Document:

EXHIBIT

10.1

 

                PARTIAL LEASE TERMINATION AGREEMENT

 

 

This Partial Lease

Termination Agreement (the “Agreement”) is made as of the 27th day

of September, 2002, by and between DEMOCRACY ASSOCIATES LIMITED PARTNERSHIP

(hereinafter referred to as “Landlord”) and E-centives, Inc. (f/k/a Emaginet,

Inc., “Tenant”)

 

WITNESSETH:

 

WHEREAS, by Lease

Agreement dated as of September 23, 1997 (together with Amendment No.1 to Lease

Agreement dated as of December 23, 1998 (“Amendment No. 1”) and the Lease

Modification Agreement, as defined below, the “Lease”), Landlord leased to

Tenant for a term of five (5) years 23,544 square feet of Net Rentable Area

located on the sixth (6th) floor  (the

“Sixth Floor Premises”) and 23,544 square feet of Net Rentable Area located on

the seventh (7th) floor  (the “Seventh

Floor Premises” and together with the Sixth Floor Premises, the “Expanded

Premises”)  of the nine (9) story office

building known as One Democracy Center having a street address of 6901

Rockledge Drive, Bethesda, Maryland (the “Building”) within an office complex

known as Democracy Center (the “Complex”), as such space is more particularly

described in the Lease;  and

 

WHEREAS, by Lease

Modification and Extension Agreement dated as of June 29, 2000 (the “Lease

Modification Agreement”) Landlord and Tenant amended the Lease (i) to

modify the description of the premises which are the subject of the Lease, as

set forth above, (ii) to extend the term of the Lease with respect to the

Expanded Premises on the terms and conditions set forth herein and

(iii) to modify certain other terms and provisions of the Lease as

hereinafter set forth; and

 

WHEREAS, the Extended Lease Term expires on September

30, 2005; and

 

WHEREAS, Tenant, prior to

September 30, 2005, desires to terminate the Lease with respect to the Seventh

Floor Premises (alternatively referred to herein as the “Released Premises”)

and to vacate and to surrender the Released Premises to Landlord; and

 

WHEREAS, Landlord has agreed to terminate the Lease

with respect to the Released Premises only and to accept said surrender of the

Released Premises upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in

consideration of the mutual covenants and premises contained herein and other

good and valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, Landlord and Tenant herein agree to amend the Lease as follows:

 

1.             Defined Terms.  Except as otherwise provided herein, the

capitalized terms used herein shall have the same meanings as provided such

terms in the Lease.

 

2.             The

Premises. (a)  Tenant shall quit,

vacate and surrender the Released Premises to Landlord at any time subsequent

to the execution of this Agreement, but in no event later than 5:00 p.m. on

December 31, 2002 (the “Partial Lease Termination Date”). Accordingly,

effective on the day after the Partial Lease Termination Date, the definition

of the Premises currently set forth in

 

1

the Lease hereby is amended to exclude the Released Premises. As a

result, effective on the day after the Partial Lease Termination Date, the

aggregate number of square feet of Net Rentable Area comprising the Premises

hereby is reduced to comprise the Sixth Floor Premises only (i.e. 23,544 square

feet of Net Rentable Area on the sixth (6th) floor of the Building).

 

(b)           The Released Premises shall be

surrendered in accordance with the pertinent provisions of the Lease on the

Partial Lease Termination Date in broom clean condition, in the same order and

condition in which they existed on the Extended Lease Term Commencement Date,

ordinary wear and tear excepted. 

Tenant, in accordance with the provisions of the Lease, shall remove all

of its personal property and moveable trade fixtures, furnishings and equipment

from the Released Premises, including, without limitation all of the cables,

wiring and equipment in and relating to the LAN room/data center, on or before

the Partial Lease Termination Date, provided that Tenant shall repair all

damage caused by such removal to the sole but reasonable satisfaction of

Landlord.  Tenant’s obligation to

observe and perform the covenants provided in this Paragraph 1 shall survive

the Partial Lease Termination Date.

 

                                (c)           Notwithstanding anything in this

Agreement to the contrary, on or before December 15, 2002, Tenant shall have

the right, subject to the terms and conditions of this Paragraph 1(c), to

notify Landlord (“Tenant’s Election Notice”) of its election to terminate the

lease of the Sixth Floor Premises in lieu of terminating the lease of the

Seventh Floor Premises. In the event Tenant timely delivers Tenant’s Election

Notice to Landlord, (i) the definition of the Released Premises shall be deemed

to include the Sixth Floor Premises only, (ii) the Premises shall be deemed to

include the Seventh Floor Premises only and (iii) the Lease shall continue in

full force and effect, subject to the terms and provision of this Agreement,

with respect to the Seventh Floor Premises only. The first sentence of this

Paragraph 1(c) notwithstanding, in the event Landlord notifies Tenant that

Landlord has bona fide prospective tenant who desires to lease the Seventh

Floor Premises, Landlord shall notify Tenant and Tenant shall within three (3)

business days of Landlord’s notice, notify Landlord of whether it will Lease

Sixth Floor Premises or the Seventh Floor Premises.

 

3.             Rent.

(a) Regardless of whether Tenant vacates the Released Premises prior to the

Partial Lease Termination Date, all installments of annual base rent with

respect to the Released Premises which are due pursuant to Article III of the

Lease shall be paid through March 31, 2003 (the “Partial Rent Termination

Date”). Similarly, Tenant shall make estimated monthly payments in respect of

Additional Rent with respect to the Released Premises, as provided in Article

IV of the Lease, through the Partial Rent Termination Date. Tenant’s obligation

with respect to payment of Additional Rent with respect to the Released

Premises pursuant to Article IV of the Lease, as well as Landlord’s obligation

to refund any overpayment made with respect to the Released Premises by Tenant

in respect of Additional Rent, all with respect to the period prior to and

including the Partial Rent Termination Date, shall survive the Partial Lease

Termination Date and the Partial Rent Termination Date. All of Tenant’s other

obligations under the Lease with respect to the Released Premises shall

continue in full force and effect through the Partial Lease Termination Date.

 

(b)  Notwithstanding anything to the contrary in

subparagraph (a) above, in the event (i) Landlord is successful in its efforts

to relet all or a portion of the Released Premises, (ii) the new tenant takes

occupancy of the Released Premises and (iii) Landlord actually receives the

payment of rent with respect to the Released Premises, then the installments of

annual base rent that Tenant is to pay with respect to the Released Premises

prior to March 31, 2003 shall be reduced by the actual amount of the rent

actually received by Landlord with respect to the Released Premises.  To the

 

2

extent Landlord

receives payment of rent with respect to the Released Premises by a new tenant,

then Landlord shall credit against Tenant’s next monthly installment of annual

base rent an amount equal to the amount received from the new tenant.

 

(c)  Tenant’s obligation to pay annual base rent,

additional rent and all other sums and charges due in accordance with the terms

and provisions of the Lease shall continue in full force and effect with

respect to the Sixth Floor Premises. 

Except as provided in Paragraph 13 below, provided Tenant complies with

the terms hereof, Tenant shall have no further obligations with respect to the

Seventh Floor Premises commencing the day immediately following the Partial

Lease Termination Date.

 

                4.             Security

Deposit.                 Paragraph 23,

Security Deposit, of the Lease Modification Agreement, hereby is modified as

follows:

 

                (a)           Landlord acknowledges that Tenant has delivered to

Landlord and is currently holding the Letter of Credit in the amount of

$449,578.80.  The Letter of Credit

currently expires on September 30, 2002. 

Tenant shall cause the Letter of Credit to be renewed or extended for an

additional six (6) months in accordance with the provisions of Paragraph 23(a)

of the Lease Modification Agreement (e.g. the Letter of Credit shall be renewed

or extended through March 31, 2003), provided that the extended Letter of

Credit shall permit a partial draw by Landlord any time after January 1, 2003

in the amount of $309,578.80 (the “Partial Payment”).  In addition, on or before January 3, 2003,Tenant shall make the

payment as identified in Paragraph 4(c) below, such that Landlord shall have

received by virtue of the Partial Payment and Additional Payment (defined

below) the full amount of the Letter of Credit. Tenant shall provide to

Landlord appropriate documentation and evidence of such renewal or extension

which is acceptable to Landlord in its sole judgment and shall be delivered to

Landlord on or before September 30, 2002. 

In the event Tenant fails to deliver to Landlord the appropriate

documentation evidencing the renewal or extension of the Letter of Credit in

accordance with this Paragraph 4(a), (i) Landlord, without notice to Tenant,

shall be entitled to immediately draw on the Letter of Credit, (ii) this

Agreement shall terminate and all rights, obligations, and liabilities of the

parties hereunder shall be released and discharged and (iii) Tenant shall

continue to comply with its obligations, liabilities and responsibilities under

the Lease with respect to the Sixth Floor Premises and the Seventh Floor

Premises through the expiration of the Extended Lease Term. Landlord, at any

time after January 1, 2003 and without any notice to Tenant, shall be entitled

to draw on the Letter of Credit in the amount of the Partial Payment and retain

the proceeds thereof and, thereafter, shall continue to hold the Letter of

Credit as the security deposit in accordance with the provisions of the Lease.  In addition, Tenant shall be obligated to

make the Additional Payment set forth in subsection (c) below in addition to

its rental payment obligations  (the

Partial Payment and Additional Payment collectively referred to as the

“Termination Payment”). The Termination Payment shall be in addition to and not

in replacement of Tenant’s obligation to make payments of annual base rent and

additional rent as set forth in Paragraph 2 above or to deliver the Additional

Payment to Landlord in accordance with the provisions of subparagraph (c)

below.

 

(b)           Paragraph

23(b) of the Lease hereby is deleted in its entirety and the Letter of Credit

shall not be subject to further reduction.

 

                (c)           On or before January 3, 2003, Tenant

shall deliver to Landlord a cash payment of $140,000.000 representing two (2)

months of annual base rent which Tenant is then obligated to

 

3

pay with respect to the Seventh Floor Premises (the

“Additional Payment”). In the event Tenant fails to deliver the Additional

Payment to Landlord, unless Landlord has relet the Seventh Floor Premises and

such tenant has taken occupancy of the Seventh Floor Premises and commenced

paying rent with respect thereto (i) this Agreement shall terminate and all rights,

obligations, and liabilities of the parties hereunder shall be released and

discharged, and (ii) Tenant shall continue to comply with its obligations,

liabilities and responsibilities under the Lease with respect to the Sixth

Floor Premises and the Seventh Floor Premises through the expiration of the

Extended Lease Term, except that the amount of the Letter of Credit to be

deposited by Tenant shall not be subject to further reduction. In the event

Tenant fails to deliver the Additional Payment and Landlord has relet the

Seventh Floor Premises and such tenant has taken occupancy of the Seventh Floor

Premises and commenced paying rent with respect thereto then this Agreement

shall remain in full force and effect and Landlord shall have the right to pursue

any and all of its rights and remedies against Tenant with respect to the Sixth

Floor Premises and the Seventh Floor Premises, as applicable, in accordance

with the terms and provisions of the Lease.

 

(d)           Notwithstanding anything to the

contrary in Paragraph 4(c) above, at any time after April 1, 2003 provided

that  (i) Tenant shall not then be in

default, beyond any applicable notice and cure period, under any of the terms

and provisions of this Lease, (ii) no physical damage to the Premises shall

have occurred, ordinary wear and tear excepted, and (iii) no other event shall

have occurred prior to April 1, 2003 which would entitle Landlord to use or to

retain all or a portion of the security deposit, then the amount of the

security deposit shall be reduced to an amount that is equal to one (1) month

of the then escalated annual base rent with respect to the Sixth Floor Premises

(the “Reduced Security Deposit”). Such reduction shall occur by means of (1)

delivery by Tenant to Landlord of a new letter of credit (the Substitute Letter

of Credit”) or an amendment or modification of the Letter of Credit which shall

comply with the provisions of Paragraph 23(a) of the Modification Agreement or

(2) delivery of cash to Landlord in the amount of the Reduced Security Deposit.

If Tenant delivers cash or a Substitute Letter of Credit to Landlord, the

original Letter of Credit shall be returned to the Tenant within ten (10)

business days following Landlord’s receipt of the Substitute Letter of Credit.

 

5.             Releasing

of and Access to the Seventh Floor Premises.  (a)  Tenant acknowledges

that Landlord, commencing on the execution of this Agreement, shall, but is not

obligated to Tenant to,  endeavor to

lease the Seventh Floor Premises to another tenant.  In order that Landlord may present the Seventh Floor Premises to

prospective tenants in the most favorable manner, Tenant agrees that it shall

vacate the Seventh Floor Premises as soon as practicable for Tenant and that

Tenant shall maintain any furniture, fixtures, furnishings and equipment

remaining in the Seventh Floor Premises in a clean, tidy and orderly manner.

 

(b)           Notwithstanding anything in this

Agreement or the Lease to the contrary, commencing on the day after the date on

which this Agreement is executed by Tenant, Landlord, its employees,

contractors, architects, agents, engineers and consultants and representatives

of prospective tenants, shall be allowed access to the Seventh Floor Premises,

without charge therefor and without diminution of the rent payable by Tenant,

to examine and inspect the Seventh Floor Premises and to prepare plans and

drawings for the renovation and modification of the Seventh Floor Premises. In

connection with any such entry, Landlord shall endeavor to provide Tenant with

prior telephonic notice of such entry.

 

4

 

(c)            In the event Landlord, prior to the Partial Lease Termination

Date, executes a lease with a tenant for all or a portion of the Seventh Floor

Premises (the “New Lease”), (i) Tenant shall remove all of its furniture,

furnishings, trade fixtures and equipment from the Seventh Floor Premises in

accordance with the provisions of Paragraph 2 above and (ii) Landlord or such

tenant, as applicable, shall have the right to commence construction of any

alterations and renovations to the improvements in the Sixth Floor Premises as

required under the New Lease.

 

                                (d)           Landlord’s

entry into the Seventh Floor Premises in accordance with the provisions of

subparagraphs (b) and (c) above shall in no way entitle Tenant nor shall Tenant

have any claim or cause of action against Landlord for an abatement or other

credit of rent due to such access or Tenant’s vacation of the Seventh Floor

Premises prior to the Partial Lease Termination Date.

 

6.             Default.  In

the event prior to March 31, 2003, Tenant is in default under any of the terms

and conditions of the Lease then, unless Landlord has relet the Seventh Floor

Premises and such tenant has taken occupancy of the Seventh Floor Premises and

commenced paying rent with respect thereto (i) this Agreement shall, at

Landlord’s sole and exclusive option, terminate and all rights, obligations,

and liabilities of the parties hereunder shall be released and discharged, and

(ii) if Landlord so elects to terminate this Agreement, Tenant shall continue

to comply with its obligations, liabilities and responsibilities under the

Lease with respect to the Sixth Floor Premises and the Seventh Floor Premises

through the expiration of the Extended Lease Term. In the event prior to March

31, 2003, Tenant is in default under any of the terms and conditions of the

Lease and Landlord has relet the Seventh Floor Premises and such tenant has

taken occupancy of the Seventh Floor Premises and commenced paying rent with

respect thereto then this Agreement shall remain in full force and effect and

Landlord shall have the right to pursue any and all of its rights and remedies

against Tenant with respect to the Sixth Floor Premises and the Seventh Floor

Premises, as applicable, in accordance with the terms and provisions of the

Lease, provided that any such recovery shall be appropriately limited or

reduced by any rental or other payments received from a third-party by Landlord

for the Seventh Floor Premises.

 

7.             Renewal.                Tenant’s right of renewal as set

forth in Paragraph 11 of the Lease Modification Agreement shall apply to the

Sixth Floor Premises and all references to the “Premises” therein shall be

deemed to refer to the Sixth Floor Premises only.

 

8.             Incorporation of

Lease Terms. Except as expressly modified or amended by this Partial

Termination of Lease Agreement, all of the terms, conditions, covenants and

agreements contained in the Lease (i) are incorporated herein by reference,

(ii) shall remain in full force and effect and (iii) shall be applicable to and

binding upon Landlord and Tenant during the Extended Lease Term.

 

9.             Broker.

  Landlord and Tenant acknowledge that

Tenant has engaged Julien J. Studley (“Tenant’s Broker”) as its broker to

assist in the negotiations relating to this Agreement. Tenant shall be solely

responsible for and shall pay any fees or commissions due and owing to said

broker pursuant to a separate agreement between said broker and Tenant.

Landlord and Tenant each represents and warrants to the other, except as

expressly provided in the preceding sentence, that neither of them has employed

or dealt with any broker, agent or finder in carrying on the negotiations

relating to this Agreement.  Tenant

shall indemnify and hold Landlord harmless from and against any claim or claims

for brokerage or other commissions asserted by any broker, agent or finder

engaged

 

5

by Tenant or with whom

Tenant has dealt in connection with this Agreement, including, without limitation,

Tenant’s Broker.

 

10.           Corporate

Authority.           Tenant hereby

represents and warrants to Landlord that all necessary corporate action has

been taken to enter this Lease and that the person signing this Lease on behalf

of Tenant has been duly authorized to do so.

 

11.           Mutual Negotiation.            Landlord and Tenant each hereby

covenant and agree that each and every provision of this Agreement has been

jointly and mutually negotiated and authorized by both Landlord and Tenant and

in the event of any dispute arising out of any provision of this Lease,

Landlord and Tenant do hereby waive any claim of authorship against the other

party.

 

12.           Lender Approval. This Agreement shall be subject to and

contingent on Landlord’s receiving the approval no later than fourteen (14)

calendar days from the date of execution of 

this Agreement of all of the terms and conditions contained herein by

TIAA, the lender that is the beneficiary of the deed of trust encumbering the

Office Complex.  Landlord agrees to use

its reasonable efforts to secure such approval.  If such approval cannot be obtained, Landlord shall notify

Tenant, this Agreement shall terminate and all rights, obligations, and

liabilities of the parties hereunder shall be released and discharged and

Tenant shall continue to comply with its obligations, liabilities and

responsibilities under the Lease through the expiration of the Extended Lease

Term.

 

13.           Release. Provided the conditions set forth in paragraphs

2, 3, 4 , 5 and 6 hereof shall have been fully satisfied and except as  expressly provided in such paragraphs 2, 3,

4, 5 and 6 hereof, commencing on the day after the Partial Lease Termination

Date, Tenant shall be relieved of all further liability under the Lease and

shall receive no further benefits (e.g. the right to purchase parking permits

in the Garage beneath the Office Complex or the surface parking lots pursuant

to Article XXIV of the Lease) with respect to the Seventh Floor Premises only.

 

                14.           Notices. In

addition to the notice to be sent to Landlord at its offices in Washington DC,

copies of all notices to Landlord or other communications required in

connection with the Lease shall be addressed to Landlord in care of Boston

Properties, Inc., Prudential Center, 111 Huntington Avenue, Suite 300, Boston,

Massachusetts 02199-7610.

 

6

IN WITNESS WHEREOF,

Landlord and Tenant have executed this Partial Lease Termination Agreement as

of the date and year first above written.

 

	

  LANDLORD:

  
	

   

  	

   

  
	

  DEMOCRACY ASSOCIATES

  LIMITED

  PARTNERSHIP, a Maryland limited partnership

  
	

   

  	

   

  
	

  By:

  	

  Boston Properties LLC,

  a Delaware limited

  liability company, its General Partner

  
	

   

  	

   

  
	

  By:

  	

  Boston Properties

  Limited Partnership, a

  Delaware limited partnership, its Managing

  Member

  
	

   

  	

   

  
	

  By:

  	

  Boston Properties,

  Inc., a Delaware

  corporation, its General Partner

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Raymond A. Ritchey

  
	

   

  	

   

  	

  Raymond A. Ritchey, Executive

  
	

   

  	

   

  	

  Vice President

  
	

   

  	

   

  
	

   

  	

   

  
	

  TENANT:

  
	

   

  	

   

  
	

  E-CENTIVES, INC., a Delaware corporation

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ David Samuels

  
	

   

  	

   

  	

  David A. Samuels, SVP and CFO

  
	

   

  	

   

  	

   

  

 

7Exhibit

10.2

 

E-CENTIVESTM [LOGO]

 

[*]

 

September

24, 2002

 

Dear [*]:

 

The purpose of this letter is to confirm the renewal

effective September 24, 2002 of the Master Services Agreement between

E-centives, Inc. (“E-centives”) and [*]

(the “Agreement”) in conformance with Section 9.1 of the Agreement on the same

terms and conditions, provided that the new or modified terms as previously

provided by E-centives to [*] and

incorporated into the following documents shall be deemed incorporated into the

Agreement:

 

(1)           Overall

Pricing Proposal;

(2)           Revised

Statement of Work ; and

(3)           Detailed

Pricing Worksheet 

 

(collectively, the “Amendment Documents”).  Copies of the Amendment Documents have been previously sent under

separate cover and are included with the letter for your convenience.  Specifically, in accordance with Section 1.3

of the Agreement, the parties confirm that the proposed changes in services and

pricing to be provided under the Agreement as incorporated in the Amendment

Documents have been reviewed and agreed upon in all material respects by the

parties.  As such, the Agreement shall

be deemed modified so as to incorporate the new Amendment Documents, which

shall be incorporated into and become part of Schedules A and B to the

Agreement as follows:

 

(1)           Revised

Statement of Work is incorporated into Schedule A;

(2)           Overall

Pricing Proposal and Detailed Pricing Worksheet are incorporated into Schedule

B.

 

In the case of any conflict in terms between the original Schedules A

and B and newly revised Schedules A and B, incorporating the Amendment

Documents, the new schedules shall govern.

 

	

  E-centives,

  Inc.

  	

   

  	

  Headquarters

  	

   

  	

  Regional Offices

  	

   

  
	

  www.e-centives.com

  	

   

  	

  6901 Rockledge Drive

  	

   

  	

  San Francisco

  	

   

  
	

   

  	

   

  	

  7th Floor

  	

   

  	

  New York

  	

   

  
	

   

  	

   

  	

  Bethesda, MD  20817

  	

   

  	

  London

  	

   

  
	

   

  	

   

  	

  tel. 240.333.6100

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  fax. 240.333.6250

  	

   

  	

   

  	

   

  

 

[*] page

1

/s/ Kamran Amjadi

 

[*] Certain

confidential information contained in this document, marked by brackets, has

been omitted and filed separately with the Securities and Exchange Commission

pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Finally, all references to “e-centives” in the Agreement shall be

replaced with references to “E-centives” to reflect the change in E-centives

corporate name.  Other than the

modification expressly set forth in this letter agreement, all terms and

conditions of the Agreement shall remain unchanged.  It is agreed that the term of this renewal begins on November 1st 2002 and ends on October 31st,  2003.  The contract will automatically renew for

another year unless notice is given 30 days prior to the end of the new term,

which is on or before October 1, 2003.

 

This letter also confirms

our mutual understanding that 10% of the costs quoted in Overall Pricing

Proposal will be allocated to a pay for performance (“PFP”) program.  The criteria for earning PFP will be

mutually agreed upon and documented as soon as possible.  The establishment of the criteria for the

PFP portion of the price shall be in the sole but reasonable discretion of [*].  It is agreed that the a reasonable PFP will

be in the same spirit as the year 1 PFP with the application of the additional

knowledge of what is possible and reasonable given the results of the year 1

program.

 

Please acknowledge receipt

of the Amendment Documents and your assent to the agreement herein by executing

in the designated area below.  If you

have any questions or concerns, please do not hesitate to contact me.  We look forward to continuing our successful

relationship with [*].

 

	

   

  	

  Warmest regards,

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  /s/ Kamran Amjadi

  	

   

  
	

   

  	

  Kamran Amjadi

  	

   

  
	

   

  	

  Chairman and CEO

  	

   

  

 

ACKNOWLEDGED

AND AGREED:

 

	

  By:

  	

    [*]

  
	

   

  	

   

  
	

  Print:

  	

    [*]

  
	

   

  	

   

  
	

  Title:

  	

    [*]

  
	

   

  	

   

  
	

  Date:

  	

    26 Sept.

  2002

  

 

Enclosures

 

	

  E-centives,

  Inc.

  	

   

  	

  Headquarters

  	

   

  	

  Regional Offices

  	

   

  
	

  www.e-centives.com

  	

   

  	

  6901 Rockledge Drive

  	

   

  	

  San Francisco

  	

   

  
	

   

  	

   

  	

  7th Floor

  	

   

  	

  New York

  	

   

  
	

   

  	

   

  	

  Bethesda, MD  20817

  	

   

  	

  London

  	

   

  
	

   

  	

   

  	

  tel. 240.333.6100

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  fax. 240.333.6250

  	

   

  	

   

  	

   

  

 

[*] page

2

/s/ Kamran Amjadi

 

 

 

 

MASTER SERVICES AGREEMENT

 

This Master Services Agreement (including any attached

exhibits, schedules and other attachments, the “Agreement”) is entered into

as of November 1, 2001 (the “Effective Date”), by and between e-centives,

Inc., a Delaware  corporation (“e-centives”), with principal

offices at 6901 Rockledge Drive, 7th Floor, Bethesda, MD 20817, and [*]

corporation (“Client”), with principal offices located at [*].

BACKGROUND

 

WHEREAS, e-centives utilizes and has the

technology and expertise to provide interactive marketing Services; and

 

WHEREAS, Client desires to retain e-centives

to provide such services in accordance with the terms and conditions of this

Agreement and to provide online to individual consumers (“User” or “Users”) the

means to obtain promotions, coupons, newsletters e-mail, and the other Services

described in this Agreement;

 

NOW THEREFORE, in consideration of the

mutual promises set forth herein and for other good and valuable consideration,

the receipt and sufficiency of which is hereby acknowledged, e-centives  and

Client agree as follows:

 

AGREEMENT

 

1.             Services

 

1.1                               e-centives

shall perform for Client the email marketing, agency, promotional offer

production and other services described on the Statement of Work (the “SOW”),

attached hereto as Schedule A (the “Services”).

 

1.2                               As

part of the Services to be provided under this Agreement, e-centives shall

adhere to the Service Level Agreement (the “SLA”) attached hereto as Schedule

C.

 

1.3                               The

scope of Services, and associated fees and rates set forth in this Agreement

shall not be modified unless in accordance with this Section 1.3.  If changes to the scope of Services, the

schedule for Deliverables, price, other modifications, and/or new Statements of

Work (hereinafter collectively “Changes”) may be necessary or desirable from

time to time, the parties agree to follow the procedures of this Section

1.3.  Either party may initiate a

request for a Change.  Change Requests

shall be submitted to the other party in writing.  Before work begins on any Change, the parties will jointly review

the impact such changes may cause on the schedule, price, or Services, and no

Change will be made without mutual written agreement to the Change, as

reflected in a copy of the

 

[*]

Certain confidential information contained in this document, marked by

brackets, has been omitted and filed separately with the Securities and

Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of

1934, as amended.

 

1

 

Change Request signed by

both parties.  For each proposed Change,

e-centives agrees to provide to Client at no additional charge, an analysis of

such Change, which shall include the following:  (a) an estimate of the fees and costs for each such Change, and

(b) an estimate of the effect such Change would have on the Services, including

the impact on outstanding and future deliverables and the delivery dates for

such deliverables.  In addition,

e-centives shall include in its analysis an explanation of any time constraints

that may apply with respect to the approval and implementation of the proposed

Change.  Changes authorized in writing

and signed by both parties shall amend this Agreement.

 

1.4.                            The

Services involve hosting Internet sites on the World Wide Web accessible by

Users of Client, as more fully described in the SOW.  Client shall provide a User agreement and privacy statement for

use on the Client Sites, to be available to each User upon access to the

applicable sections of the Client Sites. 

e-centives and Client shall coordinate the registration process by which

Users use the Client services to be provided in connection with this Agreement,

as set forth in the SOW.  The collection

and treatment of the User Data, as defined herein, shall be as set forth in

this Agreement and the SLA.  For those

Users who wish to subscribe to the coupon, promotions, or e-mail services, the

Parties shall ensure that as part of the subscription process, each User shall

be provided notice of the applicability of the User agreement to their

subscription for the services; and shall include a means to obtain from each

User his or her affirmative assent to the subscription agreement, verifiable,

recorded, and stored by e-centives for later use in the event a dispute arises

in connection with the consumer’s use of the website or the Services provided

through e-centives under this Agreement.

 

1.5                               Media

Planning and Buying Services. 

e-centives shall provide the media planning and buying services as set

forth on Schedule E hereto.

 

2.             License

 

2.1                               As

part of the Services, e-centives will provide certain coupon-related

functionality and host product, coupon, and subscription management microsites

and associated web pages (collectively, the “Client Sites”) and emails for

Client, as further described on Schedule A, which Services incorporate a software

application for creating, targeting, publishing, managing, tracking, analyzing

and reporting on promotional offers and consumer usage, and which software

application contains the current version of the e-centives MaestroTM Software

in machine executable object code format (collectively, “e-centives Promotions Product”).  Subject to the terms and conditions of this

Agreement, e-centives grants Client a worldwide, royalty-free, except for the

fees paid hereunder, non-exclusive, non-transferable, non-sublicensable,

license during the term of the Agreement to access and use the e-centives

Promotions Product to develop, test, display, and transmit coupons in email and

on the Client Sites, to support Users accessing and using such email or the

Client Sites (“User(s)”), or the promotion of Client’s products and

services.  Access shall be made

available with a confidential extranet Username and password given to Client by

e-centives.  Client agrees to

 

2

 

limit access to the

e-centives Promotions Product to authorized personnel, as identified on

Schedule D hereto, and not to allow any unauthorized person access to it,

either before or after expiration or termination of this Agreement.  The persons identified on Schedule D shall

be modified from time-to-time upon Client’s request in the case of

replacements, and with e-centives’ approval (not to be withheld unreasonably)

in the case of additional names.

 

2.2                               All

rights and licenses granted to Client hereunder are, for purposes of Section

365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”),

licenses of intellectual property within the scope of Section 101 of the

Bankruptcy Code.

 

3.             Charges and Payments

 

3.1                               Rates

and Expenses

 

Client shall pay e-centives for Services in accordance

with the rates set forth in Schedule B. 

e-centives reserves the right to charge additional fees for any services

provided that are not included on Schedule A, provided that such fees are

approved by Client in writing under Section 1.3 of this Agreement prior to

performance of the additional services. 

Upon the start of any renewal term of this Agreement, and assuming no

material  change in the overall project

scope or Deliverables as set forth on Schedule A, the charges for the Services

for the first and second renewal terms will be as set forth on Attachment 6 to

Schedule B, and changes to the pricing based on changes to the Services shall

be addressed under Section 1.3 of this Agreement.  The rates, fees or other monetary obligation of Client quoted on

Schedule B for the Services as specifically described on Schedule A hereto

shall not be increased more than once in any twelve month period, and any one

increase shall not exceed three percent (3%) of a period’s charges as quoted in

Schedule B.  This limitation shall not

apply to any Changes in accordance with Section 1.3.

 

3.2                               Invoice

and Payment

 

Payment for all undisputed charges shall be made in

accordance with the schedule set forth on Attachment 5 to Schedule B.  Except as otherwise provided herein, all

undisputed fees, including any applicable sales taxes, other taxes, or

pass-through charges due hereunder are payable within sixty (60) days of the

applicable invoice date.  In the event

that undisputed payments have not been made within such sixty (60) day period,

e-centives may send notice of a delinquency to Client. Thirty (30) days

following the date of such delinquency notice, if such delinquency is not

cured, e-centives may suspend provision of all Services hereunder without

liability.  In any collection efforts

for undisputed fees, Client shall be responsible for paying all costs,

including reasonable attorneys’ fees.

 

Client agrees to review e-centives invoices and to

notify in writing e-centives within thirty (30) days of the invoice date if any

charges are disputed.  Such

 

3

 

notice must state the reasons for or the questions

about each disputed item.  Any charges

not disputed within such thirty (30) day period are deemed undisputed.

 

The parties agree to meet promptly (in no event to

exceed fifteen (15) days) after Client’s notice in order to resolve the

disputed charges.  In the event that the

parties are unable to resolve the disputed items within fifteen (15) days of

such meeting, the parties agree that the dispute shall be escalated to a senior

officer of each company for resolution within an additional fifteen (15) day

period, and if not so settled the dispute will be settled by binding

arbitration administered by the American Arbitration Association (“AAA”) in

accordance with its Commercial Arbitration Rules (to be submitted by the

Parties within thirty (30) days after the meeting of senior executives or the

expiration of fifteen days, whichever occurs first).  The arbitration shall be heard and determined by one arbitrator

selected by the AAA, and such arbitrator shall be an attorney having experience

and familiarity with eCommerce or direct marketing disputes, unless the

participation of such an attorney is not reasonably practicable.

 

3.3                               Reimbursement

of Expenses

 

Subject to e-centives’ compliance with Client’s

expense reimbursement policies and procedures as they exist on the date of this

Agreement, a copy of which has been provided to e-centives, or may be changed

from time to time with sixty (60) days prior written notice to e-centives,

Client will reimburse e-centives for all reasonable out-of-pocket expenses

incurred in connection with the provision of the Services and Deliverables

under this Agreement.  All expenses over

$1,000 shall be pre-approved by Client, and expense reimbursement invoices or

requests shall be submitted on forms required by Client, copies of which have been

provided to e-centives,  and shall be supported by original

receipts or a reasonable substitute therefor.

 

3.4                               [*]

 

3.5                               Pay

for Performance (“PFP”)

 

3.5.1                     Service

Level Agreement Calculation

 

All measurements of Service uptime in connection with

any PFP calculation (as set forth in Schedule B hereto) shall be governed by

the SLA.

 

3.5.2                     [*]

 

4

 

4.             Proprietary Rights

 

4.1          Intellectual Property Rights

 

For purposes of this Agreement, the term Intellectual

Property Rights means any and all (by whatever name or term known or

designated) tangible and intangible and now known or hereafter existing (a)

rights associated with works of authorship throughout the world, including but

not limited to copyrights (including without limitation the sole and exclusive

right to prepare derivative works of the copyrighted work), moral rights, and

mask-works, (b) trademarks, service marks, trade names, goodwill, trade dress,

rights in packaging, merchandising rights, advertising rights and other

commercial rights, and all rights associated therewith, (c) trade secret

rights, (d) patent rights, (e) rights of privacy and rights of publicity, (f)

all other intellectual and industrial property and proprietary rights (of every

kind and nature throughout the world and however designated) whether or not

analogous to any of the foregoing rights (including without limitation logos,

character rights, “rental” rights and rights to remuneration), whether arising

by operation of law, contract, license or otherwise, and (g) all registrations,

applications, renewals, extensions, continuations, divisions or reissues

thereof now or hereafter in force throughout the universe (including without

limitation rights in any of the foregoing), whether now known or which

subsequently come into existence.

 

4.2                               e-centives

Property

 

e-centives has created, acquired or otherwise has

rights in, and may, in connection with the performance of Services hereunder,

employ, provide, modify, create, acquire or otherwise obtain rights in, various

concepts, ideas, methods, methodologies, procedures, processes, know-how, and

techniques; models (including, without limitation, function, process, system

and data models); templates, the generalized features of the structure,

sequence and organization of software, user interfaces and screen designs;

general purpose consulting and software tools, utilities and routines; and

logic, coherence and methods of operation of systems, and all associated

Intellectual Property Rights (collectively, the “e-centives Property”).

 

To the extent that e-centives utilizes any e-centives

Property in connection with the performance of Services and grant of license

hereunder, such property shall remain the property of e-centives and, except

for the limited license expressly granted herein, Client shall acquire no right

or interest in such property. 

Notwithstanding anything in this Agreement to the contrary, the parties

acknowledge and agree that e-centives will own all right, title, and interest,

including, without limitation, all Intellectual Property Rights, in and to the

e-centives Property.   All rights not

expressly granted are reserved to e-centives.

 

5

 

4.3                               Client

Property

 

“Client Property” shall mean (a) various

concepts, ideas, methods, methodologies, procedures, processes, know-how, and

techniques; models (including, without limitation, function, process, system

and data models); templates; User interfaces and screen designs, and all

associated Intellectual Property Rights and Confidential Information therein,

which Client has created, acquired or otherwise has rights in, and may, in

connection with e-centives’ performance of Services hereunder, employ, provide,

modify, create, acquire or otherwise obtain rights in; (b) all Deliverables (as

further defined and described in Section 4.4); c) all User Data (as further

defined in Section 4.5) supplied, generated, collected and/or stored in

connection with the Services under this Agreement; (d) all Client Content (as

defined and described in Section 7.1 of this Agreement); (e) all URLs and

domain names used solely for the benefit of Client in connection with the

Services or the Deliverables; and (f) all Intellectual Property Rights and

Confidential Information in all of the foregoing, which are defined

collectively, as “Client Property”.  Client is the sole and exclusive owner of all Client

Property.  Notwithstanding the

foregoing, Client Property shall not be deemed to include, and Client shall not

obtain any ownership rights in, any of the e-centives Property, even if such

e-centives Property is used in connection with or for the creation of the

Deliverables.

 

Subject to licenses granted in connection with User

Data in section 4.5 herein, Client hereby grants to e-centives a worldwide,

non-exclusive, royalty-free, non-transferable, non-sublicensable, license to

use Client Property or other materials that are reasonably needed by e-centives

solely in order to perform the Services for Client, and for no other purposes

whatsoever.  To the extent that

e-centives utilizes any Client Property or other materials (including, without

limitation, any hardware or software of Client) in connection with the

performance of the Services hereunder, such Client Property and/or materials

shall remain the sole and exclusive property of Client and, except for the

license expressly granted herein, e-centives shall acquire no right or interest

in such property.  All rights not

expressly granted are reserved to Client.

 

4.4                               Ownership

of Deliverables

 

The tangible and intangible items developed,

performed, created, or otherwise specified as Client deliverables in connection

with the provision of Services under this Agreement, as specifically identified

in Schedule A as a Client “deliverable” (the “Deliverables”) will become

the property of Client. To the extent that any e-centives Property is contained

in any of the Deliverables, Client shall not obtain any ownership rights or

interest in such e-centives Property provided. e-centives hereby grants Client,

a royalty-free, worldwide, fully paid-up, non-exclusive license to use such

e-centives Property in connection with the Deliverables.

 

Client shall own the exclusive rights, title and

interest in and to all Intellectual Property Rights in all Deliverables.  Therefore, all Deliverables shall become and

 

6

 

remain Client’s exclusive property and, unless

otherwise specifically agreed in writing by the parties, shall be considered

specially ordered for Client as “works made for hire” by an independent

contractor under the United States Copyright Laws (17 U.S.C. Section 101, and

any amendments thereto.)  If for any

reason the Deliverables are held not to be “work made for hire,” e-centives

hereby assigns all its right, title and interest in the Deliverables to

Client.  Any assignment of copyright

hereunder includes all rights of paternity, integrity, disclosure and

withdrawal and any other rights that may be known as or referred to as  “moral rights” (“Moral Rights”).  To the extent such Moral Rights cannot be

assigned under applicable law and to the extent allowed by law, e-centives

hereby waives such Moral Rights in favor of Client and consents to any action

of Client that would violate such Moral Rights in the absence of such consent.  As to all Intellectual Property rights that

are not rights of copyright, e-centives hereby irrevocably assigns all of its

right, title and interest in and to all Deliverables and all other Intellectual

Property rights therein to Client. 

Without limiting the generality of the foregoing, Client’s rights in the

Deliverables shall include, but shall not be limited to: the unrestricted and

exclusive right to reproduce, use, display or perform the Deliverables

throughout the world without name credit, for advertising, trade, or any other

lawful purpose, in and through all media now known or later created or

invented; the exclusive right throughout the world to protect the Deliverables

by copyright(s), patent(s) or trademark(s) in Client’s name and for the benefit

of Client and its affiliates, including the right to secure extensions and

renewals of such copyright(s), patent(s) or trademark(s) in Client’s name and

for Client’s benefit; the right to create derivative works from and to alter,

retouch or crop the Deliverables in any way; and the right to license,

distribute, assign or transfer any right, title, interest or intellectual

property in the Deliverables or otherwise dispose of the Deliverables or any

portion thereof for any purpose and in any manner.

 

Solely for the purpose of securing payment for

Deliverables, Client hereby grants to e-centives an unconditional first lien

and security interest in and to all Deliverables as defined above. Client

agrees that none of the foregoing shall be subjected to a superior lien or

interest, shall not be subordinated to any other lien or interest.  Client agrees that e-centives may file UCC-1

or similar documents to perfect its security interest, and further agrees to

execute all documents necessary to assist e-centives in the perfection of its

first priority security interest and to execute all document reasonable

necessary for these purposes. 

e-centives agrees to release the aforesaid security interest in and to

all Deliverables for which Client has paid in full, and further agrees to

execute all documents necessary to assist Client in the clearing the security

interest and to execute all document reasonable necessary for these purposes.

 

4.5                               User

Data

 

“User Data” means User’s name and email address

provided by Client to e-centives or otherwise collected by e-centives on behalf

of Client in connection with the provision of the Services hereunder, in the

Statement of Work attached as

 

7

 

Schedule A, or in future statements of work; all

clickstream data, coupon redemption data and information, survey results, and

any other data or information created or collected with respect to Users and

their use of the Services in connection with the Parties’ performance under this

Agreement.  Notwithstanding anything to

the contrary herein, all User Data shall be the sole and exclusive property of

Client. Client grants to e-centives a non-transferable (except to a successor

of all or substantially all of the assets or shares of e-centives entitled to

vote for the election of directors who agrees to be bound by this Agreement)

worldwide, perpetual and royalty-free license to use and to disclose  Aggregated User Data, defined as that

derivative of the universe or of collected User Data that allows e-centives to

provide statistics about the use of its services and that does not identify

Client or any individual User or any personally identifiable information as the

source of such data or part of such data. 

Client also grants to e-centives a limited license to use User Data

internally solely in connection with its performance under this Agreement and

for statistical or reporting purposes, and without disclosure of the

disaggregated User Data. The parties acknowledge and agree that all User Data

is the Confidential Information of Client, as further defined in Section 5 of

this Agreement.

 

e-centives hereby grants to Client an unconditional

first lien and security interest in and to all Client Property as defined in

Section 4.3.  e-centives agrees that

none of the foregoing shall be subjected to a superior lien or interest, shall

not be subordinated to any other lien or interest, and that as of the date of

execution of this Agreement no competing or superior lien or interest exists.  e-centives agrees that Client may file UCC-1

or similar documents to perfect its security interest, and further agrees to

execute all documents necessary to assist Client in the perfection of its first

priority security interest and to execute all document reasonably necessary for

these purposes.

 

4.6                               Proprietary

Notices

 

The parties will reach mutual agreement on the

placement and appearance of proprietary notices indicating that the Client

Sites are “powered by” e-centives,  and other appropriate proprietary notices.

 

5.             Confidentiality

 

5.1                               Obligation

 

With respect to the Confidential Information (as

defined below) disclosed by a party (the “Disclosing Party”) to the receiving party

(the “Receiving

Party”), the Receiving Party agrees that it shall:  (i) take reasonable steps to safeguard the

Confidential Information from unauthorized access or use by others; (ii) not

disclose the Confidential Information to any third party (including consultants

and subcontractors) except on a need-to-know basis in connection with the

transactions contemplated by this Agreement and then only if the third party is

subject to a written confidentiality agreement; and (iii) not use the

Confidential

 

8

 

Information for any purpose not related to this

Agreement, or (iv) to the detriment of the Disclosing Party, including in the

trading of such Disclosing Party’s securities. 

Notwithstanding the above, the parties agree that whether or not

Intellectual Property Rights of the parties is disclosed in confidence, the

Intellectual Property Rights of the parties shall remain in effect in

accordance with the laws applicable to the Intellectual Property Rights in

question.  “Confidential Information”

means all User Data, and all trade secret, confidential or proprietary

knowledge, data and information, including information related to the business,

customers and products of a Disclosing Party, specifications, know-how,

drawings, sketches, models, samples, reports, plans, forecasts, current and

historical data, computer programs, documentation, market research, market

plans, business plans, Intellectual Property, and other technical, financial or

business data in the possession of a Disclosing Party, which such Disclosing

Party desires to protect against unrestricted disclosure or competitive use,

and includes the terms of this Agreement.

 

5.2                               Exceptions

 

The obligations imposed hereunder shall not apply to

specific information whether or not designated Confidential Information

if:  (i) the information is part of the

public domain, or becomes part of the public domain through no fault of the

Receiving Party; (ii) the information is received from a third party without a

restriction of confidentiality, without a breach of this Agreement, and without

a breach of another agreement of confidentiality by the third party; (iii) the

information is independently developed by the Receiving Party through

individuals not exposed to the Confidential Information and without any

reference to it, as evidenced by the Receiving Party’s written records; or (iv)

the information is Aggregated User Data as defined in Section 4.5 of this

Agreement.

 

Neither party shall disclose to the other party any

Confidential Information obtained by such party from a third party on a confidential

basis unless such party has obtained written permission from such third party

to do so.  Evidence of such written

permission shall be provided to the requesting party upon request.

 

6.             Limitation of

Liability

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,

NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,

INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE

WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, ARISING OUT OF OR

RELATED TO THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY

(INCLUDING NEGLIGENCE).  E-CENTIVES’

AGGREGATE LIABILITY IN CONNECTION WITH THIS AGREEMENT, WHETHER IN CONTRACT,

TORT OR OTHERWISE, WILL NOT EXCEED AN AMOUNT EQUAL TO ALL THE FEES, EXPENSES

AND/OR OTHER CHARGES PAID TO E-CENTIVES BY CLIENT FROM THE INCEPTION OF THIS

AGREEMENT.

 

9

 

7.             Representations and

Warranties

 

7.1                               By

Client

 

7.1.1                     Client

Content

 

Client hereby represents and warrants that any content

owned or licensed by Client from third parties, including, but not limited to,

all text, pictures, audio, video, logos and copy contained therein, data, email

addresses, and other information (“Content”) posted on any Client Site, or

otherwise provided to e-centives by Client hereunder (including, without

limitation any Client Property) or acquired or created by e-centives at

Client’s request, including the transmission of such Content through email, for

use under this Agreement will not: (i) infringe any third party’s valid

Intellectual Property Rights; (ii) knowingly violate any law or regulation

(including, without limitation, any law or regulation governing data

collection, spam, maintenance or privacy); (iii) be defamatory; (iv) be obscene

or contain pornographic material of any kind; (v) contain material that is

grossly offensive to the online community, including blatant expressions of

bigotry, prejudice, racism, hatred, or excessive profanity; display material

that exploits children under eighteen (18) years of age; promote or provide

instructional information about illegal activities, or promote physical harm or

injury against any group or individual; (vi) intentionally contain any viruses,

Trojan horses, worms, time bombs, cancelbots or other computer programming

routines that are intended to damage, detrimentally interfere with,

surreptitiously intercept or expropriate any system, data or personal

information.

 

7.1.2                     Client

further represents and warrants to e-centives as follows:

 

(a)                                  Client

is free to enter into and to perform this Agreement, and that the performance

of all the terms of this Agreement will not breach any confidential information

agreement, non-competition agreement or other agreement with any third party;

and

 

(b)                                 Client’s

use of the Services, and provision to Users, shall be in compliance with all

applicable laws, rules, and regulations.

 

7.1.3                     Authorization

 

Insofar as it is in Client’s control to do so, Client

warrants that it has taken reasonable steps to obtain authorization from each

individual to whom Client seeks to send email. 

Client shall provide tangible proof of the steps Client has taken and

any such authorization upon e-centives reasonable request.

 

10

 

7.1.4                     Restrictions

on use of the Service

 

Except as otherwise expressly permitted in this

Agreement, and except to the extent the following restrictions are prohibited

by applicable law, Client will not: (i) disassemble, reverse engineer,

de-compile, or otherwise attempt to derive source code from the e-centives

Promotions Product software contained in the e-centives Property or otherwise

used in the provision of the Services; (ii) modify, adapt, create derivative

works based upon, or translate any such software or any part thereof; (iii)

copy, install or use any such software on any of its computer systems, servers,

or networks; (iv) transfer, lease, loan, resell for profit, distribute or

otherwise grant any rights in such software or the e-centives Property in any

form to any other party, including commercial time-sharing, rental, or service

bureau use.

 

7.2                               By

e-centives

 

7.2.1                     e-centives

hereby represents and warrants that the e-centives Property it uses to provide

the Services:  (i) will not infringe any

third-party Intellectual Property Rights arising under the laws of the United

States, the United Kingdom, Germany, , and any other country or territory where

e-centives provides the Services or Deliverables to Client; (ii) will not

violate any law or regulation (including, without limitation, any law or

regulation governing data collection, maintenance or privacy); and (iii) will

not intentionally contain any viruses, Trojan horses, worms, time bombs,

cancelbots or other computer programming routines that are intended to damage,

detrimentally interfere with, surreptitiously intercept or expropriate any

system, data or personal information.

 

7.2.2                     e-centives

further represents and warrants to Client as follows:

 

(a)                                  e-centives

is free to enter into and to perform this Agreement, and that the performance

of all the terms of this Agreement for Client will not breach any confidential

information agreement, non-competition agreement or other agreement with any

former or current consumer of e-centives’ services;

 

(b)                                 all

Services and Deliverables furnished to Client shall be in compliance with all

applicable laws, rules and regulations;

 

(c)                                  that

the e-centives Promotions Product and other software will perform substantially

in accordance with their written specifications and documentation;

 

(d)                                 that

as of the date of the execution of this Agreement, to the extent the

exclusivity provision of Section 11.2 applies, such provision would not cause

e-centives to violate, currently or at any time in the future, any contract it

currently has with a third party.

 

11

 

7.3                               Acknowledgments

Regarding Dissemination of Email

 

e-centives may: 

(a) utilize a filtering system or other means at its disposal from time

to time for the purpose of removing from Client’s list of email addresses any

address which, in the sole and reasonable discretion of e-centives could result

in liability to or otherwise create the risk of negative publicity or other

attention for e-centives or Client if such address were to receive an email

through e-centives; and (b) if a disproportionate number of email addresses are

governed by the preceding clause (a), or in the event that an ongoing email

campaign results in an unusually high number of complaints, as determined by e-centives

in its sole and reasonable discretion, e-centives may halt such campaign or

take such other action as the parties mutually agree in order to minimize the

negative effects of such campaign, provided that in no event will e-centives be

required to continue such activity to the extent it may result in liability to

e-centives  reserves the right to refuse

to send any email instructed by Client if in e-centives sole but reasonable

discretion, such mailing is illegal, immoral, inappropriate for dissemination,

would create liability of negative publicity to e-centives.  In connection with all of the foregoing,

e-centives shall inform Client prior to its taking of any such action, or if

not reasonably feasible to provide such prior notice, as soon as reasonably

practicable after such action is taken.

 

7.4          Disclaimer

 

OTHER THAN AS EXPRESSLY SET FORTH HEREIN, E-CENTIVES

DISCLAIMS ALL OTHER WARRANTIES OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY.

 

8.             Indemnification

 

8.1                               General

 

Each party shall indemnify, defend, and hold the other

harmless from and against any and all claims, losses, liabilities, demands,

damages and costs (including, without limitation, settlement costs, judgments,

and the reasonable fees of attorneys’ and other professionals) arising from any

claim alleging facts that would constitute a breach of such party’s

representations or warranties under Section 7.

 

8.2                               Indemnification

by e-centives.  e-centives

shall indemnify, defend, and hold Client harmless from and against any and all

claims, losses, liabilities, demands, damages and costs (including, without

limitation, settlement costs, judgments and the reasonable fees of attorneys

and other professional) arising from any claim alleging that the Services or

any Deliverables furnished under this Agreement infringe or misappropriate any

Intellectual Property Right of a third party arising under the laws of the

United States, the United Kingdom, Germany, and any other country or territory

where e-centives provides Services or Deliverables to Client (an “Infringement

Claim”), or any claim that e-centives has used User Data

 

12

 

outside the scope of this

Agreement, except where the claim or suit arises out of or results from: (A)

any enhancements to the e-centives products, Services, or Deliverables made in

accordance with specifications received solely from Client, (B) Client’s use of

the e-centives Services or Deliverables other than the most recent version of

the e-centives  Services or Deliverables, if such infringement or

misappropriation would have been avoided by the use of the most recent version

of the Services or Deliverables; (C) modification of the e-centives Services or

Deliverables by any party other than Client, e-centives,  its subcontractors or agents; (D) the use of the e-centives

Services or Deliverables other than in accordance with this Agreement, or (E)

Client Content.  In the event of any

Infringement Claim, e-centives will, at its sole expense and to the extent

commercially reasonable: (i) obtain for Client the right to use the infringing

Service or Deliverables; (ii) modify such Service or Deliverables in a manner

that maintains existing functionality and does not give rise to an infringement

claim; or (iii) substitute equivalent non-infringing Services or Deliverables

that are reasonably equivalent to the infringing Service or Deliverables.

 

8.3          Indemnification by Client

 

Client shall indemnify, defend and hold e-centives

harmless from and against any and all claims, losses, liabilities, demands,

damages, and costs (including, without limitation, settlement costs, judgments

and the reasonable fees of attorneys and other professionals) arising out of

(i) any use of or access to the Client Sites by Client or by an authorized

agent of Client;  (ii) any Client

Content displayed in email sent by e-centives on behalf of Client or available

through the Client Sites, or (iii) any use of Client Property by e-centives

permitted under this Agreement (iv) the provision of any goods or services through

the Client Sites or any claim that such goods or services constitute

infringement or misappropriation of any valid third-party Intellectual Property

Right; and (v) any of the exceptions in the preceding paragraph listed in

clauses (A) through (E).

 

8.4                               Procedures

 

The parties shall provide the indemnification provided

in this section provided that the indemnified party provides the indemnifying

party with (i) prompt written notice of any claim covered under this section

(“Covered Claim”), (ii) control over the defense and settlement of such Covered

Claim using counsel reasonably acceptable to the indemnified party, and (iii)

proper and full information and assistance to settle or defend any such Covered

Claim.  The indemnified party shall be

able to participate in the defense of the Covered Claim with counsel of its

choice at its own expense, and the indemnifying party shall not enter into any

settlement without the indemnified party’s written consent, which consent shall

not be unreasonably withheld.

 

13

 

9.             Term and Termination

 

9.1                               Term

 

The initial term of this Agreement shall be for twelve

(12) months, commencing on the Effective Date, and shall renew for successive

one (1) year terms unless either party provides the other party with written

notice of non-renewal sixty (60) days prior to the end of such initial or

renewal term (“Renewal Notice Period”). If by the end of the Renewal Notice

Period of the initial term, and after undertaking commercially reasonable

efforts to reach a decision, Client is unable to provide notice of non-renewal,

then Client may provide notice to e-centives that Client must defer its renewal

decision (“Renewal Deferral”).  If

Client provides notice of Renewal Deferral, then after the expiration of the

initial term, e-centives shall continue to provide the Services in accordance

with this Agreement provided Client shall pay to e-centives an amount equal to

the year-one fees and charges, pro-rated based upon the additional sixty (60)

day time period during which such Services are performed, in addition to all

other fees due under this Agreement. 

The time period during which Client must provide e-centives written

notice of non-renewal shall be extended through the sixty day Renewal Deferral

period. If no such notice is received by e-centives during the Renewal Deferral

period, this Agreement shall automatically renew for the first renewal term

commencing upon the completion of the Post-Termination Services period.

 

9.2                               Termination

upon Default

 

A “Default” shall occur under this Agreement

upon: (i) Client’s failure to pay any undisputed invoice and such failure

remains uncorrected for ten (10) days after receipt of written notice that a

payment is past due; (ii) either party’s insolvency, apparent inability to pay

debts as they become due, or any filing of bankruptcy by or against either

party or a general assignment for the benefit of its creditors; (iii) either

party’s violation of any applicable laws, statutes, ordinances, codes or other

legal requirements with respect to any Services that are not remedied within

thirty (30) days after written notice thereof (or such shorter period as may be

required by law); or (iv) either party’s failure to perform or observe any

material term or condition of this Agreement and such failure remains uncured

for more than thirty (30) days from the date of the non-breaching party’s

written notice thereof.

 

Client may terminate this Agreement upon any Default

by e-centives not cured after the required notice and thirty (30)-day cure

period set forth in this Section by providing written notice of termination to

e-centives not less than five (5) business days following the expiration of

such cure period.

 

Upon any Default by Client of this Agreement not cured

after expiration of any applicable notice and/or cure period set forth herein,

e-centives may, in its sole discretion and without waiving any other rights or

remedies available to it, do any or all of the following: (i) suspend Service

to Client until such time as Client has corrected such noncompliance, including

paying any amounts owed hereunder; or

 

14

 

(ii) terminate Service (either completely or only with

respect to an affected Service) or this Agreement.  If e-centives suspends Service pursuant to this Section, in

addition to any other charges due hereunder, Client shall pay e-centives any

fees or other costs imposed on or incurred by e-centives to restart Service.

 

9.3                               Effect

of Termination

 

9.3.1                     The

provisions of Sections 3, 4, 5, 6, 7, 8, 9 and 13 will survive the termination

of this Agreement for any reason, and upon such termination, Client shall pay

e-centives for all Services performed and expenses incurred by e-centives prior

to the effective date of termination in accordance with the provisions of

Section 3.

 

9.3.2                     In the event

of the natural expiration or any other termination of this Agreement neither

Party shall make any claim or demand for future damages, whether direct,

incidental, consequential, punitive or otherwise, on the basis that either

Party had any expectation that this Agreement would be renewed or would

continue beyond its stated initial or effective renewal Term(s).  Nothing in this paragraph shall affect

either Party’s rights accruing up through the time of any termination or

expiration.

 

9.3.3                     It is the

intent of the parties that consumers shall have, subject to the SLA, ongoing

and uninterrupted access to and use to all websites through which the Services

are provided under this Agreement even in the event of the termination or

expiration of this Agreement. 

Therefore, notwithstanding anything in this Agreement or in any

Statement of Work to the contrary, upon the termination or expiration of this

Agreement, however occurring and even in the case of default or breach by any

party (except in the case of non-payment of undisputed amounts by Client), the

following provisions shall apply:

 

(a)                                  All

websites shall remain active, accessible and usable by consumers following

termination or expiration for a period of at least 60 days in order to allow

for transition.  All of the applicable

terms and conditions shall remain in effect during the transition period,

including, without limitation, all licenses from e-centives to Client provided

the parties shall separately negotiate a fee for the post-termination services,

which fee shall be in accordance with e-centives ‘ standards rates and fees

then in effect.

 

(b)                                 e-centives

(and all successors and assigns) shall collect and deliver to Client, in such

form as the parties may agree but in all events in industry standard formats

that allow Client to transfer to, and use with, a third party, all

Deliverables, Confidential Information, Client Intellectual Property, User

Data, Client Content, and backups and archives of all the foregoing, and shall

deliver them to

 

15

 

Client or to Client’s

designee as soon as practicable but no later than forty-five (45) days after

termination or expiration of this Agreement. 

Client agrees to reimburse e-centives for reasonable and actual

out-of-pocket expenses actually incurred (excluding the time of employees to

comply with this provision).  e-centives

further agrees that Client’s representatives may assist e-centives in this

process, and e-centives agrees to reasonably cooperate with Client in all

aspects of the transition.

 

(c)                                  To

the extent that e-centives has control over any domain name or URL identifying

websites used to provide Services to Client and to which Client has rights of

ownership, e-centives shall execute such documents and take such other

reasonable actions reasonably necessary to transfer those domain names and URLs

to the ownership and control of Client.

 

10.          Use of Name

 

e-centives may use all Client Content, names, and

logos for the purpose of performing under this Agreement.  e-centives may use Client’s name and logos

in its general marketing and advertising initiatives, provided that e-centives

complies with all Client trademark or logo usage specifications and guidelines

and that all Client trademarks and logos appear with equal size and prominence

as any other company logos used in such initiatives.  e-centives may disclose any of the terms of the business

relationship with Client upon Client’s prior written approval, which approval

shall not be unreasonably withheld. 

Nothing in this Agreement shall constitute a license to use any

trademark, service mark, trade name or logo.

 

11.          [*]

 

12.          Audit and Inspection

 

e-centives agrees that Client or its representatives

shall have the right to enter into any premises of e-centives or its

contractors with two (2) business days prior notice and during regular business

hours for the purposes of verifying e-centives’ compliance with this Agreement

and any Statement of Work hereunder. 

Client shall have this right of audit and inspection at least once per

calendar year, and as otherwise mutually agreed.  Client agrees to give e-centives at least ten (10) business days’

prior notice of its intent to exercise its rights hereunder.  Client agrees to perform the audit and

inspections at its own costs and expense, and during e-centives’ normal

business hours.  e-centives agrees to reasonably

cooperate in all respects, and agrees to allow Client or its representatives to

have access to and to copy such written or magnetically stored records and data

as are reasonable necessary to complete the audit.  All materials copied in accordance with the provisions herein

shall be considered Confidential Information, as further defined in this

Agreement, and shall be returned to e-centives (with Client’s legal department

retaining

 

16

 

copies for record keeping purposes only, not to be

shared with anyone outside the legal department) immediately after completion

of the audit contemplated hereunder.

 

13.          General

 

13.1        Waiver and Amendment

 

No modification, amendment or waiver of any provision

of this Agreement shall be effective unless in writing and signed by both

parties.  No failure or delay by either

party in exercising any right, power, or remedy under this Agreement, except as

specifically provided herein, shall operate as a waiver of any such right,

power or remedy.

 

13.2        Notice

 

All notices, demands, requests, or other communications

which may be, or are required to be, given or served, or sent by any party to

any other party pursuant to this Agreement shall be in writing and will be

deemed to have been duly delivered or given when: (i) delivered by hand (with

written confirmation of receipt) before 5:00 p.m. EST on a business day (or

otherwise on the next succeeding business day); (ii) sent by facsimile before

5:00 p.m. EST on a business day (or otherwise on the next succeeding business

day) and a written confirmation of the transmission is received by the sender;

or (iii) the next business day after being deposited for delivery with a

nationally recognized overnight delivery service, such as Federal Express, and

addressed or sent, as the case may be, to the appropriate addresses or

facsimile numbers set forth below:

 

	

  To e-centives:

  	

   

  	

  e-centives, Inc.

  
	

   

  	

   

  	

  6901 Rockledge Drive

  
	

   

  	

   

  	

  7th Floor

  
	

   

  	

   

  	

  Bethesda, MD 

  20817

  
	

   

  	

   

  	

  Attn: 

  General Counsel

  
	

   

  	

   

  	

  Fax:  (240)

  333-6250

  
	

   

  	

   

  	

   

  
	

  To Customer:

  	

   

  	

  [*]

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  	

   

  	

  [*]

  

 

Each party may designate by notice in writing a new

address, to which any notice, demand, request or communication may thereafter

be so given, served or sent.

 

17

 

13.3        Independent Contractors

 

The parties are independent contractors.  Neither party shall be deemed to be an

employee, agent, partner or legal representative of the other for any purpose

and neither shall have any right, power or authority to create any obligation

or responsibility on behalf of the other.

 

13.4                        Assignment

 

Neither party may assign or otherwise transfer any of

its rights or obligations under this Agreement, without the prior written

consent of the other party, unless such assignment is part of a merger,

reorganization or sale of all or substantially all of the assigning party’s

assets.

 

This Agreement is personal to e-centives, and

e-centives shall not delegate, outsource, or subcontract all of its obligations

without the express prior written permission of Client, which Client may grant

or withhold in its sole discretion.  Any

permitted delegee or subcontractor shall agree in a signed writing to be bound

by all of the terms and conditions of this Agreement.  Notwithstanding the foregoing, e-centives shall be permitted, in

its sole discretion and without Client’s consent, to hire suppliers,

contractors, third-party service providers, and enter into other subcontracts

in connection with the provision of the Services hereunder, but in all events

e-centives shall remain primarily responsible to Client for the fulfillment of

all Services and Deliverables required by this Agreement of any Statement of

Work.

 

13.5                        Taxes

 

Each party agrees to pay, and to indemnify and hold

the other party harmless from, any sales, use, excise, import or export, value

added or similar tax or duty not based on each party’s net income, including

any penalties and interest, as well as any costs associated with the collection

or withholding thereof, and all governmental permit fees, license fees, and

customs and similar fees levied upon the delivery by e-centives of the

Services.

 

13.6        Severability

 

In the event that any provision contained in this

Agreement, or the application of any such provision to either e-centives or

Client, is held by an arbitrator or a court of competent jurisdiction to be

contrary to any law or otherwise unenforceable, such provision shall be changed

and interpreted so as to best accomplish the objectives of the original

provision to the fullest extent allowed by law and the remaining provisions of

this Agreement will remain in full force and effect.

 

13.7                        Force

Majeure

 

Neither party shall be liable for any failure of

performance hereunder due to causes beyond its reasonable control, including,

but not limited to, acts of God,

 

18

 

fire, explosion, vandalism, cable cuts, storms or

other similar catastrophes; any law, order, regulation, direction, action or

request of the United States government, or of any other government, including

state and local governments having jurisdiction over either of the parties, or

of any department, agency, commission, court, bureau, corporation or other

instrumentality of any one or more of said governments, or of any civil or

military authority; national emergencies; acts of terrorism, insurrections,

riots, wars, or strikes, lockouts, work stoppages or other labor disputes or

difficulties.  Notwithstanding anything

to the contrary set forth herein, Client agrees that payment obligations for

Services provided hereunder shall not be subject to delay due to any event of

force majeure.

 

13.8                        Cooperation

 

Each party shall cooperate with the other party by

making available, as requested, information that is reasonably deemed necessary

to accomplish its obligations and responsibilities of a party hereunder.

 

13.9                        No

Third Party Beneficiaries

 

This Agreement inures to the benefit of e-centives and

Client only and no third party shall have any rights hereunder.  None of the provisions of this Agreement

shall apply or extend directly to the Client’s customers.

 

13.10                 Attorneys’

Fees

 

The prevailing party, as determined by a court or

arbitrator of competent jurisdiction, shall be entitled to recover its

reasonable attorneys’, witness, and other fees in any action to enforce or

interpret any part of this Agreement (including fees on any appeal).  All such fees referenced herein shall only

become payable after any action contemplated hereby becomes non-appealable.

 

13.11                 Entire

Agreement

 

This Agreement, including all Schedules, Attachments,

and Addenda, constitutes the entire agreement between the parties with respect

to the subject matter hereof and supersedes all prior or contemporaneous

agreements, written or oral.

 

13.12                 Governing

Law

 

This Agreement will be interpreted and construed in

accordance with the laws of the State of New York, without regard to the

conflict of law provisions thereof.

 

19

 

In Witness Whereof,

the parties have caused this Agreement to be executed by a duly authorized

representative as of the Effective Date first set forth above.

 

	

  [*]

  	

   

  	

   

  	

  E-CENTIVES,

  INC.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Name:

  	

   

  	

   

  	

  Name:

  	

   

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

   

  
	

  Date:

  	

   

  	

   

  	

  Date:

  	

   

  
											

 

Schedule

A:          Statement of Work 

Schedule

B:          Pricing 

Schedule

C:          Service Level Agreement 

Schedule

D:          Client Authorized Personnel 

Schedule

E:           Media Buying 

 

 

 

[*]

Certain confidential information contained in this document, marked by

brackets, has been omitted and filed separately with the Securities and

Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of

1934, as amended.

 

 

20

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