Exhibit 10.7
SERVICES AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of July 2001, by
and between TBC TELEMARKETING, INC. d/b/a TBC CONSULTING GROUP, a Georgia
corporation maintaining offices at 7000 Peachtree Dunwoody Road, Building 16,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 ("TBC"), and MEDIA OUTSOURCING, INC., a New
York corporation maintaining offices at 0000 Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000
("MOS").
W I T N E S S E T H:
WHEREAS, TBC is engaged in the business of providing consulting services
to entities utilizing telemarketing services to market products and services;
WHEREAS, MOS has requested TBC to provide a minimum of two (2) senior
consultants ("Consultants") to train, manage and supervise one or more
telemarketing centers, selected by MOS to sell magazine subscription packages to
consumers selected from MOS's lists and files (the "Program");
NOW, THEREFORE, for and in consideration of the mutual recitals, terms,
covenants and conditions contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Obligations of the Parties
1.1 Services Provided. TBC shall provide the following services
("Services") to MOS: (i) Consultants, Xxxxx Xxxxxxx and Xxxx Xxxxx, or other
Consultants with similar background or expertise upon MOS's prior written
approval, which approval may not be unreasonably withheld; (ii) services of a
call center vendor, approved by MOS; (iii) training of call center employees,
who shall be fluent in the English language, to read scripts prepared or
approved by MOS, to determine consumers' interest in the purchase of magazine
subscription packages and to pass those consumers to a closing or "capping"
center selected by MOS; (iv) supervision and management of call center vendors;
(v) provision of daily reports of the call center's activities in a form
reasonably acceptable to MOS; and (vi) such other services as the parties may
mutually agree to from time to time.
1.2 Campaign Information. Prior to the commencement of each
telemarketing campaign in the Program, MOS shall provide the following
information in writing to TBC: (i) start and stop dates of campaign; (ii) number
of calls per hour to be made during the campaign; (iii) an approved
telemarketing script; (iv) a list of consumers to be contacted (this list may be
furnished on daily basis); and (v) such other information as XXX xxxxx
appropriate.
1.3 Call Center Vendor. TBC shall be responsible for contracting
with a call center vendor approved by MOS. TBC shall provide MOS with
information detailing the vendor's background, business experience and
capabilities. MOS may interview vendor's key personnel, if MOS so desires. MOS
acknowledges and understands that TBC makes no warranty or representation (i)
that a vendor's telemarketing activities will achieve the business results which
MOS desires, (ii) as to any vendor's financial viability, or (iii) that TBC
controls any vendor's dealings or operations. However, the foregoing shall not
relieve TBC of its obligation to perform adequate due diligence into all aspects
of vendor's operation or its obligation to provide Services as required by this
Agreement. MOS is relying on TBC's judgment in selecting an appropriate vendor.
TBC's contract with the vendor shall not make any representations, warranties or
other commitments on behalf of MOS, or oblige MOS to take any action with
respect to the vendor or the contract. MOS shall not be a party to the vendor
contract.
2. Fees
2.1 Base Retainer.
2.1.1 Payment. MOS shall pay TBC a base retainer ("Base
Retainer") for the Services of $35,000 per month. If requested by MOS, TBC shall
provide additional Consultants, acceptable to MOS, and the monthly Base Retainer
will increase by an amount equal to one hundred and fifty percent (150%) of the
monthly base salary paid by TBC to the additional Consultants. In addition, MOS
shall pay an amount equal to one hundred and fifty percent (150%) of any
additional cash compensation (not to include employee benefits, FICA withholding
and similar items) paid by TBC to such additional Consultants. Prior to such
additional Consultants starting work, TBC shall notify MOS of the Consultant's
monthly base salary and estimates regarding any additional cash compensation
amounts. The increased Base Retainer will be paid only during time such
additional
Consultants are utilized, partial months will be pro-rated. By way of example,
if two (2) additional Consultants, at a base salary to TBC of $1,000.00 per
month apiece, are utilized, the increase to the monthly Base Retainer shall be
$3,000.00 per month.
2.1.2 Survival of Base Retainer. Unless this Agreement is
terminated prior to expiration by TBC for convenience, or by MOS for cause
pursuant to Section 6.3.2 of this Agreement, MOS's obligation to pay the Base
Retainer shall survive until June, 2004. In the event MOS cancels the Program,
MOS will utilize the two Consultants for MOS's other call center activities and
will continue to pay the Base Retainer until expiration of the Agreement.
2.2 Call Center Fees. Prior to the start of each campaign, TBC shall
provide MOS with a written estimate of the daily call center fees for such
campaign. All fees charged by the call center vendor shall be billed to and paid
by TBC. These fees shall, in turn, be billed to MOS by TBC with a xxxx-up of
three percent (3%).
2.3 Monthly Bonus.
2.3.1 Eligibility. Each month TBC will be eligible for an
incentive bonus (the "Monthly Bonus") as a result of magazine sales from the
Program. The Monthly Bonus is determined by the number of Good Orders (as
defined below) estimated by MOS for magazine subscription packages accepted by
MOS for the previous month as shown below:
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Monthly Good Orders Bonus Per Good Order
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Less than 1001 None
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1001 to 1500 $15.00
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1501 to 2000 $20.00
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2001 to 2500 $25.00
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2501 to 3000 $30.00
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Greater than 3000 $35.00
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For the avoidance of doubt, TBC and MOS hereby acknowledge and agree that the
applicable Bonus Per Good Order for a particular month, as determined in
accordance with the table above, shall be paid for each and every Good Order
obtained during that month. For example: if the total number of Good Orders for
a given month is 2,500, the Bonus Per Good Order for that month would be $25;
accordingly, the Monthly Bonus due to TBC for that month would be equal to
$62,500 (i.e., the product of $25 (the applicable Bonus Per Good Order)
multiplied by 2,500 (the total number of Good Orders for that month)).
2.3.2 Good Orders. A Good Order is defined as a magazine
subscription package order verified by MOS pursuant to then existing MOS
verification policies which order has not been canceled by the consumer during
the timely cancellation period then in effect at MOS.
2.3.3 Draw Against Monthly Bonus. For the first three (3)
months of the Program beginning on July 1, 2001, TBC shall be paid a $15,000.00
per month draw against any Monthly Bonus amounts due TBC. Any Monthly Bonus
amounts earned by TBC up to and in excess of $15,000.00 will be first applied to
any draw amounts outstanding before being paid to TBC. TBC shall not be entitled
to receive any Monthly Bonus payments until the entire draw of $45,000.00 has
been repaid.
2.3.4 Conditions Precedent. If, for any consecutive four (4)
week period, the acquisition cost per Good Order to MOS exceeds $275, then no
Monthly Bonus or draw will be paid until the acquisition cost per Good Order is
below $275 for a subsequent consecutive four (4) week period (the "Recovery
Period"). Upon the conclusion of such Recovery Period, TBC will retroactively be
paid the Monthly Bonus amounts that would have been due during the Recovery
Period, if the Monthly Bonus had not been suspended.
2.3.5 Loan Repayment. The amount of the Monthly Bonus payable
to TBC shall be reduced by the monthly amortization payments required by that
certain loan agreement ("Loan Agreement") between TBC and MOS.
2.3.6 Acquisition Cost. The acquisition cost per Good Order
includes lead or file expense, the call center fees, "capping" or closing costs
(not to exceed $20 per order), and TBC's Base Retainer and Monthly Bonus (Base
Retainer and Monthly Bonus Fees are collectively referred to as "TBC Fees")
divided by the aggregate number of Good Orders per month. For purposes of this
calculation, the cost of the TBC Fees for the first five (5) months of this
Agreement will be deemed to be $40 per Good Order. After this period, the actual
TBC Fees shall be used.
2.4 Out of Pocket Expenses. In addition to the Base Retainer and
Monthly Bonus, MOS shall reimburse TBC for reasonable out-of-pocket expenses and
travel expenses incurred in providing the Services, provided that MOS has
pre-approved such expenses in writing.
3. Invoicing and Payment.
3.1 TBC. TBC shall invoice MOS weekly for the Base Retainer and
approved out-of-pocket fees incurred in the prior week. The Base Retainer and
any fees which are not subject to a bona fide good faith dispute shall be paid
within thirty (30) days of receipt of the invoice. TBC shall invoice MOS monthly
for the call center fees incurred in the prior month. Call center fees which are
not subject to a bona fide good faith dispute shall be paid within ten (10)
business days of receipt of the invoice. All invoiced amounts shall be deemed
valid and undisputed unless MOS notifies TBC of a dispute within ten (10)
business days from the date of MOS' receipt of the applicable invoice.
3.2 MOS. By the fifteenth (15th) day of the month, MOS shall pay TBC
its Monthly Bonus, if any, earned in the preceding month, subject to the
provisions of Section 2.3. MOS shall provide documentation supporting its
calculation of the Monthly Bonus.
4. Maintenance of Records. TBC agrees that during the term of this
Agreement and for a twenty-four (24) month period following its termination, TBC
will maintain accounting and other business records in accordance with generally
accepted accounting procedures, relating to the Services provided hereunder.
Upon reasonable notice to TBC, MOS or its designated representative shall have
the opportunity to inspect and copy said records during regular business hours
at TBC's business premises to verify the accuracy thereof.
5. Exclusivity of Services. During the term of this Agreement, MOS will
offer any outsourced call management assignments to TBC provided that TBC,
within ten (10) days of such offer, agrees to provide such services at a price
equal to or less than the price quoted by any other bona fide call center
company ("CCC") for the same services. If TBC's price should exceed that of
other CCC's, MOS can award such contracts to such other CCCs. In consideration
of the foregoing, with the exception of any agreements already in place, for the
term of this Agreement, TBC shall not provide similar consulting or other
services for or with entities engaged in the same or similar magazine business
as that of MOS.
6. Term and Termination.
6.1 Term. The term of this Agreement shall commence July 1,
2001 and expire on June 30, 2004.
6.2 Termination by TBC.
6.2.1 For Convenience. TBC at its option may terminate
this Agreement at any time by providing MOS thirty (30) days' prior notice of
said intention.
6.2.2 For Cause. TBC at its option may terminate this
Agreement for cause upon the occurrence of any of the following defaults,
provided that TBC shall have first provided MOS with a notice detailing any
asserted default and thirty (30) days shall have thereafter elapsed without MOS
having cured said default:
(i) MOS shall have committed a material breach of
this Agreement;
(ii) MOS shall have ceased or discontinued its daily
business operations; shall have filed for receivership, liquidation or
dissolution; shall have filed or had filed against it any petition for relief
under the United States Bankruptcy Code; or shall have had a receiver appointed
to manage its affairs; or
(iii) MOS shall have failed to remit payment on any
periodic invoice (except for amounts subject to a bona fide good faith dispute)
from TBC within forty-five (45) days from receipt of the invoice and after
receipt of a past due notice from TBC.
6.3 Termination by MOS.
6.3.1 For Convenience. MOS may, at its option, terminate this
Agreement at any time by providing TBC thirty (30) days' prior notice and
payment of a termination fee of $200,000.00 (which shall be liquidated damages
and not a penalty) plus the complete forgiveness of all amounts due under the
Loan Agreement between TBC and MOS, as well as payment of any outstanding
invoices.
6.3.2 For Cause. MOS may, at its option, terminate this
Agreement for cause upon the occurrence of any of the following defaults,
provided that, with the exception of 6.3.2(v), MOS shall first have provided TBC
with a notice detailing any asserted default and thirty (30) days shall have
elapsed without TBC curing said default.
(i) TBC's material breach of this Agreement.
(ii) TBC's failure to implement and conduct MOS's
telemarketing program within the time frame specified by MOS, or according to
any specific written scheduling arrangement upon which MOS and TBC have
previously agreed;
(iii) TBC's material failure to conduct MOS's
telemarketing program in a professional manner as judged by industry
standards;
(iv) TBC shall have ceased or discontinued its daily
business operations; shall have filed for receivership, liquidation or
dissolution; shall have filed or had filed against it any petition for relief
under the United States Bankruptcy Code; or shall have had a receiver appointed
to manage its affairs; and
(v) Mr. Xxxxxx Xxxxxx voluntarily ceases other than
for "Good Reason" (as such term is defined in the Employment Agreement between
Xx. Xxxxxx and MOS (the "Employment Agreement")), is released for "Cause" (as
such term is defined in the Employment Agreement), as an employee of MOS or any
affiliate of MOS; dies, or is Permanently Disabled (as such term is defined in
the Employment Agreement).
7. Indemnification.
7.1 By TBC. TBC agrees to indemnify, defend and hold MOS harmless
from and against any and all claims, causes of action, demands, losses, damages,
costs and expenses of any type (including reasonable attorneys' fees and
expenses) (collectively "Claims") arising out of or in connection with (i) any
failure of TBC or its call center vendor to perform any duties and obligations
on MOS's behalf; (ii) any act, transaction or omission by TBC or its call center
vendor including, but not limited to, any dealings with third parties, on MOS's
behalf, which does not arise from a wrongful act or omission of MOS or any
instructions from MOS; or (iii) TBC's breach of this Agreement.
7.2 By MOS. MOS agrees to indemnify, defend and hold TBC harmless
from and against any Claims arising out of or in connection with (i) any
wrongful act or omission or instructions from MOS to TBC, or (ii) MOS's breach
of this Agreement.
8. Arbitration. The parties further agree that with the exception of
claims for injunctive relief, any dispute, claim or controversy of whatever
nature arising out of or relating to the negotiation, execution, performance or
breach of this Agreement or any other dealings between them shall be resolved
solely by arbitration before three panel members in proceedings conducted in
Atlanta, Georgia before the American Arbitration Association in accordance with
its Commercial Arbitration Rules. The decision of a majority of said panel
members shall be deemed conclusive, final and binding upon the parties; and may
be entered as the judgment of any court of competent jurisdiction. The parties
shall execute all submission agreements and other documents authorizing the
submission of said dispute to arbitration for a final determination and award.
The arbitration panel shall be empowered to award attorney's fees and expenses
of arbitration (including expert witness fees) to the prevailing party in any
such arbitration. Furthermore, with respect to any civil action instituted for
injunctive relief, the parties hereby expressly agree to submit themselves to,
and consent to the jurisdiction and venue of the federal and state courts
located in Atlanta, Georgia.
9. Confidentiality; Non-Disclosure. The parties agrees that they will
maintain the confidentiality of and will not, during the term of this Agreement
and for a period of two (2) years thereafter, in any fashion, form or manner,
directly or indirectly, use, retain, make copies of, divulge, disclose or
communicate one another's Proprietary Information (as hereafter defined) to any
person (except a person employed by either of the parties who has a
business-justified need to know said information).
Upon termination of this Agreement, each party shall immediately turn over
to the other, all of the other's Proprietary Information, whether the same be in
writing, print, copy, audio or video tape, computer program or disc, picture or
other medium. Neither party shall have the right to retain any copies of the
foregoing for any reason whatsoever after termination without the express
written consent of the other party.
The term "Proprietary Information," as used in this Agreement means:
(i) Confidential proprietary information pertaining
to each party's business; the identities of actual and prospective clients,
consumers or customers; the needs and requirements of clients, consumers or
customers and prospective clients, consumers or customers; terms and conditions
under which each party deals with its clients, consumers or customers; training
manuals, training tapes and films, records, forms, unique techniques,
telemarketing scripts, methods and procedures for the operation of each party's
business; profit margins; payroll information; financial reports; pricing
procedures; and plans for future development; and
(ii) all ideas, logos, trade names, service marks,
forms, records, MOS lists and procedures whether or not improved upon, developed
or conceived during the term of this Agreement.
Proprietary Information shall not include any information that the
receiving party can establish: (a) is or subsequently becomes publicly available
through no act or omission of the receiving party; (b) was in the receiving
party's lawful possession prior to disclosure of such information, not including
such information that was supplied by either party to the other party in
contemplation of this Agreement; (c) is subsequently disclosed to receiving
party by a third party who is not in breach of an obligation of confidentiality;
(d) is independently developed by the receiving party without the use or benefit
of the disclosing party's Proprietary Information; or (e) is required to be
disclosed under a court order or a valid subpoena, provided that the receiving
party promptly notifies the disclosing party and provides the disclosing party
an opportunity to seek an appropriate protective order.
At the conclusion of the term of this Agreement or at any time that either
party shall request of the other prior thereto, the other party shall deliver
all notes, memoranda, records, reports, manuals and other documents constituting
Proprietary Information, including all copies of such material, which said party
may then possess or have under its control and certify in writing that it no
longer possesses and has not distributed any Proprietary Information.
10. Compliance with Laws. The parties shall comply with all
applicable federal and state laws, regulations, and rules, and any applicable
rules and regulations of the Federal Trade Commission.
11. Non-Assignment. TBC agrees that it will not transfer or assign this
Agreement in whole or in part without first obtaining MOS's prior written
consent. Any such assignment in contravention of the foregoing shall be without
effect.
12. Insurance. TBC shall maintain, during the Term of this
Agreement, all insurance and/or bonds required by law, including, but not
limited to:
12.1 Worker's Compensation insurance as required by statute and
Employer's Liability insurance with limits of not less than $100,000.00 per
occurrence.
12.2 Commercial General Liability insurance (including, but limited
to, premised-operations, broad-form property damage, products/completed
operations, contractual liability, independent contractors, personal injury)
with limits of at least $500,000.00 combined single limit for each occurrence.
12.3 Professional Liability (Errors and Omissions) insurance, with
limits of not less than $1,000,000.00 per occurrence.
12.4 MOS shall be named as an additional insured to the insurance
policies required under this Agreement and this shall be so evidenced upon the
Certificate(s) of Insurance. Upon request, TBC shall furnish certificates or
adequate proof of the foregoing insurance.
13. Severability. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction or arbitration panel to be
illegal or invalid, the validity of the remaining parts, terms or provisions
shall not be affected thereby; and said illegal or invalid part, term or
provision shall be deemed not to be a part of this Agreement.
14. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective affiliates, subsidiaries,
successors and assigns.
15. Notices. All notices required to be delivered under this Agreement
shall be in writing and delivered by overnight courier or mailed by certified
mail, return receipt requested, and addressed as provided below. All notices
shall be deemed to have been given upon receipt.
(1) To TBC: TBC Consulting Group
Attention: Xxx Xxxx
0000 Xxxxxxxxx Xxxxxxxx Xxxx
Building 16, Suite 300
Xxxxxxx, Xxxxxxx 00000
(2) To MOS: Media Outsourcing, Inc.
Attention: Xxxxxx Xxxxxx
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
16. Construction. This Agreement supersedes all prior negotiations,
dealings, representations and promises between the parties, whether oral or
written, and constitutes the entire understanding of the parties.
17. Form of Entity; Authority. Each party represents and warrants that it
is authorized by its governing documents and controlling state law to enter into
and to perform this Agreement and that the person executing this Agreement on
its behalf is fully authorized to execute and deliver this instrument as its
binding act.
18. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Georgia.
19. Non-Waiver. No delay or failure by either party to exercise any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right unless otherwise expressly
provided herein.
20. Independent Contractor. TBC is an independent contractor in the
performance of this Agreement and neither TBC, nor any employee or contractor of
TBC shall be deemed to be an employee of MOS. TBC shall not have the authority
to bind MOS to any obligation. The fees and other amounts paid to TBC shall not
be considered salary for pension purposes, and neither TBC, nor its employees or
subcontractors, will be entitled to any fringe or supplementary benefits of MOS.
MOS will not withhold any FICA or similar contributions from TBC's fees and
other amounts paid to TBC.
21. Survival. Those provisions, including but not limited to, sections
2.1.2, 4, 7, 8, 9, 17 and 18, which by their nature would survive expiration or
termination of this Agreement shall survive such expiration or termination.
22. Written Modification. This Agreement shall not be amended or
modified except by written agreement or addendum executed by the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers and to be effective as of the
date and year first above written.
TBC TELEMARKETING, INC. d/b/a
TBC CONSULTING GROUP
By:
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Title:
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MEDIA OUTSOURCING, INC.
By:
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Xxxxxx Xxxxxx
Title:
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