EXHIBIT 10.16
MEMORANDUM OF AGREEMENT
PENDING FINAL DRAFT OF DISTRIBUTION AGREEMENT
BY AND BETWEEN
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MARCECO LTD.
AND
Q COMM INTERNATIONAL, INC.
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Executed on: February 5, 2003
WHEREAS, Marceco Ltd. a Michigan-based Corporation, with its principal
offices located at 0000 Xxxxxxxx Xxx. X.X., Xxxxx Xxxxxx, XX 00000 is a
Independent Sales Organization (ISO) maintaining point-of-sale distribution
channels (hereinafter referred to as "Marceco").
WHEREAS Q COMM International, Inc. a Utah corporation with principal
offices located at 0000 Xxxxx 0000 Xxxx Xxxx, XX 00000-0000 (hereinafter
referred to as "Q COMM") holds ownership and trademark of a comprehensive
prepaid management system through its Qxpress(TM) Point-of-Sale activation
terminal ("Qxpress(TM)") and the Q COMM telecommunications network ("Qxpress
Services"); and
WHEREAS Q COMM desires to distribute Qxpress(TM) terminals in
conjunction with Qxpress Services to the point of sale vendors available to
Marceco through its distribution channels, and, mutually Marceco desires to
market and activate Qxpress(TM) terminals and Qxpress Services through its
available prepaid point-of-sale vendors;
AND WHEREAS, Q COMM and Marceco also desire to formalize a timetable
for a final written Agreement embodying all terms and conditions of their
commercial relationship.
NOW, WHEREFORE, IN CONSIDERATION OF MUTUAL COVENANTS AND PROMISES SET
FORTH HEREIN AND FOR OTHER GOOD AND VALUABLE CONSIDERATION THE RECEIPT AND
ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, THE SIGNATORIES OF THIS DOCUMENT DO
HEREBY IRREVOCABLY UNDERSTAND AND AGREE AS FOLLOWS:
1.) After a series of initial negotiations, Q COMM and Marceco
(collectively called "Parties") hereby agree to a ninety (90)
business day period in order to resolve all final drafts of
Distribution Agreement for distribution of Qxpress(TM)terminals
and Qxpress Services to Marceco point-of-sale vendors (hereafter
called "Distribution Agreement") if deemed necessary. This time
period shall begin on the executed day of this Agreement and
continue for ninety (90) business days thereafter. Neither Party
shall actively seek to engage competitors to replace the other and
shall work with all due diligence to finalize the business
contemplated. Unless stipulated in writing by the Parties the
deadline for the completion of the Distribution Agreement shall be
180 days from MOA effective date.
2.) Marceco shall undertake market testing by the immediate offering
and placement of Qxpress(TM) terminals and Qxpress Services (see
Addendum "A" for a copy of the Services & Rental Agreement and ACH
Agreement). This test period shall commence on the executed day of
this Agreement and shall continue until a final Distribution
Agreement is signed, or this Agreement expires.
3.) All Qxpress(TM) terminals placed by Marceco are the sole property
of Q Comm, unless otherwise purchased. Any and all warranties
either express or implied or claims of merchantability on the
Qxpress(TM) terminals are the sole responsibility of Q COMM. All
liability for non-payment or non-sufficient funds for the Merchant
account remain the sole responsibility of Marceco.
4.) Marceco shall make no representations outside of those provided by
Q COMM regarding the Qxpress(TM) unit or Qxpress Services during
this test period.
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5.) Q COMM shall receive as compensation from Marceco for all
Qxpress(TM) terminals purchased for delivery $495.00 per unit
(F.O.B. Utah) through the Weekly Rental Program. Marceco is
responsible for all Qxpress terminals and condition.
6.) Q Comm will receive three percent (3%) of the gross sale revenue
through Qxpress(TM) terminals for services rendered (see Schedule
A). Q Comm will conduct a weekly/daily ACH on all parties. This
percentage will be paid through that ACH process.
7.) Products from the Q Comm Product Library (see Schedule B) are
available for use by ISO. Each wireless product provided on
consignment (from the Product Library) must generate $200.00 per
month per location in gross revenue. If this revenue level is not
met, Q Comm reserves the right to remove the product from the
Merchant's terminal. If the Merchant wishes to continue to have
that product on their Qxpress(TM) terminal, they will be
responsible for purchasing the inventory in advance for that
product.
8.) Q COMM shall provide a non-exclusive Agreement subject to the
Services Schedule of performance.
9.) This Agreement shall be governed by International law and the
governing law of the state of Utah, without any regard to conflict
of law principals, The Parties further agree that any and all
controversies arising from this Agreement shall be submitted
binding arbitration pursuant to the rules of the American
Arbitration Association and be settled with finality through
arbitration by the American Arbitration Association.
10.) Except as otherwise set forth herein, no express or implied
license or other right of any kind are granted to ISO regarding
the POS terminals or the POS System and ISO acknowledges that the
POS Systems and all right, title and interest therein, including
without limitation any copyright, patent, trade secret or other
intellectual property right in and to the POS System are the sole
property of Q Comm. Except as otherwise set forth herein, ISO may
not (i) modify, adapt, translate, reverse engineer, decompile or
disassemble the POS System Software (except to the extent
applicable law specifically permits such activity); (ii) create
derivative works based on the POS System Software; (iii) except as
otherwise agreed by Q Comm, reproduce or make copies of the POS
System Software or any part thereof except for backup for archival
purposes; (iv) market, sell, distribute or transfer the Terminal
Software or any part thereof to any third party except Retail
Dealers, or permit any third party to use the POS Software without
Q Comm's prior written consent; (v) sublicense or otherwise
transfer the POS System Software to any other distributors,
sub-distributors or resellers; (vi) transfer the POS System
Software or POS Terminals to any Retail Dealers which ISO knows or
reasonably ought to know is purchasing it for export from the
Territory; or (vii) rent or timeshare the POS System Software. Q
Comm reserves all rights not expressly granted herein. ISO agrees
not to reverse engineer, disassemble, decompile or otherwise
attempt to derive source code, trade secrets, programming concepts
or methods or Confidential Information from the POS System
Software. Any breach of this Section shall be deemed a material
breach of this Agreement.
11.) Should the Parties fail to conclude the business contemplated
within the ninety (90) business day timetable set by Article 1 of
this Agreement, the terms of this Agreement may be extended for
any amount of time by written consent of both Parties, such
written consent shall thereafter be attached to this Agreement and
incorporated as Amendments to this Agreement pursuant to this
Article. Should both Parties fail to consent to the extension of
this Agreement, this Agreement shall immediately expire as to all
articles, except Article 3; Article 7; Article 9; and Article 10
which shall remain in force for the entirety of operation of
Qxpress(TM)terminals and Qxpress Services place by Marceco.
12.) Each party represents and warrants to the other party that it is
under no current obligation or restriction, nor will it knowingly
assume any such obligation or restriction that does or would in
any way interfere or conflict with, or that does or would present
a conflict of interest concerning the performance to be rendered
hereunder or the rights and licenses granted herein.
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13.) This Agreement may be dissolved only by written consent of both
Parties under a Distribution Agreement or and expiration of time
as in Article 1, or any similarly constructed written Agreement
between the Parties, that specifically incorporates and dissolves
this Agreement in its recitals.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seal on
this 3rd day of February, 2003 and that this date shall be the Executed Date of
this Agreement.
Q COMM International, Inc.
By: /s/Xxxxxxx Xxxxxxxx
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Signature
Name: Xxxxxxx Xxxxxxxx
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Title: President
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LICENSEE
Marceco Ltd.
By: /s/ Xxxxx Den Xxxxxx
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Signature
Name: Xxxxx Den Herder
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Title: President
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Schedules
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A = Fees & Services
B = Q Comm Product Library
C = Services & Rental Agreement (Merchant)
D = ACH Agreement (ISO & Merchant)
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Schedule A
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Fees & Services
Executive Summary - Fees
1. Data Center Fee 3%
2. Rental Fee per terminal $6.00 / week
3. Performance Minimum Required $300.00 / terminal / week
4. Minimum Performance Fee $8.95 / terminal / week (if minimum not met)
5. Agreement Term 2 years
Service Overview
1. Definitions:
|X| Independent Sales Organization (ISO) Model - This model assumes
that the Q Comm Data Center will support all Qxpress(TM) terminal
hardware in the delivery of prepaid services.
2. Term: Two (2) years
3. ISO Model Fees:
|X| Q Comm will receive 3% of all gross revenue.
This fee will include the following Support Services:
1. Data Base Administration & Management
New account set-up, updating / maintenance of all accounts,
current to the day.
2. Billing / ACH
Electronic fund collection from all parties per contract with
disbursement to all participants in the distribution channel.
ACH is schedule on a weekly or daily basis per contract. ACH
must be daily if supporting prepaid MasterCard and/or if daily
gross revenue exceeds $500.00.
3. Reporting
Web & electronic reporting of all transactions for each member
of the distribution channel. Custom reporting is available.
4. Product Management
Create new products, edit existing products, adding to
existing products, removing existing products.
5. Pin Management
Add PINs to new products, add PINs to existing products,
provide PIN status reports by product, alert Distributor / ISO
when PINs are low.
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|X| Terminal Performance Fees:
$300 weekly revenue minimum per terminal must be maintained
$8.95 weekly service fee per terminal if minimum revenues is not obtained
4. Qxpress(TM) 200 (Prepaid Services POSA System)
Weekly Rental Program or Purchase
|X| Sale price per unit - $495.00*
|X| $6.00 / week rental fee
|X| Term - Three (3) years
Year 1 - 25% of total payments apply towards purchase
Year 2 - 50% of the fees apply towards purchase
Year 3 - 75% of total payment applies towards the purchase
*Quantity pricing available
Demonstration terminals are available to rent:
|X| Rent - $35.00 per month (for the first 2 demo units)
$50.00 per month (for any additional units)
5. Products - As defined by ISO (see Schedule B).
|X| ISO may bring carrier relationships and PINs for Q Comm to manage
exclusively for the ISO.
|X| Q Comm has a library of products from which ISO may select at his
discretion.
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Schedule B
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Q Comm Product Library
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Product Margin to ISO Price Notes
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Calling Card - 1.0(cent)/ Min U.S. 42% 1.0(cent)/ min U.S. 59(cent)connect fee / 50(cent)
Monthly Mtc.
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Calling Card - 5.9(cent)/ Min U.S. 40% 5.9(cent)/ min U.S. Flat rate, no connect fee
/ No mtc. fee
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Calling Card - 10.8(cent)/ Min Mexico 42% 10.8(cent)/ min Mexico No connect fee / 99(cent)
Monthly Mtc.
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AT&T Prepaid Long Distance 33% $4.00 - 30 min No expiration period
$7.00 - 60 min
$25.00-300 min
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Pennies Rule - AT&T Long Distance 38% 1.9(cent)/ min U.S. 79(cent)connect fee / 12(cent)
Weekly Mtc.
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Verizon Airtime 20% $30 - 35(cent) Additional Fee for roaming
$50 - 30(cent)
$75 - 28(cent)
$150 - 25(cent)
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Cingular Airtime 24% $10 - 50(cent) Additional fee for roaming
$20 - 40(cent)
$30 - 35(cent)
$50 - 30(cent)
$100 - 25(cent)
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AT&T Airtime 21% Local Plan National Plan
$25 - 35(cent) $25 - 65(cent)
$50 - 30(cent) $50 - 50(cent)
$100 - 25(cent) $100 - 35(cent)
$200 - 15(cent) $200 - 25(cent)
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T-Mobile Airtime 15% $10 - 30 min. Additional fee for roaming
$25 - 100 min.
$50 - 250 min.
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Home Dial Tone - Reconex 22% $52.99 Monthly fee $39 Activation fee
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PrePaid MasterCard 40% - Activation fee $9.95 - Activation $4.95 - Refresh fee
fee
80% - Refresh fee Minimum initial Denominations
purchase-$20 (plus $20-$50-$100-$200-$400
activation fee)
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AT&T PrePaid Internet 28% Monthly Fees Activation Fees
$19.99 - 20 hrs $9.99 - 8 hrs
$29.99 - 30 hrs $19.99 - 20 hrs
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*Margin to ISO is the total percentage available to ISO less any commission percentage(s) set forth in this Memo of
Agreement and the Merchant's "SERVICES AND RENTAL AGREEMENT".
*The price and terms of this Agreement are good for 30 days without a signature.
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Schedule C
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Services & Rental Agreement and ACH Agreement
This Agreement is made this _____day of ________________ ,2002 by and between
_____________________________ (the "Merchant") and Q COMM, Inc. Q COMM Inc. is a
wholly owned subsidiary of Q COMM International, Inc. Qxpress Management System
("Qxpress(TM)") is a point-of-sale printing device for prepaid service. The
Merchant wishes to utilize the Qxpress(TM) Device for their phone card,
wireless, and any additional prepaid services as available for sales at their
designated location(s). A list of the locations is attached to this Agreement
and incorporated herein by reference.
IN THE EVENT OF A DISPUTE, THIS AGREEMENT IS SUBJECT TO ARBITRATION
AND MEDIATION.
1. The term of this agreement is two (2) years during which Q COMM, Inc. will
provide Qxpress(TM) to the Merchant at no charge. The Merchant is required to
produce a weekly minimum of $300.00 in gross prepaid card revenue. If this
minimum is not met, a service fee of $8.95 will apply. This service fee will be
included in the ACH accounting each week that performance falls below the
minimum. The service fee will commence the second Monday following the shipment
of the Qxpress(TM) terminal. Optional weekly ACH reports are available to the
Merchant upon request for a $2.00 weekly charge. Blank cards will be provided by
Q Comm at a cost of $0.10 per card ($25 per box of 250 cards). Product shipment
is F.O.B. Utah.
2. Q Comm will collect funds from Merchants on a weekly or daily basis through
an ACH. Each account will be placed on a weekly ACH initially. Once sales for an
individual unit exceeds $500/day in gross revenue, the client will be
automatically switched to a daily ACH.
3. Compensation: Q COMM, Inc. will compensate the Business for prepaid telecom
revenues as per the following:
Product Description Percentage Product Description Percentage
--------------- -------% --------------- -------%
--------------- -------% --------------- -------%
--------------- -------% --------------- -------%
4. Qxpress(TM) is and shall remain the sole property of Q COMM, Inc., and shall
be surrendered on demand if the terms of this agreement are violated.
5. Q COMM, Inc. reserves the right to remove a Qxpress(TM) from a location if
sales in that location do not warrant the Qxpress(TM) placement.
6. The Merchant shall provide the following: 1) a safe and secure place for the
Qxpress(TM) to be located, 2) a grounded power outlet, 3) phone line access, and
4) a point-of-sale material location.
Merchant:
The Merchant's store name:______________________________________________________
The Merchant's store address:___________________________________________________
City/State/Zip:___________________________________________________
The Merchant's store telephone number:__________________________________________
The Merchant's store fax number:________________________________________________
The phone number the terminal will be set-up on:________________________________
The Merchant's store Email address:_____________________________________________
Owner/Officer: (print):_________________________________________________________
Owner/Officer: (signature):_____________________________________________________
Q COMM, Inc.
Representative:_________________________________________________________________
ORIGINALS MUST BE SENT TO Q COMM, INC.
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7. Q COMM, Inc. will provide standard point-of-sale materials at it's own
expense. Private labeled point of sale material can be provided by Q COMM, Inc.
at the Merchant's expense. The Merchant can provide their own point of sale
materials subject to approval by Q COMM, Inc. (Q COMM, Inc. must assure that any
advertising meets FCC or Public Service or Utility Commission Guide lines).
8. Qxpress(TM) shall remain at the location it is initially located in and shall
not be moved without prior approval from Q COMM, Inc. (a fax or E-mail with
receipt confirmed shall also serve as notice).
9. PAYMENT: Weekly or daily, an agreed upon account will be debited by Automated
ClearingHouse (ACH) or Electronic Funds Transfer (EFT) (herein after referred to
as the "debit"). The debit will be initiated by Q COMM, Inc. If debit is refused
by The Merchant's bank, Qxpress(TM) will be turned off until the debit is
honored and a service fee of $25.00 for insufficient funds will be assessed
before Qxpress(TM) is reactivated. Two refused debits will cause this Agreement
to be terminated immediately without notice. Any fees incurred by Q Comm in
order to collect unpaid debits, including but not limited to collection agency
fees, attorney's fees and court costs, will be added to the amount Q Comm is
entitled to receive from The Merchant. Interest at 18% per annum will also be
added to unpaid debits.
10. In the event Qxpress(TM) malfunctions, the store clerk or manager will call
Qxpress Client Services at (000) 000-0000. If the Qxpress cannot be repaired
with instructions over the phone or by phone updates, Q COMM, Inc. will send a
replacement unit via overnight delivery.
11. Any disputes between The Merchant and Q COMM, Inc. that cannot be resolved
will be submitted to arbitration under the rules and regulations of the American
Arbitration Association. Either party may invoke this paragraph after providing
10 days written notice to the other party. All cost of arbitration shall be
divided equally between the parties. Any award may be enforced by a court of
law. Dispute mediation, or arbitration will be handled at the specific court
located in the county of Utah, State of Utah.
12. ENTIRE AGREEMENT: This is our entire agreement and cannot be changed unless
agreed to in writing by both parties.
13. FORCE MAJEURE: If any part of this agreement is invalidated by local,
county, state or federal rules or regulations, or a court of law, the balance of
this agreement will remain valid.
14. TAXES: Q COMM, Inc.'s carriers are responsible for collection and payment of
Federal excise and applicable State taxes unless the local, county or State
laws, rules, and regulations require that the taxes be collected at the time of
sale and reported to the taxing authorities by the Merchant. Taxes may be
collected from the card user on a per call or per minute basis. There may be
taxes that Q COMM, Inc. will collect and pass through to The Merchant. Any
additional taxes levied by Federal, State, or local entities will be passed on
to The Merchant. Any taxes collected by The Merchant will be their sole
responsibility to remit to proper taxing authorities. This statement is not
advice on the collection or reporting of taxes and we suggest that each Merchant
contact their CPA, Accountant or taxing authority in their states for the
correct taxes or reporting of same from the sale of any Prepaid
Telecommunication Product.
15. DIAL AROUND: The FCC in October 1997 mandated that all 800 or 888 calls from
a pay phone be compensated to the pay phone owner. A surcharge ($.49) may be
added to each call for toll free access from a pay phone. The Merchant is not
responsible for collecting and paying these dial around charges.
16. RETURN GOODS POLICY: All returned goods must be authorized by Q Comm, Inc.
using a Return Goods Authorization "RGA" form. All returned goods commissions,
Broker and Merchant, will be charged back to the appropriate commissioned party
on the next ACH cycle. The Broker will be responsible for the Merchant interface
on all claims. This policy does not apply to phone cards or airtime cards, as
there is a no refund-no return policy on all cards generated by Qxpress(TM). A
restocking fee of 15% will be applied to all returned goods. This fee will be
deducted from the ACH credit on the cycle following the receipt of goods. The
RGA # must be visible on all returned good shipments in order to be accepted.
17. TRANSFER OF RIGHTS OR ASSIGNMENT: This agreement shall be binding on any
successors of the parties. Neither party shall have the right to assign its
interests in this Agreement to any other party, unless the prior written consent
of the other is obtained.
18. WARRANTIES: Neither party makes any warranties with respect to the use of
Qxpress(TM) by either party or by any third party. In no event will Q COMM, Inc.
be liable for direct, indirect, incidental, or consequential damaged, that are
in any way related to Qxpress(TM) or its carriers.
19. TERMINATION: This Agreement can be terminated by Q COMM, Inc. by providing a
thirty (30) day advance written notice. The Merchant can terminate with 30 days
advance written notice if the terms of this agreement are not being met.
20. GOVERNING LAWS: This Agreement is governed by the laws, rules and
regulations of the State of Utah.
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[GRAPHIC OMITTED]
Schedule D
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ACH AGREEMENT
Authorization and Agreement for Automated Clearing House (ACH) Debits and
Credits
Company Name: __________________________________________________________________
Company Address: _______________________________________________________________
I (we) authorize: Q COMM International, Inc. herein after called "Company", to
initiate credit and/or debit entries and adjustments for any credit entries in
error to my (our) checking account indicated below and the depository named
below, herein after called "Depositor", and to credit and/or debit the same such
account.
Depositor name (Bank name): ____________________________________________________
Bank Address: __________________________________________________________________
City, State and Zip or Postal Code: ____________________________________________
Bank Phone Number: ______________________ Fax Number: __________________________
Bank Service Representative: ___________________________________________________
ACH Routing/Transit/ABA # (9 digits): __________________________________________
Account Number: ________________________________________________________________
This authority is to remain in full force and effect until Company has received
written notification from me (us). In consideration of personal benefits flowing
unto me, I hereby do guarantee payment for _________________ (Name of Business)
to Company in accordance with the terms stipulated herein.
By:____________________________________ By: Q COMM Inc.
(Please Print)
Its: __________________________________ Client Mgr: ________________________
(Title)
Signed: _______________________________ H O: _______________________________
Date: _________________________________ Date: ______________________________
PLEASE VERIFY YOUR ACCOUNT NUMBER AND ACH ROUTING NUMBER WITH YOUR BANK. ATTACH
A VOIDED CHECK TO THIS FORM. NO DEPOSIT SLIP.
Any errors and/or disputes must be corrected within two banking days of the
initiating transaction. Thank you for your confidence and trust.
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