EXHIBIT 10.4
C O N F I D E N T I A L T R E A T M E N T
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Portions of this Exhibit (Exhibit 10.4) have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange Commission
(the "Commission"). The omitted portions, which are designated by an asterisk
(*), were filed separately with the Commission.
EQUIPMENT NEGOTIATION AND REFERRAL AGREEMENT
BETWEEN
BELLSOUTH TELECOMMUNICATIONS, INC.
AND
INNOTRAC CORPORATION,
as agent of HomeTel Systems, Inc.
- CONFIDENTIAL -
NOTICE
THE INFORMATION CONTAINED HEREIN SHOULD NOT BE DISCLOSED TO UNAUTHORIZED
PERSONS. IT IS MEANT FOR USE OF THE PARTIES CONTRACTING HEREIN IN CONNECTION
WITH PERFORMANCE UNDER THIS AGREEMENT.
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NEGOTIATION AND REFERRAL AGREEMENT
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This Equipment Negotiation and Referral Agreement is by and between
INNOTRAC Corporation as agent for HomeTel Systems, Inc. ("INNOTRAC"), a Georgia
corporation, with offices at 1828 Meca Way, Norcross, GA 30093, and BellSouth
Telecommunications, Inc. ("BST"), a Georgia corporation, with an office at 3535
Colonnade Parkway, Birmingham, Alabama 35243. This Agreement replaces and
supercedes an agreement between the partners dated March 29, 1994.
WHEREAS, BST desires to make more convenient for its customers the ordering
of BST Network Services, particularly Calling Line Identification, by
facilitating the installment purchase and/or rental of telephone sets or
apparatus that are compatible with, complement and are used in connection with,
the Network Services, particularly Calling Line Identification display devices
("Sets"); and
WHEREAS, INNOTRAC wishes to engage the services of BST to directly
negotiate the installment sale and/or rentals of the Sets with new or existing
Network Services subscribers, as agents of INNOTRAC, through its Service
Representatives; and
WHEREAS, BST wishes to engage the services of INNOTRAC to accept telephone
referrals of new or existing Network Services subscribers, where direct
negotiation of Sets may not be feasible, and to offer Sets for installment sale
and/or rental to these new subscribers; and
WHEREAS, both parties recognize that these referrals are likely to increase
installment sales and/or rentals of the Sets and to advance subscriptions for
Network Services, particularly Calling Line Identification, and Sets;
NOW, THEREFORE, in consideration of Ten and 00/l00th Dollars ($10.00) in
hand paid, the above premises, and the covenants, terms and conditions contained
herein, the receipt, adequacy and sufficiency of all such consideration being
hereby acknowledged, the parties agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall commence on May 1, 1995 and shall, except
as otherwise provided herein, continue in effect thereafter through March 14,
2000, inclusive.
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2. TERRITORY
This Agreement applies to negotiation with subscribers, or referrals of
subscribers,. exclusively in association with INNOTRAC, in the Territory
described in Appendix A (the "Territory").
3. BST OBLIGATIONS
Service Representatives of BST and/or the Affiliated Companies
communicating with existing or prospective Network Services subscribers,
particularly existing or prospective Calling Line Identification subscribers,
will directly negotiate, as agents of INNOTRAC, the installment sale or rental
of appropriate complementary Sets. Where such direct negotiation may not be
feasible, these same Service Representatives will also offer the subscribers
referral to INNOTRAC for the sale and/or rental of appropriate complementary
Sets. If the subscribers indicate an interest in such referral, the BST service
representative shall on-line transfer, or refer, the subscriber or prospective
subscriber to a telephone number designated by INNOTRAC, subject to the
provisions of Section 9. (b).
This agreement affords INNOTRAC the right to this agency agreement, and to
receive such referrals, for Calling Line Identification equipment, except as
provided by separate Letter(s) of Agreement, to be negotiated on an "as
required" basis.
4. INNOTRAC OBLIGATIONS
(a) INNOTRAC agrees to accept toll-free telephone calls between the hours
of 8:00 a.m. and 12:00 a.m. Eastern Time, Monday through Friday and from 9:00
a.m. to 6:00 p.m. on Saturdays, except on holidays recognized by BST, from
subscribers and prospective subscribers who are on-line transferred, or
referred, by BST service representatives, as provided in Section 3. The
foregoing hours can be modified by mutual agreement of the parties.
(b) INNOTRAC agrees to train, to the reasonable satisfaction of BST, all of
its Call Center and Customer Service telemarketing specialists who will be
handling all forms of inquiries from BST subscribers. These inquiries include,
but are not limited to, referrals and sales, product function, installation,
billing, delivery and return. Minimum training standards shall be reasonably
determined and supplied by BST to INNOTRAC in writing. Training of Call Center
telemarketing specialists will be of sufficient duration and detail to enable
the telemarketing specialists to accurately and fully understand the function of
the Sets, particularly Calling Line Identification display units; to explain the
Sets to subscribers and prospective subscribers; and to explain INNOTRAC terms
and conditions. Training of Customer Service telemarketing specialists will be
of sufficient duration and detail to enable the telemarketing specialists to
accurately and fully understand the function of the Sets, particularly Calling
Line Identification display units; to assist BST's subscriber in
troubleshooting; to assist with billing; to assist with product delivery
inquiries; and to assist with product returns. All costs of such training will
be borne by INNOTRAC; provided, however, BST shall provide INNOTRAC training
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guidelines, materials and other assistance as is necessary to assist INNOTRAC to
adequately train its telemarketing specialists. A maximum of two (2) BST
employees will be permitted to observe any or all training sessions to ensure
the accuracy and completeness of the training.
(c) INNOTRAC shall make all reasonable efforts to ensure that all
subscriber calls transferred or referred from BST to INNOTRAC, as well as all
subsequent customer service calls associated with BST subscribers, are handled
in a prompt, helpful and courteous manner. INNOTRAC will utilize its best
efforts to maintain a monthly average of answering [ * ] of customer calls in
[ * ] seconds or less, for both the Sales and Service Centers. BST may place
test calls to INNOTRAC, visit INNOTRAC's premises, observe the handling of calls
from subscribers, assess the courtesy, knowledge, and promptness of INNOTRAC's
telemarketing specialists, and discuss the results of such calls and
observations with INNOTRAC management. INNOTRAC agrees to remove from its work
group that handles subscriber calls any telemarketing specialist who does not
perform to a level of courtesy, promptness and knowledge reasonably satisfactory
to BST and INNOTRAC; provided, however, removal of any such telemarketing
specialist from the work group handling subscriber calls shall be BST's sole
remedy for the failure of a telemarketing specialist to perform to a level of
courtesy, promptness and knowledge. INNOTRAC agrees to allow representatives of
BST, at BST's discretion with no provision for advance notice, to observe calls
taken by INNOTRAC telemarketing specialists for the purpose of ensuring
compliance to this Section. INNOTRAC agrees to place signs in conspicuous places
in the workplace notifying its employees that calls taken by telemarketing
specialists are subject to periodic monitoring for quality control purposes.
(d) INNOTRAC agrees to keep in service, solely at its expense, sufficient
telecommunications facilities dedicated to answering customer calls, including
but not limited to, toll-free lines and telephone sets, to ensure adequate
access to INNOTRAC's Sales and Call Centers as described in Section 3(c). If, at
any time, the incoming subscriber calls become too numerous to be handled by the
then prevailing numbers of telecommunications facilities and/or telemarketing
specialists allocated by INNOTRAC, INNOTRAC agrees to increase the number of
telecommunications facilities and/or telemarketing specialists to handle the
increased volume of calls to comply with the access provisions of Section 3(c).
When all telecommunications facilities and/or telemarketing specialists become
busy and incoming calls encounter a busy or hold condition, INNOTRAC shall be
relieved of its normal responsibility of handling each Sales or Customer Service
call to conclusion and make commitments to call subscribers back within four (4)
working hours of the time the subscriber's call was originally received by
INNOTRAC.
(e) INNOTRAC will purchase and own the inventory of Sets that it sells
and/or rents to subscribers, and will maintain an inventory adequate to fill
orders placed by subscribers within a reasonable time. INNOTRAC agrees to
purchase the Sets from distributor(s) designated by BST. BST will assist
INNOTRAC in obtaining Sets at a price per unit comparing favorably to the price
being offered to other purchasers of Sets, taking into consideration volume
discounts. All Sets marketed and sold by INNOTRAC pursuant to this Agreement
shall be BellSouth Sets. BST shall utilize its best efforts to assist INNOTRAC
in its efforts to obtain from designated distributors in a timely manner the
quantities of Sets ordered and required by INNOTRAC to fulfill its obligations
to subscribers and BST under this Agreement. If any designated distributor fails
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to deliver timely the quantities of Sets ordered by INNOTRAC, INNOTRAC shall be
relieved of its duty to perform under this Agreement to the extent that its
performance becomes impossible or delayed because of said failure by designated
distributor(s). In addition, BST shall ensure that any manufacturer of the Sets
delivers the Sets to INNOTRAC in good condition and that the Sets function
properly and are reasonably suited for their intended purpose. No Sets,
apparatus, equipment, devices, materials or products acquired in any manner from
any other sources, supplier, distributor or manufacturer may be advertised,
marketed, promoted, or sold in any way to subscribers referred to INNOTRAC
pursuant to this Agreement, without the prior written consent of BST.
(f) Following direct negotiation or referral by BST, INNOTRAC agrees to
handle all necessary communications with subscribers, including but not limited
to, post-sale calls, in connection with the sale and/or rental of the Sets.
INNOTRAC shall provide the Sets to subscribers on an "as-ordered" basis only,
and to the extent that INNOTRAC's inventory permits. INNOTRAC will ship, bill
and collect payment for all sets sold and/or rented except to the extent such
billing and collection is assumed by BST. A credit card order will be shipped by
INNOTRAC to the subscriber within two (2) working business days of the order
being placed. An order to be paid by personal check will be shipped by INNOTRAC
to the subscriber within five (5) business days of INNOTRAC's receipt of the
check.
(g) Notwithstanding any contrary provision of this Agreement, if any of the
material obligations of INNOTRAC are not performed to the reasonable
satisfaction of BST, other than services assumed and performed by BST, in BST's
reasonable discretion, then BST may terminate this Agreement, provided that BST
shall provide INNOTRAC with thirty (30) days written notice of its intention to
terminate and INNOTRAC shall have those thirty (30) days to satisfy BST that it
has improved its performance to levels reasonably acceptable to BST.
Notwithstanding the foregoing, if INNOTRAC commences efforts to cure any breach
of its obligations to perform any material duty required of it by this Agreement
within the thirty (30) day grace period and such breach cannot be completely
cured within said thirty (30) day grace period, the cure/grace period herein
shall be extended from day to day for a period of up to thirty (30) additional
days so long as INNOTRAC pursues efforts with diligence to cure the breech.
(h) The billing and collection of monies for all Sets sold via installment
and/or rented by INNOTRAC to subscribers directly negotiated by BST as agents of
INNOTRAC or referred by BST to INNOTRAC shall be handled in accordance with that
certain Billing and Collection Services Agreement between BST and INNOTRAC dated
March 29, 1994.
(i) INNOTRAC agrees to compensate BST for those Sets directly negotiated by
BST telemarketing specialists per the terms found in Appendix E, "Part X
Settlements."
(j) INNOTRAC will bill BST subscribers who obtain Sets by direct
negotiation or referral in accordance with the subscriber's purchase selection.
These rates are exclusive of any special offers which may prevail at the time of
the subscriber's order. INNOTRAC will ship Sets to subscriber using United
Parcel Service (UPS) Two-Day Air Service or U.S. Mail Priority Mail. Such
special offers will be mutually agreed to by INNOTRAC and BST at least thirty
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(30) days in advance of any special offer. INNOTRAC agrees to provide at least
sixty (60) days' advance notice of any pricing, shipping or shipping method
changes.
5. NONCOMMITMENT AGREEMENT
(a) This Agreement is a noncommitment agreement as to levels of installment
sales and rentals of Sets and in no way implies any promise on the part of BST
that any number of Sets will be purchased and/or rented as a result of equipment
negotiations or referrals made pursuant to this Agreement.
(b) It is expressly understood and agreed that this Agreement does not
grant to INNOTRAC an exclusive privilege to market and sell the Sets, but does
grant to INNOTRAC the exclusive right to the BST agency arrangement in the
territory and referrals of subscribers from BST in the Territory seeking to
purchase and/or rent Sets, as defined in Part 3. "BST Obligations". It is
expressly understood and agreed that this Agreement does not grant to INNOTRAC
an exclusive privilege to the BST agency arrangement and to receive referrals
from subscribers except in the Territory. However, the parties also understand
and agree that INNOTRAC may market and sell and/or rent Sets to end-users other
than subscribers negotiated by BST for INNOTRAC, or referred by BST to INNOTRAC,
pursuant to this Agreement. BST shall determine, at its own discretion, the
extent to which BST and the Affiliated Companies (as hereinafter defined) will
assist INNOTRAC by marketing, advertising, promoting, supporting or otherwise
assisting in offering the Sets and the extent to which BST will refer
subscribers to INNOTRAC except as expressly provided in this Agreement. This
Agreement does not represent, and should in no way imply, a commitment on the
part of BST to purchase any products or services of INNOTRAC except as expressly
provided herein.
6. SPECIAL RECOGNITION
(a) INNOTRAC expressly recognizes that BST is both a seller and reseller of
products and services and that nothing agreed to herein is intended to limit,
prohibit or restrict BST's merchandising activities in any way, except as
provided in this Agreement.
(b) INNOTRAC expressly recognizes that BST is a communications common
carrier licensed and regulated by the Federal Communications Commission and
various state regulatory commissions. This Agreement may be subject to such
changes or modifications as any such regulatory body may from time to time
direct in the exercise of its jurisdiction. This Agreement is also subject to
modification under the continuing jurisdiction of the U.S. District Court for
the District of Columbia in United States v. Western Electric, C.A. No. 82-0192
("Modification of Final Judgment") or under the jurisdiction of other judicial
authorities. In the event of a substantial change or deviation from the state of
facts or the degree of regulation from that existing at the time of the
execution of this Agreement which materially and adversely alters the
obligations of either party under this Agreement, the adversely affected party
shall have the option (i) to continue in full force and effect this Agreement,
as modified by any regulatory or judicial change, or (ii) terminate any and all
future obligations contemplated under this Agreement.
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7. AFFILIATES AND SUCCESSORS
For purposes of this Agreement, an "Affiliated Company" shall be defined as
any company that is owned in whole or in part by BellSouth Corporation
("BellSouth") or by one or more of its direct or indirect subsidiaries. This
Agreement shall be binding upon INNOTRAC and BST, and their respective
successors and affiliates and shall inure to the benefit of INNOTRAC and BST,
and their respective successors and affiliates, including the Affiliated
Companies. INNOTRAC shall take all steps reasonably necessary to ensure that its
successors, assigns, representatives, agents and affiliates comply with this
Agreement. BST shall take all steps reasonably necessary to ensure that its
successors, assigns, representatives, agents and affiliates, including the
Affiliated Companies, comply with this Agreement.
8. ASSIGNMENT
The rights and obligations of either party hereto may not be assigned or
assumed without the prior written consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that BST, may, without
INNOTRAC's consent, assign this Agreement and may subcontract the performance of
any of its obligations hereunder to any of the Affiliated Companies.
Notwithstanding the foregoing, BST hereby consents: (i) to INNOTRAC's assignment
of this Agreement, in whole or in part, to any corporation wholly owned by Scott
David Dorfman ("Dorfman") or any partnership or corporation having Dorfman or a
corporation wholly owned by Dorfman as a majority shareholder or general
partner, and (ii) to INNOTRAC's conveyance of a security interest in and to any
monies due from BST to INNOTRAC under this Agreement.
9. OWNERSHIP AND USE OF MARKS
(a) BST authorizes INNOTRAC to use the BellSouth Telecommunications name,
the BellSouth Telecommunications mark, and any other trademark associated with
the Sets (collectively the "Marks") solely in conjunction with the advertising,
sale and/or rental of the Sets pursuant to terms hereof and the Billing
Agreement of even date herewith (the "Billing Agreement"). INNOTRAC shall
strictly comply with all graphic standards as referenced in Appendix B and any
such other graphic standards for the Marks which may be furnished from time to
time, and shall place appropriate trademark notices on the Marks as instructed,
unless impossible. Any use of the Marks which is not authorized herein or by an
authorized representative of BST shall be strictly prohibited. INNOTRAC admits
the value of, the popularity of, and the good will associated with the Marks.
INNOTRAC acknowledges that said good will is a property right belonging to
BellSouth and that, as between the parties hereto, BellSouth is the owner of all
trademark and other rights in said Marks worldwide. INNOTRAC recognizes that
nothing contained in this Agreement is intended as an assignment or grant to
INNOTRAC of any right, title or interest in or to said Marks or to any other
marks of BellSouth or the good will attached thereto, except that INNOTRAC may
use the Marks as provided in this Agreement and/or the Billing Agreement. Any
use of the Marks shall inure to the benefit of and be on behalf of BellSouth and
its Affiliated Companies, except that INNOTRAC may use and receive the benefit
of the Marks as provided in this Agreement and/or the Billing Agreement.
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INNOTRAC further recognizes that this Agreement does not confer any right on
INNOTRAC to use the Marks in any manner outside of the United States, or to
grant sublicenses, and is not assignable except as provided in Section 8.
INNOTRAC will do nothing inconsistent with BellSouth's ownership of the Marks.
INNOTRAC acknowledges that in the event, after a thirty (30) day notice has been
issued to INNOTRAC and INNOTRAC remains in breach of Section 9 or 10 hereof and
continues to act in any manner which materially and negatively impacts on the
reputation of BST, its Marks or its Affiliated Companies, BST shall have the
right to (1) bring an action against INNOTRAC at law or in equity to protect the
Marks and to recover damages as the result of any misuse or unauthorized use
thereof and/or (2) terminate this Agreement for any such misuse or unauthorized
use by INNOTRAC.
(b) During the term of this Agreement INNOTRAC's employees will be
permitted to answer calls from referred subscribers with the phrase, "BellSouth
Phones." INNOTRAC may continue to use the In-WATS number 1-800-XXX-XXXX;
provided, however, that INNOTRAC hereby agrees and warrants that it shall
immediately cease any and all current and future use of any alphabetical and/or
alpha/numeric equivalent of said In-WATS number, including but not limited to
1-800-XXX-XXXX, and that it shall, promptly destroy any and all materials and
other tangible items which reflect any alphabetical and/or alpha/numeric
equivalent of said In-WATS number, it being understood that INNOTRAC may retain
for internal use only and for so long as is necessary any INNOTRAC business
records reflecting any alphabetical and/or alpha/numeric equivalent of said In-
WATS number. The parties will cooperate in every reasonable manner in
determining whether any specific material which reflects the alphabetical and/or
alpha/numeric equivalent is being used in violation of or in noncompliance with
this paragraph. INNOTRAC acknowledges that in the event, after a thirty (30) day
notice has been issued to INNOTRAC and INNOTRAC continues to utilize in a manner
inconsistent with the foregoing an alphabetical and/or alpha/numeric equivalent
of said In-WATS number, BST shall have the right to (1) bring an action against
INNOTRAC at law or in equity to enjoin INNOTRAC's use of the alphabetical and/or
alpha/numeric equivalent of said In-WATS number and to recover damages as the
result of any such misuse or unauthorized use thereof, and/or (2) terminate this
Agreement for any such misuse by INNOTRAC of the alphabetical and/or
alpha/numeric equivalent of said In-WATS number.
(c) Upon the expiration, termination or cancellation of this Agreement for
any reason whatsoever, INNOTRAC shall, except as otherwise provided in this
Agreement and the Billing Agreement, immediately (i) cease answering calls with
the phrase, "BellSouth Phones"; (ii) cease any uses of the Marks, and (iii)
cease its use of all materials and other tangible items bearing the Marks.
INNOTRAC shall certify compliance with this paragraph in writing to BST within
thirty (30) days of the expiration, termination or cancellation date. Upon the
expiration, termination or cancellation of this Agreement, INNOTRAC will be
allowed to sell and/or rent any remaining Sets in its possession independently
of this Agreement so long as the Marks used on or in connection with the sale
and/or rental of the Sets are (i) removed or (ii) comply with the graphic
standards set forth in this Agreement.
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10. RESTRICTION ON BST MERCHANDISING
BST and its Affiliated Companies shall not engage in any marketing or
merchandising activities that (i) diminish the pool of customer referrals to
INNOTRAC pursuant to the Referral Agreement, (ii) cause or might cause
purchasers and/or lessees of Sets to terminate their use of and/or payment for
the Sets under the Program (as defined in the Billing Agreement) and switch to
another BellSouth-related marketing or merchandising program for the delivery or
marketing of telephone company services, including caller identification
services, which services are identical or similar to those that are the subject
of this Agreement and which do not materially involve INNOTRAC as a service
provider upon not less favorable terms, or (iii) cause or might cause potential
purchasers and/or lessees of Sets to choose another BST marketing or
merchandising program for telephone company services, including caller
identification services, which services are identical or similar to those that
are the subject of this Agreement and do not materially involve INNOTRAC as a
service provider upon not less favorable terms; provided, however, that during
the calendar years 1995 and 1996, BST shall have the right in its sole
discretion to conduct a one month Caller Identification promotion involving the
distribution of Caller Identification-display units in each year in each of its
nine states. The parties agree that the terms of this Section 10 shall be
subject to good faith negotiations concerning desired changes by either party
beginning after January 1, 1997. Either party desiring such negotiations shall
provide a thirty (30) day notification to the other party pursuant to Section 15
of this Agreement.
11. ADVERTISING AND PUBLICITY
(a) All media advertising and printed material in which the Marks are to be
used shall be prepared consistent with Appendix B and with such other guidelines
as may provide to INNOTRAC by BST. BST shall prepare an approved boilerplate
for such advertising and printed materials consistent with said guidelines for
use by INNOTRAC. All media advertising and printed material using the Marks
other than in conformance with the BST boilerplate shall be submitted to BST for
review in advance and shall not be distributed or used in any manner without the
prior written approval of BST, not to be unreasonably withheld.
(b) INNOTRAC agrees not to identify BST or any other Affiliated Companies
in any advertising or publicity without the prior written consent of BST, except
as expressly provided herein. INNOTRAC agrees that the Marks shall not be used
in any advertising or publicity without the prior written consent of BST, except
as expressly provided herein.
12. INDEMNITY
(a) In the event of any infringement or claim of infringement of any
patent, trademark, copyright, trade secret or other proprietary interest based
on the sale of any Sets pursuant to this Agreement or in contemplation hereof,
INNOTRAC shall indemnify and hold harmless BST and the Affiliated Companies from
any loss, damage, expense or liability, including costs and reasonable
attorney's fees, that may result by reason of any such infringement by or claim
of infringement against INNOTRAC, except that this indemnity shall not apply to
infringements by or claims of infringement against INNOTRAC or BST, and/or the
Affiliated Companies which infringement arises out of the action of BST and/or
the Affiliated companies.
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(b) The parties agree that BST and the Affiliated Companies except as
provided by law, shall not be responsible for providing any warranty on any Sets
purchased by subscribers pursuant to this Agreement. INNOTRAC agrees to
indemnify and hold BST and the Affiliated companies harmless from any claim,
suit, action or proceeding arising by or on behalf of any subscriber with
respect to the failure of INNOTRAC to comply with any INNOTRAC warranty on the
Sets. BST and the Affiliated Companies hereby assign to INNOTRAC any and all
warranties of the manufacturer(s) of the Sets.
(c) INNOTRAC agrees to indemnify and hold harmless BST and the Affiliated
Companies, and their respective officers, employees and agents, from any and all
claims, liabilities, or loss, and all damages, direct or consequential, incurred
by BST, the Affiliated Companies, or any other person or entity, and all costs
and expenses including reasonable attorney's fees, arising in any manner,
directly or indirectly, from the negligent or unlawful conduct of INNOTRAC
arising out of or in connection with or incident to this Agreement.
(d) BST and the Affiliated Companies agree to indemnify and hold harmless
INNOTRAC and its affiliates, and their respective officers, employees and
agents, from any and all claims, liabilities, or loss, and all damages, direct
or consequential, incurred by INNOTRAC, its affiliates and/or any other person
or entity, and all costs and expenses including reasonable attorney's fees,
arising in any manner, directly or indirectly, from the negligent and/or
unlawful conduct of BST arising out of or in connection with or incident to this
Agreement.
(e) The foregoing indemnifications shall survive the termination,
cancellation or expiration of this Agreement.
13. CHOICE OF LAW
The validity, construction, interpretation, and performance of this
Agreement shall be governed by and construed in accordance with the law of the
State of Georgia.
14. INNOTRAC RELATIONSHIP
Persons furnished by INNOTRAC shall be considered solely the employees or
agents of INNOTRAC, under the sole and exclusive direction of control of
INNOTRAC, and shall not be considered employees of BST or the Affiliated
Companies for any purpose. INNOTRAC shall be responsible for compliance with all
employment-related laws, rules and regulations involving, but not limited to,
employment of labor, hours of labor, health and safety, working conditions and
payment including federal, state and local taxes chargeable or assessed with
respect to its employees, such as social security, unemployment, worker's
compensation, disability insurance and federal and state withholding.
15. NOTICES
(a) Any notices or demands that are required by law or under the terms of
this Agreement shall be given or made by BST or INNOTRAC in writing and shall be
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given by hand delivery, telegram or similar communication, or by certified or
registered mail, or by courier or telecopier, and addressed to the respective
parties set forth below. Such notices shall be deemed to have been given in this
case of telegrams or similar communications when sent, and in the case of
certified or registered mail when deposited in the United States mail with
postage prepaid.
To BST: BellSouth Telecommunications, Inc.
[ * ]
South S4IA 3535 Colonnade Parkway
Birmingham, Alabama 35235
FAX (205) 977-0979
To INNOTRAC: INNOTRAC Corporation
Mr. Scott Dorfman
1828 Meca Way
Norcross, GA 30093
FAX (404) 717-2111
(b) The above addresses may be changed at any time by giving written notice
as above provided.
(c). In addition to the foregoing, any notices of a legal nature shall be
copied to:
BellSouth Telecommunications, Inc.
Legal Department
3535 Colonnade Parkway
South E9D1
Birmingham, Alabama 35243
and
Scott Dorfman
President
INNOTRAC Corporation
1828 Meca Way
Norcross, Georgia 30093
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16. DAMAGES LIMITATIONS
IN NO EVENT SHALL BST OR INNOTRAC, OR THEIR PARENT CORPORATIONS, AFFILIATES OR
SUPPLIERS, BE LIABLE FOR SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES.
17. CONFIDENTIALITY
BST and INNOTRAC agree that they will keep the terms of this
Agreement, and any communications, business dealings and transactions pursuant
thereto, confidential and will not disclose such terms, communications, dealings
or transactions ("Information") to any person or entity not employed by,
affiliated with or otherwise under the control of, the parties with a need to
know such Information, except to the extent that disclosure (i) may be
reasonably necessary for performance hereunder, (ii) may be necessary in order
to obtain enforcement of the terms of this Agreement, or (iii) may be required
be applicable law or regulation or by order of a court of competent
jurisdiction. In the event any such disclosure is required by law, regulation or
court order, the party making the disclosure shall promptly inform the other
party. Notwithstanding the foregoing, BST consents to INNOTRAC's disclosure of
this Agreement, and any communications, business dealings and transactions
pursuant thereto to any entity that has received an assignment of this Agreement
pursuant to Section 8 above, and professionals, including attorneys and
accountants, employed by any of the persons or entities referenced in this
Section 17.
18. TERMINATION
Either party may terminate this Agreement, without cause, upon not
less than twenty-four (24) months prior written notice given in accordance with
Section 15.
19. NONDISCRIMINATION COMPLIANCE
INNOTRAC agrees to comply with the applicable provisions of the
"NONDISCRIMINATION COMPLIANCE AGREEMENT" set forth in Appendix C.
20. CONFLICT OF INTEREST
INNOTRAC acknowledges BST's "CONFLICT OF INTEREST" statement shown in
Appendix D, and further stipulates no officer or employee of BST has been
employed, retained, induced, or directed by INNOTRAC to solicit or secure this
Agreement with BST upon agreement, offer, understanding, or implication
involving any form of remuneration whatsoever. INNOTRAC agrees, in the event of
an allegation of substance (the determination of which will be made solely by
BST ) that there has been a violation hereof, INNOTRAC will cooperate in every
reasonable manner with BST in establishing whether the allegation is true.
Notwithstanding any provisions of this Agreement to the contrary, if a violation
of this provision is found to have occurred and is deemed material by BST, BST
may cancel this Agreement. If BST, in its sole discretion, believes that any
12
such violation can be cured, BST agrees to provide INNOTRAC a thirty (30) period
in which to effect such a cure.
21. SEVERABILITY
If any part of this Agreement is determined to be invalid, illegal or
unenforceable, such determination shall not affect the validity, legality or
enforceability of any other part of this Agreement, and the remaining parts of
this Agreement shall be enforced as if such invalid, illegal or unenforceable
part were not contained herein.
22. SECTION HEADINGS
The headings of the sections included in this Agreement are inserted for
convenience only and are not intended to affect the meaning or interpretation of
this Agreement.
23. ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between
the parties hereto relating to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter. The parties
acknowledge that they have read this Agreement, understand it and agree to be
bound by its terms and conditions. The provisions of this Agreement may be
amended, waived or discharged only by an instrument in writing signed by both
parties. A waiver at any time of compliance with any of the terms and conditions
of this Agreement shall not be considered a modification, cancellation or waiver
of such terms and conditions, or of an preceding or waiver of such terms and
conditions, or of an preceding or succeeding breach thereof, unless expressly so
stated in a writing signed by both parties. Appendices A through E, referred to
herein and attached hereto, are integral parts of this Agreement and are
incorporated herein by this reference.
24. SUPERCEDES PREVIOUS AGREEMENT
This Agreement supercedes, it its entirety, any prior Referral agreements
between the parties.
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IN WITNESS WHEREOF, the parties have hereunto placed their hands and seals.
INNOTRAC CORPORATION, as agent for BELLSOUTH TELECOMMUNICATIONS, INC.,
HomeTel Systems, Inc. for itself.
By: /s/ Scott Dorfman By: [_______________*_______________]
(signature) (signature)
By: Scott Dorfman By: [_______________*_______________]
(printed name) (printed name)
Title: President Title: [____________*_______________]
Date: 6-17-95 Date: 6/22/95
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APPENDIX A
---------
TERRITORY
The Territory of this Agreement shall be the states of Alabama, Florida,
Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and
Tennessee.
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APPENDIX B
----------
TRADENAME AND TRADEMARK
USAGE REQUIREMENTS - BELLSOUTH AND BELL SYMBOL
The standards of usage for the BellSouth name and logo will be as follows:
(1) The legal name of the Company is BellSouth Products, Inc. "BellSouth" is
always one word with the "B" and "S" capitalized. The work "Products" is
initial cap only. A trademark notice should appear after the word Products
in the first or most prominent usage of the BellSouth Products Mark
(BellSouth Products)
(2) The Bell Symbol must be used with the geographic modifier BellSouth
Products. The Bell Symbol may not be used alone, or in a different
proporation to the names as shown in the sample logos.
(3) Color for the logo may be used in one of three ways:
- PANTONE* 300 blue for the Bell Symbol with black for BellSouth Products.
- Print the entire logo in black or a color dark enough to provide strong
contrast between logo and background.
- Reverse the entire logo out of color background in all white. The
background color should be dark enough to provide strong contrast
between it and the logo.
(4) The Bell Symbol shall be constructed of solid heavy lines and shall not be
constructed out of any other graphic elements (such as dots, stripes, or
patterns).
(5) Whenever the Bell Symbol is depicted in print advertising, it shall always
appear a distance of at least one-half its diameter away from all edges.
(6) No text, illustration, work, name, symbol or graphic element shall touch
any part of the Bell Symbol or appear in the space surrounding and
extending from the outermost perimeter of the Bell Symbol in all directions
a distance of one-half the diameter of any depiction of the Bell Symbol.
(7) The two elements that make up the Bell Symbol (the bell and a surrounding
circle) are a single unit and shall not be used separately.
(8) The Bell Symbol shall not be displayed or placed against a background
containing a strong texture or pattern or multiple colors such that the
Bell Symbol is not clearly distinguishable from the background.
* Pantone, Inc.'s check-standard trademark for color reproduction and color
reproduction materials.
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APPENDIX C
----------
NONDISCRIMINATION COMPLIANCE AGREEMENT
Contractor shall comply with the applicable provisions of the following:
Exec. Order No. 11246, Exec. Order No. 11625, Section 8 of the Small Business
Act as amended, Railroad Revitalization and Regulatory Reform Act of 1976, Exec.
Order No. 11701, Exec. Order No. 11758, Exec. Order No. 12138 Section 503 of the
Rehabilitation Act of 1973 as amended by PL93-516, Vietnam Era Veterans'
Readjustment Assistance Act of 1974 and the rules, regulations and relevant
Orders of the Secretary of Labor pertaining to the Executive Orders and Statutes
listed above.
For contracts of or which aggregate to S2,500 or more annually, the
following table describes the clause which are included in the contract:
1. Inclusion of the Equal Employment clause in all contracts and orders;
2. Certification of non-segregated facilities;
3. Certification that an affirmative action program has been developed and
is being followed;
4. Certification that an annual Employers Information Report (EEO-1
Standard Form 100) is being followed;
5. Inclusion of the "Utilization of Minority and Women's Business
Enterprises" clause in all contracts and orders;
6. Inclusion of the "Minority and Women's Business Subcontraction Program"
clause in all contracts and orders;
7. Inclusion of the "Listing of Employment Openings" clause in all
contracts and orders;
8. Inclusion of the "Employment of the Handicapped" clause in all
contracts and orders;
$2,500 to $10,000 $10,000 to $50,000 $50,000 or more
8 1, 2, 5, 6, 7, 8 1, 2, 3*, 4*, 5, 6, 7, 8
*Applies only for business with 50 or more employees
1. Equal Employment Opportunity Provisions
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In accordance with Exec. Order No. 1246, dated September 24, 1965 and Part
60-1 of Title 41 of the codes of Federal Regulations (Public Contracts and
Property Management, Office of Federal Contract Compliance, Obligations of
Contracts and Subcontractors), as may be amended from time to time, the parties
incorporated herein by this reference the regulations and contract clauses
required by those provisions to be made a part of Government contracts and
subcontracts.
2. Certification of Non-segregated Facilities
The Contractor certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner or permit its
employees to perform their services at any location under its control where
segregated facilities are maintained and that it will obtain a similar
certification prior to the award of any nonexempt subcontract.
3. Certification of Affirmative Action Program
The Contractor affirms that it has developed and is maintaining an
affirmative action plan as required by Part 60-2 of Title 41 of the Code of
Federal Regulations.
4. Certification of Filing of Employers Information Reports
The Contractor agrees to file annually on or before the 31st day of March
complete and accurate reports on Standard Form 100 (EEO-1) or such forms as may
be promulgated in its place.
5. Utilization of Minority and Women's Business Enterprises
(a) It is the policy of the Government and us, as a Government contractor,
that minority and women's business enterprises shall have the maximum
practicable opportunity to participate in the performance of
contracts.
(b) The Contractor agrees to use his or her best efforts to carry out this
policy in the award of his or her subcontracts to the fullest extent
consistent with the efficient performance of this contract. As used in
this contract, the term "minority or women's business enterprise"
means a business with at least 50 percent of which is owned by
minority or women group members or in case of publicly owned
businesses, at least 51 percent of the stock of which is owned by
minority or women's group members. For purposes of this definition
minority group members are American Blacks, Hispanics, Asians, Pacific
Islanders, American Indians and Alaskan Natives. Contractor may rely
on written representation by subcontractors regarding their status as
minority or women's business enterprises in lieu of an independent
investigation.
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6. Minority and Women's Business Enterprises Subcontracting Program
(a) The Contractor agrees to establish and conduct a program which will
enable minority and women's business enterprises (as defined in
paragraph 5 above) to be considered fairly as subcontractors and
suppliers under the contract. In this connection, the Contractor
shall:
(1) Designate a liaison officer who will administer the Contractor's
minority and women's business enterprises program;
(2) Provide adequate and timely consideration of the potentialities
of known minority and women's business enterprise in all "make-
or-buy" decisions;
(3) Assure that known minority and women's business enterprises will
have an equitable opportunity to compete for subcontracts,
particularly by arranging solicitations, time for the preparation
of bids, quantities, specifications, and delivery schedules so as
to facilitate the participation of minority and women's business
enterprises;
(4) Maintain records showing (I) procedures which have been adopted
to comply with the policies set forth in this clause, including
the establishment of a source list of minority and women's
business enterprises (II) awards to minority and women's business
enterprises on the source list, and (III) specific efforts to
identify and award contracts to minority and women's business
enterprises;
(5) Include the utilization of Minority and Women's Business
Enterprises clause in subcontracts which offer substantial
minority and women's business enterprises subcontracting
opportunities;
(6) Cooperate with the Government's Contracting Officer for us in any
studies and surveys of the contractor's minority and women's
business enterprises procedures and practices that the
Contracting Officer may from time to time conduct;
(7) Submit periodic reports of subcontracting to known minority and
women's business enterprises with respect to the records referred
to in subparagraph (4) above, in such form and manner and at such
time (not more than quarterly) as the Government's Contracting
Officer for us may prescribe.
(a) The Contractor further agrees to insert, in any subcontract
hereunder which may exceed $5,000,000 (or in the case of WBE
$1,000,000 in the case of contracts for the construction of
any public facility and which offer substantial
subcontracting possibilities) provisions which shall conform
substantially to the language of this agreement, including
this paragraph; and
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(b) to notify the Contracting Officer of the names of such
subcontractors.
7. List of Employment Openings for Veterans
In accordance with Exec. Order 11701, dated January 24, 1973, and part 60-
250 of Title 41 of the Code of Federal Regulations, as it may be amended from
time to time, the parties incorporated herein by this reference and regulations
and contract clauses required by those provisions to be made a part of
Government contracts and subcontracts.
8. Employment of the Handicapped
In accordance with Exec. Order 11758, dated January 15, 1974, and Part 60-
741 of Title 41 of the Code of Federal Regulations, as may be amended from time
to time, the parties incorporated herein by this reference the regulations and
contract clauses required by those provisions to be made a part of Government
contracts and subcontracts.
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APPENDIX D
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CONFLICT OF INTEREST
BellSouth does business with thousands of contractors and suppliers.
It is a fundamental policy of BellSouth that such dealings shall be conducted on
a fair and impartial basis, free from improper influences, so that all
participating contractors and suppliers may be considered on the basis of the
quality and cost of their product or service.
We are also committed to doing business with contractors and suppliers
in an atmosphere that is in keeping with the highest standards of business
ethics. Although we recognize that the exchange of gifts and entertainment is
customary in some businesses, we believe this practice often raises embarrassing
questions about the motives of both the giver and receiver. Therefore, this
company has for some time followed a policy that its employees shall not accept
from customers, suppliers of property, goods or services, or from any other
persons, any gifts, benefits or unusual hospitality that may in any way tend to
influence them, or have the appearance of influencing them, in the performance
of their jobs.
Employees of BellSouth who are authorized to make purchases or
negotiate contracts are aware of this policy.
We believe that firm adherence to this policy will help establish
better business relationships between BellSouth and its contractors and
suppliers. We solicit your cooperation in achieving that objective.
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APPENDIX E
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CPE NEGOTIATION TRIAL AND PART X COMPENSATION
BST and INNOTRAC agree that it is in the mutual best interest of both
parties to enable BST service representatives to directly negotiate the sale of
Caller ID display units and other telecommunications devices directly with the
customer. In concept, this would largely eliminate the need for BST service
representatives to "refer" customers desiring such equipment to INNOTRAC to
complete the sale.
To that extent, BST and INNOTRAC agree to conduct a trial to ascertain
the effectiveness of such a program. At the end of the trial period, it shall be
BST's sole discretion to continue the trial in the trial locations; to terminate
the trial altogether; or to judge the trial a success. It will be BST's sole
discretion as to the extent to which locations are added should the trial be a
success.
TRIAL TIMING AND DURATION
The trial will begin May 1, 1995 and will run for a period of
ninety (90) days.
TRIAL LOCATION(S)
The trial will encompass all BST Marketing and Service Business
Offices and their associated Service Representatives in the states of Georgia
(GA), Louisiana (LA) and Tennessee (TN).
BST COMPENSATION
INNOTRAC agrees to compensate BST for the appropriate Part X
charges as provided by the formula provided below.
PART X COMPENSATION FORMULA
INNOTRAC compensation to BST will be calculated based on the number of
sales directly negotiated by BST Service Representatives, multiplied by the
average time spent negotiating the Caller ID or other display equipment,
multiplied by the BST determined compensation rate per minute of service
representative negotiation time.
AVERAGE NEGOTIATION TIME
The average time spent negotiating Caller ID and other display
equipment is established at [ * ].
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COMPENSATION RATE
The per minute rate by which BST will be compensated by INNOTRAC is
[ * ].
ADJUSTMENT
BST will perform periodic timing and costing studies which may result
in adjustments to the average negotiation time or compensation rate or both.
BST shall implement such adjustments at its sole discretion, provided, however,
that INNOTRAC is provided with thirty (30) days' advance notification of any
such adjustment.
BILLING
INNOTRAC will be billed monthly by BST based on the previous
month's sales activity.
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