LETTER AGREEMENT BETWEEN INTERMETRO COMMUNICATIONS, INC. AND 99¢ ONLY STORES
Exhibit
10.8
Confidential
Treatment
Requested:
Confidential
portions of
this document have been redacted and have been filed separately with the
Commission.
CONFIDENTIAL
LETTER
AGREEMENT
BETWEEN
INTERMETRO
COMMUNICATIONS, INC.
AND
99¢
ONLY
STORES
June 30,
2005
This
proposal sets forth the
principal terms with respect to a vendor relationship between InterMetro
Communications, Inc. (“InterMetro”), on the one hand, and 99¢ Only Stores
(“NDN”), on the other hand, to be created upon the execution of this Letter
Agreement.
Purpose
InterMetro
desires to enter into a
strategic, phone card merchandising agreement with NDN (“Merchandise Partnership
Agreement”) for the launch of InterMetro’s pre-paid, long distance phone cards
(“Phone Cards”) at all existing and future NDN stores as set forth herein. The
following sets forth the essential terms of this Merchandise Partnership
Agreement:
Business
Terms of Proposed
Relationship
|
InterMetro
Responsibilities
|
During
the term of the
Merchandise Partnership Agreement, InterMetro will be responsible
for the
following:
|
| • | Telephony Service– InterMetro will be responsible for providing all telephony services designated on the Phone Cards. |
| • | Customer Support– InterMetro will provide 24/7 toll-free customer support to all purchasers of Phone Cards. |
| • | Recharge Capability– For customers desiring to recharge their Phone Card, InterMetro will provide a dedicated website and 24/7 toll-free customer support. |
| • | Phone Card PIN Batches– InterMetro will provide and replenish PIN batch files that correspond to each type of Phone Card sold at NDN stores. |
| • | Phone Card Design & Production– InterMetro will provide and bear all costs associated with the design and production of the Phone Cards. All Phone Card designs must be approved by NDN prior to production. |
| • | In-Store Sales Collateral– For the purpose of marketing the Phone Cards, InterMetro will provide and bear all costs associated with the design and production of the following: (i) in-store posters; and (ii) counter |
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| stickers (collectively, “In-Store Sales Collateral”). All In-Store Sales Collateral designs must be approved by NDN prior to production. |
| • | Customized Phone Card Voice Prompts– InterMetro will bear all costs associated with the inclusion of customized voice prompts on all Phone Card access numbers for the purpose of promoting special offers at NDN stores. |
| • | Development of Phone Card Programs– InterMetro will work on the development of alternative Phone Card programs that can be offered for sale within NDN stores, subject to approval from NDN. |
| • | Manager & Employee Training– InterMetro will work with NDN to train all NDN personnel on the respective Phone Card programs. An InterMetro representative will be made available to attend, in person or via telephone, district managers meetings to review the Phone Card programs, at NDN’s discretion. |
| • | Phone Card Sales Incentive Program– InterMetro will work with NDN on developing Phone Card sales incentive programs that reward the employees of the top-selling NDN stores, though NDN is not obligated to implement any such program. |
|
NDN
Responsibilities
|
During
the term of the
Merchandise Partnership Agreement, NDN will be responsible for the
following:
|
| • | Point-of-Sale Integration– NDN will be responsible for maintaining a Phone Card point-of-sale activation system through which the scanning of the UPC code on the back of each Phone Card will generate a Phone Card PIN on the applicable customer receipt. |
| • | Phone Card Distribution– Shipment of Phone Cards and In-store Sales Collateral from the NDN distribution center to each NDN store. |
| • | Customized Phone Card Voice Prompts– At its sole discretion, NDN will provide InterMetro with customized voice prompts for placement on Phone Card access numbers for the purpose of promoting special offers at NDN stores. |
|
Phone
Card PINs
|
NDN
agrees to order Phone Card
PINs as needed from InterMetro in such amounts as NDN deems adequate
for
its distribution efforts. InterMetro will provide NDN with Phone
Card PINs
on a consignment basis.
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99
Minutes for 99¢
|
The
initial Phone Card to be
launched pursuant to the terms of the Merchandise Partnership Agreement
will be the “99 Minutes for 99¢” Phone Card which will replace the current
phone card being sold at NDN. The 99 Minutes for 99¢ Phone Card will work
in exactly the same manner as the current phone card.
|
|
Economics
|
NDN
will pay the “NDN Cost”
listed in Table A, below, as InterMetro’s compensation for 99¢’ sales of
each 99 Minutes for 99¢ Phone Card PIN sold at NDN stores. The difference
between 99¢ retail price, and the NDN Cost, will be retained by NDN at the
time of sale. [***]
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|
TABLE
A
|
||
|
Phone
Card
Type
|
NDN Cost | |
|
99
Minutes for 99¢ Phone
Card
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[***] | |
NDN
will be entitled to receive
[***] percent ([***]%) of all revenue generated from the recharge of Phone
Cards, less uncollected monies, unapproved charges, and refunds (“Recharge
Margin”) which may in no event result in InterMetro being owed any sum or sums
by NDN for recharging.
|
NDN
Sales Reporting
|
At
the beginning of each week,
NDN will supply InterMetro with a report (“PIN Sale Report”) that details
all of the Phone Card PINs sold during the previous seven (7) day
period (“Reporting Period”), defined as Monday through Sunday. The PIN
Sale Report will include the following information with respect to
each
PIN sold during the Reporting Period: (i) PIN sold; (ii) date
and time of sale; and (iii) store number where sale took place.
|
|
InterMetro
Invoicing
|
InterMetro
will invoice NDN on
a weekly basis for all Phone Card PINs sold during the previous Reporting
Period. All invoices must be paid by NDN within five (5) business
days from NDN’s receipt of such accurate invoice. Such payments will be
calculated as follows: Retail Price less NDN Cost for the 99 Minutes
for
99¢ Phone Card.
|
|
InterMetro
Recharge
Reporting
|
Within
fifteen (15) days
after the beginning of each month, InterMetro will provide NDN a
report
that details all of the recharge transactions that occurred during
the
previous calendar month (“Recharge Report”).
|
[***]Confidential
material redacted
and filed separately with the Commission.
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InterMetro
Recharge
Payments
|
Within
twenty (20) days
after the beginning of each month, InterMetro will submit payment
to NDN
for the corresponding Recharge Margin.
|
|
Term
|
The
term of the Merchandise
Partnership Agreement will commence no later than fifteen (15) days
after the execution of this Letter Agreement by the parties and will
continue thereafter for a period of two (2) years (the “Initial
Term”). Additionally, NDN must place its first Phone Card PIN order for
a
minimum of [***] Phone Card PINs no later than thirty (30) days after
the commencement of the Initial Term. After the Initial Term, the
Merchandise Partnership Agreement will be automatically renewed for
one
(1) year terms unless terminated by either party in writing at least
sixty (60) days prior to the expiration of the then current term.
|
[***]
NDN
may terminate this Letter
Agreement at any time if InterMetro’s quality of service falls below acceptable
industry standards. The parties will meet in good faith in an effort to further
define such standards.
|
[***]
|
[***]
|
During
the Initial Term or any
subsequent term of the Merchandise Partnership Agreement, InterMetro will be
the
exclusive provider of all prepaid long distance services to NDN.
|
Notices
|
Any
notice to be provided to
NDN under this Letter Agreement must be delivered by Certified Mail,
Return Receipt, to “99¢ Only Stores, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇,” and sent to both NDN’s “Chief Financial Officer” as well as to
its “EVP, Supply Chain Management.”
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[***]Confidential
material redacted
and filed separately with the Commission.
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Further
Terms
|
This
Letter Agreement contains
the deal points of the parties’ agreement. Subsequent to the execution of
this Letter Agreement, the parties intend to work together in good
faith
to prepare a ▇▇▇▇▇▇ agreement containing “boilerplate” terms not contained
in this Letter Agreement. However, should the parties fail to do
so, they
nevertheless intend the terms contained herein to be binding.
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If
the foregoing is in accordance
with your understanding, please sign this Letter Agreement in the space
indicated below and return it to InterMetro for receipt no later than midnight
(Pacific time) on June 30, 2005, whereupon this Letter Agreement will
become a binding obligation among the parties. This Letter Agreement will expire
unless InterMetro has received an executed copy by NDN within the time period
provide in the previous sentence.
| 99 CENTS ONLY STORES, INC. | INTERMETRO COMMUNICATIONS, INC. | |
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| FOR 99 CENTS ONLY STORES | FOR INTERMETRO COMMUNICATIONS | |
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| PRINTED NAME | PRINTED NAME | |
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EVP
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Director,
Business
Development
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| TITLE | TITLE | |
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6/30/05
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6/30/05
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| DATE | DATE | |
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ADDRESS:
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