EXHIBIT 6.1
SERVICE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of this 31st day of
October, 1995, by and between Network Long Distance, Inc. ("Network"), a
Delaware corporation with its headquarters located at 000 Xxxxxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxxxxxx 00000 and Value Tel, Inc. ("Value Tel"), a Delaware
corporation with its offices located at 0000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx, 00000.
WHEREAS, Network is a switch-based reseller of long distance
telecommunications services; and
WHEREAS, Value Tel is a switchless reseller of long distance
telecommunications services; and
WHEREAS, Network has purchased, or will shortly be purchasing, among
other things, selected accounts and receivables of Value Tel's end user
customers (the "Customer Accounts") currently serviced out of Value Tel's
Naperville, Illinois office (the "Acquisition"); and
WHEREAS, Value Tel has the capability to provide Network with certain
administrative services, including billing, collection and customer service,
with respect to the Customer Accounts for an interim transition period
following the Acquisition; and
WHEREAS, Network desires to utilize said administrative services and pay
Value Tel for same in accordance with the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual representations,
covenants and warranties expressed herein and the payments described below,
the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
A. VENDOR(S): Value Tel's underlying carrier(s), local exchange
carriers, interexchange carriers and other service providers, including but
not limited to billing providers and enhanced services providers.
B. VENDOR COSTS: the costs charged by Vendors and incurred by Value
Tel in the fulfillment of its obligation to provide the Services (as such
term is defined below), on Network's behalf, to the Customer Accounts
pursuant to this Agreement.
C. SERVICES: The administrative services provided by Value Tel and
further enumerated in Article III below, including but not limited to
billing, collection, customer
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service and use of Value Tel's various trade and marketing names, products
and service offerings.
D. All other terms and phrases unique to the telecommunications
industry and used within this Agreement shall be defined in accordance with
the everyday meaning assigned to the terms within the industry.
E. All terms and phrases contained herein shall be construed in
accordance with the meanings accorded to said terms and phrases in the Asset
Purchase Agreement of even date.
ARTICLE II.
TERM AND TERMINATION
A. This Agreement shall be for the term of six (6) months from and
after the effective date of this Agreement (the "Initial Term").
B. Network may, at its sole and exclusive option, renew this Agreement
beyond the Initial Term for one (1) period of three (3) months. Any such
renewal must be in writing and delivered to Value Tel at least thirty (30)
days prior to the end of the term then in effect.
C. If either party materially breaches its obligations under this
Agreement, the other party may terminate this Agreement upon ten (10) days
prior written notice. The breaching party shall have ten (10) days from
receipt of said written notice within which to cure said material breach.
D. Upon termination or expiration of this Agreement, each party shall
immediately deliver to the other all Proprietary Information furnished to it,
including all copies thereof as provided for in this Agreement.
E. Network may, in its sole discretion, terminate this Agreement upon
thirty (30) days prior written notice.
F. Upon expiration or termination of this Agreement, Value Tel must
immediately turn over and deliver to Network any and all information and
documents related in any way to the servicing of the Customer Accounts, and
any other information and documents otherwise necessary for Network's full
use, operation and enjoyment of the Assets acquired pursuant to the Asset
Purchase Agreement of even date.
ARTICLE III.
THE SERVICES
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Value Tel shall provide the Services to Network in a professional and
diligent manner, including but not limited to billing, collection, customer
service and all of the following specific functions (or specific functions as
selected by Network):
A. Value Tel shall cooperate fully with Network in immediately
arranging and coordinating a smooth and orderly transition and conversion,
from Value Tel to Network, of the Customer Accounts being purchased as part
of the Acquisition and shall execute all documents and take all actions
necessary to accomplish same.
B. At Network's request, Value Tel shall, upon reasonable notice and
as available, provide Network with written, printed, electronic transfer,
computer disk or tape reports detailing all information related in any way to
Value Tel's performance of the Services, including but not limited to ANI's,
xxxxxxxx, collections, bad debt, trouble tickets, call records, credit
checks, accounts receivable ledgers, supporting documentation with respect to
Vendor Costs, CARE reports detailing service cancellations and other LEC
information, LOA's and complete copies of customer files.
C. Value Tel hereby agrees to allow Network, during the term of this
Agreement, to utilize, for all purposes related to the servicing of the
Customer Accounts, the names "Value Tel", "Discount Network Services, Inc.",
"Teletrek" and all other names currently used by Value Tel in the conduct of
its business (the "VALUE TEL NAMES"). This covenant shall specifically
include, without limitation, the right of Network to instruct Value Tel to
"co-brand" all invoices rendered to the Customer Accounts with any or all of
the foregoing names and the name "Network Long Distance". Design of such
invoices must be approved in writing by Network. Value Tel further agrees to
indemnify Network from and against any claims of third parties which result
from Value Tel providing Network with the use of the Value Tel Names pursuant
to this Paragraph III.C. The foregoing indemnification provision shall not
apply to claims resulting from Network's own actions or omissions. The
obligations contained in this Paragraph C shall survive termination of this
Agreement, including but not limited to Network's right to use the Value Tel
Names for as long as is necessary to collect accounts receivable which were
generated using the Value Tel Names but which are not paid at the time this
Agreement terminates.
D. Value Tel hereby agrees to allow Network to utilize, for all
purposes related to the servicing of the Customer Accounts, all products and
service offerings currently provided by Value Tel to its customers.
E. Value Tel shall, as soon as possible, change the information
typically contained on the invoices rendered to the Customer Accounts prior
to the Acquisition to any information reasonably requested by Network,
including but not limited to information regarding the address and/or lockbox
location to which payments should be directed and the 800 numbers to which
billing, customer service or other inquiries should be directed. Value Tel
shall make Network the "RespOrg" on such 800 numbers.
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F. Value Tel shall provide customer service functions to the Customer
Accounts in a professional and diligent manner and shall use its best efforts
to maintain customer satisfaction. Value Tel shall further notify Network
immediately of any complaints, oral or written, received from any of the
Customer Accounts and shall take all reasonable steps necessary to satisfy
said complaints.
G. Value Tel shall provide credit risk analysis functions in
accordance with Network's standard credit policies and procedures.
H. Value Tel shall allow Network to utilize Value Tel's regulatory
tariffs to the extent such utilization is necessary for Value Tel to lawfully
perform the Services pursuant to this Agreement.
I. Value Tel shall have the obligation to advise Network of any
dispute between Value Tel and any Vendor which affect, or has the potential
to affect, the Customer Accounts. In such event, Value Tel agrees to provide
Network with an itemized invoice of the Vendor Costs owed to such Vendor and
hereby grants Network the right to pay such Vendor Costs directly to the
Vendor.
J. Value Tel shall, during business hours or other reasonable mutually
agreed to times, allow access to Network to all documents, computer
printouts, computer disks, databases, files, reports, tapes, and any other
tangible items related in any way to the Services provided by Value Tel
pursuant to this Agreement and shall work in good faith with Network to
construct and reconcile, in detail, such items to the mutual satisfaction of
the parties.
K. Value Tel shall assist Network, in any manner reasonably required,
to immediately set up a new lockbox arrangement and location or change the
ownership of Value Tel's current lockbox over to Network ("Network's
Lockbox") for purposes of receiving payments made on Customer Accounts, and
Value Tel shall facilitate all actions necessary to provide accounts
receivable processing functions with respect to the Customer Accounts,
including but not limited to picking up tapes from Vendors, downloading data
from said tapes and compiling appropriate billing data for purposes of
finalizing and mailing out bills.
L. Value Tel shall, on a daily basis, provide Network with all data,
if available, on all payments on Customer Accounts received in Network's
Lockbox, payments to Vendors and other transactions which occurred the
previous day, including actual bank/lockbox daily transmittal records.
M. Value Tel shall, on a daily basis, provide Network with all data on
payments on Customer Accounts received by Value Tel in order to properly
account for payments
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on Customer Accounts which were sent directly to Value Tel, rather than to
Network's Lockbox, including actual bank/lockbox daily transmittal records.
N. Value Tel shall cooperate with Network in facilitating an
electronic interface between Value Tel and Network for the transfer of all
information which Value Tel is obligated to provide pursuant to this
Agreement.
O. Value Tel shall, during business hours or other reasonable mutually
agreed to times, allow access to Network for purposes of cross connect
testing, need-to-service and facilitating all other service tests.
P. Value Tel shall, in no event, when rendering invoices to customers
with respect to the Customer Accounts, change the return address on envelopes
in which invoices are sent, the "send to" address on enclosed remittance
envelopes, the "payment" address on the invoices, the address of "Network's
Lockbox" or the payee on on the invoices unless requested by Network in
writing.
Q. Value Tel assumes the obligation to provide Network with
confirmation of the amount of all Vendor Costs and Value Tel's payment
thereof. Upon Network's request, Value Tel shall immediately execute a
letter authorizing Network to contact a Vendor directly.
R. Value Tel shall, at its cost, provide paper, envelopes, ink,
postage and all other items, tangible and intangible, necessary to facilitate
the billing and invoicing of the Customer Accounts.
S. Value Tel shall fully document all customer service calls received
by Value Tel during the course of fulfilling its obligation to provide same
pursuant to this Agreement, including the name of the customer, the time of
day and the date.
T. Value Tel agrees to and acknowledges that Network owns the Customer
Accounts pursuant to the Asset Purchase Agreement, and accordingly, Network
shall have the primary right, at all times, to collect payments made in
connection with any invoices rendered by Value Tel on behalf of Network
pursuant to this Agreement.
U. Value Tel hereby indemnifies and holds Network harmless from and
against any claims of third parties, including any Vendors and any customers
whose Customer Accounts are being transferred pursuant to the Asset Purchase
Agreement, which arise out of or relate to Value Tel's performance of the
Services pursuant to this Agreement. The foregoing indemnification provision
shall not apply to claims resulting from Network's own actions or omissions.
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V. Value Tel shall cooperate fully with Network in providing use,
shared use, re-arrangement, move assignment, re-routing, authorization and
rights to PIC customers and facilitate access on Value Tel's vendors' CIC's
to Network and to grant and facilitate all current or future underlying
transport services requested by Network at Network's expense with Network's
authorization.
W. Value Tel shall provide mutually agreeable space and access for
systems and Network on-site personnel, as requested by Network, to perform
and assist in the transition process. In addition, a mutually agreeable
transition coordinator shall be assigned by Value Tel and Network to
facilitate a smooth and effective transition and ongoing relationship.
X. Value Tel will provide monthly information that will allow Network
to report current revenues and expenses, aged accounts receivable, meet
timely reporting requirements set by governmental and regulatory authorities,
and which will allow Network to produce accurate traffic reports from call
usage details.
ARTICLE IV.
PAYMENT TERMS
A. Network shall compensate Value Tel for the Services in accordance
with the payment terms described below and the schedule of fees and charges
attached hereto and made a part hereof as ATTACHMENT A. Unless otherwise
specified herein, all Services shall be performed and provided by Value Tel,
and paid for by Network, in accordance with ATTACHMENT A.
B. Value Tel shall render invoices to Network for each monthly billing
period during the term of this Agreement which invoices shall include: (1)
the Vendor Costs incurred by Value Tel on Network's behalf during that
period; (2) the fees charged by Value Tel, in accordance with ATTACHMENT A,
for the Services provided by Value Tel to the Customer Accounts on Network's
behalf during that period; (3) all applicable Federal, State and Local use,
excise, sales or privilege taxes, duties or similar fees incurred in
connection with the provision of the Services during that period.
C. Network shall pay Value Tel for invoices rendered by Value Tel
within thirty (30) days of receipt of same. However, if a Vendor whose
Vendor Costs appear on said invoice requires payment prior to the expiration
of said thirty (30) days, Network shall pay Value Tel for said Vendor Costs
in accordance with said Vendor's payment terms. Upon mutual written agreement
between Network and Value Tel, Network may pay any Vendor Cost directly to
the appropriate Vendor.
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D. Failure of Network to pay any invoices pursuant to this Article IV
will result in the right of Value Tel to terminate this Agreement, and cease
any obligations of Value Tel contained herein, upon ten (10) days prior
written notice.
ARTICLE V.
CONFIDENTIALITY
Each party agrees that all information furnished to it and identified by
the other party as being confidential or proprietary information or trade
secrets (collectively referred to as "Proprietary Information"), is, and
shall continuously remain, the sole and exclusive property of the party
furnishing the same (hereinafter referred to as the "Disclosing Party"). Each
party shall treat the Proprietary Information and the contents of this
Agreement in a confidential manner and, except to the extent necessary in
connection with the performance of its obligations under this Agreement,
neither party shall directly or indirectly disclose the same to any third
party without the written consent of the Disclosing Party, unless required by
law to divulge such information to regulatory authorities or unless required
in connection with enforcing the Receiving Party's rights hereunder. The
obligations contained in this Article V. shall survive termination of this
Agreement.
ARTICLE VI.
GENERAL
A. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
B. Nothing contained within this Agreement shall be construed as
creating a joint venture or employment relationship between the parties
hereto or their employees.
C. Neither Network nor Value Tel shall have the authority to bind the
other, by contract or otherwise, or make representations as to the policies
and procedures of the other, except as provided for herein.
ARTICLE VII.
WAIVER
No waiver by any party or any default by any other party in the
performance of any provision of this Agreement shall be deemed to be a waiver
of, or in any manner release of such party from, performance of any provision
in the future; nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of such right or like right
accruing to it hereafter.
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ARTICLE VIII.
AUTHORITY TO ENTER INTO AGREEMENT
Each party hereto warrants and represents that it has full legal and
regulatory authority to enter into this Agreement and to consummate the
transactions contemplated hereby and that this Agreement is not in conflict
with any other agreement, contract or tariff to which such party is a party
or by which it may be bound. Each party hereto further warrants and
represents that the individuals executing the Agreement have the full power
and authority to bind their respective entities to the terms hereof and have
been authorized to do so in accordance with such entities corporate or other
organization.
ARTICLE IX.
ARBITRATION, CONSTRUCTION AND INTERPRETATION
A. This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of Louisiana. Any claims arising out
of this Agreement or the performance hereof shall be decided by binding
arbitration under the auspices of, and in accordance with the rules of, the
American Arbitration Association. Any arbitration hearing held pursuant to
the terms of this Article IX shall be held in Baton Rouge and shall be
presided over by a panel of three (3) arbitrators.
B. If any term, covenant, or condition of this Agreement or the
application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application
of such term covenant or condition to persons or circumstance other than
those to which it is held invalid or unenforceable shall not be affected
thereby and each term, covenant or condition of the Agreement shall be valid
and be enforced to the fullest extent permitted by law.
ARTICLE X.
NOTICES
Any written notice, demand or request, required or authorized by this
Agreement, shall be deemed properly given to or served on Network if mailed
by United States Mail, certified, return receipt requested to:
NETWORK LONG DISTANCE, INC.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
ATTN: Xxxx Xxxx, President
and shall be deemed properly given to or served on Value Tel if mailed by
United States
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Mail, return receipt requested to:
VALUE TEL, INC.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxx, President
ARTICLE XI.
ENTIRE AGREEMENT
This Agreement, together with its attachments and exhibits, constitutes
the entire Agreement with respect to use of the services between the parties
hereto and supersedes all prior agreements, proposals, negotiations,
representations, discussions, and correspondence, either written or oral,
with respect to the subject matter hereof. To the extent, however, that any
provision, term, or condition of this Agreement is in conflict with any of
the attachments, exhibits, or addendums hereto, said attachments, exhibits,
or addendums shall be deemed to supercede this Agreement. No amendments to
the Agreement shall be effective unless in writing and signed by both parties
hereto.
IN WITNESS WHEREOF, the parties caused these presents to be executed,
acknowledged and delivered in a form and manner proper and sufficient at law,
all as of the day and year first above written.
NETWORK LONG DISTANCE, INC.
BY: /s/ XXXX XXXX
----------------------------------
NAME: XXXX XXXX
TITLE: PRESIDENT
VALUE TEL, INC.
BY: /s/ XXX XXXXX
----------------------------------
NAME: XXX XXXXX
TITLE: PRESIDENT
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Attachment A
Schedule of Fees and Charges
The fees and charges to be paid to Value Tel by Network shall be equal to
Value Tel's actual cost of providing the services specified hereunder but in
no event shall said fees and charges exceed three percent (3%) of the Total
Net Revenue (as such term is defined in the Asset Purchase of even date).
Network shall pay all applicable sales agent commissions relative to the
Qualified Customer Accounts (as such term is defined in the Asset Purchase
Agreement) but in no event shall said sales agent commissions exceed seven
percent (7%) of Total Net Revenue.
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