Exhibit (10-2)
EXHIBIT A
VALIDATION PROCESSING PURCHASE AGREEMENT
INTERNET PROVIDED LONG DISTANCE
This Agreement made this __ day of _ 1995 by and between Internet Communications
Services, Inc., a Delaware corporation (hereinafter "Internet") with an office
at 183 East Main, Suite 750, Rochester, New York, USA 14604 and La Opinion
Tarleta Telefonica Telecard, Inc., a California corporation, sometimes referred
to as "La Opinion" (hereinafter "Reseller"), with its principal offices at 411
West Fifth Street, Los Angeles, California 90013.
WHEREAS, "Internet" supplies telecommunications services;
WHEREAS, "Reseller" desires to purchase such services from Internet;
WHEREAS, Internet will provide Service to Reseller (generate PIN and group
numbers) pursuant to short form service Agreements referred to as Confidential
Service Orders ("CSO"), in the form attached hereto, which shall at all times
incorporate the terms and conditions of this Agreement, as well as any
additional terms and conditions unique to each related CSO and/or to each and
any contract between reseller and other parties that Reseller desires to be a
part of and subject to this Agreement (e.g. number of minutes and dollars per
group of PINS, institution number).
NOW, THEREFORE, in consideration, of the promises made herein and intending to
be legally bound, the Parties agree as follows:
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1. APPOINTMENT
Subject to the terms and conditions of this Agreement, Internet hereby
appoints reseller, ordering wholesale units/minutes of telephone talk time
herein as a non-exclusive Reseller of such service, and Reseller upon ordering
or receiving or accepting Internet service hereby exclusively accepts such
appointment and both parties agree to be bound by all the terms and conditions
outlined herein, for the term of the Agreement. During the term of this
Agreement, and any extensions of same, neither Internet nor any affiliate of
Internet shall provide its Validation Processing Services utilizing Internet
Provided Long Distance (Validation Processing Service Bureau Functions and/or
Long Distance rates and mark-ups thereon) to any competitor of Reseller under
more favorable terms than that herein provided in the Hispanic market in
California. The relationship of Internet and Reseller shall provide Reseller
with a favored nations clause, at no time will Internet provide the same or
better terms to a competitor of Resellers in the Hispanic market in California.
2. DURATION OF AGREEMENT
Unless otherwise terminated pursuant to the terms of this Agreement,
the Parties agree that the aforesaid shall commence upon execution of this
Agreement by both parties and shall terminate at the end of the twenty fourth
(24) month.
A. Renewal: This Agreement shall renew for a continuous twelve (12)
month period, and shall be binding against the parties hereto, upon written
Agreement by the parties at least 60 days prior to the end of the term.
3. SERVICES
A. In General, Internet will provide its proprietary debit card
switching services to Reseller, Service provided to Resellers consumers is
prepaid and is accessed using a card of a particular denomination. The user of
a card calls a dedicated to and owned by Reseller toll free 800 number printed
on the card and enters a designated Personal Identification number (PIN) in
order to gain access to the Services. Each card has a unique PIN. After
entering a valid PIN, a purchaser may place calls. For each call made,
equipment operated by Internet tracks the calling time allotted to each card,
depending on the price per minute allocated to that particular call. The retail
charges for the domestic and international minutes are to be defined by Reseller
from time to time and provided to Internet in writing.
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B. Further Description of Services Offered. Internet will receive
calls placed by Resellers consumers via shared access facilities owned or leased
by Internet to its long distance carriers of choice. Reseller assumes
responsibility for all incoming calls directed to Internet on Resellers
dedicated owned by Reseller toll free 800 numbers to Internet's switching
platform. Internet will perform its validation processing service bureau
functions (automated attendant, PIN verification, balance verification, domestic
and international rate plan verification, billing and barging), and will
terminate valid calls over Internet's shared long distance trunk groups to its
long distance carriers of choice, at its cost plus a margin. All calls will be
controlled using Internet's proprietary switching systems. The charges for
switching services are described in Schedule A of this Agreement.
4. PURCHASE PRICE/PAYMENT TERMS
A. Incoming Toll Free 800 Service. Reseller agrees to pay Internet,
or Internet's long distance carrier of choice direct, the per minute rates
charged by such carrier to Internet. In addition to the "out-of-pocket" per
minute rates, Reseller agrees to pay Internet a pro rated access charge equal to
$0.003 per minute, to compensate internet for its cost of access. Internet or
Internet's long distance carrier of choice will bill reseller weekly, payment
net 14 days for payment of such long distance charges.
1. Reseller has been informed and understands that it will incur
a significantly greater number of incoming 800 calls/minutes to its dedicated
800 numbers, then it will outbound completed calls. Such calls/minutes can be
attributed to incoming calls processed that: ring no answer, receive busy
tones, and/or calls related to account balance data requests.
2. It is expressly understood that the 800 numbers utilized to
provision service, specifically, the 800 number 891-1006 and the 800 number 891-
1026, are owned by Reseller.
B. Validation Processing Cost. Reseller agrees to pay Internet, at
the rates defined in Schedule A, annexed hereto, for all minutes of validation
processing attempted/utilized. Internet will bill Reseller weekly, payment net
14 days.
C. Outgoing Local, Domestic and International Long Distance Charges.
Internet will charge Reseller its cost of domestic (1+) and international (011+)
long distance service plus a 15% margin (cost per minute X 15% margin X
communications tax = Resellers wholesale outgoing cost per minute), at
Internet's rates, subject to change as Internet's carriers of Choice bill
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Internet as defined in Schedule "B" annexed hereto (current cost). Internet
will bill Reseller in 30 second/6 second thereafter billing increments, as
Internet is billed by its long distance carriers, weekly, payment net 14 days.
1. Internet agrees to use its best efforts to use the long
distance carriers of its choice charging lowest rates (factoring in quality of
service).
2. During the term of this Agreement, Internet agrees to provide
Reseller with a revised list of its least cost routing ("LCR") cost per country
table plus its agreed upon 15% margin on the first day of each month. Such LCR
table will depict any changes (increases or decreases) in Internet's cost to
complete outbound long distance services. Internet will use its best efforts to
notify Reseller of any rate increases or decreases as Internet is notified of
such changes by its long distance carriers of choice.
D. Payment of all Internet invoices shall be made by Reseller on or
before all payment due dates, TIME BEING OF THE ESSENCE.
1. All orders, (CSO's requesting the generation of additional
authorization codes and the batching of additional authorization codes, and the
development of custom voice prompts, and/or additional retail rate plans) are
subject to prior acceptance by Internet in its reasonable discretion.
2. Internet, in its sole discretion, reserves the right to
increase its wholesale per minute rates (rates charged for inbound and/or
outbound long distance calls) charged to Reseller, by the amount that Internet's
rates are increased by it's long distance carriers of choice.
3. At any time during the term of this Agreement, Internet will
allow for Reseller to utilize its own long distance carriers for 800 and/or
outbound long distance services. In addition to Internet's validation
processing service fees, at the rates defined in Schedule C, annexed hereto,
Reseller will be charged a $250 per month per 11 termination port charge with a
$6.00 one time installation charge, as well as the local telephone company local
loop charges.
4. In an effort to limit Resellers liability on unbillable 800
calls, if instructed to do so, Internet will debit against an end users
account/Personnel Identification Number (PIN) the costs related to all
authorized, PIN accepted, yet uncompleted calls (e.g. ring no answer, busy or
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account data requests). Internet will accomplish this objective by imposing a
surcharge, at the beginning of each completed call, equal to the systems call
set up time, or by billing/utilizing an inflated first minute surcharge.
5. Any tax or levy, or tax liability resulting from the retail
sale of prepaid phone cards shall be paid and/or collected for any governmental
authority by Reseller direct, and/or its customers/Dealers. If at any time
during the term of this Agreement or any extension thereof, the Federal, State
or local authorities assess any tax whatsoever by virtue of the sale of the
aforementioned service, then, in that event, the Reseller herein, shall be
solely responsible for the full payment of any such tax liability. This
provision shall serve as an indemnification and hold harmless against Internet
(Wholesaler). In the event Reseller fails to pay the tax assessment in the
first instance and thus Internet pays any tax due, then, upon presentation of
any bill or invoice regarding said tax, the Reseller shall reimburse Internet
for such tax payment and all reasonable costs incurred regarding the same.
Internet shall be responsible for all taxes relating to the
Validation Processing Service Bureau functions it renders. If state law
requires payment on Sales tax on cards in the future, Internet will not charge
taxes on services if Reseller provides a reseller certificate, and assumes all
tax liabilities direct.
6. Reseller shall retain sole responsibility for obtaining all
orders, processing all receivables, and bad debt associated with its product.
Reseller shall be responsible for all monetary collections, including sales tax
if applicable, from all its customers. Payment net 14 days from Invoices of
Internet Invoices as per Sections A, B and C above, are not contingent upon
Resellers customers payment to it.
7. Internet shall be responsible for all fraud which is not
directly associated with the distribution and sale of the debit cards or which
is not caused by employees, officers, agents, and affiliates of Reseller,
including without limitation card manufactures and distributors employed by
Reseller in connection herewith. The limit of said liability shall be limited
to the actual air-time losses incurred.
E. Reseller agrees to pay applicable set up fees associated with
custom massaging, multiple custom retail rate plans, system programming, etc.,.
If applicable, these fees will be outlined in the individual CSO's made part of
this Agreement.
5. DEPOSIT
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Reseller agrees to provide Internet, upon execution of this Agreement,
with a cash deposit of $10,000.00. Such deposit will be held by Internet, in
accrued interest bearing account with Reseller as beneficiary, as security in
the event of default, for payment governing all invoices, that shall be sent by
Internet to Reseller. Internet reserves the right to request additional and/or
"pay-up" of the original and existing deposit(s). Upon amicable culmination of
this Agreement, Internet shall return to Reseller, all deposits held, including
interest, deducting any outstanding amounts due Internet. Internet reserves the
right to withhold a portion of said deposit, pursuant to the termination of the
Agreement, to cover any current liabilities associated with exposure to Internet
as a result of their being outstanding active PIN's and unissued toll bills.
6. CUSTOMER SERVICE
A. Internet will provide Personalized customer service via a Reseller
provided and owned dedicated 800 number in accordance with the customer service
it provides for its Telecaller TM product, at the cost of $0.48 per minute
billed, for all minutes of customer service directed to Internet. Internet,
will provide Reseller with monthly billing statements, payment net 14 days, for
such service.
1. Customer service in accordance with the customer service
Internet provides for its Telecaller TM product can further be defined as; (i)
Bilingual operators on site Monday through Friday 8am-11pm e.s.t.., (ii)
Bilingual operators on site Saturdays and night weekend hours as call volumes
deem necessary, (iii) calls routed to an answering machine during off hour
times. Internet will make its best efforts to provide a high quality customer
service (e.g. maintain enough staff to handle calls in a timely and professional
manor), and agrees to work with Reseller to extend the hours of on site customer
service if/when Reseller and Internet deem it necessary based upon call volumes
and consumer interest.
2. Reseller may at any time during the term of this Agreement,
purchase at InterNet cost, plus a $100.00 per month service fee, the required
customer service workstations to provide its own "active" customer service.
3. As an alternative to InterNet provided or Reseller provided
customer service, InterNet is willing to provide customer service to Reseller on
a monthly flat rate contract basis. The rates for this service will be based
upon the type of coverage deemed necessary and InterNet's fixed cost to
provision such service, and will be agreed to by both parties and made part of
this Agreement in the form of a properly executed CSO.
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7. CONDUCT OF BUSINESS
A. Obligations Assumed by InterNet. InterNet shall:
1. Provide weekly billing statements to Reseller describing total
billable minutes for each category of the Services at the prices specified
Section 4 of this Agreement.
2. Use best efforts to provide Reseller with the batch and Personal
Identification Numbers (PIN) ordered. InterNet shall not be liable for any
damages no matter how proximate or remote, as a result of any delay or failure
to deliver the Products.
3. Provide: (i.) all technical functions relating to the system,
its data base management, and call integrity, (ii.) necessary networking and
transmission facilities, (iii.) generation of authorization codes and the
batching of authorization codes, (iv.) custom voice prompts, (v.) Incoming and
outgoing trunk system traffic statistics, (vi.) accuracy of all billings, and
customer service support to Reseller for in depth analysis of customer
complaints, 24 hour/7 days per week/365 days per year, and (vii.) network
monitoring & surveillance, and on request custom report generation.
B. Obligations Assumed by Reseller. Reseller shall:
1. Be solely responsible for the commercialization of Resellers
Debit Card product including, by way of example not limitation, advertising,
marketing and promotional representations. Reseller shall indemnify, hold
harmless, and at InterNet's request, defend InterNet from and against any and
all claims, liabilities, damages, and expenses (including attorney's fees and
related costs and expenses) arising out of or in conjunction with Resellers
commercialization of its Debit card product.
C. Mutual Obligations of Both Parties. Each party shall:
1. Obtain and maintain, at its own expense, all governmental
licenses, permits, and approvals which are necessary or advisable for its
implementation of this Agreement by and comply with all applicable laws and
regulations.
2. Represent and warrant that they shall conduct business in strict
conformity with all International, domestic, local, state, and federal laws,
rules and regulations.
3. Not create any obligations of any kind whatsoever or nature on
behalf of each other.
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8. INDEMNIFICATION AND INSURANCE
A. InterNet agrees to indemnity and hold Reseller harmless from any and
all claims, suits, actions, demands, costs, settlements, liens, losses, demands,
expenses, and all other liabilities including all reasonable legal costs on
account thereof, arising out of or resulting from any grossly negligent or
intentional misrepresentations by InterNet. Not withstanding the prior
sentence, such indemnification shall be limited to actual damages incurred.
B. Reseller agrees to indemnify and hold InterNet harmless from any and
all claims, suits, actions, demands, costs, settlements, liens, losses, demands,
expenses, and all other liabilities including all reasonable legal cost on
account thereof, arising out of or resulting from the negligence of intentional
misrepresentations by Reseller.
C. Except as provided herein or under applicable law or regulation,
neither party shall be liable hereunder for any consequential or punitive
damages.
D. The obligations of this Section 7 shall survive the termination of
this Agreement.
9. TERMINATIONS OF AGREEMENT
If Either party considers the other to be in breach of this Agreement
the party asserting a breach has a right to cancel the Agreement subject to the
following precedent:
A. Written notice of the alleged basis for the breach shall be mailed by
certified mail return receipt requested and regular mail, and/or
B. The party receiving the notice may within three (3) business days cure
the alleged breach to the reasonable satisfaction of the asserting party, and/or
C. If the breach is not cured to the reasonable satisfaction of the
asserting party, this Agreement shall terminate at the end of the third (3)
business day period set forth above.
D. If the breach relates to prompt payment of InterNet invoices, and such
breach is not cured to the reasonable satisfaction of InterNet, InterNet
reserves the right to terminate this Agreement.
1. Upon termination of this Agreement relating to payment of
InterNet invoices, InterNet reserves the right to take any action to curtail and
limit its liabilities
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to include interruption and/or delay in processing of calls, and/or deactivation
of all PIN's related to all unpaid invoices, and termination of all services.
InterNet will not be held responsible in any way, shape or form for any losses,
damages or other, sustained by Reseller, resulting from a partial or complete
interruption, suspension or shut down of any and/or all services provided by
InterNet to Reseller, provided that the termination was as a result of uncured
as set forth above.
E. In the unlikely event that the system is down for more than two hours,
on any three occasions in any 30 day period or for an aggregate of six hours in
any thirty day period, Reseller will have the option to cancel Agreement without
prejudice, immediately.
10. CONFIDENTIALITY
The terms of this Agreement and any information relating to InterNet,
Reseller, or their respective customers which are furnished or revealed pursuant
to this Agreement are deemed to be confidential. Neither party shall at any
time disclose any of the terms of this Agreement nor any such previously
described confidential information to any other third party except to the
professional advisors of either party or as may be required by applicable law.
11. NON-CIRCUMVENTION
InterNet acknowledges that from time to time Reseller may introduce or
disclose the names of certain parties to InterNet as "Wholesale" customers or
potential customers to whom Reseller has already presented to or sold to the
idea of debit telephone calling cards. InterNet hereby agrees not to do
business directly with any such party. This non-circumvention does not prohibit
any other Wholesale Distributors or Resellers of InterNet service from
presenting to and servicing any account.
This Non-circumvention goes into effect in connection with each
specific introduced party at the point which InterNet commences pursuing such
business with such party through Reseller.
12. WARRANTY
InterNet warrants to Reseller only that it will provide: (i.) a first
class service and (ii.) that such service meets government applied laws and
regulation.
13. FORCE MAJEURE
InterNet shall not be liable for any failure, interruption, diminution
of service in the event that such failure, interruption or diminution is the
result of an act
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of God, natural disaster, fire, civil or military authority, insurrection, riot,
war, national emergency, strike or other labor dispute, power failure, failure
of other carriers or exchanges, flood, explosion, acts or omissions of carriers
or suppliers, or other cause out of InterNet's reasonable control.
14. LIMITATION OF LIABILITY
All other provisions in this Agreement notwithstanding, liability of
either party under this Agreement shall be limited to the total cost of Services
to Reseller prior to termination.
Neither party shall be responsible or liable for any incidental
consequential damages, including lost revenues or profits, incurred by either
party or any user of the Services as contemplated herein, unless such damages
have arisen from willful misconduct of one of their employees.
15. MISCELLANEOUS
A. AUTHORITY. Both parties hereby represent and warrant that he or
she are acting as a principal on his or her own behalf and has full power and
authority to execute and deliver this Agreement and to perform the duties and
obligations hereunder.
B. SEVERABILITY. This Agreement shall be considered to be severable
with respect to any term or provision which shall be found to be invalid, void,
or unenforceable and the remaining terms and provisions shall continue to be
binding upon the parties hereto.
C. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter of this
Agreement and there are no representations, warranties, covenants, agreements or
collateral understandings, oral or otherwise, expressed or implied, affecting
this instrument which are not expressly set forth herein. This Agreement may
only be amended by an instrument signed by the parties hereto.
D. WAIVER. A waiver by either party of a breach of any provision of
the Agreement and these General Terms shall not operate as, nor be constructed
as, a waiver of any subsequent breach.
E. PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
thereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provisions were omitted.
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F. HEADINGS. All headings contained herein are inserted for
convenience only and do not constitute a part of the Agreement and these General
Terms.
G. NOTICE. Any notice to be given under the Agreement or these
General Terms shall be deemed given when mailed by registered or certified mail,
return receipt requested, postage prepaid to the party to be notified at the
address set forth above in this Agreement, or at such other address as such
party may designate in writing to the other party.
H. SCOPE. Nothing contained herein shall be construed to constitute
the parties hereto as partners, joint ventures or as agents of each other, but
the relationship shall be one of independent contractors with InterNet providing
the Services Described hereunder to Reseller for the considerations set forth in
this Agreement and any attachments hereto.
I. CHOICE OF LAW. The construction, interpretation and performance
of this Agreement shall be governed by the law of the State of New York,
excluding its choice law rules.
IN WITNESS WHEREOF, the parties heretofore above caused this Agreement
to be executed by their duly authorized representatives effective as of the date
first written above.
InterNet Communications Services, Inc.
/s/ David Goodwell
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Vice President and COO
La Opinion Tarleta Telefonica Telecard, Inc.
/s/ Gil A. Garcia
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CFO
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