EXHIBIT 10.10
SERVICE AGREEMENT
THIS AGREEMENT is made this 19th day of August, 1996 by and between
Innovative Telecom Corporation, a Delaware corporation having its principal
office at 2 Harrison Street, Nashua, New Hampshire 03060 (hereinafter
"Innovative") and Computer Telephone Corporation, a Massachusetts corporation
having its principal office at 360 Second Avenue, Waltham, Massachusetts 02154
(hereafter "Client").
WHEREAS, Client desires to purchase certain telecommunications services
from Innovative as described herein;
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which both parties
acknowledge, the parties agree as follows:
1. SERVICES
During the term of this Agreement Innovative shall provide the following
services (the "Services") to and for the benefit of Client:
A. In General. Innovative shall provide prepaid transaction services
(the "Services") for Client, at Innovative's facilities located in New York,
New York. Services are described herein, and in detail in Exhibit A, attached
hereto and made a part hereof.
The Services involve receiving local, long distance or international
calls from Client's customers via Client's carrier facilities, performing
prepaid transaction processing services on those calls, and presenting those
calls for completion via Client's designated local, long distance or
international carriers.
Optional International Termination Service. Client may enter into an
agreement with any carrier or carriers of its choosing for the provision of
international telecommunications services. Innovative shall provide Services
with respect to Client's international calls using such carrier or carriers in
the same manner and for the same rates for domestic calls as specified in
Exhibit A. In the event that Client chooses to use Innovative as a carrier
for international telecommunications services, the-parties shall enter into a
separate agreement governing the rates, terms and conditions of such service.
Intellectual Property. All services and systems provided by INNOVATIVE,
including Services provided pursuant to Work Orders as described herein, shall
be proprietary to INNOVATIVE, and INNOVATIVE shall retain total intellectual
property rights in all Services provided in connection with this Agreement.
B. Responsibilities of the Parties.
This Agreement contains exclusivity and non-compete provisions (see
Section 2).
1. Innovative. Innovative's switching services will be available 7
days per week, 24 hours per day, 365 days per year. Innovative shall meet the
quality standards described in Exhibit A, and shall provide all services as
further describe in Exhibit A. Services shall be provided in a good and
workmanlike manner.
Carrier Management. The parties shall cooperate to facilitate
Innovative's provision of Carrier management, as more fully described in
Exhibit A.
Call Records. INNOVATIVE will capture Call Detail Records
hereinafter "CDR" for each of Client's calls entering and exiting INNOVATIVE's
equipment. CDR will be stored at the switching location and transferred to a
location designated by Client.
2. Client. Except as provided in Exhibit A, Section 4, all circuit
connections to and from Innovative's equipment are the responsibility of
Client. Long distance access in sufficient capacity according to Client's
quarterly forecasts will be provided by Client to at Client's expense, in
consultation with Innovative. Client must provide a single point of contact
with adequate technical qualifications to communication with Innovative's
technical support personnel.
Tariffs, Taxes. As further defined in Section 3E, Client is
responsible for all state, federal and any required foreign tariffing
requirements, and for payment of all telecommunications, sales and use taxes
in connection with the Services. Except as described in Exhibit A, Section 4,
Client is also responsible for all data-lines and carrier access transport,
local carrier connections, and for providing the unique 800 access number for
the prepaid services.
CDR. Client will provide data line connection to Client's
location and computer equipment to capture the CDR from INNOVATIVE's switch.
B. Pricing. Client shall be billed for prepaid transaction services,
and live operator services if needed, and for Service Enhancements under this
Agreement.
C. Statements. Innovative shall provide billing statements to
Client including total billable minutes, for each category of the Services
described in Exhibit A. Each billing statement shall describe activity for
the previous billing period.
D. Service Enhancements. Enhancements to Innovative's services are
described in Work Orders which signed by both parties, specifying the required
enhancements to Innovative's base platform. Such Work orders, if needed to
provide the Services, are appended to Exhibit A, and are a part thereof. In
the future, further Service Enhancements shall take the form of additional
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Work Orders. Terms of payment pertaining to the changes specified in such
Work Order are defined in each such Work Order. Prices for underlying
Services may be changed in the future if changes or enhancements increase the
cost of providing Services. No patent, copyright or other proprietary or
intellectual property rights will be transferred to Client for any work done
hereunder, including under Work Orders.
Additional Enhancements. Client agrees to purchase Services under
Statements of Work for the implementation of standard post-paid telephone
calling card, or standard 1+ long distance "MTS" services, or other
enhancements as agreed by the parties. Client agrees to make advance payments
against completion of such Statements of Work, payable upon the signing of
such Statements of Work by both parties, and as further described in Exhibit
A. Any carrier functions provided by Innovative shall be dealt with under a
separate agreement.
2. TERM, TERMINATION, EXCLUSIVITY, NON-COMPETITION, RIGHT OF
REFUSAL
A. Term. This Agreement shall be effective on the date shown above
for a Term of 42 months.
B. Termination. Client may terminate at any time on sixty (60) days
written notice, subject to the provisions of C and D below. In addition,
Client may terminate this Agreement free of those provisions, on 60 days
written notice to Innovative, in the event Innovative raises its prices under
Section 3G, such that aggregate billing to Client is increased by more than
158 in any 12 month period, if all increases during the period were applied to
the last month of the period.
C. Exclusivity, Non-Competition. For a period of 18 months following
the effective date of this Agreement (the "Exclusivity and Non-compete
Period"), Client hereby agrees to purchase prepaid calling services through
Innovative exclusively if at all, and directly or indirectly through no other.
The parties agree that this provision is a material inducement to Innovative's
entering into this Agreement, and is consideration for Innovative's
substantial initial investment required to serve Client, which.investment is
not wholly covered by the initial set-up fees quoted herein. The sole
exceptions to this duty of exclusivity-and non-competition shall be (i) in the
event of termination following Innovative's uncured material Default, or (ii)
in the event of allowed termination following price changes as described
above. For purposes of this Section and Section D below, prepaid calling card
services are defined as any performance of the real-time debit function.
D. Right of First Refusal. For the period beginning with the end of
the Exclusivity and Non-compete Period defined in Section C above, and ending
42 months after the effective date of this Agreement, Client shall offer
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Innovative a right of first refusal on any purchase of prepaid calling
services from third parties, on the same terms as that offered to such third
parties. The sole exceptions to this right of first refusal shall be the
exceptions number (i) and (ii) described in C above.
3 PRICE AND PAYMENT
A. Invoices. Innovative shall invoice Client in accordance with the
prices set forth in Exhibit A.
B. Timing. Innovative shall invoice Client according to the schedule
appearing in Exhibit A. Client shall pay each invoice within the time frames
set forth. Innovative shall notify Client of all invoices not paid within
such time, and Client shall have five (5) days after receipt of such notice to
pay such invoices ("Grace Period").
C. Disputes. If any dispute exists with respect to the amount, Client
shall pay the undisputed amount to Innovative, and provide Innovative with a
written memorandum specifying the disputed portion of the invoiced amount and
the basis for such dispute. Client and Innovative each agree that they shall
discuss in good faith and resolve any such disputes if possible within ten
(10) days of receipt by of the written memorandum.
D. Definition of Late Payments. Payments of any invoiced amount
received after the five (5) day Grace Period shall be considered late
payments, and interest shall begin accruing as of the sixth day following the
receipt of notice. Failure to pay such amounts during the Grace Period, in
addition to triggering the accrual of interest, shall be an Event of Default
under this Agreement.
E. Taxes. Except as otherwise provided herein, the prices which
shall be paid by Client under this Agreement do not include any state or local
sales taxes. It is the responsibility of Client or Client's agents to collect
such taxes as may be required, except as explicitly provided herein, and
Client shall reimburse Innovative for applicable sales or use taxes. Client
shall be responsible for all telecommunications taxes.
F. Interest. Payments are deemed paid when received by Innovative.
Past due amounts shall bear interest at the rate of 1.5% per month or the
maximum allowed by applicable law, whichever is less. Client shall pay all
costs of collection.
G. Price Changes. Innovative may change its prices after 12 months,
on 90 days' written notice to Client. Such price changes may affect Client's
right to terminate this Agreement as described in Section 2.
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4. WARRANTY
A. Innovative hereby represents, warrants and agrees as follows:
1. Innovative warrants that it owns or has rights to systems and
equipment adequate to provide Services as specified herein, and that it shall
provide services without substantial and material deviation from those
described herein.
2. Because regulation of telecommunications services changes rapidly,
Innovative makes no warranty that its Services will be deemed in conformity
with state or federal laws or regulations. In the event that filings or other
actions are required by agencies to continue the Services, Innovative will
make all reasonable efforts to promptly conform to such requests.
3. This Agreement is a legal, valid and binding obligation of
Innovative and is and shall remain enforceable against Innovative in
accordance with its terms. Innovative is a corporation duly organized and
validly existing in good standing under the laws of Delaware.
B. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, Innovative MAKES
NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO CLIENT, ANY CONSUMER
OR OTHER PERSON RELATING TO MATTERS ADDRESSED IN THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION, ANY WARRANTIES REGARDING THE MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE OF THE SERVICES.
C. Limitations of Warranty. This Warranty shall not apply, and
Innovative shall have no liability for any harm to Client in the event that a
failure is the result of Client's negligence, or misuse or abuse of the
Services. Client shall notify its customers of the limitations of
Innovative's liability as set forth in this Agreement. Client shall hold
Innovative harmless against any expense, judgment or loss as a result of
Client's failure to notify its customers of Innovative's limited liability or
as a result of any other act or omission of Client. This warranty shall
terminate upon termination of this Agreement or the cessation of the provision
of Services by Innovative to Client.
5. DEFAULT
A. Event of Default Defined. It shall constitute an "Event of
Default" hereunder upon the occurrence of any one or more of the following:
1. Client. With respect to Client, upon Client's failure to pay any
invoiced amount during the Grace Period as defined above, or any other
material breach of this Agreement which remains uncured for 30 days following
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receipt of notice of the breach by the other party.
2. Innovative. With respect to Innovative, if Service is interrupted
for forty-eight (48) continuous hours after written notice by Client to
Innovative of the interruption (a "Material Interruption"), or any other
material breach of this Agreement which remains uncured for 30 days following
receipt of notice of the breach by the other party.
3. Either Party. With respect to either party, if such party either
(i) files a petition under the United States Bankruptcy Code or is adjudicated
a bankrupt, or (ii) a petition in bankruptcy is filed against such party and
not discharged within thirty (30) days of such filing, or (iii) such party
becomes insolvent or makes an assignment for the benefit of its creditors or
any arrangement pursuant to any bankruptcy law, or (iv) such party
discontinues its business or a receiver is appointed for it or its business,
or (v) such party takes steps to liquidate, reorganize or otherwise dissolve.
B. Remedies. Upon the occurrence of any Event of Default hereunder,
then, as to the party who was not in breach (the "Aggrieved Party"), the
following constitute the Aggrieved Party's exclusive remedies:
1. Termination. The Aggrieved Party may terminate this Agreement,
and all of its unaccrued obligations hereunder.
2. Damages, etc. The Aggrieved Party may proceed by alternative
dispute resolution to enforce performance or to recover damages;
3. Right of Cure. In all cases involving termination for breach, a
breaching party may avoid termination and liability for damages by curing such
default within the time frames specified in 5.A. above. In all cases, the
time periods shall be measured from the breaching Party's receipt of the
notice of breach from the Aggrieved Party. In the case of breaches allowing a
30 day cute period, the breaching party shall provide, within 5 days of
- -receipt of the Aggrieved Party's notice, a written motion to cure describing
the steps to be taken to cure the breach.
4 Additional Limitation as to Certain Interruptions. Except for
Innovative's gross negligence or wilful misconduct, Client's right to
terminate shall be its exclusive remedy. Innovative shall not be responsible
for costs associated with obtaining substitute services.
6. INDEMNIFICATION, LIMITATION OF LIABILITY
A. Indemnification. Except as otherwise stated in Section 5,
DEFAULT, each party to this Agreement hereby agrees to
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indemnify, defend and otherwise hold the other harmless from and against all
suits, claims and any other losses (any of the foregoing, a "Loss"), including
but not limited to attorneys' fees, that arise from or are in any way related
to the Services or this Agreement, but only to the extent that such loss
results directly from the negligence, willful misconduct or Event of Default
of or by the party obligated to indemnify, and does not result proximately
from the negligence or willful misconduct or Event of Default of or by the
party seeking indemnification. In the event a party receives notice of any
action or event which would give rise to the indemnification obligations
contained herein, such party shall within twenty (20) days of receipt of such
notice, notify the other of the occurrence of such action or event, as the
case may be; provided, however, that the indemnitor's failure to receive such
notice shall not relieve it of its obligation to provide such indemnity except
to the extent such failure prejudices the indemnitor's ability to avoid
liability under this Section 6. Upon receipt of such notice, the indemnifying
party shall immediately take all actions necessary to protect the indemnitee's
interests and to defend, settle or otherwise resolve such Loss.
B. Limitation on Liability. All other provisions in this Agreement
notwithstanding, liability of Innovative under this Agreement shall be limited
to the greater of the total amount billed by Innovative for Services to Client
in the one (1) month prior to an Event of Default, or the total amount of
disputed invoices. Client must notify Innovative within 60 days of receipt of
any invoice, for purposes of including the invoice amount under this section
B.
7. COMPETITION, NONDISCLOSURE
A. ComPetition. Either party may provide or procure similar services
to or from any third party or parties except as provided under Section 2.
B. Nondisclosure. Neither party shall directly or indirectly divulge
or communicate, to any other entity, any information concerning any matters
affecting or relating to the
business of the other party. This nondisclosure section applies but is not
limited to customer lists, credit classifications, records, statistics, the
identity of any of the customers of the party, pricing, methods of operation,
or other data. The parties hereto stipulate that as between them, this
information is important, material and confidential and gravely affects the
success of the business of the parties. Any breach of the terms of this non
disclosure section shall be a material breach of this Agreement. This
non-disclosure section shall survive the termination of the business
relationship between the parties for any reason.
C. Promotion. The parties may disclose the existence and general nature of
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this contractual relationship for marketing purposes. The disclosing party
shall, prior to such disclosure, provide the other party with a copy, and
obtain written permission to make such disclosure. Such permission shall not
be unreasonably delayed or withheld.
8. ASSIGNMENT
This Agreement and the Services provided hereunder may not be assigned
by either Party, unless the express written consent of the other party has
been obtained prior to any assignment, and such consent shall not be
unreasonably delayed or withheld.
9. NOTICES
Any notice hereunder shall be in writing to the addresses first shown
above, and shall be effective when received by the Parties hereto, or on the
business day following postmark for delivery via United States Postal Service
Express Mail, return receipt requested at the time designated by the Postal
Service for delivery, whichever occurs first.
10. CUMULATIVE RIGHTS
The rights and remedies reserved to the parties herein are cumulative
and in addition to any further rights and remedies available at law or in
equity.
11. GOVERNING LAWS AND ALTERNATIVE DISPUTE RESOLUTION
This Agreement shall be deemed to have been entered into in the state of
New Hampshire and shall be governed by, construed and interpreted in
accordance with the laws of the State of New Hampshire. If a dispute arises
between the parties about the performance of this Agreement, Innovative and
Client shall attempt in good faith to resolve or cure the dispute by mutual
- -agreement before initiating legal action to enforce any rights or remedies
hereunder. If the parties cannot resolve the matter by discussion, they will
engage in nonbinding mediation within ten (10) working days. If the matter
cannot be resolved by mediation within 30 days, the parties will select one
(1) arbitrator, in accordance with the then-existing expedited commercial
dispute resolution procedures of the American Arbitration Association. The
binding arbitration shall be held in Boston, Massachusetts. The arbitrators
shall render their decision in less than thirty (30) days after their
selection in a ruling that sets forth the specific factual findings and, if
applicable, legal conditions on which the decision is based.
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12. MERGER
This Agreement, together with any exhibits or attachments hereto, and
any subsequent amendments hereto, and nondisclosure agreements entered into
between the parties, contains the entire agreement between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations and representations by or between them, whether oral or written,
and all prior or contemporaneous agreements, whether oral or written. This
Agreement may be amended from time to time by mutual written agreement of both
parties. The headings used in this Agreement are for the convenience of the
parties and are not deemed to be part of this Agreement.
13.SEVERABILITY
If any portion of this Agreement is found to be invalid or
unenforceable, the parties agree that the remaining portions shall remain in
effect. If one portion limiting liability is found unenforceable, remaining
portions limiting liability shall remain in effect. The parties further agree
that in the event such invalid or unenforceable portion is an essential part
of this Agreement, it shall be replaced with one which most nearly reflects
the intentions of the parties as expressed in the portion.
14 WAIVER
No delay or omission to exercise any right or remedy accruing to
Innovative or Client hereunder upon any breach or breaches or event of default
or defaults by Innovative or Client shall impair any right or remedy on
subsequent breach or default.
15.SCOPE
Nothing contained herein shall be construed to constitute the parties
hereto as partners, joint venturers or as agents of each other, but the
relationship shall be one of independent contractors with Innovative providing
the Services described hereunder to Client for the considerations set forth in
this Agreement and any attachments hereto.
16. BENEFIT
This Agreement and the Services to be rendered hereunder are solely for
the benefit of the parties hereto, their successors and assigns. No third
person shall acquire any rights or claims, by reason of or under this
Agreement, except as both parties hereto shall agree in writing, or in cases
where substantially all of the assets of a party are purchased by another
party.
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17. FORCE MAJEURE
No default in performance of any obligation hereunder shall constitute
an event of default or a breach of this Agreement, to the extent that such
failure to perform, delay or default arises out of a cause that is beyond the
reasonable control and without negligence of the party otherwise chargeable
with such default, including, but not limited to acts of God, interruption of
power, utility, transportation or communications services, action of civil or
military authority, sabotage, national emergencies or catastrophe. Either
party desiring to rely upon any of the foregoing as an excuse for default
shall give to the other party prompt written notice of the facts which
constitute such excuse, and when such excuse ceases to exist, prompt notice
thereof to the other party. This Section shall in no way limit the right of
either party to make any claim against any third party for any damages
suffered due to said causes.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective executive officers being hereunto duly
authorized.
Innovative: Client:
By: /s/ Mark A. Tubinis By: /s/ Steven P. Milton
Name: Mark A. Tubinis Name: Steven P. Milton
Title: President Title: President
Date: 8/20/96 Date: 8/20/96
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Exhibit A - Description and Pricing of Services
Invoices are payable within 15 days from receipt. Facsimile transmission
shall be acceptable. Invoices shall be issued twice monthly. The period
between invoices shall be referred to as the "Billing Cycle." Service shall be
available within 60 days of contract signing.
1. Transaction Processing.
Innovative will install switches as required for Client's long distance
and prepaid card services.
Features. Features include standard prepaid phone card call flow
(attached), English and Spanish prompts and operators, switching and database
transaction processing, branded product announcement (if desired), value
remaining messages balance transfer, language selection, repeat calling,
barge-in, time-out or zero-out live to operator, balance announcements, and
call rating announcements.
Quality Standards; Network. Innovative shall engineer the network in
conjunction with input from Client to adhere to a P.01 grade of service level,
to meet Client's volume forecasts. Innovative shall provide data to Client
such that both parties may analyze incoming and outgoing traffic patterns, and
make facilities procurement decisions to work towards a non-blocking
configuration, based on Client's terminating location-specific monthly traffic
forecasts. This data shall be included as part of the Reports selected by
Client. Client and Innovative recognize the importance of traffic monitoring
and the inherent difficulties in achieving efficient network configurations to
accommodate changing traffic usage and destination patterns.
Quality Standards; Platform. The platform(s) shall be available to
process all presented and fully entered transactions to a standard of 99.0%
operability as measured over each month.
Pricing. Prepaid Transaction Processing Services shall be performed.for
a price of $0.0095 per answered minute billed to consumers, one minute
minimum, each call rounded up to the nearest full minute.
If Client does not incur billing for at least 25,000,000 minutes in total
through January 31, 1998, this pricing shall be replaced by the revised
stepped pricing schedule below, as of February 1, 1998:
Monthly Billed Minutes Per Minute Rate
0 - 5,000,000 $0.0200
5,000,001 - 10,000,000 $0.0150
10,000,001 and over $0.0095
2. Customer Care.
Innovative will provide 24 hour, 7 day per week live customer care, at a
price of $0.75 per live operator call minute, one minute minimum, each
subsequent minute rounded up to the next higher 0.10 minute (six second)
increment.
3. Number Generation, PIN Expiration Activation Deposit.
Innovative will provide Client with unique PIN numbers and load these
numbers into the Client-allocated prepaid calling card centralized database
maintained by Innovative.
PIN Lifetime. Innovative will generate PIN numbers in batches as
requested by Client and will maintain these numbers on the database until card
expiration, or 24 months following PIN loading, whichever occurs first. The
price for this service is per PIN loaded for immediate or later activation.
Order Frequency. Client must notify Innovative in writing 7 days in advance
of requested delivery time for PINs.
ExPiration. PINs shall expire on a date certain; all cards or other
materials shall disclose this date. Expired PINs may be deleted from
Innovative's records.
Price Per PIN Order. PIN orders equal to or in excess of 250,000 PINs
will be billed at $0.010 per PIN. All other PIN orders shall be billed at
$0.020 per PIN with a minimum order of $250.00.
4. Call Flow, Reports, Carrier Management Technical Support
Innovative will manage Client's carrier relations and local loop
requirements as part of their services to Client, as well as provide technical
support for Client's carriers, carrier connections and clients.
Call Flow. Innovative will provide its standard call flow (attached) as
modified with Client's customized greetings. Other changes to the standard
call flow or rate structure besides Client's initial customized greetings
shall be pursuant to Work Orders.
Additional Lunacies. For additional languages beyond Spanish and
English, Work Orders may include costs of operator services procurement and
training.
RePorts. Innovative will provide up to 10 standard reports, including a
liability report, and a facilities occupancy report, at no extra charge.
Additional or modified reports will be pursuant to Work Order and additional
monthly charges as quoted. Additionally, CDR shall be provided every three
months on diskette or via modem.
CDR. Alternatively, Innovative shall provide raw Call Detail Records
(CDR) as a data feed to Client's equipment. Client will be responsible for
data line connections from Innovative to Client in order to transfer CDR, and
shall provide its own equipment to receive the transfers of CDR from
Innovative. Innovative's work to make Client's systems compatible with
Innovative's shall be performed under a Work Order, if needed.
Innovative shall retain archives of CDR for 3 months after providing
same.
In addition, Innovative shall provide CDR on demand, by the end of the
second business day following a request, for an additional charge of $125.00
per request.
Carrier Management. Innovative will manage Client's carrier connections
to and from its switching facilities. Services will include configuring and
wiring of new facilities, moves, adds, and changes, routine testing, carrier
trouble shooting and emergency service for up to 40 hours per month, provided
during weekdays (except holidays). For services over 40 hours per month, or
for services performed during evenings, weekends or holidays, a surcharge of
575.00 per hour shall apply.
Innovative shall provide Reports to Client to facilitate the making of
decisions as to configuration, timing and quantity issues, for Client's
installation of carrier facilities to be connected to Innovative's switching
platform. Client shall provide required assistance in the form of quarterly
traffic forecasts.
The parties desire both efficient use of switch trucking capacity, and
the ability to utilize multiple carriers each with varying traffic and
destination patterns. As of the date of this Amendment, the parties have
agreed upon a platform and network configuration designed to best and most
efficiently accommodate these two desires. Client acknowledges that
successful implementation also requires ongoing cooperation and joint efforts
to apply Client's accurate destination-specific traffic forecasts to issues of
carrier trucking allocation, installation and configuration.
Technical SupPort. In case of an emergency service call for Client's
carriers, Innovative's will respond within 4 hours of notification by Client
or its representatives.
Innovative will provide 24 hour technical support and system back up-and
rerouting support. Innovative will also provide activation support and card
printing support.
Least cost routing may be provided at Client's option pursuant to a Work
Order.
Innovative shall have the authority to respond to all subpoena's and
similar orders issued by local, state, federal and government agency
officials. Each request will be filled for a $125.00 fee per request.
Price: $50.00 per DS1 connected to Innovative's platform for all
services described in this Section 4. A minimum monthly charge of $3,000
("take or pay") will apply until this Agreement expires or is otherwise
terminated.
5. Initial DePosit; SetuP Fee, PrePaid Software Engineering.
Client shall pay, upon contract signing, a deposit of $50,000, which
shall be applied to all billing under 1 through 4 above, as incurred.
Client shall also pay, upon contract signing, a non-refundable setup fee
of $80,000 partially offsetting Innovative's startup expenses associated with
establishment of the prepaid program for Client. If Client is billed for
25,000,000 minutes or more in total during the first 18 months of this
Agreement, Innovative, shall issue Client, with the next monthly invoice, a
credit for $20,000, applicable to any and all future billing from that point
forward.
Upon contract signing Client shall also pre-pay $20,000 representing a
non-refundable initial prepayment against Work Orders (as described in Section
6), for custom software development involving standard-billed calling card
services, or the implementation of standard measured toll service "MTS" for
Client, or other services. These Work orders will be performed within the
first 12 months of this Agreement, covering these contemplated expedited
enhancements to the Services.
6. Statements of Work.
For custom alterations beyond capabilities described herein, Client will
submit a Work Order, to be separately negotiated and signed by both parties.
Changes to Services not within the scope of this Agreement, and other
non-routine items shall require a Work Order.
Price: Work Orders will be carried out at the following hourly rates:
Senior Level Management Support $145.00
Engineering Development (Software) $135.00
Technical Support, Installation Support $120.00
Program Management and Marketing Support $100.00
Innovative will invoice Client upon completion of the Service described in the
Statement of Work, unless progress payments or other terms are specified
therein.
7. Quarterly Capacity Forecast, Addition of Additional Capacity
Innovative and Client will both monitor network traffic levels. Client
will submit a written forecast, broken out by region, to Innovative 45 days
prior to each calendar quarter, applicable to the upcoming calendar quarter.
Innovative will add additional switching capacity, and work with Client to
determine needed carrier facilities, as required in connection with Client's
forecasted volume levels. Client recognizes that capacity upgrades may
require up to 90 days from receipt of the Forecast.
Client must provide 90 days advance notice of initiation of programs,
promotions or other events which impact volume levels. Client will provide
copies of all applicable publicity, and examples of all printed materials seen
by end users.
8. Fulfillment
Upon request, Innovative will provide fulfillment as per the attached
Fulfillment Services description.
Point of Sale activation and inventory system shall be made available
under a Statement of Work.
FULFILLMENT SERVICES
Innovative will provide, at CTC's option, the following Telecard and point of
sale material fulfillment services:
1. General Description of Fulfillment Services
a) Fulfillment System. Innovative will maintain a computerized
fulfillment system to process card and POS materials fulfillment orders,
generate invoices and packing slips to CTC's distributors, monitor perpetual
inventory and monitor account balances due from customers.
b) Warehousing and Inventory. Innovative will warehouse up to
2,000,000 cards and provide up to 500 square feet of rack storage space for
point of sale materials.
c) CTC's Responsibility. CTC shall be responsible for
providing Innovative with its credit policies in writing, providing bank
accounts into which Innovative may make direct deposits, and shall bear all
financial responsibility for returns, customers credits, and bad debt. CTC
shall also provide Master Card/Visa merchant account for fulfillment, the 800
line for fulfillment order taking, fax machines and blank invoices, paper,
packaging materials, cards and point of sale material.
2. Fulfillment Order Entry
Innovative will enter fulfillment orders received by telephone or fax
for established accounts, and Master Card/VISA. Innovative shall have the
right to issue credits and refunds.
Price. $2.75 per order.
3. Fulfillment
Innovative will fill orders within 72 hours of receipt via UPS.
Price. $3.25 per order plus postage (UPS) for orders up to 100 cards or
POS pieces. Quantities of over 100 cards will be billed at $3.00, plus an
additional $0.03 per card.
4. Billing and Collection
- Innovative will invoice customers for all shipped orders within 72
hours from shipment.
- Innovative will provide weekly sales reports and monthly
perpetual inventory reports.
- Innovative will establish accounts on the fulfillment system for
wholesale customers.
- Innovative will perform credit checking functions, shall call
customers requesting payments due, and utilize other escalation procedures,
all in accordance with CTC's credit policies.
Price. Credit Application Processing - $50.00 per account, plus any out
of pocket credit reference-related expenses (Dun & Bradstreet, etc.)
Billing - $2.00 per invoice, plus postage.
Collection Services - $3.00 per call made or letter written, plus
postage.
5. Activation (other than Batch Activations)
Card activation shall be done via touch tone system to be created under
a Work Order. CTC shall provide the 800 line.
Price. $0.02 per card activated.
6. Minimum Billing
The services described above shall amount to at least $2,500 per month,
excluding postage. CTC shall be billed for any shortfall occurring in any
month (no carry-forward).