Exhibit 10.2
AGREEMENT
THIS AGREEMENT is dated as of the 30th day of January 2004.
BETWEEN: Net2Phone, Inc., ("Net2Phone") a corporation existing under the laws of
the State of Delaware USA, having its principal place of business at
520 Broad Street Newark, NJ 07102, USA; and
AND: Union Telecard Alliance, LLC ("UTA") a limited liability company
existing under the laws of the State of Delaware, USA, having its
principal place of business at 44 Cherry Valley Avenue, West Hempstead,
NY 11552, USA.
IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 Definitions
In this Agreement the following terms shall have the following
meanings:
"Active Cards" means those Cards with unused minutes that were
activated within the Effective Period that have not expired or been
disabled or deactivated pursuant to this Agreement.
"Cards" means those prepaid disposable calling cards distributed by UTA
on behalf of Net2Phone.
"Effective Date" means December 31, 2003 at 11:59 p.m.
"Effective Period" means the two-year period predating the Effective
Date.
"Final Payment" is defined in paragraph 4.5.
"Inactive Cards" means Cards that were activated prior to January 1,
2002 at 12:00 a.m.
"Net Value" means the price that Net2Phone charged UTA for the sale of
a Card.
"Reconciliation Date" means December 31, 2005 at 11:59 p.m.
"Reconciliation Period" means the period between the Effective Date and
the Reconciliation Date.
"Return Allowance Reserve" means the monies representing the Net Value
of all unused Active Cards in the market.
1.2 Construction of Certain References
In this Agreement where the context admits:
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(a) references to "this Agreement" or to any other agreement or
document referred to in this Agreement mean this Agreement or such
other agreement or document as amended, varied, supplemented, modified
or novated from time to time, and include any schedules;
(b) references to clause(s) and schedule(s) are references to clause(s)
and schedule(s) of and to this Agreement; references to paragraphs are,
unless otherwise stated, references to paragraphs of this Agreement;
and
(c) any reference to a "writing" shall include typewriting, printing,
lithography, photography, telex, facsimile and the printed out version
of a communication by electronic mail and other modes of representing
or reproducing words in a legible form.
1.3 Headings
The headings and sub-headings are inserted for convenience only and
shall not affect the construction of this Agreement.
2. Commencement and Duration
2.1 This Agreement shall commence on the Effective Date and expire upon the
Reconciliation Date and Final Payment.
3. Payments
3.1 Return Allowance Reserve. Upon execution of this Agreement, Net2Phone
shall transfer the Return Allowance Reserve to UTA as of the Effective
Date which the parties agree is $777,989.51. The Return Allowance
Reserve shall be maintained by UTA in an FDIC insured bank to be
mutually agreed upon by the parties. In the event of a shortfall in the
Return Allowance Reserve during the Reconciliation Period, Net2Phone
will be responsible for such shortfall, such shortfall shall include
any amounts necessary to reimburse UTA for the expenses set forth in
Section 3.4 below.
3.2 Accounts Receivable. Upon execution of this Agreement, UTA agrees to
remit to Net2Phone the sum of $130,955.57 representing open accounts
receivable due and owing to Net2Phone as of the Effective Date.
3.3 Net Commissions Due. Upon execution of this Agreement, Net2Phone agrees
to remit to UTA the sum of $4,547.35 representing the net commissions
due to UTA as of the Effective Date.
3.4 Expenses. Net2Phone agrees to reimburse UTA the sum of $42,608.37
representing certain expenses that UTA previously incurred in the
printing and creating of Cards that remained inactive, with such
reimbursement to be deducted by UTA in calculating the Final Payment.
4. Reconciliation Period.
4.1 Usage during the Reconciliation Period. On the 1st day of each month
during the Reconciliation Period, Net2Phone shall report all usage on
Active Cards for the prior 30-day period. Within fifteen (15) days of
receipt of the report, UTA shall remit payment to 1.1 Net2Phone
calculated based upon the Net Value of usage on the Active Cards.
Payment shall be made from the funds in the Return Allowance Reserve
and the Return Allowance Reserve shall be reduced by the amount of the
payment made to Net2Phone.
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4.2 Return of Active Cards during the Reconciliation Period. In the event
UTA seeks to return Active Cards to Net2Phone during the Reconciliation
Period, UTA shall submit the returns to Net2Phone via the OASIS system.
Such submission shall contain a list of the Active Cards to be returned
along with the control numbers. UTA represents and warrants that it
will only issue returns to customers who have returned a physical card.
Upon confirmation by Net2Phone that the unused balances remain on the
returned Active Cards (which confirmation shall be completed within
five (5) business days of UTA's return submission), UTA shall release
to itself the Net Value of the returned Active Cards from the Return
Allowance Reserve. The Return Allowance Reserve shall be reduced by the
amount of the released funds to UTA.
4.3 Return of Inactive Cards during the Reconciliation Period. In the event
UTA seeks to return Inactive Cards to Net2Phone during the
Reconciliation Period, UTA shall submit the returns to Net2Phone via
the OASIS system. Such submission shall contain a list of the Inactive
Cards to be returned along with the control numbers. UTA represents and
warrants that it will only issue returns to customers who have returned
a physical card. Upon confirmation by Net2Phone that the unused
balances remain on the returned Inactive Cards (which confirmation
shall be completed within five (5) business days of UTA's return
submission), UTA shall be entitled to payment of the Net Value of the
returned Inactive Cards from Net2Phone. Payment shall be due within
forty-five (45) days of confirmation by Net2Phone.
4.4 Return of Commissions. In the event UTA returns Active Cards and/or
Inactive Cards pursuant to paragraphs 4.2 or 4.3, commissions
originally paid on those Cards by Net2Phone to UTA shall be remitted
back to Net2Phone by UTA within forty-five (45) days of Net2Phone's
confirmation of the unused balances on the returned Active Cards and/or
Inactive Cards.
4.5 Final Payment. On the Reconciliation Date, all remaining Active Cards
shall be expired and after a final reconciliation between the parties,
all funds remaining in the Return Allowance Reserve shall be returned
to Net2Phone by February 15, 2006. ("Final Payment").
4.6 Services Provided by Net2Phone. During the Reconciliation Period and
provided there has not been an early termination of this Agreement
pursuant to paragraph 5.1, Net2Phone shall: (a) continue to provide all
services for the Active Cards; (b) not increase the rates and/or fees
associated with the Active Cards without the prior written consent of
UTA; and (c) not expire or cause to be expired any Active Card even if
it has an earlier expiration date.
5. Termination
5.1 Either party may terminate this Agreement immediately by giving written
notice to the other party if such other party:
(a) becomes insolvent, is adjudicated bankrupt or compounds with
or makes any arrangement with or makes a general assignment
for the benefit of its creditors;
(b) compulsorily or voluntarily enters into liquidation, except
for the purposes of a bona fide reorganization and with the
prior written approval of the other party;
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(c) has a receiver, manager or trustee appointed over the whole or
a substantial part of its business or assets;
(d) suffers any analogous process, as those listed in (a), (b) and
(c) above, under any foreign law;
(e) commits any material breach of any of the terms of this
Agreement and fails to remedy that breach (if capable of
remedy) within five (5) business days after written notice
from the other party giving full particulars of the breach and
requiring it to be remedied.
5.2 In the event of early termination of this Agreement pursuant to Section
5.1(e), the parties agree to submit the matter of the disposition of
the Return Allowance Reserve and the parties rights and obligations
thereto to the dispute resolution procedures contained in Section 6.11.
In the event of early termination of this Agreement pursuant to Section
5.1(a)-(d), the parties agree to submit the matter of the disposition
of the Return Allowance Reserve and the parties rights and obligations
thereto to the applicable bankruptcy court, receiver or trustee, as the
case may be.
6. Miscellaneous
6.1 Limitation of Liability/Disclaimer of Warranties. Except as set forth
in this Section 6.1, Net2Phone shall have no liability whatsoever to
UTA or any third party for any error, act or omission in connection
with the services provided in the Active Cards. All services provided
hereunder are provided "as is" with no warranty of any kind. Neither
party shall be liable for any indirect, punitive, incidental or
consequential damages of any kind asserted by the other party or any
third party. Net2Phone's liability shall be limited to a refund of the
Net Value of the Active Card only for services interruptions caused by
the gross negligence or wilful misconduct of Net2Phone. In no event
shall Net2Phone be liable for any claims arising from any alleged
misrepresentation in the marketing, advertising or branding of the
Cards by UTA, provided that any such alleged misrepresentation is not
due to any failure of Net2Phone to provide accurate information to UTA.
UTA shall defend and indemnify Net2Phone for any claims asserted
against Net2Phone arising out of any misrepresentation in any
advertising or marketing of the Cards by UTA, provided that such
misrepresentation was not due to any failure of Net2Phone to provide
accurate information to UTA. Notwithstanding this Disclaimer of
Warranties, Net2Phone will defend and indemnify UTA for any claims
alleged by third parties of the third party's inability to use the
services provided by Net2Phone.
6.2 Assignment
This Agreement shall not be assigned by either party without the prior
written consent of the other party to this Agreement.
6.3 Entire Agreement
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This Agreement constitutes the whole agreement between the parties and
supersedes and extinguishes any prior drafts, agreements,
representations, warranties and arrangements of any nature, whether in
writing or oral, relating to such subject matter. Any amendments,
alterations or variations to this Agreement shall be made only in a
writing agreed to and signed by both parties hereto.
6.4 No Waiver
No failure to exercise nor any delay in exercising by any party to this
Agreement of any right, power, privilege or remedy under this Agreement
shall impair or operate as a waiver thereof in whole or in part.
6.5 No Partnership or Authority
Nothing in this Agreement shall constitute or be deemed to constitute a
partnership between the parties nor shall a party be deemed the agent
of any other party for any purpose.
6.6 Independent Contractor. UTA is an independent contractor and when its
employees act under the terms of this Agreement, they shall be deemed
at all times to be under the supervision and responsibility of UTA. No
person employed by UTA and acting under the terms of this Agreement
shall be deemed to be acting as agent or employee of Net2Phone for any
purpose whatsoever.
6.7 Successors
This Agreement shall be binding upon, and inure to the benefit of, the
successors, representatives and permitted assigns of the parties
hereto.
6.8 Invalidity
If any provision of this Agreement shall be held to be illegal, void,
invalid or unenforceable under the laws of any jurisdiction, the
legality, validity and enforceability of the remainder of this
Agreement in that jurisdiction shall not be affected, and the legality,
validity and enforceability of the whole of this Agreement shall not be
affected in any other jurisdiction.
6.9 Notices
Any notices required to be given under this Agreement or in connection
with the matters contemplated by it shall, except where otherwise
specifically provided, be in writing (a) personally delivered, in which
case it shall be deemed to have been given upon delivery at the
relevant address, or (b) sent by first class pre-paid post, in which
case it shall be deemed to have been given two days after the date of
posting, or (c) sent by recognized overnight courier, in which case it
shall be deemed to have been given the next day, or (d) sent by
facsimile, in which case it shall be deemed to have been given when
dispatched, subject to confirmation of uninterrupted transmission by a
transmission report, to the following persons of either UTA or
Net2Phone at the following address:
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FOR NET2PHONE:
Net2Phone, Inc.
520 Broad Street, 8th Floor
Newark, New Jersey 07102
Attn: General Counsel
(p) (973) 438-3066
(f) (973) 438-3100
FOR UTA:
Union Telecard Alliance, LLC
44 Cherry Valley Avenue
West Hempstead, NY 11552
Attn: Joseph Farber
(p) 516-394-1501 (x113)
(f) 516-394-1537
6.10 Governing law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey and each of the parties irrevocably
submits to the exclusive jurisdiction of the federal and state courts
in New Jersey.
6.11 Dispute Resolution Procedures
The parties will initially refer all disputes under this Agreement
(including the disposition of the Return Allowance Reserve in the event
of an early termination of this Agreement due to a breach) to one or
more executives appointed from both UTA and Net2Phone. The appointed
executives will make reasonable attempts to resolve the dispute. In the
event the executives are unable to resolve a dispute within twenty (20)
days of a party receiving written notice of a dispute from the other
party, the parties will submit the matter to binding arbitration
according to the Commercial Rules of the American Arbitration
Association and applying the Federal Rules of Evidence. The schedule
and rules for the arbitration proceedings will be as set by the
arbitrator(s) and the arbitration proceedings will be held in Newark,
New Jersey, USA. Each party will bear its own costs of participating in
the arbitration proceedings.
6.12 Due Authorizations
Each party represents and warrants to the other party that (a) it has
all requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and (b) the individual
executing this Agreement on behalf of such party is duly authorized to
execute this Agreement on behalf of such party and to bind such party
hereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date written above.
NET2PHONE, INC. UNION TELECARD ALLIANCE, LLC
By: __________________________ By:______________________________
Name: ________________________ Name:____________________________
Title: _______________________ Title: __________________________
Date: ________________________ Date: ___________________________
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