Sent by Facsimile
-----------------
August 17, 1998
Mr. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Pivot Rules
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Patricof Enterprises-Pivot Rules
----------------------------------------
Dear ▇▇▇▇▇▇▇▇:
This letter agreement (the "Agreement") is entered into between Pivot
Rules, Inc. ("Pivot Rules") and ▇▇▇▇▇▇▇ Patricof Enterprises ("KPE") in order
to effect the launch of ▇▇▇▇▇▇▇.▇▇▇ in the most expeditious and cost-effective
manner. The parties agree that this agreement supplements that certain
agreement (the "Initial Agreement") dated as of May 13, 1998 between Pivot
Rules and KPE.
1) Site Development and Project Management: KPE shall provide continued
full time project management and site development through the date of
the launch. KPE agrees that for so long as it is providing site
development services under this Agreement that it shall make the
services of ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇ available to
Pivot Rules. Except for the services to be provided pursuant to
paragraph 2 below, the site development and project management costs
will be billed on a time basis at the following rates:
o VP of Production (▇▇▇) $110/hour
o Producer (▇▇▇▇▇) $75/hour
o Graphic Designer (▇▇▇▇) $60/hour
o HTML Engineer $50/hour
As Producer, ▇▇▇▇▇ ▇▇▇▇ will track hours and provide Pivot Rules with
a bi-weekly summary and corresponding invoice. KPE will begin tracking
hours spent for new features on Tuesday, August 18.
KPE will be paid for all work performed under this agreement in the
form of Pivot Rules common stock based on a per share value of Two (2)
Dollars. The parties agree that the shares due KPE under this
agreement shall be delivered on the sixtieth day following the date on
which the site is launched to the public and shall otherwise be
subject to the paragraph 5 of the Initial Agreement.
[letterhead of ▇▇▇▇▇▇▇ Patricof Enterprises]
KPE agrees that all work done by its employees hereunder, our under
the initial agreement, shall include a sixty (60) day warranty from
the time that such work is incorporated in the site and made available
to the public. In the event that Pivot Rules finds any bug or error in
any of the code delivered by KPE within such sixty (60) day period,
KPE shall correct such bug or error and redeliver the source and
object code as quickly as possible and at no additional cost to Pivot
Rules.
KPE agrees to fixes bugs in work previously done by its employees,
prior to launch at no additional cost to Pivot Rules.
2) Programming: To increase the speed of development, KPE shall provide
two senior programmers for the continued backend development of the
site. KPE will utilize the same billing rates as Evolution, and the
cost will be based on feature deliverables, not time. The features
that KPE will work on will be mutually agreed upon. KPE will have the
same terms and conditions as Evolution in regards to overages, time
deadlines, and warranties for this work.
3) The following is agreed to in regards to Phase 2:
o Both parties will, on a best efforts basis, commence Phase 2
development within 4 weeks of launch.
o KPE will hold the original team of Ron, Chuck, and ▇▇▇▇ available
for Phase 2 work.
o KPE agrees that Evolution will be part of Phase 2, and that
their work will be negotiated, managed, and billed by KPE on
a cost basis.
o All Phase 2 work will be priced by KPE at prevailing market
prices.
4) Pivot guarantees that KPE will be the lead site developer and project
managers for new functionality to be added to the site for a period of
four months from the date work is commenced on Phase 2. There are no
guarantees made to KPE regarding the scope of Phase 2. Notwithstanding
the foregoing, nothing contained herein shall limit Pivot Rules right
to hire programmers and manage the development of the site with its
own personnel.
5) The attached language addressing "Work for Hire" ,"Confidentiality and
Exclusivity" and promotion and site credit is attached to this
Agreement and incorporated herein and in the Initial Agreement by
reference.
Your counter-signature below indicates your acceptance of these terms.
▇▇▇▇▇▇▇ PATRICOF ENTERPRISES PIVOT RULES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------- ----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President - Executive Vice President
Business Development
WORK FOR HIRE
The following language concerning "work for hire" is added to the
Agreement and the Initial Agreement:
"KPE hereby acknowledges that all of the deliverables and any
other documentation, materials or intellectual property provided
by KPE and its subcontractors to Pivot Rules (collectively
the "Work Product") are works which have been specifically
commissioned by Pivot Rules and are "works for hire" for Pivot
Rules and Pivot Rules shall own all rights, title and interest
therein. To the extent that title to any work product does not ,
by operation of law, vest in Pivot Rules or any of the Work
Product is not considered "works made for hire", all right, title
and interest therein are hereby irrevocably assigned to Pivot
Rules. KPE agrees to give Pivot Rules and any person designated
by Pivot Rules reasonable assistance required to perfect Pivot
Rules rights in and to the Work Product.
Pivot Rules acknowledges that KPE asserts, owns, holds a license
to use and sublicense, or has all required permissions or
consents, to use certain pre-existing development tools,
routines, subroutines and other programs, data and materials not
included in the Work Product that KPE may include on the web site
developed under this agreement."
CONFIDENTIALITY AND EXCLUSIVITY
The following language concerning "confidentiality" and "exclusivity" is
added to the Agreement and the Initial Agreement:
(a) All information concerning Pivot Rules' Web site, customer list,
vendor lists, sales activity, costing model, past, present and future
business, fulfillment business activities and business and promotion plans
and methods, together with all names, addresses and other customer
information relating to Pivot Rules or Pivot Rules's customers
(collectively, "Proprietary Information") are the unique and valuable
property of Pivot Rules. Unless compelled by law or directed by Pivot
Rules in writing, KPE shall not use such Proprietary Information for any
purpose other than the performance of its duties and obligation under the
Contract. KPE shall take all reasonable and customary precautions to
ensure that all Proprietary Information is protected from unauthorized
disclosure to any party not required to have access to such information.
Notwithstanding the foregoing, KPE's shall have the right in its
promotional and/or marketing materials to describe generally the work it
has performed for Pivot Rules. The terms contained in this section shall
survive the termination of the Contract.
(b) KPE acknowledges that Pivot Rules is a publicly traded company and
that the unauthorized disclosure of Pivot Rules' confidential information
could have a material adverse affect. KPE shall take all appropriate
precautions necessary to prevent its officers, directors, employees and
agents from directly or indirectly trading on any of Pivot Rules's
non-public information.
(c) KPE agrees that for a period of nine (9) months from the date
Pivot Rules' Web site is launched to the public it shall not, nor shall
any of its affiliates, officers, directors, employees, or agents render
any service to, or own any interest in, any Competitive Business. For
purposes of this Agreement, a "Competitive Business" shall mean any of the
following:
(i) a person, corporation, partnership or other entity which
sells or has plans to sell more than one brand of name
brand apparel, fashion accessories, or home furnishings
via the Internet at a discount of the manufacturer's or
designer's suggested retail price; or
(ii) May Department Stores, Federated Department Stores,
▇▇▇▇▇▇▇▇'▇ Inc. (other than Saks Fifth Avenue but not
Saks Off Fifth), Mercantile Department Stores, ▇▇▇▇▇▇▇'▇
Inc., Nordstrom, Inc., ▇▇▇▇▇▇-▇▇▇▇▇▇ Corp., Spiegel Inc.,
and any subsidiary or division of, or any successor to,
any of the foregoing companies.
Without limiting the foregoing, KPE shall have the right to render
services to any full price department stores (including full price stores
which on occasion run promotional sales at discounts to retail) not listed
in clause (ii) above provided that such services are not in connection
with any off-price division or subsidiary of such department store. KPE
agrees that in the event of a breach or threatened breach of this
paragraph, Pivot Rules shall have no adequate remedy in money damages and,
accordingly, shall be entitled to appropriate injunctive relief against
such breach or threatened breach. Notwithstanding the foregoing, the
ownership of less than five percent (5%) of any publicly traded company
engaged in a Competitive Business shall not constitute a violation of this
section. Except as specifically provided in this section, KPE shall not be
restricted hereunder from furnishing any type of service to any person or
entity.
(d) For so long as KPE shall be bound by the provisions of this
section above, Pivot Rules shall:
(i) maintain on its Web site a link to KPE's Web site and
KPE's corporate logo;
(ii) include a reference to KPE in all press material in which
Pivot Rules discusses the development of the Web site;
and
(iii) include a discussion of KPE's development of the Web site
in all press kits which Pivot Rules distributes.
