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Exhibit 10.11
PREPAID CELLULAR RESELLER AGREEMENT
This Prepaid Cellular Reseller Agreement (the "Agreement") is made as of the
19th day of February, 1999, by and between Shared Technologies Cellular, Inc., a
Delaware corporation, having its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("STC"), and MCI Telecommunications
Corporation and WorldCom Technologies, Inc. and their respective affiliates
(collectively, "MCI WORLDCOM").
WHEREAS, STC provides certain prepaid cellular communications services, which
include the utilization of certain third-party relationships with technology
providers and cellular service carriers, automated audit and billing systems, an
interactive voice response ("IVR") platform, activation of Phones, sale and
redemption of PINs, and related End User service. Such prepaid cellular services
to be provided to End Users pursuant to the terms of this Agreement are herein
referred to as the "Services." As used herein, the term "End Users" refers to
end users of the Services.
WHEREAS, MCI WORLDCOM is engaged in the business of selling prepaid
long-distance cards and services through direct distribution and major retail
outlets across the U.S.;
WHEREAS, this Agreement provides for a program, pursuant to which MCI WORLDCOM
and STC will market and sell the Services to End Users under an MCI WorldCom
brand name, pursuant to which MCI WORLDCOM will have responsibility for
distribution development, marketing, merchandising and brand management, and
pursuant to which STC will be responsible for providing the Services,
back-office service administration and End User service for the Services; and
WHEREAS, under the program, End Users will purchase MCI WorldCom branded prepaid
cellular phone and airtime kits for use of the Services (a "Phone Kit"),
pursuant to the terms hereof. Such Phone Kits may include initial airtime or
require a separate airtime purchase for service activation, with additional
airtime available by purchase of additional cards through retail and by purchase
of PINs by phone from STC.
NOW, THEREFORE, in consideration of the promises and covenants contained herein,
the receipt and adequacy of which are acknowledged, the parties agree as
follows.
1. GENERAL DESCRIPTION OF PROGRAM.
(a) Scope. MCI WORLDCOM and STC are entering into this Agreement for the purpose
of marketing and providing Services to End Users under an MCI WorldCom brand
name through the MCI WORLDCOM retail accounts listed on the attached Exhibit A
(the "Retailers"), and short-form direct response TV advertising by STC
consistent with the terms of this Agreement, with additional usage available to
End Users by purchase from the Retailers and by phone from STC's interactive
voice response system ("IVR").
(b) Phone Kits, PINs and Cards. Retail sales of the Services will include the
sale of Phone Kits
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by MCI WORLDCOM through the Retailers and by STC through direct-response
television advertisements. Each Phone Kit will include one cellular prepaid
phone programmed or enabled with software and/or other technology obtained by
STC from its technology partner(s), to enable the phone to utilize the Services
(a "Phone"). In addition, each Phone Kit may include initial airtime or require
a separate airtime card (a "Card") purchase for service activation. As used
herein, the term "Card" refers to a plastic (or comparable material) card that
has a personal identification number ("PIN") printed on it for use of the
Services. Airtime (i.e. usage) of the Services is obtained through the
redemption of PINs by End Users. After an End User purchases a Phone Kit, and
separate Card if required, the End User must call STC to activate the Phone. The
additional purchase of airtime from a Retailer consists of an End User
purchasing a Card (which contains a PIN). Alternatively, the additional purchase
of airtime directly from STC consists of the purchase of another PIN only by
means of the End User calling STC's IVR, the phone number for which shall appear
on all Cards.
(i) Card Denominations. Cards shall be in face value denominations of
$30, $50 and $75.
(ii) PIN Expirations. All PINs will be valid for a period of 60 days
from the date that they are redeemed (see "Redemption" below). However, in the
event that an End User purchases and redeems another PIN within 30 days after
the expiration of a prior PIN, STC will reinstate for 60 days the amount of
unused airtime that had been remaining on the expired PIN (a "PIN Recharge").
(iii) Activation. In order for an End User to use his or her Phone, the
End User must initially activate the Phone. Activation is accomplished when an
End User redeems (see "Redemption" below) the PIN on the initial Card included
in the Phone Kit or on a Card purchased separately. A minimum of $30 of airtime
must be redeemed in order to activate a Phone. At the same time, the End User
also needs to provide STC with the electronic serial number ("ESN") that appears
on that particular Phone. STC then assigns a MIN to the Phone. The term "MIN"
means mobile identification number. A MIN is equivalent to a phone number. Once
activated, in order for a MIN to remain active an End User must redeem a PIN at
least once every 60 days.
(iv) Redemption. There are two ways for an End User to supply airtime
to a Phone; by purchasing a Card from a Retailer and calling STC with the PIN,
or by purchasing a PIN directly from STC. With respect to Cards, a Card's PIN
may be redeemed by an End User by calling STC's IVR, whereby the End User gives
STC the PIN from the Card. The PIN appears on the Card in a secured manner. In
response, STC gives the End User an airtime control code ("ACC"), which the End
User inputs into the Phone's keypad. This loads the Phone for airtime.
Similarly, with respect to PINs purchased directly from STC, a End User calls
STC's IVR, purchases a PIN, and STC provides the End User with an ACC (see
Section 7(i), "Accepted Payment Methods"). Redemption is deemed to occur when
STC gives the ACC to the End User, both for Card PIN redemptions and PIN
purchases directly from STC.
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2. TERM. This Agreement shall commence as of the date first written above and
have an initial term of two (2) years. The term hereof shall automatically renew
for successive one (1) year terms unless either party gives notice of
termination at least 120 days prior to the end of the term then in effect.
3. TERMINATION.
(a) Both parties shall have the right to terminate this Agreement by reason of
an uncured default of the other party in accordance with Section 3 hereof.
(b) Both parties shall have the right to terminate this Agreement for
convenience with 120 days' notice, subject to the following. The term "for
convenience" shall mean for any reason other than an uncured default of the
other party.
(i) In the event that MCI WORLDCOM elects to terminate this Agreement
for convenience, MCI WORLDCOM agrees to implement one of the following options,
A) that, for a period of one (1) year (inclusive of the notice period required
by Paragraph 3(b) hereof) following the effective date of such termination, MCI
WORLDCOM shall continue to offer and promote only the Services, to the exclusion
of other prepaid cellular services, to all Retailers from which MCI WORLDCOM had
taken orders for the Services during the term of this Agreement or, B) MCI
WORLDCOM may choose to pay a buyout equal to $___ for each End User with an
active MIN, with respect to End Users that became users of the Services through
one of the Retailers. In the event of a termination for convenience, either by
MCI WORLDCOM pursuant to this Section 3(b)(i) or by STC pursuant to Section
3(b)(ii) below, no sales of Cards or PINs to End Users shall occur after the
effective date of such termination and no PIN Recharges shall occur following
such termination effective date. STC shall continue to honor all PINs during the
sixty (60) day period following such termination effective date.
(ii) In the event that STC elects to terminate this Agreement for
convenience, STC agrees to implement one of the following options, A) that, for
a period of one (1) year (inclusive of the notice period required by Paragraph
3(b) hereof) following the effective date of such termination, STC shall
continue to provide all Services to MCI WORLDCOM , or B), STC may choose to pay
a buyout equal $___ for each End User with an active MIN, with respect to End
Users that became users of the Services through one of the Retailers.
(c) In the event that MCI WORLDCOM elects not to renew this Agreement, then for
a period of one (1) year following the expiration of this Agreement, MCI
WORLDCOM shall continue to offer and promote the Services, on a non-exclusive
basis, to all of the Retailers to which it had offered the Services immediately
prior to such termination.
(d) In the event that STC elects not to renew this Agreement, then for a period
of one (1) year
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following the expiration of this Agreement, STC shall continue to make available
to MCI WORLDCOM all services to support the provision of Services.
4. EXCLUSIVITY.
[redacted]
5. PRICING. Suggested retail pricing ("SRP") for the Services, on a per-minute
basis, inclusive of telecommunications taxes, is as follows.
(a) Local service: $____
(b) Long-distance: $____
(c) Roaming: $____
(d) Local service airtime pertains to calls made by an End User that originate
and terminate within the local cellular service area of the End User's MIN
("Local Area"). Local service rates also apply to airtime for all incoming calls
received by an End User within such End User's Local Area, regardless of from
where they originate. Long-distance service airtime pertains to all calls made
by an End User that originate within the End User's Local Area and terminate
outside of such Local Area. Roaming applies to all calls made or received by an
End User outside of the Local Area.
(e) The parties agree to use commercially reasonable efforts to maintain
competitive pricing levels, with respect to other national providers. Any
reductions of SRP shall be by mutual written agreement between the parties, and
shall become implemented within approximately 30 days of such agreement. The
parties shall consider the following factors in determining what constitutes
such competitive pricing: end user pricing for activation, redemption, access,
local airtime, long distance and roaming services; and whether pricing is on a
tiered basis, in which case such comparison shall be made using a blended rate.
(f) Returned Phones. MCI WORLDCOM shall provide weekly reports to STC detailing
all Phone returns by End Users and Retailers, which reports shall include the
ESN of each such Phone. If a Phone has not been activated, then STC shall not
charge MCI WORLDCOM for the $10 of initial airtime. If a Phone has been
activated, STC will promptly deactivate the Phone and refund to MCI WORLDCOM the
wholesale cost of the usage associated with the initial Card.
6. DISCOUNTS AND COMMISSIONS.
(a) Card PIN Discount to MCI WORLDCOM. STC agrees to sell PINs to MCI WORLDCOM
for Cards at a base discount of __% off of the SRP of such PINs ("Base
Discount"). For example,
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STC will charge MCI WORLDCOM $__ for a PIN that is used on a Card with an SRP of
$___. For initial airtime (included in the Phone Kit), STC will charge MCI
WORLDCOM $____ for such $___ of initial airtime. STC shall furnish PINs to MCI
WORLDCOM to enable MCI WORLDCOM to produce Cards bearing PINs, which PINs shall
be provided in sufficient quantities as reasonably required by MCI WORLDCOM.
However, the actual sale of each PIN shall be deemed to occur only when such PIN
is redeemed by an End User from STC.
(b) Average Monthly Usage Commission to MCI WORLDCOM. STC agrees to pay a
commission to MCI WORLDCOM based on a percentage of the average monthly usage of
End Users using the Services ("Average Monthly Usage Commission"). Such Average
Monthly Usage Commission shall be based on the aggregate dollar amount (based on
SRPs) of PINs redeemed by all End Users each month during the term of this
Agreement, divided by the total number of active MINs during such month
("Average Monthly Usage"). The Average Monthly Usage Commission shall be an
amount representing ___% for each dollar that the Average Monthly Usage exceeds
$___, multiplied by the aggregate dollar amount (based SRPs) of PINs redeemed by
all End Users during such month. The Average Monthly Usage Commission will be
reported monthly to MCI WORLDCOM by the 15th of the following month, with
payment from STC net 30 from the date of the report.
(i) For example, if Average Monthly Usage were $____ for a particular
month in which an aggregate of $1,000,000 of PINs were redeemed by End Users,
then STC would pay MCI WORLDCOM an Average Monthly Usage Commission of $______
(i.e. ____% x $1,000,000). Average Monthly Usage Commissions shall be payable by
the last day of the month following the month in which they accrue.
(c) Commissions on Direct PIN Sales by STC. With respect to sales of MCI
WORLDCOM branded PINs made by STC directly to End Users, STC agrees to pay MCI
WORLDCOM a monthly commission in the amount of __% of the SRP of each such PIN
sold ("PIN Commissions"). STC shall be responsible for collecting from End Users
the purchase price of such PINs and paying PIN Commissions to MCI WORLDCOM
within 30 days from the end of the month in which the PIN sales occurred.
(d) MIN Activation Commissions on Phone Kit Sales by STC. When STC generates an
MCI WORLDCOM branded Phone Kit sale, STC shall pay to MCI WORLDCOM an activation
commission (an "Activation Commission"), which shall accrue at the time the
Phone is activated. Activation Commissions shall be based on ___ percent (_%) of
the sales price of the Phone Kit excluding the wholesale value of the PIN for
the initial Card. Such commissions shall be payable by the last day of the month
following the month in which they accrue. The wholesale value of the initial
Card PIN for Phone Kit sales generated by STC shall be the SRP of the Card less
MCI WORLDCOM's Base Discount.
(i) For example, if STC were to generate a Phone Kit sale for $____
(including an initial
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$__ Card), then, upon activation of the Phone, STC would become obligated to pay
an Activation Commission to MCI WORLDCOM in the amount of $_____ (i.e. % x
[$____ - $____]).
(e) STC agrees to provide MCI WORLDCOM with PIN discounts and sales commissions
equal to or greater than those given to any other distributor or agent of STC
that purchases comparable volumes of services from STC. STC further agrees that
its pricing shall remain competitive with the prepaid cellular services
industry.
7. STC'S RESPONSIBILITIES. Without in any way limiting the responsibilities of
STC elsewhere stated in this Agreement, STC shall have the following additional
responsibilities:
(a) Services. STC agrees to provide the Services to End Users pursuant to the
terms hereof.
(b) Carrier Relations. STC shall be responsible for maintaining agreements with
cellular carriers as necessary to provide the Services in the cellular markets
identified in Exhibit A. MCI WORLDCOM shall have no responsibility or liability
with respect to such carriers, except to the extent arising out of MCI
WORLDCOM's act or negligence. STC will be the customer of record with such
carriers and shall be responsible for payment of all charges billed to STC for
the Services. STC shall indemnify and hold MCI WORLDCOM harmless with respect to
any claims by such carriers or End Users against MCI WORLDCOM arising in
connection with the Services, except to the extent that any such claim arises
out of MCI WORLDCOM's act or negligence, subject to the obligation of MCI
WORLDCOM to insert language in its standard End User agreements to the effect
that MCI WORLDCOM provides no warranties, express or implied, with respect to
the Services. This indemnification expressly excludes claims relating to Phones
and related goods sold by or on behalf of MCI WORLDCOM. STC and MCI WORLDCOM
agree to work together in performing a market analysis with respect to
optimizing wireless wholesale costs.
(c) Fraud/Cloning. STC shall be responsible for all charges that may result from
the cloning of MINs or ESNs relating to the Services, except to the extent
caused by the act or negligence of MCI WORLDCOM. STC shall provide monthly
reports to MCI WORLDCOM detailing incidents of such cloning.
(d) Regulatory Approvals. To the extent that any regulatory approvals may be
required in order for STC to provide the Services, all such approvals,
including, without limitation, tariff filings, permits, certifications,
authorizations and licenses, shall be the responsibility of STC.
(e) Use of MCI WORLDCOM Long-Distance Services. STC agrees to to select MCI
WORLDCOM, or an MCI WORLDCOM affiliate, as the long-distance carrier for the
Services, when at all possible, subject to STC's reasonable discretion with
respect to the terms on which such long-distance services are offered to STC.
(f) Response Times for Order Fulfillment.
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(i) Activations. STC will use its reasonable efforts to activate Phones
(i.e. provide them with an active MIN) and provide ESN changes within, on
average, ___ hours of STC's receipt of End Users' telephonic activation orders.
STC will make available sufficient blocks of MINs for all major cellular service
markets in the U.S.
(ii) PINs. STC shall provide Card PINs to MCI WORLDCOM within three (3)
business days of STC's receipt of MCI WORLDCOM's written or electronic purchase
orders.
(iii) End User Service Levels. STC shall maintain a monthly average
response time to End User service calls such that the average time on hold for
End Users calling the toll-free service number during hours of operation shall
be ___ seconds, and End Users calling the IVR system shall have unrestricted
access with no time on hold. STC shall further maintain a monthly average call
abandonment rate not to exceed ______ percent (_%). In addressing End User
calls, STC will endeavor to provide a complete answer or problem resolution in
the course of each End User's call, while generally taking no more than ____ ( )
____ to resolve most Service issues, except in the case of Service problems that
affect a significant number of End Users, in which case STC will prioritize its
response to such problems in order to try to provide a more rapid resolution. In
the event that STC fails to meet the standards set forth in this Subparagraph
7(f)(iii), STC shall be entitled to a thirty (30) day cure period to cure such
default. Additional performance and service level criteria shall be added as
reasonably requested by MCI WORLDCOM and agreed to by STC in writing.
(g) IVR System. STC shall maintain an interactive voice response ("IVR") system
for End Users to obtain activation for their Phones and to purchase and redeem
PINs. The IVR system shall be operative 24 hours a day, seven days a week.
(h) Toll-Free End User Service Number. STC shall provide a toll-free telephone
number for End Users to call for activations, redemptions and Services support.
STC shall provide staffing for such End User support line seven days a week,
from 8:00 a.m. to 12:00 a.m. Eastern time Monday through Saturday and 8:00 a.m.
to 6:00 p.m. Eastern time on Sunday, with the exception of New Years Day, Easter
Sunday, Thanksgiving Day and Christmas Day at which time the operator center is
closed. Additionally, operator center(s) will close at 2:00 p.m. Eastern time on
Christmas Eve and New Years Eve.
(i) Accepted Payment Methods. STC agrees to accept payment by End Users for PINs
by means of all major credit cards and by automatic check handling payments
against U.S. bank accounts, subject to STC's reasonable discretion with respect
to such transactions.
(j) Payment Terms for PINs. STC shall invoice MCI WORLDCOM monthly for PINs, as
follows. Certain Retailers shall be equipped with technology that will enable
Cards with magnetic strips to be run through a card swipe device when a Card is
purchased from such Retailer. The PIN on that Card will only then become enabled
for redemption (herein referred to as "POS-Enabled PINs"). This process is
intended to reduce theft problems. STC shall invoice MCI WORLDCOM
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for POS-Enabled PINs in the month following the month in which such PINs are
redeemed. In other instances, MCI WORLDCOM will sell Cards to Retailers with
Non-POS-Enabled PINs, both on a consignment basis and on a non-consignment
basis. With respect to Non-POS-Enabled PINs sold to Retailers by MCI WORLDCOM on
a consignment basis, STC shall invoice MCI WORLDCOM for such PINs in the month
following the month in which such PINs are redeemed. With respect to
Non-POS-Enabled PINs sold to Retailers by MCI WORLDCOM on a non-consignment
basis, STC shall invoice MCI WORLDCOM for such PINs when the Cards bearing such
PINs are shipped by MCI WORLDCOM to the Retailers. MCI WORLDCOM shall notify STC
at the time that it ships such Cards. MCI WORLDCOM shall pay all invoices within
30 days of the invoice date.
(k) Taxes. STC shall be responsible for the payment of all federal
telecommunications taxes applicable to the sale of the Services.
(l) Reporting. STC shall provide the following information to MCI WORLDCOM on a
weekly basis, (i) An activations report, by Retailer showing both new PIN
redemptions and reactivations of previously expired PINs, (ii) a redemption
report, by retailer/channel (with STC being a channel), showing redemptions by
Card denomination. STC shall also provide the following information to MCI
WORLDCOM on a monthly basis, a) a summary of activations report with ESNs, b)
summary of redemptions report by control numbers, and (iii) an average
commissions report (by the 15th of the following month), with detail to
illustrate the number of End Users, by MIN, and aggregate PIN redemptions (based
on SRPs) broken out by new and existing End Users. STC shall also provide other
reports as mutually determined to be necessary.
(m) Phones and Programming.
(i) Technology Rights/Systems. STC shall be responsible for maintaining
agreements with technology providers for licensing applicable technology(ies),
generating PINs and providing programming for Phones, and will provide full
indemnification to MCI WORLDCOM for any and all claims brought against MCI
WORLDCOM in connection therewith, including, without limitation, any such claims
for patent infringement. STC also shall purchase, maintain and operate systems
necessary for PIN generation. STC further agrees to use its reasonable efforts
to secure additional technology rights with respect to new technologies relating
to the Services, as such technologies become available.
(ii) Access to Programming Information. STC agrees to make available to
MCI WORLDCOM and its authorized agents such information as reasonably required
to enable MCI WORLDCOM, and such agents, to program Phones in order that such
Phones will function properly with the Services.
(iii) Phone Kit Fulfillment Option. MCI WORLDCOM shall have the option
of delegating to STC the responsibility for preparing Phones for retail sale,
for a fee of $____
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per Phone, payable on a net 30-day basis. Such preparation of Phones would
include:
(A) programming (sometimes referred to as "flashing") the
Phones with the technology necessary to enable the
Phones to function properly with the Services;
(B) packaging the Phones in Phone Kits (using materials
provided by MCI WORLDCOM), including packing, shrink
wrapping and labeling for retail distribution; and
(C) providing monthly reports to MCI WORLDCOM, in a
mutually agreeable format, detailing such Phone Kit
fulfillments.
(n) Direct Response TV Sales. STC shall establish a direct response television
advertising program to market and sell the Services, as follows:
(i) Commissions Payable to MCI WORLDCOM. MCI WORLDCOM shall be entitled
to receive commissions on all sales of MCI WORLDCOM branded Phone Kits by STC
directly to End Users that call the toll-free number appearing in STC's
television advertisements, in accordance with Section 6(d) hereof.
(ii) Phone Kits. STC shall be solely responsible for all fulfillment
associated with Phone Kits sold through STC's direct-response TV advertisements.
These Phone Kits shall have the same appearance as Phone Kits sold by MCI
WORLDCOM through the Retailers. STC shall have no responsibility with respect to
the sale of Phone Kits through the Retailers, which shall be the sole
responsibility of MCI WORLDCOM.
(iii) Pricing. STC agrees to adhere to the same pricing guidelines for
its direct-response TV ad sales as otherwise applicable to the sale of the
Services, as set forth in Section 5.
(iv) MCI WORLDCOM's Ad Law Dept. Approval. Reference is made to
Paragraph 9(b) hereof with respect to the need for MCI WORLDCOM's Advertising
Law Department to review the content of all television advertisements that
contain any reference to ▇▇▇▇(s) of MCI WORLDCOM.
(o) STC Support of MCI WORLDCOM Switch-Based Programs. STC shall support
programs of MCI WORLDCOM that provide debit cellular services via
non-handset-debit-technolog(ies), in accordance with Exhibit C hereof.
8. MCI WORLDCOM'S RESPONSIBILITIES. Without in any way limiting the
responsibilities of MCI WORLDCOM elsewhere stated in this Agreement, MCI
WORLDCOM shall have the following additional responsibilities:
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(a) Marketing and Distribution of Services. MCI WORLDCOM shall market, promote
and sell the Services through the Retailers, using its commercially reasonable
efforts to effectively promote such sales to the same degree as it would any of
its other major products and services. Such efforts shall include, without
limitation, facilitating in-store Retailer promotions and advertising in
Retailers circulars, which may be accomplished through co-op advertising or
market development fund programs offered by MCI WORLDCOM to the Retailers.
(b) Production of Cards. MCI WORLDCOM shall be responsible for production of all
Cards, which shall describe in reasonable detail the procedures for activation
and redemption of PINs for use of the Services, and shall conform to the
requirements set forth in Section 8(c) below. MCI WORLDCOM shall produce such
quantity of Cards as reasonably required to sufficiently satisfy End User
demand. MCI WORLDCOM shall maintain inventory control of its Cards by means of
control numbers for each PIN, which will be provided to MCI WORLDCOM by STC.
Such control numbers are necessary because the PIN is concealed until an End
User purchases the Card and reveals the PIN. It should be noted that not all
Cards will have a scratch-off area for the concealment of PINs.
(c) Point of Sale Materials. MCI WORLDCOM shall be responsible for production of
all point of sale ("POS") materials, including product packaging, labeling,
instructions, coverage maps, signage, and marketing materials such as retail
displays and product brochures. Such POS materials shall be subject to STC's
prior approval as to form and content, which approval shall not be unreasonably
withheld or delayed.
(i) STC Service Provider. All POS materials, with the exception of
materials related to Phone Kits and Phones, shall clearly display the
CellEase(R) logo and shall indicate: "Also redeemable by CellEase(R) customers"
and shall display only STC's toll-free number for End Users to call. STC shall
provide MCI WORLDCOM with language and logo requirements for POS materials for
the purpose of identifying the technology partner(s) associated with the
Services.
(ii) PIN Purchase Requirement. All POS materials shall prominently and
clearly indicate that End Users must redeem one PIN at least every 60 days in
order to maintain Service.
(d) Programming of Phones/Transmittal of Data to STC. MCI WORLDCOM shall be
responsible for the programming of Phones prior to shipment to the Retailers,
unless such task is delegated to STC pursuant to Section 7(m)(iii) hereof.
Phones shall be programmed with STC-authorized prepaid cellular technology(ies),
and shall be configured for STC-approved rate plans. When programming Phones,
MCI WORLDCOM shall utilize data supplied to MCI WORLDCOM through STC's carrier
activation terminal system. STC shall provide MCI WORLDCOM with remote access to
STC's carrier activation terminal. MCI WORLDCOM also shall transmit, or cause to
be transmitted by Retailers, to STC all data reasonably required by STC to track
ESNs and PINs
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electronically, except that to the extent that a Retailer does not have
electronic data capabilities then such data shall be transmitted by such other
means as practicable. Such data shall be reported in a mutually agreeable
format.
(e) Retailer Interface with STC's Systems. MCI WORLDCOM shall use its reasonable
efforts to advise and recommend to the Retailers that they establish automated
POS activation systems that utilize either MCI WORLDCOM's or STC's POS
activation system. In the event that any Retailer(s) utilize MCI WORLDCOM's POS
activation system, then MCI WORLDCOM shall electronically transmit to STC all
data received from such Retailer(s) immediately upon MCI WORLDCOM's receipt of
such data.
(f) Reporting. MCI WORLDCOM shall provide monthly reports to STC, in a mutually
agreeable format, detailing sales data by each Retailer for Phone Kits and
Cards, and other related information, including ESNs and control numbers as
shipped to each Retailer. For returns, MCI WORLDCOM will send STC the ESNs for
all returned Phones in a timely manner.
(g) Taxes. MCI WORLDCOM shall be responsible for advising the Retailers that
they are responsible for charging, collecting and remitting all sales and use
taxes and governmental and quasi-governmental surcharges on sales of Phones and
Cards.
9. TRADEMARKS/SERVICE MARKS USAGE.
(a) Neither party nor either party's subdistributors or agents shall use any
trademarks, service marks, tradenames or other intellectual property
(collectively, "Marks") of the other in any manner, except as expressly
authorized in writing or in this Agreement by the owning party, all of which
Marks shall remain the exclusive property of the owner, without any right of
implied license pursuant to this Agreement. Upon termination of this Agreement,
the parties shall return to each other all marketing and sales materials then in
their possession that contain any Marks of the other party, and shall
immediately cease any and all use of any Marks of the other party, except that
each party shall have the right to continue to use POS materials and television
advertisements containing Marks of the other party for such time after
termination of this Agreement until its inventory of such POS materials are
substantially depleted and until a new television advertisement can be produced,
but in no case beyond 90 days following the termination of this Agreement.
(b) Without in any way limiting the foregoing, it is expressly understood and
agreed that all uses by STC of MCI WORLDCOM Marks, including, without
limitation, in television ads, require submission by MCI WORLDCOM to its
Advertising Law Department for prior approval, which approval shall not be
unreasonably withheld or delayed.
(c) STC hereby represents and warrants that CellEase(R) is a registered
trademark of STC, and such falls within the definition of the term ▇▇▇▇, as used
herein.
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(d) The parties hereby mutually represent to each other that each of them has
all right, title and interest in and to all Marks to be used in connection with
the Services, that use of any such ▇▇▇▇ shall not violate any trademark, service
▇▇▇▇, copyright, trade secret, proprietary right or publicity right of any third
party. In the event that the use of any party's ▇▇▇▇ in connection with the
Services becomes the subject of a claim of infringement against the other party
hereto, then the party whose ▇▇▇▇ is alleged to have caused such infringement
shall indemnify and hold harmless the other party hereto with respect to such
claim. If a ▇▇▇▇ becomes unusable due to such a claim, then the party whose ▇▇▇▇
is the subject of such claim shall provide a noninfringing replacement ▇▇▇▇ for
use in connection with this Agreement, as reasonably required.
10. PUBLICITY. Any press releases concerning this Agreement shall be subject to
prior mutual review and approval, which approval shall not be unreasonably
withheld or delayed.
11. RELATIONSHIP OF THE PARTIES.
(a) The relationship between STC and MCI WORLDCOM arising from this Agreement
does not in any way constitute a joint venture, partnership, general agency, or
employment relationship.
(b) Neither party shall make any unauthorized representations or warranties
concerning the products or services of the other.
12. DEFAULT. Except as otherwise provided in this Agreement, in the event either
party fails to perform any of its obligations under this Agreement and such
failure continues for more than ten (10) business days, or, in the case of a
non-monetary default, thirty (30) days, following written notice of such
default, then the non-defaulting party shall have the right to terminate this
Agreement immediately upon written notice to the other party, without limiting
any other remedies available hereunder or at law or in equity.
13. LIMITATIONS OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER,
DIRECTLY OR OTHERWISE, FOR INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS),
INDIRECT, PUNITIVE OR SPECIAL DAMAGES ARISING IN ANY WAY IN CONNECTION WITH THIS
AGREEMENT.
14. NOTICE. Whenever any notice is required to be given hereunder, such notice
shall be given in writing and personally delivered or sent by certified or
registered mail, return receipt requested, or by overnight courier. Notice shall
be deemed to have been given at the time of receipt, if personally delivered, or
three (3) days after mailing if sent by certified or registered mail, or upon
delivery if sent by overnight courier. Either party may change its notice
address by giving notice of the change to the other party pursuant to this
Section.
If sent by MCI WORLDCOM to STC, such notice shall be addressed to:
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Shared Technologies Cellular, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
If sent by STC to MCI WORLDCOM, such notice shall be addressed to:
MCI Telecommunications Corporation
Legal Department, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
All notices relating to matters that require the approval of the Advertising Law
Department of MCI WORLDCOM, pursuant to Section 8(b) hereof, shall include a
copy of the applicable notice to be sent to:
Advertising Group Law & Public Policy
MCI Communications Corporation
2nd Floor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: Assoc. Litigation Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
15. ASSIGNMENT. Neither party may assign this Agreement to any third party
without the prior written consent of the other party, such consent not to be
unreasonably withheld or delayed. This Agreement shall be valid and binding upon
all heirs, successors and permitted transferees or assigns of the parties
hereto.
16. EXCUSE OF PERFORMANCE. Either party shall be relieved from liability for
non-performance due to any cause beyond the reasonable control of the party to
be excused, including delays of suppliers or carriers. In the event of such
cause for delay, the party so affected shall take commercially reasonable steps
to avoid or remove such cause of non-performance and both parties shall
recommence performance as soon as such cause is removed or ceases, but in no
event longer than 30 days following the first date of such non-performance. The
party claiming such delay shall give the other party notice of the delay as soon
as reasonably practicable.
17. AUDIT RIGHTS. The parties each shall have audit rights, limited to two
audits per year, with respect to the other's records reasonably related to each
party's obligations hereunder, including, without limitation, sales and revenue
records, billing data, activation and redemption data, and information
concerning commissions and discounts.
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18. ARBITRATION. Any dispute or disagreement arising between the parties in
connection with this Agreement, which is not settled to the mutual satisfaction
of the parties within thirty (30) days (or such longer period as may be mutually
agreed upon) from the date that either party informs the other in writing that
such dispute or disagreement exists, shall be settled by arbitration in
accordance with the J.A.M.S./ENDISPUTE Arbitration Rules and Procedures, as
amended by this Agreement. The cost of the arbitration, including the fees and
expenses of the arbitrator(s), will be shared equally by the parties unless the
award otherwise provides. Each party shall bear the cost of preparing and
presenting its case. The parties agree that this provision and the arbitrator's
authority to grant relief shall be subject to the United States Arbitration Act,
9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this Agreement, and the
AVA-AAA Code of Ethics for Arbitrators in Commercial Disputes. The parties agree
that the arbitrator(s) shall have no power or authority to make awards or issue
orders of any kind except as expressly permitted by this Agreement, and in no
event shall the arbitrator(s) have the authority to make any award that provides
for punitive or exemplary damages. The decision of the arbitrator(s) shall
follow the plain meaning of the relevant documents, and shall be final and
binding upon the parties. The award may be confirmed and enforced in any court
of competent jurisdiction. All post-award proceedings shall be governed by the
USAA.
19. GENERAL.
(a) This Agreement shall be governed by the laws of the State of New York,
without giving effect to any principle of conflict-of-laws that would require
the application of the law of any other jurisdiction.
(b) This Agreement, including any exhibits or addenda attached hereto,
constitutes the entire understanding between the parties relating to the subject
matter hereof and supersedes any and all prior discussions, proposals or
agreements, whether oral or written.
(c) No modification, addition or waiver to this Agreement shall be valid unless
made in writing signed by the parties hereto.
(d) In the event of a dispute arising out of this Agreement, the prevailing
party shall be entitled to recovery of its reasonable legal fees and expenses.
(e) The waiver of any provision of this Agreement shall not be construed as a
continuing waiver of such breach or of other breaches of the same or of other
provisions hereof. (f) The section headings of this Agreement are for reference
purposes only and shall not constitute a part hereof or affect the meaning or
interpretation of this Agreement. Whether defined terms are stated in the
singular or plural shall not affect their construction as defined terms.
(g) All payment obligations, provisions relating to limitations of liability,
post-termination obligations and any other provisions that by sense and context
are intended to survive the termination of this Agreement shall so remain in
effect after the termination hereof.
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(h) Each party represents that it has full power and authority to enter into and
perform this Agreement and knows of no impediment to its performance.
The parties acknowledge that they have each read this Agreement in its entirety,
understand it and agree to be bound by its terms and conditions.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date first written above.
SHARED TECHNOLOGIES CELLULAR, INC. MCI TELECOMMUNICATIONS CORPORATION
By:_______________________________ By:_______________________________
Date: February ___, 1999 Date: February ___, 1999
[all exhibits redacted]
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