or encumbrances of Lessee's creditors or other persons
having claims against (or otherwise claiming through) Lessee.
9.5. Personal Property. Lessor and Lessee hereby agree that the
Equipment will always remain and be deemed personal or moveable property, and
Lessee covenants not to enter into any agreement with any third party or take
any action inconsistent with the foregoing.
9.6. Sublease. Lessee may not sublease any item of Equipment or assign
this Lease to any other party without the prior written consent of Lessor,
provided Lessor does not unreasonably withhold such consent. No such sublease or
assignment will in any way relieve Lessee of its obligations hereunder. If
Lessee subleases any item of Equipment or assigns this Lease in accordance with
the provisions of this Section 9.6, Lessor may accept rental and other payments
directly from such sublessee or assignee, but no such acceptance will in any way
constitute a release of Lessee from its obligations under the Lease except to
the extent that any such sublessee or assignee actually makes such payment.
ARTICLE X
INSURANCE
10.1. Lessee's Obligation to Insure. Lessee shall provide fire, theft
and comprehensive insurance coverage for all Equipment at Lessee's expense, in a
commercially reasonable amount.
10.2. Excess Liability Indemnity. Lessee agrees to indemnify and hold
Lessor harmless from all loss, liability and expense, including reasonable
attorneys' fees, in excess of the limits of liability insurance for bodily
injury, death or property damage caused by or arising out of the ownership,
maintenance, use or operation of the Equipment, as provided for in this Article.
Lessee further agrees to indemnify and hold harmless Lessor from and against
loss, liability and expense; including reasonable attorneys' fees, because of
Lessee's failure to comply with any terms, provisions and conditions of any
insurance policy insuring Lessor and Lessee or because of Lessee's failure to
comply with the terms and provisions of this Article.
ARTICLE XI
INDEMNIFICATION AND LIABILITY
11.1. Risk of Liability Assumed by Lessee. Lessee assumes all risk and
liability for the loss of or damage to the Equipment, for the death of or injury
to any person or property of another and for all other risks and liabilities
arising from the use, operation, condition, possession or storage of the
Equipment. Nothing in this Lease authorizes Lessee or any other person to
operate any of the Equipment so as to impose any liability or other obligation
on Lessor.
4
<PAGE>
11.2. Lessee's Duty to Indemnify. Lessee agrees to indemnify, defend
and hold harmless Lessor from all claims, loss or damage Lessor may sustain for
any of the following reasons:
(a) Loss of, or damage to, any Equipment by any cause;
(b) Injury to, or death of, any person, including but not
limited to agents or employees of Lessee arising from the use,
possession, selection, delivery, return, condition or operation of any
of the Equipment;
(c) Damage to any property arising from the use, possession,
selection, delivery, return, condition or operation of any of the
Equipment.
Lessee shall reimburse Lessor for all expenses, losses, liabilities,
fines, penalties and claims of every type, including reasonable attorneys' fees,
imposed on or incurred by Lessor due to Lessee's use or operazion of any
Equipment, or because of the failure by Lessee to perform any of the Lease
terms. Lessee shall also pay interest at the highest legal rate from the day any
such payment is made by Lessor until the date Lessor is reimbursed by Lessee.
ARTICLE XII
ACCIDENT, LOSS OF, OR DAMAGE TO EQUIPMENT
12.1. Notification to Lessor. If any Equipment is damaged, lost, stolen
or destroyed as a result of its operation, use, maintenance or possession,
Lessee shall promptly notify Lessor of the occurrence and shall file all
necessary accident reports, including those required by law and those required
by interested insurance companies.
12.2. Cooperation in Defense of Claims. Lessee and its employees and
agents shall cooperate fully with Lessor and all insurers providing insurance
under this Lease in the investigation and defense of all claims or suits. Lessee
shall promptly deliver to Lessor all papers, notices and documents served on, or
delivered to, Lessee or its employees and agents in connection with any claim,
suit, action or proceeding at law or in equity commenced or threatened against
Lessee or Lessor concerning the Equipment.
12.3. Options of Lessor. In the event of loss or damage of any kind to
any item of Equipment, Lessee, at its option, shall:
(a) Place such Equipment in good repair, condition and working
order; or
(b) Replace such Equipment with like Equipment in good repair,
condition and working order.
5
<PAGE>
ARTICLE XIII
EVENT OF DEFAULT
The failure of Lessee to pay, within ten (10) days following
receipt of written notice from Lessee of non-payment on the due date, any rent
or other amount required to be paid to Lessor under this Lease or any other
agreement between Lessee and Lessor or to perform, within thirty (30) days after
written notice by Lessor specifying the default, any covenant, condition or
obligation required to be performed by Lessee under this Lease or any other
agreement between Lessee or Lessor will constitute an Event of Default.
ARTICLE XIV
RIGHTS, REMEDIES AND OBLIGATIONS ON DEFAULT
14.1. Lessor's Rights and Remedies. In case of an Event of Default by
Lessee under the Lease, Lessor will have the right to exercise any one or more
of the following remedies:
(a) To terminate the Lease of the Equipment and Lessee's
rights thereunder as to any or ail items of such Equipment;
(b) To repossess the Equipment without legal process. Lessee
agrees that, upon default, Lessor or Lessor's agent may enter upon any
premises where the Equipment is located and repossess and remove it.
Lessee specifically waives any right of action Lessee might otherwise
have arising out of the entry and repossession, and releases Lessor of
any claim for trespass or damage caused by reason of the entry,
repossession, or removal. Any repossession of a particular item of
Equipment will not constitute a termination of this Lease as to any
other items of Equipment, unless Lessor expressly so notifies Lessee in
writing;
(c) To exercise any other remedy permitted at law or in
equity.
14.2. Lessee's Obligation for Lessor's Costs and Attorneys' Fees. Upon
default, Lessee shall reimburse Lessor for all reasonable expenses of
repossession and enforcement of Lessor's rights and remedies, together with
interest at the rate of eighteen percent (18%) per annum, until the date of
payment. Notwithstanding any other provisions of this Lease, if Lessor places
all or any part of Lessor's claim against Lessee in the hands of an attorney for
collection, Lessee shall pay Lessor's reasonable attorneys' fees.
14.3. Remedies Cumulative. The remedies of Lessor set forth in this
Article are cumulative to the extent permitted by law and may be exercised
partially, concurrently, or separately. The exercise of one remedy may not be
deemed to preclude the exercise of any other remedy.
6
<PAGE>
14.4. Failure to Enforce Not Waiver. Any failure or delay on the part
of Lessor to exercise any remedy or right under this Lease will not operate as a
waiver. The failure of Lessor to require performance of any of the terms,
covenants, or provisions of this Lease by Lessee will not constitute a waiver of
any of the rights under the Lease. No forbearance by Lessor to exercise any
rights or privileges under this Lease will be construed as a waiver, but all
rights and privileges shall continue in effect as if no forbearance had
occurred. No covenant or condition of this Lease may be waived except by the
written consent of this Lessor. Any such written waiver of any term of this
Lease will be effective only in the specific instance and for the specific
purpose given.
ARTICLE XV
PAYMENT BY LESSOR
In the event Lessee fails to procure, maintain or pay for any insurance
required to be procured, maintained and paid for by Lessee hereunder, or to make
any payment required to be made by Lessee hereunder (including, but not limited
to, the payment of any fees, assessments, charges or taxes), Lessor has the
right, but is not obligated, to obtain such insurance, or make such payment, on
behalf of Lessee. In the event Lessor does so, Lessee shall reimburse Lessor for
the cost thereof upon demand and the failure to make such reimbursement within
ten (10) days after demand will constitute an Event of Default hereunder as
defined in Article 13 hereof.
ARTICLE XVI
DISCLAIMER AND WARRANTIES
Lessor warrants that it owns the Equipment free and clear of any liens
or other encumbrances and is hereby transferring the Equipment with clear title.
LESSOR OTHERWISE LEASES THE EQUIPMENT AS IS WITHOUT WARRANTY OF ANY KIND
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE XVII
RETURN OF EQUIPMENT
In the event Lessee does not exercise its purchase option after written
notice from Lessor upon the termination of this Lease, Lessee shall return to
Lessor the Eaulipment free and clear of all liens or encumbrances of Lessee's
creditors or other persons having claims against or otherwise claiming through
Lessee; and in such condition, repair and working order as the Equipment was in
on the date of this Lease, ordinary wear and tear resulting from the proper use
thereof excepted.
7
<PAGE>
ARTICLE XVII
NOTICES
All notices required or permitted to be given hereunder shall be in
writing and will be valid and sufficient if dispatched by (i) hand delivery,
(ii) by telex, cable or facsimile transceiver, with confirming letter mailed
promptly thereafter in accordance with clause (iv) hereof, (iii) by reputable
overnight express courier or (iv) by certified mail, postage prepaid, return
receipt requested, deposited in any post offices in the United States, as the
case may be, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided, from time to time. Either
party may change its address by notices given to the other party in the manner
set forth above. When sent by cable or facsimile as aforesaid, notices given as
herein provided are considered to have been received when sent; otherwise,
notices are considered to have been received only upon delivery or attempted
delivery during normal business hours.
ARTICLE XVIII
AMENDMENT AND MODIFICATION
This Lease may not be amended, modified or altered in any manner except
in a writing signed by both parties.
ARTICLE XIX
ENTIRE AGREEMENT
This Lease constitutes the entire agreement between the parties
respecting the subject matter. No agreements, representations or warranties
other than those specifically set forth in this Lease are binding on any of the
parties unless set forth in writing and signed by both parties.
ARTICLE XX
GOVERNING LAW
This Lease has been executed and delivered in the State of Texas and
shall be interpreted under, and construed in accordance with, the of law of
Texas, without regard to choice of law principles that may apply a different
state's substantive law. It is agreed that Texas law controls the validity of,
and the obligations created by, this Lease.
8
<PAGE>
ARTICLE XXI
EFFECT OF PARTIAL INVALIDITY
Should any part of this Agreement for any reason be declared invalid,
such decision will not affect of any remaining portions, which shall remain in
force and effect as if this Agreement had been executed with the invalid portion
thereof eliminated, and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of this Agreement
without including therein any such part or portion which may for any reason be
hereafter declared invalid.
ARTICLE XXII
HEADINGS
Headings used in this Agreement are to facilitate reference only, do
not form a part of this Agreement, and may not in any way affect the
interpretation hereof.
ARTICLE XXIII
NO WAIVER
No failure on the part of any party to exercise, and no delay in
exercising, any right or remedy hereunder will operate as a waiver thereof. Nor
will any single or partial exercise of any right or remedy hereunder exclude any
other or further exercise thereof or the exercise of any other right hereunder.
ARTICLE XXIV
ATTORNEYS' FEES
The prevailing party in any litigation, arbitration or other
proceedings arising out of this Agreement shall be reimbursed by the other party
for all costs and expenses incurred in such proceedings, including reasonable
attorneys' fees.
ARTICLE XXV
FORCE MAJEURE
No party hereto will be liable for delay or default in performing
hereunder if such performance is delayed or prevented by conditions or events
beyond such party's control. If a Force Majeure condition occurs, the party
delayed or unable to perform shall give immediate notice of such occurrence to
the other party. The party affected by the other party's inability to
9
<PAGE>
perform may, after sixty (60) days, elect to either terminate this Agreement or
continue performance with the option of extending the terms of the Agreement up
to the length of time the Force Majeure conditions endure. The party
experiencing the Force Majeure condition must inform the other party in writing
when such a condition ceases to exist.
LESSEE: LESSOR:
PREFERRED VOICE, INC. CAPITAL GROWTH FUND LTD.
By:/s/ G. Ray Miller By:
-------------------------
Its: G. Ray Miller Its:
-------------------------
6500 Greenville Avenue P.O. Box 3444
Suite 570 Road Town, Tortola
Dallas, Texas 75206 British Virgin Islands
(214) 265-9663
10
<PAGE>
Equipment Lease
Attachment "A"
19' rack mountable chassis
Trenton Pentium 200 # 3579
64 MB ram # ASI0003715 - ASI0003716
Seagate Hawk 2.1 GB HDD # JBV47393
32 Ports w/ 4 ports VCS continuos
4 ports VCS phonetics
Modem/Fax 33.6 Class 2 Internal # 24420
Dialogic Cards:
2 Antares 2000 x 50 MHS
2 160 SLC 16 port card
14' Monitor
Microsoft serial mouse
Keyboard
I copy Preferred VIP cellular/SOHO software (object code only)
11
<PAGE>
Equipment Lease
Attachment "B"
After Purchase
Payment Price
- - -------------------------------- --------------------------------
1 98,085.59
2 96,139.27
3 94,160.51
4 92,148.77
5 90,103.50
6 88,024.15
7 85,910.14
8 83,760.89
9 81,575.83
10 79,354.34
11 77,095.84
12 74,799.69
13 72,465.27
14 70,091.94
15 67,679.06
16 65,225.97
17 62,731.99
18 60,196.44
19 57,618.63
20 54,997.86
21 52,333.41
22 49,624.56
23 46,870.55
24 44,070.65
25 41,224.08
26 38,330.07
27 35,387.82
28 32,396.54
29 29,355.40
30 26,263.58
31 23,120.23
32 19,924.48
33 16,675.48
34 13,372.32
35 10,014.11
36 6,600.00
12
<PAGE>
AMENDMENT NO. 1 TO LEASE AGREEMENT
The Lease Agreement dated March 18, 1998, between Preferred Voice, Inc and
Capital Growth Fund Ltd. is hereby amended to include Article XXVI in its
entirely as follows:
ARTICLE XXVI
Lessor has the option at any time to convert its unpaid lease payments,
in this instance to be defined as Purchase Price in Attachment "B", into shares
of common stock, $.001 par value per share, of Lessee (the "Stock"), derived
from dividing the Purchase Price by the conversion rate where the conversion
rate is the smaller of :
(a) $1.00 or,
(b) One-half of the average closing price of the Stock on
the exchange on which it is traded for the 10 day
period prior to conversion or if the Stock is not
then traded on an exchange, one-half of the average
of the last bid price for the 10 day period prior to
the conversion.
Except as amended hereby, the Lease Agreement remains in full force and
effect in accordance with its terms.
Date: 10/15/98
-------------------------------
Preferred Voice, Inc.
By: /s/ G. Ray Miller
--------------------------------
G. Ray Miller
President
13
EXHIBIT 10.17
FIRST AMENDMENT TO LEASE
This FIRST AMENDMENT TO LEASE (the "Agreement") is made as of this 1st day of
March 1999 by and between DALLAS OFFICE PORTFOLIO, LP, A DELAWARE LIMITED
PARTNERSHIP ("Landlord") as successor-in-interest to GREENVILLE AVENUE
PROPERTIES, LTD. ("Previous Landlord") and PREFERRED VOICE, INC. having an
address at 6500 Greenville Avenue, Suite 570, Dallas, Texas, 75206 ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease dated February 3, 1998 (the
"Lease") with respect to the Premises consisting of approximately 1,707 square
feet ("Existing Space") know as Suite 570, in the building known as 6500
Greenville Place, located at 6500 Greenville Avenue, Dallas, Texas, which
premises are more particularly described in the Lease; and,
WHEREAS, Landlord and Tenant now mutually desire to amend the Lease to reflect
(i) the addition of 1,881 square feet (the "Expansion Space") as shown on
Exhibit "B-2" annexed hereto and made a part thereof (ii) the then subsequent
extension of lease on the Existing Space, which all space combined (including
the Expansion Space and Existing Space shall be known as Suite 570, consisting
of 3,588 rentable square feet as shown on Exhibit "B-1" annexed hereto and made
a part hereof (the"Premises") and to further amend the terms and conditions of
the Lease as set forth below; and;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby covenant and agree as follows:
1. The provisions of this Agreement shall supersede any inconsistent
provisions contained in the Lease, regardless of whether such inconsistent
provisions are contained in the printed portion of the Lease or any rider
annexed thereto and made a part thereof. All capitalized items not otherwise
defined herein shall have the same meanings ascribed to them in the Lease.
2. The term of this Agreement shall commence March 1, 1999 upon the
conditions set forth herein.
3. On approximately March 5, 1999, Tenant shall surrender unto Landlord
the Existing Space and relocate into the Expansion Space, so that Landlord may
perform the Work specified in Exhibit A-Work Letter. At such time, Tenant shall
occupy the Expansion Space in accordance with all of the applicable provisions
of the Lease.
Effective from and after the day following substantial completion of
the Work in the Existing Space ("Substantial Completion Date" which is estimated
to be March 31, 1999), Tenant shall then occupy both the Existing space and the
Expansion Space ("Effective Date"). Landlord and Tenant
1
<PAGE>
shall confirm the Effective Date in an acceptance letter or other written
instrument after the Effective Date within fifteen (15) days of demand therefore
by Landlord, provided, however, that the failure of Landlord and Tenant to
execute such letter or instrument shall not affect the Effective Date as
established pursuant to this Paragraph 3. If the Effective Date occurs on a day
other than the first day of a calendar month, rent and such other amounts
constituting additional rental under the Lease with respect to the Existing
Space shall be prorated on a per diem basis for the month in which the Effective
Date shall occur. Tenant expressly waives any right to rescind this Agreement or
the Lease, or any damages, direct or indirect, winch may result from Landlord's
failure to deliver the Existing Premises by April 1, 1999. If Landlord shall be
unable to deliver to Tenant possession of the Existing Space by April 1,1999,
then rent for the Expansion Space shall continue and rent for the Existing Spam
only shall continue to abate (as is reflected in paragraph 5 below) for such
period as possession by Tenant is delayed unless Tenant shall cause such delay
in which case rent shall not abate and rent for the entire Premises shall
commence April 1, 1999. The continuation of the abatement of rent with respect
to the Existing Space, does constitute full settlement of all claim which Tenant
might otherwise have against Landlord by reason of the Existing Space not being
ready for occupancy by April 1, 1999 and no such failure by Landlord to deliver
possession of the Existing Space shall affect or impair the validity of the
Agreement or the Lease, or the obligations of Tenant hereunder or give rise to
any claim for damages by Tenant or claim for rescission of this Agreement or the
Lease. Notwithstanding anything contained herein to the contrary, if Landlord is
unable to deliver the Existing Space to Tenant by April 1, 1999, then the term
of this Lease shall be extended by the number of days of such delay in
commencement of the Effective Date and the Base Annual Rent for that extension
period shall be equal to the per diem rate Tenant paid during the month of
April, 2002.
4. Upon Tenant's execution thereof, Tenant shall pay to Landlord the
sum of $523.75 to be held by Landlord as additional security pursuant to Article
6 of the Fundamental Lease Provisions of the Lease, for a total Security Deposit
held of $4,933.50.
5. Effective from and after the March 1, 1999, Base Annual Rent, as
reflected in Article 4 of the Fundamental Lease Provisions shall be:
March 1, 1999 - March 5,1999: $2,276.00 per month
March 6,1999 - Substantial Completion Date $2,508.00 per month
*Effective Date - Month 12 $4,784.00 per month
Month 13 - Month 24 $4,933.50 per month
Month 25 - Month 36 $5,083.00 per month
*Month 12 shall mean through the last day of the 12th full calendar month
following the Effective Date. Month 24 shall mean through the last day of the
24th full calendar month following the Effective Date. Month 36 shall mom
through the last day to the 36th full calendar month following the Effective
Date.
6. For and in consideration of the covenants contained in the Lease to
which this Agreement has been made a part, Landlord and Tenant agree that the
ending date, as defined in Paragraph (3) of the Fundamental Lease Provisions
section of the Lease shall become April 30, 2002, unless otherwise adjusted as
detailed in paragraph 3 above.
2
<PAGE>
7. Landlord, at its sole cost and expense, shall provide Tenant
requested improvements (the "Improvements") to the Existing Space only, in a
building standard manner for a cost to Landlord not to exceed $12,248
("Landlord's Allowance") and in the manner specified in Exhibit "A" ("Work
Letter") and the contractor's bid (Exhibit A-1) herein attached. In the event
the cost of completing the Improvements exceeds Landlord's Allowance or if
Tenant makes any changes to the Improvements, Tenant expressly agrees that the
costs attributable to those changes shall be the sole responsibility of Tenant
and Tenant shall pay same to Landlord upon demand as specified in Exhibit A.
Except for the Improvements, Tenant acknowledges and agrees that it has made a
fall and complete inspection of the Existing Space and the Expansion Space
(Premises) and accepts such in its present "as-is" condition as suitable for
Tenant's intended use and occupancy and/or continued occupancy thereof. Upon
Tenant's complete possession of the "Premises", it shall be conclusively
presumed that same has been so accepted by Tenant, is in satisfactory conditions
and complies fully with Landlord's covenants and obligations.
8. Tenant expressly warrants and represents that the sole broker who
negotiated and brought about this transaction was Transwestern Property Company
("Landlord's Agent") and Swearingen Realty Group ("Tenant's Agent"). Tenant
represents it neither consulted nor negotiated with any broker other than those
named herein with regard to the Premises. Tenant agrees to indemnify, defend and
save Landlord harmless from and against any claims for fees or commissions from
anyone or my entity other than those brokers named herein, with whom Tenant has
dealt in connection with this Agreement. The foregoing provisions contained in
this Paragraph 8 shall survive the expiration or early termination of the Lease.
9. Effective from and after the Effective Date, Tenant's parking as
reflected to in Section 12 of the Fundamental Lease Provisions shall be amended
to read: "A total of three (3) Garage parking spaces at no charge during the
term and eight (8) Lot spaces at no charge during the term, all on a first come
first serve basis. Tenant shall no longer be entitled to one (1) additional
unreserved garage parking space on a month to month basis."
10. Effective from and after the Effective Date, Section 5 of the
Fundamental Lease Provisions shall change from "1998" to "1999".
11. Effective from and after the Effective Date, subject to Tenant's
then current financials, prior right of first refusal (if any), prior renewal
options (if any), and as long as Tenant is not or has not been in default under
the Lease, and has not subleased or assigned all or any portion of the Premises,
then Tenant shall have a one-time Right of First Refusal on approximately 1,000
square feet (as shown on attached Exhibit "D"-"Refusal Space") under the
following terms and conditions:
1) Tenant must agree to at least the same total lease package
being offered to a bona- fide third party but in no case less
than the base rental Tenant is contracted to pay.
2) Landlord shall give notice ("Refusal Notice") to Tenant of a
bona-fide offer for the refusal space and Tenant shall then
have three (3) business days in which to accept or reject said
offer.
3
<PAGE>
3) If Tenant should reject Landlord's offer (or if such offer is
not accepted in writing within the three (3) business day
period, then Tenant's Right of First Refusal shall become null
and void,
4) If Tenant accepts said offer, Tenant must execute a lease
modification covering such space within seven (7) days of
receipt related paperwork from Landlord under the term and
conditions specified in the offer or Tenant shall be in
default under the Lease.
12. This Agreement shall not constitute an Agreement by Landlord and
shall not be binding upon Landlord unless and until this Agreement shall be
executed by Landlord and Tenant and shall be delivered by Landlord to Tenant.
19. This Agreement may not be changed orally, and shall be binding upon
and shall inure to the benefit of the parties to it, their respective heirs,
successors and, as permitted, their assigns.
20. Except as hereby modified or amended, all of the terms, covenants
and conditions of the Lease shall remain unmodified and in full force and
effect.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Agreement as of
the day and year first above written.
LANDLORD: TENANT:
DALLAS OFFICE PORTFOLIO, L.P., Preferred Voice, Inc.
a Delaware limited partnership
By: Suburban Dallas Office Portfolio, LLC,
a Delaware limited liability company, its
sole general partner
By: Beacon Capital Partners, L.P., a Delaware
limited partnership, its sole member
By: Beacon Capital Partners, Inc., a Maryland
corporation, its sole general partner
By:/s/ Illegible By:/s/ Mary Merritt
--------------------------------- ------------------------
Name:Illegible Name:Mary Merritt
---------------------------- -------------------
Title Title: VP Finance
-------------------------- ------------------
Hereunto Duly Authorized
Date Signed:3/1/99 Date Signed:2/26/99
------------------------ ------------
4
<PAGE>
EXHIBIT "A"
WORK LETTER
TO
OFFICE LEASE AGREEMENT
BETWEEN
DALLAS OFFICE PORTFOLIO, L.P., A DELAWARE LIMITED PARTNERSHIP
AND PREFERRED VOICE, INC.
This Exhibit sets forth the respective obligations of, and the procedures to be
followed by, Landlord and Tenant in the design and construction of those
improvements that will prepare the Existing Premises described in Exhibit B-1 of
the Lease for Tenant's use and occupancy.
1. The Work.
--------
The "Work" will consist of leasehold improvements described in the
floor plan and specifications attached to this Lease as Exhibit C "(Final
Plan").
B. Landlord will pay all costs and fees incurred in connection with construction
of the leasehold improvements as described in the Final Plan up to a cost of
$12,248. Tenant will pay all costs and fees incurred in connection with
preparation of plans and working drawings (if should later be required) and
construction resulting from a change requested by Tenant pursuant to Paragraph 2
of this Exhibit and any amount in excess of $12,248 incurred by Landlord in
connection with the design and construction of the Work (collectively, "Tenant's
Cost"). Tenants Cost hereunder will be deemed additional rent under the Lease.
2. Changes
-------
A. If Tenant desires any changes, alterations or additions to the Final
Plan, Tenant must submit a detailed written request to Landlord ("Change
Order"). If reasonable and practicable and generally consistent with the Final
Plan previously approved, Landlord will comply with the Change Order, but all
costs in connection therewith, including without limitation any additional
plans, drawings and engineering reports or opinions or modifications of such
existing item, win be paid for by Tenant. Landlord may at any time reasonably
estimate Tenant's Cost for a Change Order, in advance, and, Tenant will deposit
the estimated amount with Landlord within five (5) days after requested by
Landlord. If such estimated amount exceeds the actual amount of Tenant's Cost,
Tenant will receive a refund of the difference, and if the actual amount exceeds
the estimated amount, Tenant will pay the difference to Landlord within five (5)
days after requested by Landlord. If any additional plans, drawings or
specifications, or modifications of such items, are required to construct a
Change Order, the same will be prepared (at Tenant's cost by Tenant's architect)
and approved in the manner described above. Under no circumstances will any
Change Orders serve to abate the rentals under the Lease.
5
<PAGE>
3. Substantial Completion
----------------------
A. Landlord will be deemed to have "substantially completed" the Work
for the purposes thereof if Landlord has caused all of the Work to be completed
substantially except for so called "punchlist items," e.g., minor details of
construction or decoration or mechanical adjustments winch do not substantially
interfere with Tenant's occupancy of the New Premises to be made by Tenant. If
there is any dispute as to whether Landlord has substantially completed the
Work, the good faith decision of Landlords architect will be final and binding
on the parties.
B. If Landlord notifies Tenant in writing that the Work is
substantially completed, and Tenant fails to object thereto in writing within
three (3) days thereafter specifying in reasonable detail the items of Work
needed to be performed in order for substantial completion, Tenant will be
deemed conclusively to have agreed that the Work is substantially completed, for
purposes of commencing rental under the Lease.
C. Substantial completion will not prejudice Tenant's rights to require
fill completion of any remaining items of Work. However, if Landlord notifies
Tenant in writing that the Work is fully completed, and Tenant fails to object
thereto in writing within fifteen (15) days thereafter specifying in reasonable
detail the items of work needed to be completed and the nature of work needed to
complete said items, Tenant will be deemed conclusively to have accepted the
Work as fully completed (or such portions thereof as to which Tenant has not so
objected).
4. Construction.
------------
A. Landlord reserves the right to substitute comparable or better
materials and items for those shown in the attached Final Plan.
B. Landlord warrants that Landlord will employ an experienced, licensed
contractor to construct the leasehold improvements and will require in the
construction contract that such contractor construct the leasehold improvements
in a good and workmanlike manner and in compliance with all applicable laws,
ordinances and budding codes; provided, however, Tenant will be solely
responsible for determining whether or not Tenant is a public accommodation
under The Americans with Disabilities Act and Texas Architectural Barriers Act
and whether or not the Final Working Drawings comply with such laws and the
regulations thereunder.
5. Liability
---------
The parties acknowledge that Landlord is not an architect or engineer,
and that the Work will be performed by Landlord's independent contractor.
Accordingly, Landlord does not guarantee or warrant that the Final Plan will be
free from errors or omissions, nor that the Work will be free from defects, and
Landlord will have no liability therefor. In the event of such errors,
omissions, or defects,
6
<PAGE>
by the independent contractor, Landlord will cooperate in any action Tenant
desires to bring against such party.
6. Incorporation Into Lease: Default.
---------------------------------
THE PARTIES AGREE THAT THE PROVISIONS OF THIS EXHIBIT ARE HEREBY
INCORPORATED BY THIS REFERENCE INTO THE LEASE FULLY AS THOUGH SET
FORTH THEREIN. In the event of any express inconsistencies between the Lease and
this the latter will govern and control. Any default by Tenant hereunder will
constitute a default by Tenant under the Lease and Tenant will be subject to the
remedies and other provisions applicable thereto under the Lease.
INITIALED FOR INITIALED FOR
IDENTIFICATION: IDENTIFICATION:
BY LANDLORD: BY TENANT:
/s/ /s/
- - ------------------------------ ---------------------------
7
<PAGE>
EXHIBIT B-1
[Graphic of Premises]
8
<PAGE>
EXHIBIT B-2
[Graphic of Expansion Space]
9
<PAGE>
EXHIBIT C
[Graphic of Final Plan]
10
<PAGE>
EXHIBIT D
[Graphic of Refusal Space]
11
EXHIBIT 10.18
MASTER DISTRIBUTOR AGREEMENT
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas o USA 75206-1002
Phone: 214-265-9580; Fax: 214-265-9663
MASTER DISTRIBUTOR: IN TOUCH SOLUTIONS, LLC
721 SEABOARD ST. #15
MYRTLE BEACH, SC 29577
(O) 843-626-1100 (F) 843-626-5009
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement"), is made and
entered into as of the 30th day of December, 1998 by and between PVI, a
corporation organized and existing under the laws of the State of Delaware
authorized to do business in Texas, and Master Distributor, a corporation
organized and existing under the laws of the State of South Carolina.
BACKGROUND
----------
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively referred to hereinafter, as the "Services").
Master Distributor is a member of an affiliated group of companies based in
Myrtle Beach South Carolina which, provides various telecommunication related
services including Personal Communication Services (PCS), Telephone Answering
Services (TAS), long distance, voice mail and paging services. In order to
increase its sales of the Services, PVI is establishing a national distribution
network through the creation of multiple distributorships (the
"Distributorships"). The Master Distributor desires to establish a
Distributorship and PVI has agreed to grant the Distributor the distribution
rights set forth herein. Accordingly in consideration of the mutual covenants
and agreements set forth below, PVI and Master Distributor agree as follows:
1
<PAGE>
OPERATIVE PROVISIONS
--------------------
1. DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and Services within
but not limited to certain Market Areas as shall be further
defined in the territory referred to in Exhibit 1A and Exhibit
1B hereinafter this area shall be defined for further
references as the Market Area throughout this Agreement.
1.2 Distributor means a legally established corporation, entity,
or individual qualified to sell and/or distribute PVI's
Services under Master Distributor.
1.3 Dealer means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Distributor Agreement.
1.4 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor,
or Dealer to sell PVI's Services directly to End-Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of
trade name which PVI may designate, use or adopt from time to
time to identify its Services.
1.7 Services means any telecommunication service(s) or equipment
offered by PVI.
1.8 Proprietary Information means any information, written or
oral, including, without limitation, any technical and/or
design information on the Services, and any information
relating to the present or future business operations,
financial condition, plans, sales, marketing and promotional
efforts, customers and price lists of PVI and its subsidiaries
and affiliates disclosing such information, and all other
information of any kind which may reasonably be deemed
confidential or proprietary, including, without limitation,
this Agreement and its terms.
1.9 National Account/Affinity Group will mean but not be limited
to, certain national, regional groups/companies that operate
in areas with multiple locations. For example, PVI currently
provides Services for members of the National Association of
the Self Employed (NASE).
2 APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts appointment, as PVI's sole Master Distributorship in
the area defined on Exhibit I of this agreement.
2
<PAGE>
2.2 Master Distributor shall market and sell the Services within
the assigned Market Area(s) at the prices set forth in Exhibit
2 attached hereto. The Master Distributor shall have the right
to market PVI Services outside the defined Market Area within
the continental United States. PVI may change the prices for
its Services at any time due to business conditions and or
regulatory changes. PVI will not offer pricing lower than the
pricing defined herein to other Master Distributors without
making that same pricing structure available to the Master
Distributor. It is understood by the Master Distributor that
national accounts/affinity groups may require other rate plans
and PVI will not be required to offer those rate plans to the
Master Distributor. It is expressly understood that the Master
Distributor may market to national account/affinity groups and
in those cases, when necessary, PVI will provide marketing
support to the Master Distributor that may include special
pricing. Any special pricing offered will be approved by PVI
and at PVI's sole discretion and the Master Distributor will
be eligible to earn Commissions as further defined herein. As
stated, Exhibit I define the Master Distributor's Market Area.
PVI will not assign any other Master Distributor in the same
Market Area.
2.3 Master Distributor shall be paid Commissions in accordance
with the Commission schedule set forth in Exhibit 3 attached
hereto. Commissions shall be paid by the 15th day of each
month based upon collections during the prior month. The
Commission rates may not be changed without Master
Distributor's prior written consent, except as certain
Commission rates may be increased from time to time by PVI as
part of a sales promotion or incentive which may be temporary
in nature, Prior to Master Distributor's sale of any
additional Services on behalf of PVI, Master Distributor and
PVI shall mutually agree upon a Commission schedule particular
to that Service, which schedule shall be added as an Exhibit
to this Agreement. Commissions will be paid on accounts sold
outside the Master Distributor Market Area. The Commission
rate will be the standard PVI Commissions defined herein less
any Master Distributor over-rides outside of the Market Area.
Should the Master Distributor enter into a contract with a
national account/affinity group at the PVI retail rates
defined herein, the Master Distributor will be awarded
Commissions, as defined herein, on all revenues billed and
collected (by terms defined herein). Should the national
account/affinity group Agreement for PVI Services through the
Master Distributor at retail rates that are not defined in
this Agreement, PVI and the Master Distributor will agree to a
Commission schedule for the specific account and define the
Commission on an Exhibit to be attached to this Agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any interest
in a company (or entity) which competes with the business of
PVI through the manufacture and/or sale of
3
<PAGE>
Services which are substantially equivalent to, or competitive
with, PVI's Services. In the event that PVI begins selling its
Services within the Market Area as defined herein, by any
means other than through Master Distributor, the restrictions
placed on Master Distributor in this Section 2.4 shall
terminate; provided that, for a period of ninety (90) days
after PVI commences such other sales, Master Distributor shall
not solicit for a competitive service any PVI End-User
acquired by Master Distributor during the term of this
Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship within the Market Area for PVI's Services as
defined in Exhibit 1. The Market Area is NOT TO BE CONSIDERED
AN EXCLUSIVE MARKETING AREA; however, this Master Distributor
agreement has certain compensation provisions defined in
Exhibit 3, that compensate the Master Distributor for any
sales activity within the Master Distributor Market Area that
is not directly related to its own marketing efforts and not
directly related to any national account/affinity marketing by
PVI (PVI will not be responsible for paying Commissions to the
Master Distributor on direct national accounts that PVI
originates including but not limited to affinity groups).
3 RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly
or through any number of Distributors, Dealers, or Agents. PVI
shall not be a Party to any arrangements between Master
Distributor and its Distributors, Dealers, or Agents, nor will
PVI in any manner be bound, or have any legal obligation in
respect thereof. Master Distributor further agrees that it is
not, nor shall it represent itself to be a PVI employee or
officer of PVI, nor shall it assume or create any obligations
or responsibility on behalf of PVI, unless otherwise agreed
upon, in writing, by PVI. Also, it will be the Master
Distributor's responsibility to design Agent's and Dealers
Commission plans as it relates to the Master Distributors
business and the Master Distributor will have the sole right
to adjust those plans as required or as necessary.
3.2 Master Distributor shall use its best efforts to identify and
contract with Distributors, Dealers, and Agents, as
appropriate, and shall assist them in creating a market for,
promoting, and maintaining a demand for PVI's Services, as
well as, establishing an efficient network within the Market
Area in order to obtain maximum sales of PVI's Services.
Master Distributor shall be solely responsible for training
and compensating all its Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the
Market Area and participate in such trade shows and other
venues which will stimulate sales.
4
<PAGE>
Master Distributor shall, in its sole discretion, determine
the amount of any such advertising and shall be solely
responsible for the resultant costs and expenses incurred. PVI
may, at its sole discretion, provide advertising at no expense
to Master Distributor, as it deems necessary. These activities
shall be considered in any determination of the inactivity
clause herein; however, any inactivity determination will
remain and always be at PVI's sole discretion.
3.4 Master Distributor shall send copies of all advertising and
sales promotion material and literature relating to the
Services to PVI for review and approval prior to distribution
which approval shall not be unreasonably withheld.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical literature,
the name of PVI and the Trade Marks shall be evidenced and
respected. Master Distributor shall use the Trade Marks in
their original form, unless otherwise approved in advance, in
writing by PVI.
3.6 Master Distributor shall at all times maintain an inventory of
collateral support materials, for promotion, advertising,
signage, point-of-sale, record keeping, subscriptions, and
other items related to sales of the Services. PVI will make
available marketing materials as such materials are available.
Any such materials provided by PVI to Master Distributor shall
be provided free of charge unless otherwise agreed by Master
Distributor.
3.7 Master Distributor shall forward any money collected for PVI
as it relates to the PVI Services sold to an End User
contracting for PVI Services as it relates to this Agreement,
on a weekly basis.
3.8 PVI will require that all potential Distributor, Dealers, and
or Agents that contact PVI directly shall first be directed to
work with the Master Distributor for information of Services
within the Market Area. It is understood by both parties that
in some cases it may be necessary for PVI to work directly
with certain national account prospects or affinity groups
within the Master Distributor's Area and that due to the
specific agreements PVI will not be liable for any over-rides
or Commissions in any way. The national account or affinity
groups that PVI may market to will be defined and identified
by PVI and will be at the sole discretion of PVI.
3.9 Should PVI be acquired or merge with another company or change
ownership in any way, this Master Distributor Agreement shall
remain in full force as long as the Master Distributor is in
compliance with the terms of this Agreement. PVI will include
such language in any acquisition or merger agreement.
5
<PAGE>
4 PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all claims
relating to such action) brought against Master Distributor,
based upon a claim that the Service(s) or the use thereof
infringes a United States patent, Trade Mark, Service Mark, or
copyright ("Infringement Claim"), PVI shall defend and hold
harmless the Mater Distributor against such action at its
expense and pay the costs and damages awarded in any such
action, provided that PVI shall have sole control of the
defense of any such action and all negotiations for its
settlement or compromise. At any time during the course of any
Infringement Claim, or in PVI's opinion, the Services are
likely to become the subject of an Infringement Claim, PVI
will, at its option and its sole expense, either procure the
right to continue using the Service(s), or replace or modify
the same so that such Service(s) becomes non-infringing. PVI
will not have any liability to Master Distributor for an
Infringement Claim, if such claim results from Master
Distributor's modification of the Services in any manner.
4.2 The foregoing states the entire liability of PVI with respect
to an Infringement Claim. No costs or expenses will be
incurred by the Master Distributor in defense of any such
claim. Not withstanding the provisions of section 4.2 PVI
shall be liable to the Master Distributor for the Market Area
fee paid pursuant to this Agreement in the event that
infringement claim results in PVI's inability to provide the
Service in the Market Area as contemplated by this Agreement.
4.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End-User to use the
Services patented by PVI. No license to make, sell, or use the
Services shall be created other than that explicitly set forth
in PVI's Service forms with the End-Users.
5 RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Master Distributor shall be advised by PVI of
any significant changes in Service(s) specifications. If these
changes are not acceptable to the End-User, PVI shall then
deal with the Master Distributors down line subscribers to the
Services and take all reasonable action to satisfy said
End-User.
5.2 PVI shall provide the Master Distributor with all necessary
documents and system documentation, required to market and
sell the Services, which shall remain the property of PVI.
Such documents and documentation may be in written form or
transmitted by tape, diskettes, e-mail, or other software
media, as determined by PVI.
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5.3 PVI shall provide the Master Distributor with all pertinent
technical and sales information and collateral support
materials referenced in Section 3.7 above, PVI shall inform
the Master Distributor on a regular basis about the
development of new Services and applications, trends, and
competition in the market. PVI shall provide financial
assistance in implementing new changes in the form advertising
and promotions.
5.4 PVI shall provide the Master Distributor with the training
free of charge and within reasonable limits. Persons eligible
for training are Master Distributor's sales personnel. The
Master Distributor shall be responsible for all travel,
lodging, and all other out-of-pocket expenses related with the
training of its personnel.
5.5 PVI shall not assign more than one Master Distributor in
Market Area defined on Exhibit 1.
5.6 PVI shall:
(a) Develop and produce original copy (i.e. layout,
verbiage, plates, negatives, dies, and/or other setup
materials) of all necessary advertising and collateral
support materials for marketing the Services;
(b) Provide and maintain all equipment (hardware, software,
and co-location facilities) reasonably necessary to
support the PVI Services marketed and sold by the
Master Distributor;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the
Master Distributor;
(d) Perform all fulfillment of the PVI Services marketed
and sold by the Master Distributor.
(e) Pay all Master Distributor Commissions outlined herein,
on a timely monthly basis as defined in section 2.3 of
this Agreement.
(f) PVI will in its best efforts at all times maintain the
network and equipment to provide the Services defined
herein.
(g) PVI warrants that it has the regulatory authority and
will maintain compliance during the term of this
Agreement.
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(h) PVI warrants that it is licensed to utilize the
necessary technologies required to offer Service(s) and
will maintain said technology licenses during the term
of this Agreement.
6 LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master
Distributor with respect to the Services. The Master Distributor agrees
that PVI shall not be liable for any special, incidental, indirect, or
consequential damages, or for the loss of profit, revenue or Services
even if PVI shall have been advised of the possibility of such
potential loss or damage. The Service is an elective Service by the
customer not a primary means of Service such as: dedicated service
(T-l's) or local dial tone.
7 DURATION AND TERMINATION OF THE AGREEMENT
7.1 This Agreement shall be effective for an initial term
commencing on the date of this Agreement (i.e., date of
execution by both Parties) and ending three (3) calendar years
thereafter. If not terminated by notice by either Party at
least sixty (60) days prior to the end of the initial term
hereof or any renewal term, the Agreement will be
automatically renewed for an unlimited number of successive
one (1) year periods.
7.2 Either Party may, without incurring any liability to the other
Party, unilaterally and with immediate effect, terminate this
Agreement at any time by a written notice sent to the other
Party in the event that:
(a) The other Party fails, for any reason(s) whatsoever, to
perform any of its obligations under this Agreement and
fails to remedy such default within thirty (30) days
after the receipt of written notice of default and
request for cure which notice shall be sent certified
mail return receipt requested; or
(b) The other Party becomes insolvent, files or is subject
to the filing of judicial process under any law
relating to bankruptcy or insolvency, consents to a
receivership, adopts an arrangement with creditors, is
dissolved, enters into liquidation, or ceases doing
business: or
(c) The Master Distributor uses the name of PVI, or any
form thereof, as a corporate name for doing business,
or trade name, or otherwise, without the prior written
consent of PVI: or
(d) PVI will monitor all Master Distributor marketing. It
is understood by the Master Distributor that a
requirement to maintain the Master
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Distributorship is consistent marketing efforts, to be
defined as but not limited to: consistently adding new
Agents & Dealers, the addition of new customers at a
reasonable rate expected by Master Distributors. Any
inactivity, AS DEEMED AT THE SOLE DISCRETION OF PVI,
will be grounds for termination of this Master
Distributor Agreement. Should this termination for
inactivity right be exercised by PVI, the Master
Distributor will have the option of converting to a
standard and approved Dealer and or Agent Agreement and
will be subject to a Non-Compete for a period of ninety
(90) days. During the Non-Competition period the Master
Distributor will not contact, solicit, or offer any
services to PVI customers nor enter into any
relationship that would compete with the business of
PVI. Also, all customers submitted to PVI directly or
through Agents/Dealers and subsequent End-Users, the
Commissions due will be paid as defined herein for the
length of this agreement. However, any Commissions paid
on new business submitted will be paid as defined
within the new Agent/Dealer Agreement executed by both
parties. A reasonable start-up time will be extended
and as long as Dealers, Agents and End-users are being
added to sell and purchase PVI Service(s), it will
constitute activity.
8 EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Master
Distributor shall immediately (i) remove from its premises all
signs advertising the Services or which use the Marks, (ii)
cease to engage in advertising or promotional activities
concerning PVI's Services and use of its Marks, (iii) cease to
represent in any manner that the Master Distributor has been
designated by PVI as such, and (iv) deliver to PVI at the
Master Distributor's expense, all price lists, sales manuals,
service manuals, and any other documents concerning PVI's
Services which are in the Master Distributor's possession.
8.2 Master Distributor shall, with the mutually agreed termination
of this Agreement, have the right to claim reimbursement, or
compensation for Distributors, Dealers and Agents but shall
not have the right for compensation for alleged loss of
goodwill, loss of profits on anticipated sales, or the like,
or have any other liability for losses or damages resulting
from the termination this Agreement
9 PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and
not to copy, reproduce, distribute, or disclose to any third
party, without the prior written approval of PVI, any
Proprietary Information.
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9.2 All sales of the Services (inclusive of license of the
Licensed Software) to Dealers and Agents are of the material
and tangible Services only. These sales, however, do not
include the sale of Services design (and source and/ or object
codes pertaining to the Licensed Software) which are
Proprietary to PVI. To the extent any such Proprietary
Information is made available to the Master Distributor, it is
done on a confidential basis. The Master Distributor will
neither disclose circuitry design details nor principles, nor
software codes (of any kind related), nor copy them for
purposes of manufacture, nor attempt to reverse-engineer
(de-compile) or otherwise alter the Services for any purpose
whatsoever.
9.3 With respect to the Proprietary Information relating to the
Master Distributor's business which is made available to PVI
by the Master Distributor to allow PVI to perform its
obligations under this Agreement, PVI will instruct its
personnel to keep such information confidential by using the
same care and discretion that PVI uses with data which PVI
designates as Proprietary Information. However, PVI shall not
be required to keep confidential any data which is or becomes
publicly available, is already in PVI's possession, is
independently developed by PVI outside the scope of this
Agreement, or is legally obtained form third parties. In
addition, PVI shall not be required to keep confidential and
may use for PVI's benefit any ideas, concepts, know-how, or
techniques relating to PVI's Services submitted to PVI or
developed during the term of this Agreement by PVI personnel
or jointly by PVI and the Master Distributor's personnel,
unless otherwise mutually agreed to by PVI and Master
Distributor.
9.4 The obligations of the Parties under this Section 9 shall
survive the expiration or termination of this Agreement, for
whatever reason, and shall be binding upon the Parties, their
successors and/or assigns.
9.5 The Parties acknowledge that the obligations and promises
under this Section 9 are of a special, unique character which
gives them particular value, and that a breach thereof could
result in irreparable and continuing damage for which there
can be no reasonable or adequate damages, remedy, or
compensation in an action of law. Each Party shall be entitled
to injunctive relief, a decree for specific performance,
and/or other equitable relief in the event of any breach, or
threatened breach by the other of its obligations or promises
under this Section 9, in addition to any other rights or
remedies which it may possess (including monetary damages, if
appropriate).
10 GENERAL
10.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws of the State of Texas.
10
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10.2 Both PVI and Master Distributor agree that prior to any filing
with any jurisdiction as defined in section 10.3 herein,
automatic Arbitration would be the first solution to any
dispute. Both parties will select an Arbitrator and the
Arbitrators selected by both parties will select a third party
Arbitrator the three arbitrators will rule on any dispute. Any
ruling by the Arbitrator's will be final. The Arbitrators
selected will be subject to the venues agreed to herein.
10.3 The Master Distributor and PVI consents to venue, and the
jurisdiction of the courts of Texas or the courts of Michigan
and may only file with courts located in Dallas County or
Oakland County and both parties agree that any dispute arising
under this Agreement shall be resolved in such jurisdictions.
10.4 This Agreement cannot be assigned or sold to any third party
or any other entity, without first giving PVI first right of
refusal and/or without the prior written consent from PVI
which shall not be unreasonably withheld.
10.5 All notices and demands of any kind which either Party may
require or desire to serve upon the other shall be in writing
and shall be delivered either by personal service or by mail
at the address of the receiving Party set forth below (or at
such different addresses as may be designated by such party by
written notice to the other Party) or by facsimile. Such
notice shall be deemed received on the earlier of (i) the date
when was actually received or (ii) in the case of mailing,
five (5) business days after being deposited in the United
States mail with sufficient prepaid postage, registered, or
certified mail with return receipt requested and properly
addressed, or (iii) if by facsimile when the sending Party
shall have received facsimile confirmation that the message
has been received by the receiving Party's facsimile machine.
If notice is sent by facsimile, a confirmed copy of such
facsimile shall be sent by mail to the receiving party.
The address and facsimile numbers of the Parties, for purposes of the
Agreement are as follows:
PVI MASTER DISTRIBUTOR
Preferred Voice, Inc. In Touch Solutions, LLC
6500 Greenville Ave., Ste. 570 721 Seaboard St. #15
Dallas, TX 75206-1002 Myrtle Beach, SC 29577
Facsimile: 214-265-9663 Facsimile: 843-626-5009
Attention: G. Ray Miller Attention: Jeanne Kolenda
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10.6 Any provision of the Agreement held to be invalid under applicable law
shall not render this Agreement invalid as a whole, and in such event,
such provision shall be interpreted so as to best accomplish the intent
of the Parties within the limits of applicable law.
10.7 A valid contract binding upon PVI and the Master Distributor comes into
being upon execution of this Agreement by duly authorized
representatives of PVI and the Master Distributor. This Agreement
contains the exclusive terms and conditions between the Parties hereto
with respect to the subject matter hereof, and does not operate as an
acceptance of any conflicting or additional terms and provisions of the
Master Distributor's Agreements with Distributors, Dealers or Agents,
which shall not be deemed to alter the terms hereof. Amendments to this
Agreement may be effected only in writing, when signed by the Parties
hereto specifically stating it is intended to amend this Agreement,
10.8 Costs of Enforcement:
If any action is commenced by either Party concerning this Agreement,
the Party which prevails in such action will be entitled to a judgement
against the other Party for the costs of such arbitration or action,
including court cost, reasonable expenses of litigation, and reasonable
attorneys' fees.
10.9 The Master Distributor acknowledges that it is an independent
contractor.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate originals on the dates indicated herein.
PREFERRED VOICE, INC. IN TOUCH SOLUTIONS, LLC
/s/ Richard K. Stone /s/ Jeanne Kolenda
- - ------------------------------------ ----------------------------
By Richard K. Stone, Vice- President By Jeanne Kolenda, President
Authorized Signature Master Distributor
Authorized Signature
Date: 12/30/98 Date: 12/30/98
------------------------------- -----------------------
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Exhibit 1 A
Market Area Fee: $25,000.00
Market Area: North Carolina and South Carolina
1. All NXX's (exchanges are included and defined as NXX's as part of the
Market Area).
2. The Master Distributor will pay $25,000 up front.
For each up-front dollar (does not include any portion of the Master Distributor
fee financed by PVI or any Market Area other than what is defined on Exhibit 1)
paid by the Master Distributorship, PVI will issue one (1) PVI Warrant to the
Master Distributor, at a strike price of $1.00, in the name provided by the
Master Distributor. The Master Distributor may sell the Warrant at any time
during the period defined in the Warrant Agreement forthcoming and according to
the rules established by the Warrant Agreement. This statement/explanation will
be superceded by the Warrant/Stock Agreement executed by and between both
parties to be provided by PVI within 15 working days of the execution of this
Master Distributor Agreement. This offer may be replaced, changed and/or
terminated if this agreement and the Master Distributorship fee is not executed
and received by January 15, 1999. Any deposits for future Market Areas are
included and will be awarded dollar for dollar as defined above, one Warrant for
each dollar spent for the reservation of a Market Area.
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EXHIBIT 2 PRODUCT 1
EMMA Telephone Receptionist
PRODUCT DESCRIPTION: EMMA TR is the world's first central office "voice auto
attendant".
PRODUCT APPLICATION: EMMA TR is a viable way for business' to answer their
phones professionally, 24 hours a day 7 days a week. EMMA's predatory pricing
and user friendly features are revolutionary to a $2.3 billion market that has
not had any competition to date.
TARGET MARKET: All companies that require an attendant during office hours and
after hour answering services.
PRODUCT FEATURES & BENEFITS:
X Consistent professional X 24 hours 7 days a week receptionist
X 50% less cost than competition X Local locate
X Extended local calling X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 per answered line X Expanded local dialing - (varies)
X $4.95 local locate X $49.95 Set-up fee
X $4.95 Per personal directory X $0.12 Long distance dialing
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Telephone Answering Services, Paging Companies and Voice Mail
Companies.
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EXHIBIT 2 PRODUCT 2
EMMA Virtual Personal Assistant
SERVICE DESCRIPTION: VIP 800 VPA is a revolutionary service that addresses four
important areas for the average business person: time management, connectivity,
single number simplicity and low cost. It allows the business user to never miss
a call and allows them the ability to receive a call, via the revolutionary
ability to call forward a personal 800 toll free number to any number, from any
phone anywhere at anytime. It allows them to screen out calls to voice mail that
they wish not to take and utilize the most advanced speaker independent voice
recognition technology, to place calls by speaking the name of the individual or
business they wish to call from their pre-programmed voice directory. Best of
all it is reliable, convenient, user friendly and the predatory pricing makes it
affordable for everyone.
SERVICE APPLICATION: VIP 800 VPA is specifically designed for the business
person that is on the move or dealing with multiple time zones. They can receive
calls from their cellular phone, office phone, home phone, hotel phone, clients
phone, friend's cellular phone and any phone they choose etc. Basically the
business person can receive a call anytime anywhere from any phone. They also
have the ability to screen calls to voice mail that they do not want. They will
also be able to put into storage their Palm Pilots and address books with all of
their contacts and phone numbers loaded into their voice directory by PVI. They
simply speak the name from their directory and the call is completed. This
service is the answer to the four aforementioned challenges to the business
person today: time management, connectivity, single number simplicity and low
cost. The business person's customers and potential customers will only have one
number to remember, not 3 to 4 numbers for their contact person as they have
today.
TARGET MARKET: Local, regional, national and international business travelers.
Large corporations right down to the home based business and individuals.
PRODUCT FEATURES & BENEFITS:
X Single number X HOME BASE PRICING
X SINGLE NUMBER LOCATE X VOICE DIALING DIRECTORY
X CALL SCREENING X NO NUMBERS TO REMEMBER
X AVAILABILITY AT ALL TIMES X NO MANUAL DIALING
X ULTIMATE CUSTOMER SERVICE X ELIMINATES HARD FRAUD
X BECOMES LD CALLING CARD X LOCAL ACCESS TO VOICE DIRECTORY
X TIME MANAGEMENT X CONNECTIVITY
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi- Level Marketing Companies, Paging Companies, Executive Suites,
Shared Tenant Providers and TAS Companies.
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PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X $5.00 Local locate
X $0.22 per/min - outside home X Expanded local dialing
(varies) base
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Certain companies that offer locate type functions through voice
mail today such as, Wild Fire and various other non-voice touch tone activated
service. The problem the competition faces against the PVI EMMA product line is
they are not competitively priced (due to their equipment architecture costs and
software deficiencies) and they are not user friendly, unlike EMMA.
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EXHIBIT 2 PRODUCT 3
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial the family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grand-children with a number that they can reach them on, the
parents can provide the grand-parents a number that they can reach them anywhere
in the USA. PVI can provide nap-sack tags for the smaller children and even dog
tags can be ordered with the family 800 number on the tag. The convenient easy
to use speaker independent voice directory will be pre-programmed with all of
the participants numbers: office, home, cellular etc. This service also comes
with a locate feature so that if your children or other family members need you,
they can easily find you no matter where you are: work, cell phone, lake house,
home, hotel, etc. This VIP 800 service can also be set-up with a "fraud free"
guarantee, which is great for kids in college. As with all VIP 800 services,
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
X Emergency's X Only one number to remember
X Fraud Control X Connectivity
X Everyday communication X Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi- Level Marketing Companies, Paging Companies.
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X Local locate no cost
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Adds moves & changes ($0.25) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
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COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2 PRODUCT 4
EMMA Virtual Office
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.0. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms.
Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 HOURS 7 DAYS A WEEK
X CALL SCREENING X SINGLE NUMBER LOCATE
X CALL FORWARDING TO REMOTE OFFICES X NO CPE REQUIRED
X TIME MANAGEMENT X CONNECTIVITY
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 Monthly cost X $49.95 Set-up fee
X $4.95 Per one number locate X Expanded Local (varies)
X $4.95 Locate screening X $0.18 per minute dialing
X $.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2 PRODUCT 5
EMMA International Direct
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2 PRODUCT 6
EMMA Corporate Direct
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMME VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X 0. 16 Per minute cost X
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2 PRODUCT 7
The "Smart" Business Line
SERVICE DESCRIPTION: The SBL gives any person the competitive edge. It is
specifically designed for persons on the move who do business from two or more
locations, i.e., office, home, cellular phone, hotel room, etc. With SBL anyone
can receive or make important local and long distance calls anywhere in the USA.
SBL also gives you the convenience and safety of making calls by using a
voice-activated telephone directory of your most frequently called names and
numbers.
SERVICE APPLICATION: The telephone company, after 100 years, is still providing
local business lines that only ring at one location. SBL is a portable (on the
go) business line that rings you at any phone no matter where you go, locally or
anywhere in the USA. You never have to miss an important call again. It also
gives you the option to screen your incoming calls on any phone you use. The
Intelligent Call Screening (ICS) function tells you the name of the person
calling you and you have the choice of either accepting the call, sending the
call to voice mail, or having SBL tell the caller you are not available at this
time. The service also offers you low cost long distance (1+ dialing, incoming
800 service and calling card). SBL also provides you with the ability to make
calls by speaking the name of the person or location you are calling. You never
have to remember a telephone number or dial a lot of digits. This revolutionary
service has the potential to alter the telecommunications industry as we know it
today.
TARGET MARKET: Real Estate Agents, Pilots, Flight Attendants, Appraisers,
Service Technicians, Consultants, Engineering firms, Brokers, Attorneys etc....
SERVICE PRICING:
SBL $19.95 monthly charge
Set-up fee $40.00 one time charge
Custom Greeting $10.00 onetime charge
Custom Greeting $2.95 monthly
Expanded local calling $9.95
(pricing will vary slightly by area)
DISTRIBUTION: Master Distributors and Agents. Commissions available.
COMPETITION: None
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EXHIBIT 3
EMMA VPA, FF, ID, CD Commission Schedule:
X 30% Per 800 number reservation
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X 50% one time set-up fee All Commissions are paid on collected revenue only
EMMA TR & VO Commission Schedule:
X 50% per month (Per line answered)
X 30% per month (One number locate)
X 50% Set-up fee (One time Commission)
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X $1.00 Per month (EMMA TAS Territory Over-ride) All Commissions paid on
collected revenues only
SBL Commission:
X 50% of the service set-up fee
X 16% of the Basic Business Line Monthly Fee (including ELC, Custom Greeting)
X 0% of the Custom Greeting set-up fee
X 10% Residual on any other monthly usage charges (long distance, calling card)
X 3% quarterly over-ride on usage revenue (long distance, calling card)
All Commissions paid on collected revenues only
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EXHIBIT 10.19
MASTER DISTRIBUTOR AGREEMENT
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas USA 75206-1002
Phone: 214-265-9580 Fax 214-265-9663
MASTER DISTRIBUTOR: ANSWERING SERVICE, INC.
25140 LAHSER
SUITE 100
SOUTHFIELD, MI 48034
(O) 800-351-5256 (F) 248-353-2093
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement"), is made and
entered into as of the 30th day of December, 1999 by and between PVI, a
corporation organized and existing under the laws of the State of Delaware
authorized to do business in Texas, and Master Distributor, a corporation
organized and existing under the laws of the State of Michigan.
BACKGROUND
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PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively referred to hereinafter, as the "Services").
Master Distributor is a member of an affiliated group of companies based in
Southfield Michigan which, provides various telecommunication related services
including Personal Communication Services (PCS), Telephone Answering Services
(TAS), long distance, voice mail and paging services. In order to increase its
sales of the Services, PVI is establishing a national distribution network
through the creation ofmultiple distributorships (the "Distributorships"). The
Master Distributor desires to establish a Distributorship and PVI has agreed to
grant the Distributor the distribution rights set forth herein. Accordingly in
consideration of the mutual covenants and agreements set forth below, PVI and
Master Distributor agree as follows:
OPERATIVE PROVISIONS
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1 DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and Services within
but not limited to certain Market Areas as shall be further
defined in the territory referred to in Exhibit I A and
Exhibit I B hereinafter this area shall be defined for further
references as the Market Area throughout this Agreement.
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1.2 Distributor means a legally established corporation, entity,
or individual qualified to sell and/or distribute PVI's
Services under Master Distributor.
1.3 Dealer means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Distributor Agreement.
1.4 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor,
or Dealer to sell PVI's Services directly to End- Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of
trade name which PVI may designate, use, or, adopt from time
to time to identify its Services.
1.7 Services means any telecommunication service(s) or equipment
offered by PVI.
1.8 Proprietary Information means any information, written or
oral, including, without limitation, any technical, and/or
design information on the Services, and any information
relating to the present or future business operations,
financial condition, plans, sales, marketing and promotional
efforts, customers and price lists of PVI and its subsidiaries
and affiliates disclosing such information, and all other
information of any kind which may reasonably be deemed
confidential or proprietary, including, without limitation,
this Agreement and its terms.
1.9 National Account/Affinity Group will mean but not be limited
to, certain national, regional groups/companies that operate
in areas with multiple locations. For example, PVI currently
provides Services for members of the National Association of
the Self Employed (NASE).
2 APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts appointment, as PVI's sole Master Distributorship in
the area defined on Exhibit I of this agreement.
2.2 Master Distributor shall market and sell the Services within
the assigned Market Area(s) at the prices set forth in Exhibit
2 attached hereto. The Master Distributor shall have the right
to market PVI Services outside the defined Market Area within
the continental United States. PVI may change the prices for
its Services at any time due to business conditions and or
regulatory changes. PVI will not offer pricing lower than the
pricing defined herein to other Master Distributors without
making that same pricing structure available to the Master
Distributor. It is understood by the Master Distributor that
national accounts/affinity groups may require other rate plans
and PVI will not be required to offer those rate plans to the
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Master Distributor. It is expressly understood that the Master
Distributor may market to national account/affinity groups and
in those cases, when necessary, PVI will provide marketing
support to the Master Distributor that may include special
pricing. Any special pricing offeredwill be approved by PVI
and at PVI's sole descretion and the Master Distributor will
be eligible to earn Commissions as further defined herein. As
stated, Exhibit 1 defines the Master Distributor's Market
Area. PVI will not assign any other Master Distributor in the
same Market Area.
2.3 Master Distributor shall be paid Commissions in accordance
with the Commission schedule set forth in Exhibit 3 attached
hereto. Commissions shall be paid by the 15 1h day of each
month based upon collections during the prior month. The
Commission rates may not be changed without Master
Distributor's prior written consent, except as certain
Commission rates may be increased from time to time by PVI as
part of a sales promotion or incentive which may be temporary
in nature. Prior to Master Distributor's sale of any
additional Services on behalf of PVI, Master Distributor and
PVI shall mutually agree upon a Commission schedule particular
to that Service, which schedule shall be added as an Exhibit
to this Agreement. Commissions will be paid on accounts sold
outside the Master Distributor Market Area. The Commission
rate will be the standard PVI Commissions defined herein less
any Master Distributor over-rides outside of the Market Area.
Should the Master Distributor enter into a contract with a
national account/affinity group at the PVI retail rates
defined herein, the Master Distributor will be awarded
Commissions, as defined herein, on all revenues billed and
collected (by terms defined herein). Should the national
account/affinity group Agreement for PVI Services through the
Master Distributor at retail rates that are not defined in
this Agreement, PVI and the Master Distributor will agree to a
Commission schedule for the specific account and define the
Commission on an Exhibit to be attached to this Agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any interest
in a company (or entity) which competes with the business of
PVI through the manufacture and/or sale of Services which are
substantially equivalent to, or competitive with, PVI's
Services. In the event that PVI begins selling its Services
within the Market Area as defined herein , by any means other
than through Master Distributor, the restrictions placed on
Master Distributor in this Section 2.4 shall terminate;
provided that, for a period of ninety (90) days after PVI
commences such other sales, Master Distributor shall not
solicit for a competitive service any PVI End-User acquired by
Master Distributor during the term of this Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship within the Market Area for PVI's Services as
defined in Exhibit 1. The Market Area is NOT TO BE CONSIDERED
AN EXCLUSIVE MARKETING AREA; however, this Master Distributor
agreement has certain compensation provisions defined in
Exhibit 3, that compensate the Master Distributor for any
sales activity within the Master
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Distributor Market Area that is not directly related to its
own marketing efforts and not directly related to any national
account/affinity marketing by PVI (PVI WILL NOT BE RESPONSIBLE
FOR PAYING COMMISSIONS TO THE MASTER DISTRIBUTOR ON DIRECT
NATIONAL ACCOUNTS THAT PVI ORIGINATES INCLUDING BUT NOT
LIMITED TO AFFINITY GROUPS).
3 RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly
or through any number of Distributors, Dealers, or Agents. PVI
shall not be a Party to any arrangements between Master
Distributor and its Distributors, Dealers, or Agents, nor will
PVI in any manner be bound, or have any legal obligation in
respect thereof. Master Distributor further agrees that it is
not, nor shall it represent itself to be a PVI employee or
officer of PVI, nor shall it assume or create any obligations
or responsibility on behalf of PVI, unless otherwise agreed
upon, in writing, by PVI. Also, it will be the Master
Distributor's responsibility to design Agent's and Dealers
Commission plans as it relates to the Master Distributors
business and the Master Distributor will have the sole right
to adjust those plans as required or as necessary.
3.2 Master Distributor shall use its best efforts to identify and
contract with Distributors, Dealers, and Agents, as
appropriate, and shall assist them in creating a market for,
promoting, and maintaining a demand for PVI's Services, as
well as, establishing an efficient network within the Market
Area in order to obtain maximum sales of PVI's Services.
Master Distributor shall be solely responsible for training
and compensating all its Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the
Market Area and participate in such trade shows and other
venues which will stimulate sales. Master Distributor shall,
in its sole discretion, determine the amount of any such
advertising and shall be solely responsible for the resultant
costs and expenses incurred. PVI may, at its sole discretion,
provide advertising at no expense to Master Distributor, as it
deems necessary. These activities shall be considered in any
determination of the inactivity clause herein; however, any
inactivity determination will remain and always be at PVI's
sole discretion.
3.4 Master Distributor shall send copies of all advertising and
sales promotion material and literature relating to the
Services to PVI for review and approval prior to distribution
which approval shall not be unreasonably withheld.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical literature,
the name of PVI and the Trade Marks shall be evidenced and
respected. Master Distributor shall use the Trade Marks in
their original form, unless otherwise approved in advance, in
writing by PVI.
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3.6 Master Distributor shall at all times maintain an inventory of
collateral support materials, for promotion, advertising,
signage, point-of-sale, record keeping, subscriptions, and
other items related to sales of the Services. PVI will make
available marketing materials as such materials are available.
Any such materials provided by PVI to Master Distributor shall
be provided free of charge unless otherwise agreed by Master
Distributor.
3.7 Master Distributor shall forward any money collected for PVI
as it relates to the PVI Services sold to an End User
contracting for PVI Services as it relates to this Agreement,
on a weekly basis.
3.8 PVI will require that all potential Distributor, Dealers, and
or Agents that contact PVI directly shall first be directed to
work with the Master Distributor for information of Services
within the Market Area. It is understood by both parties that
in some cases it may be necessary for PVI to work directly
with certain national account prospects or affinity groups
within the Master Distributor's Area and that due to the
specific agreements PVI will not be liable for any over-rides
or Commissions in any way. The national account or affinity
groups that PVI may market to will be defined and identified
by PVI and will be at the sole discretion of PVI.
3.9 Should PVI be acquired or merge with another company or change
ownership in any way, this Master Distributor Agreement shall
remain in full force as long as the Master Distributor is in
compliance with the terms of this Agreement. PVI will include
such language in any acquisition or merger agreement.
4 PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all claims
relating to such action) brought against Master Distributor,
based upon a claim that the Service(s) or the use thereof
infringes a United States patent, Trade Mark, Service Mark, or
copyright ("Infringement Claim"), PVI shall defend and hold
harmless the Master Distributor against such action at its
expense and pay the costs and damages awarded in any such
action, provided that PVI shall have sole control of the
defense of any such action and all negotiations for its
settlement or compromise. At any time during the course of any
Infringement Claim, or in PVI's opinion, the Services are
likely to become the subject of an Infiingement Claim, PVI
will, at its option and its sole expense, either procure the
right to continue using the Service(s), or replace or modify
the same so that such Service(s) becomes non- infringing. PVI
will not have any liability to Master Distributor for an
Infringement Claim, if such claim results from Master
Distributor's modification of the Services in any manner.
4.2 The foregoing states the entire liability of PVI with respect
to an Infringement Claim.No costs or expenses will be incurred
by the Master Distributor in defense
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of any such claim. Notwithstanding the provisions of section
4.2 PVI shall be liable to the Master Distributor for the
Market Area fee paid pursuant to this Agreement in the event
that infringement claim results in PVI's inability to provide
the Service in the Market Area as contemplated by this
Agreement.
4.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End-User to use the
Services patented by PVI. No license to make, sell, or use the
Services shall be created other than that explicitly set forth
in PVI's Service forms with the End-Users.
5 RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Master Distributor shall be advised by PVI of
any significant changes in Service(s) specifications. If these
changes are not acceptable to the End-User, PVI shall then
deal with the Master Distributors down line subscribers to the
Services and take all reasonable action to satisfy said
End-User.
5.2 PVI shall provide the Master Distributor with all necessary
documents and system documentation, required to market and
sell the Services, which shall remain the property of PVI.
Such documents and documentation may be in written form or
transmitted by tape, diskettes, e-mail, or other software
media, as determined by PVI.
5.3 PVI shall provide the Master Distributor with all pertinent
technical and sales information and collateral support
materials referenced in Section 3.7 above, PVI shall inform
the Master Distributor on a regular basis about the
development of new Services and applications, trends, and
competition in the market.PVI shall provide financial
assistance in implementing new changes in the form advertising
and promotions.
5.4 PVI shall provide the Master Distributor with the training
free of charge and within reasonable limits., Persons eligible
for training are Master Distributor's sales personnel. The
Master Distributor shall be responsible for all travel,
lodging, and all other out-of-pocket expenses related with the
training of its personnel.
5.5 PVI shall not assign more than one Master Distributor in
Market Area defined on Exhibit 1.
5.6 PVI shall:
(a) Develop and produce original copy (i.e. layout,
verbiage, plates, negatives, dies, and/or other setup
materials) of all necessary advertising and
collateral support materials for marketing the
Services;
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(b) Provide and maintain all equipment (hardware,
software, and co-location facilities) reasonably
necessary to support the PVI Services marketed and
sold by the Master Distributor;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the
Master Distributor;
(d) Perform all fulfillment of the PVI Services marketed
and sold by the Master Distributor.
(e) Pay all Master Distributor Commissions outlined
herein, on a timely monthly basis as defined in
section 2.3 of this Agreement.
(f) PVI will in its best efforts at all times maintain
the network and equipment to provide the Services
defined herein.
(g) PVI warrants that it has the regulatory authority and
will maintain compliance during the term of this
Agreement.
(h) PVI warrants that it is licensed to utilize the
necessary technologies required to offer Service(s)
and will maintain said technology licenses during the
term of this Agreement.
6 LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master
Distributor with respect to the Services. The Master Distributor agrees
that PVI shall not be liable for any special, incidental, indirect, or
consequential damages, or for the loss of profit, revenue or Services
even if PVI shall have been advised of the possibility of such
potential loss or damage. The Service is an elective Service by the
customer not a primary means of Service such as: dedicated service
(T-l's) or local dial tone.
7 DURATION AND TERMINATION OF THE AGREEMENT
7.1 This Agreement shall be effective for an initial term
commencing on the date of this Agreement (i.e. date of
execution by both Parties) and ending three (3) calendar years
thereafter. If not terminated by notice by either Party at
least sixty (60) days prior to the end of the initial term
hereof or any renewal term, the Agreement will be
automatically renewed for an unlimited number of successive
one (1) year periods.
7.2 Either Party may, without incurring any liability to the other
Party, unilaterally and with immediate effect, terminate this
Agreement at any time by a written notice sent to the other
Party in the event that:
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(a) The other Party fails, for any reason(s) whatsoever, to
perform any of its obligations under this Agreement and
fails to remedy such default within thirty (30) days
after the receipt of written notice of default and
request for cure which notice shall be sent certified
mail return receipt requested; or
(b) The other Party becomes insolvent, files or is subject
to the filing of judicial process under any law
relating to bankruptcy or insolvency, consents to a
receivership, adopts an arrangement with creditors is
dissolved, enters into liquidation, or ceases doing
business; or
(c) The Master Distributor uses the name of PVI, or any
form thereof, as a corporate name for doing business,
or trade name, or otherwise, without the prior written
consent of PVI; or
(d) PVI will monitor all Master Distributor marketing. It
is understood by the Master Distributor that a
requirement to maintain the Master Distributorship is
consistent marketing efforts, to be defined as but not
limited to: consistently adding new Agents & Dealers,
the addition of new customers at a reasonable rate
expected by Master Distributors. Any inactivity, AS
DEEMED AT THE SOLE DISCRETION OF PVI, will be grounds
for termination of this Master Distributor Agreement.
Should this termination for inactivity right be
exercised by PVI, the Master Distributor will have the
option of converting to a standard and approved Dealer
and or Agent Agreement and will be subject to a
Non-Compete for a period of ninety (90) days. During
the Non-Competition period the Master Distributor will
not contact, solicit, or offer any services to PVI
customers nor enter into any relationship that would
compete with the business of PVI. Also, all customers
submitted to PVI directly or through Agents/Dealers and
subsequent End-Users, the Commissions due will be paid
as defined herein for the length of this agreement.
However, any Commissions paid on new business submitted
will be paid as defined within the new Agent/Dealer
Agreement executed by both parties. A reasonable
start-up time will be extended and as long as Dealers,
Agents and End-users are being added to sell and
purchase PVI Service(s), it will constitute activity.
8 EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Master
Distributor shall immediately (i) remove from its premises all
signs advertising the Services or which use the Marks, (ii)
cease to engage in advertising or promotional activities
concerning PVI's Services and use of its Marks, (iii) cease to
represent in any manner that the Master Distributor has been
designated by PVI as such, and (iv) deliver to PVI at the
Master Distributor's expense, all price lists, sales manuals,
service manuals, and any other documents concerning PVI's
Services which are in the Master Distributor's possession.
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8.2 Master Distributor shall, with the mutually agreed termination
of this Agreement, have the right to claim reimbursement, or
compensation for Distributors, Dealers and Agents but shall
not have the right for compensation for alleged loss of
goodwill, loss of profits on anticipated sales, or the like,
or have any other liability for losses or damages resulting
from the termination this Agreement
9 PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and
not to copy, reproduce, distribute, or disclose to any third
party, without the prior written approval of PVI, any
Proprietary Information.
9.2 All sales of the Services (inclusive of license of the
Licensed Software) to Dealers and Agents are of the material
and tangible Services only. These sales, however, do not
include the sale of Services design (and source and/or object
codes pertaining to the Licensed Software) which are
Proprietary to PVI. To the extent any such Proprietary
Information is made available to the Master Distributor, it is
done on a confidential basis. The Master Distributor will
neither disclose circuitry design details nor principles, nor
software codes (of any kind related), nor copy them for
purposes of manufacture, nor attempt to reverse-engineer
(de-compile) or otherwise alter the Services for any purpose
whatsoever.
9.3 With respect to the Proprietary Information relating to the
Master Distributor's business which is made available to PVI
by the Master Distributor to allow PVI to perform its
obligations under this Agreement, PVI will instruct its
personnel to keep such information confidential by using the
same cam and discretion that PVI uses with data which PVI
designates as Proprietary Information. However, PVI shall not
be required to keep confidential any data which is or becomes
publicly available, is already in PVI's possession, is
independently developed by PVI outside the scope of this
Agreement, or is legally obtained form third parties. In
addition, PVI shall not be required to keep confidential and
may use for PVI's benefit any ideas, concepts, know-how, or
techniques relating to PVI's Services submitted to PVI or
developed during the term of this Agreement by PVI personnel
or jointly by PVI and the Master Distributor's personnel,
unless otherwise mutually agreed to by PVI and Master
Distributor.
9.4 The obligations of the Parties under this Section 9 shall
survive the expiration or termination of this Agreement, for
whatever reason, and shall be binding upon the Parties, their
successors and/or assigns.
9.5 The Parties acknowledge that the obligations and promises
under this Section 9 are of a special, unique character which
gives them particular value, and that a breach thereof could
result in irreparable and continuing damage for which there
can be no reasonable or adequate damages, remedy, or
compensation in an action of law. Each Party shall be entitled
to injunctive relief, a decree for specific performance,
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and/or other equitable relief in the event of any breach, or
threatened breach by the other of its obligations or promises
under this Section 9, in addition to any other rights or
remedies which it may possess (including monetary damages, if
appropriate).
10 GENERAL
10.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws of the State of Texas.
10.2 Both PVI and Master Distributor agree that prior to any filing
with any jurisdiction as defined in section 10.3 herein,
automatic Arbitration would be the first solution to any
dispute. Both parties will select an Arbitrator and the
Arbitrators selected by both parties will select a third party
Arbitrator the three arbitrators will rule on any dispute. Any
ruling by the Arbitrator's will be final. The Arbitrators
selected will be subject to the venues agreed to herein.
10.3 The Master Distributor and PVI consents to venue, and the
jurisdiction of the courts of Texas or the courts of Michigan
and may only file with courts located in Dallas County or
Oakland County and both parties agree that any dispute arising
under this Agreement shall be resolved in such jurisdictions.
10.4 This Agreement cannot be assigned or sold to any third party
or any other entity, without first giving PVI first right of
refusal and/or without the prior written consent from PVI
which shall not be unreasonably withheld.
10.5 All notices and demands of any kind which either Party may
require or desire to serve upon the other shall be in writing
and shall be delivered either by personal service or by mail
at the address of the receiving Party set forth below (or at
such different addresses as may be designated by such party by
written notice to the other Party) or by facsimile. Such
notice shall be deemed received on the earlier of (i) the date
when was actually received or (ii) in the case of mailing,
five (5) business days after being deposited in the United
States mail with sufficient prepaid postage, registered, or
certified mail with return receipt requested and properly
addressed, or (iii) if by facsimile when the sending Party
shall have received facsimile confirmation that the message
has been received by the receiving Party's facsimile machine.
If notice is sent by facsimile, a confirmed copy of such
facsimile shall be sent by mail to the receiving party.
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The address and facsimile numbers of the Parties, for purposes of the
Agreement are as follows:
PVI MASTER DISTRIBUTOR
Preferred Voice, Inc. Answering Service, Inc.
6500 Greenville Ave., Ste. 570 25140 Lahser, Suite 100
Dallas, TX 75206-1002 Southfield, MI 48034
Facsimile: 214-265-9663 Facsimile: 248-353-2093
Attention: G. Ray Miller Attention: John Robinson
10.6 Any provision of the Agreement held to be invalid under
applicable law shall not render this Agreement invalid as a
whole, and in such event, such provision shall be interpreted
so as to best accomplish'the intent of the Parties within the
limits of applicable law.
10.7 A valid contract binding upon PVI and the Master Distributor
comes into being upon execution of this Agreement by duly
authorized representatives of PVI and the Master Distributor.
This Agreement contains the exclusive terms and conditions
between the Parties hereto with respect to the subject matter
hereof, and does not operate as an acceptance of any
conflicting or additional terms and provisions of the Master
Distributor's Agreements with Distributors, Dealers or Agents,
which shall not be deemed to alter the terms hereof.
Amendments to this Agreement may be effected only in writing,
when signed by the Parties hereto specifically stating it is
intended to amend this Agreement.
10.8 Costs of Enforcement:
If any action is commenced by either Party concerning this
Agreement, the Party which prevails in such action will be
entitled to a judgement against the other Party for the costs
of such arbitration or action, including court cost,
reasonable expenses of litigation, and reasonable attorneys'
fees.
10.9 The Master Distributor acknowledges that it is an independent
contractor.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate originals on the dates indicated herein.
PREFERRED VOICE, INC. ANSWERING SERVICE, INC.
/s/ Richard K. Stone /s/ John Robinson
- - ----------------------------------- ----------------------------------
By Richard K. Stone, Vice-President By John Robinson
Authorized Signature Master Distributor
Authorized Signature
Date: 12/30/98 Date: 1/21/99
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EXHIBIT 1 A
Market Area Fee: $30,000.00
Market Area:
The State of Michigan
1. All NXX's (exchanges are included and defined as NXX's as part of the Market
Area).
2. The Master Distributor will pay $30,000 up front.
- $15,000 due upon signature of this agreement
- $15,000 due on January 29, 1999
For each up-front dollar (does not include any portion of the Master Distributor
fee financed by PVI or any Market Area other than what is defined on Exhibit 1)
paid by the Master Distributorship, PVI will issue one (1) PVI Warrant to the
Master Distributor, at a strike price of $1.00, in the name provided by the
Master Distributor. The Master Distributor may sell the Warrant at any time
during the period defined in the Warrant Agreement forthcoming and according to
the rules established by the Warrant Agreement. This statement/explination will
be superceded by the Warrant/Stock Agreement executed by and between both
parties to be provided by PVI within 15 working days of the execution of this
Master Distributor Agreement. This offer may be replaced, changed and/or
terminated if this agreement and the Master Distributorship fee is not executed
and received by January 15, 1999. Any deposits for future Market Areas are
included and will be awarded dollar for dollar as defined above, one Warrant for
each dollar spent for the reservation of a Market Area.
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EXHIBIT 2 PRODUCT 1
EMMA Telephone Receptionist
PRODUCT DESCRIPTION: EMMA TR is the world's first central office "voice auto
attendant".
PRODUCT APPLICATION: EMMA TR is a viable way for businesses to answer their
phones professionally, 24 hours a day 7 days a week. EMMA's predatory pricing
and user friendly features are revolutionary to a $2.3 billion market that has
not had any competition to date.
TARGET MARKET: All companies that require an attendant during office hours and
after hour answering services.
PRODUCT FEATURES & BENEFITS:
Consistent professional receptionist 24 hours 7 days a week
50% less cost than competition Local locate
Extended local calling No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
$19.95 per answered line Expanded local dialing - (varies)
$4.95 local locate $49.95 Set-up fee
$4.95 Per personal directory $0.12 Long distance dialing
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions. can be earned.
COMPETITION: Telephone Answering Services, Paging Companies and Voice Mail
Companies.
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EXHIBIT 2 PRODUCT 2
EMMA Virtual Personal Assistant
SERVICE DESCRIPTION: VIP 800 VPA is a revolutionary service that addresses four
important areas for the average business person: time management, connectivity,
single number simplicity and low cost. It allows the business user to never miss
a call and allows them the ability to receive a call, via the revolutionary
ability to call forward a personal 800 toll free number to any number, from any
phone anywhere at anytime. It allows them to screen out calls to voice mail that
they wish not to take and utilize the most advanced speaker independent voice
recognition technology, to place calls by speaking the name of the individual or
business they wish to call from their pre- programmed voice directory. Best of
all it is reliable, convenient, user friendly and the predatory pricing makes it
affordable for everyone.
SERVICE APPLICATION: VIP 800 VPA is specifically designed for the business
person that is on the move or dealing with multiple time zones. They can receive
calls from their cellular phone, office phone, home phone, hotel phone, clients
phone, friend's cellular phone and any phone they choose etc. Basically the
business person can receive a call anytime anywhere from any phone. They also
have the ability to screen calls to voice mail that they do not want. They will
also be able to put into storage their Palm Pilots and address books with all of
their contacts and phone numbers loaded into their voice directory by PVI. They
simply speak the name from their directory and the call is completed. This
service is the answer to the four aforementioned challenges to the business
person today: time management connectivity, single number simplicity and low
cost. The business person's customers and potential customers will only have one
number to remember, not 3 to 4 numbers for their contact person as they have
today.
TARGET MARKET: Local, regional, national and international business travelers.
Large corporations right down to the home based business and individuals.
PRODUCT FEATURES & BENEFITS:
Single number Home base pricing
Single number locate Voice dialing directory
Call screening No numbers to remember
Availability at all times No manual dialing
Ultimate customer service Eliminates hard fraud
Becomes LD calling card Local access to voice directory
Time Management Connectivity
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi- Level Marketing Companies, Paging Companies, Executive Suites,
Shared Tenant Providers and TAS Companies.
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PRODUCT PRICING:
$4.95 - 800 number reservation $4.95 call screening
$0.12 per/min - home base calls $5.00 Local locate
$0.22 per/min - outside home base Expanded local dialing (varies)
Adds moves & changes ($.025) $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through voice
mail today such as, Wild Fire and various other non-voice touch tone activated
service. The problem the competition faces against the PVI EMMA product line is
they are not competitively priced (due to their equipment architecture costs and
software deficiencies) and they are not user friendly, unlike EMMA.
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EXHIBIT 2 PRODUCT 3
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial the family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grand-children with a number that they can reach them on, the
parents can provide the grand-parents a number that they can reach them anywhere
in the USA. PVI can provide nap-sack tags for the smaller children and even dog
tags can be ordered with the family 800 number on the tag. The convenient easy
to use speaker independent voice directory will be pre-programmed with all of
the participants numbers: office, home, cellular etc. This service also comes
with a locate feature so that if your children or other family members need you,
they can easily find you no matter where you are: work, cell phone, lake house,
home, hotel, etc. This VIP 800 service can also be set-up with a "fraud free"
guarantee, which is great for kids in college. As with all VIP 800 services,
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
Emergencies Only one number to remember
Fraud control Connectivity
Everyday communication Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi- Level Marketing Companies, Paging Companies.
PRODUCT PRICING:
$4.95 - 800 number reservation $4.95 call screening
$0.12 per/min - home base calls Local locate no cost
$0.22 per/min - outside home base Expanded local dialing (varies)
Adds moves & changes ($.025) $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
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COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
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EXHIBIT 2 PRODUCT 4
EMMA Virtual Office
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.O. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms. Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
Consistent professional receptionist 24 hours 7 days a week
Call Screening Single number locate
Call forwarding to remove offices No CPE required
Time management Connectivity
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
$19.95 Monthly cost $49.95 Set-up fee
$4.95 Per one number locate Expanded Local (varies)
$4.95 Locate screening $0.18 per minute
$.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2 PRODUCT 5
EMMA International Direct
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
Product Application: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS
Consistent professional receptionist 24 hours 7 days a week
Intelligent Call Forwarding Smart calling card
Single number dialing for customers No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
$9.95 per month $99.95 Set-up fee
Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2 PRODUCT 6
EMMA Corporate Direct
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMME VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS
Consistent professional receptionist 24 hours 7 days a week
Intelligent Call Forwarding Smart calling card
Single number dialing for customers No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
$9.95 per month $99.95 Set-up fee
0.16 Per minute cost
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 3
EMMA VPA, FF, ID, CD Commission Schedule:
30% Per 800 number reservation
10% Residual Commission paid on the per minute billing
10% Residual Commission paid any other Services purchased by customer
50% one time set-up fee
All Commissions are paid on collected revenue only
EMMA TR & VO Commission Schedule:
50% per month (Per line answered)
30% per month (One number locate)
50% Set-up fee (One time Commission)
10% Residual Commission paid on the per minute billing
10% Residual Commission paid any other Services purchased by customer
$1.00 Per month (EMMA TAS Territory Over-ride)
All Commissions paid on collected revenues only
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EXHIBIT 10.20
MASTER DISTRIBUTOR AGREEMENT
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas o USA 75206-1002
Phone: 214-265-9580
Fax 214-265-9663
MASTER DISTRIBUTOR: Amerivoice Telecommunications, Inc.
212 W. Wisconsin Ave.
Suite 500
Milwaukee, WI 53203
Office: 414-277-2111
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement'), is made and
entered into as of the 30th day of December 1998 by and between PVI, a
corporation organized and existing under the laws of the State of Delaware
authorized to do business in Texas, and Master Distributor, a corporation
organized and existing under the laws of the State of Wisconsin.
BACKGROUND
----------
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively referred to hereinafter, as the "Services").
Master Distributor is a member of an affiliated group of companies based
Milwaukee which, provides various telecommunication related services including
Personal Communication Services (PCS), Telephone Answering Services (TAS), long
distance, voice mail, cellular and paging services. In order to increase its
sales of the Services, PVI is establishing a national distribution network
through the creation of multiple distributorships (the "Distributorships'). The
Master Distributor desires to establish a Distributorship and PVI has agreed to
grant the Distributor the distribution rights set forth herein. Accordingly in
consideration of the mutual covenants and agreements set forth below, PVI and
Master Distributor agree as follows:
OPERATIVE PROVISIONS
--------------------
1. DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and Services within
but not limited to certain Market Areas as shall be further
defined in the territory referred to in Exhibit I A and
Exhibit I B hereinafter this area shall be defined for further
references as the Market Area throughout this Agreement.
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1.2 Distributor means a legally established corporation, entity,
or individual qualified to sell and/or distribute PVI's
Services under Master Distributor.
1.3 Dealer means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Distributor Agreement.
1.4 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor,
or Dealer to sell PVI's Services directly to End- Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of
trade name which PVI may designate, use, or adopt from time to
time to identify its Services.
1.7 Services means any telecommunication service(s) or equipment
offered by PVI
1.8 Proprietary Information means any information, written or
oral, including, without limitation, any technical and/or
design information on the Services, and any information
relating to the present or future business operations,
financial condition, plans, sales, marketing and promotional
efforts, customers and price lists of PVI and its subsidiaries
and affiliates disclosing such information, and all other
information of any kind which may reasonably be deemed
confidential or proprietary, including, without limitation,
this Agreement and its terms.
1.9 National Account/Affinity Group will mean but not be limited
to, certain national, regional groups/companies that operate
in areas with multiple locations. For example, PVI currently
provides Services for members of the National Association of
the Self Employed (NASE).
2. APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts appointment, as PVI's sole Master Distributorship in
the area defined on Exhibit 1 of this agreement.
2.2 Master Distributor shall market and sell the Services within
the assigned Market Area(s) at the prices set forth in Exhibit
2 attached hereto. The Master Distributor shall have the right
to market PVI Services outside the defined Market Area within
the continental United States. PVI may change the prices for
its Services at any time due to business conditions and or
regulatory changes. PVI will not offer pricing lower than the
pricing defined herein to other Master Distributors without
making that same pricing structure available to the Master
Distributor. It is understood by the Master Distributor that
national accounts/affinity groups may require other rate plans
and PVI will not be required to offer those rate plans to the
Master Distributor. It is expressly understood that the Master
Distributor may market to national account/affinity groups
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and in those cases, when necessary, PVI will provide
marketing support to the Master Distributor that may include
special pricing. Any special pricing offered will be
approved by PVI and at PVI's sole discretion and the Master
Distributor will be eligible to earn Commissions as further
defined herein. As stated, Exhibit 1 define the Master
Distributor's Market Area. PVI will not assign any other
Master Distributor in the same Market Area.
2.3 Master Distributor shall be paid Commissions in accordance
with the Commission schedule set forth in Exhibit 3 attached
hereto. Commissions shall be paid by the 15th day of each
month based upon collections during the prior month. The
Commission rates may not be changed without Master
Distributor's prior written consent, except as certain
Commission rates may be increased from time to time by PVI
as part of a sales promotion or incentive which may be
temporary in nature. Prior to Master Distributor's sale of
any additional Services on behalf of PVI, Master Distributor
and PVI shall mutually agree upon a Commission schedule
particular to that Service, which schedule shall be added as
an Exhibit to this Agreement. Commissions will be paid on
accounts sold outside the Master Distributor Market Area.
The Commission rate will be the standard PVI Commissions
defined herein less any Master Distributor over-rides
outside of the Market Area. Should the Master Distributor
enter into a contract with a national account/affinity group
at the PVI retail rates defined herein, the Master
Distributor will be awarded Commissions, as defined herein,
on all revenues billed and collected (by terms defined
herein). Should the national account/affinity group
Agreement for PVI Services through the Master Distributor at
retail rates that are not defined in this Agreement, PVI and
the Master Distributor will agree to a Commission schedule
for the specific account and define the Commission on an
Exhibit to be attached to this Agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any
interest in a company (or entity) which competes with the
business of PVI through the manufacture and/or sale of
Services which are substantially equivalent to, or
competitive with, PVI's Services. In the event that PVI
begins selling its Services within the Market Area as
defined herein , by any means other than through Master
Distributor, the restrictions placed on Master Distributor
in this Section 2.4 shall terminate; provided that for a
period of ninety (90) days after PVI commences such other
sales, Master Distributor shall not solicit for a
competitive service any PVI End-User acquired by Master
Distributor during the term of this Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship within the Market Area for PVI's Services as
defined in Exhibit 1. The Market Area is NOT TO BE
CONSIDERED AN EXCLUSIVE MARKETING AREA,; however, this
Master Distributor agreement has certain compensation
provisions defined in Exhibit 3, that compensate the Master
Distributor for any sales activity within the Master
Distributor Market Area that is not directly related to its
own marketing efforts and not directly related to any
national account/affinity marketing by PVI (PVI WILL NOT BE
RESPONSIBLE FOR
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PAYING COMMISSIONS TO THE MASTER DISTRIBUTOR ON DIRECT
NATIONAL ACCOUNTS THAT PVI ORIGINATES INCLUDING BUT NOT
LIMITED TO AFFINITY GROUPS).
3. RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly
or through any number of Distributors, Dealers, or Agents. PVI
shall not be a Party to any arrangements between Master
Distributor and its Distributors, Dealers, or Agents, nor will
PVI in any manner be bound, or have any legal obligation in
respect thereof. Master Distributor further agrees that it is
not, nor shall it represent itself to be a PV1 employee or
officer of PVI, nor shall it assume or create any obligations
or responsibility on behalf of PVI, unless otherwise agreed
upon, in writing, by PVI. Also, it will be the Master
Distributor's responsibility to design Agent's and Dealers
Commission plans as it relates to the Master Distributors
business and the Master Distributor will have the sole right
to adjust those plans as required or as necessary.
3.2 Master Distributor shall use its best efforts to identify and
contract with Distributors, Dealers, and Agents, as
appropriate, and shall assist them in creating a market for,
promoting, and maintaining a demand for PVI's Services, as
well as, establishing an efficient network within the Market
Area in order to obtain maximum sales of PVI's Services.
Master Distributor shall be solely responsible for training
and compensating all its Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the
Market Area and participate in such trade shows and other
venues which will stimulate sales. Master Distributor shall,
in its sole discretion, determine the amount of any such
advertising and shall be solely responsible for the resultant
costs and expenses incurred. PVI may, at its sole discretion,
provide advertising at no expense to Master Distributor, as it
deems necessary. These activities shall be considered in any
determination of the inactivity clause herein; however, any
inactivity determination will remain and always be at PVI's
sole discretion.
3.4 Master Distributor shall send copies of all advertising and
sales promotion material and literature relating to the
Services to PVI for review and approval prior to distribution
which approval shall not be unreasonably withheld.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical literature,
the name of PVI and the Trade Marks shall be evidenced and
respected. Master Distributor shall use the Trade Marks in
their original form, unless otherwise approved in advance, in
writing by PVI.
3.6 Master Distributor shall at all times maintain an inventory of
collateral support materials, for promotion, advertising,
signage, point-of-sale, record keeping, subscriptions, and
other items related to sales of the Services. PVI will make
available marketing materials as such materials are available.
Any such materials provided by
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PVI to Master Distributor shall be provided free of charge
unless otherwise agreed by Master Distributor.
3.7 Master Distributor shall forward any money collected for PVI
as it relates to the PVI Services sold to an End User
contracting for PVI Services as it relates to this
Agreement, on a weekly basis.
3.8 PVI will require that all potential Distributor, Dealers,
and or Agents that contact PVI directly shall first be
directed to work with the Master Distributor for information
of Services within the Market Area. It is understood by both
parties that in some cases it may be necessary for PVI to
work directly with certain national account prospects or
affinity groups within the Master Distributor's Area and
that due to the specific agreements PVI will not be liable
for any over-rides or Commissions in any way. The national
account or affinity groups that PVI may market to will be
defined and identified by PVI and will be at the sole
discretion of PVI.
3.9 Should PVI be acquired or merge with another company or
change ownership in any way, this Master Distributor
Agreement shall remain in full force as long as the Master
Distributor is in compliance with the terms of this
Agreement. PVI will include such language in any acquisition
or merger agreement.
4. PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all
claims relating to such action) brought against Master
Distributor, based upon a claim that the Service(s) or the
use thereof infringes a United States patent, Trade Mark,
Service Mark, or copyright ("Infringement Claim"), PVI shall
defend and hold harmless the Mater Distributor against such
action at its expense and pay the costs and damages awarded
in any such action, provided that PVI shall have sole
control of the defense of any such action and all
negotiations for its settlement or compromise. At any time
during the course of any Infringement Claim, or in PVI's
opinion, the Services are likely to become the subject of an
Infringement Claim, PVI will, at its option and its sole
expense, either procure the right to continue using the
Service(s), or replace or modify the same so that such
Service(s) becomes non-infringing. PVI will not have any
liability to Master Distributor for an Infringement Claim,
if such claim results from Master Distributor's modification
of the Services in any manner.
4.2 The foregoing states the entire liability of PVI with
respect to an Infringement Claim. No costs or expenses will
be incurred by the Master Distributor in defense of any such
claim. Not withstanding the provisions of section 4.2 PVI
shall be liable to the Master Distributor for the Market
Area fee paid pursuant to this Agreement in the event that
infringement claim results in PVI's inability to provide the
Service in the Market Area as contemplated by this
Agreement.
4.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End User to use the
Services patented by PVI. No license to make, sell,
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or use the Services shall be created other than that
explicitly set forth in PVI's Service forms with the
End-Users.
5. RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Master Distributor shall be advised by PVI of
any significant changes in Service(s) specifications. If these
changes are not acceptable to the End-User, PVI shall then
deal with the Master Distributors down line subscribers to the
Services and take all reasonable action to satisfy said
End-User.
5.2 PVI shall provide the Master Distributor with all necessary
documents and system documentation, required to market and
sell the Services, which shall remain the property of PVI.
Such documents and documentation may be in written form or
transmitted by tape, diskettes, e-mail, or other software
media, as determined by PVI.
5.3 PVI shall provide the Master Distributor with all pertinent
technical and sales information and collateral support
materials referenced in Section 3.7 above, PVI shall inform
the Master Distributor on a regular basis about the
development of new Services and applications, trends, and
competition in the market. PVI shall provide financial
assistance in implementing new changes in the form advertising
and promotions.
5.4 PVI shall provide the Master Distributor with the training
free of charge and within reasonable limits. Persons eligible
for training are Master Distributor's sales personnel. The
Master Distributor shall be responsible for all travel,
lodging, and all other out-of-pocket expenses related with the
training of its personnel.
5.5 PVI shall not assign more than one Master Distributor in
Market Area defined on Exhibit 1.
5.6 PVI shall:
(a) Develop and produce original copy (i.e. layout,
verbiage, plates, negatives, dies, and/or other setup
materials) of all necessary advertising and
collateral support materials for marketing the
Services;
(b) Provide and maintain all equipment (hardware,
software, and co-location facilities) reasonably
necessary to support the PVI Services marketed and
sold by the Master Distributor;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the
Master Distributor;
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(d) Perform all fulfillment of the PVI Services marketed
and sold by the Master Distributor.
(e) Pay all Master Distributor Commissions outlined
herein, on a timely monthly basis as defined in
section 2.3 of this Agreement.
(f) PVI will in its best efforts at all times maintain
the network and equipment to provide the Services
defined herein.
(g) PVI warrants that it has the regulatory authority and
will maintain compliance during the term of this
Agreement.
(h) PVI warrants that it is licensed to utilize the
necessary technologies required to offer Service(s)
and will maintain said technology licenses during the
term of this Agreement.
6. LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master
Distributor with respect to the Services. The Master Distributor agrees that PVI
shall not be liable for any special, incidental, indirect, or consequential
damages, or for the loss of profit, revenue or Services even if PVI shall have
been advised of the possibility of such potential loss or damage, The Service is
an elective Service by the customer not a primary means of Service such as:
dedicated service (T-l's) or local dial tone.
7. DURATION AND TERMINATION OF THE AGREEMENT
7.1 This Agreement shall be effective for an initial term
commencing on the date of this Agreement (i.e. date of
execution by both Parties) and ending three (3) calendar years
thereafter. If not terminated by notice by either Party at
least sixty (60) days prior to the end of the initial term
hereof or any renewal term, the Agreement will be
automatically renewed for an unlimited number of successive
one (1) year periods.
7.2 Either Party may, without incurring any liability to the other
Party, unilaterally and with immediate effect, terminate this
Agreement at any time by a written notice sent to the other
Party in the event that:
(a) The other Party fails, for any reason(s) whatsoever,
to perform any of its obligations under this
Agreement and fails to remedy such default within
thirty (30) days after the receipt of written notice
of default and request for cure which notice shall be
sent certified mail return receipt requested; or
(b) The other Party becomes insolvent, files or is
subject to the filing of judicial process under any
law relating to bankruptcy or insolvency, consents to
a receivership, adopts an arrangement with creditors,
is dissolved, enters into liquidation, or ceases
doing business: or
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(c) The Master Distributor uses the name of PVI, or any
form thereof, as a corporate name for doing business,
or trade name, or otherwise, without the prior written
consent of PVI: or
(d) PVI will monitor all Master Distributor marketing. It
is understood by the Master Distributor that a
requirement to maintain the Master Distributorship is
consistent marketing efforts, to be defined as but not
limited to: consistently adding new Agents & Dealers,
the addition of new customers at a reasonable rate
expected by Master Distributors. Any inactivity, AS
DEEMED AT THE SOLE DISCRETION OF PVI, will be grounds
for termination of this Master Distributor Agreement.
Should this termination for inactivity right be
exercised by PVI, the Master Distributor will have the
option of converting to a standard and approved Dealer
and or Agent Agreement and will be subject to a Non-
Compete for a period of ninety (90) days. During the
Non-Competition period the Master Distributor will not
contact, solicit, or offer any services to PVI
customers nor enter into any relationship that would
compete with the business of PVI. Also, all customers
submitted to PVI directly or through Agents/Dealers and
subsequent End-Users, the Commissions due will be paid
as defined herein for the length of this agreement.
However, any Commissions paid on new business submitted
will be paid as defined within the new Agent/Dealer
Agreement executed by both parties. A reasonable
start-up time will be extended and as long as Dealers,
Agents and End-users are being added to sell and
purchase PVI Service(s), it will constitute activity.
8. EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement the Master
Distributor shall immediately (i) remove from its premises all
signs advertising the Services or which use the Marks, (ii)
cease to engage in advertising or promotional activities
concerning PVI's Services and use of its Marks, (iii) cease to
represent in any manner that the Master Distributor has been
designated by PVI as such, and (iv) deliver to PVI at the
Master Distributor's expense, all price lists, sales manuals,
service manuals, and any other documents concerning PVI's
Services which are in the Master Distributor's possession.
8.2 Master Distributor shall, with the mutually agreed termination
of this Agreement, have the right to claim reimbursement, or
compensation for Distributors, Dealers and Agents but shall
not have the right for compensation for alleged loss of
goodwill, loss of profits on anticipated sales, or the like,
or have any other liability for losses or damages resulting
from the termination this Agreement
9. PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and
not to copy, reproduce, distribute, or disclose to any third
party, without the prior written approval of PVI, any
Proprietary Information.
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9.2 All sales of the Services (inclusive of license of the
Licensed Software) to Dealers and Agents are of the material
and tangible Services only. These sales, however, do not
include the sale of Services design (and source and/ or object
codes pertaining to the Licensed Software) which are
Proprietary to PVI. To the extent any such Proprietary
Information is made available to the Master Distributor, it is
done on a confidential basis. The Master Distributor will
neither disclose circuitry design details nor principles, nor
software codes (of any kind related), nor copy them for
purposes of manufacture, nor attempt to reverse-engineer
(de-compile) or otherwise alter the Services for any purpose
whatsoever.
9.3 With respect to the Proprietary Information relating to the
Master Distributor's business which is made available to PVI
by the Master Distributor to allow PVI to perform its
obligations under this Agreement, PVI will instruct its
personnel to keep such information confidential by using the
same care and discretion that PVI uses with data which PVI
designates as Proprietary Information. However, PVI shall not
be required to keep confidential any data which is or becomes
publicly available, is already in PVI's possession, is
independently developed by PVI outside the scope of this
Agreement, or is legally obtained form third parties. In
addition, PVI shall not be required to keep confidential and
may use for PVI's benefit any ideas, concepts, know-how, or
techniques relating to PVI's Services submitted to PVI or
developed during the term of this Agreement by PVI personnel
or jointly by PVI and the Master Distributor's personnel,
unless otherwise mutually agreed to by PVI and Master
Distributor.
9.4 The obligations of the Parties under this Section 9 shall
survive the expiration or termination of this Agreement, for
whatever reason, and shall be binding upon the Parties, their
successors and/or assigns.
9.5 The Parties acknowledge that the obligations and promises
under this Section 9 are of a special, unique character which
gives them particular value, and that a breach thereof could
result in irreparable and continuing damage for which there
can be no reasonable or adequate damages, remedy, or
compensation in an action of law. Each Party shall be entitled
to injunctive relief, a decree for specific performance,
and/or other equitable relief in the event of any breach, or
threatened breach by the other of its obligations or promises
under this Section 9, in addition to any other rights or
remedies which it may possess (including monetary damages, if
appropriate).
10. GENERAL
10.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws of the State of Texas.
10.2 Both PVI and Master Distributor agree that prior to any filing
with any jurisdiction as defined in section 10.3 herein,
automatic Arbitration would be the first solution to any
dispute. Both parties will select an Arbitrator and the
Arbitrators selected by both parties will select a third party
Arbitrator the three arbitrators will rule on any dispute.
-9-
<PAGE>
Any ruling by the Arbitrator's will be final. The Arbitrators
selected will be subject to the venues agreed to herein.
10.3 The Master Distributor and PVI consents to venue, and the
jurisdiction of the courts of Texas and may only file with
courts located in Dallas County and both parties agree that
any dispute arising under this Agreement shall be resolved in
such jurisdictions.
10.4 This Agreement cannot be assigned or sold to any third party
or any other entity, without first giving PVI first right of
refusal and/or without the prior written consent from PVI
which shall not be unreasonably withheld.
10.5 All notices and demands of any kind which either Party may
require or desire to serve upon the other shall be in writing
and shall be delivered either by personal service or by mail
at the address of the receiving Party set forth below (or at
such different addresses as may be designated by such party by
written notice to the other Party) or by facsimile. Such
notice shall be deemed received on the earlier of (i) the date
when was actually received or (ii) in the case of mailing,
five (5) business days after being deposited in the United
States mail with sufficient prepaid postage, registered, or
certified mail with return receipt requested and properly
addressed, or (iii) if by facsimile when the sending Party
shall have received facsimile confirmation that the message
has been received by the receiving Party's facsimile machine.
If notice is sent by facsimile, a confirmed copy of such
facsimile shall be sent by mail to the receiving party.
The address and facsimile numbers of the Parties, for purposes of the Agreement
are as follows:
PVI PREFERRED VOICE, INC.
6500 Greenville Ave., Ste. 570
Dallas, TX 75206-1002
Facsimile: 214-265-9663
Attention: G. Ray Miller
MASTER DISTRIBUTOR
Amerivoice Telecommunications, Inc.
212 W. Wisconsin Ave
Milwaukee, WI 53203
Facsimile: 414-277-2116
Attention: Louis Miller
10.6 Any provision of the Agreement held to be invalid under
applicable law shall not render this Agreement invalid as a
whole, and in such event, such provision shall be interpreted
so as to best accomplish the intent of the Parties within the
limits of applicable law.
10.7 A valid contract binding upon PVI and the Master Distributor
comes into being upon execution of this Agreement by duly
authorized representatives of PVI and the Master Distributor.
This Agreement contains the exclusive terms and conditions
between the Parties hereto with respect to the subject matter
hereof, and does not operate as an acceptance of any
conflicting or additional terms and provisions of the Master
Distributor's Agreements with Distributors, Dealers or Agents,
which shall not be
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<PAGE>
deemed to alter the terms hereof. Amendments to this Agreement
may be effected only in writing, when signed by the Parties
hereto specifically stating it is intended to amend this
Agreement.
10.8 Costs of Enforcement:
If any action is commenced by either Party concerning this
Agreement, the Party which prevails in such action will be
entitled to a judgement against the other Party for the costs
of such arbitration or action, including court cost,
reasonable expenses of litigation, and reasonable attorneys'
fees.
10.9 The Master Distributor acknowledges that it is an independent
contractor.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate originals on the dates indicated herein.
Preferred Voice, Inc.
/s/ Richard K. Stone
- - ----------------------------------
By Richard K Stone, Vice-President
Authorized Signature
Date: 12-30-98
------------------------
Amerivoice Telecommunications, Inc.
/s/ Louis Miller
- - ----------------------------------
By Louis Miller
Master Distribuutor
Authorized Signature
Date: 12-30-98
------------------------
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<PAGE>
EXHIBIT 1 A
Market Area Fee: $40,000.00
Market Area: State of Illinois
State of Wisconsin
1. All NXX's (exchanges are included and defined as NXX's as part of the
Market Area).
2. The Master Distributor Fee will be paid in full up front.
For each up-front dollar (does not include any portion of the Master Distributor
fee financed by PVI or any Market Area other than what is defined on Exhibit 1)
paid by the Master Distributorship, PVI will issue one (1) PVI Warrant to the
Master Distributor, at a strike price of $1.00, in the name provided by the
Master Distributor. The Master Distributor may sell the Warrant at any time
during the period defined in the Warrant Agreement forthcoming and according to
the rules established by the Warrant Agreement. This statement/explanation will
be superceded by the Warrant/Stock Agreement executed by and between both
parties to be provided by PVI within 15 working days of the execution of this
Master Distributor Agreement. This offer may be replaced, changed and/or
terminated if this agreement and the Master Distributorship fee is not executed
and received by January 15, 1999. Any deposits for future Market Areas are
included and will be awarded dollar for dollar as defined above, one Warrant for
each dollar spent for the reservation of a Market Area.
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<PAGE>
EXHIBIT 2 PRODUCT 1
EMMA Telephone Receptionist
PRODUCT DESCRIPTION: EMMA TR is the world's first central office "voice auto
attendant."
PRODUCT APPLICATION: EMMA TR is a viable way for business' to answer their
phones professionally, 24 hours a day 7 days a week. EMMA's predatory pricing
and user friendly features are revolutionary to a $2.3 billion market that has
not had any competition to date.
TARGET MARKET: All companies that require an attendant during office hours and
after hour answering services.
PRODUCT FEATURES & BENEFITS:
X Consistent professional X 24 hours 7 days a week
receptionist
X 50% less cost than X Local locate
competition
X Extended local calling X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X 19.95 per answered line X Expanded local dialing-(varies)
X $4.95 local locate X $49.95 Set-up fee
X $4.95 Per personal directory X $0.12 Long distance dialing
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Telephone Answering Services, Paging Companies and Voice Mail
Companies.
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<PAGE>
EXHIBIT 2 PRODUCT 2
EMMA Virtual Personal Assistant
SERVICE DESCRIPTION: VIP 800 VPA is a revolutionary service that addresses four
important areas for the average business person: time management, connectivity,
single number simplicity and low cost. It allows the business user to never miss
a call and allows them the ability to receive a call, via the revolutionary
ability to call forward a personal 800 toll free number to any number, from any
phone anywhere at anytime. It allows them to screen out calls to voice mail that
they wish not to take and utilize the most advanced speaker independent voice
recognition technology, to place calls by speaking the name of the individual or
business they wish to call from their pre- programmed voice directory. Best of
all it is reliable, convenient, user friendly and the predatory pricing makes it
affordable for everyone.
SERVICE APPLICATION: VIP 800 VPA is specifically designed for the business
person that is on the move or dealing with multiple time zones. They can receive
calls from their cellular phone, office phone, home phone, hotel phone, clients
phone, friend's cellular phone and any phone they choose etc. Basically the
business person can receive a call anytime anywhere from any phone. They also
have the ability to screen calls to voice mail that they do not want. They will
also be able to put into storage their Palm Pilots and address books with all of
their contacts and phone numbers loaded into their voice directory by PVI. They
simply speak the name from their directory and the call is completed. This
service is the answer to the four aforementioned challenges to the business
person today: time management, connectivity, single number simplicity and low
cost. The business person's customers and potential customers will only have one
number to remember, not 3 to 4 numbers for their contact person as they have
today.
TARGET MARKET: Local, regional, national and international business travelers.
Large corporations right down to the home based business and individuals.
PRODUCT FEATURES & BENEFITS:
X Single number X Home base pricing
X Single number locate X Voice dialing directory
X Call screening X No numbers to remember
X Availability at all times X No manual dialing
X Ultimate customer service X Eliminates hard fraud
X Becomes LD calling card X Local access to voice directory
X Time Management X Connectivity
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<PAGE>
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies, Executive Suites,
Shared Tenant Providers and TAS Companies.
PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X $5.00 Local locate
X $0.22 per/min - outside home X Expanded local dialing
base (varies)
X Add moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through voice
mail today such as, Wild Fire and various other non-voice touch tone activated
service. The problem the competition faces against the PVI EMMA product line is
they are not competitively priced (due to their equipment architecture costs and
software deficiencies) and they are not user friendly, unlike EMMA.
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<PAGE>
EXHIBIT 2 PRODUCT 3
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial the family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grand-children with a number that they can reach them on, the
parents can provide the grand-parents a number that they can reach them anywhere
in the USA o PVI can provide nap-sack tags for the smaller children and even dog
tags can be ordered with the family 800 number on the tag. The convenient easy
to use speaker independent voice directory will be pre-programmed with all of
the participants numbers: office, home, cellular, etc. This service also comes
with a locate feature so that if your children or other family members need you,
they can easily find you no matter where you are: work, cell phone, lake house,
home, hotel, etc. This VIP 800 service can also be set-up with a "fraud free"
guarantee, which is great for kids in college. As with all VIP 800 services,
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
X Emergency's X Only one number to remember
X Fraud control X Connectivity
X Everyday communication X Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies.
PRODUCT PRICING:
X $4.95 - 800 number X $4.95 call screening
reservation
X $0.12 per/min - home base X Local locate no cost
calls
X $0.22 per/min - outside home X Expanded local dialing (varies)
base
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
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EXHIBIT 2 PRODUCT 4
EMMA Virtual Office
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.O. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms. Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
X Consistent professional X 24 hours 7 days a week
receptionist
X Call Screening X Single number locate
X Call forwarding to remote X No CPE required
offices
X Time management X Connectivity
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 Monthly cost X $49.95 Set-up fee
X $4.95 Per one number locate X Expanded Local (varies)
X $4.95 Locate screening X $0.18 per minute
X $.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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<PAGE>
EXHIBIT 2 PRODUCT 5
EMMA INTERNATIONAL DIRECT
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS
X Consistent professional X 24 hours 7 days a week
receptionist
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for X No CPE required
customers
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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<PAGE>
EXHIBIT 2 PRODUCT 6
EMMA Corporate Direct
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMME VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS
X Consistent professional X 24 hours 7 days a week
receptionist
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for X No CPE required
customers
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X 0.16 Per minute cost X
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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<PAGE>
EXHIBIT 2 PRODUCT 7
The "SMART" Business Line
SERVICE DESCRIPTION: The SBL gives any person the competitive edge. It is
specifically designed for persons on the move who do business from two or more
locations, i.e., office, home, cellular phone, hotel room, etc. With SBL anyone
can receive or make important local and long distance calls anywhere in the USA.
SBL also gives you the convenience and safety of making calls by using a
voice-activated telephone directory of your most frequently called names and
numbers.
SERVICE APPLICATION: The telephone company, after 100 years, is still providing
local business lines that only ring at one location. SBL is a portable (on the
go) business line that rings you at any phone no matter where you go, locally or
anywhere in the USA. You never have to miss an important call again. It also
gives you the option to screen your incoming calls on any phone you use. The
Intelligent Call Screening (ICS) function tells you the name of the person
calling you and you have the choice of either accepting the call, sending the
call to voice mail, or having SBL tell the caller you are not available at this
time. The service also offers you low cost long distance (1+ dialing, incoming
800 service and calling card). SBL also provides you with the ability to make
calls by speaking the name of the person or location you are calling. You never
have to remember a telephone number or dial a lot of digits. This revolutionary
service has the potential to alter the telecommunications industry as we know it
today.
TARGET MARKET: Real Estate Agents, Pilots, Flight Attendants, Appraisers,
Service Technicians, Consultants, Engineering firms, Brokers, Attorneys
etc......
SERVICE PRICING:
SBL $19.95 monthly charge
Set-up fee $40.00 one time charge
Custom Greeting $10.00 one time charge
Custom Greeting $2.95 monthly
Expanded local calling $9.95
(pricing will vary slightly by area)
DISTRIBUTION: Master Distributors and Agents. Commissions available.
COMPETITION: None
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<PAGE>
EXHIBIT 3
EMMA VPA, FF, ID, CD Commission Schedule:
X 30% Per 800 number reservation
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X 50% one time set-up fee
All Commissions are paid on collected revenue only
EMMA TR & VO Commission Schedule:
X 50% per month (Per line answered)
X 30% per month (One number locate)
X 50% Set-up fee (One time Commission)
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X $1.00 Per month (EMMA TAS Territory Over-ride)
All Commissions paid on collected revenues only
SBL Commission:
X 50% of the service set-up fee
X 16% of the Basic Business Line Monthly Fee (including ELC, Custom Greeting)
X 0% of the Custom Greeting set-up fee
X 10% Residual on any other monthly usage charges (long distance, calling card)
X 3% quarterly over-ride on usage revenue (long distance, calling card)
All Commissions paid on collected revenues only
-21-
EXHIBIT 10.21
MASTER DISTRIBUTOR AGREEMENT
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas 75206-1002
MASTER DISTRIBUTOR: VOICENET NEW MEDIA, INC.
715 BROADWAY
SOMERVILLE, MA 02144
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement"), is made and
entered into as of the 30th day of December, 1998 by and between PVI, a
corporation organized and existing under the laws of the state of Delaware, and
Master Distributor, a corporation organized and existing under the laws of the
state of Massachusetts.
BACKGROUND
----------
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively, the "Services").
Master Distributor is a member of an affiliated group of companies based in
Somerville which, through a network of agents and distributors, provide various
telecommunication related services including cellular, long distance, and paging
services. In order to increase its sales of the Services, PVI is establishing a
national distribution network through the creation of multiple distributorships
(the "Distributorships"). The Master Distributor desires to establish a
Distributorship and PVI has agreed to grant the Distributor the distribution
rights set forth herein. Accordingly in consideration of the mutual covenants
and agreements set forth below, PVI and Master Distributor agree as follows:
OPERATIVE PROVISIONS
--------------------
1. DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and services within
but not limited to certain market areas.
1.2 Distributor means a legally established corporation, entity,
or individual qualified to sell and/or distribute PVI's
Services under Master Distributor.
1.3 Dealer means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Agreement Distributor and/or Distributor.
1
<PAGE>
1.4 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor,
or Dealer to sell PVI's Services directly to End- Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of
trade name which PVI may designate, use, or adopt from time to
time to identify its Services.
1.7 Services means any telecommunication service(s) or equipment
offered by PVI.
1.8 Proprietary Information means any information, written or
oral, including, without limitation, any technical and/or
design information on the Services, and any information
relating to the present or future business operations,
financial condition, plans, sales, marketing and promotional
efforts, customers and price lists of PVI and its subsidiaries
and affiliates disclosing such information, and all other
information of any kind which may reasonably be deemed
confidential or proprietary, including, without limitation,
this Agreement and its terms.
1.9 National Account Affinity Group will mean but not be limited
to, certain national, regional groups/companies that operate
in areas with multiple locations. For example, PVI currently
provides services for members of the National Association of
the Self Employed (NASE).
2. APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts appointment, as PVI's non-exclusive Master
Distributorship in the area defined on Exhibit I attached
hereto.
2.2 Master Distributor shall market and sell the Services within
the assigned market area(s) at the prices set forth in Exhibit
2 attached hereto. The Master Distributor will shall have the
right to market PVI services outside the defined (Exhibit 1)
market area within the continental United States. PVI may
change the prices for its services at any time, or within the
time constraints dictated by certain telecommunication
tariffs, and/or other governing authority, which ever is first
to occur. PVI will not offer pricing lower than the pricing
defined herein to other Master Distributors or subagents
without making that same pricing structure available to the
Master Distributor. It is understood by the Master Distributor
that national accounts/affinity groups may require other rate
plans and PVI will not be required to offer those rate plans
to the Master Distributor. It is expressly understood that the
Master Distributor may market to national account/affinity
groups and in those cases, when necessary, PVI will provide
marketing support to the Master Distributor that may include
special pricing. Any special pricing offered will be approved
by PVI and at PVI's sole discretion and the Master Distributor
will be eligible to earn commissions as further defined
herein.
2
<PAGE>
As stated, Exhibit I will define the Master Distributor
market area. PVI will not assign any other Master
Distributor in the same market area.
2.3 Master Distributor shall be paid commissions in accordance
with the commission schedule set forth in Exhibit 3 attached
hereto. Commissions shall be paid by the 15th day of each
month based upon collections during the prior month, as
appropriate. The commission rates may not be changed without
Master Distributor's prior written consent, except as
certain commission rates may be increased from time to time
by PVI as part of a sales promotion or incentive which may
be temporary in nature. Prior to Master Distributor's sale
of any additional Services on behalf of PVI, Master
Distributor and PVI shall mutually agree upon a commission
schedule particular to that Service, which schedule shall be
added as an Exhibit to this agreement. Commissions will be
paid on accounts sold outside the defined (Exhibit 1) Master
Distributor area, the commission rate will be the standard
PVI commissions defined herein less any Master Distributor
over-rides. Should the Master Distributor enter into a
contract with a national account/affinity group at the PVI
retail rates defined herein, the Master Distributor will be
awarded commissions, as defined herein, on all revenues
billed and collected (by terms defined herein). Should the
national account/affinity group contract for PVI services
through the Master Distributor at retail rates that are not
defined in this contract, PVI and the Master Distributor
will agree to a commission schedule for the specific account
and define the commission on an Exhibit to be attached to
this agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any
interest in a company (or entity) which competes with the
business of PVI through the manufacture and/or sale of
services which are substantially equivalent to, or
competitive with, PVI's Services. In the event that PVI
begins selling its services within the market area as
defined herein , by any means other than through Master
Distributor, the restrictions placed on Master Distributor
in this Section 2.4 shall terminate; provided that, for a
period of one year after PVI commences such other sales,
Master Distributor shall not solicit for a competitive
service any PVI end-user acquired by Master Distributor
during the term of this Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship for PVI's products and services as defined
herein and may vary by market area. The Master
Distributorship will be assigned a marketing (and the cost
for said marketing area) area defined by NPA's and may also
be defined by NXX's on the appropriate attachment contained
herein. The market area is NOT TO BE CONSIDERED AN EXCLUSIVE
MARKETING AREA; however, this Master Distributor agreement
has certain compensation provisions defined in Exhibit 3,
that compensate the Master Distributor for any sales
activity within the Master Distributor area that is not
directly related to its own marketing efforts and not
directly related to any national account/affinity marketing
by PVI (PVI WILL NOT BE RESPONSIBLE FOR PAYING COMMISSIONS
TO THE MASTER DISTRIBUTOR ON DIRECT NATIONAL ACCOUNTS
INCLUDING BUT NOT LIMITED TO AFFINITY GROUPS).
3
<PAGE>
3. RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly
or through any number of Distributors, Dealers, or Agents.
PVI shall not be a Party to any arrangements between Master
Distributor and its Distributors, Dealers, or Agents, nor
will PVI in any manner be bound, or have any legal
obligation in respect thereof. Master Distributor further
agrees that it is not, nor shall it represent itself to be,
the legal or authorized representative of PVI, nor shall it
assume or create any obligations or responsibility on behalf
of PVI, unless otherwise agreed upon, in writing, by PVI.
Also, it will be the Master Distributor's responsibility to
design sub-agent commission plans as it relates to the
Master Distributors business and the Master Distributor will
have the sole right to adjust those plans as required or as
necessary. However; this will not prevent PVI from
publishing a commission plan for agents/distributors that
are not Master Distributors.
3.2 Master Distributor shall use its best efforts to identify
and contract with Distributors, Dealers, and Agents, as
appropriate, and shall assist them in creating a market for,
promoting, and maintaining a demand for PVI's Services, as
well as, establishing an efficient network within the market
area defined herein, in order to obtain maximum sales of
PVI's Services. Master Distributor shall be solely
responsible for training and compensating all its
Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the
market area and participate in such trade shows and other
venues which will stimulate sales. Master Distributor shall,
in its sole discretion, determine the amount of any such
advertising and shall be solely responsible for the
resultant costs and expenses incurred. PVI may, at its sole
discretion, provide advertising at no expense to Master
Distributor, as it deems necessary. These activities shall
be considered in any determination of the inactivity clause
herein; however, any inactivity determination will remain
and always be at PVI's sole discretion.
3.4 Master Distributor shall send copies of all advertising and
sales promotion material and literature relating to the
Services to PVI for review and approval, prior to
distribution.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical
literature, the name of PVI and the Trade Marks shall be
evidenced and respected. Master Distributor shall use the
Trade Marks in their original form, unless otherwise
approved in advance, in writing by PVI.
3.6 Master Distributor shall at all times maintain a sufficient
inventory of collateral support materials, for promotion,
advertising, signage, point-of-sale, record keeping,
subscriptions, and other items related to sales of the
Services. PVI will make available marketing materials as
such materials are available. Any such materials provided by
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PVI to Master Distributor shall be provided free of charge
unless otherwise agreed by Master Distributor.
3.7 Master Distributor shall, forward any money collected for
PVI as it relates to the PVI services sold to an end user,
customer, or any other entity contracting for PVI services
as it relates to this agreement, on a weekly basis.
3.8 PVI will, in its best effort, encourage all potential agents
that contact PVI directly to work with the Master
Distributor within the Master Distributor area defined
herein. It is understood by both parties that in some cases
it may be necessary for PVI to work directly with certain
national account prospects or affinity groups within the
Master Distributor area and that due to the specific
agreements will not be liable for any over-rides or
commissions in any way. The national account or affinity
groups that PVI may market to will be defined and identified
by PVI and will be at the sole discretion of PVI.
3.9 Should PVI be acquired or merge with another company or
change ownership in any way, this Master Distributor
agreement shall remain in full force as long as the Master
Distributor is in compliance with the terms of this
agreement. PVI will include such language in any acquisition
or merger agreement.
4. PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all
claims relating to such action) brought against Master
Distributor, based upon a claim that use of the service
infringes a United States patent, trademark, service mark,
or copyright (an "Infringement Claim"), PVI shall defend
such action at its expense and pay the costs and damages
awarded in any such action, provided that PVI shall have
sole control of the defense of any such action and all
negotiations for its settlement or compromise. At any time
during the course of any Infringement Claim, or in PVI's
opinion, the Services are likely to become the subject of an
Infringement Claim, PVI will, at its option and its expense,
either procure the right to continue using the Service(s),
or replace or modify the same so that it becomes
non-infringing. PVI will not have any liability to Master
Distributor for an Infringement Claim, if such claim results
from Master Distributor's modification of the Services in
any manner.
4.2 The foregoing states the entire liability of PVI with
respect to an Infringement Claim. No costs or expenses will
be incurred by the Master Distributor in defense of any such
claim.
4.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End-User to use the
Services patented by PVI. No license to make, sell, or use
the Services shall be created other than that explicitly set
forth in PVI's agreement with the End-Users.
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5. RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Master Distributor shall be advised by PVI of
any significant changes in Service(s) specifications.
5.2 PVI shall provide the Master Distributor with all necessary
documents and system documentation, required to market and
sell the Services, which shall remain the property of PVI.
Such documents and documentation may be in written form or
transmitted by tape, diskettes, e-mail, or other software
media, as determined by PVI.
5.3 PVI shall provide the Master Distributor with all pertinent
technical and sales information and collateral support
materials referenced in Section 3.7 above, PVI shall inform
the Master Distributor on a regular basis about the
development of new Services and applications, trends, and
competition in the market.
5.4 PVI shall provide the Master Distributor with the training
free of charge and within reasonable limits. Persons eligible
for training are Master Distributor's sales personnel. The
Master Distributor shall be responsible for all travel,
lodging, and all other out-of-pocket expenses related with the
training of its personnel.
5.5 PVI Shall not assign more than one Master Distributor per
market area defined on Exhibit 1.
5.6 PVI shall:
(a) Develop and produce original copy (i.e. layout,
verbiage, plates, negatives, dies, and/or other setup
materials) of all necessary advertising and
collateral support materials for marketing the
Services;
(b) Provide and maintain all equipment (hardware,
software, and co-location facilities) reasonably
necessary to support the PVI Services marketed and
sold by the Master Distributor;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the
Master Distributor;
(d) Perform all fulfillment of the PVI Services marketed
and sold by the Master Distributor.
(e) Pay all Master Distributor commissions outlined
herein, on a monthly basis.
(f) PVI will in its best efforts at all times maintain
the network and equipment to provide the services
defined herein.
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6. LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master Distributor
with respect to the Services. The Master Distributor agrees that PVI shall
not be liable for any special, incidental, indirect, or consequential
damages, or for the loss of profit, revenue or Services even if PVI shall
have been advised of the possibility of such potential loss or damage. PVI
7. DURATION AND TERMINATION OF THE AGREEMENT
7.1 This agreement shall be effective for an initial term commencing on
the date of this Agreement (i.e. date of execution by both Parties)
and ending three (3) calendar years thereafter. If not terminated by
notice by either Party at least sixty (60) days prior to the end of
the initial term hereof or any renewal term, the Agreement will be
automatically renewed for an unlimited number if successive one (1)
year periods.
7.2 Either Party may, without incurring any liability to the other Party,
unilaterally and with immediate effect, terminate this Agreement at
any time by a written notice sent to the other Party in the event
that:
(a) The other Party fails, for any reason(s) whatsoever, to perform
any of its obligations under this Agreement and fails to remedy
such default within thirty (30) days after the mailing of written
notice of default and request for cure; or
(b) The other Party becomes insolvent, files or is subject to the
filing of judicial process under any law relating to bankruptcy
or insolvency, consents to a receivership, adopts an arrangement
with creditors, is dissolved, enters into liquidation, or ceases
doing business.
(c) The Master Distributor uses the name of PVI, or any form thereof,
as a corporate name for doing business, or trade name, or
otherwise, without the prior written consent of PVI.
(d) PVI will monitor all Master Distributor marketing. It is
understood by the Master Distributor that a requirement to
maintain the Master Distributorship is consistent marketing
efforts, to be defined but not limited to: consistently adding
new agents & dealers, the addition of new customers at a rate
expected by Master Distributors. Any inactivity, AS DEEMED AT THE
SOLE DISCRETION OF PVI, will be grounds for termination of this
Master Distributor agreement. Should this inactivity
section/point be exercised by PVI, the Master Distributor will
have the option of converting to a standard PVI agent agreement.
Also, all customers submitted to PVI directly or through sub-
agents/dealers and subsequent commissions due will be paid as
defined herein for the length of this agreement. However, any
commissions paid on new business submitted will be paid as
defined within the new agent agreement executed by both parties.
A reasonable ramp-up time will be extended and as
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long as customers and agents are being added to sell and purchase
PVI service, it will constitute activity.
8. EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Master
Distributor shall immediately (i) remove from its premises all
signs advertising the Services or which use the Marks, (ii) cease
to engage in advertising or promotional activities concerning
PVI's services and their use of the Marks, (iii) cease to
represent in any manner that the Master Distributor has been
designated by PVI as such, and (iv) deliver to PVI at the Master
Distributor's expense, all price lists, sales manuals, service
manuals, and any other documents concerning PVI's Services which
are in the Master Distributor's possession.
8.2 Neither Party shall, in connection with the expiration and or
termination of this Agreement, has the right to claim any
indemnity reimbursement, or compensation for alleged loss of
clientele, goodwill, loss of profits on anticipated sales, or the
like, or have any other liability for losses or damages resulting
from the expiration termination. Each Party acknowledges that it
has decided and will decide on all investments, expenditures, and
commitments in full awareness of the possibility of its potential
losses or damages resulting from such expiration or termination
and being willing to bear the risk thereof.
9. PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and not
to copy, reproduce, distribute, or disclose to any Third Party,
without the prior written approval of PVI, any Proprietary
information.
9.2 All sales of the services (inclusive of license of the Licensed
Software) to Dealers and Agents are of the material and tangible
Services only. These sales, however, do not include the sale of
Services design (and source and/ or object codes pertaining to
the Licensed Software) which are Proprietary to PVI. to the
extent any such property is made available to the Master
Distributor, it is done on a confidential basis. The Master
Distributor will neither disclose circuitry design details nor
principals, nor software codes (of any kind related), nor copy
them for purposes of manufacture, nor attempt to reverse-engineer
(de-compile) to otherwise alter the Services for any Purpose
whatsoever.
9.3 With respect to the Proprietary Information relating to the
Master Distributor's business which is made available to PVI by
the Master Distributor to allow PVI to perform its obligations
under this Agreement, PVI will instruct its personnel to keep
such information confidential by using the same care and
discretion that PVI uses with data which PVI designates as
confidential. However, PVI shall not be required to keep
confidential any data which is or becomes publicly available, is
already in PVI's possession, is independently developed by PVI
outside the scope of this Agreement,
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or is rightly obtained form third parties. In addition, PVI
shall not required to keep confidential and may use for PVI's
benefit any ideas, concepts, know-how, or techniques relating
to PVI's Services submitted to PVI's or developed during the
term of this Agreement by PVI personnel or jointly by PVI and
the Master Distributor's personnel.
9.4 The obligations of the Parties under this Section 9 shall
survive the expiration or termination of this Agreement, for
whatever reason, and shall be binding upon the Parties, their
successors and/or assigns.
9.5 The Parties knowledge that the obligations and promises under
this Section 9 are of a special, unique character which gives
them particular value, and that a breach thereof could result
in irreparable and continuing damage for which there can be no
reasonable or adequate damages, remedy, or compensation in an
action of law. Each Party shall be entitled to injunctive
relief, a decree for specific performance, and/or other
equitable relief in the event of any breach, or threatened
breach by the other of its obligations or promises under this
Section 9, in addition to any other rights or remedies which
it may possess (including monetary damages, if appropriate).
10. GENERAL
10.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws in the State of Texas.
10.2 The master Distributor consents to venue in, and the
jurisdiction of, the courts of Texas and agrees that any
dispute arising under this Agreement shall be resolved in such
jurisdictions, at PVI's option. However, PVI reserves the
right to bring suit in any court of competent jurisdiction.
10.3 This agreement cannot be assigned or sold to any third party
or any other entity, without the prior written approval of
PVI.
10.4 All notices and demands of any kind which either Party may
require or desire to serve upon the other shall be in writing
or by facsimile, and shall be delivered by personal service or
by mail at the address of the receiving Party set forth below
(or at such different addresses as may be designated by such
party by written notice to the other Party). Such notice shall
be deemed received on the earlier of (i) the date when was
actually received or (ii) in the case of mailing, five (5)
business days being deposited in the United States mail,
postage prepaid, registered, or certified receipt requested
and properly addressed, or (iii) if by facsimile when the
sending Party shall have received facsimile confirmation that
the message has been received by the receiving Party's
facsimile machine. If notice is sent by facsimile, a confirmed
copy of such facsimile shall be sent by mail to each address.
The address and facsimile numbers of the Parties, for purposes
of the Agreement are as follows:
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PVI MASTER DISTRIBUTOR
Preferred Voice, Inc. VoiceNet New Media, Inc.
6500 Greenville Avenue, Ste. 570 715 Broadway
Dallas, Texas 75206-1002 Somerville, MA 02144
Facsimile: 214-265-1002 Facsimile: 617-761-5010
Attention: G. Ray Miller Attention:
10.5 Any provision of the Agreement held to be invalid under
applicable law shall not render this Agreement invalid as a
whole, and in such event, such provision shall be interpreted so
as to best accomplish the intent of the Parties within the limits
of applicable law.
10.6 A valid contract binding upon PVI and the Master Distributor
comes into being upon execution of this agreement by duly
authorized representatives of PVI and the Master Distributor.
This agreement contains the exclusive terms and conditions
between the Parties hereto with respect to the subject matter
hereof, and does not operate as an acceptance of any conflicting
or additional terms and provisions of the Master Distributor's
agreements with Distributors, Dealers or Agents, which shall not
be deemed to alter the terms hereof. Amendments to this Agreement
may be effected only in writing, when signed by the Parties
hereto specifically stating it is intended to amend this
Agreement.
10.7 Costs of Enforcement:
If any action is commenced by either Party concerning this
Agreement, the Party which substantially prevails in such action
will be entitled to a judgement against the other Party for the
costs of such arbitration or action, including court cost,
reasonable expenses of litigation, and reasonable attorneys'
fees.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Agreement in duplicate on the
dates indicated hereon.
/s/ Richard K. Stone /s/ Kevin O'Dono
- - ----------------------------- ------------------------------------------
Richard Stone Master Distributor
Vice-President Authorized Signature Only
Sales & Marketing (The above signature has the authority
Preferred Voice, Inc. to legal bind the company to the terms and
conditions of this agreement)
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EXHIBIT 2
PRODUCT 1
EMMA TELEPHONE RECEPTIONIST
PRODUCT DESCRIPTION: EMMA TR is the world's first central office "voice auto
attendant".
PRODUCT APPLICATION: EMMA TR is a viable way for business' to answer their
phones professionally, 24 hours a day 7 days a week. EMMA's predatory pricing
and user friendly features are revolutionary to a $2.3 billion market that has
not had any competition to date.
TARGET MARKET: All companies that require an attendant during office hours and
after hour answering services.
PRODUCT FEATURES & BENEFITS:
X Consistent professional receptionist X 24 hours 7 days a week
X 50% less cost than competition X Local locate
X Extended local calling X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 per answered line X Expanded local dialing - (varies)
X $4.95 local locate X $49.95 Set-up fee
X $4.95 Per personal directory X $0.12 Lone distance dialing
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Telephone Answering Services. Paging Companies and Voice Mail
Companies.
<PAGE>
EXHIBIT 2
PRODUCT 2
EMMA VIRTUAL PERSONAL ASSISTANT
PRODUCT DESCRIPTION: EMMA VPA is a revolutionary product that addresses four
important areas for the average business person: time management, connectivity,
single number locate and affordability. It allows the business user to never
miss a call and allows them the ability to receive a call, via the revolutionary
ability to call forward a personal 800 toll free number to any number, from any
phone anywhere at anytime. It allows them to screen out calls to voice mail that
they wish not to take and utilize the most advanced speaker independent voice
recognition technology, to place calls by speaking the name of the individual or
business they wish to call from their pre-programmed voice directory. Best of
all it is reliable, convenient, user friendly and the predatory pricing makes it
affordable for everyone.
PRODUCT APPLICATION: EMMA VPA is specifically designed for the business person
that is on the move or dealing with multiple time zones. They can receive calls
from their cellular phone, office phone, home phone, hotel phone, clients phone,
friend or clients cellular phone, friends home phone etc. Basically the business
person can receive a call anytime anywhere from any phone. They also have the
ability to screen calls to voice mail that they do not want. They will also be
able to put into storage their Palm Pilots and address books with all of their
contacts and phone numbers loaded into their voice directory by PVI. They simply
speak the name from their directory and the call is completed. This service is
an affordable answer to the four aforementioned challenges to the business
person today: time management, connectivity, single number locate and low cost
for service.
TARGET MARKET: Local, regional, national and international business travelers.
Large corporations right down t o the home based business and individuals.
PRODUCT FEATURES & BENEFITS:
X Single Number X Home base pricing
X Single number locate X Voice dialing directory
X Call screening X No numbers of remember
X Availability at all times X No manual dialing
X Ultimate customer service X Eliminates hard fraud
X Becomes LD calling card X Local access to voice directory
X Time Management X Connectivity
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies, Executive Suites,
Shared Tenant Providers and TAS Companies.
<PAGE>
PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X $5.00 Local locate
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through voice
mail today such as, Wild Fire and various other non-voice touch tone activated
service. The problem the competition faces against the PVI EMMA product line is
they are not competitively priced (due to their equipment architecture costs and
software deficiencies) and they are not user friendly, unlike EMMA.
<PAGE>
EXHIBIT 2
PRODUCT 3
EMMA VIRTUAL OFFICE
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.O. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the callas to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms.
Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Call Screening X Single number locate
X Call forwarding to remote offices X No CPE required
X Time management X Connectivity
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment,
A "Master Distributor" will be secured in each market area. the most likely,
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 Monthly cost X $49.95 Set-up fee
X $4.95 Per one number locate X Expanded Local (varies)
X $4.95 Locate screening X $0.18 per minute
X $.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driving services.
<PAGE>
EXHIBIT 2
PRODUCT 4
EMMA FRIENDS & FAMILY
PRODUCT DESCRIPTION: EMMA family & friends is a common directory that close
friends & families call each other with. Each user would have die family 800
number and be able to speak the name or location of a member of the directory
and connect to each other.
PRODUCT APPLICATION: Many families are scattered across the state and country.
This EMMA service allows you to always stay in touch, whether it is for normal
everyday communication or in the case of an emergency. Grandparents can provide
their grand-children with a number that they can reach them on, the parents can
provide the grand-parents a number that they can reach them anywhere, PVI will
provide nap-sack tags for the smaller children and even dog tags can be ordered
with the family 800 number on the tag. The convenient easy to use speaker
independent voice directory will be pre- programmed with all of the parties
numbers: office, home, cellular etc. This product also comes with a locate
feature so that if your children or other family members need you, you can
easily be found no matter where you are: work, lake house, home, vacation EMMA
will find you. This EMMA service can also be set-up with a "fraud free"
guarantee, which is great for college bound children. As with all EMMA products
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
X Emergency's X Only one number to remember
X Fraud control X Connectivity
X Everyday communication X Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies.
PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X $5.00 Local locate
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
<PAGE>
EXHIBIT 2
PRODUCT 5
EMMA INTERNATIONAL DIRECT
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS:
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
<PAGE>
EXHIBIT 2
PRODUCT 6
EMMA CORPORATE DIRECT
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMMA VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS:
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area. The most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X Per minute cost
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
EXHIBIT 10.22
MASTER DISTRIBUTOR AGREEMENT
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas o USA 75206-1002
Phone: 214-265-9580 Fax 214-265-9663
MASTER DISTRIBUTOR: BEST VOICE, INC.
1025 SOUTHWEST MARTIN DOWNS BLVD.
SUITE 203
PALM CITY, FL 34990
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement"), is made and
entered into as of the 29th day of December, 1998 by and between PVI, a
corporation organized and existing under the laws of the state of Delaware, and
Master Distributor, a corporation organized and existing under the laws of the
state of Florida.
BACKGROUND
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively, the "Services").
Master Distributor is a member of an affiliated group of companies based in
Stuart, Florida which, through a network of agents and distributors, provide
various telecommunication related services including cellular, long distance,
and paging services. In order to increase its sales of the Services, PVI is
establishing a national distribution network through the creation of multiple
distributorships (the "Distributorships"). The Master Distributor desires to
establish a Distributorship and PVI has agreed to grant the Distributor the
distribution rights set forth herein. Accordingly in consideration of the mutual
covenants and agreements set forth below, PVI and Master Distributor agree as
follows:
OPERATIVE PROVISIONS
1 DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and services within
but not limited to certain market areas.
1.2 Distributor means a legally established corporation, entity,
or individual qualified to sell and/or distribute PVI's
Services under Master Distributor.
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1.3 Dealer means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Agreement Distributor and/or Distributor.
1.4 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor,
or Dealer to sell PVI's Services directly to End-Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of
trade name which PVI may designate, use, or adopt from time to
time to identify its Services.
1.7 Services means any telecommunication service(s) or equipment
offered by PVI.
1.8 Proprietary Information means any information, written or
oral, including, without limitation, any technical and/or
design information on the Services, and any information
relating to the present or future business operations,
financial condition, plans, sales, marketing and promotional
efforts, customers and price lists of PVI and its subsidiaries
and affiliates disclosing such information, and all other
information of any kind which may reasonably be deemed
confidential or proprietary, including, without limitation,
this Agreement and its terms.
1.9 National Account/Affinity Group will mean but not be limited
to, certain national, regional groups/companies that operate
in areas with multiple locations. For example, PVI currently
provides services for members of the National Association of
the Self Employed (NASE).
2 APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts appointment, as PVI's non-exclusive Master
Distributorship in the area defined on Exhibit 1 attached
hereto.
2.2 Master Distributor shall market and sell the Services within
the assigned market area(s) at the prices set forth in Exhibit
2 attached hereto. The Master Distributor will shall have the
right to market PVI services outside the defined (Exhibit 1)
market area within the continental United States. PVI may
change the prices for its services at any time, or within the
time constraints dictated by certain telecommunication
tariffs, and/or other governing authority, which ever is first
to occur. PVI will not offer pricing lower than the pricing
defined herein to other Master Distributors or sub-agents
without making that same pricing structure available to the
Master Distributor. It is understood by the Master Distributor
that national accounts/affinity groups may require other rate
plans and PVI will not be required to offer those rate plans
to the Master Distributor. It is expressly understood that the
Master Distributor may market to national account/affinity
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groups and in those cases, when necessary, PVI will provide
marketing support to the Master Distributor that may include
special pricing. Any special pricing offered will be
approved by PVI and at PVI's sole discretion and the Master
Distributor will be eligible to earn commissions as further
defined herein. As stated, Exhibit 1 will define the Master
Distributor market area. PVI will not assign any other
Master Distributor in the same market area.
2.3 Master Distributor shall be paid commissions in accordance
with the commission schedule set forth in Exhibit 3 attached
hereto. Commissions shall be paid by the 15th day of each
month based upon collections during the prior month, as
appropriate. The commission rates may not be changed without
Master Distributor's prior written consent, except as
certain commission rates may be increased from time to time
by PVI as part of a sales promotion or incentive which may
be temporary in nature. Prior to Master Distributor's sale
of any additional Services on behalf of PVI, Master
Distributor and PVI shall mutually agree upon a commission
schedule particular to that Service, which schedule shall be
added as an Exhibit to this agreement. Commissions will be
paid on accounts sold outside the defined (Exhibit 1) Master
Distributor area, the commission rate will be the standard
PVI commissions defined herein less any Master Distributor
over-rides. Should the Master Distributor enter into a
contract with a national account/affinity group at the PVI
retail rates defined herein, the Master Distributor will be
awarded commissions, as defined herein, on all revenues
billed and collected (by terms defined herein). Should the
national account/affinity group contract for PVI services
through the Master Distributor at retail rates that are not
defined in this contract, PVI and the Master Distributor
will agree to a commission schedule for the specific account
and define the commission on an Exhibit to be attached to
this agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any
interest in a company (or entity) which competes with the
business of PVI through the manufacture and/or sale of
services which are substantially equivalent to, or
competitive with, PVI's Services. In the event that PVI
begins selling its services within the market area as
defined herein, by any means other than through Master
Distributor, the restrictions placed on Master Distributor
in this Section 2.4 shall terminate; provided that, for a
period of one year after PVI commences such other sales,
Master Distributor shall not solicit for a competitive
service any PVI end-user acquired by Master Distributor
during the term of this Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship for PVI's products and services as defined
herein and may vary by market area. The Master
Distributorship will be assigned a marketing (and the cost
for said marketing area) area defined by NPA's and may also
be defined by NXX's on the appropriate attachment contained
herein. THE MARKET AREA IS NOT TO BE CONSIDERED AN EXCLUSIVE
MARKETING AREA; however, this Master Distributor agreement
has certain compensation provisions defined in Exhibit 3,
that compensate the Master Distributor for any sales
activity within the Master Distributor area that is not
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directly related to its own marketing efforts and not
directly related to any national account/affinity marketing
by PVI (PVI WILL NOT BE RESPONSIBLE FOR PAYING COMMISSIONS
TO THE MASTER DISTRIBUTOR ON DIRECT NATIONAL ACCOUNTS
INCLUDING BUT NOT LIMITED TO AFFINITY GROUPS).
3 RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly
or through any number of Distributors, Dealers, or Agents.
PVI shall not be a Party to any arrangements between Master
Distributor and its Distributors, Dealers, or Agents, nor
will PVI in any manner be bound, or have any legal
obligation in respect thereof. Master Distributor further
agrees that it is not, nor shall it represent itself to be,
the legal or authorized representative of PVI, nor shall it
assume or create any obligations or responsibility on behalf
of PVI, unless otherwise agreed upon, in writing, by PVI.
Also, it will be the Master Distributor's responsibility to
design sub-agent commission plans as it relates to the
Master Distributors business and the Master Distributor will
have the sole right to adjust those plans as required or as
necessary. However; this will not prevent PVI from
publishing a commission plan for agents/distributors that
are not Master Distributors.
3.2 Master Distributor shall use its best efforts to identify
and contract with Distributors, Dealers, and Agents, as
appropriate, and shall assist them in creating a market for,
promoting, and maintaining a demand for PVI's Services, as
well as, establishing an efficient network within the market
area defined herein, in order to obtain maximum sales of
PVI's Services. Master Distributor shall be solely
responsible for training and compensating all its
Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the
market area and participate in such trade shows and other
venues which will stimulate sales. Master Distributor shall,
in its sole discretion, determine the amount of any such
advertising and shall be solely responsible for the
resultant costs and expenses incurred. PVI may, at its sole
discretion, provide advertising at no expense to Master
Distributor, as it deems necessary. These activities shall
be considered in any determination of the inactivity clause
herein; however, any inactivity determination will remain
and always be at PVI's sole discretion.
3.4 Master Distributor shall send copies of all advertising and
sales promotion material and literature relating to the
Services to PVI for review and approval, prior to
distribution.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical
literature, the name of PVI and the Trade Marks shall be
evidenced and respected. Master Distributor shall use the
Trade Marks in their original form, unless otherwise
approved in advance, in writing by PVI.
3.6 Master Distributor shall at all times maintain a sufficient
inventory of collateral support materials, for promotion,
advertising, signage, point-of-sale, record keeping,
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subscriptions and other items related to sales of the
Services. PVI will make available marketing materials as
such materials are available. Any such materials provided by
PVI to Master Distributor shall be provided free of charge
unless otherwise agreed by Master Distributor.
3.7 Master Distributor shall, forward any money collected for
PVI as it relates to the PVI services sold to an end user,
customer, or any other entity contracting for PVI services
as it relates to this agreement, on a weekly basis.
3.8 PVI will, in its best effort, encourage all potential agents
that contact PVI directly to work with the Master
Distributor within the Master Distributor area defined
herein. It is understood by both parties that in some cases
it may be necessary for PVI to work directly with certain
national account prospects or affinity groups within the
Master Distributor area and that due to the specific
agreements will not be liable for any over-rides or
commissions in any way. The national account or affinity
groups that PVI may market to will be defined and identified
by PVI and will be at the sole discretion of PVI.
3.9 Should PVI be acquired or merge with another company or
change ownership in any way, this Master Distributor
agreement shall remain in full force as long as the Master
Distributor is in compliance with the terms of this
agreement. PVI will include such language in any acquisition
or merger agreement.
4 PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all
claims relating to such action) brought against Master
Distributor, based upon a claim that use of the service
infringes a United States patent, trademark, service mark,
or copyright (an "Infringement Claim"), PVI shall defend
such action at its expense and pay the costs and damages
awarded in any such action, provided that PVI shall have
sole control of the defense of any such action and all
negotiations for its settlement or compromise. At any time
during the course of any Infringement Claim, or in PVI's
opinion, the Services are likely to become the subject of an
Infringement Claim, PVI will, at its option and its expense,
either procure the right to continue using the Service(s),
or replace or modify the same so that it becomes non-
infringing. PVI will not have any liability to Master
Distributor for an Infringement Claim, if such claim results
from Master Distributor's modification of the Services in
any manner.
4.2 The foregoing states the entire liability of PVI with
respect to an Infringement Claim. No costs or expenses will
be incurred by the Master Distributor in defense of any such
claim.
4.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End-User to use the
Services patented by PVI. No license to make, sell, or use
the Services shall be created other than that explicitly set
forth in PVI's agreement with the End-Users.
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5 RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Master Distributor shall be advised by PVI of
any significant changes in Service(s) specifications.
5.2 PVI shall provide the Master Distributor with all necessary
documents and system documentation, required to market and
sell the Services, which shall remain the property of PVI.
Such documents and documentation may be in written form or
transmitted by tape, diskettes, e-mail, or other software
media, as determined by PVI.
5.3 PVI shall provide the Master Distributor with all pertinent
technical and sales information and collateral support
materials referenced in Section 3.7 above, PVI shall inform
the Master Distributor on a regular basis about the
development of new Services and applications, trends, and
competition in the market.
5.4 PVI shall provide the Master Distributor with the training
free of charge and within reasonable limits. Persons
eligible for training are Master Distributor's sales
personnel. The Master Distributor shall be responsible for
all travel, lodging, and all other out-of-pocket expenses
related with the training of its personnel.
5.5 PVI Shall not assign more than one Master Distributor per
market area defined on Exhibit 1.
5.6 PVI shall:
(a) Develop and produce original copy (i.e. layout,
verbiage, plates, negatives, dies, and/or other setup
materials) of all necessary advertising and collateral
support materials for marketing the Services;
(b)Provide and maintain all equipment (hardware, software,
and co-location facilities) reasonably necessary to support
the PVI Services marketed and sold by the Master
Distributor;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the Master
Distributor;
(d) Perform all fulfillment of the PVI Services marketed and
sold by the Master Distributor.
(e) Pay all Master Distributor commissions outlined herein,
on a monthly basis.
(f) PVI will in its best efforts at all times maintain the
network and equipment to provide the services defined
herein.
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6 LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master
Distributor with respect to the Services. The Master Distributor
agrees that PVI shall not be liable for any special, incidental,
indirect, or consequential damages, or for the loss of profit, revenue
or Services even if PVI shall have been advised of the possibility of
such potential loss or damage. PVI
7 DURATION AND TERMINATION OF THE AGREEMENT
7.1 This agreement shall be effective for an initial term
commencing on the date of this Agreement (i.e. date of
execution by both Parties) and ending three (3) calendar
years thereafter. If not terminated by notice by either
Party at least sixty (60) days prior to the end of the
initial term hereof or any renewal term, the Agreement will
be automatically renewed for an unlimited number if
successive one (1) year periods.
7.2 Either Party may, without incurring any liability to the
other Party, unilaterally and with immediate effect,
terminate this Agreement at any time by a written notice
sent to the other Party in the event that:
(a) The other Party fails, for any reason(s) whatsoever, to
perform any of its obligations under this Agreement and
fails to remedy such default within thirty (30) days after
the mailing of written notice of default and request for
cure; or
(b) The other Party becomes insolvent, files or is subject
to the filing of judicial process under any law relating to
bankruptcy or insolvency, consents to a receivership, adopts
an arrangement with creditors, is dissolved, enters into
liquidation, or ceases doing business.
(c) The Master Distributor uses the name of PVI, or any form
thereof, as a corporate name for doing business, or trade
name, or otherwise, without the prior written consent of
PVI.
(d) PVI will monitor all Master Distributor marketing. It is
understood by the Master Distributor that a requirement to
maintain the Master Distributorship is consistent marketing
efforts, to be defined but not limited to: consistently
adding new agents & dealers, the addition of new customers
at a rate expected by Master Distributors. Any inactivity,
AS DEEMED AT THE SOLE DISCRETION OF PVI, will be grounds for
termination of this Master Distributor agreement. Should
this inactivity section/point be exercised by PVI, the
Master Distributor will have the option of converting to a
standard PVI agent agreement. Also, all customers submitted
to PVI directly or through sub-agents/dealers and subsequent
commissions due will be paid as defined herein for the
length of this agreement. However, any commissions paid on
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new business submitted will be paid as defined within the
new agent agreement executed by both parties. A reasonable
ramp-up time will be extended and as long as customers and
agents are being added to sell and purchase PVI service, it
will constitute activity.
8 EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Master
Distributor shall immediately (i) remove from its premises
all signs advertising the Services or which use the Marks,
(ii) cease to engage in advertising or promotional
activities concerning PVI's services and their use of the
Marks, (iii) cease to represent in any manner that the
Master Distributor has been designated by PVI as such, and
(iv) deliver to PVI at the Master Distributor's expense, all
price lists, sales manuals, service manuals, and any other
documents concerning PVI's Services which are in the Master
Distributor's possession.
8.2 Neither Party shall, in connection with the expiration and
or termination of this Agreement, has the right to claim any
indemnity reimbursement, or compensation for alleged loss of
clientele, goodwill, loss of profits on anticipated sales,
or the like, or have any other liability for losses or
damages resulting from the expiration termination. Each
Party acknowledges that it has decided and will decide on
all investments, expenditures, and commitments in full
awareness of the possibility of its potential losses or
damages resulting from such expiration or termination and
being willing to bear the risk thereof.
9 PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and
not to copy, reproduce, distribute, or disclose to any Third
Party, without the prior written approval of PVI, any
Proprietary information.
9.2 All sales of the services (inclusive of license of the
Licensed Software) to Dealers and Agents are of the material
and tangible Services only. These sales, however, do not
include the sale of Services design (and source and/or
object codes pertaining to the Licensed Software) which are
Proprietary to PVI. To the extent any such property is made
available to the Master Distributor, it is done on a
confidential basis. The Master Distributor will neither
disclose circuitry design details nor principals, nor
software codes (of any kind related), nor copy them for
purposes of manufacture, nor attempt to reverse- engineer
(de-compile) to otherwise alter the Services for any Purpose
whatsoever.
9.3 With respect to the Proprietary Information relating to the
Master Distributor's business which is made available to PVI
by the Master Distributor to allow PVI to perform its
obligations under this Agreement, PVI will instruct its
personnel to keep such information confidential by using the
same care and discretion that PVI uses with data which PVI
designates as confidential. However, PVI shall not be
required to keep confidential any data which is or becomes
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publicly available, is already in PVI's possession, is
independently developed by PVI outside the scope of this
Agreement, or is rightly obtained form third parties. In
addition, PVI shall not be required to keep confidential and
may use for PVI's benefit any ideas, concepts, know-how, or
techniques relating to PVI's Services submitted to PVI's or
developed during the term of this Agreement by PVI personnel
or jointly by PVI and the Master Distributor's personnel.
9.4 The obligations of the Parties under this Section 9 shall
survive the expiration or termination of this Agreement, for
whatever reason, and shall be binding upon the Parties,
their successors and/or assigns.
9.5 The Parties knowledge that the obligations and promises
under this Section 9 are of a special, unique character
which gives them particular value, and that a breach thereof
could result in irreparable and continuing damage for which
there can be no reasonable or adequate damages, remedy, or
compensation in an action of law. Each Party shall be
entitled to injunctive relief, a decree for specific
performance, and/or other equitable relief in the event of
any breach, or threatened breach by the other of its
obligations or promises under this Section 9, in addition to
any other rights or remedies which it may possess (including
monetary damages, if appropriate).
10 GENERAL
10.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws in the State of
Texas.
10.2 The Master Distributor consents to venue in, and the
jurisdiction of, the courts of Texas and agrees that any
dispute arising under this Agreement shall be resolved in
such jurisdictions, at PVI's option. However, PVI reserves
the right to bring suit in any court of competent
jurisdiction.
10.3 This agreement cannot be assigned or sold to any third party
or any other entity, without the prior written approval of
PVI.
10.4 All notices and demands of any kind which either Party may
require or desire to serve upon the other shall be in
writing or by facsimile, and shall be delivered by personal
service or by mail at the address of the receiving Party set
forth below (or at such different addresses as may be
designated by such party by written notice to the other
Party). Such notice shall be deemed received on the earlier
of (i) the date when was actually received or (ii) in the
case of mailing, five (5) business after being deposited in
the United States mail, postage prepaid, registered, or
certified receipt requested and properly addressed, or (iii)
if by facsimile when the sending Party shall have received
facsimile confirmation that the message has been received by
the receiving Party's facsimile machine. If notice is sent
by facsimile, a confirmed copy of such facsimile shall be
sent by mail to each address.
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The address and facsimile numbers of the Parties, for purposes of the
Agreement are as follows:
PVFI MASTER DISTRIBUTOR
Preferred Voice, Inc. Best Voice, Inc.
6500 Greenville Ave., Ste. 570 1025 Southwest Martin Downs Blvd.,
Dallas, TX 75206-1002 #203
Palm City, Florida 34990
Facsimile: 214-265-9663 Facsimile:561-287-0603
Attention: G. Ray Miller Attention: Roy Emmett
10.5 Any provision of the Agreement held to be invalid under
applicable law shall not render this Agreement invalid as a
whole, and in such event, such provision shall be
interpreted so as to best accomplish the intent of the
Parties within the limits of applicable law.
10.6 A valid contract binding upon PVI and the Master Distributor
comes into being upon execution of this agreement by duly
authorized representatives of PVI and the Master
Distributor. This agreement contains the exclusive terms and
conditions between the Parties hereto with respect to the
subject matter hereof, and does not operate as an acceptance
of any conflicting or additional terms and provisions of the
Master Distributor's agreements with Distributors, Dealers
or Agents, which shall not be deemed to alter the terms
hereof. Amendments to this Agreement may be effected only in
writing, when signed by the Parties hereto specifically
stating it is intended to amend this Agreement.
10.7 Costs of Enforcement:
If any action is commenced by either Party concerning this
Agreement, the Party which substantially prevails in such
action will be entitled to a judgement against the other
Party for the costs of such arbitration or action, including
court cost, reasonable expenses of litigation, and
reasonable attorneys' fees.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate on the dates indicated hereon.
/s/ Richard K. Stone /s/ Roy R. Emmett
- - --------------------- -----------------------------
Richard K. Stone 12/29/98 Master Distributor 01/04/99
Vice-President Authorized Signature Only
Sales & Marketing (The above signature has the
Preferred Voice, Inc. authority to legal bind the
company to the terms and
conditions of this agreement)
Print Name:
-----------------------------
Roy R. Emmett
President
Best Voice, Inc.
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EXHIBIT I
Market Area Fee: $25,000.00
Market Area:
Area Codes: 561, 954, 305
1. All NXX's (exchanges are included and defined as NXX's as part defined area).
2. Should any of these area codes split and a new area code be created by
the local phone company, the new area code(s) and NXX's will become
part of the market area and be added to this agreement.
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EXHIBIT 2
PRODUCT 1
EMMA TELEPHONE RECEPTIONIST
PRODUCT DESCRIPTION: EMMA TR is the world's first central office "voice auto
attendant".
PRODUCT APPLICATION: EMMA TR is a viable way for business' to answer their
phones professionally, 24 hours a day 7 days a week. EMMA's predatory pricing
and user friendly features are revolutionary to a $2.3 billion market that has
not had any competition to date.
TARGET MARKET.: All companies that require an attendant during office hours and
after hour answering services.
PRODUCT FEATURES & BENEFITS:
X Consistent professional receptionist X 24 hours 7 days a week
X 50% less cost than competition X Local locate
X Extended local calling X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 per answered line X Expanded local dialing - (varies)
X $4.95 local locate X $49.95 Set-up fee
X $4.95 Per personal directory X $0.12 Long distance dialing
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Telephone Answering Services, Paging Companies and Voice Mail
Companies.
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EXHIBIT 2
PRODUCT 2
EMMA VIRTUAL PERSONAL ASSISTANT
PRODUCT DESCRIPTION: EMMA VPA is a revolutionary product that addresses four
important areas for the average business person: time management, connectivity,
single number locate and affordability. It allows the business user to never
miss a call and allows them the ability to receive a call, via the revolutionary
ability to call forward a personal 800 toll free number to any number, from any
phone anywhere at anytime. It allows them to screen out calls to voice mail that
they wish not to take and utilize the most advanced speaker independent voice
recognition technology, to place calls by speaking the name of the individual or
business they wish to call from their pre-programmed voice directory. Best of
all it is reliable, convenient, user friendly and the predatory pricing makes it
affordable for everyone.
PRODUCT APPLICATION: EMMA VPA is specifically designed for the business person
that is on the move or dealing with multiple time zones. They can receive calls
from their cellular phone, office phone, home phone, hotel phone, clients phone,
friend or clients cellular phone, friends home phone etc. Basically the business
person can receive a call anytime anywhere from any phone. They also have the
ability to screen calls to voice mail that they do not want. They will also be
able to put into storage their Palm Pilots and address books with all of their
contacts and phone numbers loaded into their voice directory by PVI. They simply
speak the name from their directory and the call is completed. This service is
an affordable answer to the four aforementioned challenges to the business
person today: time management, connectivity, single number locate and low cost
for service.
TARGET MARKET: Local, regional, national and international business travelers.
Large corporations right down to the home based business and individuals.
PRODUCT FEATURES & BENEFITS:
X Single number X Home base pricing
X Single number locate X Voice dialing directory
X Call screening X No numbers to remember
X Availability at all times X No manual dialing
X Ultimate customer service X Eliminates hard fraud
X Becomes LD calling card X Local access to voice directory
X Time Management X Connectivity
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies, Executive Suites,
Shared Tenant Providers and TAS Companies.
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PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X $5.00 Local locate
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through voice
mail today such as, Wild Fire and various other non-voice touch tone activated
service. The problem the competition faces against the PVI EMMA product line is
they are not competitively priced (due to their equipment architecture costs and
software deficiencies) and they are not user friendly, unlike EMMA.
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EXHIBIT 2
PRODUCT 3
EMMA VIRTUAL OFFICE
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.O. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms. Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Call Screening X Single number locate
X Call forwarding to remote offices X No CPE required
X Time management X Connectivity
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 Monthly cost X $49.95 Set-up fee
X $4.95 Per one number locate X Expanded Local (varies)
X $4.95 Locate screening X $0.18 per minute
X $.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2
PRODUCT 4
EMMA FRIENDS & FAMILY
PRODUCT DESCRIPTION: EMMA family & friends is a common directory that close
friends & families call each other with. Each user would have the family 800
number and be able to speak the name or location of a member of the directory
and connect to each other.
PRODUCT APPLICATION: Many families are scattered across the state and country.
This EMMA service allows you to always stay in touch, whether it is for normal
everyday communication or in the case of an emergency. Grandparents can provide
their grand-children with a number that they can reach them on, the parents can
provide the grand-parents a number that they can reach them anywhere, PVI will
provide nap- sack tags for the smaller children and even dog tags can be ordered
with the family 800 number on the tag. The convenient easy to use speaker
independent voice directory will be pre-programmed with all of the parties
numbers: office, home, cellular etc. This product also comes with a locate
feature so that if your children or other family members need you, you can
easily be found no matter where you are: work, lake house, home, vacation EMMA
will find you. This EMMA service can also be set-up with a "fraud free"
guarantee, which is great for college bound children. As with all EMMA products
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
X Emergencies X Only one number to remember
X Fraud control X Connectivity
X Everyday communication X Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies.
PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X Local locate no cost
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
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EXHIBIT 2
PRODUCT 5
EMMA INTERNATIONAL DIRECT
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other countries cannot have an 800
number that terminates into another country. This is the only 800 number that
allows voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS:
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee X Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 2
PRODUCT 6
EMMA CORPORATE DIRECT
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMMA VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X Per minute cost X
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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EXHIBIT 3
EMMA VPA, FF, ID, CD Commission Schedule:
30% Per 800 number reservation
10% Residual commission paid on the per minute billing 50% one time set-up fee
All commissions are paid on collected revenue only
EMMA TR & VO Commission Schedule:
50% per month (Per line answered) 30% per month (One number locate) 50%
Set-upfee (One time Commission)
$1.00 Per month (EMMA TAS Territory Over-ride)
All commissions paid on collected revenues only
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EXHIBIT 10.23
Master Distributor Agreement
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas o USA 75206-1002
Phone: 214-265-9580 Fax 214-265-9663
MASTER DISTRIBUTOR: NOMIS COMMUNICATIONS, INC.
705 NORTH EXPRESSWAY
BROWNSVILLE, TX 78520
(0) 956-546-2495 (F ) 956 -541-6371
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement"), is made and
entered into as of the 30TH day of December, 1998 by and between PVI, a
corporation organized and existing under the laws of the State of Delaware
authorized to do business in Texas, and Master Distributor, a corporation
organized and existing under the laws of the State of Texas.
BACKGROUND
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively referred to hereinafter, as the "Services").
Master Distributor is a member of an affiliated group of companies based in
Texas which, through a network of agents and distributors, provide various
telecommunication related services including Personal Communication Services
(PCS), Telephone Answering Services (TAS), long distance, voice mail and paging
services. In order to increase its sales of the Services, PVI is establishing a
national distribution network through the creation of multiple distributorships
(the "Distributorships"). The Master Distributor desires to establish a
Distributorship and PVI has agreed to grant the Distributor the distribution
rights set forth herein. Accordingly in consideration of the mutual covenants
and agreements set forth below, PVI and Master Distributor agree as follows:
OPERATIVE PROVISIONS
1 DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and Services within
but not limited to certain Market Areas as shall be further
defined in the territory referred to in Exhibit I A and Exhibit
1 B hereinafter this area shall be defined for further
references as the Market Area throughout this Agreement.
1.2 Distributor means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Distributor.
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1.3 Dealer means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services
under Master Distributor Agreement.
1.4 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor, or
Dealer to sell PVI's Services directly to End-Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of trade
name which PVI may designate, use, or adopt from time to time to
identify its Services.
1.7 Services means any telecommunication service(s) or equipment
offered by PVI.
1.8 Proprietary Information means any information, written or oral,
including, without limitation, any technical and/or design
information on the Services, and any information relating to the
present or future business operations, financial condition,
plans, sales, marketing and promotional efforts, customers and
price lists of PVI and its subsidiaries and affiliates
disclosing such information, and all other information of any
kind which may reasonably be deemed confidential or proprietary,
including, without limitation, this Agreement and its terms.
1.9 National Account/Affinity Group will mean but not be limited to,
certain national, regional groups/companies that operate in
areas with multiple locations. For example, PVI currently
provides Services for members of the National Association of the
Self Employed (NASE).
2 APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts appointment, as PVI's sole Master Distributorship in the
area defined on Exhibit I A and Exhibit I B of this agreement.
2.2 Master Distributor shall market and sell the Services within the
assigned Market Area(s) at the prices set forth in Exhibit 2
attached hereto. The Master Distributor shall have the right to
market PVI Services outside the defined Market Area within the
continental United States. PVI may change the prices for its
Services at any time due to business conditions and or
regulatory changes. PVI will not offer pricing lower than the
pricing defined herein to other Master Distributors without
making that same pricing structure available to the Master
Distributor. It is understood by the Master Distributor that
national accounts/affinity groups may require other rate plans
and PVI will not be required to offer those rate plans to the
Master Distributor. It is expressly understood that the Master
Distributor may market to national account/affinity groups and
in those cases, when necessary, PVI will provide marketing
support to the Master Distributor that may include special
pricing. Any special pricing offered will be approved by PVI and
at PVI's sole descretion and the Master Distributor will be
eligible to earn Commissions as further defined herein. As
stated, Exhibit I A and Exhibit I B define the Master
Distributor's Market Area. PVI will not assign any other Master
Distributor in the same Market Area.
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2.3 Master Distributor shall be paid Commissions in accordance with
the Commission schedule set forth in Exhibit 3 attached hereto.
Commissions shall be paid by the 15th day of each month based
upon collections during the prior month. The Commission rates
may not be changed without Master Distributor's prior written
consent, except as certain Commission rates may be increased
from time to time by PVI as part of a sales promotion or
incentive which may be temporary in nature. Prior to Master
Distributor's sale of any additional Services on behalf of PVI,
Master Distributor and PVI shall mutually agree upon a
Commission schedule particular to that Service, which schedule
shall be added as an Exhibit to this Agreement. Commissions will
be paid on accounts sold outside the Master Distributor Market
Area. The Commission rate will be the standard PVI Commissions
defined herein less any Master Distributor over-rides outside of
the Market Area. Should the Master Distributor enter into a
contract with a national account/affinity group at the PVI
retail rates defined herein, the Master Distributor will be
awarded Commissions, as defined herein, on all revenues billed
and collected (by terms defined herein). Should the national
account/affinity group Agreement for PVI Services through the
Master Distributor at retail rates that are not defined in this
Agreement, PVI and the Master Distributor will agree to a
Commission schedule for the specific account and define the
Commission on an Exhibit to be attached to this Agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any interest in
a company (or entity) which competes with the business of PVI
through the manufacture and/or sale of Services which are
substantially equivalent to, or competitive with, PVI's
Services. In the event that PVI begins selling its Services
within the Market Area as defined herein , by any means other
than through Master Distributor, the restrictions placed on
Master Distributor in this Section 2.4 shall terminate; provided
that, for a period of one year after PVI commences such other
sales, Master Distributor shall not solicit for a competitive
service any PVI End-User acquired by Master Distributor during
the term of this Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship within the Market Area for PVI's Services as
defined in Exhibit 1 A and Exhibit 1 B. The Market Area is NOT
TO BE CONSIDERED AN EXCLUSIVE MARKETING AREA; however, this
Master Distributor agreement has certain compensation provisions
defined in Exhibit 3, that compensate the Master Distributor for
any sales activity within the Master Distributor Market Area
that is not directly related to its own marketing efforts and
not directly related to any national account/affinity marketing
by PVI (PVI WILL NOT BE RESPONSIBLE FOR PAYING COMMISSIONS TO
THE MASTER DISTRIBUTOR ON DIRECT NATIONAL ACCOUNTS THAT PVI
ORIGINATES INCLUDING BUT NOT LIMITED TO AFFINITY GROUPS).
3 RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly or
through any number of Distributors, Dealers, or Agents. PVI
shall not be a Party to any arrangements between Master
Distributor and its Distributors, Dealers, or Agents, nor will
PVI in any manner be bound, or have any legal obligation in
respect thereof. Master Distributor further agrees that it is
not, nor shall it represent itself to be a PVI employee or
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officer of PVI, nor shall it assume or create any obligations or
responsibility on behalf of PVI, unless otherwise agreed upon, in
writing, by PVI. Also, it will be the Master Distributor's
responsibility to design Agent's and Dealers Commission plans as
it relates to the Master Distributors business and the Master
Distributor will have the sole right to adjust those plans as
required or as necessary.
3.2 Master Distributor shall use its best efforts to identify and
contract with Distributors, Dealers, and Agents, as appropriate,
and shall assist them in creating a market for, promoting, and
maintaining a demand for PVI's Services, as well as, establishing
an efficient network within the Market Area in order to obtain
maximum sales of PVI's Services. Master Distributor shall be
solely responsible for training and compensating all its
Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the Market
Area and participate in such trade shows and other venues which
will stimulate sales. Master Distributor shall, in its sole
discretion, determine the amount of any such advertising and
shall be solely responsible for the resultant costs and expenses
incurred. PVI may, at its sole discretion, provide advertising at
no expense to Master Distributor, as it deems necessary. These
activities shall be considered in any determination of the
inactivity clause herein; however, any inactivity determination
will remain and always be at PVI's sole discretion.
3.4 Master Distributor shall send copies of all advertising and sales
promotion material and literature relating to the Services to PVI
for review and approval prior to distribution which approval
shall not be unreasonably withheld.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical literature, the
name of PVI and the Trade Marks shall be evidenced and respected.
Master Distributor shall use the Trade Marks in their original
form, unless otherwise approved in advance, in writing by PVI.
3.6 Master Distributor shall at all times maintain an inventory of
collateral support materials, for promotion, advertising,
signage, point-of-sale, record keeping, subscriptions, and other
items related to sales of the Services. PVI will make available
marketing materials as such materials are available. Any such
materials provided by PVI to Master Distributor shall be provided
free of charge unless otherwise agreed by Master Distributor.
3.7 Master Distributor shall forward any money collected for PVI as
it relates to the PVI Services sold to an End User contracting
for PVI Services as it relates to this Agreement, on a weekly
basis.
3.8 PVI will require that all potential Distributor, Dealers, and or
Agents that contact PVI directly shall first be directed to work
with the Master Distributor for information of Services within
the Market Area. It is understood by both parties that in some
cases it may be necessary for PVI to work directly with certain
national account prospects or affinity groups within the Master
Distributor's Area and that due to the specific agreements PVI
will not be liable for any over-rides or Commissions in any way.
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The national account or affinity groups that PVI may market to
will be defined and identified by PVI and will be at the sole
discretion of PVI.
3.9 Should PVI be acquired or merge with another company or change
ownership in any way, this Master Distributor Agreement shall
remain in full force as long as the Master Distributor is in
compliance with the terms of this Agreement. PVI will include
such language in any acquisition or merger agreement.
4 PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all claims
relating to such action) brought against Master Distributor,
based upon a claim that the Service(s) or the use thereof
infringes a United States patent, Trade Mark, Service Mark, or
copyright ("Infringement Claim"), PVI shall defend and hold
harmless the Mater Distributor against such action at its expense
and pay the costs and damages awarded in any such action,
provided that PVI shall have sole control of the defense of any
such action and all negotiations for its settlement or
compromise. At any time during the course of any Infringement
Claim, or in PVI's opinion, the Services are likely to become the
subject of an Infringement Claim, PVI will, at its option and its
sole expense, either procure the right to continue using the
Service(s), or replace or modify the same so that such Service(s)
becomes non-infringing. PVI will not have any liability to Master
Distributor for an Infringement Claim, if such claim results from
Master Distributor's modification of the Services in any manner.
4.2 The foregoing states the entire liability of PVI with respect to
an Infringement Claim. No costs or expenses will be incurred by
the Master Distributor in defense of any such claim. Not
withstanding the provisions of section 4.2 PVI shall be liable to
the Master Distributor for the Market Area fee paid pursuant to
this Agreement in the event that infringement claim results in
PVI's inability to provide the Service in the Market Area as
contemplated by this Agreement.
4.3 The purchase of the Services contemplated by this Agreement may
result in an implied license to the End-User to use the Services
patented by PVI. No license to make, sell, or use the Services
shall be created other than that explicitly set forth in PVI's
Service forms with the End-Users.
5 RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Master Distributor shall be advised by PVI of any
significant changes in Service(s) specifications. If these
changes are not acceptable to the End-User, PVI shall then deal
with the Master Distributors down line subscribers to the
Services and take all reasonable action to satisfy said End-User.
5.2 PVI shall provide the Master Distributor with all necessary
documents and system documentation, required to market and sell
the Services, which shall remain the property of PVI. Such
documents and documentation may be in written form or transmitted
by tape, diskettes, e-mail, or other software media, as
determined by PVI.
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5.3 PVI shall provide the Master Distributor with all pertinent
technical and sales information and collateral support materials
referenced in Section 3.7 above, PVI shall inform the Master
Distributor on a regular basis about the development of new
Services and applications, trends, and competition in the
market.PVI shall provide financial assistance in implementing
new changes in the form advertising and promotions.
5.4 PVI shall provide the Master Distributor with the training free
of charge and within reasonable limits. Persons eligible for
training are Master Distributor's sales personnel. The Master
Distributor shall be responsible for all travel, lodging, and
all other out-of-pocket expenses related with the training of
its personnel.
5.5 PVI shall not assign more than one Master Distributor in Market
Area defined on Exhibit I A and Exhibit I B.
5.6 PV1 shall:
(a) Develop and produce original copy (i.e. layout, verbiage,
plates, negatives, dies, and/or other setup materials) of
all necessary advertising and collateral support materials
for marketing the Services;
(b) Provide and maintain all equipment (hardware, software,
and co-location facilities) reasonably necessary to
support the PVI Services marketed and sold by the Master
Distributor;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the Master
Distributor;
(d) Perform all fulfillment of the PVI Services marketed and
sold by the Master Distributor.
(e) Pay all Master Distributor Commissions outlined herein, on
a timely monthly basis as defined in section 2.3 of this
Agreement.
(f) PVI will in its best efforts at all times maintain the
network and equipment to provide the Services defined
herein.
6 LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master
Distributor with respect to the Services. The Master Distributor agrees
that PVI shall not be liable for any special, incidental, indirect, or
consequential damages, or for the loss of profit, revenue or Services
even if PVI shall have been advised of the possibility of such
potential loss or damage. The Service is an elective Service by the
customer not a primary means of Service such as: dedicated service
(T-l's) or local dial tone.
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7 DURATION AND TERNIINATION OF THE AGREEMENT
7.1 This Agreement shall be effective for an initial term commencing
on the date of this Agreement (i.e. date of execution by both
Parties) and ending three (3) calendar years thereafter. If not
terminated by notice by either Party at least sixty (60) days
prior to the end of the initial tenn hereof or any renewal term,
the Agreement will be automatically renewed for an unlimited
number of successive one (1) year periods.
7.2 Either Party may, without incurring any liability to the other
Party, unilaterally and with immediate effect, terminate this
Agreement at any time by a written notice sent to the other
Party in the event that:
(a) The other Party fails, for any reason(s) whatsoever, to
perform any of its obligations under this Agreement and
fails to remedy such default within thirty (30) days after
the receipt of written notice of default and request for
cure which notice shall be sent certified mail return
receipt requested; or
(b) The other Party becomes insolvent, files or is subject
to the filing of judicial process under any law relating to
bankruptcy or insolvency, consents to a receivership, adopts
an arrangement with creditors, is dissolved, enters into
liquidation, or ceases doing business: or
(c) The Master Distributor uses the name of PVI, or any form
thereof, as a corporate name for doing business, or trade
name, or otherwise, without the prior written consent of
PVI: or
(d) PVI will monitor all Master Distributor marketing. It is
understood by the Master Distributor that a requirement to
maintain the Master Distributorship is consistent marketing
efforts, to be defined as but not limited to: consistently
adding new Agents & Dealers, the addition of new customers
at a reasonable rate expected by Master Distributors. Any
inactivity, AS DEEMED AT THE SOLE DISCRETION OF PVI, will be
grounds for termination of this Master Distributor
Agreement. Should this termination for inactivity right be
exercised by PVI, the Master Distributor will have the
option of converting to a standard and approved Dealer and
or Agent Agreement. Also, all customers submitted to PVI
directly or through Agents/Dealers and subsequent End-Users,
the Commissions due will be paid as defined herein for the
length of this agreement. However, any Commissions paid on
new business submitted will be paid as defined within the
new Agent/Dealer Agreement executed by both parties. A
reasonable start-up time will be extended and as long as
Dealers, Agents and End-users are being added to sell and
purchase PVI Service(s), it will constitute activity.
8 EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Master
Distributor shall immediately (i) remove from its premises all
signs advertising the Services or which use the Marks,(ii) cease
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to engage in advertising or promotional activities concerning
PVI's Services and use of its Marks, (iii) cease to represent in
any manner that the Master Distributor has been designated by PVI
as such, and (iv) deliver to PVI at the Master Distributor's
expense, all price lists, sales manuals, service manuals, and any
other documents concerning PVI's Services which are in the Master
Distributor's possession.
8.2 Master Distributor shall, with the mutually agreed termination of
this Agreement, have the right to claim reimbursement, or
compensation for Distributors, Dealers and Agents but shall not
have the right for compensation for alleged loss of goodwill,
loss of profits on anticipated sales, or the like, or have any
other liability for losses or damages resulting from the
termination this Agreement
9 PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and not
to copy, reproduce, distribute, or disclose to any third party,
without the prior written approval of PVI, any Proprietary
Inforination.
9.2 All sales of the Services (inclusive of license of the Licensed
Software) to Dealers and Agents are of the material and tangible
Services only. These sales, however, do not include the sale of
Services design (and source and/ or object codes pertaining to
the Licensed Software) which are Proprietary to PVI. To the
extent any such Proprietary Information is made available to the
Master Distributor, it is done on a confidential basis. The
Master Distributor will neither disclose circuitry design details
nor principles, nor software codes (of any kind related), nor
copy them for purposes of manufacture, nor attempt to
reverse-engineer (de-compile) or otherwise alter the Services for
any purpose whatsoever.
9.3 With respect to the Proprietary Information relating to the
Master Distributor's business which is made available to PVI by
the Master Distributor to allow PVI to perform its obligations
under this Agreement, PVI will instruct its personnel to keep
such information confidential by using the same care and
discretion that PVI uses with data which PVI designates as
Proprietary Information. However, PVI shall not be required to
keep confidential any data which is or becomes publicly
available, is already in PVI's possession, is independently
developed by PVI outside the scope of this Agreement, or is
legally obtained form third parties. In addition, PVI shall not
be required to keep confidential and may use for PVI's benefit
any ideas, concepts, know-how, or techniques relating to PVI's
Services submitted to PVI or developed during the term of this
Agreement by PVI personnel or jointly by PVI and the Master
Distributor's personnel, unless otherwise mutually agreed to by
PVI and master Distributor.
9.4 The obligations of the Parties under this Section 9 shall survive
the expiration or termination of this Agreement, for whatever
reason, and shall be binding upon the Parties, their successors
and/or assigns.
9.5 The Parties acknowledge that the obligations and promises under
this Section 9 are of a special, unique character which gives
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them particular value, and that a breach thereof could result in
irreparable and continuing damage for which there can be no
reasonable or adequate damages, remedy, or compensation in an
action of law. Each Party shall be entitled to injunctive relief,
a decree for specific performance, and/or other equitable relief
in the event of any breach, or threatened breach by the other of
its obligations or promises under this Section 9, in addition to
any other rights or remedies which it may possess (including
monetary damages, if appropriate).
10 GENERAL
10.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws of the State of Texas.
10.2 The Master Distributor consents to venue , and the jurisdiction
of the courts of Texas and agrees that any dispute arising under
this Agreement shall be resolved in such jurisdictions.
10.3 This Agreement cannot be assigned or sold to any third party or
any other entity, without first giving PVI first right of refusal
and/or without the prior written consent from PVI which shall not
be unreasonably withheld.
10.4 All notices and demands of any kind which either Party may
require or desire to serve upon the other shall be in writing and
shall be delivered either by personal service or by mail at the
address of the receiving Party set forth below (or at such
different addresses as may be designated by such party by written
notice to the other Party) or by facsimile. Such notice shall be
deemed received on the earlier of (i) the date when was actually
received or (ii) in the case of mailing, five (5) business days
after being deposited in the United States mail with sufficient
prepaid postage, registered, or certified mail with return
receipt requested and properly addressed, or (iii) if by
facsimile when the sending Party shall have received facsimile
confirmation that the message has been received by the receiving
Party's facsimile machine. If notice is sent by facsimile, a
confirmed copy of such facsimile shall be sent by mail to the
receiving party.
The address and facsimile numbers of the Parties, for purposes of the
Agreement are as follows:
PVI MASTER DISTRIBUTOR
Preferred Voice, Inc. Nomis Communications, Inc.
6500 Greenville Ave., Ste. 570 705 North Expressway
Dallas, TX 75206-1002 Brownsville, TX 78520
Facsimile: 214-265-9663 Facsimile: 956 -541-6371
Attention: G. Ray Mille Attention: Simon Rubinsky
10.5 Any provision of the Agreement held to be invalid under
applicable law shall not render this Agreement invalid as a
whole, and in such event, such provision shall be interpreted so
as to best accomplish the intent of the Parties within the limits
of applicable law.
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10.6 A valid contract binding upon PVI and the Master Distributor
comes into being upon execution of this Agreement by duly
authorized representatives of PVI and the Master Distributor.
This Agreement contains the exclusive terms and conditions
between the Parties hereto with respect to the subject matter
hereof, and does not operate as an acceptance of any conflicting
or additional terms and provisions of the Master Distributor's
Agreements with Distributors, Dealers or Agents, which shall not
be deemed to alter the terms hereof. Amendments to this Agreement
may be effected only in writing, when signed by the Parties
hereto specifically stating it is intended to amend this
Agreement.
10.7 Costs of Enforcement:
If any action is commenced by either Party concerning this
Agreement, the Party which prevails in such action will be
entitled to a judgement against the other Party for the costs
of such arbitration or action, including court cost,
reasonable expenses of litigation, and reasonable attorneys'
fees.
10.8 The Master Distributor acknowledges that it is an independent
contractor.
IN WITNESS THEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate originals on the dates indicated herein.
Preferred Voice, Inc. Nomis Communications, Inc.
/s/ Richard K. Stone /s/ Simon Rubinsky
- - --------------------------- -------------------------
By Richard K Stone, Vice-President By Simon Rubinsky,
Authorized Signature Master Distributor
Authorized Signature
Date: 12/31/98 Date: 12/30/98
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Exhibit I A
Market Area Fee: $25,000.00
Market Area 1:
Area Code(s): 713, 281, 409
1. All NXX's (exchanges are included and defined as NXX's as part of the Market
Area).
2. Should any of these area codes split and a new area code be created by the
local phone company, the new area code(s) and NXX(s) will become part of Market
Area and be added to this agreement at no additional costs and/or fee's.
3. The Master Distributor will pay $20,000.00 up front. The following schedule
will define the payment plan.
Payment 2:
The Balance due is $5,000.00 and will be paid by February 5, 1999.
For each up-front dollar (does not include any portion of the Master Distributor
fee financed by PVI or any Market Area other than what is defined on Exhibit I
A) paid by the Master Distributorship, PVI will issue one (1) PVI Warrant (PVI
Stock) to the Master Distributor in the name provided by the Master Distributor.
The value of the Warrant is $ 1. 00 (equal value) the Master Distributor may
sell the Warrant at any time during the period defined in the Warrant Agreement
forthcoming and according to the rules established by the Warrant Agreement.
This statement will be superceded by the Warrant/Stock Agreement executed by and
between both parties to be provided by PVI within 15 working days of the
execution of this Master Distributor Agreement. This offer may be replaced,
changed and/or terminated if this agreement and the Master Distributorship fee
is not executed and received by January 11, 1999. Any deposits for future Market
Areas are included and will be awarded dollar for dollar as defined above, one
Warrant for each dollar spent for the reservation of a Market Area. (See Exhibit
I A and Exhibit I B).
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Exhibit I B
Market Area Fee: $15,000.00* Deposit: $0.00
Market Area 2:
Area Code(s): 512, 210, 830, 956
1. All NXX's (exchanges are included and defined as NXX's as part of the defined
area).
2. Should any of these area codes split and a new area code be created by the
local phone company, the new area code(s) and NXX(s) will become part of the
Market Area and be added to this agreement at no additional costs and/or fee's.
3. The Master Distributor will pay $15,000.00 up front within sixty (60) days.
4. The Master Distributor is being given first right of refusal for this Market
Area: 512, 210, 830, 956. The fee will be due upon EMMA TR (see Services being
available in the 512 or 210 market Area.
*The San Antonio Austin Market Area fee is being discounted from $25,000 to the
price reflected above.
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Exhibit 2 Product 1
EMMA EMMA Telephone Receptionist
PRODUCT DESCRIPTION: EMMA TR is the world's first central office
"voice auto attendant".
PRODUCT APPLICATION: EMMA TR is a viable way for business' to
answer their phones professionally, 24 hours a day 7 days a week.
EMMA's predatory pricing and user friendly features are
revolutionary to a $2.3 billion market that has not had any
competition to date.
TARGET MARKET: All companies that require an attendant during
office hours and after hour answering services.
PRODUCT FEATURES & BENEFITS:
X Consistent professional X 24 hours 7 days a week
receptionist
X 50% less cost than X Local locate
competition
X Extended local calling X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for
product deployment. A "Master Distributor" will be secured in
each market area, the most likely candidates will be current TAS,
voice mail and paging providers with established customers within
the specific market area.
PRODUCT PRICING:
X $19.95 per answered line X Expanded local dialing - (varies)
X $4.95 local locate X $49.95 Set-up fee
X $4.95 Per personal X $0.12 Long distance dialing
directory
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be
earned
COMPETITION: Telephone Answering Services, Paging Companies and
Voice Mail Companies.
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Exhibit 2 Product 2
EMMA Virtual Personal Assistant
SERVICE DESCRIPTION: VIP 800 VPA is a revolutionary service that addresses
four important areas for the average business person: time management,
connectivity, single number simplicity and low cost. It allows the business
user to never miss a call and allows them the ability to receive a call,
via the revolutionary ability to call forward a personal 800 toll free
number to any number, from any phone anywhere at anytime. It allows them to
screen out calls to voice mail that they wish not to take and utilize the
most advanced speaker independent voice recognition technology, to place
calls by speaking the name of the individual or business they wish to call
from their pre-programmed voice directory. Best of all it is reliable,
convenient, user friendly and the predatory pricing makes it affordable for
everyone.
SERVICE APPLICATION: VIP 800 VPA is specifically designed for the business
person that is on the move or dealing with multiple time zones. They can
receive calls from their cellular phone, office phone, home phone, hotel
phone, clients phone, friend's cellular phone and any phone they choose
etc. Basically the business person can receive a call anytime anywhere from
any phone. They also have the ability to screen calls to voice mail that
they do not want. They will also be able to put into storage their Palm
Pilots and address books with all of their contacts and phone numbers
loaded into their voice directory by PVI. They simply speak the name from
their directory and the call is completed. This service is the answer to
the four aforementioned challenges to the business person today: time
management, connectivity, single number simplicity and low cost. The
business person's customers and potential customers will only have one
number to remember, not 3 to 4 numbers for their contact person as they
have today.
TARGET MARKET: Local, regional, national and international business
travelers. Large corporations right down to the home based business and
individuals.
PRODUCT FEATURES & BENEFITS:
X Single number X Home base pricing
X Single number locate X Voice dialing directory
X Call screening X No numbers to remember
X Availability at all times X No manual dialing
X Ultimate customer service X Eliminates hard fraud
X Becomes LD calling card X Local access to voice directory
X Time Management X Connectivity
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies, Executive
Suites, Shared Tenant Providers and TAS Companies.
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PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X $5.00 Local locate
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Add moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through
voice mail today such as, Wild Fire and various other non-voice touch tone
activated service. The problem the competition faces against the PVI EMMA
product line is they are not competitively priced (due to their equipment
architecture costs and software deficiencies) and they are not user
friendly, unlike EMMA.
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Exhibit 2 Product 3
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial the family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grand-children with a number that they can reach them on, the
parents can provide the grand-parents a number that they can reach them anywhere
in the USA. PVI can provide nap-sack tags for the smaller children and even dog
tags can be ordered with the family 800 number on the tag. The convenient easy
to use speaker independent voice directory will be pre- programmed with all of
the participants numbers: office, home, cellular etc. This service also comes
with a locate feature so that if your children or other family members need you,
they can easily find you no matter where you are: work, cell phone, lake house ,
home, hotel, etc. This VIP 800 service can also be set-up with a "fraud free"
guarantee, which is great for kids in college. As with all VIP 800 services,
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
X Emergencies X Only one number to remember X Fraud control X Connectivity X
Everyday communication X Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies.
PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening X $0.12 per/min - home
base calls X Local locate no cost X $0.22 per/min - outside home base X Expanded
local dialing (varies) X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
Competition: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
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Exhibit 2 Product 4
EMMA Virtual Office
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.0. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms. Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 HOURS 7 DAYS A WEEK
X CALL SCREENING X SINGLE NUMBER LOCATE
X CALL FORWARDING TO REMOTE OFFICES X NO CPE REQUIRED
X TIME MANAGEMENT X CONNECTIVITY
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 Monthly cost X $49.95 Set-up fee
X $4.95 Per one number locate X Expanded Local (varies)
X $4.95 Locate screening X $0.18 per minute dialing
X $.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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Exhibit 2 Product 5
EMMA International Direct
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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Exhibit 2 Product 6
EMMA Corporate Direct
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMME VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X 0. 16 Per minute cost X
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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Exhibit 3
EMMA VPA, FF, ID, CD Commission Schedule:
X 30% Per 800 number reservation
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X 50% one time set-upfee
All Commissions are paid on collected revenue only
EMMA TR & VO Commission Schedule:
X 50% per month (Per line answered)
X 30% per month (One number locate)
X 50% Set-up fee (One time Commission)
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X $1.00 Per month (EMMA TAS Territory Over-ride)
All Commissions paid on collected revenues only
SBL Commission:
X 50% of the service set-up fee
X 16% of the Basic Business Line Monthly Fee (including ELC,
Custom Greeting)
X 0% of the Custom Greeting set-up fee
X 10% Residual on any other monthly usage charges (long distance, calling
card)
X 3% quarterly over-ride on usage revenue(long distance, calling card)
All Commissions paid on collected revenues only
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EXHIBIT 10.24
MASTER DISTRIBUTOR AGREEMENT
This AGREEMENT is signed between PVI and Master Distributor as designated below:
PVI: Preferred Voice, Inc.
Suite #570
6500 Greenville Avenue
Dallas, Texas - USA 75206-1002
Phone: 214-265-9580 Fax 214-265-9663
Master Distributor: FLORIDA WIRELESS
2111 NORTH 15TH STREET
TAMPA, FL 33605
(0) 813-247-1150
THIS MASTER DISTRIBUTOR AGREEMENT (hereinafter the "Agreement"), is made and
entered into as of the 25th day of January, 1999 by and between PVI, a
corporation organized and existing under the laws of the State of Delaware
authorized to do business in Texas, and Master Distributor, a corporation
organized and existing under the laws of the State of Florida.
BACKGROUND
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively referred to hereinafter, as the "Services").
Master Distributor is a member of an affiliated group of companies based in
Tampa Florida which, provides various telecommunication related services
including Personal Communication Services (PCS), Telephone Answering Services
(TAS), long distance, voice mail, cellular and paging services. In order to
increase its sales of the Services, PVI is establishing a national distribution
network through the creation of multiple distributorships (the
"Distributorships"). The Master Distributor desires to establish a
Distributorship and PVI has agreed to grant the Distributor the distribution
rights set forth herein. Accordingly in consideration of the mutual covenants
and agreements set forth below, PVI and Master Distributor agree as follows:
OPERATIVE PROVISIONS
1 DEFINITIONS: (as used in this Agreement)
1.1 Master Distributor means the company as noted herein that has
purchased the right to market PVI products and Services within but not
limited to certain Market Areas as shall be further defined in the
territory referred to in Exhibit 1 A and Exhibit 1 B hereinafter this
area shall be defined for further references as the Market Area
throughout this Agreement.
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1.2 Distributor means a legally established corporation, entity, or
individual qualified to sell and/or distribute PVI's Services under
Master Distributor.
1.3 Dealer means a legally established corporation, entity, or individual
qualified to sell and/or distribute PVI's Services under Master
Distributor Agreement.
1.4 Agent means a legally established corporation, entity, or individual
retained by the Master Distributor, a Distributor, or Dealer to sell
PVI's Services directly to End-Users.
1.5 End-Users means customers using and paying for PVI's Services.
1.6 Mark(s) means any trademark, service mark, trade dress of trade name
which PVI may designate, use, or adopt from time to time to identify
its Services.
1.7 Services means any telecommunication service(s) or equipment offered
by PVI.
1.8 Proprietary Information means any information, written or oral,
including, without limitation, any technical and/or design information
on the Services, and any information relating to the present or future
business operations, financial condition, plans, sales, marketing and
promotional efforts, customers and price lists of PVI and its
subsidiaries and affiliates disclosing such information, and all other
information of any kind which may reasonably be deemed confidential or
proprietary, including, without limitation, this Agreement and its
terms.
1.9 National Account/Affinity Group will mean but not be limited to,
certain national, regional groups/companies that operate in areas with
multiple locations. For example, PVI currently provides Services for
members of the National Association of the Self Employed (NASE).
2 APPOINTMENT & DUTIES OF MASTER DISTRIBUTOR
2.1 1 Subject to the provisions of Section 2.2 hereof, PVI hereby appoints
Master Distributor, and Master Distributor hereby accepts appointment,
as PVI's sole Master Distributorship in the area defined on Exhibit 1
of this agreement.
2.2 Master Distributor shall market and sell the Services within the
assigned Market Area(s) at the prices set forth in Exhibit 2 attached
hereto. The Master Distributor shall have the right to market PVI
Services outside the defined Market Area within the continental United
States. PVI may change the prices for its Services at any time due to
business conditions and or regulatory changes. PVI will not offer
pricing lower than the pricing defined herein to other Master
Distributors without making that same pricing structure available to
the Master Distributor. It is understood by the Master Distributor
that national accounts/affinity groups may require other rate plans
and PVI will not be required to offer those rate plans to the Master
Distributor. It is expressly understood that the Master Distributor
may market to national account/affinity groups and in those cases,
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when necessary, PVI will provide marketing support to the Master
Distributor that may include special pricing. Any special pricing
offered will be approved by PVI and at PVI's sole discretion and the
Master Distributor will be eligible to earn Commissions as further
defined herein. As stated, Exhibit I define the Master Distributor's
Market Area. PVI will not assign any other Master Distributor in the
same Market Area.
2.3 Master Distributor shall be paid Commissions in accordance with the
Commission schedule set forth in Exhibit 3 attached hereto.
Commissions shall be paid by the 15th day of each month based upon
collections during the prior month. The Commission rates may not be
changed without Master Distributor's prior written consent, except as
certain Commission rates may be increased from time to time by PVI as
part of a sales promotion or incentive which may be temporary in
nature. Prior to Master Distributor's sale of any additional Services
on behalf of PVI, Master Distributor and PVI shall mutually agree upon
a Commission schedule particular to that Service, which schedule shall
be added as an Exhibit to this Agreement. Commissions will be paid on
accounts sold outside the Master Distributor Market Area. The
Commission rate will be the standard PVI Commissions defined herein
less any Master Distributor over-rides outside of the Market Area.
Should the Master Distributor enter into a contract with a national
account/affinity group at the PVI retail rates defined herein, the
Master Distributor will be awarded Commissions, as defined herein, on
all revenues billed and collected (by terms defined herein). Should
the national account/affinity group Agreement for PVI Services through
the Master Distributor at retail rates that are not defined in this
Agreement, PVI and the Master Distributor will agree to a Commission
schedule for the specific account and define the Commission on an
Exhibit to be attached to this Agreement.
2.4 Master Distributor may not enter into any joint venture, the
establishment with a new corporation, or acquire any interest in a
company (or entity) which competes with the business of PVI through
the manufacture and/or sale of Services which are substantially
equivalent to, or competitive with, PVI's Services. In the event that
PVI begins selling its Services within the Market Area as defined
herein , by any means other than through Master Distributor, the
restrictions placed on Master Distributor in this Section 2.4 shall
terminate; provided that, for a period of ninety (90) days after PVI
commences such other sales, Master Distributor shall not solicit for a
competitive service any PVI End-User acquired by Master Distributor
during the term of this Agreement.
2.5 The Master Distributor will pay a fee to secure the Master
Distributorship within the Market Area for PVI's Services as defined
in Exhibit 1. The Market Area is NOT TO BE CONSIDERED AN EXCLUSIVE
MARKETING AREA,; however, this Master Distributor agreement has
certain compensation provisions defined in Exhibit 3, that compensate
the Master Distributor for any sales activity within the Master
Distributor Market Area that is not directly related to its own
marketing efforts and not directly related to any national
account/affinity marketing by PVI (PVI WILL NOT BE RESPONSIBLE FOR
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PAYING COMMISSIONS TO THE MASTER DISTRIBUTOR ON DIRECT NATIONAL
ACCOUNTS THAT PVI ORIGINATES INCLUDING BUT NOT LIMITED TO AFFINITY
GROUPS).
3 RIGHTS AND OBLIGATIONS OF MASTER DISTRIBUTOR
3.1 Master Distributor may market and sell the Services directly or
through any number of Distributors, Dealers, or Agents. PVI shall not
be a Party to any arrangements between Master Distributor and its
Distributors, Dealers, or Agents, nor will PVI in any manner be bound,
or have any legal obligation in respect thereof. Master Distributor
further agrees that it is not, nor shall it represent itself to be a
PVI employee or officer of PVI, nor shall it assume or create any
obligations or responsibility on behalf of PVI, unless otherwise
agreed upon, in writing, by PVI. Also, it will be the Master
Distributor's responsibility to design Agent's and Dealers Commission
plans as it relates to the Master Distributors business and the Master
Distributor will have the sole right to adjust those plans as required
or as necessary.
3.2 Master Distributor shall use its best efforts to identify and contract
with Distributors, Dealers, and Agents, as appropriate, and shall
assist them in creating a market for, promoting, and maintaining a
demand for PVI's Services, as well as, establishing an efficient
network within the Market Area in order to obtain maximum sales of
PVI's Services. Master Distributor shall be solely responsible for
training and compensating all its Distributors, Dealers, and Agents.
3.3 Master Distributor shall advertise PVI's Services in the Market Area
and participate in such trade shows and other venues which will
stimulate sales. Master Distributor shall, in its sole discretion,
determine the amount of any such advertising and shall be solely
responsible for the resultant costs and expenses incurred. PVI may, at
its sole discretion, provide advertising at no expense to Master
Distributor, as it deems necessary. These activities shall be
considered in any determination of the inactivity clause herein;
however, any inactivity determination will remain and always be at
PVI's sole discretion.
3.4 Master Distributor shall send copies of all advertising and sales
promotion material and literature relating to the Services to PVI for
review and approval prior to distribution which approval shall not be
unreasonably withheld.
3.5 In all advertising, trade shows, conventions, and other promotions, as
well as in all sales and technical literature, the name of PVI and the
Trade Marks shall be evidenced and respected. Master Distributor shall
use the Trade Marks in their original form, unless otherwise approved
in advance, in writing by PVI.
3.6 Master Distributor shall at all times maintain an inventory of
collateral support materials, for promotion, advertising, signage,
point-of-sale, record keeping, subscriptions, and other items related
to sales of the Services. PVI will make available marketing materials
as such materials are available. Any such materials provided by PVI to
Master Distributor shall be provided free of charge unless otherwise
agreed by Master Distributor.
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3.7 Master Distributor shall forward any money collected for PVI as it
relates to the PVI Services sold to an End User contracting for PVI
Services as it relates to this Agreement, on a weekly basis.
3.8 PVI will require that all potential Distributor, Dealers, and or
Agents that contact PVI directly shall first be directed to work with
the Master Distributor for information of Services within the Market
Area. It is understood by both parties that in some cases it may be
necessary for PVI to work directly with certain national account
prospects or affinity groups within the Master Distributor's Area and
that due to the specific agreements PVI will not be liable for any
over-rides or Commissions in any way. The national account or affinity
groups that PVI may market to will be defined and identified by PVI
and will be at the sole discretion of PVI.
3.9 Should PVI be acquired or merge with another company or change
ownership in any way, this Master Distributor Agreement shall remain
in full force as long as the Master Distributor is in compliance with
the terms of this Agreement. PVI will include such language in any
acquisition or merger agreement.
4 PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all claims relating
to such action) brought against Master Distributor, based upon a claim
that the Service(s) or the use thereof infringes a United States
patent, Trade Mark, Service Mark, or copyright ("Infringement Claim"),
PVI shall defend and hold harmless the Mater Distributor against such
action at its expense and pay the costs and damages awarded in any
such action, provided that PVI shall have sole control of the defense
of any such action and all negotiations for its settlement or
compromise. At any time during the course of any Infringement Claim,
or in PVI's opinion, the Services are likely to become the subject of
an Infringement Claim, PVI will, at its option and its sole expense,
either procure the right to continue using the Service(s), or replace
or modify the same so that such Service(s) becomes non-infringing. PVI
will not have any liability to Master Distributor for an Infringement
Claim, if such claim results from Master Distributor's modification of
the Services in any manner.
4.2 The foregoing states the entire liability of PVI with respect to an
Infringement Claim. No costs or expenses will be incurred by the
Master Distributor in defense of any such claim. Not withstanding the
provisions of section 4.2 PVI shall be liable to the Master
Distributor for the Market Area fee paid pursuant to this Agreement in
the event that infringement claim results in PVI's inability to
provide the Service in the Market Area as contemplated by this
Agreement.
4.3 The purchase of the Services contemplated by this Agreement may result
in an implied license to the End-User to use the Services patented by
PVI. No license to make, sell, or use the Services shall be created
other than that explicitly set forth in PVI's Service forms with the
End-Users.
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5 RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its Services.
The Master Distributor shall be advised by PVI of any significant
changes in Service(s) specifications. If these changes are not
acceptable to the End-User, PVI shall then deal with the Master
Distributors down line subscribers to the Services and take all
reasonable action to satisfy said End-User.
5.2 PVI shall provide the Master Distributor with all necessary documents
and system documentation, required to market and sell the Services,
which shall remain the property of PVI. Such documents and
documentation may be in written form or transmitted by tape,
diskettes, e-mail, or other software media, as determined by PVI.
5.3 PVI shall provide the Master Distributor with all pertinent technical
and sales information and collateral support materials referenced in
Section 3.7 above, PVI shall inform the Master Distributor on a
regular basis about the development of new Services and applications,
trends, and competition in the market. PVI shall provide financial
assistance in implementing new changes in the form advertising and
promotions.
5.4 PVI shall provide the Master Distributor with the training free of
charge and within reasonable limits. Persons eligible for training are
Master Distributor's sales personnel. The Master Distributor shall be
responsible for all travel, lodging, and all other out-of-pocket
expenses related with the training of its personnel.
5.5 PVI shall not assign more than one Master Distributor in Market Area
defined on Exhibit 1.
5.6 PVI shall:
(a) Develop and produce original copy (i.e. layout, verbiage,
plates, negatives, dies, and/or other setup materials) of all
necessary advertising and collateral support materials for
marketing the Services;
(b) Provide and maintain all equipment (hardware, software, and
co-location facilities) reasonably necessary to support the PVI
Services marketed and sold by the Master Distributor;
(c) Provide and maintain the connectivity necessary to provision
the PVI Services marketed and sold by the Master Distributor;
(d) Perform all fulfillment of the PVI Services marketed and sold
by the Master Distributor.
(e) Pay all Master Distributor Commissions outlined herein, on a
timely monthly basis as defined in section 2.3 of this Agreement.
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(f) PVI will in its best efforts at all times maintain the
network and equipment to provide the Services defined herein.
(g) PVI warrants that it has the regulatory authority and will
maintain compliance during the term of this Agreement.
(h) PVI warrants that it is licensed to utilize the necessary
technologies required to offer Service(s) and will maintain said
technology licenses during the term of this Agreement.
6 LIMITATION OF LIABILITIES
PVI makes no warranties, expressed or implied, to the Master Distributor with
respect to the Services. The Master Distributor agrees that PVI shall not be
liable for any special, incidental, indirect, or consequential damages, or for
the loss of profit, revenue or Services even if PVI shall have been advised of
the possibility of such potential loss or damage. The Service is an elective
Service by the customer not a primary means of Service such as: dedicated
service (T- 1's) or local dial tone.
7 DURATION AND TERMINATION OF THE AGREEMENT
7.1 This Agreement shall be effective for an initial term commencing on
the date of this Agreement (i.e. date of execution by both Parties)
and ending three (3) calendar years thereafter. If not terminated by
notice by either Party at least sixty (60) days prior to the end of
the initial term hereof or any renewal term, the Agreement will be
automatically renewed for an unlimited number of successive one (1)
year periods.
7.2 Either Party may, without incurring any liability to the other Party,
unilaterally and with immediate effect, terminate this Agreement at
any time by a written notice sent to the other Party in the event
that:
(a) The other Party fails, for any reason(s) whatsoever, to
perform any of its obligations under this Agreement and fails to
remedy such default within thirty (30) days after the receipt of
written notice of default and request for cure which notice shall
be sent certified mail return receipt requested; or
(b) The other Party becomes insolvent, files or is subject to the
filing of judicial process under any law relating to bankruptcy
or insolvency, consents to a receivership, adopts an arrangement
with creditors, is dissolved, enters into liquidation, or ceases
doing business: or
(c) The Master Distributor uses the name of PVI, or any form
thereof, as a corporate name for doing business, or trade name,
or otherwise, without the prior written consent of PVI: or
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(d) PVI will monitor all Master Distributor marketing. It is
understood by the Master Distributor that a requirement to
maintain the Master Distributorship is consistent marketing
efforts, to be defined as but not limited to: consistently adding
new Agents & Dealers, the addition of new customers at a
reasonable rate expected by Master Distributors. Any inactivity,
AS DEEMED AT THE SOLE DISCRETION OF PVI, will be grounds for
termination of this Master Distributor Agreement. Should this
termination for inactivity right be exercised by PVI, the Master
Distributor will have the option of converting to a standard and
approved Dealer and or Agent Agreement and will be subject to a
Non-Compete for a period of ninety (90) days. During the Non-
Competition period the Master Distributor will not contact,
solicit, or offer any services to PVI customers nor enter into
any relationship that would compete with the business of PVI.
Also, all customers submitted to PVI directly or through
Agents/Dealers and subsequent End-Users, the Commissions due will
be paid as defined herein for the length of this agreement.
However, any Commissions paid on new business submitted will be
paid as defined within the new Agent/Dealer Agreement executed by
both parties. A reasonable start-up time will be extended and as
long as Dealers, Agents and End-users are being added to sell and
purchase PVI Service(s), it will constitute activity.
8 EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Master
Distributor shall immediately (i) remove from its premises all signs
advertising the Services or which use the Marks, (ii) cease to engage
in advertising or promotional activities concerning PVI's Services and
use of its Marks, (iii) cease to represent in any manner that the
Master Distributor has been designated by PVI as such, and (iv)
deliver to PVI at the Master Distributor's expense, all price lists,
sales manuals, service manuals, and any other documents concerning
PVI's Services which are in the Master Distributor's possession.
8.2 Master Distributor shall, with the mutually agreed termination of this
Agreement, have the right to claim reimbursement, or compensation for
Distributors, Dealers and Agents but shall not have the right for
compensation for alleged loss of goodwill, loss of profits on
anticipated sales, or the like, or have any other liability for losses
or damages resulting from the termination this Agreement
9 PROTECTION OF PROPRIETARY INFORMATION
9.1 The Master Distributor agrees to maintain in confidence and not to
copy, reproduce, distribute, or disclose to any third party, without
the prior written approval of PVI, any Proprietary Information.
9.2 All sales of the Services (inclusive of license of the Licensed
Software) to Dealers and Agents are of the material and tangible
Services only. These sales, however, do not include the sale of
Services design (and source and/ or object codes pertaining to the
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Licensed Software) which are Proprietary to PVI. To the extent any
such Proprietary Information is made available to the Master
Distributor, it is done on a confidential basis. The Master
Distributor will neither disclose circuitry design details nor
principles, nor software codes (of any kind related), nor copy them
for purposes of manufacture, nor attempt to reverse-engineer (de-
compile) or otherwise alter the Services for any purpose whatsoever.
9.3 With respect to the Proprietary Information relating to the Master
Distributor's business which is made available to PVI by the Master
Distributor to allow PVI to perform its obligations under this
Agreement, PVI will instruct its personnel to keep such information
confidential by using the same care and discretion that PVI uses with
data which PVI designates as Proprietary Information. However, PVI
shall not be required to keep confidential any data which is or
becomes publicly available, is already in PVI's possession, is
independently developed by PVI outside the scope of this Agreement, or
is legally obtained form third parties. In addition, PVI shall not be
required to keep confidential and may use for PVI's benefit any ideas,
concepts, know-how, or techniques relating to PVI's Services submitted
to PVI or developed during the term of this Agreement by PVI personnel
or jointly by PVI and the Master Distributor's personnel, unless
otherwise mutually agreed to by PVI and Master Distributor.
9.4 The obligations of the Parties under this Section 9 shall survive the
expiration or termination of this Agreement, for whatever reason, and
shall be binding upon the Parties, their successors and/or assigns.
9.5 The Parties acknowledge that the obligations and promises under this
Section 9 are of a special, unique character which gives them
particular value, and that a breach thereof could result in
irreparable and continuing damage for which there can be no reasonable
or adequate damages, remedy, or compensation in an action of law. Each
Party shall be entitled to injunctive relief, a decree for specific
performance, and/or other equitable relief in the event of any breach,
or threatened breach by the other of its obligations or promises under
this Section 9, in addition to any other rights or remedies which it
may possess (including monetary damages, if appropriate).
10 GENERAL
10.1 This Agreement shall be interpreted and its effect shall be determined
in accordance with the laws of the State of Texas.
10.2 Both PVI and Master Distributor agree that prior to any filing with
any jurisdiction as defined in section 10.3 herein, automatic
Arbitration would be the first solution to any dispute. Both parties
will select an Arbitrator and the Arbitrators selected by both parties
will select a third party Arbitrator the three arbitrators will rule
on any dispute. Any ruling by the Arbitrator's will be final. The
Arbitrators selected will be subject to the venues agreed to herein.
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10.3 The Master Distributor and PVI consents to venue, and the jurisdiction
of the courts of Texas or the courts of Michigan and may only file
with courts located in Dallas County or Oakland County and both
parties agree that any dispute arising under this Agreement shall be
resolved in such jurisdictions.
10.4 This Agreement cannot be assigned or sold to any third party or any
other entity, without first giving PVI first right of refusal and/or
without the prior written consent from PVI which shall not be
unreasonably withheld.
10.5 All notices and demands of any kind which either Party may require or
desire to serve upon the other shall be in writing and shall be
delivered either by personal service or by mail at the address of the
receiving Party set forth below (or at such different addresses as may
be designated by such party by written notice to the other Party) or
by facsimile. Such notice shall be deemed received on the earlier of
(i) the date when was actually received or (ii) in the case of
mailing, five (5) business days after being deposited in the United
States mail with sufficient prepaid postage, registered, or certified
mail with return receipt requested and properly addressed, or (iii) if
by facsimile when the sending Party shall have received facsimile
confirmation that the message has been received by the receiving
Party's facsimile machine. If notice is sent by facsimile, a confirmed
copy of such facsimile shall be sent by mail to the receiving party.
The address and facsimile numbers of the Parties, for purposes of the Agreement
are as follows:
PVI MASTER DISTRIBUTOR
Preferred Voice, Inc. Florida Wireless
6500 Greenville Ave., Ste. 570 2111 North 15th Street
Dallas, TX 75206-1002 Tampa, FL 33605
Facsimile: 214-265-9663 Facsimile: (813)248-4154
Attention: G. Ray Miller Attention: Chip Fallen
10.6 Any provision of the Agreement held to be invalid under applicable law
shall not render this Agreement invalid as a whole, and in such event,
such provision shall be interpreted so as to best accomplish the
intent of the Parties within the limits of applicable law.
10.7 A valid contract binding upon PVI and the Master Distributor comes
into being upon execution of this Agreement by duly authorized
representatives of PVI and the Master Distributor. This Agreement
contains the exclusive terms and conditions between the Parties hereto
with respect to the subject matter hereof, and does not operate as an
acceptance of any conflicting or additional terms and provisions of
the Master Distributor's Agreements with Distributors, Dealers or
Agents, which shall not be deemed to alter the terms hereof.
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Amendments to this Agreement may be effected only in writing, when
signed by the Parties hereto specifically stating it is intended to
amend this Agreement.
10.8 Costs of Enforcement:
If any action is commenced by either Party concerning this Agreement,
the Party which prevails in such action will be entitled to a
judgement against the other Party for the costs of such arbitration or
action, including court cost, reasonable expenses of litigation, and
reasonable attorneys' fees.
10.9 The Master Distributor acknowledges that it is an independent
contractor.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate originals on the dates indicated herein.
PREFERRED VOICE, INC. FLORIDA WIRELESS
/s/ Richard K. Stone /s/ Chip Fallen
- - -------------------- --------------------
By Richard K. Stone, Vice-President By Chip Fallen
Authorized Signature Master Distributor
Authorized Signature
Date:1/25/99 Date:1/27/99
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EXHIBIT 1 A
Market Area Fee: $20,000.00
Market Area: Area Codes 813
1. All NXX's (exchanges are included and defined as NXX's as part of the Market
Area).
2. The Master Distributor Fee has been waived by PVI for this Market Area.
For each up-front dollar (does not include any portion of the Master Distributor
fee financed by PVI or any Market Area other than what is defined on Exhibit 1)
paid by the Master Distributorship, PVI will issue one (1) PVI Warrant to the
Master Distributor, at a strike price of $1.00, in the name provided by the
Master Distributor. The Master Distributor may sell the Warrant at any time
during the period defined in the Warrant Agreement forthcoming and according to
the rules established by the Warrant Agreement. This statement/explanation will
be superceded by the Warrant/Stock Agreement executed by and between both
parties to be provided by PVI within 15 working days of the execution of this
Master Distributor Agreement. This offer may be replaced, changed and/or
terminated if this agreement and the Master Distributorship fee is not executed
and received by January 15, 1999. Any deposits for future Market Areas are
included and will be awarded dollar for dollar as defined above, one Warrant for
each dollar spent for the reservation of a Market Area.
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Exhibit 2 Product 1
EMMA EMMA Telephone Receptionist
PRODUCT DESCRIPTION: EMMA TR is the world's first central office
"voice auto attendant".
PRODUCT APPLICATION: EMMA TR is a viable way for business' to answer
their phones professionally, 24 hours a day 7 days a week. EMMA's
predatory pricing and user friendly features are revolutionary to a
$2.3 billion market that has not had any competition to date.
TARGET MARKET: All companies that require an attendant during office
hours and after hour answering services.
PRODUCT FEATURES & BENEFITS:
X Consistent professional X 24 hours 7 days a week
receptionist
X 50% less cost than X Local locate
competition
X Extended local calling X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product
deployment. A "Master Distributor" will be secured in each market
area, the most likely candidates will be current TAS, voice mail and
paging providers with established customers within the specific market
area.
PRODUCT PRICING:
X $19.95 per answered line X Expanded local dialing - (varies)
X $4.95 local locate X $49.95 Set-up fee
X $4.95 Per personal directory X $0.12 Long distance dialing
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be
earned
COMPETITION: Telephone Answering Services, Paging Companies and Voice
Mail Companies.
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Exhibit 2 Product 2
EMMA Virtual Personal Assistant
SERVICE DESCRIPTION: VIP 800 VPA is a revolutionary service that addresses
four important areas for the average business person: time management,
connectivity, single number simplicity and low cost. It allows the business
user to never miss a call and allows them the ability to receive a call,
via the revolutionary ability to call forward a personal 800 toll free
number to any number, from any phone anywhere at anytime. It allows them to
screen out calls to voice mail that they wish not to take and utilize the
most advanced speaker independent voice recognition technology, to place
calls by speaking the name of the individual or business they wish to call
from their pre-programmed voice directory. Best of all it is reliable,
convenient, user friendly and the predatory pricing makes it affordable for
everyone.
SERVICE APPLICATION: VIP 800 VPA is specifically designed for the business
person that is on the move or dealing with multiple time zones. They can
receive calls from their cellular phone, office phone, home phone, hotel
phone, clients phone, friend's cellular phone and any phone they choose
etc. Basically the business person can receive a call anytime anywhere from
any phone. They also have the ability to screen calls to voice mail that
they do not want. They will also be able to put into storage their Palm
Pilots and address books with all of their contacts and phone numbers
loaded into their voice directory by PVI. They simply speak the name from
their directory and the call is completed. This service is the answer to
the four aforementioned challenges to the business person today: time
management, connectivity, single number simplicity and low cost. The
business person's customers and potential customers will only have one
number to remember, not 3 to 4 numbers for their contact person as they
have today.
TARGET MARKET: Local, regional, national and international business
travelers. Large corporations right down to the home based business and
individuals.
PRODUCT FEATURES & BENEFITS:
X Single number X Home base pricing
X Single number locate X Voice dialing directory
X Call screening X No numbers to remember
X Availability at all times X No manual dialing
X Ultimate customer service X Eliminates hard fraud
X Becomes LD calling card X Local access to voice directory
X Time Management X Connectivity
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies, Executive
Suites, Shared Tenant Providers and TAS Companies.
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PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening X $0.12 per/min - home
base calls X $5.00 Local locate X $0.22 per/min - outside home base X Expanded
local dialing (varies) X Add moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through
voice mail today such as, Wild Fire and various other non-voice touch tone
activated service. The problem the competition faces against the PVI EMMA
product line is they are not competitively priced (due to their equipment
architecture costs and software deficiencies) and they are not user
friendly, unlike EMMA.
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Exhibit 2 Product 3
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial the family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grand-children with a number that they can reach them on, the
parents can provide the grand-parents a number that they can reach them anywhere
in the USA. PVI can provide nap-sack tags for the smaller children and even dog
tags can be ordered with the family 800 number on the tag. The convenient easy
to use speaker independent voice directory will be pre- programmed with all of
the participants numbers: office, home, cellular etc. This service also comes
with a locate feature so that if your children or other family members need you,
they can easily find you no matter where you are: work, cell phone, lake house ,
home, hotel, etc. This VIP 800 service can also be set-up with a "fraud free"
guarantee, which is great for kids in college. As with all VIP 800 services,
family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
PRODUCT FEATURES & BENEFITS:
X Emergenciess X Only one number to remember
X Fraud control X Connectivity
X Everyday communication X Single number locate
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies.
PRODUCT PRICING:
X $4.95 - 800 number reservation X $4.95 call screening
X $0.12 per/min - home base calls X Local locate no cost
X $0.22 per/min - outside home base X Expanded local dialing (varies)
X Adds moves & changes ($.025) X $29.95 Set-up fee
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
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Exhibit 2 Product 4
EMMA Virtual Office
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.O. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms. Realtors such as Re Max and others.
PRODUCT FEATURES & BENEFITS
X CONSISTENT PROFESSIONAL RECEPTIONIST X 24 HOURS 7 DAYS A WEEK
X CALL SCREENING X SINGLE NUMBER LOCATE
X CALL FORWARDING TO REMOTE OFFICES X NO CPE REQUIRED
X TIME MANAGEMENT X CONNECTIVITY
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area.
PRODUCT PRICING:
X $19.95 Monthly cost X $49.95 Set-up fee
X $4.95 Per one number locate X Expanded Local (varies)
X $4.95 Locate screening X $0.18 per minute dialing
X $.05 Per call cost (local)
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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Exhibit 2 Product 5
EMMA International Direct
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee X Per minute charges based on country
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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Exhibit 2 Product 6
EMMA Corporate Direct
PRODUCT DESCRIPTION: EMMA C.D. offers the ability to any customer/company
instant connectivity to any employee that has EMMA VPA.
PRODUCT APPLICATION: EMMA C.D. allows a company to enhance their EMMA VPA
service. The companies EMME VPA numbers are loaded into a data-base that is
assigned its own 800 number. By dialing the 800 number and speaking the name of
the person you will be automatically connected to their VPA locate number.
TARGET MARKET: This can be a
PRODUCT FEATURES & BENEFITS
X Consistent professional receptionist X 24 hours 7 days a week
X Intelligent Call Forwarding X Smart calling card
X Single number dialing for customers X No CPE required
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Master Distributor" will be secured in each market area, the most likely
candidates will be current TAS, voice mail and paging providers with established
customers within the specific market area. Affinity groups will also secure
business opportunities for this product.
PRODUCT PRICING:
X $9.95 per month X $99.95 Set-up fee
X 0. 16 Per minute cost X
DISTRIBUTOR COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
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Exhibit 2 Product 7
The "Smart" Business Line
SERVICE DESCRIPTION: The SBL gives any person the competitive edge. It is
specifically designed for persons on the move who do business from two or more
locations, i.e., office, home, cellular phone, hotel room, etc. With SBL anyone
can receive or make important local and long distance calls anywhere in the USA.
SBL also gives you the convenience and safety of making calls by using a
voice-activated telephone directory of your most frequently called names and
numbers.
SERVICE APPLICATION: The telephone company, after 100 years, is still providing
local business lines that only ring at one location. SBL is a portable (on the
go) business line that rings you at any phone no matter where you go, locally or
anywhere in the USA. You never have to miss an important call again. It also
gives you the option to screen your incoming calls on any phone you use. The
Intelligent Call Screening (ICS) function tells you the name of the person
calling you and you have the choice of either accepting the call, sending the
call to voice mail, or having SBL tell the caller you are not available at this
time. The service also offers you low cost long distance (1+ dialing, incoming
800 service and calling card). SBL also provides you with the ability to make
calls by speaking the name of the person or location you are calling. You never
have to remember a telephone number or dial a lot of digits. This revolutionary
service has the potential to alter the telecommunications industry as we know it
today.
TARGET MARKET: Real Estate Agents, Pilots, Flight Attendants, Appraisers,
Service Technicians, Consultants, Engineering firms, Brokers, Attorneys etc....
SERVICE PRICING:
SBL $19.95 monthly charge
Set-up fee $40.00 one time charge
Custom Greeting $10.00 one time charge
Custom Greeting $2.95 monthly
Expanded local calling $9.95
(pricing will vary slightly by area)
DISTRIBUTION: Master Distributors and Agents. Commissions available.
COMPETITION: None
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Exhibit 3
EMMA VPA, FF, ID, CD Commission Schedule:
X 30% Per 800 number reservation
X 10% Residual Commission paid on the per minute billing
X Residual Commission paid on any other
X 10% Residual Commission paid any other Services purchased by customer
X 50% one time set-up fee
All Commissions are paid on collected revenue only
EMMA TR & VO Commission Schedule:
X 50% per month (Per line answered)
X 30% per month (One number locate)
X 50%Set-up fee (One time Commission)
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X $1.00 Per month (EMMA TAS Territory Over-ride)
All Commissions paid on collected revenues only
SBL Commission:
X 50% of the service set-up fee
X 16% of the Basic Business Line Monthly Fee (including ELC, Custom Greeting)
X 0% of the Custom Greeting set-up fee
X 10% Residual on any other monthly usage charges (long distance, calling card)
X 3% quarterly over-ride on usage revenue (long distance, calling card)
All Commissions paid on collected revenues only
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EXHIBIT 10.25
MASTER DISTRIBUTOR AGREEMENT
THIS MASTER DISTRIBUTOR AGREEMENT (the "Agreement"), by and between Preferred
Voice, Inc. ("PVI"), a corporation organized and existing under the laws of the
State of Delaware authorized to do business in Texas, and Voice Retrieval, Inc.
("Master Distributor"), a corporation organized and existing under the laws of
the State of Texas. This Agreement shall become effective beginning on the last
date of signature hereto (the "Effective Date").
RECITAL
WHEREAS, PVI is in the business of providing certain voice recognition products
and services having multiple applications in the telecommunication industry; and
WHEREAS, Master Distributor is a member of an affiliated group of companies
which provide various telecommunication related services including Personal
Communication Services (PCS), Telephone Answering Services (TAS), long distance,
voice mail and paging services; and
WHEREAS, in order to increase its sales of the products and services, PVI is
establishing a national distribution network through the creation of multiple
distributorships who will have geographic areas of primary responsibility but
not exclusive areas, as described herein (the "Distributorships"); and
WHEREAS, the Master Distributor desires to establish a Distributorship and PVI
has agreed to grant the Master Distributor the distribution rights set forth
herein.
TERMS AND CONDITIONS
NOW THEREFORE for and in consideration of the mutual premises described herein
and for other good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged the parties hereto agree as follows:
1. DEFINITIONS. The definitions set forth above and the following
definitions shall apply to this Agreement:
1.1 Affinity Groups means organizations whose membership consists
of persons who derive benefits from the group or who otherwise
wish to support the group.
1.2 Agent means a legally established corporation, entity, or
individual retained by the Master Distributor, a Distributor,
or Dealer to sell PVI's Services directly to End- Users.
1.3 Accounts shall mean purchasers of Services.
1.4 Dealer means a legally established corporation, entity, or
individual qualified to sell PVI's Services under Master
Distributor Agreement.
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1.5 Distributor means a legally established corporation, entity,
or individual qualified to sell PVI's Services under Master
Distributor.
1.6 End-Users means persons using PVI's Services.
1.7 Mark(s) means any trademark service mark, trade dress or trade
name which PVI may designate, use, or adopt from time to time
to identify its Services.
1.8 Market Area means that non-exclusive geographic area
identified on Addendum "A" attached hereto.
1.9 National Account means national and regional entities that
operate in multiple locations in different territories.
1.10 PVI Proprietary Information means any information, written or
oral, including without limitation any technical and/or design
information on the Services, and any information relating to
the present or future business operations, financial
condition, plans, sales, marketing and promotional efforts,
customers and price lists of PVI or of the applied party
hereto and its subsidiaries and affiliates disclosing such
information, and all other information of any kind which may
reasonably be deemed confidential or proprietary, including
without limitation this Agreement and its terms
1.11 Services or PV1 Services means any telecommunication
service(s) or equipment offered by PVI.
2. APPOINTMENT OF MASTER DISTRIBUTOR AND MARKET AREA.
2.1 Subject to the terms and provisions hereof, PVI hereby
appoints Master Distributor, and Master Distributor hereby
accepts such appointment, as PVI's sole Master Distributor in
the Market Area. PVI will not appoint any other Master
Distributor in the same Market Area during the Term but other
master distributors of PVI and PVI itself may sell to Accounts
in the Market Area.
2.2 Master Distributor shall market and sell the Services to
Accounts within the Market Area at the prices set forth in
Addendum "B" attached hereto. The Master Distributor shall
have the right but not the obligation to market and sell PVI
Services outside the Market Area within the continental United
States and Master Distributor agrees that the prices set forth
in Addendum "B" shall also apply to such sales.
2.3 PVI hereby grants to Master Distributor a limited, non
exclusive license to brand, co brand market and sell services
using the "Voice Retrieval and information Services" name,
logo, trademark and goodwill, which PVI acknowledges is
exclusively owned by Master Distributor. Under the foregoing
license and with the prior approval of PVI, such approval not
to be reasonably withheld or delayed, Master Distributor shall
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be licensed to brand, co-brand, market and sell the services
using any other name, logo or trademark that is owned or
developed by Master Distributor.
3. PRICING.
3.1 PVI may change the prices for its Services at any time, PVI
will not offer pricing lower than the pricing defined herein
to other Master Distributors without making that same pricing
structure available to the Master Distributor; provided,
however, National Accounts/Affinity Groups may require other
rate plans and PVI will not be required to offer those rate
plans to the Master Distributor. Master Distributor may market
to National Account/Affinity Groups and in those cases, when
necessary, PVI will provide marketing support to the Master
Distributor that may include special pricing. Any special
pricing offered will be approved by PVI and at PVI's sole
discretion and the Master Distributor will be eligible to earn
Commissions as further defined herein.
4. COMMISSIONS.
4.1 Master Distributor shall be entitled to Commissions for
Accounts established by Master Distributor both inside and
outside of the Market Area. Master Distributor shall bill the
Accounts established by the Master Distributor both inside and
outside the Market Area in accordance with reasonable business
practices. Master Distributor shall use reasonable/best
efforts to collect the amounts owed by Accounts both inside
and outside the Market Area. Within thirty (30) days following
the end of any calendar mouth during which the agreement is in
effect, Master Distributor shall remit to PVI the difference
between (i) the gross amount collected from Accounts for such
calendar month, less (ii) the commissions earned for such
calendar month by Master Distributor in accordance with the
commission schedule set forth in Addendum "C" attached hereto.
All Residual Commissions accrued to Master Distributor will be
paid quarterly.
4.2 In the event PVI adds new Services, Master Distributor and PVI
shall mutually agree upon a Commission schedule particular to
each new Service, which schedule shall be added as an Addendum
to this Agreement.
4.3 Commissions will be paid on collections received by PVI from
Accounts established by Master Distributor both within and
outside the Market Area. The Commission to be paid Master
Distributor for sales made outside, the Market Area shall be
less any master distributor over-rides for collections from
outside of the Market Area.
4.4 Should the Master Distributor enter into a contract with a
National Account/Affinity Group at the PVI retail rates
defined herein, the Master Distributor will be awarded
Commissions, as defined herein, on all revenues billed and
collected (as those terms are defined herein). Should the
National Account/Affinity Group Agreement for PVI Services
through the Master Distributor at retail rates that are not
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defined in this Agreement, PVI and the Master Distributor will
agree to a Commission schedule for the specific account and
define the Commission on an Addendum to be attached to this
Agreement.
4.5 Master Distributor shall not be entitled to any Commission on
any National Account or Affinity Group obtained by PVI that
was not previously contracted by the Master Distributor. In
the Market Area, Master Distributor will be entitled to a
Commission as described on the attached Addendum "C" on
Accounts other than National Accounts or Affinity Groups
obtained by PVI in the Market Area. Master Distributor shall
not be entitled to any Commission on sales made to Accounts
within the Market Area but by another master distributor.
4.6 It may be necessary for PVI to work directly with certain
National Account prospects or Affinity Groups within the
Market Area and that due to the specific agreements PVI will
not be liable for any over-rides or Commissions in any way.
The National Account or Affinity Groups that PVI may market to
will be defined and identified by PVI and will be at the sole
discretion of PVI.
5. OTHER BUSINESS. During the Term, Master Distributor may not enter into any
joint venture, establish new corporation or other entity, or acquire any
interest in a company (or entity) which competes with the business of PVI
through the sale of any service, that is substantially equivalent to, or
competitive with, any of PVI's Services or through the manufacture or sale of
equipment or other goods that may be used to provide services substantially
equivalent to or competitive with any of PVI's Services. It is understood that
the Master Distributor may do other similar business within Master Distributor's
sole discretion that perform similar functions however those alike telecom
services will not incorporate VOICE RECOGNITION TECHNOLOGY. In the event that
PVI begins selling its Services within the Market Area, by any means other than
through Master Distributor, the restrictions placed on Master Distributor in
this Section shall terminate; provided that, for a period of ninety (90) days
after PVI commences such other sales, Master Distributor shall not solicit for a
competitive service any Account acquired by Master Distributor during the Term.
PVI warrants that it will not enter into the Voice Mail business within the
Master Distributor Market Area.
6. FEE.
6.1 The Master Distributor will pay a fee to secure the Master
Distributorship within the Market Area. The Market Area is not
to be CONSIDERED AN EXCLUSIVE MARKETING AREA.
7. OBLIGATIONS OF MASTER DISTRIBUTOR.
7.1 Master Distributor may market and sell the Services within and
outside the Market Area directly or through any number of
Distributors, Dealers, or Agents. PVI shall not be a party to
any arrangements between Master Distributor and its
Distributors, Dealers, or Agents, nor will PVI in any manner
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be bound, or have any legal obligation in respect thereof.
Master Distributor further agrees that it is not, nor shall it
represent itself to be a PVI employee or officer of PVI, nor
shall it assume or create any obligations or responsibility on
behalf of PVI, unless otherwise agreed upon in advance and in
writing by PVI.
7.2 It will be the Master Distributor's sole responsibility to
design Agent and Dealer Commission plans as it relates to the
Master Distributor's business and the Master Distributor will
have the sole right to adjust those plans. Master Distributor
shall be solely responsible for training and compensating all
its Distributors, Dealers, and Agents.
7.3 Master Distributor shall use reasonable to establish an
efficient network within the Market Area in order to obtain
maximum sales of PVI's Services and to identify and contract
with Distributors, Dealers, and Agents, as appropriate, and
shall assist them in creating a market for, promoting, and
maintaining a demand for PVI's Services.
7.4 Master Distributor shall advertise PVI's Services in the
Market Area and participate in trade shows and other venues
that will stimulate sales. Master Distributor shall, in its
sole discretion, determine the amount and the form of any such
advertising, subject to PVI's review right in regard to the
Marks, as described below, and shall be solely responsible for
the costs and expenses incurred in connection therewith.
7.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical literature,
the name of PVI and the Marks shall be evidenced and
respected. Master Distributor shall use the Marks in their
original form, unless otherwise approved in advance and in
writing by PVI. All advertising material and other material
bearing any Mark or the name of PVI (the "Mark Material")
shall be subject to the prior written approval of PVI, which
PVI may not unreasonably withhold.
7.6 Master Distributor shall at all times maintain an inventory of
collateral support materials for promotion, advertising,
signage, point-of-sale, record keeping, subscriptions, and
other items related to sales of the Services sufficient to
meet the demand for Services (the "Collateral Support
Material").
7.7 Master Distributor shall forward any money collected for PVI
as it relates to the PVI Services or otherwise on a weekly
basis.
8. MERGER. Should PVI be acquired or merge with another company or change
ownership in any way, this Agreement shall remain in full force as long as the
Master Distributor is in compliance with the terms of this Agreement. PVI will
include such language in any acquisition or merger agreement.
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9. INDEMNITY.
9.1 If timely and promptly notified of any action (and all claims
relating to such action) brought against Master Distributor,
based upon a claim that the Service(s) or the use thereof as
permitted by PVI infringes a trademark, service mark or
copyright or due to the negligence, gross negligence, or
reckless disregard of PVI ("Infringement Claim"), PVI shall
indemnify, defend and hold harmless the Master Distributor
against such action provided that PVI shall, have sole control
of the defense of any such action and all negotiations for its
settlement or compromise. Master Distributor shall cooperate
with PVI in regard to the defense of Infringement Claims. If
at any time during the course of any Infringement Claim, or in
PVI's opinion, the Services are likely to became the subject
of an Infringement Claim, PVI will, at its option and its sole
expense, either procure the right to continue using the
Service(s), or replace or modify the same so that such
Service(s) becomes non-infringing, PVI will not have any
liability to Master Distributor for an Infringement Claim, if
such claim results from Master Distributor's modification of
the Services in any manner or Master Distributor's conduct
outside the scope of this Agreement.
9.2 The foregoing states the entire liability of PVI with respect
to an Infringement Claim. Notwithstanding the provisions of
this Section PVI shall be liable to the Master Distributor for
a return of the Market Area Fee actually paid pursuant to this
Agreement and all Commissions due as of the date of such
inability in the event that Infringement Claim results in
PVI's inability to provide the Services in the Market Area as
contemplated by this Agreement.
9.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End-User to use the
Services patented by PVI. No license to make, sell. or use the
Services shall be created other than that explicitly set forth
in PVI's Service forms with the End-Users.
9.4 Master Distributor agrees to defend, indemnify, and hold
harmless PVI from and against all claims, losses, liabilities,
lawsuits and damages relating to and/or arising from any
action or omission by Master Distributor which would
constitute a breach or default under this Agreement
(collectively, the "Claims"). PVI agrees to provide reasonable
notice to Master Distributor of each such Claim. Master
Distributor reserves the right to control the defense as
against any Claim. PVI reserves the right to participate in
the defense of any Claim with counsel of PVI's own choosing
and at PVI's sole cost. Master Distributor may not settle a
Claim without the prior written approval of PVI which approval
will not be unreasonably withheld or delayed.
10. OBLIGATIONS OF PVI.
10.1 PVI reserves the right to modify the characteristics of its
Services without the consent of the Master Distributor
provided such modification does not result in a substantial
expenditure by Master Distributor, or a reduction in the
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Commission due Master Distributor as of the date of such
modification. The Master Distributor shall be advised by PVI
of any significant changes in Service(s) specifications.
10.2 PVI shall timely provide the Master Distributor with all
available documents and system documentation (the
"Documentation") required to market and sell the Services,
which shall remain the property of PVI. Such Documentation may
be in written form or transmitted by tape, diskettes, e-mail,
or other software media, as determined by PVI.
10.3 PVI shall timely provide the personnel of Master Distributor
with training in regard to the Services free of charge and
within reasonable limits. PVI shall be responsible for all
travel, lodging, and all other out-of-pocket expenses related
with the training of its personnel. The Master Distributor
shall be responsible for all travel, lodging, and all other
out-of-pocket expenses related with the training of its
personnel.
10.4 PVI shall develop and produce original copy (i.e., layout
verbiage, plates, negatives, dies, and/or other setup
materials) of Collateral Support Materials for marketing the
Services. The cost of reproduction and storage shall be Master
Distributor's sole responsibility.
10.5 PVI shall use reasonable efforts to provide and maintain all
equipment (hardware, software, and co-location facilities)
reasonably necessary to support the PVI Services marketed and
sold by the Master Distributor.
10.6 PVI shall use reasonable efforts to provide and maintain the
connectivity necessary to the provision of the PVI Services
marketed and sold by the Master Distributor.
10.7 PVI shall use reasonable efforts to perform all fulfillment of
the PVI Services marketed and sold by the Master Distributor.
11. WARRANTIES AND REPRESENTATIONS.
11.1 PVI warrants and represents to Master Distributor that it has
the regulatory authority required to offer the Services and
that PVI will maintain compliance during the Term.
11.2 PVI warrants and represents to Master Distributor that it is
licensed to utilize the necessary technologies required to
offer Services and will use reasonable efforts to maintain
said technology licenses during the Term.
11.3 Each of PVI and Master Distributor (each, "Warranting Party")
warrant and represent to the other that Warranting Party has
the legal capacity and authority to enter into this Agreement,
to become legally obligated under this Agreement, and to
perform Warranting Party's obligations under this Agreement.
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11.4 Master Distributor and PVI covenants that all materials that
each such party develops for its use or the use of its
respective Master Distributors, Dealers, Distributors or
Agents under this Agreement and any related agreement will not
infringe upon or misappropriate any trademark, copyright,
service mark, privacy, publicity or other third party right.
11.5 Master Distributor warrants and represents to PVI that Master
Distributor has or will obtain the personnel and other sources
required for Master Distributor to fulfill its obligations
hereunder.
12. Not Applicable.
13. DISCLAIMER. PVI makes no warranties, expressed or implied, including without
limitation the implied warranties of fitness for a particular purpose and
merchantability to the master distributor with respect to the services and all
such warranties are disclaimed.
14. TERM, TERMINATION AND REMEDIES.
14.1 This Agreement shall be effective for an initial term
commencing on the Effective Date and ending ten (10) calendar
years thereafter (the "Term"). If not terminated by notice by
either party at least sixty (60) days prior to the end of the
initial term hereof or any renewal term, the Agreement will be
automatically renewed for an unlimited number of successive
one (1) year periods. Each such renewal period shall be
included within the Term.
14.2 Either party hereto without incurring any liability to the
other party may unilaterally and with immediate effect,
terminate this Agreement at any time by delivering a written
notice of termination to the other party ("Recipient") if any
of the following "Defaults" occur:
a. the Recipient fails for any reason(s) whatsoever to
perform any of its obligations under this Agreement
and fails to remedy such default within thirty (30)
days after the receipt of written notice of default
and request for cure; or
b. Recipient ceases to do business; or
c. Recipient files for bankruptcy relief or is placed
into involuntary bankruptcy so long as such
involuntary bankruptcy petition is not dismissed
within sixty (60) days following the filing; or
d. Recipient is generally unable to pay its debts as
they become due; or
e. Recipient's business is placed under a Court
appointed receiver.
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14.3 Each party may pursue all available remedies under this
Agreement and/or applicable law in the event of a Default
subject to the terms hereof.
14.4 If Master Distributor uses the name of PVI, or any form
thereof as a corporate name for doing business, or trade name,
or otherwise, without the prior written consent of PVI then
PVI may immediately terminate this Agreement by delivering
written notice to Master Distributor.
14.5 A requirement to maintain the Distributorship is consistent
marketing efforts, to be defined as but not limited to:
consistently adding new Agents & Dealers, the addition of new
customers at a reasonable rate, etc. Any material inactivity,
AS DEEMED AT THE SOLE DISCRETION OF PVI, will be grounds for
termination of this Agreement by delivering thirty (30) days
written notice to Master Distributor providing such inactivity
is not discontinued within such thirty (30) day period. Should
this termination for inactivity right be exercised by PVI, the
Master Distributor will have the option of converting to a
standard and approved Dealer and or Agent Agreement and will
be subject to a noncompete agreement for a period of ninety
(90) days following Master Distributor delivering to PVI a
written notice of such election.
14.6 Upon the termination of this agreement by the Master
Distributor due to PVI's default under any of sections 14.2
(b)-(e) of this agreement (PVI's inability to deliver
service), Master Distributor shall have the option and right
of first refusal (the "Option") for thirty (30) days following
such termination (the "Option Period) to purchase all of the
active phone numbers owned or operated by PVI in the Market
Area that the Master Distributor, through it's sales efforts,
have contracted with to provide PVI's Services. The purchase
price of the phone numbers shall be (i) three (3) times (ii)
the average monthly gross revenue for the Market Area for
three (3) months immediately preceding the date of such
termination. Master Distributor shall exercise the Option by
delivering written notice of it's intent to exercise the
Option to PVI prior to the expiration of the Option Period.
The Master Distributor shall deliver the total purchase price
within the thirty (30) day period after the intent to option
is exercised. Upon delivery of the total purchase price, PVI
agrees and covenants to transfer the total purchase price,
free and clear of any encumbrances, and to execute such
documents and take such action as is necessary to transfer and
evidence the transfer of the Phone Numbers to the Master
Distributor. The Master Distributor understands that Phone
Numbers are of the public domain and that the user of such
Phone Numbers may have the authority to determine the
ownership of such numbers through legal and regulatory
conditions.
15. EFFECT OF TERMINATION.
15.1 Upon expiration or earlier termination of this Agreement, the
Master Distributor shall immediately: (i) remove from its
premises all signs and other materials advertising the
Services or which use the Marks; (ii) cease to engage in
advertising or promotional activities concerning PVI's
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Services and use of its Marks; (iii) cease to represent in any
manner that the Master Distributor has been designated by PVI
as such; and (iv) deliver to PVI at the Master Distributor's
expense, all price lists, sales manuals, service manuals, and
any other documents concerning PVI's Services which are in the
Master Distributor's possession.
15.2 Master Distributor shall, with the mutually agreed termination
of this Agreement, have the right to claim reimbursement, or
compensation for Distributors, Dealers and Agents but shall
not have the right for compensation for alleged loss of
goodwill, loss of profits on anticipated sales, or the like,
or have any other liability for losses or damages resulting
from the termination of this Agreement.
16. CONFIDENTIALITY.
16.1 The Master Distributor agrees to maintain in confidence and
not to copy, reproduce, distribute, or disclose to any third
party, without the prior written approval of PVI, any PVI
Proprietary Information.
16.2 All information which Master Distributor considers to be its
confidential information must be designated in writing as
"Confidential Information" at the time such information is
disclosed to PVI. In regard to Confidential Information of
Master Distributor disclosed to PVI, PVI agrees to use the
same care and discretion to prevent unauthorized disclosure
that PVI uses with similar data which PVI designates as PVI
Proprietary Information. However, PVI shall not be required to
keep confidential any data which is or becomes publicly
available, through no fault of PVI or any other person under a
duty to keep such information confidential, is in PVI's
possession prior to the Effective Date, is independently
developed by PVI outside the scope of this Agreement or is
legally obtained from third parties. In addition, PVI shall
not be required to keep confidential and may use for PVI's
benefit any ideas, concepts, know-how, or techniques relating
to PVI's Services submitted to PVI or developed during the
Term by PVI personnel or jointly by PVI and the Master
Distributor's personnel, unless otherwise mutually agreed in
writing by PVI and Master Distributor. PVI may disclose Master
Distributor's Confidential Information to PVI's employees and
professionals such as accountants and attorneys on an "as
needed" basis, provided however, that such persons agree to
maintain the confidentiality of the information.
16.3 The obligations of the parties hereto under this Section shall
survive the expiration or earlier termination of this
Agreement, for whatever reason, and shall be binding upon the
parties, their successors and/or assigns.
16.4 The parties hereto acknowledge that the obligations and
promises under this Section are of a special, unique character
which gives them particular value, and that a breach thereof
could result in irreparable and continuing damage for which
there can be no reasonable or adequate damages, remedy, or
compensation in an action of law.
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16.5 Each party hereto shall be entitled to injunctive relief, a
decree for specific performance, and/or other equitable relief
in the event of any breach, or threatened breach by the other
of its obligations or promises under this Section, in addition
to any other rights or remedies which it may possess or to
which it may be entitled under this Agreement and/or
applicable law, subject to the terms hereof (including
monetary damages, if appropriate).
16.6 Neither party hereto shall be in breach of this Agreement by
disclosing information protected by this Section of the other
party hereto pursuant to an order of a Court or Administrative
Tribunal of competent jurisdiction; provided, however the
party so compelled to disclose shall inform the other party in
advance and in writing of the possibility of such an order.
17. GENERAL.
17.1 This Agreement shall be interpreted and its effect shall be
determined in accordance with the laws of the State of Texas
and applicable United States federal law.
17.2 Each of the Master Distributor and PVI consent to venue, and
the jurisdiction of the state and federal courts of Dallas
County, Texas and both parties hereto agree that any dispute
arising under this Agreement shall be resolved in such
jurisdiction.
17.3 This Agreement cannot be assigned or sold to any third party
or any other entity, without first giving PVI first right of
refusal and/or without the prior written consent from PVI
which shall not be unreasonably withheld.
17.4 All notices and demands of any kind which either party may
require or desire to serve upon the other shall be in writing
and shall be deemed delivered when delivered either by
personal service or by mail at the address of the receiving
party set forth below (or at such different addresses as may
be designated by such party by written notice to the other
party) or by facsimile. Such notice shall be deemed received
on the earlier of (i) the date when was actually received or
(ii) in the case of mailing, five (5) business days after
being deposited in the United States mail with sufficient
prepaid postage, registered, or certified mail with return
receipt requested and properly addressed, or (iii) if by
facsimile when the sending party shall have received facsimile
confirmation that the message has been received by the
receiving party's facsimile machine. If notice is sent by
facsimile, a confirmed copy of such facsimile shall be sent by
mail to the receiving party. The address and facsimile numbers
of the parties, for purposes of the Agreement are as follows:
PVI MASTER DISTRIBUTOR
Preferred Voice, Inc. Voice Retrieval, Inc.
6500 Greenville Ave., Ste. 570 3222 Skylane
Dallas, TX 75206-1002 Carrollton, TX 75006
Facsimile: 214-265-9663 Facsimile: 972-380-0118
Attention: G. Ray Miller Attention: Mark Babtista
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17.5 Any provision of the Agreement held to be invalid by a court
of competent jurisdiction under applicable law shall not
render this Agreement invalid as a whole, and in such event,
such provision shall be interpreted by a court of competent
jurisdiction so as to best accomplish the intent of the
parties within the limits of applicable law.
17.6 A valid contract binding upon PVI and the Master Distributor
comes into being upon execution of this Agreement by duly
authorized representatives of PVI and the Master Distributor.
This Agreement contains the exclusive terms and conditions
between the parties hereto with respect to the subject matter
hereof, and does not operate as an acceptance of any
conflicting or additional terms and provisions of the Master
Distributor's Agreements with Distributors, Dealers or Agents,
which shall not be deemed to alter the terms hereof Amendments
to this Agreement may be effected only in writing, when signed
by the parties hereto specifically stating it is intended to
amend this Agreement.
17.7 If any action is commenced by either party concerning this
Agreement, the party which prevails in such action will be
entitled to collect from the other party all relief available
under applicable law and/or this Agreement subject to the
terms hereof, and all costs of such action, including court
cost, reasonable expenses of litigation, and reasonable
attorneys' fees.
17.8 The Master Distributor acknowledges that it is an independent
contractor and not an employee of PVI. Master Distributor,
accordingly, shall not be entitled to any benefit as an
employee of PVI. Master Distributor shall not be supervised by
PVI.
17.9 Section 3., 4.,9., 11., 12., 13., 14., 3., 15., 16., 17.1,
17.2, 17.4, and 17.9 shall survive the expiration or earlier
termination or cancellation of this Agreement.
IN WITNESS WHEREOF, PVI and the Master Distributor hereby have duly executed,
signed, and initialed each page of this Master Distributor Agreement in
duplicate originals on the dates indicated herein.
PREFERRED VOICE, INC. MASTER DISTRIBUTOR
By: /s/ Richard K. Stone By: /s/ Mark Babtista
----------------------------------- -----------------------
Name: Richard K. Stone Name: Mark Babtista
Title: Vice President Title: CEO
Address: 6500 Greenville Ave.,Suite 570 Address: 3222 Skylane
Dallas, TX 75206 Carrollton, TX 75006
Telephone: 214-265-9580 Telephone: 972-713-2822
Facsimile: 214-265-9663 Facsimile: 972-713-2850
Date of Execution: 5/03/99 Date of Execution: 5/03/99
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EXHIBIT 1A
MARKET AREA FEE: $25,000.00
MARKET AREA: 214, 817, 972, 940
1. ALL NXX'S (EXCHANGES ARE INCLUDED AND DEFINED AS NXX'S AS PART OF THE MARKET
AREA).
2. THE MASTER DISTRIBUTOR WILL PAY $25,000.00 UPON EXECUTION OF THIS AGREEMENT.
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EXHIBIT 2 PRODUCT
EMMA TELEPHONE RECEPTIONIST
SERVICE DESCRIPTION: EMMA TR is the world's first central office "voice auto
attendant".
SERVICE APPLICATION: EMMA TR is a viable way for business' to answer their
phones professionally, 24 hours a day 7 days a week. EMMA's predatory pricing
and user friendly features are revolutionary.
CAN MY COMPANY USE TR: EMMA TR is for any company that requires an attendant
during office hours or after hour answering services. ANY SIZE COMPANY
QUALIFIES.
SERVICE FEATURES & BENEFITS:
X CONSISTENT PROFESSIONAL RECEPTIONIST 24 HOURS A DAY 7 DAYS A WEEK
X LESS THAN YOUR CURRENT SERVICE
X PUT YOUR CURRENT RECEPTIONIST TO WORK
X LOCAL LOCATE
X NO EQUIPMENT TO INSTALL
RECURRING MONTHLY SERVICE PRICING:
| | $19.95 PER ANSWERED LINE
| | $4.95 PER LOCAL LOCATE (OPTIONAL)
| | $4.95 PERSONAL VOICE DIALING DIRECTORY (OPTIONAL)
| | 7.9 CENTS PER MINUTE FOR ANY LONG DISTANCE CALL
| | $2.95 CUSTOM GREETING (OPTIONAL)
| | EXPANDED LOCAL DIALING (VARIES BY AREA, OPTIONAL)
| | ADDS, MOVES AND CHANGES ARE 25 CENTS PER CHANGE (AFTER INITIAL SERVICE
SET-UP)
ONE TIME SERVICE SET-UP CHARGES:
| | $49.95 SYSTEM SET-UP
| | $10.00 CUSTOM GREETING (OPTIONAL)
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EXHIBIT 2 PRODUCT 2
EMMA PERSONAL ASSISTANT
SERVICE DESCRIPTION: EMMA PA is a revolutionary service that addresses four
important areas for the average businessperson: time management, connectivity,
single number simplicity and low cost. PA users will never miss a call. Instead,
they remain in constant connectivity via revolutionary technology, which will
call forward a personal 800 toll-free number to any location or any phone,
anywhere.
SERVICE APPLICATION: EMMA PA is specifically designed for the business person
that is on the move or dealing with multiple time zones. They can receive calls
from their cellular phone, office phone, home phone, hotel phone, clients phone,
friend's cellular phone and any phone they choose etc. Basically, a business
person can receive a call anytime anywhere from any phone. Thanks to Preferred
Voice's patented Intelligent Call Screening our customers have the ability to
hear the voice of their caller. Customers may then choose to either accept the
call and be connected, or decline the call and send their caller to voice mail.
Additionally, PA customers will enjoy the convenience of voice dialing, PA
customers simply speak any name from their voice directory and the call is
completed. All these tools combined mean one thing...single number simplicity
and constant connectivity.
CAN I USE PA: EMMA TR is designed for local, regional, national and
international business travelers. Large corporations right down to the home
based business and individuals.
SERVICE FEATURES & BENEFITS:
X LOW COST
X ULTIMATE CUSTOMER SERVICE TOOL
X SINGLE NUMBER LOCATE
X INTELLIGENT CALL SCREENING (ICS)
X VOICE DIALING DIRECTORY
X EXCELLENT INCOMING 800 RATE AVAILABLE
RECURRING MONTHLY SERVICE PRICING:
| | $4.95 800 NUMBER RESERVATION
| | $4.95 CALL SCREENING (OPTIONAL)
| | $2.95 CUSTOM GREETING (OPTIONAL
| | $0.12 PER MINUTE - INCOMING ON ALL CALLS TO YOUR LOCAL CALLING AREA
(CALLING CARD TRAVEL FEATURE OR CLIENT/CUSTOMER ACCESS)
| | $0.18 PER MINUTE - INCOMING ON ALL CALLS OUTSIDE YOUR LOCAL CALLING AREA
(CALLING CARD TRAVEL FEATURE)
ONE TIME SERVICE SET-UP CHARGES:
| | $29.95 DATABASE SET-UP FEE
| | $10.00 CUSTOM GREETING
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EXHIBIT 2 PRODUCT 3
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial their family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grandchildren with a number that they can reach them on, the
parents can provide the grandparents a number that they can reach them anywhere
in the USA. PVI can provide nap tags for the smaller children and even dog tags
can be ordered with the family 800 number on the tag. The convenient easy to use
speaker independent voice directory will be pre- programmed with all of the
participants' numbers: office, home, cellular, etc. This service also comes with
a locate feature so that if your children or other family members need you, they
can easily find you no matter where you are: work, cell phone, lake house, home,
hotel, etc. This EMMA service can also be set-up with a "fraud free" guarantee,
which is great for kids in college. As with all EMMA services, family & friends
is priced for all budgets.
TARGET MARKET: Families and friends.
SERVICE FEATURES & BENEFITS:
X EMERGENCIES
X FRAUD CONTROL
X CONNECTIVITY
X SINGLE NUMBER LOCATE
RECURRING MONTHLY SERVICE PRICING:
| | $4.95 800 NUMBER RESERVATION
| | $2.95 CUSTOM GREETING
| | $4.95 CALL SCREENING
| | $0.12 PER MINUTE TO CALL FAMILIES HOME CITY
| | $0.18 TO CALL OUTSIDE THE HOME CITY
| | ADDS, MOVES AND CHANGES ARE 25 CENTS PER CHANGE (AFTER INITIAL SERVICE
SET-UP)
ONE TIME SERVICE SET-UP CHARGES:
| | $29.95 DATABASE SET-UP FEE
| | $10.00 CUSTOM GREETING
16
<PAGE>
EXHIBIT 2 PRODUCT 4
EMMA VIRTUAL OFFICE
SERVICE DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
SERVICE APPLICATION: EMMA V.O. is a Service designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices located in different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms.
SERVICE FEATURES & BENEFITS:
X CONSISTENT PROFESSIONAL RECEPTIONIST 24 HOURS PER DAY 7 DAYS A WEEK
X INTELLIGENT CALL SCREENING
X SINGLE NUMBER DIALING
X NO EQUIPMENT TO INSTALL
X CONNECTIVITY
RECURRING MONTHLY SERVICE PRICING:
| | $4.95 PER MONTH
| | $4.95 INTELLIGENT CALL SCREENING
| | $2.95 CUSTOM GREETING
| | 18 CENTS PER MINUTE
ONE TIME SERVICE SET-UP CHARGES:
| | $50 SERVICE SET-UP
| | $10 CUSTOM GREETING
17
<PAGE>
EXHIBIT 2 PRODUCT 5
EMMA INTERNATIONAL DIRECT
SERVICE DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
SERVICE APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other countries cannot have an 800
number that terminates into another country. This is the only 800 number that
allows voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling. Such as: hotels, manufacturing companies, service companies, etc.
SERVICE FEATURES & BENEFITS:
X VOICE ACTIVATED (JUST SPEAK THE LOCATION OR CITY AND BE CONNECTED)
X SINGLE NUMBER DIALING FOR CUSTOMERS
X CONSISTENT PROFESSIONAL RECEPTIONIST 24 HOURS PER DAY 7 DAYS A WEEK
X SMART CALLING CARD
RECURRING MONTHLY SERVICE PRICING:
| | $4.95 PER MONTH
| | $9.95 CUSTOM GREETING
| | PER MINUTE RATE PRICING BASED ON COUNTRY
ONE TIME SERVICE SET-UP CHARGES:
| | $150 SERVICE SET-UP
| | $50 CUSTOM GREETING
18
<PAGE>
EXHIBIT 2 PRODUCT 6
EMMA The "SMART" Business Line
SERVICE DESCRIPTION: The SBL gives any person the competitive edge. It is
specifically designed for persons on the move who do business from two or more
locations, i.e., office, home, cellular phone, hotel room, etc. With SBL anyone
can receive or make important local and long distance calls anywhere in the USA.
SBL also gives you the convenience and safety of making calls by using a
voice-activated telephone directory of your most frequently called names and
numbers.
SERVICE APPLICATION: The telephone company, after 100 years, is still providing
local business lines that only ring at one location. SBL is a portable (on the
go) business line that rings you at any phone no matter where you go, locally or
anywhere in the USA. You never have to miss an important call gain. It also
gives you the option to screen your incoming calls on any phone you use. The
Intelligent Call Screening (ICS) function tells you the name of the person
calling you and you have the choice of either accepting the call, sending the
call to voice mail, or having SBL tell the caller you are not available at this
time. The service also offers you low cost long distance (1+ dialing, incoming
800 service and calling card). SBL also provides you with the ability to make
calls by speaking the name of the person or location you are calling. You never
have to remember a telephone number or dial a lot of digits. This revolutionary
service has the potential to alter the telecommunications industry as we know it
today.
TARGET MARKET: Real Estate Agents, Pilots, Flight Attendants, Appraisers,
Service Technicians, Consultants, Engineering firms, Brokers, Attorneys, etc.
...
FEATURES & BENEFITS:
X NEVER MISS AN IMPORTANT CALL AGAIN
X INTELLIGENT CALL SCREENING
X TIME MANAGEMENT
X SINGLE NUMBER SIMPLICITY
X LOCATE FEATURE
RECURRING MONTHLY SERVICE PRICING:
| | $19.95 PER MONTH
| | $2.95 CUSTOM GREETING
| | EXPANDED LOCAL CALLING (VARIES BY AREA)
ONE TIME SERVICE SET-UP CHARGES:
| | $40 SERVICE SET-UP
| | $10 CUSTOM GREETING
19
<PAGE>
EXHIBIT 3
EMMA VPA, FF, ID, SBL Commission Schedule:
X 30% Per 800 number reservation
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by
customer
X 50% one time set-up fee
X All Commissions are paid on collected revenue only and paid
Quarterly
EMMA TR & VO Commission Schedule:
X 50% per month (Per line answered)
X 30% per month (One number locate)
X 50% Set-up fee (One time Commission)
X 10% Residual Commission paid on the per minute billing
X 10% Residual Commission paid any other Services purchased by customer
X $1.00 Per month (EMMA TAS Territory Over-ride paid Quarterly)
All Commissions paid on collected revenues only
20
EXHIBIT 10.26
SOFTWARE LICENSE AGREEMENT
This Software License Agreement is made as of this 25th day of
September, 1999, between Preferred Voice, Inc., a Delaware corporation
("Licensor") and Rural Cellular Corporation, a Minnesota corporation, on behalf
of itself and its wholly owned subsidiaries and affiliates ("Licensee").
Licensor and Licensee are collectively referred to in this Agreement as the
"Parties."
Background Information
Licensor has developed a system (the "System") that when interconnected
with a telecommunications switching system is capable of performing the services
(the "Services") described in a Marketing Agreement between Licensor and
Licensee of even date (the "Marketing Agreement"). Each System consists of the
hardware, certain third party software (the "Third Party Software") and certain
proprietary application software developed by Licensor (the "Application
Software"). Licensee is a wireless carrier that is currently providing
telecommunications service in areas described in the Marketing Agreement (the
"Service Areas"). Licensee wishes to offer the Services to end users ("End
Users") under its own brand in conjunction with its telecommunications services,
and Licensor has agreed to install its System in Licensee's location for that
purpose pursuant to the Marketing Agreement.
In consideration of the mutual promises made in this Agreement,
Licensor and Licensee agree that the terms and conditions set forth as follows
will apply to the license of Application Software.
ARTICLE 1. LICENSE AND PROCUREMENT
1.01 License. Pursuant to this Agreement, Licensor hereby grants to
Licensee a nontransferable, non-exclusive license to use the Application
Software, together with all subsequent improvements thereto in the Service Area.
Licensor also grants to Licensee a non-transferable, non-exclusive sublicense to
use the Third Party Software, solely in connection with operation of the System.
1.02 Term. The initial term of this Agreement shall be co-terminus with
the Marketing Agreement.
ARTICLE 2. LIMITATIONS ON USE
2.01 General Use. Licensee agrees to use the Application Software and
Third Party Software solely to provide the Services to End Users. Licensee may
private brand the Services it offers.
2.02 Location.
(a) Use of Application Software. The Application Software may
be used only on the hardware provided by Licensor ("Designated Hardware") at
Licensee's switch locations in the Licensed Areas.
SOFTWARE LICENSE AGREEMENT - PAGE 1
<PAGE>
(b) Temporary Use of Non-Designated Hardware. Licensee may
temporarily install and use the Application Software on hardware other than
Designated Hardware, but only if the Designated Hardware cannot be used because
of hardware, software or other malfunction and only until the Designated
Hardware is returned to operation. Licensee shall not install or use the
Application Software on such replacement hardware without the prior verbal
consent of Licensor. Licensor shall not unreasonably withhold this consent if
the proposed replacement hardware meets or exceeds the Specifications for the
Designated Hardware.
2.03 Copies. Licensee may make one "backup copy" of the Application
Software for archival purposes at each location; any such archival copy may be
stored at the location where the products are installed and operational or at
any such reputable off-site storage facility or facilities, as the case may be,
which Licensee, in its reasonable judgment, shall select to maintain and protect
such archival copy for purposes of disaster recovery. Licensee shall not
otherwise copy any portion of the Software. Licensee shall reproduce and include
Licensor's applicable copyright notice, patent notice, trademark, or service
mark on any copies of the Application Software.
ARTICLE 3. PROPERTY RIGHTS
3.01 Title to Software. Title to the Application Software is reserved
for Licensor. Licensee acknowledges and agrees that Licensor is and shall remain
the owner of the Application Software and shall be the owner of all copies of
the Application Software made by Licensee.
3.02 Confidentiality of Software. Licensee acknowledges that the
Application Software is confidential in nature and constitutes a trade secret
belonging to Licensor. Licensee agrees to hold the Application Software in
confidence for Licensor and not to sell, rent, license, distribute, transfer, or
disclose the Application Software or its contents, including methods or ideas
used in the Application Software, to anyone except to employees of Licensee when
disclosure to employees is necessary to use the license granted in this
Agreement. Licensee shall instruct all employees to whom any such disclosure is
made that the disclosure is confidential and that the employee must keep the
Application Software confidential by using the same care and discretion that
they use with other data designated by Licensee as confidential. The
confidentiality requirements of this Section shall be in effect both during the
term of this Agreement and for a period of seven (7) years after it is
terminated, provided, that the foregoing restrictions shall not apply to
information: (a) generally known to the public or obtainable from public
sources; (b) readily apparent from the keyboard operations, visual display, or
output reports of the Application Software; (c) previously in the possession of
Licensee or subsequently developed or acquired without reliance on the
Application Software; or (d) approved by Licensor for release without
restriction.
3.03 Security. Licensee agrees to keep the Software in a secure place,
under access and use restrictions designated to prevent disclosure of the
Software to unauthorized persons. Licensee agrees to at least implement the
security precautions that it normally uses to protect its own confidential
materials and trade secrets.
SOFTWARE LICENSE AGREEMENT - PAGE 2
<PAGE>
3.04 Disclosure as Breach. Licensee agrees that any disclosure of the
Software to a third party, except as set forth above, constitutes a material
breach of this Agreement, entitling Licensor to the benefit of Section 5.01
hereof.
3.05 Removal of Markings. Licensee agrees not to remove, mutilate, or
destroy any copyright, patent notice, trademark, service mark, other proprietary
markings, or confidential legends placed on or within the Software.
ARTICLE 4. WARRANTY PROVISIONS
4.01 Warranties
(a) General. Licensor warrants, that (i) it has good title to
the Application Software and the right to license its use to Licensee free of
any proprietary rights, liens, or encumbrances of any other party, (ii) it has
the right to sublicense the Third Party Software to Licensee for its use in the
System; (iii) the Application Software will permit the System to provide
Services when properly interconnected to Licensee's functioning switches
described in the Marketing Agreement (provided, that any modification of the
Application Software by any persons other than Licensor shall, unless pursuant
to Licensor's instruction, void the Warranty in this clause (II);
(iii)commencing on installation thereof, and for a period of 90 days thereafter,
(I) the Software shall be free of viruses, bugs or contaminants which may cause
damage to Licensee's systems or interrupt Licensee's utilization of a System;
and (2)the media in which the Software is contained shall be free of material
defects in materials or workmanship.
b. Year 2000. Licensor warrants that the Application Software
delivered or modified by Licensor is, or will be, Year 2000 Compliant (as
defined below). Year 2000 Compliant software that is intended to interoperate
with third party products (including Third Party Software) as described herein
will be compatible and inter-operate in such manner as to process between them,
as applicable, date related data correctly as described in the definition of
"Year 2000 Compliant." Except as set forth in the preceding sentence, (i)
Licensor assumes no responsibilities or obligations to cause third party
products to function with the Application Software; and (ii) Licensor will not
be in breach of this warranty for any failure of the Application Software to be
Year 2000 Compliant if such failure results from the inability of any software,
hardware, or systems of Licensee or any third party to be Year 2000 Compliant.
"Year 2000 Compliant" means that (a) neither the performance nor functionality
of the Application Software will be affected by dates prior to, during and after
the year 2000, (b) no value for current date will cause any interruption in the
operation of the Application Software; (c) the year 2000 is recognized as a leap
year; (d) in all interfaces and data storage the century, in any date, is
specified either explicitly or by unambiguous algorithms or inferencing rules;
and (e) date-based functionality of the Application Software behaves and will
behave consistently for dates prior to, during and after the year 2000.
4.02 Remedies. In the event of any nonconformity or defect in the
Application Software (or any other breach with respect to the condition or
operation of the Application Software) for which Licensor is responsible,
Licensor shall, during the foregoing respective warranty periods, (A) provide
reasonable efforts to correct or cure such nonconformity, defect, contaminant or
breach
SOFTWARE LICENSE AGREEMENT - PAGE 3
<PAGE>
(which may include a workaround for system errors), (B) at Licensor's option,
replace the relevant part of the Application Software in lieu of curing such
nonconformity, defect, contaminant or breach, or (C) if Licensor determines that
neither of the foregoing is commercially practicable, remove the System and
terminate the Marketing Agreement and this License Agreement.
4.03 Warranty Disclaimer. LICENSOR DOES NOT REPRESENT OR WARRANT THAT
ALL ERRORS WILL BE CORRECTED. LICENSEE AGREES THAT LICENSEE'S SOLE AND EXCLUSIVE
REMEDY FOR THE DEFECTS DESCRIBED IN THIS SECTION SHALL BE LIMITED TO THE
CORRECTIVE ACTION DESCRIBED IN THIS SECTION. THE EXPRESS WARRANTIES SET FORTH IN
THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.04 Limitation of Remedies. LICENSEE AGREES THAT ITS EXCLUSIVE
REMEDIES, AND LICENSOR'S ENTIRE LIABILITY WITH RESPECT TO THE SOFTWARE IS AS SET
FORTH IN THIS AGREEMENT. LICENSEE FURTHER AGREES THAT LICENSOR SHALL NOT BE
LIABLE TO LICENSEE FOR ANY INDIRECT DAMAGES, INCLUDING ANY LOST PROFITS, LOST
SAVINGS, OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF ITS USE OR
INABILITY TO USE THE SOFTWARE OR THE BREACH OF ANY EXPRESS OR IMPLIED WARRANTY,
EXCEPT AS SET FORTH IN SECTION 4.05.
4.05 Indemnification.
(a) Infringement. Licensor agrees to indemnify and hold
Licensee and its directors, officers, employees and agents, harmless against any
and all claims, demands, actions, losses, liabilities, judgments, settlements,
awards and costs (including reasonable attorneys' fees and expenses)
(collectively, "Liabilities") arising out of or related to any claim against
Licensee by a third party that Licensee's use or possession of the Third Party
Software or Application Software (or the license or sublicense granted to
Licensee hereunder with respect thereto), infringes or violates any United
States patent, copyright or other proprietary right of any third party; provided
that Licensee gives Licensor prompt notice of any such claim of which it has
actual knowledge and cooperates fully with Licensor in the defense of such
claim. Licensor shall have the exclusive right to defend and settle at its sole
discretion and expense all suits or proceedings arising out of the foregoing.
Licensee shall not have the right to settle any action, claim or threatened
action without the prior written consent of Licensor (at Licensor's sole and
absolute discretion). In case use of the Third Party Software or Application
Software is forbidden by a court of competent jurisdiction because of
proprietary infringement, Licensor shall promptly, at its option, (i) procure
for Licensee the rights to continue using the Third Party Software and
Application Software; (ii) replace the infringing Third Party Software or
Application Software with non-infringing Third Party Software or Application
Software of equal performance and quality which are materially the functional
equivalent of the infringing Third Party Software or Application Software; (iii)
modify the infringing Application Software so it becomes non-infringing while
materially maintaining the functionality thereof; or (iv) if none of the
foregoing are commercially practicable, remove the System and terminate the
Marketing Agreement and this License Agreement Licensor will then be released
from any further
SOFTWARE LICENSE AGREEMENT - PAGE 4
<PAGE>
obligation whatsoever to Licensee with respect to the infringing part of the
Third Party Software or Application Software. Nothing in this Section shall be
deemed to make Licensor liable for any patent or copyright infringement suits
that arise in connection with (a) designs, modifications, use, integration or
data furnished by Licensee if infringement would have been avoided by not using
or combining the Application Software with such other programs or data (except
the Third Party Software) or (b) if infringement would have been avoided by the
use of an updated version made available to Licensee.
(b) Other. Licensor agrees to indemnify and hold Licensee
harmless against any and all Liabilities arising out of Licensor's negligent
acts or omissions, intentional torts, or material breach of this Agreement.
ARTICLE 5. TERMINATION
5.01 Cause for Termination. The license granted in this Agreement shall
terminate automatically and without further notice upon the occurrence of
expiration of the term, specified in Section 1.02 or of any renewal term in the
absence of a subsequent renewal in accordance with the terms of this Agreement.
Licensor may terminate this Agreement in the event that (a) Licensee discloses
the Software to a third party, whether directly or indirectly and whether
inadvertently or purposefully, or (b) Licensee attempts to use, copy, license,
or convey the Software in any manner contrary to the terms of this Agreement or
in derogation of Licensor's proprietary rights in the Application Software. In
addition, either party may terminate this Agreement (and all licenses granted
hereunder) at any time if (a) the other party breaches any term hereof (other
than breaches by Licensee pursuant to the preceding sentence) or the Marketing
Agreement and fails to cure such breach within 30 days after receipt of written
notice, (b) the other party shall be or becomes insolvent, (c) the other party
makes an assignment for the benefit of creditors, (d) there are instituted by
the other party proceedings in bankruptcy or under any insolvency or similar law
or for reorganization, receivership or dissolution, (e) there are instituted
against the other party proceedings in bankruptcy or under any insolvency or
similar law or for reorganization, receivership or dissolution, which
proceedings are not dismissed within 60 days, or (f) the other party ceases to
do business.
5.02 Effect of Termination. Licensee agrees that on termination under
Section 5.01, Licensor may recover all copies of Application Software that have
been delivered to or made by Licensee, and (on Licensor's request) Licensee
shall destroy all copies of the Application Software that are not recovered by
Licensor, certify to Licensor that it has retained no copies of the Application
Software, and acknowledge that it may no longer use the Application Software.
Upon termination of the license, Licensor's obligations under this Agreement
shall cease.
ARTICLE 6. MISCELLANEOUS
6.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF
LAW RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO
THE LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
SOFTWARE LICENSE AGREEMENT - PAGE 5
<PAGE>
6.02 Headings. Headings used in this Agreement are to facilitate
reference only, are not a part of this Agreement, and will not in any way affect
the interpretation hereof. The use herein of the word "including," when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," or "but not limited to," or
words of similar import) is used with references thereto, but rather shall be
deemed to refer to all other items and matters, that reasonably could fall
within the broadest possible scope of such general statement, term or matter.
6.03 Assignment. This Agreement, and all rights and obligations
hereunder, are personal as to the parties hereto and may not be assigned, in
whole or in part, by any of the parties to any other person, firm or corporation
without the prior written consent thereto by the other party hereto, which
consent will not be unreasonably withheld; except that either party may freely
assign any or all of its rights and obligations hereunder to any affiliate or
any person acquiring all or substantially all of that party's stock or assets.
An affiliate is (a) an entity that owns all or substantially all of the
outstanding stock of the entity so assigning, (b) an entity all or substantially
all of whose stock is owned by the entity so assigning, or (c) an entity under
common ownership with the entity so assigning. Such assignee entity shall
thereupon be free to assign the rights and obligations under this Agreement to
any other affiliate. Any assignment contrary to the terms hereof shall be null
and void and of no force or effect.
6.04 Failure or Partial Exercises. No failure on the part of any party
to exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
6.05 Entire Agreement, Amendments. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
Licensee did not rely on any representations or warranties of Licensor or its
employees or agents other than those set forth in this Agreement. This Agreement
may not be modified or amended except by a writing that states that it is an
amendment to this Agreement and which is signed by duly authorized
representative of the parties.
6.06 Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be valid and sufficient if dispatched either (i)
by hand delivery, (ii) by facsimile transceiver, with confirming letter mailed
promptly thereafter by first class mail, postage prepaid, (iii) by reputable
overnight express courier or (iv) by certified mail, postage prepaid, return
receipt requested, deposited in any post office in the United States, in any
case, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided from time to time in the
manner set forth above. When sent by facsimile as aforesaid, notices given as
herein provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
SOFTWARE LICENSE AGREEMENT - PAGE 6
<PAGE>
6.07 Partial Invalidity. If any clause or provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
6.08 Attorneys Fees. The prevailing party in any litigation,
arbitration or other proceedings arising out of this Agreement shall be
reimbursed by the other party for all costs and expenses incurred in such
proceedings, including reasonable attorneys' fees.
6.09 Force Majeure. No party hereto shall be liable for delay or
default in performing hereunder, other than a delay or default in payment of any
monies due to the other party, if such performance is delayed or prevented by a
Force Majeure Condition. "Force Majeure Condition" means any condition or event
beyond the reasonable control of the party affected thereby, including fire,
explosion, or other casualty, act of God, war or civil disturbance, acts of
public enemies, embargo, the performance or non-performance of third parties,
acts of city, state, local or federal governments in their sovereign,
regulatory, or contractual capacity, labor difficulties, and strikes, but
specifically excluding a party's failure to be Year 2000 Compliant. If a Force
Majeure Condition occurs, the party delayed or unable to perform shall give
prompt notice of such occurrence to the other party. The party affected by the
other party's inability to perform, may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
6.10 Independent Contractor. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement will be construed (a) to give either party the power
SOFTWARE LICENSE AGREEMENT - PAGE 7
<PAGE>
to direct and control the day-to-day activities of the other, (b) to constitute
the parties as partners, joint venturers, owners or otherwise as participants in
a joint or common undertaking, or (c) to allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.
PREFERRED VOICE, INC. RURAL CELLULAR
CORPORATION
on behalf of itself and its wholly owned
subsidiaries and affiliates
By: /s/ Richard K. Stone By: /s/ Scott G. Donlea
--------------------------- -----------------------------------
Name; Richard K. Stone Name: Scott G. Donlea
Title: Vice President Title: Vice President Market Development
6500 Greenville Avenue Address: 3905 Dakota St., S.W.
Suite 570 3905 Dakota Street SW
Dallas, Texas 75206 Alexandria, MN 56308 USA
Fax No: 214-265-9663 Fax No: (320) 808-2181
Phone: 214-265-9580 Phone: (320) 762-2000
SOFTWARE LICENSE AGREEMENT - PAGE 8
EXHIBIT 10.27
MARKETING AGREEMENT
This Marketing Agreement is made as of this 25th day of September,
1999, between Preferred Voice, Inc., a Delaware corporation ("PVI") and Rural
Cellular Corporation, a Minnesota corporation, on behalf of itself and its
wholly owned subsidiaries and affiliates ("WIRELESS PROVIDER"). PVI and WIRELESS
PROVIDER are collectively referred to in this Agreement as the "Parties."
Background Information
PVI has developed a system (the "System") that when interconnected with
a telecommunications switching system is capable of performing the services
described in Exhibit A attached hereto and incorporated herein by reference (the
"Services"). Each System consists of the hardware described in Exhibit B,
certain third party software and certain proprietary application software
developed by PVI. WIRELESS PROVIDER is a licensed wireless carrier that is
currently providing telecommunications service in the areas described in Exhibit
C. WIRELESS PROVIDER wishes to offer the Services to end users ("End Users")
under its own brand in conjunction with its telecommunications services.
In consideration of the mutual promises made in this Agreement, PVI and
WIRELESS PROVIDER agree that the terms and conditions set forth as follows will
apply to the license of Application Software.
ARTICLE 1. INSTALLATION
1.01 Installation. PVI shall install, at its cost, its Systems at
WIRELESS PROVIDER's switch locations set forth in Exhibit C to interconnect with
switches described in Exhibit C. The System will remain the property of PVI.
WIRELESS PROVIDER shall prepare the site in accordance with PVI's
specifications. Installation of Systems will be completed within 90 days. PVI
agrees to install Systems so that they shall comply in all material respects
with all federal, state, and local laws and regulations in force on the date
hereof.
1.02 PVI Testing. PVI shall test, at its cost, the Systems to ensure
that they work properly. The testing period shall (i) commence promptly upon the
completion of installation of the System at the sites, but in no event later
than five (5) days following such completion of installation (the "Commencement
Date"), and (ii) conclude upon acceptance by as described in Section 1.03 below.
Should material deficiencies arise in the performance of the System during
testing, PVI shall inform WIRELESS PROVIDER promptly thereof by submitting
notice, including a written, reasonably detailed description of each deficiency,
to WIRELESS PROVIDER. PVI shall then use reasonable efforts to cure the
noncompliance. WIRELESS PROVIDER shall use its best efforts to assist PVI in
curing such noncompliance. Upon completion of such cure, PVI shall give notice
to WIRELESS PROVIDER thereof. The total period of time that may be spent on the
testing period shall not exceed thirty (30) days from the Commencement Date. If
PVI, using commercially reasonable efforts,
MARKETING AGREEMENT - PAGE 1
**[Confidential Treatment] indicates portions of this document that have been
deleted from this document and have been separately filed with the Securities
and Exchange Commission.
<PAGE>
is unable to cure any material deficiency of the System within 30 days of the
Commencement Date, then following notice thereof either party may give the other
party thirty (30) days' written notice of its election to terminate this
Agreement and the reasons therefor.
1.03 WIRELESS PROVIDER Acceptance. PVI shall inform WIRELESS PROVIDER
in writing of the completion of PVI's testing under Section 1.02. WIRELESS
PROVIDER will thereupon commence testing of the System, and shall have 30 days
in which to test the functionality of the System with employees. Upon completion
of the 30day test period, WIRELESS PROVIDER shall either provide PVI with
written notice of any problems revealed in its tests or deliver PVI an
acceptance certificate, substantially in the form attached hereto as Exhibit D
(the "Acceptance Certificate"). The System shall be deemed to have been accepted
by WIRELESS PROVIDER upon execution and delivery by WIRELESS PROVIDER to PVI of
an Acceptance Certificate, executed by an authorized representative of WIRELESS
PROVIDER or failure of WIRELESS PROVIDER to provide written notice to PVI of any
problems WIRELESS PROVIDER discovers within the 30- day period it is conducting
tests.
ARTICLE 2. SALES AND MARKETING
2.01 Sales. WIRELESS PROVIDER shall use commercially reasonable efforts
to promote sale of the Services so as to maximize revenues, including conducting
commercially reasonable advertising campaigns and maintaining an inventory of
collateral support materials for promotion, advertising, point-of-sale, record
keeping, subscriptions, and other items related to sales of the Services.
WIRELESS PROVIDER shall bill and collect for Services used by End Users.
2.02 Pricing. The WIRELESS PROVIDER will determine the prices at which
the Services will be made available to End-Users and any changes to these
prices.
2.03 Advertising and Promotional Literature. PVI will assist WIRELESS
PROVIDER in the development and production of original copy of advertising and
collateral support materials (i.e. layout, verbiage, plates, negatives, dies,
and/or other setup materials) that may be utilized by WIRELESS PROVIDER for
marketing the Services. WIRELESS PROVIDER shall send copies of all advertising
and sales promotion material and literature relating to the Services to PVI for
review prior to distribution.
2.04. Exclusivity. WIRELESS PROVIDER agrees that during the term of
this Agreement it will not install, for testing or any other purposes, any
network based (as opposed to handset based) system which competes with the
Services provided by PVI hereunder, in the areas identified in Exhibit C, as
long as PVI is in compliance with the terms and conditions of this Agreement.
ARTICLE 3. PAYMENT
WIRELESS PROVIDER shall pay PVI a share of WIRELESS PROVIDER's revenue
from the Services (net of all taxes, surcharges and other governmental fees or
any late charges) determined from the schedule set forth in Exhibit E. This
amount shall be paid monthly on the fifteenth day of each month for revenue
billed for the Services in the prior month.
MARKETING AGREEMENT - PAGE 2
<PAGE>
ARTICLE 4. TRAINING AND SUPPORT
4.01 Technical Support. During the term of this Agreement, PVI shall
provide a technical support help desk that WIRELESS PROVIDER may call to report
System troubles twenty-four (24) hours per day, seven (7) days per week basis.
PVI shall troubleshoot the problems and contact the appropriate vendor to
resolve problems that cannot be resolved by actions WIRELESS PROVIDER may take
on PVI's instruction. During the term of this Agreement, PVI shall provide (i)
remote, dial-up System support, on a twenty-four (24) hours per day, seven (7)
days per week basis, and (ii) packages, generally containing corrections of
known software defects and updates or patches to increase or improve performance
and occasionally also containing minor feature enhancements of existing
software, relating to a current System. WIRELESS PROVIDER shall provide
permanent digital connectivity to each System for the purpose of off-site
software revision and maintenance.
4.02 Provisioning. For up to the first six months following
installation of the System, PVI shall update and maintain the customer and names
data bases in the System based on information provided by End Users directly or
through WIRELESS PROVIDER. During that period PVI shall train WIRELESS
PROVIDER's personnel in data base update and maintenance procedures. WIRELESS
PROVIDER will be responsible for such work after such training period.
4.03 Training. As part of the installation process and at no cost to
WIRELESS PROVIDER, PVI shall provide WIRELESS PROVIDER's personnel with the
initial training and instruction as described on Exhibit F attached hereto
concerning the operation and use of the System by conducting training sessions
at a mutually convenient time at WIRELESS PROVIDER's facility. Any additional
training services that are requested by WIRELESS PROVIDER shall be invoiced to
WIRELESS PROVIDER in accordance with PVI's then prevailing hourly rates.
WIRELESS PROVIDER shall be responsible for all travel and other expenses of its
personnel attending such training sessions.
ARTICLE 5. TERM
The initial term of this Agreement shall be three years. Upon
expiration of the initial term specified above, the Agreement shall
automatically renew for up to seven successive one (1) year terms unless either
party gives the other notice of its intention not to renew the license at least
sixty (60) days prior to the expiration of the then current term.
ARTICLE 6. WARRANTY PROVISIONS
6.01 General. PVI warrants that (a) it shall install the System
pursuant to Section 1.01 so that it is properly interconnected to WIRELESS
PROVIDERS's switches identified in Exhibit C and (b) the System will provide
Services when properly interconnected to WIRELESS PROVIDER's functioning
switches of the types described in Exhibit C (provided, that ANY MODIFICATION OF
THE SYSTEM BY ANY PERSONS OTHER THAN PVI SHALL, UNLESS PURSUANT TO PVI'S
INSTRUCTION, VOID THE WARRANTY IN THIS SECTION 6.01).
6.02 Year 2000. PVI warrants that the System delivered or modified by
PVI is, or will be, Year 2000 Compliant (as defined below). Year 2000 Compliant
MARKETING AGREEMENT - PAGE 3
<PAGE>
(as defined below). Year 2000 Compliant software that is intended to
interoperate with third party products as described herein will be compatible
and inter-operate in such manner as to process between them, as applicable, date
related data correctly as described in the definition of "Year 2000 Compliant."
Except as set forth in the preceding sentence, (i) PVI assumes no
responsibilities or obligations to cause third party products to function with
the System; and (ii) PVI will not be in breach of this warranty for any failure
of the System to be Year 2000 Compliant if such failure results from the
inability of any software, hardware, or systems of WIRELESS PROVIDER or any
third party to be Year 2000 Compliant. "Year 2000 Compliant" means that (a)
neither the performance nor functionality of the System will be affected by
dates prior to, during and after the year 2000, (b) no value for current date
will cause any interruption in the operation of the System; (c) the year 2000 is
recognized as a leap year; (d) in all interfaces and data storage the century,
in any date, is specified either explicitly or by unambiguous algorithms or
inferencing rules; and (e) date-based functionality of the System behaves and
will behave consistently for dates prior to, during and after the year 2000.
ARTICLE 7. TERMINATION
7.01 Cause for Termination. This Agreement shall terminate
automatically and without further notice upon the occurrence of expiration of
the term, specified in Article 5 or of any renewal term in the absence of a
subsequent renewal in accordance with the terms of this Agreement. PVI may
terminate this Agreement in the event that revenue sharing payments to PVI are
less than $2000 per System per month for three consecutive months, unless
WIRELESS PROVIDER pays PVI the shortfall. In addition, either party may
terminate this Agreement at any time if (a) the other party breaches any term
hereof and fails to cure such breach within 30 days (or ten days in the case of
a failure to pay any sum due) after receipt of written notice, (b) the other
party shall be or becomes insolvent, (c) the other party makes an assignment for
the benefit of creditors, (d) there are instituted by the other party
proceedings in bankruptcy or under any insolvency or similar law or for
reorganization, receivership or dissolution, (e) there are instituted against
the other party proceedings in bankruptcy or under any insolvency or similar law
or for reorganization, receivership or dissolution, which proceedings are not
dismissed within 60 days, or (f) the other party ceases to do business.
7.02 Effect of Termination. WIRELESS PROVIDER agrees that on
termination under Section 7.01, PVI may recover all Systems that have been
installed. PVI shall remove the Systems within 60 days of the termination of
this Agreement and if it fails to do so, WIRELESS PROVIDER may remove them and,
at PVI's cost, ship the Systems to PVI. Upon termination of the license, the
obligations of both parties under this Agreement shall cease. The termination or
expiration of this Agreement shall in no way relieve either party from its
obligation to pay the other any sums accrued hereunder prior to such termination
or expiration.
ARTICLE 8. INSURANCE
Each party hereto shall maintain, during the term of this Agreement,
the following insurance coverage as well as all other insurance required by law
in the jurisdictions where the work is performed: (a) worker's compensation and
related insurance as required by law; (b) employer's liability insurance with a
limit of at least five hundred thousand ($500,000) dollars for each
MARKETING AGREEMENT - PAGE 4
<PAGE>
occurrence; (c) comprehensive general liability insurance, with a limit of at
least one million ($1,000,000) dollars per occurrence; and (d) comprehensive
motor vehicle liability insurance with limits of at least one million
($1,000,000) dollars for bodily injury including death, to any one person, three
hundred thousand ($300,000) dollars for each occurrence of property damage, and
one million ($1,000,000) dollars for each occurrence. Each party shall (i)
furnish the other prior to the start of the relevant work, if requested by the
other, certificates or adequate proof of the insurance required by this Section
and (ii) notify the other in writing at least thirty (30) days prior to
cancellation of or any material change in the policy.
ARTICLE 9. MISCELLANEOUS
9.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF
LAW RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO
THE LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
9.02 Headings. Headings used in this Agreement are to facilitate
reference only, are not a part of this Agreement, and will not in any way affect
the interpretation hereof. The use herein of the word "including," when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," or "but not limited to," or
words of similar import) is used with references thereto, but rather shall be
deemed to refer to all other items and matters, that reasonably could fall
within the broadest possible scope of such general statement, term or matter.
9.03 Assignment. This Agreement, and all rights and obligations
hereunder, are personal as to the parties hereto and may not be assigned, in
whole or in part, by any of the parties to any other person, firm or corporation
without the prior written consent thereto by the other party hereto, which
consent will not be unreasonably withheld; except that either party may freely
assign any or all of its rights and obligations hereunder to any affiliate or to
any person acquiring all or substantially all of that party's stock or assets.
An affiliate is (a) an entity that owns all or substantially all of the
outstanding stock of the entity so assigning, (b) an entity all or substantially
all of whose stock is owned by the entity so assigning, or (c) an entity under
common ownership with the entity so assigning. Such assignee entity shall
thereupon be free to assign the rights and obligations under this Agreement to
any other affiliate. Any assignment contrary to the terms hereof shall be null
and void and of no force or effect.
9.04 Failure or Partial Exercises. No failure on the part of any party
to exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
9.05 Entire Agreement, Amendments. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof
MARKETING AGREEMENT - PAGE 5
<PAGE>
and supersedes all prior agreements among the parties relative to the subject
matter hereof. In entering this Agreement, WIRELESS PROVIDER did not rely on any
representations or warranties of PVI or its employees or agents other than those
set forth in this Agreement. This Agreement may not be modified or amended
except by a writing that states that it is an amendment to this Agreement and
which is signed by duly authorized representative of the parties.
9.06 Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be valid and sufficient if dispatched either (i)
by hand delivery, (ii) by facsimile transceiver, with confirming letter mailed
promptly thereafter by first class mail, postage prepaid, (iii) by reputable
overnight express courier or (iv) by certified mail, postage prepaid, return
receipt requested, deposited in any post office in the United States, in any
case, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided from time to time in the
manner set forth above. When sent by facsimile as aforesaid, notices given as
herein provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
9.07 Partial Invalidity. If any clause or provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
9.08 Attorneys Fees. The prevailing party in any litigation,
arbitration or other proceedings arising out of this Agreement shall be
reimbursed by the other party for all costs and expenses incurred in such
proceedings, including reasonable attorneys' fees.
9.09 Force Majeure. No party hereto shall be liable for delay or
default in performing hereunder, other than a delay or default in payment of any
monies due to the other party, if such performance is delayed or prevented by a
Force Majeure Condition. "Force Majeure Condition" means any condition or event
beyond the reasonable control of the party affected thereby, including fire,
explosion, or other casualty, act of God, war or civil disturbance, acts of
public enemies, embargo, the performance or non-performance of third parties,
acts of city, state, local or federal governments in their sovereign,
regulatory, or contractual capacity, labor difficulties, and strikes, but
specifically excluding a party's failure to be Year 2000 Compliant. If a Force
Majeure Condition occurs, the party delayed or unable to perform shall give
prompt notice of such occurrence to the other party. The party affected by the
other party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
MARKETING AGREEMENT - PAGE 6
<PAGE>
9.10 Independent Contractor. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement will be construed (a) to give either party the power
to direct and control the day-to-day activities of the other, (b) to constitute
the parties as partners, joint venturers, owners or otherwise as participants in
a joint or common undertaking, or (c) to allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.
9.11 Confidentiality. The terms of this Agreement, and all information
transmitted between or among the parties pursuant hereto or in connection
herewith, including, without limitation, any information concerning WIRELESS
PROVIDER's customers, shall be deemed "Confidential Information" and shall be
maintained in confidence by all parties and shall be disclosed only to such of
the receiving party's employees or agents having a need to know the Confidential
Information for the purposes of performing obligations under this Agreement. No
party may disclose the Confidential Information to any third party, except as
may be required pursuant to a lawfully issued subpoena or other formal demand
for the production of information by a court of competent jurisdiction or a
regulatory body with jurisdiction over the party. In the event any such demand
is made, the party ordered to produce the Confidential Information shall
promptly notify the other party and shall use its best efforts to maintain the
confidentiality of the Confidential Information. In addition, if either party
determines that this Agreement is a "material contract," that party may file
this Agreement with the Securities and Exchange Commission, provided that it
notifies the other party at least fifteen (15) days prior to such filing and
cooperates with the other party to seek confidential treatment of provisions
reasonably designated by the other party for such treatment. Each party may use
Confidential Information obtained solely as a result of this Agreement only for
the purpose of performing hereunder. Neither party may use the other party's
Confidential Information for any other purpose without the express prior written
agreement of the party which disclosed the Confidential Information.
PREFERRED VOICE, INC. RURAL CELLULAR CORPORATION
on behalf of itself and its wholly owned
subsidiaries and affiliates
By: /s/ Richard K. Stone By: Scott G. Donlea
---------------------------- -----------------------------------
Name: Richard K Stone Name: Scott G. Donlea
Title: Vice President Title: Vice President Market Development
6500 Greenville Avenue Address: 3905 Dakota Street SW
Suite 570 Alexandria, MN 56308 USA
Dallas, Texas 75206
Fax No.: 214-265-9663 Fax No.: (320) 808-2181
Phone: 214-265-9580 Phone: (320) 762-2000
MARKETING AGREEMENT - PAGE 7
<PAGE>
EXHIBIT A
=========
PREFERRED VOICE, INC.
=====================
PRODUCT DESCRIPTIONS
====================
SAFETY DIALING is a service that allows the person
placing the call to access the
WIRELESS PROVIDER'S network, dial
the assigned access code (such as**)
on the keypad, speak a name from his
or her directory. That name's prog-
rammed number will then be dialed.
EXHIBIT A
<PAGE>
EXHIBIT B
=========
Hardware Configuration (24 pts)
ITEM DESCRIPTION
FTU-2000A CUSTOM COMPUTER
PIIBX4OP38 PENT 11 400MHz CPU
PIIBX33P38 PENT 11 333MHz CPU
64M040 64MB DIMM RAM
FD015 3.5" FDD, BLACK
HD91S 9.1GB HDD, SCSI
ALM-100B-H 4.3GB HDD, SCSI
CDKIT1 ALARM BOARD
CDT240A DUAL SLIM CD-ROM
SCSR03 SLIM LINE CD-ROM
MD566A JUMPERABLE FAX/MDM
MNT40 MS WIN NT 4.0
240SCT1 PORT RESOURCE
ANTARES VOICE RESOURCE
PRO 2V ALARM RESOURCE
PORT FEE VOICE REC RESOURCE
Optional Hardware Components
48v Inverter
Master Switch
Traffic Engineering
Users Ports
1000 11
2000 20
3000 26
Spares Kit
EXHIBIT B
<PAGE>
EXHIBIT C
WIRELESS PROVIDER Locations
[to be added]
Rural Cellular Corporation
3905 Dakota Street SW
Alexandria, Minnesota 56308
320-762-2000
RSA's
RSA 1
RSA 2
RSA 3
RSA 5
RSA 6
South Dakota RSA 4
Unicel - Maine
Bomarc Industrial Park
Bangor, ME
207-942-6558
RSA's
Oxford - RSA 1
Somerset - RSA 2
Kennebec - RSA 3
MSA
Bangor
RCC Atlantic, Inc.
1100 Mountain View Drive
Colchester, VT 05446-1919
802-654-5000
RSA's
Massachusetts - RSA 1
New Hampshire - RSA 1
New York - RSA 2
Vermont - RSA 1
Vermont - RSA 2
MSA
Burlington - MSA
EXHIBIT C
<PAGE>
EXHIBIT D
=========
Form of Acceptance Certificate
==============================
The undersigned, an authorized representative of
_________________________, a ______________________ corporation, on behalf of
itself and its wholly owned subsidiaries and affiliates ("WIRELESS PROVIDER"),
in his/her capacity as _______________________, does hereby certify that (a) the
testing period (as such term is defined in the Software License Agreement, dated
as of _______________, 1999 (the "Agreement"), by and between Preferred Voice,
Inc. ("PVI") and WIRELESS PROVIDER with respect to the System (as defined in the
Agreement) purchased or licensed by WIRELESS PROVIDER has been successfully
completed, (b) the System satisfies the requirements of the Specifications (as
defined in the Agreement) and (c) the System is hereby accepted by WIRELESS
PROVIDER.
Date:
----------------------------- ----------------------------------------
By:
-----------------------------------
Printed Name:
-------------------------
EXHIBIT D
<PAGE>
EXHIBIT E
=========
Revenue Sharing Fees
====================
[Confidential Treatment Requested]** OF THE FIRST [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF THE NEXT [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF ALL REVENUE IN EXCESS OF [Confidential
Treatment Requested]** FOR EACH SYSTEM
For purposes of this Agreement, "Revenue" shall equal the greater of:
the amount that would have been received by WIRELESS CARRIER if the charges set
forth in the Exhibit E-1 had been charged to each End User using the Services
described in Exhibit E-1, except that if WIRELESS PROVIDER is offering reduced
rates or free service as part of a promotion, only a new End User's actual
revenue shall be accrued for the promotion during the first thirty (30) days of
provision of the Services to the new End User; or
the actual revenue received from End Users for the Services.
EXHIBIT E
<PAGE>
EXHIBIT E-1
Safety Dialing [Confidential Treatment Requested]**
------------------------------------
EXHIBIT E-1
<PAGE>
EXHIBIT F
=========
Training
1. Services Training --
o Target Audience
-- Product Manager
-- Product Marketing
o Contents
-- Complete review of each PVI service description and application
-- Market Position -- Target Market
2. System Installation and Maintenance Training --
Installation
o Hardware Installation
o T-1 Configuration
o VIP Programming
-- SCC
-- DID
Maintenance
o Alarm Systems
o Hardware Replacement
o Hardware Expansion
3. Provisioning
EXHIBIT F
EXHIBIT 10.28
SOFTWARE LICENSE AGREEMENT
This Software License Agreement is made as of this 21st day of September,
1999, between Preferred Voice, Inc., a Delaware corporation ("Licensor") and
Southwest Texas Telephone Company, a Texas corporation, on behalf of itself and
its wholly owned subsidiaries and affiliates ("Licensee"). Licensor and Licensee
are collectively referred to in this Agreement as the "Parties."
BACKGROUND INFORMATION
Licensor has developed a system (the "System") that when interconnected
with a telephone switching system is capable of performing the services (the
"Services") described in a Marketing Agreement between Licensor and Licensee of
even date (the "Marketing Agreement"). Each System consists of the hardware,
certain third party software (the "Third Party Software") and certain
proprietary application software developed by Licensor (the "Application
Software"). Licensee is a licensed local exchange carrier that is currently
providing telecommunications service in local calling areas described in the
Marketing Agreement (the "Service Areas"). Licensee wishes to offer the Services
to end users ("End Users") under its own brand in conjunction with its
telecommunications services, and Licensor has agreed to install its System in
Licensee's location for that purpose pursuant to the Marketing Agreement.
In consideration of the mutual promises made in this Agreement, Licensor
and Licensee agree that the terms and conditions set forth as follows will apply
to the license of Application Software.
ARTICLE 1. LICENSE AND PROCUREMENT
1.01 LICENSE. Pursuant to this Agreement, Licensor hereby grants to
Licensee a nontransferable, non-exclusive license to use the Application
Software, together with all subsequent improvements thereto in the Service Area.
1.02 TERM. The initial term of this Agreement shall be co-terminus wit
Marketing Agreement.
ARTICLE 2. LIMITATIONS ON USE
2.01 GENERAL USE. Licensee agrees to use the Application Software solely to
provide the Services to End Users. Licensee may private brand the Services it
offers.
SOFTWARE LICENSE AGREEMENT - 1
<PAGE>
2.02 LOCATION.
(a) Use of Application Software. The Application Software may be used
only on the hardware provided by Licensor ("Designated Hardware") at
Licensee's switch locations in the Licensed Areas.
(b) Temporary Use of Non-Desiqnated Hardware. Licensee may temporarily
install and use the Application Software on hardware other than Designated
Hardware, but only if the Designated Hardware cannot be used because of
hardware, software or other malfunction and only until the Designated
Hardware is returned to operation. Licensee shall not install or use the
Application Software on such replacement hardware without the prior verbal
consent of Licensor. Licensor shall not unreasonably withhold this consent
if the proposed replacement hardware meets or exceeds the Specifications
for the Designated Hardware.
2.03 COPIES. Licensee may make one "backup copy" of the Application
Software for archival purposes at each location; any such archival copy may be
stored at the location where the products are installed and operational or at
any such reputable off-site storage facility or facilities, as the case may be,
which Licensee, in its reasonable judgment, shall select to maintain and protect
such archival copy for purposes of disaster recovery. Licensee shall not
otherwise copy any portion of the Software. Licensee shall reproduce and include
Licensor's applicable copyright notice, patent notice, trademark, or service
mark on any copies of the Application Software.
ARTICLE 3. PROPERTY RIGHTS
3.01 TITLE TO SOFTWARE. Title to the Application Software is reserved for
Licensor. Licensee acknowledges and agrees that Licensor is and shall remain the
owner of the Application Software and shall be the owner of all copies of the
Application Software made by Licensee.
3.02 CONFIDENTIALITY OF SOFTWARE. Licensee acknowledges that the
Application Software is confidential in nature and constitutes a trade secret
belonging to Licensor. Licensee agrees to hold the Application Software in
confidence for Licensor and not to sell, rent, license, distribute, transfer, or
disclose the Application Software or its contents, including methods or ideas
used in the Application Software, to anyone except to employees of Licensee when
disclosure to employees is necessary to use the license granted in this
Agreement. Licensee shall instruct all employees to whom any such disclosure is
made that the disclosure is confidential and that the employee must keep the
Application Software confidential by using the same care and discretion that
they use with other data designated by Licensee as confidential. The
confidentiality requirements of this Section shall be in effect both during the
term of this Agreement and after it is terminated, provided, that the foregoing
SOFTWARE LICENSE AGREEMENT - 2
<PAGE>
restrictions shall not apply to information: (a) generally known to the public
or obtainable from public sources; (b) readily apparent from the keyboard
operations, visual display, or output reports of the Application Software; (c)
previously in the possession of Licensee or subsequently developed or acquired
without reliance on the Application Software; or (d) approved by Licensor for
release without restriction.
3.03 SECURITY. Licensee agrees to keep the Software in a secure place,
under access and use restrictions designated to prevent disclosure of the
Software to unauthorized persons. Licensee agrees to at least implement the
security precautions that it normally uses to protect its own confidential
materials and trade secrets.
3.04 DISCLOSURE AS BREACH. Licensee agrees that any disclosure of the
Software to a third party, except as set forth above, constitutes a material
breach of this Agreement, entitling Licensor to the benefit of Section 5.01
hereof.
3.05 REMOVAL OF MARKINGS. Licensee agrees not to remove, mutilate, or
destroy any copyright, patent notice, trademark, service mark, other proprietary
markings, or confidential legends placed on or within the Software.
ARTICLE 4. WARRANTY PROVISIONS
4.01 WARRANTIES.
(a) General. Licensor warrants that (i) it has good title to the
Application Software and the right to license its use to Licensee free of
any proprietary rights, liens, or encumbrances of any other party, (ii) the
Application Software will permit the System to provide Services when
properly interconnected to Licensee's functioning switches described in the
Marketing Agreement (provided, that any modification of the Application
Software by any persons other than Licensor shall void the Warranty in this
clause (iii) commencing on installation thereof, and for a period of 90
days thereafter, (iv) the Software shall be free of viruses, bugs or
contaminants which may cause damage to Licensee's systems or interrupt
Licensee's utilization of a System; and (v) the media in which the Software
is contained shall be free of material defects in materials or workmanship.
(b) Year 2000. Licensor warrants that the Application Software
delivered or modified by Licensor is, or will be, Year 2000 Compliant (as
defined below). Year 2000 Compliant software that is intended to
interoperate with third party products (including Third Party Software) as
described herein will be compatible and interoperate in such manner as to
process between them, as applicable, date related data correctly as
described in the definition of "Year 2000 Compliant." Except as set forth
in the preceding sentence, (i) Licensor assumes no responsibilities or
obligations to cause third party products to function with the Application
Software; and (ii) Licensor will not be in breach of this warranty for any
failure of the Application Software to be Year 2000 Compliant if such
SOFTWARE LICENSE AGREEMENT - 3
<PAGE>
failure results from the inability of any software, hardware, or systems of
Licensee or any third party to be Year 2000 Compliant. "Year 2000 Compliant"
means that (a) neither the performance nor functionality of the Application
Software will be affected by dates prior to, during and after the year 2000, (b)
no value for current date will cause any interruption in the operation of the
Application Software; (c) the year 2000 is recognized as a leap year; (d) in all
interfaces and data storage the century, in any date, is specified either
explicitly or by unambiguous algorithms or inferencing rules and (e) date-based
functionality of the Application Software behaves and will behave consistently
for dates prior to, during and after the year 2000.
4.02 REMEDIES. In the event of any nonconformity or defect in the
Application Software (or any other breach with respect to the condition or
operation of the Application Software) for which Licensor is responsible,
Licensor shall, during the foregoing respective warranty periods, (A) provide
reasonable efforts to correct or cure such nonconformity, defect, contaminant or
breach (which may include a workaround for system errors), (13) at Licensor's
option, replace the relevant part of the Application Software in lieu of curing
such nonconformity, defect, contaminant or breach, or (C) if Licensor determines
that neither of the foregoing is commercially practicable, remove the System and
terminate the Marketing Agreement and this License Agreement.
4.03 WARRANTY DISCLAIMER. LICENSOR DOES NOT REPRESENT OR WARRANT THAT ALL
ERRORS WILL BE CORRECTED. LICENSEE AGREES THAT LICENSEE'S SOLE AND EXCLUSIVE
REMEDY FOR THE DEFECTS DESCRIBED IN THIS SECTION SHALL BE LIMITED TO THE
CORRECTIVE ACTION DESCRIBED IN THIS SECTION. THE EXPRESS WARRANTIES SET FORTH IN
THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.04 LIMITATION OF REMEDIES. LICENSEE AGREES THAT ITS EXCLUSIVE REMEDIES,
AND LICENSOR'S ENTIRE LIABILITY WITH RESPECT TO THE SOFTWARE IS AS SET FORTH IN
THIS AGREEMENT. LICENSEE FURTHER AGREES THAT LICENSOR SHALL NOT BE LIABLE TO
LICENSEE FOR ANY INDIRECT DAMAGES, INCLUDING ANY LOST PROFITS, LOST SAVINGS, OR
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF ITS USE OR INABILITY
TO USE THE SOFTWARE OR THE BREACH OF ANY EXPRESS OR IMPLIED WARRANTY, EXCEPT AS
SET FORTH IN SECTION 4.05.
4.05 INDEMNIFICATION.
(a) Infringement. Licensor agrees to indemnify and hold Licensee and
its directors, officers, employees and agents, harmless against any and all
claims, demands, actions, losses, liabilities, judgments, settlements,
SOFTWARE LICENSE AGREEMENT - 4
<PAGE>
awards and costs (including reasonable attorneys' fees and expenses)
(collectively, "Liabilities") arising out of or related to any claim
against Licensee by a third party that Licensee's use or possession of the
Application Software (or the license granted to Licensee hereunder with
respect thereto), infringes or violates any United States patent, copyright
or other proprietary right of any third party; provided that Licensee gives
Licensor prompt notice of any such claim of which it has actual knowledge
and cooperates fully with Licensor in the defense of such claim. Licensor
shall have the exclusive right to defend and settle at its sole discretion
and expense all suits or proceedings arising out of the foregoing. Licensee
shall not have the right to settle any action, claim or threatened action
without the prior written consent of Licensor (at Licensor's sole and
absolute discretion). In case use of the Application Software is forbidden
by a court of competent jurisdictionbecause of proprietary infringement,
Licensor shall promptly, at its option, (i) procure for Licensee the rights
to continue using the Application Software; (ii) replace the infringing
Application Software with non-infringing Application Software of equal
performance and quality which are materially the functional equivalent of
the infringing Application Software; (iii) modify the infringing
Application Software so it becomes non- infringing while materially
maintaining the functionality thereof; or (iv) if none of the foregoing are
commercially practicable, remove the System and terminate the Marketing
Agreement and this License Agreement Licensor will then be released from
any further obligation whatsoever to Licensee with respect to the
infringing part of the Application Software. Nothing in this Section shall
be deemed to make Licensor liable for any patent or copyright infringement
suits that arise in connection with (a) designs, modifications, use,
integration or data furnished by Licensee if infringement would have been
avoided by not using or combining the Application Software with such other
programs or data or (b) if infringement would have been avoided by the use
of an updated version made available to Licensee.
(b) Other. Licensor agrees to indemnify and hold Licensee harmless
against any and all Liabilities arising out of Licensor's negligent acts or
omissions, intentional torts, or material breach of this Agreement.
ARTICLE 5. TERMINATION
5.01 CAUSE FOR TERMINATION. The license granted in this Agreement shall
terminate automatically and without further notice upon the occurrence of
expiration of the term, specified in Section 1.02 or of any renewal term in the
absence of a subsequent renewal in accordance with the terms of this Agreement.
Licensor may terminate this Agreement in the event that (a) Licensee discloses
the Software to a third party, whether directly or indirectly and whether
inadvertently or purposefully, or (b) Licensee attempts to use, copy, license,
or convey the Software in any manner contrary to the terms of this Agreement or
in derogation of Licensor's proprietary rights in the Application Software. In
addition, either party may terminate this Agreement (and all licenses granted
hereunder) at any time if (a) the other party breaches any term hereof (other
SOFTWARE LICENSE AGREEMENT - 5
<PAGE>
than breaches by Licensee pursuant to the preceding sentence) or the Marketing
Agreement and fails to cure such breach within 30 days after receipt of written
notice, (b) the other party shall be or becomes insolvent, (c) the other party
makes an assignment for the benefit of creditors, (d) there are instituted by
the other party proceedings in bankruptcy or under any insolvency or similar law
or for reorganization, receivership or dissolution, (e) there are instituted
against the other party proceedings in bankruptcy or under any insolvency or
similar law or for reorganization, receivership or dissolution, which
proceedings are not dismissed within 60 days, or (f) the other party ceases to
do business.
5.02 EFFECT OF TERMINATION. Licensee agrees that on termination under
Section 5.01, Licensor may recover all copies of Application Software that have
been delivered to or made by Licensee, and (on Licensor's request) Licensee
shall destroy all copies of the Application Software that are not recovered by
Licensor, certify to Licensor that it has retained no copies of the Application
Software, and acknowledge that it may no longer use the Application Software.
Upon termination of the license, Licensor's obligations under this Agreement
shall cease.
ARTICLE 6. MISCELLANEOUS
6.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF LAW
RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO THE
LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
6.02 HEADINGS. Headings used in this Agreement are to facilitate reference
only, are not a part of this Agreement, and will not in any way affect the
interpretation hereof. The use herein of the word "including," when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not non- limiting
language (such as "without limitation," or "but not limited to," or words of
similar import) is used with references thereto, but rather shall be deemed to
refer to all other items and matters, that reasonably could fall within the
broadest possible scope of such general statement, term or matter.
6.03 ASSIGNMENT. This Agreement, and all rights and obligations hereunder,
are personal as to the parties hereto and may not be assigned, in whole or in
part, by any of the parties to any other person, firm or corporation without the
prior written consent thereto by the other party hereto, which consent will not
be unreasonably withheld; except that either party may freely assign any or all
of its rights and obligations hereunder to any affiliate. An affiliate is (a) an
entity that owns all or substantially all of the outstanding stock of the entity
so assigning, (b) an entity all or substantially all of whose stock is owned by
the entity so assigning, or (c) an entity under common ownership with the entity
so assigning. Such assignee entity shall thereupon be free to assign the rights
SOFTWARE LICENSE AGREEMENT - 6
<PAGE>
and obligations under this Agreement to any other affiliate. Any assignment
contrary to the terms hereof shall be null and void and of no force or effect.
6.04 FAILURE OR PARTIAL EXERCISES. No failure on the part of any party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
6.05 ENTIRE AGREEMENT, AMENDMENTS. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
Licensee did not rely on any representations or warranties of Licensor or its
employees or agents other than those set forth in this Agreement. This Agreement
may not be modified or amended except by a writing that states that it is an
amendment to this Agreement and which is signed by duly authorized
representative of the parties.
6.06 NOTICES. All notices required or permitted to be given hereunder shall
be in writing and shall be valid and sufficient if dispatched either (i) by hand
delivery, (ii) by facsimile transceiver, with confirming letter mailed promptly
thereafter by first class mail, postage prepaid, (iii) by reputable overnight
express courier or (iv) by certified mail, postage prepaid, return receipt
requested, deposited in any post office in the United States, in any case,
addressed to the addresses set forth on the signature page of this Agreement, or
such other addresses as may be provided from time to time in the manner set
forth above. When sent by facsimile as aforesaid, notices given as herein
provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
6.07 PARTIAL INVALIDITY. If any clause or provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
6.08 ATTORNEYS FEES. The prevailing party in any litigation, arbitration or
other proceedings arising out of this Agreement shall be reimbursed by the other
party for all costs and expenses incurred in such proceedings, including
reasonable attorneys' fees.
SOFTWARE LICENSE AGREEMENT - 7
<PAGE>
6.09 FORCE MAJEURE. No party hereto shall be liable for delay or default in
performing hereunder, other than a delay or default in payment of any monies due
to the other party, if such performance is delayed or prevented by a Force
Majeure Condition. "Force Majeure Condition" means any condition or event beyond
the reasonable control of the party affected thereby, including fire, explosion,
or other casualty, act of God, war or civil disturbance, acts of public enemies,
embargo, the performance or non-performance of third parties, acts of city,
state, local or federal governments in their sovereign, regulatory, or
contractual capacity, labor difficulties, and strikes, but specifically
excluding a party's failure to be Year 2000 Compliant. If a Force Majeure
Condition occurs, the party delayed or unable to perform shall give prompt
notice of such occurrence to the other party. The party affected by the other
party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
6.10 INDEPENDENT CONTRACTOR. The relationship of the parties established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement will be construed (a) to give either party the power to direct and
control the day-to-day activities of the other, (b) to constitute the parties as
partners, joint venturers, owners or otherwise as participants in a joint or
common undertaking, or (c) to allow either party to create or assume any
obligation on behalf of the other for any purpose whatsoever.
PREFERRED VOICE, INC. Southwest Texas Telephone Company
on behalf of itself and its wholly owned
subsidiaries and affiliates
By: /s/ Richard K. Stone By: /s/ Gary C. Gilmer
--------------------- ---------------------
Name: Richard K. Stone Name: Gary C. Gilmer
Title: Vice President Title: President
6500 Greenville Avenue Address: P.O. Box 128
Suite 750 Rocksprings, TX 78880
Dallas, Texas 75206
Fax No.: 214-265-9663 FAX No.: 830-683-4190
Phone: 214-265-9580 Phone: 830-683-2111
SOFTWARE LICENSE AGREEMENT - 8
EXHIBIT 10.29
MARKETING AGREEMENT
This Marketing Agreement is made as of the 21st day of September, 1999,
between Preferred Voice, Inc., a Delaware corporation ("PVI") and Southwest
Texas Telephone Company, a Texas corporation, on behalf of itself and its wholly
owned subsidiaries and affiliates ("ILEC"). PVI and ILEC are collectively
referred to in this Agreement as the "Parties."
BACKGROUND INFORMATION
PVI has developed a system (the "System") that when interconnected with a
telephone switching system is capable of performing the services described in
Exhibit A attached hereto and incorporated herein by reference (the "Services").
Each System consists of the hardware described in Exhibit B, certain third party
software and certain proprietary application software developed by PVI. ILEC is
a licensed local exchange carrier that is currently providing telecommunications
service in the local calling areas described in Exhibit C. ILEC wishes to offer
the Services to end users ("End Users") under its own brand in conjunction with
its telecommunications services.
In consideration of the mutual promises made in this Agreement, PVI and
ILEC agree that the terms and conditions set forth as follows will apply to the
license of Application Software.
ARTICLE 1. INSTALLATION
1.01 INSTALLATION. PVI shall install its Systems at ILEC's switch locations
set forth in Exhibit C to interconnect with switches described in Exhibit C. The
System will remain the property of PVI. ILEC shall prepare the site in
accordance with PVI's specifications. Installation of Systems will be completed
within 90 days.
PVI agrees that it will comply with all ILEC's security, confidentiality
and regulatory requirements in relation to the System installed at any site. In
addition, PVI agrees to use all reasonable efforts to install Systems so that
they shall comply in all material respects with all federal, state, and local
laws and regulations in force on the date hereof, which directly impose
obligations upon PVI or the applicable manufacturer.
1.02 PVI TESTING. PVI shall test the Systems to ensure that they work
properly. The testing period shall (i) commence promptly upon the completion of
installation of the System at the sites, but in no event later than five (5)
days following such completion of installation (the "Commencement Date"), and
(ii) conclude upon acceptance by as described in Section 1.03 below.
Should material deficiencies arise in the performance of the System during
testing, PVI shall inform ILEC promptly thereof by submitting notice, including
a written, reasonably detailed description of each deficiency, to ILEC. PVI
shall then use reasonable efforts to cure the noncompliance. ILEC shall use its
best efforts to assist PVI in curing such noncompliance. Upon completion of such
cure, PVI shall give notice to ILEC thereof. The total period of time that may
be spent on the testing period shall not exceed ninety (90) days from the
Commencement Date. If PVI, using commercially reasonable efforts, is unable to
**[Confidential Treatment] indicates portions of this document that have been
deleted from this document and have been separately filed with the Securities
and Exchange Commission.
MARKETING AGREEMENT - Page 1
<PAGE>
cure any material deficiency of the System within 90 days of the Commencement
Date, then following notice thereof either party may give the other party thirty
(30) days' written notice of its election to terminate this Agreement and the
reasons therefor.
1.03 ILEC ACCEPTANCE. PVI shall inform ILEC in writing of the completion of
PVI's testing under Section 1.02. ILEC will thereupon commence testing of the
System, and shall have fourteen (14) days in which to test the functionality of
the System with employees. Upon completion of the fourteen (14) day test period,
ILEC shall either provide PVI with written notice of any problems revealed in
its tests or deliver PV1 an acceptance certificate, substantially in the form
attached hereto as Exhibit D (the "Acceptance Certificate"). The System shall be
deemed to have been accepted by ILEC upon execution and delivery by ILEC to PVI
of an Acceptance Certificate, executed by an authorized representative of ILEC
or failure of ILEC to provide written notice to PVI of any problems ILEC
discovers within the fourteen (14) day period it is conducting tests.
ARTICLE 2. SALES AND MARKETING
2.01 SALES. ILEC shall use its own judgement in promoting the sale of the
Services, including conducting commercially reasonable advertising campaigns and
maintaining an inventory of collateral support materials for promotion,
advertising, point-of-sale, record keeping, subscriptions, and other items
related to sales of the Services. ILEC shall bill and collect for Services used
by End Users.
2.02 PRICING. The ILEC will determine the prices at which the Services will
be made available to End-Users and any changes to these prices.
2.03 ADVERTISING AND PROMOTIONAL LITERATURE. PVI will assist ILEC in
the development and production of original copy of advertising and collateral
support materials (i.e. layout, verbiage, plates, negatives, dies, and/or other
setup materials) that may be utilized by ILEC for marketing the Services.
2.04. EXCLUSIVITY. ILEC agrees that it will not install, for testing or any
other purposes, any system which competes with PVI's Systems to provide Voice
Recognition dialing service in any calling area that ILEC is authorized to serve
during the term of this Agreement as long as PVI is in compliance with the terms
and conditions of this Agreement. This provision shall not apply within ninety
(90) days of the end of the term.
ARTICLE 3. PAYMENT
ILEC shall pay PV1 a share of ILEC's revenue from the Services determined
from the schedule set forth in Exhibit E. This amount shall be paid monthly on
the fifteenth day of each month for Services billed in the prior month, and
shall be reduced by any amounts paid in prior months on account of billing that
was deemed uncollectible or against which a credit was issued.
MARKETING AGREEMENT - Page 2
<PAGE>
ARTICLE 4. TRAINING AND SUPPORT
4.01 TECHNICAL SUPPORT. During the term of this Agreement, PVI shall
provide a technical support help desk that ILEC may call to report System
troubles twenty-four (24) hours per day, seven (7) days per week basis. PVI
shall troubleshoot the problems and contact the appropriate vendor to resolve
problems that cannot be resolved by actions ILEC may take on PVI's instruction.
During the term of this Agreement, PVI shall provide (i) remote, dial-up System
support, on a twenty-four (24) hours per day, seven (7) days per week basis, and
(ii) packages, generally containing corrections of known software defects and
updates or patches to increase or improve performance and occasionally also
containing minor feature enhancements of existing software, relating to a
current System. ILEC shall provide permanent digital connectivity to each System
for the purpose of off-site software revision and maintenance.
4.02 PROVISIONING. For up to the first six months following installation of
the System, PVI shall update and maintain the customer and names data bases in
the System based on information provided through ILEC. During that period PVI
shall train ILEC's personnel in data base update and maintenance procedures.
ILEC will be responsible for such work after such training period.
4.03 TRAINING. As part of the installation process, PVI shall provide
ILEC's personnel with the initial training and instruction as described on
Exhibit F attached hereto concerning the operation and use of the System by
conducting training sessions at a mutually convenient time at ILEC's facility.
Any additional training services that are requested by ILEC shall be invoiced to
ILEC in accordance with PVI's then prevailing hourly rates. ILEC shall be
responsible for all travel and other expenses of its personnel attending such
training sessions.
ARTICLE 5. TERM
The term of this Agreement shall be ten (10) years; however, on the fifth
(5th) or any succeeding anniversary of the date of this Agreement, the ILEC may
terminate this Agreement by giving notice of its intention not to continue this
Agreement at least sixty (60) days prior to the anniversary.
ARTICLE 6. WARRANTY PROVISIONS
6.01 GENERAL. PVI warrants that the System will provide Services when
properly interconnected to ILEC's functioning switches of the types described in
Exhibit C (provided, that ANY MODIFICATION OF THE SYSTEM BY ANY PERSONS OTHER
THAN PVI SHALL VOID THE WARRANTY IN THIS SECTION 6.01).
6.02 YEAR 2000. PVI warrants that the System delivered or modified by PVI
is, or will be, Year 2000 Compliant (as defined below). Year 2000 Compliant
software that is intended to interoperate with third party products as described
herein will be compatible and inter-operate in such manner as to process between
them, as applicable, date related data correctly as described in the definition
of "Year 2000 Compliant." Except as set forth in the preceding sentence, (i) PVI
assumes no responsibilities or obligations to cause third party products to
function with the System; and (ii) PVI will not be in breach of this warranty
for any failure of the System to be Year 2000 Compliant if such failure results
MARKETING AGREEMENT - Page 3
<PAGE>
from the inability of any software, hardware, or systems of ILEC or any third
party to be Year 2000 Compliant. "Year 2000 Compliant" means that (a) neither
the performance nor functionality of the System will be affected by dates prior
to, during and after the year 2000, (b) no value for current date will cause any
interruption in the operation of the System; (c) the year 2000 is recognized as
a leap year; (d) in all interfaces and data storage the century, in any date, is
specified either explicitly or by unambiguous algorithms or inferencing rules;
and (e) date-based functionality of the System behaves and will behave
consistently for dates prior to, during and after the year 2000.
ARTICLE 7. TERMINATION
7.01 CAUSE FOR TERMINATION. This Agreement shall terminate automatically
and without further notice upon the occurrence of expiration of the term,
specified in Article 5 or of any renewal term in the absence of a subsequent
renewal in accordance with the terms of this Agreement. PVI may terminate this
Agreement in the event that revenue sharing payments to PVI are less than $2000
per System per month for three consecutive months, unless ILEC pays PVI the
shortfall. In addition, either party may terminate this Agreement at any time if
(a) the other party breaches any term hereof and fails to cure such breach
within 30 days (or ten days in the case of a failure to pay any sum due) after
receipt of written notice, (b) the other party shall be or becomes insolvent,
(c) the other party makes an assignment for the benefit of creditors, (d) there
are instituted by the other party proceedings in bankruptcy or under any
insolvency or similar law or for reorganization, receivership or dissolution,
(e) there are instituted against the other party proceedings in bankruptcy or
under any insolvency or similar law or for reorganization, receivership or
dissolution, which proceedings are not dismissed within 60 days, or (f) the
other party ceases to do business.
7.02 EFFECT OF TERMINATION. ILEC agrees that on termination under Section
7.01, PVI may recover all Systems that have been installed. Upon termination of
the license, PVI's obligations under this Agreement shall cease. The termination
or expiration of this Agreement shall in no way relieve either party from its
obligation to pay the other any sums accrued hereunder prior to such termination
or expiration.
ARTICLE 8. INSURANCE
Each party hereto shall maintain, during the term of this Agreement, the
following insurance coverage as well as all other insurance required by law in
the jurisdictions where the work is performed: (a) worker's compensation and
related insurance as required by law; (b) employer's liability insurance with a
limit of at least five hundred thousand ($500,000) dollars for each occurrence;
(c) comprehensive general liability insurance, with a limit of at least one
million ($1,000,000) dollars per occurrence; and (d) comprehensive motor vehicle
liability insurance with limits of at least one million ($1,000,000) dollars for
bodily injury including death, to any one person, three hundred thousand
($300,000) dollars for each occurrence of property damage, and one million
($1,000,000) dollars for each occurrence. Each party shall (i) furnish the other
prior to the start of the relevant work, if requested by the other, certificates
or adequate proof of the insurance required by this Section and (ii) notify the
other in writing at least thirty (30) days prior to cancellation of or any
material change in the policy. Notwithstanding the above, each party shall have
the option where permitted by law to self-insure any or all of the foregoing.
MARKETING AGREEMENT - Page 4
<PAGE>
ARTICLE 9. MISCELLANEOUS
9.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF LAW
RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO THE
LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
9.02 HEADINGS. Headings used in this Agreement are to facilitate reference
only, are not a part of this Agreement, and will not in any way affect the
interpretation hereof. The use herein of the word "including," when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not non-limiting
language (such as "without limitation," or "but not limited to," or words of
similar import) is used with references thereto, but rather shall be deemed to
refer to all other items and matters, that reasonably could fall within the
broadest possible scope of such general statement, term or matter.
9.03 ASSIGNMENT. This Agreement, and all rights and obligations hereunder,
are personal as to the parties hereto and may not be assigned, in whole or in
part, by any of the parties to any other person, firm or corporation without the
prior written consent thereto by the other party hereto, WHICH CONSENT WILL NOT
BE UNREASONABLY WITHHELD; except that either party may freely assign any or all
of its rights and obligations hereunder to any affiliate. An affiliate is (a) an
entity that owns all or substantially all of the outstanding stock of the entity
so assigning, (b) an entity all or substantially all of whose stock is owned by
the entity so assigning, or (c) an entity under common ownership with the entity
so assigning. Such assignee entity shall thereupon be free to assign the rights
and obligations under this Agreement to any other affiliate. Any assignment
contrary to the terms hereof shall be null and void and of no force or effect.
9.04 FAILURE OR PARTIAL EXERCISES. No failure on the part of any party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
9.05 ENTIRE AGREEMENT, AMENDMENTS. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
ILEC did not rely on any representations or warranties of PVI or its employees
or agents other than those set forth in this Agreement. This Agreement may not
be modified or amended except by a writing that states that it is an amendment
to this Agreement and which is signed by duly authorized representative of the
parties.
9.06 NOTICES. All notices required or permitted to be given hereunder shall
be in writing and shall be valid and sufficient if dispatched either (i) by hand
delivery, (ii) by facsimile transceiver, with confirming letter mailed promptly
thereafter by first class mail, postage prepaid, (iii) by reputable overnight
MARKETING AGREEMENT - Page 5
<PAGE>
express courier or (iv) by certified mail, postage prepaid, return receipt
requested, deposited in any post office in the United States, in any case,
addressed to the addresses set forth on the signature page of this Agreement, or
such other addresses as may be provided from time to time in the manner set
forth above. When sent by facsimile as aforesaid, notices given as herein
provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
9.07 PARTIAL INVALIDITY. If any clause or provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
9.08 ATTORNEYS FEES. The prevailing party in any litigation, arbitration or
other proceedings arising out of this Agreement shall be reimbursed by the other
party for all costs and expenses incurred in such proceedings, including
reasonable attorneys' fees.
9.09 FORCE MAJEURE. No party hereto shall be liable for delay or default in
performing hereunder, other than a delay or default in payment of any monies due
to the other party, if such performance is delayed or prevented by a Force
Majeure Condition. "Force Majeure Condition" means any condition or event beyond
the reasonable control of the party affected thereby, including fire, explosion,
or other casualty, act of God, war or civil disturbance, acts of public enemies,
embargo, the performance or non-performance of third parties, acts of city,
state, local or federal governments in their sovereign, regulatory, or
contractual capacity, labor difficulties, and strikes, but specifically
excluding a party's failure to be Year 2000 Compliant. If a Force Majeure
Condition occurs, the party delayed or unable to perform shall give prompt
notice of such occurrence to the other party. The party affected by the other
party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
9.10 INDEPENDENT CONTRACTOR. The relationship of the parties established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement will be construed (a) to give either party the power to direct and
control the day-to-day activities of the other, (b) to constitute the parties as
partners, joint venturers, owners or otherwise as participants in a joint or
common undertaking, or (c) to allow either party to create or assume any
obligation on behalf of the other for any purpose whatsoever.
MARKETING AGREEMENT - Page 6
<PAGE>
9.11 REGULATION. Both parties understand that the ILEC is a regulated
entity and nothing in this agreement shall have the effect of requiring ILEC to
violate any rule or law of the federal or state jurisdiction.
PREFERRED VOICE, INC. Southwest Texas Telephone Company
By:/s/ Richard K. Stone By:/s/ Gary C. Gilmer
--------------------- -----------------------
Name:Richard K. Stone Name: Gary C. Gilmer
Title: Vice-President Title: President
6500 Greenville Avenue Highway 55 South
Suite 570 Rocksprings, Texas 78880
Dallas, Texas 75206 email: [email protected]
Fax No.: 214-265-9663 Fax No.: 830-683-4190
Phone: 214-265-9580 Phone: 830-683-2111
MARKETING AGREEMENT - Page 7
<PAGE>
EXHIBIT A
PREFERRED VOICE, INC
PRODUCT DESCRIPTIONS
VIP EMMA 888 SERVICES
Each EMMA 888 service was specifically designed to combine all the following
existing Telco services with the convenience of speech independent dialing. Each
of these services offer specific benefits and features designed to satisfy the
communication needs of the end user.
[GRAPHIC OMITTED]
Long Distance Calling Card
Selective Call Screening
One Number "Locate"
Voice Activated Dialing
Voice Directory
(1) EMMA. THE "SMART" BUSINESS LINE AND EMMA PA (PERSONAL ASSISTANT): The
"SMART" Business Line has a local number on the front and can receive calls
dialed from the public switched telephone network. In addition to the local
number each subscriber may be assigned a dedicated 888 number giving them not
only local but national presence. In addition unlike the traditional telephone
line that is connected to a specific telephone the SBL floats and can be pointed
to ring at any telephone the subscriber selects. This feature is usually
referred as "single number locate." This service may be offered as a supplement
to existing business lines.
ONE NUMBER LOCATE:
The subscriber to this service is assigned his own personal 888 number.
When that number is dialed the calling party is greeted by a prompt.
The call will then be sent to whatever number the user has programmed
in his Locate file (i.e. cellular phone, hotel, pager, etc.) anywhere
in the world.
TELEPHONE CALLING CARD:
The subscriber can use the SBL as a telephone calling card. During the
forwarding prompt, the user touch-tones any key on his phone and speaks
his Personal Identification Number; at the next prompt he may speak a
name from his personal voice directory. The Voice Directory may contain
100 names with their corresponding numbers. For numbers not in the
voice directory, the subscriber simply says, "Dial Number' and SBL will
prompt "Number please". The user then may voice dial the number or
touch-tone using the DTMF pad.
INTELLIGENT CALL SCREENING:
This feature can be turned on or off by the subscriber. When a caller
dials the subscriber's 888 number SBL will prompt for the callers name
and present the name to the subscriber. The subscriber has the option
of accepting the call or sending the call to their voice mail.
EXHIBIT A - Page 1
<PAGE>
(2) EMMA CD (CORPORATE DIRECT):
Businesses that have multiple individuals with EMMA PA numbers can avoid having
to remember or look-up everyone's personal EMMA PA number by using the EMMA CD.
The caller dials the dedicated EMMA CD number and simply speaks the called
person's name and the call is quickly forwarded to his current programmed locate
number.
(3) EMMA VO (VIRTUAL OFFICE)
This service configuration was designed for the group that does not have a
single physical office or whose members are out of their offices consistently.
EMMA VO allows the group to have a single number. When there is a call for a
member, EMMA will forward the call to the member's office. If he is out of the
office, EMMA will locate a member if so desired or will take a message. EMMA
provides all of the SO/HO type of business requirements including single number,
Locate, personal directory and access to voice mail.
(4) EMMA FF (FAMILY AND FRIENDS):
This service was developed to allow anyone that has the subscriber's dedicated
888 number to access the subscribers Voice Directory. This allows the subscriber
to give their number to a son in college, a daughter in a distant city, etc. At
the subscriber's discretion, EACH one of the callers can call anyone whose name
is in the Voice Directory.
EMMA FF. "LOCATE":
This service also allows the owner to program any number in his Locate
file. The caller speaks "Locate" and the call is instantly sent to the
owner's cell phone, pager, office, or any number he desires.
EMMA FF. "TELEPHONE CALLING CARD":
The owner turns the service into a fully functional Telephone Calling
Card by speaking "Dial Number". EMMA will prompt for a PIN. Once the
PIN has been verified, the service prompts "Number please" and the user
may then speak the number or use DTMF from the telephone pad.
VIP EMMA
Inbound Corporate extension directory - This directory stores the subscriber's
internal names and extensions. When Emma receives a call, she compares the
callers request to the stored names and extensions and forwards the calls
accordingly. The directory is customized for each subscriber and can include
names, departments, and even branches at different locations.
Outbound corporate directory - (optional service) One or more outbound corporate
directories can be created to facilitate outbound calling. For example, a
company could create directories for branches, vendors, clients, etc. The user
accesses Emma through an extension number or DID and simply speaks the directory
listing and the call is connected, eliminating the need to look-up or dial the
number.
EXHIBIT A - Page 2
<PAGE>
Outbound Personal directory - (optional service) A personal directory is a
directory created for an individual user and is accessed with the use of an
authorization code or ANI. Individuals within the Company may want a directory
of their personal frequently called names.
Telephone Calling Card - Any company utilizing Emma can issue, track, and
terminate calling cards on a real-time basis. Calling cards are activated
instantaneously. Effectively, an Emma user becomes a "virtual long-distance
company." This service can be restricted to specific users or specific phone
numbers only.
This document and its attachments are confidential and proprietary information,
the exclusive rights to which are the sole property of Preferred Voice, Inc.
Upon receipt and acceptance of these materials, the recipient agrees not to
reproduce or distribute copies electronic, xerographic, verbal, or otherwise)
without the express written permission of Preferred Voice, Inc.
EXHIBIT A - Page 3
<PAGE>
EXHIBIT B
Hardware Configuration (24 pts)
ITEM DESCRIPTION
FTU-2000A CUSTOM COMPUTER
PIIBX4OP38 PENT II 40OMHz CPU
PIIBX33P38 PENT II 333MHz CPU
64MO40 64MB DIMM RAM
FDO15 3.5" FDD, BLACK
HD91 S 9.1GB HDD, SCSI
ALM-1 OOB-H 4.3GB HDD, SCSI
CDKIT1 ALARM BOARD
CDT240A DUAL SLIM CD-ROM
SCSR03 SLIM LINE CD-ROM
MD566A JUMPERABLE
FAX/MDM
MNT40 MS WIN NT 4.0
240SCT1 PORTRESOURCE
ANTARES VOICE RESOURCE
PR02V ALARM RESOURCE
PORT FEE VOICE REC RESOURCE
Optional Hardware Components
48v Inverter
Master Switch
TRAFFIC ENGINEERING
USERS PORTS
1000 11
2000 20
3000 26
Spares Kit
EXHIBIT B
<PAGE>
EXHIBIT C
ILEC LOCATIONS
Siemans DCO located at Camp Wood, Texas
EXHIBIT C - Page 1 of 1
<PAGE>
EXHIBIT D
FORM OF ACCEPTANCE CERTIFICATE
The undersigned, an authorized representative of [ ], a corporation, on behalf
of itself and its wholly owned subsidiaries and affiliates ("ILEC"), in his/her
capacity as [ ], does hereby certify that (a) the testing period (as such term
is defined in the Software License Agreement, dated as of [ ], 1999 (the
"Agreement"), by and between Preferred Voice, Inc. ("PVI") and ILEC with respect
to the System (as defined in the Agreement) purchased or licensed by ILEC has
been successfully completed, (b) the System satisfies the requirements of the
Specifications (as defined in the Agreement) and (c) the System is hereby
accepted by ILEC.
Date:
------------------ ---------------------------
By:
------------------------
Printed Name:
--------------
EXHIBIT D - Page 1 of 1
<PAGE>
EXHIBIT E
REVENUE SHARING FEES
[Confidential Treatment Requested]** OF THE FIRST [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF THE NEXT [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF ALL REVENUE IN EXCESS OF [Confidential
Treatment Requested]** FOR EACH SYSTEM
Revenue shall be net of un-collectibles and credits. Revenues shall not include
service order revenue related to the installation and disconnection of Services;
however, all installation revenues generated over and above the service order
fee will be Revenue for purposes of this Exhibit E. In addition, any amounts
collected for the Services on account of vouchers distributed to individuals
with disabilities shall be Revenue for purposes of this Exhibit E.
EXHIBIT E - Page 1 of 1
<PAGE>
EXHIBIT F
TRAINING
1. Services Training --
o Target Audience
-- Product Manager
-- Product Marketing
o Contents
-- Complete review of each PVI service description and
application
-- Market Position
-- Target Market
2. System Installation and Maintenance Training --
Installation
o Hardware Installation
o T-1 Configuration
o VIP Programming
-- ScC
-- DID
Maintenance
o Alarm Systems
o Hardware Replacement
o Hardware Expansion
3. Provisioning
EXHIBIT F - Page 1 of 1
EXHIBIT 10.30
SOFTWARE LICENSE AGREEMENT
This Software License Agreement is made as of this 13th day of October,
1999, between Preferred Voice, Inc., a Delaware corporation ("Licensor") and
Kaplan Telephone Company, Inc., a Louisiana corporation, on behalf of itself and
its wholly owned subsidiaries and affiliates ("Licensee"). Licensor and Licensee
are collectively referred to in this Agreement as the "Parties."
BACKGROUND INFORMATION
Licensor has developed a system (the "System") that when interconnected
with a telephone switching system is capable of performing the services (the
"Services") described in a Marketing Agreement between Licensor and Licensee of
even date (the "Marketing Agreement"). Each System consists of the hardware,
certain third party software (the "Third Party Software") and certain
proprietary application software developed by Licensor (the "Application
Software"). Licensee is a licensed local exchange carrier that is currently
providing telecommunications service in local calling areas described in the
Marketing Agreement (the "Service Areas"). Licensee wishes to offer the Services
to end users ("End Users") under its own brand in conjunction with its
telecommunications services, and Licensor has agreed to install its System in
Licensee's location for that purpose pursuant to the Marketing Agreement.
In consideration of the mutual promises made in this Agreement, Licensor
and Licensee agree that the terms and conditions set forth as follows will apply
to the license of Application Software.
ARTICLE 1. LICENSE AND PROCUREMENT
1.01 LICENSE. Pursuant to this Agreement, Licensor hereby grants to
Licensee a nontransferable, non-exclusive license to use the Application
Software, together with all subsequent improvements thereto in the Service Area.
1.02 TERM. The initial term of this Agreement shall be co-terminus with the
Marketing Agreement.
ARTICLE 2. LIMITATIONS ON USE
2.01 GENERAL USE. Licensee agrees to use the Application Software solely to
provide the Services to End Users. Licensee may private brand the Services it
offers.
2.02 LOCATION.
(a) Use of Application Software. The Application Software may be used
only on the hardware provided by Licensor ("Designated Hardware") at
Licensee's switch locations in the Licensed Areas.
SOFTWARE LICENSE AGREEMENT - PAGE 1
<PAGE>
(b) Temporary Use of Non-Designated Hardware. Licensee may temporarily
install and use the Application Software on hardware other than Designated
Hardware, but only if the Designated Hardware cannot be used because of
hardware, software or other malfunction and only until the Designated
Hardware is returned to operation. Licensee shall not install or use the
Application Software on such replacement hardware without the prior verbal
consent of Licensor. Licensor shall not unreasonably withhold this consent
if the proposed replacement hardware meets or exceeds the Specifications
for the Designated Hardware.
2.03 COPIES. Licensee may make one "backup copy" of the Application
Software for archival purposes at each location; any such archival copy may be
stored at the location where the products are installed and operational or at
any such reputable off-site storage facility or facilities, as the case may be,
which Licensee, in its reasonable judgment, shall select to maintain and protect
such archival copy for purposes of disaster recovery. Licensee shall not
otherwise copy any portion of the Software. Licensee shall reproduce and include
Licensor's applicable copyright notice, patent notice, trademark, or service
mark on any copies of the Application Software.
ARTICLE 3. PROPERTY RIGHTS
3.01 TITLE TO SOFTWARE. Title to the Application Software is reserved for
Licensor. Licensee acknowledges and agrees that Licensor is and shall remain the
owner of the Application Software and shall be the owner of all copies of the
Application Software made by Licensee.
3.02 CONFIDENTIALITY OF SOFTWARE. Licensee acknowledges that the
Application Software is confidential in nature and constitutes a trade secret
belonging to Licensor. Licensee agrees to hold the Application Software in
confidence for Licensor and not to sell, rent, license, distribute, transfer, or
disclose the Application Software or its contents, including methods or ideas
used in the Application Software, to anyone except to employees of Licensee when
disclosure to employees is necessary to use the license granted in this
Agreement. Licensee shall instruct all employees to whom any such disclosure is
made that the disclosure is confidential and that the employee must keep the
Application Software confidential by using the same care and discretion that
they use with other data designated by Licensee as confidential. The
confidentiality requirements of this Section shall be in effect both during the
term of this Agreement and after it is terminated, provided, that the foregoing
restrictions shall not apply to information: (a) generally known to the public
or obtainable from public sources; (b) readily apparent from the keyboard
operations, visual display, or output reports of the Application Software; (c)
previously in the possession of Licensee or subsequently developed or acquired
without reliance on the Application Software; or (d) approved by Licensor for
release without restriction.
3.03 SECURITY. Licensee agrees to keep the Software in a secure place,
under access and use restrictions designated to prevent disclosure of the
Software to unauthorized persons. Licensee agrees to at least implement the
security precautions that it normally uses to protect its own confidential
materials and trade secrets.
SOFTWARE LICENSE AGREEMENT - PAGE 2
<PAGE>
3.04 DISCLOSURE AS BREACH. Licensee agrees that any disclosure of the
Software to a third party, except as set forth above, constitutes a material
breach of this Agreement, entitling Licensor to the benefit of Section 5.01
hereof.
3.05 REMOVAL OF MARKINGS. Licensee agrees not to remove, mutilate, or
destroy any copyright, patent notice, trademark, service mark, other proprietary
markings, or confidential legends placed on or within the Software.
ARTICLE 4. WARRANTY PROVISIONS
4.01 WARRANTIES
(a) General. Licensor warrants that (i) it has good title to the
Application Software and the right to license its use to Licensee free of
any proprietary rights, liens, or encumbrances of any other party, (ii) the
Application Software will permit the System to provide Services when
properly interconnected to Licensee's functioning switches described in the
Marketing Agreement (provided, that any modification of the Application
Software by any persons other than Licensor shall void the Warranty in this
clause(ii)); and (iii) commencing on installation thereof, and for a period
of 90 days thereafter, (x) the Software shall be free of viruses, bugs or
contaminants which may cause damage to Licensee's systems or interrupt
Licensee's utilization of a System; and (y) the media in which the Software
is contained shall be free of material defects in materials or workmanship.
(b) Year 2000. Licensor warrants that the Application Software
delivered or modified by Licensor is, or will be, Year 2000 Compliant (as
defined below). Year 2000 Compliant software that is intended to
interoperate with third party products (including Third Party Software) as
described herein will be compatible and inter-operate in such manner as to
process between them, as applicable, date related data correctly as
described in the definition of "Year 2000 Compliant." Except as set forth
in the preceding sentence, (i) Licensor assumes no responsibilities or
obligations to cause third party products to function with the Application
Software; and (ii) Licensor will not be in breach of this warranty for any
failure of the Application Software to be Year 2000 Compliant if such
failure results from the inability of any software, hardware, or systems of
Licensee or any third party to be Year 2000 Compliant. "Year 2000
Compliant" means that (a) neither the performance nor functionality of the
Application Software will be affected by dates prior to, during and after
the year 2000, (b) no value for current date will cause any interruption in
the operation of the Application Software; (c) the year 2000 is recognized
as a leap year; (d) in all interfaces and data storage the century, in any
date, is specified either explicitly or by unambiguous algorithms or
inferencing rules; and (e) date-based functionality of the Application
Software behaves and will behave consistently for dates prior to, during
and after the year 2000.
4.02 REMEDIES. In the event of any nonconformity or defect in the
Application Software (or any other breach with respect to the condition or
operation of the Application Software) for which Licensor is responsible,
Licensor shall, during the foregoing respective warranty periods, (A) provide
reasonable efforts to correct or cure such nonconformity, defect, contaminant or
breach (which may include a workaround for system errors), (B) at Licensor's
SOFTWARE LICENSE AGREEMENT - PAGE 3
<PAGE>
option, replace the relevant part of the Application Software in lieu of curing
such nonconformity, defect, contaminant or breach, or (C) if Licensor determines
that neither of the foregoing is commercially practicable, remove the System and
terminate the Marketing Agreement and this License Agreement.
4.03 WARRANTY DISCLAIMER. LICENSOR DOES NOT REPRESENT OR WARRANT THAT ALL
ERRORS WILL BE CORRECTED. LICENSEE AGREES THAT LICENSEE'S SOLE AND EXCLUSIVE
REMEDY FOR THE DEFECTS DESCRIBED IN THIS SECTION SHALL BE LIMITED TO THE
CORRECTIVE ACTION DESCRIBED IN THIS SECTION. THE EXPRESS WARRANTIES SET FORTH IN
THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.04 LIMITATION OF REMEDIES. LICENSEE AGREES THAT ITS EXCLUSIVE REMEDIES,
AND LICENSOR'S ENTIRE LIABILITY WITH RESPECT TO THE SOFTWARE IS AS SET FORTH IN
THIS AGREEMENT. LICENSEE FURTHER AGREES THAT LICENSOR SHALL NOT BE LIABLE TO
LICENSEE FOR ANY INDIRECT DAMAGES, INCLUDING ANY LOST PROFITS, LOST SAVINGS, OR
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF ITS USE OR INABILITY
TO USE THE SOFTWARE OR THE BREACH OF ANY EXPRESS OR IMPLIED WARRANTY, EXCEPT AS
SET FORTH IN SECTION 4.05.
4.05 INDEMNIFICATION.
(a) Infringement. Licensor agrees to indemnify and hold Licensee and
its directors, officers, employees and agents, harmless against any and all
claims, demands, actions, losses, liabilities, judgments, settlements,
awards and costs (including reasonable attorneys' fees and expenses)
(collectively, "Liabilities") arising out of or related to any claim
against Licensee by a third party that Licensee's use or possession of the
Application Software (or the license granted to Licensee hereunder with
respect thereto), infringes or violates any United States patent, copyright
or other proprietary right of any third party; provided that Licensee gives
Licensor prompt notice of any such claim of which it has actual knowledge
and cooperates fully with Licensor in the defense of such claim. Licensor
shall have the exclusive right to defend and settle at its sole discretion
and expense all suits or proceedings arising out of the foregoing. Licensee
shall not have the right to settle any action, claim or threatened action
without the prior written consent of Licensor (at Licensor's sole and
absolute discretion). In case use of the Application Software is forbidden
by a court of competent jurisdiction because of proprietary infringement,
Licensor shall promptly, at its option, (i) procure for Licensee the rights
to continue using the Application Software; (ii) replace the infringing
Application Software with non-infringing Application Software of equal
performance and quality which are materially the functional equivalent of
the infringing Application Software; (iii) modify the infringing
Application Software so it becomes non-infringing while materially
maintaining the functionality thereof; or (iv) if none of the foregoing are
commercially practicable, remove the System and terminate the Marketing
Agreement and this License Agreement Licensor will then be released from
any further obligation whatsoever to Licensee with respect to the
infringing part of the Application Software. Nothing in this Section shall
be deemed to make Licensor liable for any patent or copyright infringement
SOFTWARE LICENSE AGREEMENT - PAGE 4
<PAGE>
suits that arise in connection with (a) designs, modifications, use,
integration or data furnished by Licensee if infringement would have been
avoided by not using or combining the Application Software with such other
programs or data or (b) if infringement would have been avoided by the use
of an updated version made available to Licensee.
(b) Other. Licensor agrees to indemnify and hold Licensee harmless
against any and all Liabilities arising out of Licensor's negligent acts or
omissions, intentional torts, or material breach of this Agreement.
ARTICLE 5. TERMINATION
5.01 CAUSE FOR TERMINATION. The license granted in this Agreement shall
terminate automatically and without further notice upon the occurrence of
expiration of the term, specified in Section 1.02 or of any renewal term in the
absence of a subsequent renewal in accordance with the terms of this Agreement.
Licensor may terminate this Agreement in the event that (a) Licensee discloses
the Software to a third party, whether directly or indirectly and whether
inadvertently or purposefully, or (b) Licensee attempts to use, copy, license,
or convey the Software in any manner contrary to the terms of this Agreement or
in derogation of Licensor's proprietary rights in the Application Software. In
addition, either party may terminate this Agreement (and all licenses granted
hereunder) at any time if (a) the other party breaches any term hereof (other
than breaches by Licensee pursuant to the preceding sentence) or the Marketing
Agreement and fails to cure such breach within 30 days after receipt of written
notice, (b) the other party shall be or becomes insolvent, (c) the other party
makes an assignment for the benefit of creditors, (d) there are instituted by
the other party proceedings in bankruptcy or under any insolvency or similar law
or for reorganization, receivership or dissolution, (e) there are instituted
against the other party proceedings in bankruptcy or under any insolvency or
similar law or for reorganization, receivership or dissolution, which
proceedings are not dismissed within 60 days, or (f) the other party ceases to
do business.
5.02 EFFECT OF TERMINATION. Licensee agrees that on termination under
Section 5.01, Licensor may recover all copies of Application Software that have
been delivered to or made by Licensee, and (on Licensor's request) Licensee
shall destroy all copies of the Application Software that are not recovered by
Licensor, certify to Licensor that it has retained no copies of the Application
Software, and acknowledge that it may no longer use the Application Software.
Upon termination of the license, Licensor's obligations under this Agreement
shall cease.
ARTICLE 6. MISCELLANEOUS
6.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF LAW
RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO THE
LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
SOFTWARE LICENSE AGREEMENT - PAGE 5
<PAGE>
6.02 HEADINGS. Headings used in this Agreement are to facilitate reference
only, are not a part of this Agreement, and will not in any way affect the
interpretation hereof. The use herein of the word "including," when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not non-limiting
language (such as "without limitation," or "but not limited to," or words of
similar import) is used with references thereto, but rather shall be deemed to
refer to all other items and matters, that reasonably could fall within the
broadest possible scope of such general statement, term or matter.
6.03 ASSIGNMENT. This Agreement, and all rights and obligations hereunder,
are personal as to the parties hereto and may not be assigned, in whole or in
part, by any of the parties to any other person, firm or corporation without the
prior written consent thereto by the other party hereto, which consent will not
be unreasonably withheld; except that either party may freely assign any or all
of its rights and obligations hereunder to any affiliate. An affiliate is (a) an
entity that owns all or substantially all of the outstanding stock of the entity
so assigning, (b) an entity all or substantially all of whose stock is owned by
the entity so assigning, or (c) an entity under common ownership with the entity
so assigning. Such assignee entity shall thereupon be free to assign the rights
and obligations under this Agreement to any other affiliate. Any assignment
contrary to the terms hereof shall be null and void and of no force or effect.
6.04 FAILURE OR PARTIAL EXERCISES. No failure on the part of any party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
6.05 ENTIRE AGREEMENT, AMENDMENTS. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
Licensee did not rely on any representations or warranties of Licensor or its
employees or agents other than those set forth in this Agreement. This Agreement
may not be modified or amended except by a writing that states that it is an
amendment to this Agreement and which is signed by duly authorized
representative of the parties.
6.06 NOTICES. All notices required or permitted to be given hereunder shall
be in writing and shall be valid and sufficient if dispatched either (i) by hand
delivery, (ii) by facsimile transceiver, with confirming letter mailed promptly
thereafter by first class mail, postage prepaid, (iii) by reputable overnight
express courier or (iv) by certified mail, postage prepaid, return receipt
requested, deposited in any post office in the United States, in any case,
addressed to the addresses set forth on the signature page of this Agreement, or
such other addresses as may be provided from time to time in the manner set
forth above. When sent by facsimile as aforesaid, notices given as herein
provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
SOFTWARE LICENSE AGREEMENT - PAGE 6
<PAGE>
6.07 PARTIAL INVALIDITY. If any clause or provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
6.08 ATTORNEYS FEES. The prevailing party in any litigation, arbitration or
other proceedings arising out of this Agreement shall be reimbursed by the other
party for all costs and expenses incurred in such proceedings, including
reasonable attorneys' fees.
6.09 FORCE MAJEURE. No party hereto shall be liable for delay or default in
performing hereunder, other than a delay or default in payment of any monies due
to the other party, if such performance is delayed or prevented by a Force
Majeure Condition. "Force Majeure Condition" means any condition or event beyond
the reasonable control of the party affected thereby, including fire, explosion,
or other casualty, act of God, war or civil disturbance, acts of public enemies,
embargo, the performance or non-performance of third parties, acts of city,
state, local or federal governments in their sovereign, regulatory, or
contractual capacity, labor difficulties, and strikes, but specifically
excluding a party's failure to be Year 2000 Compliant. If a Force Majeure
Condition occurs, the party delayed or unable to perform shall give prompt
notice of such occurrence to the other party. The party affected by the other
party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
6.10 INDEPENDENT CONTRACTOR. The relationship of the parties established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement will be construed (a) to give either party the power to direct and
control the day-to-day activities of the other, (b) to constitute the parties as
partners, joint venturers, owners or otherwise as participants in a joint or
common undertaking, or (c) to allow either party to create or assume any
obligation on behalf of the other for any purpose whatsoever.
SOFTWARE LICENSE AGREEMENT - PAGE 7
<PAGE>
PREFERRED VOICE, INC. Kaplan Telephone Company
on behalf of itself and its wholly owned
subsidiaries and affiliates
By:/s/ Richard K. Stone By:/s/ Carl A. Turnley
-------------------- -------------------
Name: Richard K. Stone Name: Carl A. Turnley
Title: Vice President Title: Vice President
6500 Greenville Avenue Address: 118 Irving Ave.
Suite 570 Kaplan, LA 70548
Dallas, Texas 75206
Fax No.: 214-265-9663 Fax No: 318-643-6000
Phone: 214-265-9580 Phone: 318-643-7171
SOFTWARE LICENSE AGREEMENT - PAGE 8
EXHIBIT 10.31
MARKETING AGREEMENT
This Marketing Agreement is made as of this 13th day of October, 1999,
between Preferred Voice, Inc., a Delaware corporation ("PVI") and Kaplan
Telephone Company, Inc., a Louisiana corporation, on behalf of itself and its
wholly owned subsidiaries and affiliates ("ILEC"). PVI and ILEC are collectively
referred to in this Agreement as the "Parties."
BACKGROUND INFORMATION
PVI has developed a system (the "System") that when interconnected with a
telephone switching system is capable of performing the services described in
Exhibit A attached hereto and incorporated herein by reference (the "Services").
Each System consists of the hardware described in Exhibit B, certain third party
software and certain proprietary application software developed by PVI. ILEC is
a licensed local exchange carrier that is currently providing telecommunications
service in the local calling areas described in Exhibit C. ILEC wishes to offer
the Services to end users ("End Users") under its own brand in conjunction with
its telecommunications services.
In consideration of the mutual promises made in this Agreement, PVI and
ILEC agree that the terms and conditions set forth as follows will apply to the
license of Application Software.
ARTICLE 1. INSTALLATION
1.01 INSTALLATION. PVI shall install its Systems at ILEC's switch locations
set forth in Exhibit C to interconnect with switches described in Exhibit C. The
System will remain the property of PVI. ILEC shall prepare the site in
accordance with PVI's specifications. Installation of Systems will be completed
within 90 days.
PVI agrees that it will use best efforts to comply with all ILEC's
security, confidentiality and regulatory requirements in relation to the System
installed at any site. In addition, PVI agrees to use all reasonable efforts to
install Systems so that they shall comply in all material respects with all
federal, state, and local laws and regulations in force on the date hereof,
which directly impose obligations upon PVI or the applicable manufacturer.
1.02 PVI TESTING. PVI shall test the Systems to ensure that they work
properly. The testing period shall (i) commence promptly upon the completion of
installation of the System at the sites, but in no event later than five (5)
days following such completion of installation (the "Commencement Date"), and
(ii) conclude upon acceptance by as described in Section 1.03 below.
**[Confidential Treatment] indicates portions of this document that have been
deleted from this document and have been separately filed with the Securities
and Exchange Commission.
MARKETING AGREEMENT - PAGE 1
<PAGE>
Should material deficiencies arise in the performance of the System during
testing, PVI shall inform ILEC promptly thereof by submitting notice, including
a written, reasonably detailed description of each deficiency, to ILEC. PVI
shall then use reasonable efforts to cure the noncompliance. ILEC shall use its
best efforts to assist PVI in curing such noncompliance. Upon completion of such
cure, PVI shall give notice to ILEC thereof. The total period of time that may
be spent on the testing period shall not exceed ninety (90) days from the
Commencement Date. If PVI, using commercially reasonable efforts, is unable to
cure any material deficiency of the System within 90 days of the Commencement
Date, then following notice thereof either party may give the other party thirty
(30) days' written notice of its election to terminate this Agreement and the
reasons therefor.
1.03 ILEC ACCEPTANCE. PVI shall inform ILEC in writing of the completion of
PVI's testing under Section 1.02. ILEC will thereupon commence testing of the
System, and shall have five (5) days in which to test the functionality of the
System with employees. Upon completion of the five (5) day test period, ILEC
shall either provide PVI with written notice of any problems revealed in its
tests or deliver PVI an acceptance certificate, substantially in the form
attached hereto as Exhibit D (the "Acceptance Certificate"). The System shall be
deemed to have been accepted by ILEC upon execution and delivery by ILEC to PVI
of an Acceptance Certificate, executed by an authorized representative of ILEC
or failure of ILEC to provide written notice to PVI of any problems ILEC
discovers within the five (5) day period it is conducting tests.
ARTICLE 2. SALES AND MARKETING
2.01 SALES. ILEC shall use best efforts to promote sale of the Services so
as to maximize revenues, including conducting commercially reasonable
advertising campaigns and maintaining an inventory of collateral support
materials for promotion, advertising, point-of-sale, record keeping,
subscriptions, and other items related to sales of the Services. ILEC shall bill
and collect for Services used by End Users.
2.02 PRICING. The parties will jointly agree on the prices at which the
Services will be made available to End-Users and any changes to these prices.
2.03 ADVERTISING AND PROMOTIONAL LITERATURE. PVI will assist ILEC in the
development and production of original copy of advertising and collateral
support materials (i.e. layout, verbiage, plates, negatives, dies, and/or other
setup materials) that may be utilized by ILEC for marketing the Services. ILEC
shall send copies of all advertising and sales promotion material and literature
relating to the Services to PVI for review prior to distribution.
2.04. EXCLUSIVITY. ILEC agrees that it will not install, for testing or any
other purposes, any system which competes with PVI's Systems to provide service
in any calling area that ILEC is authorized to serve during the term of this
Agreement as long as PVI is in compliance with the terms and conditions of this
Agreement.
MARKETING AGREEMENT - PAGE 2
<PAGE>
ARTICLE 3. PAYMENT
ILEC shall pay PVI a share of ILEC's revenue from the Services determined
from the schedule set forth in Exhibit E. This amount shall be paid monthly on
the fifteenth day of each month for Services billed in the prior month.
ARTICLE 4. TRAINING AND SUPPORT
4.01 TECHNICAL SUPPORT. During the term of this Agreement, PVI shall
provide a technical support help desk that ILEC may call to report System
troubles twenty-four (24) hours per day, seven (7) days per week basis. PVI
shall troubleshoot the problems and contact the appropriate vendor to resolve
problems that cannot be resolved by actions ILEC may take on PVI's instruction.
During the term of this Agreement, PVI shall provide (i) remote, dial-up System
support, on a twenty-four (24) hours per day, seven (7) days per week basis, and
(ii) packages, generally containing corrections of known software defects and
updates or patches to increase or improve performance and occasionally also
containing minor feature enhancements of existing software, relating to a
current System. ILEC shall provide permanent digital connectivity to each System
for the purpose of off-site software revision and maintenance.
4.02 PROVISIONING. For up to the first six months following installation of
the System, PVI shall update and maintain the customer and names data bases in
the System based on information provided by End Users directly or through ILEC.
During that period PVI shall train ILEC's personnel in data base update and
maintenance procedures. ILEC will be responsible for such work after such
training period.
4.03 TRAINING. As part of the installation process, PVI shall provide
ILEC's personnel with the initial training and instruction as described on
Exhibit F attached hereto concerning the operation and use of the System by
conducting training sessions at a mutually convenient time at ILEC's facility.
Any additional training services that are requested by ILEC shall be invoiced to
ILEC in accordance with PVI's then prevailing hourly rates. ILEC shall be
responsible for all travel and other expenses of its personnel attending such
training sessions.
ARTICLE 5. TERM
The term of this Agreement shall be ten (10) years; however, on the fifth
(5 th) or any succeeding anniversary of the date of this Agreement, either party
may terminate this Agreement by giving notice of its intention not to continue
this Agreement at least sixty (60) days prior to the anniversary.
MARKETING AGREEMENT - PAGE 3
<PAGE>
ARTICLE 6. WARRANTY PROVISIONS
6.01 GENERAL. PVI warrants that the System will provide Services when
properly interconnected to ILEC's functioning switches of the types described in
Exhibit C (provided, that ANY MODIFICATION OF THE SYSTEM BY ANY PERSONS OTHER
THAN PVI SHALL VOID THE WARRANTY IN THIS SECTION 6.01).
6.02 YEAR 2000. PVI warrants that the System delivered or modified by PVI
is, or will be, Year 2000 Compliant (as defined below). Year 2000 Compliant
software that is intended to interoperate with third party products as described
herein will be compatible and inter-operate in such manner as to process between
them, as applicable, date related data correctly as described in the definition
of "Year 2000 Compliant." Except as set forth in the preceding sentence, (i) PVI
assumes no responsibilities or obligations to cause third party products to
function with the System; and (ii) PVI will not be in breach of this warranty
for any failure of the System to be Year 2000 Compliant if such failure results
from the inability of any software, hardware, or systems of ILEC or any third
party to be Year 2000 Compliant. "Year 2000 Compliant" means that (a) neither
the performance nor functionality of the System will be affected by dates prior
to, during and after the year 2000, (b) no value for current date will cause any
interruption in the operation of the System; (c) the year 2000 is recognized as
a leap year; (d) in all interfaces and data storage the century, in any date, is
specified either explicitly or by unambiguous algorithms or inferencing rules;
and (e) date-based functionality of the System behaves and will behave
consistently for dates prior to, during and after the year 2000.
ARTICLE 7. TERMINATION
7.01 CAUSE FOR TERMINATION. This Agreement shall terminate automatically
and without further notice upon the occurrence of expiration of the term,
specified in Article 5 or of any renewal term in the absence of a subsequent
renewal in accordance with the terms of this Agreement. PVI may terminate this
Agreement in the event that revenue sharing payments to PVI are less than $2000
per System per month for three consecutive months, unless ILEC pays PVI the
shortfall. In addition, either party may terminate this Agreement at any time if
(a) the other party breaches any term hereof and fails to cure such breach
within 30 days (or ten days in the case of a failure to pay any sum due) after
receipt of written notice, (b) the other party shall be or becomes insolvent,
(c) the other party makes an assignment for the benefit of creditors, (d) there
are instituted by the other party proceedings in bankruptcy or under any
insolvency or similar law or for reorganization, receivership or dissolution,
(e) there are instituted against the other party proceedings in bankruptcy or
under any insolvency or similar law or for reorganization, receivership or
dissolution, which proceedings are not dismissed within 60 days, or (f) the
other party ceases to do business.
7.02 EFFECT OF TERMINATION. ILEC agrees that on termination under Section
7.01, PVI may recover all Systems that have been installed. Upon termination of
the license, PVI's obligations under this Agreement shall cease. The termination
MARKETING AGREEMENT - PAGE 4
<PAGE>
or expiration of this Agreement shall in no way relieve either party from its
obligation to pay the other any sums accrued hereunder prior to such termination
or expiration.
ARTICLE 8. INSURANCE
Each party hereto shall maintain, during the term of this Agreement, the
following insurance coverage as well as all other insurance required by law in
the jurisdictions where the work is performed: (a) worker's compensation and
related insurance as required by law; (b) employer's liability insurance with a
limit of at least five hundred thousand ($500,000) dollars for each occurrence;
(c) comprehensive general liability insurance, with a limit of at least one
million ($1,000,000) dollars per occurrence; and (d) comprehensive motor vehicle
liability insurance with limits of at least one million ($1,000,000) dollars for
bodily injury including death, to any one person, three hundred thousand
($300,000) dollars for each occurrence of property damage, and one million
($1,000,000) dollars for each occurrence. Each party shall (i) furnish the other
prior to the start of the relevant work, if requested by the other, certificates
or adequate proof of the insurance required by this Section and (ii) notify the
other in writing at least thirty (30) days prior to cancellation of or any
material change in the policy. Notwithstanding the above, each party shall have
the option where permitted by law to self-insure any or all of the foregoing.
ARTICLE 9. MISCELLANEOUS
9.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF LAW
RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO THE
LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
9.02 HEADINGS. Headings used in this Agreement are to facilitate reference
only, are not a part of this Agreement, and will not in any way affect the
interpretation hereof. The use herein of the word "including," when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not non-limiting
language (such as "without limitation," or "but not limited to," or words of
similar import) is used with references thereto, but rather shall be deemed to
refer to all other items and matters, that reasonably could fall within the
broadest possible scope of such general statement, term or matter.
9.03 ASSIGNMENT. This Agreement, and all rights and obligations hereunder,
are personal as to the parties hereto and may not be assigned, in whole or in
part, by any of the parties to any other person, firm or corporation without the
prior written consent thereto by the other party hereto, which consent will not
be unreasonably withheld; except that either party may freely assign any or all
of its rights and obligations hereunder to any affiliate. An affiliate is (a)
MARKETING AGREEMENT - PAGE 5
<PAGE>
an entity that owns all or substantially all of the outstanding stock of the
entity so assigning, (b) an entity all or substantially all of whose stock is
owned by the entity so assigning, or (c) an entity under common ownership with
the entity so assigning. Such assignee entity shall thereupon be free to assign
the rights and obligations under this Agreement to any other affiliate. Any
assignment contrary to the terms hereof shall be null and void and of no force
or effect.
9.04 FAILURE OR PARTIAL EXERCISES. No failure on the part of any party to
exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
9.05 ENTIRE AGREEMENT, AMENDMENTS. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
ILEC did not rely on any representations or warranties of PVI or its employees
or agents other than those set forth in this Agreement. This Agreement may not
be modified or amended except by a writing that states that it is an amendment
to this Agreement and which is signed by duly authorized representative of the
parties.
9.06 NOTICES. All notices required or permitted to be given hereunder shall
be in writing and shall be valid and sufficient if dispatched either (i) by hand
delivery, (ii) by facsimile transceiver, with confirming letter mailed promptly
thereafter by first class mail, postage prepaid, (iii) by reputable overnight
express courier or (iv) by certified mail, postage prepaid, return receipt
requested, deposited in any post office in the United States, in any case,
addressed to the addresses set forth on the signature page of this Agreement, or
such other addresses as may be provided from time to time in the manner set
forth above. When sent by facsimile as aforesaid, notices given as herein
provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
9.07 PARTIAL INVALIDITY. If any clause or provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
9.08 ATTORNEYS FEES. The prevailing party in any litigation, arbitration or
other proceedings arising out of this Agreement shall be reimbursed by the other
MARKETING AGREEMENT - PAGE 6
<PAGE>
party for all costs and expenses incurred in such proceedings, including
reasonable attorneys' fees.
9.09 FORCE MAJEURE. No party hereto shall be liable for delay or default in
performing hereunder, other than a delay or default in payment of any monies due
to the other party, if such performance is delayed or prevented by a Force
Majeure Condition. "Force Majeure Condition" means any condition or event beyond
the reasonable control of the party affected thereby, including fire, explosion,
or other casualty, act of God, war or civil disturbance, acts of public enemies,
embargo, the performance or non-performance of third parties, acts of city,
state, local or federal governments in their sovereign, regulatory, or
contractual capacity, labor difficulties, and strikes, but specifically
excluding a party's failure to be Year 2000 Compliant. If a Force Majeure
Condition occurs, the party delayed or unable to perform shall give prompt
notice of such occurrence to the other party. The party affected by the other
party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
9.10 INDEPENDENT CONTRACTOR. The relationship of the parties established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement will be construed (a) to give either party the power to direct and
control the day-to-day activities of the other, (b) to constitute the parties as
partners, joint venturers, owners or otherwise as participants in a joint or
common undertaking, or (c) to allow either party to create or assume any
obligation on behalf of the other for any purpose whatsoever.
9.11 PVI'S USE. ILEC shall permit PVI to use its Systems to provide
Services to its own end users ("PVI End Users") where efficient networking would
be promoted by such use by PVI End Users.
PREFERRED VOICE, INC. Kaplan Telephone Company, Inc.
on behalf of itself and its wholly owned
subsidiaries and affiliates
By:/s/ Richard K. Stone By: /s/ Carl A. Turnley
-------------------- -------------------
Name: Richard K. Stone Name: Carl A. Turnley
Title: Vice President Title: Vice President
6500 Greenville Avenue Address: 118 North Irving
Suite 570 Kaplan, LA 70548
Dallas, Texas 75206 Fax No.: 318-643-6000
Fax No.: 214-265-9663 Phone: 318-643-7171
Phone: 214-265-9580
MARKETING AGREEMENT - PAGE 7
<PAGE>
EXHIBIT A
PREFERRED VOICE, INC
PRODUCT DESCRIPTIONS
VIP EMMA 888 SERVICES
Each EMMA 888 service was specifically designed to combine all the following
existing Telco services with the convenience of speech independent dialing.
Each of these services offer specific benefits and features designed to
satisfy the communication needs of the end user.
[GRAPHIC OMITTED]
1-888 Number dedicated to one user
Long Distance Calling Card
Selective Call Screening
One Number "Locate"
Voice Activated Dialing
Voice Directory
(1) EMMA. THE "SMART" BUSINESS LINE AND EMMA PA (PERSONAL ASSISTANT):
The "SMART" Business Line has a local number on the front and can
receive calls dialed from the public switched telephone network. In addition
to the local number each subscriber may be assigned a dedicated 888 number
giving them not only local but national presence. In addition unlike the
traditional telephone line that is connected to a specific telephone the SBL
floats and can be pointed to ring at any telephone the subscriber selects.
This feature is usually referred as "single number locate." This service may
be offered as a supplement to existing business lines.
ONE NUMBER LOCATE:
The subscriber to this service is assigned his own personal 888 number.
When that number is dialed the calling party is greeted by a prompt. The
call will then be sent to whatever number the user has programmed in his
Locate file (i.e. cellular phone, hotel, pager, etc.) anywhere in the
world.
TELEPHONE CALLING CARD:
The subscriber can use the SBL as a telephone calling card. During the
forwarding prompt, the user touch-tones any key on his phone and speaks
his Personal Identification Number; at the next prompt he may speak a
name from his personal voice directory. The Voice Directory may contain
100 names with their corresponding numbers. For numbers not in the
voice directory, the subscriber simply says, "Dial Number" and SBL will
prompt "Number please". The user then may voice dial the number or
touch-tone using the DTMF pad.
MARKETING AGREEMENT - PAGE 8
<PAGE>
INTELLIGENT CALL SCREENING:
This feature can be turned on or off by the subscriber. When a caller
dials the subscriber's 888 number SBL will prompt for the callers name
and present the name to the subscriber. The subscriber has the option
of accepting the call or sending the call to their voice mail.
(2) EMMA CD (CORPORATE DIRECT):
Businesses that have multiple individuals with EMMA PA numbers can
avoid having to remember or look-up everyone's personal EMMA PA number by using
the EMMA CD. The caller dials the dedicated EMMA CD number and simply speaks the
called person's name and the call is quickly forwarded to his current programmed
locate number.
(3) EMMA VO (VIRTUAL OFFICE)
This service configuration was designed for the group that does not
have a single physical office or whose members are out of their offices
consistently. EMMA VO allows the group to have a single number. When there is a
call for a member, EMMA will forward the call to the member's office. If he is
out of the office, EMMA will locate a member if so desired or will take a
message. EMMA provides all of the SO/HO type of business requirements including
single number, Locate, personal directory and access to voice mail.
(4) EMMA FF (FAMILY AND FRIENDS):
This service was developed to allow anyone that has the subscriber's
dedicated 888 number to access the subscriber's Voice Directory. This allows the
subscriber to give their number to a son in college, a daughter in a distant
city, etc. At the subscriber's discretion, EACH one of the callers can call
anyone whose name is in the Voice Directory.
(5) THE ELECTRONIC SPEECH RECOGNITION PHONE BOOK:
This service allows the ILEC to load their local serving exchange phone
numbers from their current phone book into the EMMA speech recognition phone
directory. Callers may speak a name from the phone book and be connected to
local serving exchanges. PVI will load the phone book information into the VIP
System utilizing a disk or CD ROM provided by the ILEC. There will be no cost to
the ILEC associated with loading this information into the System.
VIP EMMA
Inbound Corporate extension directory - This directory stores the subscriber's
internal names and extensions. When Emma receives a call, she compares the
MARKETING AGREEMENT - PAGE 9
<PAGE>
caller's request to the stored names and extensions and forwards the calls
accordingly. The directory is customized for each subscriber and can include
names, departments, and even branches at different locations.
Outbound corporate directory - (optional service) One or more outbound corporate
directories can be created to facilitate outbound calling. For example, a
company could create directories for branches, vendors, clients, etc. The user
accesses Emma through an extension number or DID and simply speaks the directory
listing and the call is connected, eliminating the need to look-up or dial the
number.
Outbound Personal directory - (optional service) A personal directory is a
directory created for an individual user and is accessed with the use of an
authorization code or ANI. Individuals within the Company may want a directory
of their personal frequently called names.
Telephone Calling Card - Any company utilizing Emma can issue, track, and
terminate calling cards on a real-time basis. Calling cards are activated
instantaneously. Effectively, an Emma user becomes a "virtual long-distance
company." This service can be restricted to specific users or specific phone
numbers only.
This document and its attachments are confidential and proprietary information,
the exclusive rights to which are the sole property of Preferred Voice, Inc.
Upon receipt and acceptance of these materials, the recipient agrees not to
reproduce or distribute copies electronic, xerographic, verbal, or otherwise)
without the express written permission of Preferred Voice, Inc.
MARKETING AGREEMENT - PAGE 10
<PAGE>
EXHIBIT B
Hardware Configuration (24 pts)
ITEM DESCRIPTION
FTU-2000A CUSTOM COMPUTER
PIIBX40P38 PENT II 400 MHz CPU
PIIBX33P38 PENT II 333 MHz CPU
64M040 64 MB DIMM RAM
FD015 3.5" FDD, BLACK
HD91S 9.1 GB HDD, SCSI
ALM-100B-H 4.3 GB HDD, SCSI
CDKIT1 ALARM BOARD
CDT240A DUAL SLIM CD-ROM
SCSR03 SLIM LINE CD-ROM
MD566A JUMPERABLE FAX/MDM
MNT40 MS WIN NT 4.0
240SCT1 PORT RESOURCE
ANTARES VOICE RESOURCE
PRO 2V ALARM RESOURCE
PORT FEE VOICE REC RESOURCE
Optional Hardware Components 48 v Inverter
Master Switch
TRAFFIC ENGINEERING
USERS PORTS
1000 11
2000 20
3000 26
Spares Kit
MARKETING AGREEMENT - PAGE 11
<PAGE>
EXHIBIT C
ILEC LOCATIONS
[TO BE ADDED]
MARKETING AGREEMENT - PAGE 12
<PAGE>
EXHIBIT D
FORM OF ACCEPTANCE CERTIFICATE
The undersigned, an authorized representative of [ ], a [ ]corporation, on
behalf of itself and its wholly owned subsidiaries and affiliates ("ILEC"), in
his/her capacity as [ ], does hereby certify that (a) the testing period (as
such term is defined in the Software License Agreement, dated as of [ ], 1999
(the "Agreement"), by and between Preferred Voice, Inc. ("PVI") and ILEC with
respect to the System (as defined in the Agreement) purchased or licensed by
ILEC has been successfully completed, (B) the System satisfies the requirements
of the Specifications (as defined in the Agreement) and (c) the System is hereby
accepted by ILEC.
Date:
----------------- -----------------------------------------
By:
-------------------------------------
Printed Name:
----------------------------
MARKETING AGREEMENT - PAGE 13
<PAGE>
EXHIBIT E
REVENUE SHARING FEES
[Confidential Treatment Requested]** OF THE FIRST [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF THE NEXT [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF ALL REVENUE IN EXCESS OF [Confidential
Treatment Requested]** FOR EACH SYSTEM
MARKETING AGREEMENT - PAGE 14
<PAGE>
EXHIBIT F
TRAINING
1. SERVICES TRAINING -
o Target Audience
- Product Manager
- Product Marketing
o Contents
- Complete review of each PVI service description and
application
- Market Position
- Target Market
2. SYSTEM INSTALLATION AND MAINTENANCE TRAINING Installation o Hardware
Installation o T-1 configuration o VIP Programming
- SCC
- DID
Maintenance
o Alarm Systems
o Hardware Replacement
o Hardware Expansion
3. PROVISIONING
MARKETING AGREEMENT - PAGE 15
EXHIBIT 10.32
SOFTWARE LICENSE AGREEMENT
This Software License Agreement is made as of this 8th day of November,
1999, between Preferred Voice, Inc., a Delaware corporation ("Licensor") and
Midwest Wireless Communications L.L.C., a Delaware limited liability company, on
behalf of itself and its wholly owned subsidiaries and affiliates ("Licensee").
Licensor and Licensee are collectively referred to in this Agreement as the
"Parties."
Background Information
Licensor has developed a system (the "System") that when interconnected
with a telephone switching system is capable of performing the services (the
"Services") described in a Marketing Agreement between Licensor and Licensee of
even date (the "Marketing Agreement"). Each System consists of the hardware,
certain third party software (the "Third Party Software") and certain
proprietary application software developed by Licensor (the "Application
Software"). Licensee is a licensed provider of wireless telephony and data
services in the calling areas described in the Marketing Agreement (the "Service
Areas"). Licensee wishes to offer the Services to end users ("End Users") under
its own brand in conjunction with its telecommunications services, and Licensor
has agreed to install its System in Licensee's location for that purpose
pursuant to the Marketing Agreement.
In consideration of the mutual promises made in this Agreement,
Licensor and Licensee agree that the terms and conditions set forth as follows
will apply to the license of Application Software.
ARTICLE 1. LICENSE AND PROCUREMENT
1.01 License. Pursuant to this Agreement, Licensor hereby grants to
Licensee a nontransferable, non-exclusive license to use the Application
Software, together with all subsequent improvements thereto in the Service Area.
1.02 Term. The initial term of this Agreement shall be co-terminus with
the Marketing Agreement.
ARTICLE 2. LIMITATIONS ON USE
2.01 General Use. Licensee agrees to use the Application Software
solely to provide the Services to End Users. Licensee may private brand the
Services it offers.
2.02 Location.
(a) Use of Application Software. The Application Software may
be used only on the hardware provided by Licensor ("Designated Hardware") at
Licensee's switch locations in the Licensed Areas.
SOFTWARE LICENSE AGREEMENT - Page 1
<PAGE>
(b) Temporary Use of Non-Designated Hardware. Licensee may
temporarily install and use the Application Software on hardware other than
Designated Hardware, but only if the Designated Hardware cannot be used because
of hardware, software or other malfunction and only until the Designated
Hardware is returned to operation. Licensee shall not install or use the
Application Software on such replacement hardware without the prior verbal
consent of Licensor. Licensor shall not unreasonably withhold this consent if
the proposed replacement hardware meets or exceeds the Specifications for the
Designated Hardware.
2.03 Copies. Licensee may make one "backup copy" of the Application
Software for archival purposes at each location; any such archival copy may be
stored at the location where the products are installed and operational or at
any such reputable off-site storage facility or facilities, as the case may be,
which Licensee, in its reasonable judgment, shall select to maintain and protect
such archival copy for purposes of disaster recovery. Licensee shall not
otherwise copy any portion of the Software, except as necessary to use the
Application Software, solely as permitted in this Agreement. Licensee shall
reproduce and include Licensors applicable copyright notice, patent notice,
trademark, or service mark on any copies of the Application Software.
ARTICLE 3. PROPERTY RIGHTS
3.01 Title to Software. Title to the Application Software is reserved
for Licensor. Licensee acknowledges and agrees that Licensor is and shall remain
the owner of the Application Software and shall be the owner of all copies of
the Application Software made by Licensee.
3.02 Confidentiality of Software. Licensee acknowledges that the
Application Software is confidential in nature and that Licensor considers it a
trade secret belonging to Licensor. Licensee agrees to hold the Application
Software in confidence for Licensor and not to sell, rent, license, distribute,
transfer, or disclose the Application Software or its contents, including
methods or ideas used in the Application Software, to anyone except to employees
or third party consultants of Licensee when disclosure to employees or such
third party consultants is necessary to use the license granted in this
Agreement. Licensee shall instruct all employees and third party consultants to
whom any such disclosure is made that the disclosure is confidential and that
the employee must keep the Application Software confidential by using the same
care and discretion that they use with other data designated by Licensee as
confidential. The confidentiality requirements of this Section shall be in
effect both during the term of this Agreement and after it is terminated for a
period of three (3) years, provided, that the foregoing restrictions shall not
apply to information: (a) generally known to the public or obtainable from
public sources; (b) readily apparent from the keyboard operations, visual
display, or output reports of the Application Software; (c) previously in the
possession of Licensee or subsequently developed or acquired without reliance on
the Application Software; or (d) approved by Licensor for release without
restrictions on use and disclosure similar to those found in this Agreement.
3.03 Security. Licensee agrees to keep the Software in a secure place,
under access and use restrictions designated to prevent disclosure of the
Software to unauthorized persons. Licensee agrees to at least implement the
security precautions that it normally uses to protect its own confidential
materials and trade secrets.
SOFTWARE LICENSE AGREEMENT - Page 2
<PAGE>
3.04 Disclosure as Breach. Licensee agrees that any disclosure of the
Software to a third party, except as set forth above, constitutes a material
breach of this Agreement, entitling Licensor to the benefit of Section 5.01
hereof.
3.05 Removal of Markings. Licensee agrees not to remove, mutilate, or
destroy any copyright, patent notice, trademark, service mark, other proprietary
markings, or confidential legends placed on or within the Software.
ARTICLE 4. WARRANTY PROVISIONS
4.01 Warranties
(a) General. Licensor warrants that (i) it has good title to
the Application Software and the right to license its use to Licensee free of
any proprietary rights, liens, or encumbrances of any other party, (ii) the
Application Software will permit the System to provide Services when properly
interconnected to Licensee's functioning switches described in the Marketing
Agreement (provided, that ANY MODIFICATION OF THE APPLICATION SOFTWARE. BY ANY
PERSONS OTHER THAN LICENSOR SHALL VOID THE WARRANTY IN THIS CLAUSE (ii)), (iii)
commencing on installation thereof, and for a period of one (1) year thereafter,
(1) the Software shall be free of viruses, bugs or contaminants which may cause
damage to Licensee's systems or interrupt Licensee's utilization of a System;
and (2) the media in which the Software is contained shall be free of material
defects in materials or workmanship.
b. Year 2000. Licensor warrants that the Application Software
delivered or modified by Licensor is Year 2000 Compliant (as defined below).
Year 2000 Compliant software that is intended to interoperate with third party
products (including Third Party Software) as described herein will be compatible
and inter-operate in such manner as to process between them, as applicable, date
related data correctly as described in the definition of "Year 2000 Compliant."
Except as set forth in the preceding sentence, (i) Licensor assumes no
responsibilities or obligations to cause third party products to function with
the Application Software; and (ii) Licensor will not be in breach of this
warranty for any failure of the Application Software to be Year 2000 Compliant
if such failure results from the inability of any software, hardware, or systems
of Licensee or any third party to be Year 2000 Compliant. "Year 2000 Compliant"
means that (a) neither the performance nor functionality of the Application
Software will be affected by dates prior to, during and after the year 2000, (b)
no value for current date will cause any interruption in the operation of the
Application Software; (c) the year 2000 is recognized as a leap year; (d) in all
interfaces and data storage the century, in any date, is specified either
explicitly or by unambiguous algorithms or inferencing rules; and (e) date-based
functionality of the Application Software behaves and will behave consistently
for dates prior to, during and after the year 2000.
4.02 Remedies. In the event of any nonconformity or defect in the
Application Software (or any other breach with respect to the condition or
operation of the Application Software) for which Licensor is responsible,
Licensor shall, during the foregoing respective warranty periods, (A) provide
reasonable efforts to correct or cure such nonconformity, defect, contaminant or
breach
SOFTWARE LICENSE AGREEMENT - Page 3
<PAGE>
(which may include a workaround for system errors), (13) at Licensor's option,
replace the relevant part of the Application Software in lieu of curing such
nonconformity, defect, contaminant or breach, or (C) if Licensor determines that
neither of the foregoing is commercially practicable, remove the System and
terminate the Marketing Agreement and this License Agreement.
4.03 Warranty Disclaimer. LICENSOR DOES NOT REPRESENT OR WARRANT THAT
ALL ERRORS WILL BE CORRECTED. LICENSEE AGREES THAT LICENSEE'S SOLE AND EXCLUSIVE
REMEDY FOR THE DEFECTS DESCRIBED IN THIS SECTION SHALL BE LIMITED TO THE
CORRECTIVE ACTION DESCRIBED IN THIS SECTION. THE EXPRESS WARRANTIES SET FORTH IN
THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.04 Limitation of Remedies. LICENSEE AGREES THAT ITS EXCLUSIVE
REMEDIES, AND LICENSORS ENTIRE LIABILITY WITH RESPECT TO THE SOFTWARE IS AS SET
FORTH IN THIS AGREEMENT. LICENSEE FURTHER AGREES THAT LICENSOR SHALL NOT BE
LIABLE TO LICENSEE FOR ANY INDIRECT DAMAGES, INCLUDING ANY LOST PROFITS, LOST
SAVINGS, OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF ITS USE OR
INABILITY TO USE THE SOFTWARE OR THE BREACH OF ANY EXPRESS OR IMPLIED WARRANTY,
EXCEPT AS SET FORTH IN SECTION 4.05.
4.05 Indemnification.
(a) Infringement. Licensor agrees to indemnify and hold
Licensee and its directors, officers, employees and agents, harmless against any
and all claims, demands, actions, losses, liabilities, judgments, settlements,
awards and costs (including reasonable attorneys' fees and expenses)
(collectively, "Liabilities") arising out of or related to any claim against
Licensee by a third party that Licensee's use or possession of the Application
Software (or the license granted to Licensee hereunder with respect thereto),
infringes or violates any United States patent, copyright or other proprietary
right of any third party; provided that Licensee gives Licensor prompt notice of
any such claim of which it has actual knowledge and cooperates fully, at
Licensor's expense, with Licensor in the defense of such claim. Licensor shall
have the exclusive right to defend and settle at its sole discretion and expense
all suits or proceedings arising out of the foregoing. Licensee shall not have
the right to settle any action, claim or threatened action without the prior
written consent of Licensor (at Licensor's sole and absolute discretion). In
case use of the Application Software is forbidden by a court of competent
jurisdiction because of proprietary infringement, Licensor shall promptly, at
its option, (i) procure for Licensee the rights to continue using the
Application Software; (ii) replace the infringing Application Software with
non-infringing Application Software of equal performance and quality which are
materially the functional equivalent of the infringing Application Software;
(iii) modify the infringing Application Software so it becomes non-infringing
while materially maintaining the functionality thereof; or (iv) if none of the
foregoing are commercially practicable, remove the System and terminate the
Marketing Agreement and this License Agreement. Licensor will then be released
from any further obligation whatsoever to Licensee with respect to the
infringing part of the Application Software. Nothing in this Section shall be
deemed to make Licensor liable for any patent
SOFTWARE LICENSE AGREEMENT - Page 4
<PAGE>
or copyright infringement suits that arise in connection with (a) designs,
modifications, use, integration or data furnished by Licensee if infringement
would have been avoided by not using or combining the Application Software with
such other programs or data or (b) if infringement would have been avoided by
the use of an updated version made available to Licensee.
(b) Other. Licensor agrees to indemnify and hold Licensee
harmless against any and all Liabilities arising out of Licensor's negligent
acts or omissions, intentional torts, or material breach of this Agreement.
ARTICLE 5. TERMINATION
5.01 Cause for Termination. The license granted in this Agreement shall
terminate automatically and without further notice upon the occurrence of
expiration of the term, specified in Section 1.02 or of any renewal term in the
absence of a subsequent renewal in accordance with the terms of this Agreement.
Licensor may terminate this Agreement in the event that (a) Licensee discloses
the Software to a third party except as authorized herein, whether directly or
indirectly and whether inadvertently or purposefully, or (b) Licensee attempts
to use, copy, license, or convey the Software in any manner contrary to the
terms of this Agreement or in derogation of Licensors proprietary rights in the
Application Software. In addition, either party may terminate this Agreement
(and all licenses granted hereunder) at any time if (a) the other party breaches
any material term hereof (other than breaches by Licensee pursuant to the
preceding sentence) or the Marketing Agreement and fails to cure such breach
within 30 days after receipt of written notice, (b) the other party shall be or
becomes insolvent, (c) the other party makes an assignment for the benefit of
creditors, (d) there are instituted by the other party proceedings in bankruptcy
or under any insolvency or similar law or for reorganization, receivership or
dissolution, (e) there are instituted against the other party proceedings in
bankruptcy or under any insolvency or similar law or for reorganization,
receivership or dissolution, which proceedings are not dismissed within 60 days,
or (f) the other party ceases to do business. In the event that Licensor
terminates this Agreement pursuant to this Section, Licensor may invoke all
rights Licensor possesses upon termination.
5.02 Effect of Termination. Licensee agrees that on termination under
Section 5.01, Licensor may recover all copies of Application Software that have
been delivered to or made by Licensee, and (on Licensor's request) Licensee
shall destroy all copies of the Application Software that are not recovered by
Licensor, certify to Licensor that it has retained no copies of the Application
Software, and acknowledge that it may no longer use the Application Software.
Upon termination of the license, Licensors obligations under this Agreement
shall cease.
ARTICLE 6. MISCELLANEOUS
6.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF
LAW RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO
THE LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
SOFTWARE LICENSE AGREEMENT - Page 5
<PAGE>
6.02 Headings. Headings used in this Agreement are to facilitate
reference only, are not a part of this Agreement, and will not in any way affect
the interpretation hereof. The use herein of the word "including," when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," or "but not limited to," or
words of similar import) is used with references thereto, but rather shall be
deemed to refer to all other items and matters, that reasonably could fall
within the broadest possible scope of such general statement, term or matter.
6.03 Assignment. This Agreement, and all rights and obligations
hereunder, are personal as to the parties hereto and may not be assigned, in
whole or in part, by any of the parties to any other person, firm or corporation
without the prior written consent thereto by the other party hereto, which
consent will not be unreasonably withheld; except that either party may freely
assign any or all of its rights and obligations hereunder to any affiliate. An
affiliate is (a) an entity that owns all or substantially all of the outstanding
stock of the entity so assigning, (b) an entity all or substantially all of
whose stock is owned by the entity so assigning, or (c) an entity under common
ownership with the entity so assigning. Such assignee entity shall thereupon be
free to assign the rights and obligations under this Agreement to any other
affiliate. Any assignment contrary to the terms hereof shall be null and void
and of no force or effect.
6.04 Failure or Partial Exercises. No failure on the part of any party
to exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
6.05 Entire Agreement, Amendments. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
Licensee did not rely on any representations or warranties of Licensor or its
employees or agents other than those set forth in this Agreement. This Agreement
may not be modified or amended except by a writing that states that it is an
amendment to this Agreement and which is signed by duly authorized
representative of the parties.
6.06 Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be valid and sufficient if dispatched either (i)
by hand delivery, (ii) by facsimile transceiver, with confirming letter mailed
promptly thereafter by first class mail, postage prepaid, (iii) by reputable
overnight express courier or (iv) by certified mail, postage prepaid, return
receipt requested, deposited in any post office in the United States, in any
case, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided from time to time in the
manner set forth above. When sent by facsimile as aforesaid, notices given as
herein provided shall be considered to have been received at the beginning of
recipients next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
SOFTWARE LICENSE AGREEMENT - Page 6
<PAGE>
6.07 Partial Invalidity. If any clause or provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
6.08 Attorneys' Fees. The prevailing party in any litigation,
arbitration or other proceedings arising out of this Agreement shall be
reimbursed by the other party for all costs and expenses incurred in such
proceedings, including reasonable attorneys' fees.
6.09 Force Majeure. No party hereto shall be liable for delay or
default in performing hereunder, other than a delay or default in payment of any
monies due to the other party, if such performance is delayed or prevented by a
Force Majeure Condition. "Force Majeure Condition" means any condition or event
beyond the reasonable control of the party affected thereby, including fire,
explosion, or other casualty, act of God, war or civil disturbance, acts of
public enemies, embargo, acts of city, state, local or federal governments in
their sovereign, regulatory, or contractual capacity, labor difficulties, and
strikes, but specifically excluding a party's failure to be Year 2000 Compliant.
If a Force Majeure Condition occurs, the party delayed or unable to perform
shall give prompt notice of such occurrence to the other party. The party
affected by the other party's inability to perform may, after sixty (60) days,
elect to either terminate this Agreement or continue performance with the option
of extending the terms of the Agreement up to the length of time the Force
Majeure Condition endures. The party experiencing the Force Majeure Condition
must inform the other party in writing when such a condition ceases to exist.
Each party shall, with the cooperation of the other, exercise all reasonable
efforts to mitigate the extent of a delay or failure resulting from a Force
Majeure Condition.
6.10 Independent Contractor. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement will be construed (a) to give either party the power
to direct and control the day-to-day activities of the other, (b) to constitute
the parties as partners, joint venturers, owners or otherwise as participants in
a joint or common undertaking, or (c) to allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.
SOFTWARE LICENSE AGREEMENT - Page 7
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PREFERRED VOICE, INC. Midwest Wireless Communications, L.L.C.
on behalf of itself and its wholly owned
subsidiaries and affiliates
By: By:
-------------------------- -----------------------------------
Name: Name:
-------------------------- -----------------------------------
Title: Title:
-------------------------- -----------------------------------
6500 Greenville Avenue Address:
Suite 570 -----------------------------------
Dallas, Texas 75206 ----------------------------------------
Fax No.: 214-265-9663 ----------------------------------------
Phone: 214-265-9580 Fax No.
-----------------------------------
Phone:
-----------------------------------
SOFTWARE LICENSE AGREEMENT - Page 8
EXHIBIT 10.33
MARKETING AGREEMENT
This Marketing Agreement is made as of this 8th day of November, 1999,
between Preferred Voice, Inc., a Delaware corporation ("PVI") and Midwest
Wireless Communications, L.L.C., a Delaware limited liability company, on behalf
of itself and its wholly owned subsidiaries and affiliates ("WIRELESS
PROVIDER"). PVI and WIRELESS PROVIDER are collectively referred to in this
Agreement as the "Parties."
BACKGROUND INFORMATION
PVI has developed a system (the "System") that when interconnected with
a telephone switching system is capable of performing the services described in
Exhibit A attached hereto and incorporated herein by reference (the "Services").
Each System consists of the hardware described in Exhibit B, certain third party
software and certain proprietary application software developed by PVI. WIRELESS
PROVIDER is a licensed wireless carrier that is currently providing
telecommunications service in the calling areas described in Exhibit C. WIRELESS
PROVIDER wishes to offer the Services to end users ("End Users") under its own
brand in conjunction with its telecommunications services.
In consideration of the mutual promises made in this Agreement, PVI and
WIRELESS PROVIDER agree that the terms and conditions set forth as follows will
apply to the license of Application Software.
ARTICLE 1. INSTALLATION
1.01 INSTALLATION. PVI shall install its Systems at WIRELESS PROVIDER's
switch locations set forth in Exhibit C to interconnect with switches described
in Exhibit C. The System will remain the property of PVI. WIRELESS PROVIDER
shall prepare the site in accordance with PVI's specifications. Installation of
Systems will be completed within 90 days of that date set forth in the
introductory paragraph of this Agreement. At WIRELESS PROVIDER'S option,
additional Systems may be added as the WIRELESS PROVIDER expands into additional
calling areas.
PVI agrees that it will use best efforts to comply with all
WIRELESS PROVIDER's security, confidentiality and regulatory requirements in
relation to the System installed at any site. In addition, PVI agrees to use all
reasonable efforts to install Systems so that they shall comply in all material
respects with all federal, state, and local laws and regulations in force on the
date hereof, which directly impose obligations upon PVI or the applicable
manufacturer.
1.02 PVI TESTING. PVI shall test the Systems to ensure that
they work properly. The testing period shall (i) commence promptly upon the
completion of installation of the System at the sites, but in no event later
than five (5) days following such completion of installation (the "Commencement
Date"), and (ii) conclude upon acceptance by as described in Section 1.03 below.
Should material deficiencies arise in the performance of the System during
testing, PVI
**[Confidential Treatment] indicates portions of this document that have been
deleted from this document and have been separately filed with the Securities
and Exchange Commission.
MARKETING AGREEMENT - Page 1
<PAGE>
shall inform WIRELESS PROVIDER promptly thereof by submitting notice, including
a written, reasonably detailed description of each deficiency, to WIRELESS
PROVIDER. PVI shall then use reasonable efforts to cure the noncompliance.
WIRELESS PROVIDER shall use its best efforts to assist PVI in curing such
noncompliance. Upon completion of such cure, PVI shall give notice to WIRELESS
PROVIDER thereof. The total period of time that may be spent on the testing
period shall not exceed ninety (90) days from the Commencement Date. If PVI,
using commercially reasonable efforts, is unable to cure any material deficiency
of the System within 90 days of the Commencement Date, then following notice
thereof either party may give the other party thirty (30) days' written notice
of its election to terminate this Agreement and the reasons therefor.
1.03 WIRELESS PROVIDER ACCEPTANCE. PVI shall inform WIRELESS PROVIDER
in writing of the completion of PVI's testing under Section 1.02. WIRELESS
PROVIDER will thereupon commence testing of the System, and shall have 60 days
in which to test the functionality of the System with employees. Upon completion
of the 60 day test period, WIRELESS PROVIDER shall either provide PVI with
written notice of any problems revealed in its tests or deliver PVI an
acceptance certificate, substantially in the form attached hereto as Exhibit D
(the "Acceptance Certificate"). The System shall be deemed to have been accepted
by WIRELESS PROVIDER upon execution and delivery by WIRELESS PROVIDER to PVI of
an Acceptance Certificate, executed by an authorized representative of WIRELESS
PROVIDER or failure of WIRELESS PROVIDER to provide written notice to PVI of any
problems WIRELESS PROVIDER discovers within the 60-day period it is conducting
tests.
ARTICLE 2. SALES AND MARKETING
2.01 SALES. WIRELESS PROVIDER shall use all commercially reasonable
efforts to promote sale of the Services so as to maximize revenues, including
conducting commercially reasonable advertising campaigns and maintaining an
inventory of collateral support materials for promotion, advertising,
point-of-sale, record keeping, subscriptions, and other items related to sales
of the Services. WIRELESS PROVIDER shall bill and collect for Services used by
End Users.
2.02 PRICING. WIRELESS PROVIDER will establish pricing for the Services
in its absolute discretion.
2.03 ADVERTISING AND PROMOTIONAL LITERATURE. If so requested by
WIRELESS PROVIDER, PVI will assist WIRELESS PROVIDER in the development and
production of original copy of advertising and collateral support materials
(i.e. layout, verbiage, plates, negatives, dies, and/or other setup materials)
that may be utilized by WIRELESS PROVIDER for marketing the Services.
ARTICLE 3. PAYMENT
WIRELESS PROVIDER shall pay PVI a share of WIRELESS PROVIDER's revenue
from the Services determined from the schedule set forth in Exhibit E. This
amount shall be paid monthly by the last day of each month for Services billed
in the prior month.
MARKETING AGREEMENT - Page 2
<PAGE>
ARTICLE 4. TRAINING AND SUPPORT
4.01 TECHNICAL SUPPORT. During the term of this Agreement, PVI shall
provide a technical support help desk that WIRELESS PROVIDER may call to report
System troubles twenty-four (24) hours per day, seven (7) days per week basis.
PVI shall troubleshoot the problems and contact the appropriate vendor to
resolve problems that cannot be resolved by actions WIRELESS PROVIDER may take
on PVI's instruction. During the term of this Agreement, PVI shall provide (i)
remote, dial-up System support, on a twenty-four (24) hours per day, seven (7)
days per week basis, and (ii) packages, generally containing corrections of
known software defects and updates or patches to increase or improve performance
and occasionally also containing minor feature enhancements of existing
software, relating to a current System. WIRELESS PROVIDER shall provide
permanent digital connectivity to each System for the purpose of off-site
software revision and maintenance.
4.02 PROVISIONING. For up to the first six months following
installation of the System, PVI shall update and maintain the customer and names
data bases in the System based on information provided by End Users directly or
through WIRELESS PROVIDER. During that period PVI shall train WIRELESS
PROVIDER's personnel in data base update and maintenance procedures. WIRELESS
PROVIDER will be responsible for such work after such training period.
4.03 TRAINING. As part of the installation process, PVI shall provide
WIRELESS PROVIDER's personnel with the initial training and instruction as
described on Exhibit F attached hereto concerning the operation and use of the
System by conducting training sessions at a mutually convenient time at WIRELESS
PROVIDER's facility. Any additional training services that are requested by
WIRELESS PROVIDER shall be invoiced to WIRELESS PROVIDER in accordance with
PVI's then prevailing hourly rates. WIRELESS PROVIDER shall be responsible for
all travel and other expenses of its personnel attending such training sessions.
ARTICLE 5. TERM
The initial term of this Agreement shall be five years. Upon expiration
of the initial term specified above, the Agreement shall automatically renew for
up to five successive one (1) year terms unless either party gives the other
notice of its intention not to renew the license at least sixty (60) days prior
to the expiration of the then current term.
ARTICLE 6. WARRANTY PROVISIONS
6.01 GENERAL. PVI warrants that the System will provide Services when
properly interconnected to WIRELESS PROVIDER's functioning switches of the types
described in Exhibit C (provided, that ANY MODIFICATION OF THE SYSTEM BY ANY
PERSONS OTHER THAN PVI SHALL VOID THE WARRANTY IN THIS SECTION 6.01).
MARKETING AGREEMENT - Page 3
<PAGE>
6.02 YEAR 2000. PVI warrants that the System delivered or modified by
PVI is Year 2000 Compliant (as defined below). Year 2000 Compliant software that
is intended to interoperate with third party products as described herein will
be compatible and inter-operate in such manner as to process between them, as
applicable, date related data correctly as described in the definition of "Year
2000 Compliant." Except as set forth in the preceding sentence, (i) PVI assumes
no responsibilities or obligations to cause third party products to function
with the System; and (ii) PVI will not be in breach of this warranty for any
failure of the System to be Year 2000 Compliant if such failure results from the
inability of any software, hardware, or systems of WIRELESS PROVIDER or any
third party to be Year 2000 Compliant. "Year 2000 Compliant" means that (a)
neither the performance nor functionality of the System will be affected by
dates prior to, during and after the year 2000, (b) no value for current date
will cause any interruption in the operation of the System; (c) the year 2000 is
recognized as a leap year; (d) in all interfaces and data storage the century,
in any date, is specified either explicitly or by unambiguous algorithms or
inferencing rules; and (e) date-based functionality of the System behaves and
will behave consistently for dates prior to, during and after the year 2000.
ARTICLE 7. TERMINATION
7.01 CAUSE FOR TERMINATION. This Agreement shall terminate
automatically and without further notice upon the occurrence of expiration of
the term, specified in Article 5 or of any renewal term in the absence of a
subsequent renewal in accordance with the terms of this Agreement. PVI may
terminate this Agreement in the event that revenue sharing payments to PVI are
less than $2000 per System per month for three consecutive months, unless
WIRELESS PROVIDER pays PVI the shortfall. In addition, either party may
terminate this Agreement at any time if (a) the other party breaches any
material term hereof and fails to cure such breach within 30 days (or ten days
in the case of a failure to pay any sum due) after receipt of written notice,
(b) the other party shall be or becomes insolvent, (c) the other party makes an
assignment for the benefit of creditors, (d) there are instituted by the other
party proceedings in bankruptcy or under any insolvency or similar law or for
reorganization, receivership or dissolution, (e) there are instituted against
the other party proceedings in bankruptcy or under any insolvency or similar law
or for reorganization, receivership or dissolution, which proceedings are not
dismissed within 60 days, or (f) the other party ceases to do business. As long
as WIRELESS PROVIDER continues to pay PVI the fees due pursuant to this
Agreement, the WIRELESS PROVIDER shall be permitted to continue to use the
System to provide the Services for a period of up to ninety (90) days following
termination in order for the WIRELESS PROVIDER to test and install a replacement
service.
7.02 EFFECT OF TERMINATION. WIRELESS PROVIDER agrees that on
termination under Section 7.01, PVI may recover all Systems that have been
installed. Upon termination of the license, PVI's obligations under this
Agreement shall cease. The termination or expiration of this Agreement shall in
no way relieve either party from its obligation to pay the other any sums
accrued hereunder prior to such termination or expiration.
MARKETING AGREEMENT - Page 4
<PAGE>
ARTICLE 8. INSURANCE
Each party hereto shall maintain, during the term of this Agreement,
the following insurance coverage as well as all other insurance required by law
in the jurisdictions where the work is performed: (a) workers compensation and
related insurance as required by law; (b) employer's liability insurance with a
limit of at least five hundred thousand ($500,000) dollars for each occurrence;
(c) comprehensive general liability insurance, with a limit of at least one
million ($1,000,000) dollars per occurrence; and (d) comprehensive motor vehicle
liability insurance with limits of at least one million ($1,000,000) dollars for
bodily injury including death, to any one person, three hundred thousand
($300,000) dollars for each occurrence of property damage, and one million
($1,000,000) dollars for each occurrence. Each party shall (i) furnish the other
prior to the start of the relevant work, if requested by the other, certificates
or adequate proof of the insurance required by this Section and (ii) notify the
other in writing at least thirty (30) days prior to cancellation of or any
material change in the policy. Notwithstanding the above, each party shall have
the option where permitted by law to self-insure any or all of the foregoing.
ARTICLE 9. MISCELLANEOUS
9.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT ANY CONFLICTS OF
LAW RULES OR PRINCIPLES OF THE STATE OF TEXAS THAT WOULD REQUIRE REFERENCE TO
THE LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.
9.02 HEADINGS. Headings used in this Agreement are to facilitate
reference only, are not a part of this Agreement, and will not in any way affect
the interpretation hereof. The use herein of the word "including," when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," or "but not limited to," or
words of similar import) is used with references thereto, but rather shall be
deemed to refer to all other items and matters, that reasonably could fall
within the broadest possible scope of such general statement, term or matter.
9.03 ASSIGNMENT. This Agreement, and all rights and obligations
hereunder, are personal as to the parties hereto and may not be assigned, in
whole or in part, by any of the parties to any other person, firm or corporation
without the prior written consent thereto by the other party hereto, which
consent will not be unreasonably withheld; except that either party may freely
assign any or all of its rights and obligations hereunder to any affiliate. An
affiliate is (a) an entity that owns all or substantially all of the outstanding
stock of the entity so assigning, (b) an entity all or substantially all of
whose stock is owned by the entity so assigning, or (c) an entity under common
ownership with the entity so assigning. Such assignee entity shall thereupon be
free to assign the rights and obligations under this Agreement to any other
affiliate. Any assignment contrary to the terms hereof shall be null and void
and of no force or effect.
MARKETING AGREEMENT - Page 5
<PAGE>
9.04 FAILURE OR PARTIAL EXERCISES. No failure on the part of any party
to exercise, and no delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof. Nor shall any single or partial exercise of any
right or remedy hereunder exclude any other or further exercise thereof or the
exercise of any other right hereunder.
9.05 ENTIRE AGREEMENT, Amendments. This Agreement and all schedules and
exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. In entering this Agreement,
WIRELESS PROVIDER did not rely on any representations or warranties of PVI or
its employees or agents other than those set forth in this Agreement. This
Agreement may not be modified or amended except by a writing that states that it
is an amendment to this Agreement and which is signed by duly authorized
representative of the parties.
9.06 NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be valid and sufficient if dispatched either (i)
by hand delivery, (ii) by facsimile transceiver, with confirming letter mailed
promptly thereafter by first class mail, postage prepaid, (iii) by reputable
overnight express courier or (iv) by certified mail, postage prepaid, return
receipt requested, deposited in any post office in the United States, in any
case, addressed to the addresses set forth on the signature page of this
Agreement, or such other addresses as may be provided from time to time in the
manner set forth above. When sent by facsimile as aforesaid, notices given as
herein provided shall be considered to have been received at the beginning of
recipient's next business day following their confirmed transmission; otherwise,
notices shall be considered to have been received only upon delivery or
attempted delivery during normal business hours.
9.07 PARTIAL INVALIDITY. If any clause or provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this
Agreement that in lieu of each clause or provision of this Agreement that is
held to be illegal, invalid, or unenforceable, there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and still be legal, valid,
and enforceable.
9.08 ATTORNEYS FEES. The prevailing party in any litigation,
arbitration or other proceedings arising out of this Agreement shall be
reimbursed by the other party for all costs and expenses incurred in such
proceedings, including reasonable attorneys' fees.
9.09 FORCE MAJEURE. No party hereto shall be liable for delay or
default in performing hereunder, other than a delay or default in payment of any
monies due to the other party, if such performance is delayed or prevented by a
Force Majeure Condition. "Force Majeure Condition" means any condition or event
beyond the reasonable control of the party affected thereby, including fire,
explosion, or other casualty, act of God, war or civil disturbance, acts of
public enemies, embargo, acts of city, state, local or federal governments in
their sovereign, regulatory,
MARKETING AGREEMENT - Page 6
<PAGE>
or contractual capacity, labor difficulties, and strikes, but specifically
excluding a party's failure to be Year 2000 Compliant. If a Force Majeure
Condition occurs, the party delayed or unable to perform shall give prompt
notice of such occurrence to the other party. The party affected by the other
party's inability to perform may, after sixty (60) days, elect to either
terminate this Agreement or continue performance with the option of extending
the terms of the Agreement up to the length of time the Force Majeure Condition
endures. The party experiencing the Force Majeure Condition must inform the
other party in writing when such a condition ceases to exist. Each party shall,
with the cooperation of the other, exercise all reasonable efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.
9.10 INDEPENDENT CONTRACTOR. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement will be construed (a) to give either party the power
to direct and control the day-to-day activities of the other, (b) to constitute
the parties as partners, joint venturers, owners or otherwise as participants in
a joint or common undertaking, or (c) to allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.
9.11 PVI'S USE. WIRELESS PROVIDER shall permit PVI to use its Systems
to provide Services to its own end users ("PVI End Users") where efficient
networking would be promoted by such use by PVI End Users.
9.12 CONFIDENTIALITY OF AGREEMENT. The terms of this Agreement shall be
maintained in confidence by all parties and may be disclosed only to such of a
party's employees or agents having a need to know its terms. No party may
disclose the terms to any third party, other than its attorneys, accountants or
contractors having a need to know, except as may be required pursuant to a
lawfully issued subpoena or other formal demand for the production of
information by a court of competent jurisdiction or a regulatory body with
jurisdiction over the party. In the event any such demand is made, the party
ordered to produce such information shall promptly notify the other party and
shall use its best efforts to maintain the confidentiality of such information.
If either party determines that this Agreement is a "material contract," that
party may file this Agreement with the Securities and Exchange Commission,
provided that it notifies the other party at least fifteen (15) days prior to
such filing and cooperates with the other party for such treatment.
MARKETING AGREEMENT - Page 7
<PAGE>
Preferred Voice, Inc. Midwest Wireless Communications, L.L.C.,
on behalf of itself and its wholly owned
subsidiaries and affiliates
By: By:
----------------------------- -----------------------------------
Name: Name:
----------------------------- -----------------------------------
Title: Title:
----------------------------- -----------------------------------
6500 Greenville Avenue Address:
Suite 570 ----------------------------------------
Dallas, Texas 75206 ----------------------------------------
Fax No.: 214-265-9663 Fax No.:
------------------------------
Phone: 214-265-9580 Phone:
------------------------------
PV1/MW.Wire1ess.MktgAgrmt.doc
MARKETING AGREEMENT - Page 8
<PAGE>
EXHIBIT A
PREFERRED VOICE, INC.
PRODUCT DESCRIPTIONS
FLEET CALLING ADVANTAGE permits any caller dial-up access to a
directory of cellular phones served by
WIRELESS PROVIDER, and the caller may
then speak the name of the person in the
Directory with whom he wishes to speak and
be connected with that person's cellular
phone.
INTELLIGENT CALL SCREENING gives the subscriber the ability to hear the
voice of the person calling and the option
to accept the call or deny the call. Denying
the call will automatically send it to voice
mail or if the subscriber does not have voice
mail, the system will inform the caller that
the person is currently unavailable.
SAFETY DIALING is a service that allows the person
placing the call to access the WIRELESS
PROVIDERS network, dial the assigned access
code (such as**) on the keypad, speak a name
from his or her directory. That name's
programmed number will then be dialed.
EXHIBIT A - Page 1
<PAGE>
EXHIBIT B
=========
HARDWARE CONFIGURATION (24PTS)
ITEM DESCRIPTION
FTU-2000A CUSTOM COMPUTER
P llBX40P38 PENT 11 400MHz CPU
P11BX33P38 PENT 11 333MHz CPU
64MO40 64MB D1MM RAM
FD015 3.5" FDD, BLACK
HD91S 9.1GB HDD, SCS1
ALM-1008B-H 4.3GB HDD, SCS1
CDKIT1 ALARM BOARD
CDT240A DUAL SLIM CD-ROM
SCSR03 SLIM LINE CD-ROM
MD566A JUMPERABLE FAX/MDM
MNT40 MS WIN NT 4.0
240SCT1 PORT RESOURCE
ANTARES VOICE RESOURCE
PRO 2V ALARM RESOURCE
PORT FEE VOICE REC RESOURCE
Optional Hardware Components
48v Inverter
Master Switch
TRAFFIC ENGINEERING
USERS PORTS
1000 11
2000 20
3000 26
Spares Kit
EXHIBIT B - Page 1
<PAGE>
EXHIBIT C
=========
MIDWEST WIRELESS COMMUNICATIONS L.L.C.
1015 26TH PLACE NW
OWATONNA, MN 55060
EXHIBIT C - Page 1
<PAGE>
EXHIBIT D
=========
FORM OF ACCEPTANCE CERTIFICATE
==============================
The undersigned, an authorized representative of ______________________
____________________________, a _______________________ corporation, on behalf
of itself and its wholly owned subsidiaries and affiliates ("WIRELESS PROVIDER")
, in his/her capacity as ______________________, does hereby certify that (a)
the testing period (as such term is defined in the Software License Agreement,
dated as of ______________________, 1999 (the "Agreement"), by and between Pre-
ferred Voice, Inc. ("PVI") and WIRELESS PROVIDER with respect to the System (as
defined in the Agreement) purchased or licensed by WIRELESS PROVIDER has been
successfully completed, (b) the System satisfies the requirements of the
Specifications (as defined in the Agreement) and (c) the System is hereby
accepted by WIRELESS PROVIDER.
Date:
----------------------------- ----------------------------------------
By:
-----------------------------------
Printed Name:
-----------------------------------
EXHIBIT D - Page 1
<PAGE>
EXHIBIT E
=========
REVENUE SHARING FEES
====================
[Confidential Treatment Requested]** OF THE FIRST [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF THE NEXT [Confidential Treatment
Requested]** IN REVENUE FOR EACH SYSTEM
[Confidential Treatment Requested]** OF ALL REVENUE IN EXCESS OF [Confidential
Treatment Requested]** FOR EACH SYSTEM
For purposes of this Agreement, Revenue shall equal the greater of
(a) the amount that would have been received by Wireless Carrier if the
charges set forth in the Exhibit E-1 had been charged to each
subscriber using one of the Services described in Exhibit E-1 except
that if WIRELESS PROVIDER is offering reduced rates -or free service as
part of a promotion, only a new subscribers actual revenue need be
accrued for the promotion during the first 30 days of service to the
new subscriber, or
(b) the actual revenue received from subscribers using a Service
offered by means of a System, excluding sales and use taxes, interest,
late charges and shipping and handling fees.
EXHIBIT E - Page 1
<PAGE>
EXHIBIT E-1
===========
Service Monthly Fees
- - --------------------------------------------------------------------------------
Fleet Calling Advantage [Confidential Treatment
Requested]**
Intelligent Call Screening [Confidential Treatment
Requested]**
Safety Dialing [Confidential Treatment
Requested]**
EXHIBIT E-1 - Page 1
<PAGE>
EXHIBIT F
=========
TRAINING
1. SERVICES TRAINING-
O Target Audience
- Product Manager
- Product Marketing
o Contents
- Complete review of each PVI service description and
application
- Market Position
- Target Market
2. SYSTEM INSTALLATION AND MAINTENANCE TRAINING-
Installation
o Hardware Installation
o T-1 Configuration
o VIP Programming
- SCC
- DID
Maintenance
o Alarm Systems
o Hardware Replacement
o Hardware Expansion
3. PROVISIONING
EXHIBIT F - Page 1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for Preferred Voice, Inc.
</LEGEND>
<CIK> 0000946822
<NAME> Preferred Voice, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 41,750
<SECURITIES> 0
<RECEIVABLES> 3,360
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,110
<PP&E> 442,536
<DEPRECIATION> 161,049
<TOTAL-ASSETS> 1,169,150
<CURRENT-LIABILITIES> 1,063,033
<BONDS> 0
0
0
<COMMON> 9,695
<OTHER-SE> (745,656)
<TOTAL-LIABILITY-AND-EQUITY> 1,169,150
<SALES> 180,383
<TOTAL-REVENUES> 180,383
<CGS> 15,033
<TOTAL-COSTS> 15,033
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176,752
<INCOME-PRETAX> (779,426)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 88,828
<CHANGES> 0
<NET-INCOME> (690,598)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
