TERM SHEET
THIS TERM SHEET ("TERM SHEET") sets forth the basic terms of the Agreement
between Netgateway on the one hand, and xXxxxxxxx.xxx ("ICI") on the other
hand and is dated January 26, 1999 for reference purposes.
- EXCLUSIVITY. Netgateway in conjunction with its Xxxxxxxxxxxx.xxx
subsidiary (collectively, "Netgateway") will be ICI's exclusive electronic
commerce ("eCommerce") provider. The parties acknowledge that ICI has
relationships with credit card processors outside of the United States.
Transactions with such non-United States processors will not conflict with
this exclusivity clause.
- INITIATIVES. The relationship will initially be comprised of three
initiatives to be performed by Netgateway for or in conjunction with ICI and
will be embodied by such agreements as appropriate. The Initiatives will
include the following:
- XXXXXXXXXX.XXX INTERNET COMMERCE SOLUTION. Netgateway shall create
a new xXxxxxxxx.xxx Internet home page consistent with the pricing structure
set forth in this Term Sheet that ICI may elect to host at ICI's facility.
The home page will include a number of electronic links to various ICI
merchandise departments (i.e., "Cigar Bar", "CD2Ttrade") to be designed and
hosted by Netgateway and commerce enabled through its Internet Commerce
Center. Netgateway will design, host and manage up to 30 such departments
pursuant to the initial pricing structure set forth herein. The Internet
Commerce Center's capabilities will be made available to each department
and/or overall project, consisting of (1) advanced business reporting, (2)
web site design and development, (3) commerce server solutions, (4)
clearinghouse functions, including real time credit card processing through
ICI's merchant account (5) training and (6) help desk and technical support
for ICI (as opposed to ICI's clients). Netgateway has the right to display
its logos and appropriate "Powered by" language on the home page and
department sites.
- ICI STORESONLINE. In conjunction with the ICI Internet Commerce
Solution, ICI will resell StoresOnline storefronts to merchants who will be
linked to the ICI Internet Commerce Solution and may, at Netgateway's
discretion, be listed on the various electronic malls in the Netgateway
Online Mall Network ICI initially anticipates launching 1,000 - 1,200 such
storefronts. Netgateway will create and host each electronic storefront using
its standard format and content allowances. ICI and/or each individual
merchant will provide Netgateway the data required to create the storefronts.
If required, Netgateway will facilitate the process between third party
merchants and a United States credit card processor for the merchant to apply
for a credit card merchant account.
- PRICING AND REVENUE. The following pricing and revenue will apply;
- ICI will pay Netgateway an initial fee of twenty five thousand
dollars ($25,000) for the Initial development of the xXxxxxxxx.xxx Internet
Commerce Solution.
ICI will pay Netgateway an additional five hundred dollars ($500) maintenance
fee each month for the duration of the Agreement in exchange for maintenance
support for the ICI Internet Commerce Solution (not to exceed 8 hours per
month on a non-cumulative). ICI will also pay Netgateway a nominal fee (not
to exceed $1,500 per new department) for each new department launched
following the initial launch of the ICI Internet Commerce Solution.
- ICI will pay Netgateway the greater of fifty cents ($.50) or 2% of
the gross revenue of each transaction processed through the Internet Commerce
Center.
- ICI will pay Netgateway the greater of $150 or 50% of the gross
revenue ICI receives for setting up each ICI StoresOnline electronic
storefront. Netgateway will also receive a monthly service fee of $80 per
month from ICI for each active ICI StoresOnline electronic storefront. ICI
guarantees Netgateway a minimum of six months of service fees for each ICI
StoresOnline electronic storefront ($80 x 6 mos. = $480 per storefront
minimum to Netgateway).
- ICI and Netgateway shall split on a 50%-50% basis all third party
revenue generated on the ICI Internet Commerce Solution sites and links,
except for that revenue as specifically noted above and revenue to which ICI
is not a party. Examples of such third party revenue includes, but is not
limited to, banner advertising and sales of featured products from third
parties. ICI shall oversee the efforts of such sales and shall provide
Netgateway with appropriate third party documentation and a monthly
reconciliation. ICI shall require approval of any advertising and/or products
placed on the ICI Internet Commerce Solution site by Netgateway.
- In the event ICI requires additional development outside the scope
of this Term Sheet, Netgateway shall provide a programming development
allowance to ICI equal to 30% of the aggregate monthly revenues derived from
the ICI StoresOnline storefronts. A discounted hourly rate of $70 per hour
will be applied against this allowance. As an example, 1,000 ICI storefronts
would generate a monthly programming allowance of $24,000 (1,000 x $80 x
.30). Unused portions of the allowance will not cumulate from month to month.
All additional programming required by ICI beyond the monthly allowance will
be billed by Netgateway at $100 per hour.
- MISCELLANEOUS. The parties have discussed and outlined responsibilities
and will execute their respective tasks in as timely a manner as possible.
Both parties will use their best efforts to launch the ICI Internet Commerce
Solution by February 26, 1999. The parties have discussed that Netgateway
intends to independently market the Internet Commerce Center and StoresOnline
service package through various other channels and reseller relationships for
which ICI shall have no participation.
- TERM. The initial term of the Agreement shall be three years,
commencing upon the signing of the Term Sheet.
- PAYMENT. All services shall be paid it advance. The initial development
fees for the ICI Internet Commerce Solution and, maintenance fees for the
first three months shall be due upon signing of this term sheet and
nonrefundable upon receipt. The total amount due at signing is $26,500
($25,000 development fee + 3 mos. maintenance fee). All future monthly
maintenance fees will be due and payable at the beginning of each calendar
quarter for the following quarter. ICI shall pay the fee for each ICI
StoresOnline account monthly, one month in advance. All other fees payable by
ICI or its customers shall become due and payable within five business days
of receipt of the monthly invoice from Netgateway.
While the parties intend to replace this Term Sheet with a more format set of
documents, this Term Sheet is nonetheless a binding agreement between the
parties when signed by both of the parties in the spaces provided below. This
Term Sheet will govern the relationship between the parties until a more
formal set of documents is executed and will not in any way be affected by
the failure to complete such formal set of documents.
SCHEDULE A - ICI SCHEDULE AND PAYMENT FOR INITIATIVES
Development Phase I
Payment for Commencement, of Phase --
$15,000 ($30,000-$15,000 initial payment according to agreement) Due 4/28/99
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Affiliate System
Expected Completion June 1999
ICI StoresOnline Storebuilding Wizard
Expected Completion April 1999
Shopping Slide Show
Expected Completion June 1999
Development Phase II
Payment for Commencement of Phase -- $30,000 When Phase II begins
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Online Auction Site. (including support for Classifieds)
Expected Completion August 1999
Link to WINR/CMS
Expected Completion
Four weeks after WINR/CMS code is determined functional and bug free.
Foreign Language Translation.
3 English Foreign Malls
Expected Completion July 1999
Language 1
Expected Completion July 1999
Language 2
Expected Completion July 1999
Language 3
Expected Completion August 1999
Language 4
Expected Completion August 1999
Language 5
Expected Completion August 1999
ADDENDUM A
THIS ADDENDUM A ("ADDENDUM") is an addendum to the Term Sheet dated January
26, 1999 between Netgateway and xXxxxxxxx.xxx (the "Term Sheet") and is dated
March 5, 1999 for references purposes only. The Addendum modifies the terms
and conditions of the Term Sheet to the extent inconsistent therewith.
- ADDITIONAL INITIATIVES. The parties have agreed to extend the scope of the
agreement set forth in the Term Sheet to encompass five (5) additional
initiatives, which will be embodied, by such agreements as appropriate. The
Additional Initiatives will include the following:
- ONLINE AUCTION SITE. Netgateway shall develop and provide to ICI as
part of the eCommerce Services provided by Netgateway to ICI, a basic
online auction site to electronically market, sell and purchase
various goods and services. Both parties shall mutually agree upon
functionality and target launch date.
- SHOPPING SLIDE SHOW. Netgateway shall develop and provide to ICI as
part of the eCommerce Services provided by Netgateway to ICI, a
Shopping Slide Show. The Shopping Slide Show functionality will allow
visitors electronically browsing ICI merchandise departments to view
each department's merchandise images in a slide show setting. Visitors
may view the Shopping Slide Show on a pre-determined or
self-determined pace, allowing click-throughs from the current image
to an electronic order form.
- ICI STORESONLINE STOREBUILDING WIZARD. Netgateway shall develop and
provide to ICI as part of the eCommerce Services provided by
Netgateway to ICI, a Store building Wizard. The Store building Wizard
will allow merchants to create a standard ICI StoresOnline storefront
by submitting data in a template format. The Store building Wizard
will accommodate the importing of standard electronic images.
- FOREIGN LANGUAGE TRANSLATION. Netgateway shall translate the ICI
Internet Commerce Solution into five foreign languages to be
identified by ICI and three (3) English language malls for the United
Kingdom, Canada and Australia. Launch of each Foreign Language ICI
Internet Commerce Solution ("FLICI") shall trigger the completion of
the scope of work performed by Netgateway. ICI will be charged at the
standard rates outlined in this term sheet for any additional
translation services. The fees for stores located in such malls shall
be governed by the terms set forth in the Term Sheet.
- LINKING TO WINR/CMS SYSTEMS. ICI retained the services of Winners
Internet Network ("WINR") and Cyberlink Monetary Trust of Austria
("CMS") as ICI's exclusive international credit card processor.
Netgateway will assist WINR and OMS representatives in linking the
WINR/CMS system to the ICI Internet Commerce Solution in order to
facilitate international credit card transactions for orders placed
via the ICI Internet Commerce Solution and to facilitate all credit
card transactions in all FLICI Malls.
- MERCHANT ACCOUNT REFERRAL FEE. Netgateway shall pay ICI the lesser of 50%
of a finder's fee or $75 for any credit card merchant account opened by
Netgateway's U.S. merchant account provider generated from a merchant lead
provided to Netgateway by ICI.
- Netgateway shall receive 50% of all banner advertising revenue from banners
and links featured on the ICI Internet Commerce Solution sites, provided,
however, that Netgateway participates in the sale, creation or distribution
of the process that generates such revenue or provided that such
transaction runs through the ICC or Netgateway servers. This provision will
not apply to banner advertising or click through relationships solely
within the ICI Commerce Solution sites.
- Netgateway will make its XxxxxxXxxxxx.xxx storefronts available for
placement on the ICI Internet Commerce Solution sites free of monthly fees
for sixty days. Thereafter Netgateway will charge ICI its standard monthly
storefront fee for each storefront.
- ADDITIONAL PAYMENTS. ICI shall pay Netgateway for the Additional
Initiatives outlined in this Addendum A as follows:
- ICI shall pay Netgateway $60,000 for development costs as follows:
- $15,000 on the execution of this Addendum, which shall represent
a nonrefundable fee to be applied toward development;
- $45,000 prorated and due at the beginning of each new phase of
development as per payment schedule to be provided under separate
cover.
- In addition to the fixed development fee set forth above, ICI deliver
to Netgateway on or before March 31, 1999, 70,000 shares of the ICI
stock.
- Five thousand dollars ($5,000) for each additional FLICI translation.
- Four hundred dollars ($400) per month basic maintenance fee per active
FLICI, to include up to 8 hours of programming per mall on a monthly
basis. Unused time is not carried over from month to month.
- $64.00 per month for each ICI StoresOnline electronic storefront
translated and residing in a FLICI. Pricing applies to each of the
first three FLICI. Each additional FLICI is $40.00
- Affiliate System. Netgateway will build an affiliate system for ICI
pursuant to mutually agreed upon specifications. In general the system is
to provide ICI with the ability to have outside affiliate Web sites drive
prospective customers to the iChargeit Mall. Key features are anticipated
to be:
- Ability to manage affiliate mall products, categories, and pricing
- Affiliate program description
- Affiliate membership form
- Display programs details including commission schedule
- Maintain commission schedule
- Automatic or manual approval of new affiliates, email notification
- Tracking of "click-throughs" and purchases
- Online account reporting for ICI and affiliates
- RIGHTS TO ICI CUSTOMERS. It is anticipated that ICI may from time to time
introduce Netgateway to certain of its customers. The parties hereto agree
that such customers will remain the
customers of ICI and Netgateway agrees not to take any actions with
regard to such customers which would impact on the relationship of such
customers with ICI, without the express written consent of ICI.
- ACTION CALL. As part of the ICI's StoresOnline custom reseller
relationship with Netgateway, ICI's customers will receive Action Call
support services pursuant to Action Calls standard terms of agreement.
As part of this relationship, an 800 number will be set up for ICI,
which will have the ability to route technical support questions to
StoresOnline and sales inquiries to ICI.
- RIGHT OF FIRST REFUSAL. ICI shall give Netgateway a right of first
refusal on any design and development aspects for any product or
services not currently within Netgateway's environment, which ICI
desires to add to the ICI mall.
The Addendum will be subject to the same terms and conditions as the Term Sheet
dated January 26, 1999 between Netgateway and ICI. By signing below both
Netgateway and ICI agree to attach an incorporate this Addendum A into the Term
Sheet.
ACCEPTED AND AGREED:
XXxxxxxxx.xxx NETGATEWAY, INC.
By: /s/ Xxxxx Xxxxx /s/ Xxxxxx X. Xxxxxxx, Xx.
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Xxxxx Xxxxx Xxxxxx X. Xxxxxxx, Xx.
CEO President
