"CONFIDENTIAL TREATMENT REQUESTED. Confidential portions of this document were
redacted and filed separately with the Commission."
MEMORANDUM OF UNDERSTANDING
Dated: January 13, 1997
GENERAL:
This memorandum of understanding defines a business relationship in which Unisys
Payment Systems Division (PSD) and In Store Media Systems Inc. (ISMSI) will each
participate in the development of software/middleware, hardware, manufacturing,
installation and operation and support of Coupon Exchange Center (CEC) systems
worldwide. This proposal, if acceptable, will be replaced by a formal, written
business agreement.
This proposal is based upon what ISMSI believes to be reasonable assumptions and
once the CEC's are in place. gives PSD an opportunity to realize an ongoing and
potentially large revenue stream for PSD's efforts.
XXXXX and PSD, for participation in the relationship, will each receive revenues
as described in this document. ISMSI, for its participation, will receive all
revenues whatsoever generated through this business venture less the fees and
royalties due Unisys as described in Exhibit A.
The respective parties bring the following strengths to the business
relationship:
UNISYS ISMSI
Kiosk middleware development expertise Patent protection on CEC system
Kiosk Hardware development expertise Marketing staff to effectively market the CEC's
Kiosk Manufacturing expertise Marketing knowledge and expertise in couponing
Hardware regulatory compliance expertise and other related fields
Networking expertise Marketing staff to properly promote. market and
Database Design and Implementation expertise sell coupons and related advertising media
Global support infrastructure media through the CEC's.
Unisys name recognition Day to day general servicing of the CEC's
Windows NT Expertise Point of sale system interface expertise
Transaction Processing expertise Coupon reader technology
Coupon shredder technology
CEC design
Manufacturing capacity
MARKETING RIGHTS:
Product(s) designed by Unisys solely for ISMSI specifications would only be used
by ISMSI unless agreed by ISMSI.
DEVELOPMENT RIGHTS:
PSD is the sole provider of the middleware product to ISMSI unless agreed
otherwise by PSD.
INITIAL MIDDLEWARE PRODUCT:
Phase 1 of this business relationship will be the development of an initial
working product, Beta Test, and installation of the initial 25 CEC's to verify
proof of concept. Subsequent phases are to be defined.
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
Unisys agrees to provide, at cost, resources and expertise to complete its
portion of the Phase 1 deliverable(s) at defined in Exhibit B. A rough estimate
of the costs for the initial working product and 2-4 Beta Test sites in the US
are estimated at $620,000, with any over-run capped at 10%. This preliminary
estimate will be finalized at the sign-off of the requirements definition, which
is expected to be received by Unisys in mid January. It is further agreed that
over-runs above 10% may be negotiated depending on circumstance.
ISMSI agrees to provide resources and expertise to complete its portion of the
Phase 1 deliverable(s) as defined in Exhibit B. In addition. ISMSI will provide
monthly the funds to cover PSD cost for the Phase 1 deliverables as defined in
Exhibit B.
MIDDLEWARE SOFTWARE SUPPORT:
PSD agrees to provide the local field geography teams hot line, bug fixes,
patches, and assistance required to support the Middleware product developed by
PSD. In addition. PSD will provide minor middleware enhancements to keep the
product current. PSD will fund the aforementioned support and enhancements via
royalty revenues paid to PSD by ISMSI. This effort will be capped at 12% of such
revenues.
FUTURE MIDDLEWARE PRODUCT:
New standard middleware products, non-standard middleware products, or custom
middleware products will be developed and funded based on a mutually agreed
business case.
INITIAL HARDWARE PRODUCT:
PSD will provide ISMSI a proposal/hardware specification regarding the
utilization of Unisys hardware technology within the CEC's/Kiosks by February 1,
1997, for consideration of both parties to be integrated into the solution.
FIELD MAINTENANCE SUPPORT:
Unisys will provide ISMSI a proposal regarding field hardware maintenance of the
CEC/Kiosk at the request of ISMSI.
DEFAULT:
If either party should be in default with respect to the business plans and/or
deliverables, and the other party elects to dissolve this business relationship.
the other party will so notify, in writing, the party in default. The defaulting
party shall have 60 days to cure such default or provide a mutually acceptable
plan to cure.
TERMINATION FOR DEFAULT:
In the event the default(s) is not cured, or a mutually acceptable plan to cure
is not received within the specified time, then the non-defaulting party shall
have the right to terminate this agreement. In the event of [*...*] provided
that a [*...*] in good faith.
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
TERM OF AGREEMENT:
The initial term of this agreement is for a period of 5 years. This agreement
will automatically be extended for an additional 12 months at the end of the
initial term, and annually thereafter unless terminated in writing by either
party 90 days prior to expiration date.
DEFINITIONS:
In$taCa$h Coupon: Any coupon distributed throughout the system that gives the
shopper an "on the spot" rebate.
Free Standing Insert Coupon: Any non-In$taCa$h Coupon.
Electronic Coupon: Any "paperless" coupon distributed throughout the system.
Redeemed Coupon: Any In$taCa$h Coupon, Free Standing Insert Coupon or Electronic
Coupon read, shredded, or processed by the system and billed to the
Manufacturer.
Customer Service Station: A workstation to be utilized by the consumer, having a
minimum configuration of a PC, display, card reader, scanner/shredder, printer,
and necessary software/middleware.
CEC: A Kiosk containing 1-3 Customer Service Stations, any necessary peripherals
for the integrated solution, including the point of sale coupon shredder and
check writers, Kiosk server, networking and software/middleware.
POD: A geographic marketing area containing a host computer linking 1-25 Kiosks.
EXPRESSION OF INTENT:
This document is only an expression of the general terms which might form the
basis for a definitive agreement to be entered into between the parties. This
document should, in no way, be construed as a binding agreement between the
parties. If a definitive agreement incorporating the terms of this document is
not completed. for whatever reason, neither party shall have any liability to
the other. The exception to this being purchase orders provided between the
companies to cover the development costs while the final agreement is being
finalized.
The target date for a signed contract is February 15, 1997.
AGREED:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxxx, Xx.
------------------------- ---------------------------
Xxxxxxx X. Xxxxxx 1/15/97 Xxxxxxx Xxxxxxx, Xx.
V.P. and General Manager President/CEO
Payment Systems Division In Store Media Systems, Inc.
Xxxxxx Xxxxxxxxxxx
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
EXHIBIT A
---------
Royalty and Fee Structure
Number of Kiosks 1-250 251-720 000-0000 0000 & Up
---------------- ----- ------- -------- ---------
Annual License Fee per Kiosk
With Kiosks Having:
One Customer Service Station $1,000 $ 900 $ 800 $ 600
Two Customer Service Stations 2,500 2,250 2,000 1,500
Three Customer Service Stations 5,000 4,500 4,000 3,000
Royalty: Per Redeemed In$taCa$h
Coupon .015 .015 .015 .015
Royalty: per Redeemed Free Standing
Insert Coupon .005 .005 .005 .005
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
Based on Unisys's understanding of the proposed CEC system, the following
is the proposed preliminary division of responsibility. This is dependent on an
agreed requirements definition and a final division of responsibility.
PHASE 1 DELIVERABLES
DEVELOPMENT
------------------------------------------------------------------------------------------------------------------------
AREA UNISYS (INCLUDED IN PRELIMINARY QUOTE) ISMSI
------------------------------------------------------------------------------------------------------------------------
POD All database control excluding reports and user interface Database reports and user interface
Kiosk Host All software excluding Point of Sale monitor Point of Sale monitor
All hardware development
Regulatory Compliance
Checkout line All software in Kiosk Host controlling the checkout line All hardware development
Maintenance routines Regulatory Compliance
Customer Kiosk hardware drivers (Active X) Customer Station display program
Station Maintenance program All hardware development
Regulatory Compliance
Process All software and specifications under source safe revision ISMSI software delivered to Unisys
BETA TEST - (2-4 BETA TEST SITES EACH WITH A CEC KIOSK HOST AND 3 OR MORE CUSTOMER
STATIONS)
UNISYS (2 INCLUDED IN PRELIMINARY QUOTE) ISMSI
--------------------------------------------------------------------------------------------
Install Software at site Site Preparation
Install POD software Install ISMSI software
Install hardware at site
Support software on site. Support software and hardware on site
Train store personnel
Early customer documentation
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
ROLLOUT OF 25 LOCATIONS
-------------------------------------------------------------------------------------------------------------------------
UNISYS (NOT INCLUDED IN PRELIMINARY QUOTE) ISMSI
-------------------------------------------------------------------------------------------------------------------------
Remote support of 23 more sites - travel if required Site Preparation of 23 more sites
Customer/Support Field Manual Documentation Install 23 more sites providing remove HW & SW Support -
Travel if required
Customer/Support training
User documentation
ON-GOING SUPPORT
-------------------------------------------------------------------------------------------------------------------------
UNISYS (NOT INCLUDED IN PRELIMINARY QUOTE) ISMSI
-------------------------------------------------------------------------------------------------------------------------
Second Level Phone support Installations - hardware and software
Software Support for all software developed by Unisys Software Support for all software developed by ISMSI
Software distribution update installations
On-site routine maintenance
First Level phone maintenance
"Minor" enhancements within support allocation On-site repair/swap out and spares inventory
"Major" enhancements quoted as requested POD staff training
Depot Maintenance of ISMSI hardware
Fly and Fix Hardware support
Depot hardware repair center training
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
The following is a preliminary set of Milestone interdependencies required to
support Unisys development activities in concert with the aboe defined
responsibilities:
PHASE 1 MILESTONES
WHO WHAT WHEN
----------------------------------------------------------------------------------------------------------------------------
ISMSI ISMSI provides final phase 1 requirements definition (functional specification revision 2?) [*...*]
UNISYS Unisys to evaluate final requirements and verify schedules and finalize quotation [*...*]
JOINT Xxx Xxxxxx to visit Plymouth for creation of POD SQL database schema and review of [*...*]
functional specification and architecture.
UNISYS Unisys provides specifications for key software interfaces [*...*]
ISMSI The following [*...*] provided to Unisys [*...*]
[*...*]
[*...*]
[*...*]
(Note: the above can be [*...*])
UNISYS Unisys provides [*...*] to ISMSI [*...*] [*...*]
UNISYS Unisys provides [*...*] [*...*]
UNISYS Unisys provides [*...*] ISMSI [*...*] [*...*]
JOINT Phase 1 Development complete, integration with ISMSI components [*...*]
JOINT Beta Test [*...*]
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
Based on Unisys's understanding of the proposed CEC system, the following is the
proposed preliminary division of responsibility. This is dependent on an agreed
hardware specification and a final decision of responsibility expected to be
approved by 3/31/97.
PHASE 1 DELIVERABLES
DEVELOPMENT
AREA UNISYS (INCLUDED IN PRELIMINARY QUOTE) ISMSI LAKESHORE
------------------------------------------------------------------------------------------------------------------------------------
Customer Station Customer Station Hardware Design. Shredder/scanner hardware
Manufacture and Certifications design and manufacture
CEC Packaging design and manufacture
Integration and final test of
the Customer Stations and
Scanner/shredder.
CS / CW Hardware design Packaging design, integration,
and manufacture.
BETA TEST - (2-4 BETA TEST SITES EACH WITH A CEC KIOSK HOST AND 3 OR MORE CUSTOMER STATIONS)
------------------------------------------------------------------------------------------------------------------------------------
UNISYS (4 INCLUDED IN PRELIMINARY QUOTE) ISMSI LAKESHORE
Site preparation
Support install Customer Stations at site Install hardware at site and wire store Support install of CEC and CS/CW's
at site
Support Customer Station hardware on site Support software and hardware on site Support CEC and CS/CW hardware
Train store personnel on site
Early customer documentation
ROLLOUT OF 25 LOCATIONS
------------------------------------------------------------------------------------------------------------------------------------
UNISYS (NOT INCLUDED IN PRELIMINARY QUOTE) ISMSI LAKESHORE
------------------------------------------------------------------------------------------------------------------------------------
Manufacture and deliver to Lakeshore 25 3X Manufacture and deliver to ISMSI 25
Customer stations for integration. Deliver complete CEC and CS/CW spare parts.
configurations.
Remote support of 23 more sites - travel if Site preparation of 23 more sites Remote support of 23 more sites -
required travel if required
Customer/Support Field Manual Documentation Install 23 more sites providing remote Customer/Support Field Manual
HW & SW Support - Travel if required Documentation
Customer/Support training
User documentation
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
The following is a preliminary set of Milestone interdependencies required to
support Unisys development activities in concert with the above defined
responsibilities.
PHASE 1 MILESTONES
WHO WHAT WHEN
-----------------------------------------------------------------------------------------------
JOINT DESIGN REVIEW AT LAKESHORE [*...*]
ISMSI COMPONENT HARDWARE FOR SOFTWARE DEVELOPMENT [*...*]
JOINT DESIGN REVIEW AT PLYMOUTH [*...*]
ISMSI APPROVE HARDWARE MOU [*...*]
LAKESHORE LAKESHORE STARTS TOP + BOTTOM ROUGH DRAWINGS [*...*]
UNISYS LOWER SECTION FIRST FRAMES MADE [*...*]
UNISYS PROTOTYPE FRAME TO LAKESHORE [*...*]
ISMSI HARDWARE SPECIFICATION APPROVED [*...*]
LAKESHORE START TOOLING, AND UPPER SECTION DETAILED DRAWINGS [*...*]
UNISYS FIRM DESIGN FOR LAKESHORE [*...*]
UNISYS FRONTAL FIT COMPONENTS DESIGNED [*...*]
LAKESHORE UPPER SECTION SKELETON [*...*]
JOINT BEGIN INTEGRATION AT LAKESHORE [*...*]
LAKESHORE ENCLOSED UNITS (2) AT PLYMOUTH FOR CERTIFICATION [*...*]
UNISYS CERTIFICATION TESTING COMPLETE [*...*]
JOINT FIRST 7 UNITS BUILT [*...*]
JOINT START BETA TEST [*...*]
[*...*] Confidential material redacted and filed separately with the Commission.
"CONFIDENTIAL TREATMENT REQUESTED"
ON-GOING SUPPORT
------------------------------------------------------------------------------------------------------------------------------------
UNISYS (NOT INCLUDED IN PRELIMINARY QUOTE) ISMSI LAKESHORE
------------------------------------------------------------------------------------------------------------------------------------
Second Level Phone Support Installations - hardware and software Second Level Phone Support
On-site repair/swap out and spares inventory
Enhancements quoted as requested POD staff training Enhancements quoted as requested
Depot Maintenance of ISMSI hardware Depot Maintenance of ISMSI hardware
Fly and Fix Hardware support Fly and Fix
Depot hardware repair center training
[*...*] Confidential material redacted and filed separately with the Commission.
