Exhibit 10.16
FULFILLMENT AGREEMENT
This FULFILLMENT AGREEMENT, including all schedules hereto (the
"Agreement") is entered into this 8th day of July, 1999 and is by and between
Taymark, with its principal place of business at 0000 Xxxxx Xxxx Xxxxxxx, Xxxxx
Xxxx Xxxx Xxxxxxxxx, 00000 ("Taymark"), a division of Xxxxxx Corporation, a
Minnesota Corporation, and iParty Corp., a Delaware corporation with its
principal place of business at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("iParty").
WHEREAS, Taymark is, among other things, in the business of the
stocking, sale and distribution of party goods and related merchandise to
commercial customers; and
WHEREAS, iParty is the owner and operator of the iParty Site (as
defined herein) on which it, among other things, intends to sell Products (as
defined herein) to retail customers; and
WHEREAS, iParty desires to engage Taymark, and Taymark wishes to be
engaged by iParty, for the purpose of fulfilling purchase orders placed on the
iParty Site for Products on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
As used herein the following terms shall have the following meanings:
"Adjustments" shall mean the net dollar amount of any increase or
decrease in the dollar amount of any Order due to changes in the nature
of the Order or refunds, chargebacks, service charges, credits,
returns, and discounts with respect to such Order.
"Agreement" shall mean this Fulfillment Agreement and all schedules and
exhibits hereto, as such may be amended from time to time in accordance
with the terms hereof.
"Business Day" shall mean Monday thru Friday, excluding holidays or
days recognized as holidays by Taymark.
"Customer" shall mean any person accessing or navigating the iParty
Site or calling the iParty Number.
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"Customer Information" shall mean any information submitted by or
collected from a Customer while such Customer is accessing or
navigating the iParty Site or inquiring about or placing an Order on
the iParty Site or by calling the iParty Number.
"Common Stock" shall mean the common stock, par value $.001 per share,
of iParty.
"Force Majeure" shall mean earthquake, flood, fire, storm, natural
disaster, act of God, war, armed conflict, labor strike, lockout, or
boycott that results in the cessation, interruption or delay in the
performance of a party's obligations hereunder.
"Intellectual Property Rights" shall mean any and all patent,
trademark, service xxxx, copyright, trade secret or other intellectual
property or similar rights or interest.
"iParty" shall mean iParty Corp., a Delaware corporation with its
principal place of business at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000
"iParty Number" shall mean the 1-800-4-iparty (0-000-000-0000)
toll-free telephone number established by iParty and/or any additional
or successor numbers.
"iParty Site" shall mean the World Wide Web site located at URL address
"xxxx://xxx.xxxxxx.xxx" and/or any additional or successor sites
operated by iParty.
"Order" shall mean any order for Products placed by a Customer on the
iParty Site or by calling the iParty Number.
"Order Information" shall mean that portion of the Customer Information
which is required by Taymark to process Orders in accordance with the
terms hereof, including, without limitation, any payment information or
instructions provided by a Customer.
"Products" shall mean all party related items and merchandise contained
in all of the catalogs published by Taymark as such catalogs may be
amended and updated from time to time and such other items and
merchandise as the parties may from time to time agree to sell
hereunder.
"Purchasing Volumes" shall mean gross dollar amount of orders placed on
the iParty Site or through the iParty Number in any given calender year
for Products shipped by Taymark to Customers pursuant to the terms of
this Agreement, plus or minus any Adjustments. Where used herein as a
benchmark amount for any given calendar year, the Purchasing Volumes
shall be as follows:
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Calendar Year Dollar Amount
1999 $150,000
2000 $2,500,000
2001 $7,500,000
Any Subsequent An increase of 10% from
Year the previous required
dollar amount for the
previous year
"Xxxxxx Corporation" shall mean Xxxxxx Corporation, a Minnesota
corporation with its principal executive offices at 0000 Xxx Xxxxx
Xxxxx, Xxxxx Xxxxxxx, Xxxxxxxxx 00000, and all subsidiaries and
division thereof.
"Taymark" shall mean that division of Xxxxxx Corporation which is
providing the fulfillment services hereunder, with offices at 0000
Xxxxx Xxxx Xxxxxxx, Xxxxx Xxxx Xxxx Xxxxxxxxx, 00000.
2. TERM.
2.1 INITIAL TERM. This Agreement shall be effective as of the date
hereof and shall terminate (unless terminated sooner pursuant to the terms of
Section 11 hereof) on December 31, 2002.
2.2 OPTIONAL RENEWAL. iParty shall have the option to renew this
Agreement for additional terms of one (1) year if iParty meets or exceeds the
Purchasing Volumes for the calender year in which this Agreement would otherwise
expire.
2.3 RIGHT OF FIRST REFUSAL. Upon expiration or termination of this
agreement, other than a termination by iParty pursuant to Section 11.1 hereof,
iParty shall not enter into an agreement for party related merchandise
fulfillment services with a third-party until and unless iParty has, in writing,
offered Taymark, the opportunity to provide such services to iParty on identical
terms and conditions as such third-party and further provided Taymark with ten
(10) Business Days to accept or reject said offer.
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3. BASIC BUSINESS TERMS.
3.1 BASIC AGREEMENT. iParty and Taymark shall develop an information
exchange system (the "Information Exchange System") for the purpose of
conducting Order transactions via the iParty Site and transmitting to each other
Customer Information, Order Information and such other information as is
necessary and required pursuant to the terms of this Agreement. Customers will
place Orders on the iParty Site or via the iParty Number. Order Information for
Orders placed on the iParty Site will be transmitted to Taymark via the
Information Exchange System. Order Information for Orders placed via the iParty
Number will be collected directly by Taymark. iParty will be responsible for
approving the credit of customers and shall pay for all orders fulfilled by
Taymark without deduction for any uncollected accounts. After such approval has
been communicated to Taymark, Taymark will be responsible for picking, packing
and shipping Orders directly to Customers in accordance with the terms of this
Agreement. Customer Information collected by Taymark via the iParty Number shall
be transmitted to iParty via the Information Exchange System. Nothing contained
in this Agreement shall prohibit iParty from fulfilling Orders directly or
through a third-party. Taymark and iParty hereby accept such terms and agree to
process and fulfill such Orders as set forth herein.
3.2 INTERNET FULFILLMENT.
3.2.1 Xxxxxx Corporation shall not, directly or indirectly,
utilizing any of the facilities operated by its Taymark division (including, but
not limited to the White Bear Parkway facility identified in the preamble
hereto) or any of the inventory contained in any such facilities, provide
"Fulfillment Services" (as defined below) to enable any third-party entity to
sell party related items or merchandise via the Internet or the World Wide Web
(or any successors thereto); provided, however, that Xxxxxx Corporation may use
its Taymark Division and related facilities to provided Fulfillment Services to
any entity that is an "Affiliated Corporation" (as defined below), division or
subsidiary of Xxxxxx Corporation. For the purposes of this Section 3.2.1 a
corporation is an "Affiliated Corporation" if more than 50 percent of its
capital stock is in common ownership with the stock of Xxxxxx Corporation. For
the purposes of Section 3.2, "Fulfillment Services" shall include the receipt of
individual retail customer orders for Products via telephone, e-mail (or other
electronic means), the picking, packing and shipping of those orders to retail
consumers, and providing customer service in connection with such orders.
"Fulfillment Services" shall not include the mere sale of Products to
third-parties who may elect to resell such Products on the Internet or the World
Wide Web (or any successors thereto). Nothing contained in this Agreement shall
prohibit or prevent Xxxxxx Corporation from providing Fulfillment Services to
third-parties using any of its facilities, divisions, subsidiaries or Affiliated
Corporations other than Taymark and the facilities operated by Taymark.
3.2.2 The terms of Section 3.2.1 shall apply for the term of
this Agreement, as such may be extended in accordance with the provisions
hereof. Notwithstanding the foregoing, Xxxxxx Corporation and/or Taymark may use
the Taymark facilities to provide Fulfillment
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Services directly or to any third-party entity, on 30 days prior written notice
to iParty, in the event that iParty has not met the Purchasing Volume for the
previous calendar year; provided, however; that if iParty is within 25 percent
of such Purchasing Volume, and within such 30 day period makes a cash payment to
Taymark in an amount equal to difference between the Purchasing Volume for such
year and the actual dollar volume of Orders for such year, then the prohibitions
contained in Section 3.2.1 shall remain in full force and effect.
3.3 COMPLIANCE. The parties will agree to implement such reasonable
practices and procedures as are necessary to assure the compliance of the
parties with the terms and conditions of this Agreement.
3.4 SET UP. The parties will provide database and technical assistance
to one another for the testing of the Information Exchange System.
3.5 CURRENT iPARTY INVENTORY. Within thirty (30) days of the date
hereof, Taymark shall purchase from iParty, at a price equal to iParty's cost
for such items, and transport to and store in its warehouse, all inventory owned
by iParty and located at Michael's Distribution Services in Baltimore, Maryland;
provided, however, that Taymark shall not be required to pay in excess of
$100,000 pursuant to this Section 3.5; and provided, further, that Taymark shall
not be required to purchase any inventory which, in its reasonable opinion, is
not in saleable condition. iParty will pay any charges or costs imposed by
Michael's Distribution Services in connection with making the inventory
available for transport.
3.6 CATALOG. Taymark and iParty shall prepare a private label iParty
catalog which features certain items available on the iParty Site. Taymark's
responsibilities shall include photography, layout and design of the catalog.
iParty shall be responsible for the cost of paper, printing, mailing and all
other costs associated with the catalogs. The parties will work together to
achieve cost efficiencies in the production and distribution of the catalogs.
3.7 CUSTOMER SERVICE. Taymark shall staff a department to provide
customer service for iParty Customers. Taymark shall initially respond to
Customer inquiries via the iParty Number regarding Products and the status of
shipped Orders and, by the end of 1999 shall implement a system to reply to such
inquiries via e-mail as well. In performing these services Taymark shall
identify itself to Customers as "iParty". Taymark shall correspond with
Customers in a polite and courteous manner in an accordance with the same
standards Taymark applies to those customer service representatives who service
Taymark's own business. Taymark shall respond to all inquiries as promptly as is
reasonably possible. By the end of 1999 iParty shall implement a system to allow
for Customers to check the status of shipped Orders via the iParty Site.
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4. ORDER PROCEDURE.
4.1 ORDER RECEIPT. Orders will be received by Taymark as follows:
4.1.1 ORDERS FROM iPARTY SITE. Order Information for Orders
placed on the iParty Site will be transmitted to Taymark via the Information
Exchange System. Such Orders will be deemed received by Taymark at the time of
electronic acknowledgment by Taymark of receipt of the electronic transmission
of such Orders.
4.1.2 TELEPHONE ORDERS. Taymark shall receive and process
Orders placed via the iParty Number. Taymark shall transmit such Customer
Information to iParty via the Information Exchange System. Such Orders shall be
deemed received at the time Taymark receives credit approval from iParty.
4.2 FULFILLMENT. The following sets forth iParty's service requirements
from Taymark's fulfillment and warehouse operational systems:
4.2.1 STANDARD. "Standard Orders" means Orders shipped
domestically and internationally via carriers other than overnight carriers and
two-day carriers. Provided that Taymark has received credit approval from iParty
by 12:00 noon Central Time on the day of receipt of a Standard Order, Taymark
will ship such Standard Order no later than 6:00 p.m., Central Time, the second
Business Day following receipt by Taymark of credit approval for such Standard
Order. Standard Orders for which credit approval is received after 12:00 Noon,
Central Time on any Business Day, or at any time on any day which is not a
Business Day, will be shipped no later than 6:00 p.m., Central Time the third
Business Day following receipt of credit approval. Commencing six months from
the date hereof, and provided iParty maintains the Purchasing Volume, Taymark
will use its reasonable efforts to ship all Standard Orders within one Business
Day of receipt by Taymark of each such credit approval.
4.2.2 PRIORITY. "Priority Orders" means Orders shipped
domestically or internationally via overnight or two-day carrier. Priority
Orders for which credit approval has been received by Taymark on any Business
Day before 12:00 Noon, Central Time will be shipped on the same day. Priority
Orders for which credit approval is received after 12:00 Noon, Central Time on
any Business Day, or at any time on any day which is not a Business Day, will be
shipped on the following Business Day.
4.2.3 BACK-ORDERS. iParty may elect to have Taymark hold an
Order that has one or more items out of stock until it is completely filled by
so indicating in the Information Exchange System transmission relating to such
Order. iParty may inform Taymark from time to time of the number of days (the
"Back-Order Period"), that Taymark is to hold such Orders before shipping the
available Products and canceling the out of stock Products. In the event that
all Products included in an Order are out stock, Taymark will hold the Order for
the full Back-Order Period before canceling the Order (subject to prior
cancellation of such Order by iParty).
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4.2.4 INVENTORY. Taymark will provide iParty with inventory
updates, via the Information Exchange System, not less than three times per day,
in an electronic format mutually agreed to by the parties hereto. These updates
shall occur during Taymark business hours (which are 7:00 AM to 6:00 PM Central
Time) and anytime that Taymark updates its inventory database and shall be
spaced in reasonable intervals so as to informative and useful to iParty. iParty
Customers will have the option of canceling an Order that can not be filled, or
choosing to elect an option of waiting no longer than the Back-Order Period for
the Order to be filled.
4.2.5 LABELS; PACKING SLIPS. Subject to iParty's prior written
approval, Taymark will create (a) customer mailing labels and packing slips
identifying iParty for all Orders shipped pursuant to this Agreement and (b)
labels with the iParty logo to be applied to the exterior of all packages
shipped pursuant to this Agreement.
4.2.6 PICK, PACK, AND SHIP. Taymark will put forward its best
efforts to maintain its current high level of standards of service and quality
in all of its dealings with iParty Customers. Taymark will use its best efforts
to minimize human error in picking, packing and shipping Orders. Taymark will
strive for a high quality package presentation for all Orders shipped to iParty
Customers hereunder. Taymark shall not be in breach of this Agreement so long as
the service and quality provided to Customers of iParty meets the same standards
that Taymark applies to the customers of Taymark.
4.2.7 PAYMENTS TO TAYMARK; PRICING. Taymark shall invoice
weekly, in a format mutually agreeable to iParty and Taymark, iParty for the
Orders shipped for such week, including shipping costs, plus or minus the net
dollar amount of any Adjustments realized in such month. Taymark represents and
warrants to iParty that all times the prices charged to iParty for Products
shall be discounted by not less than 20 percent from the then lowest current
retail price at which such Products are sold by Taymark in its other marketing
channels. Taymark will provide greater discounts on certain items as may be
agreed upon by the parties from time to time on not more than five percent of
the Products sold pursuant to this Agreement. Subject to Section 4.2.7.1, iParty
shall pay all invoices within 30 days of receipt. All payments due Taymark shall
be made in United States Dollars. Taymark shall separately state on each
invoice, and iParty shall pay in accordance with the terms hereof, any shipping
charges, sales or other taxes or duties which Taymark may be required to pay or
collect upon delivery of the Products. iParty shall not be liable for any income
taxes due by Taymark.
4.2.7.1 If iParty reasonably, and in good faith,
disputes any charge or amount on any invoice and such dispute cannot be resolved
promptly through good faith discussions between the parties, iParty shall pay
the amounts due under such invoice less the disputed amount, and the parties
shall diligently proceed to resolve such disputed amount. iParty shall notify
Taymark in writing of any disputed amount within a reasonable period following
iParty's discovery of same, but in no case later than the earlier of the due
date or 30 days following receipt of the relevant invoice.
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4.2.8 MONTHLY REPORTS. iParty and Taymark shall prepare and
deliver to the other party summary reports of Orders each month within 15 days
of the end of each calendar month. These reports will verify and confirm that
unit sales and costs are accurate and the respective sales reporting systems are
functioning properly.
4.2.9 AUDITS. Each party shall maintain complete, clear,
accurate records in connection with services provided under this Agreement and
shall maintain such records for a minimum of three years following the record's
creation. Each party shall, at all times during the term of this Agreement, have
full and complete access to all such records, in whatever medium, related to the
services performed, including, without limitation, records concerning all
information associated with Orders and the picking, packing and shipping
thereof. Each party shall have the right, at its own expense, to direct a
reputable independent public certified accounting firm reasonably acceptable to
the other party (subject to the execution by such accounting firm the reasonable
confidentiality agreement of the inspected party) to conduct a reasonable
inspection of all or portions of the records which are directly or indirectly
related to performance under this Agreement. Any such inspection may be
conducted at such time the parties agree, but in no event later than 15 Business
Days following written notice to the party to be inspected.
Taymark agrees to allow representatives of iParty inspect the
facilities from which the fulfillment services are performed, upon reasonable
notice to Taymark and execution of Taymark's reasonable confidentiality
agreement by all parties entering the facility.
4.2.10 CUSTOMER INVOICING. iParty shall be responsible for
Customer collections, including applicable sales tax.
5. PRODUCT RETURNS.
5.1 ORDER ERRORS. Taymark will re-fill Orders to Customers at no
additional fulfillment or return processing costs to iParty for returned
Products, under the following circumstances:
(a) Products reported as missing by the Customer that
were listed on the packing slip or invoice as fulfilled;
(b) Products returned as incorrect items shipped (items
included in the package that were not ordered); and
(c) Products returned which are defective (excludes
customer errors on imprinting instructions).
5.2 RETURNS. iParty has established a return policy which is attached
hereto as Schedule 5.2 and may be amended from time to time by iParty upon 30
days written notice to
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Taymark. All Products returns shall be handled in accordance with such policy
and in accordance with the terms of Schedule 5.2 attached hereto; provided,
however, that Taymark reserves the right to charge a re-stocking fee of not more
than 15 percent of the price of the returned portion of the Order.
6. SHIPPING.
6.1 CHOICE OF CARRIER. Taymark shall select reputable carriers for
shipment of products. Orders will be deemed shipped when delivered by Taymark to
the carrier.
6.2 SHIPPING COSTS. iParty shall pay Taymark shipping costs per the
shipping tables attached hereto as Schedule 6.2 (as may be reasonably amended
from time to time by Taymark). Taymark agrees that if that if the dollar amount
per Order provides cost efficiencies for Taymark, Taymark will use its best
efforts to share a portion of such cost efficiencies with iParty.
6.3 MERCHANDISE INSERTS. At iParty's request, Taymark shall insert
promotional merchandise inserts in packages containing Orders. iParty shall
supply such inserts to Taymark at no cost to Taymark.
7. FURTHER OBLIGATIONS.
7.1 DESIGNATED EMPLOYEES. Each party shall designate appropriate staff
members to act as the principal points of contact between iParty and Taymark for
the implementation and operation of such party's performance and the obtaining
of necessary approvals hereunder. The contact persons will be responsible for
coordinating efforts applicable to this Agreement and reporting and resolving
issues that may arise on day-to-day working basis.
The initial such contact persons are as follows:
iParty: Xxxxxxx Xxxxxxxxx Xxxxxx, and Xxx Xxxxxxxx
Taymark: Xxx Done, Xxxx Xxxxxxxxx, and Xxxxx Xxxxxxxxx
Each party may change such contact persons upon written notice
to the other.
7.2 CONFIDENTIAL INFORMATION. During the Term of this Agreement, iParty
and Taymark mutually agree to keep in confidence and prevent the acquisition,
disclosure, use or misappropriation by any person or entity of information
relating to this Agreement, including, but not limited to, all types of
information regarding Customer Information, pricing information, new product
development, technical information, methods, techniques, marketing plans,
business procedures, agreements, techniques or know-how, processes or other
proprietary or confidential or intellectual proprietary information
(collectively, "Confidential Information") which is received from either party
under this Agreement; provided, however, that neither party shall be
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liable to the other for disclosure of any data or information if the same is
disclosed with the prior written approval of the other party.
The foregoing obligations shall not apply to information which
the recipient can demonstrate by written evidence:
(i) is or becomes publicly available without breach of
this Agreement by the party receiving the
Confidential Information (Customer Information shall
not be deemed publicly available merely because the
components which make up the Customer Information are
in the public domain);
(ii) is released for disclosure by the disclosing party
with its written consent;
(iii) is known by the receiving party prior to its receipt
thereof from the disclosing party;
(iv) is rightly received by the receiving party from a
third party (other than in connection with this
Agreement) without confidential limitations;
(v) is required to be disclosed by a court order,
provided the disclosing party is given prompt notice
of such order and given opportunity to contest it and
the scope of the disclosure is limited to the minimum
extent consistent with compliance with such order; or
(vi) is independently developed by the receiving party
without reliance upon any information provided by the
disclosing party.
7.2.1 RETURN OF CONFIDENTIAL INFORMATION. Confidential
Information shall be returned to the owner of same upon the earlier of (i)
demand of the owner of such Confidential Information, or (ii) the termination or
expiration of this Agreement.
7.2.2 INJUNCTIVE RELIEF. Each party expressly agrees that
monetary damages would be inadequate to compensate the other for any breach of
this Section 7.2, that any such breach or threatened breach by either party of
this Section 7.2 will cause irreparable injury to the other party and that, in
addition to any other remedies that may be available, at law or in equity, the
other party shall be entitled to seek injunctive relief against the breach or
threatened breach of any provision of this Section 7.2 or the continuation of
any breach without the necessity of proving actual damages or posting a bond.
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8. REPRESENTATIONS AND WARRANTIES.
8.1 REPRESENTATIONS AND WARRANTIES OF XXXXXX CORPORATION. With
knowledge that iParty is relying thereon in entering into this Agreement, Xxxxxx
Corporation hereby represents and warrants to iParty as follows:
(i) Xxxxxx Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
(ii) This Agreement constitutes the legal, valid and binding
obligation of Xxxxxx Corporation, enforceable against Xxxxxx Corporation in
accordance with its terms. Xxxxxx Corporation has taken all corporate action
necessary for the authorization, execution and delivery of this Agreement, and
for the performance by Xxxxxx Corporation of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by Xxxxxx
Corporation will not result in a breach of or default under any contract or
agreement to which Xxxxxx Corporation is a party.
(iii) Taymark will use its reasonable efforts to assure that
the facilities (including, without limitation, all equipment) utilized to
provide the fulfillment services have been designed or will be modified to
ensure continuous operation and use prior to, during and after the calendar year
2000, and to operate during such time periods so that iParty will not experience
any loss of information or assets, interruption in service, invalid and/or
incorrect reporting or results and so that Customers will not experience any
delay in receiving Products. In the event that, at any time, such facilities are
found not to conform with this warranty, Taymark shall correct any such
nonconformance so as to enable such facilities to function in full conformance
herewith.
(iv) Taymark is, to its knowledge, and at all times during the
term of this Agreement shall be, in material compliance with all applicable
laws, rules and regulations, including but not limited to, the laws, rules and
regulations of the Federal Trade Commission.
(v) Taymark has (a) obtained the sufficient rights to all the
computer code, documentation, trademarks, trade names, copyrights and other
Intellectual Property Rights that are used in it's business or on the Products
to be sold by it or otherwise in connection with this Agreement, and (b) has the
right to grant the rights contemplated by this Agreement.
(vi) Taymark will use its best efforts to assure that, with
respect to any computer hardware, software, and any other items, in whatever
form or medium and notwithstanding the manner provided by it (including, without
limitation, any reports or other information or items transmitted in any manner)
(collectively, the " Taymark Technology"), such Taymark Technology does not and
will not contain any program, routine, device or other undisclosed feature,
including, without limitation, a so-called time bomb, virus, software lock, drop
dead device, malicious logic, worm, trojan horse, or trap or back door which is
designed to
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delete, deactivate, interfere with or otherwise harm any software, program,
data, device, system or service, or which is intended to provide unauthorized
access or to produce unauthorized modification (collectively "Disabling
Procedures"). Taymark agrees to notify iParty immediately upon discovery of any
Disabling Procedure that is or may be included in any Taymark Technology. If
Disabling Procedures are discovered or reasonably suspected to be present in any
Taymark Technology, Taymark agrees to take immediate action, at its own expense,
to identify and eradicate such disabling procedures and carry out any recovery
necessary to remedy any impact of such Disabling Procedures.
(vii) All employees and agents utilized by Taymark in the
performance of its obligations hereunder shall possess the requisite skill to
perform their assigned tasks and all such tasks shall be performed in a
professional manner, in accordance with industry standards.
8.2 REPRESENTATIONS AND WARRANTIES OF iPARTY. With knowledge that
Xxxxxx Corporation is relying thereon in entering into this Agreement, iParty
hereby represents and warrants to Xxxxxx Corporation as follows:
(i) iParty is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(ii) This Agreement constitutes the legal, valid and binding
obligation of iParty, enforceable against iParty in accordance with its terms.
iParty has taken all corporate action necessary for the authorization, execution
and delivery of this Agreement, and for the performance by iParty of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by iParty will not result in a breach of or default under any
contract or agreement to which iParty is a party.
(iii) iParty will use its reasonable efforts to assure that
it's facilities (including, without limitation, all equipment) utilized to
provide the fulfillment services have been designed or will be modified to
ensure continuous operation and use prior to, during and after the calendar year
2000, and to operate during such time periods so that Xxxxxx Corporation will
not experience any loss of information or assets, interruption in service,
invalid and/or incorrect reporting or results and so that Customers will not
experience any delay in receiving Products. In the event that, at any time, such
facilities are found not to conform with this warranty, iParty shall correct any
such nonconformance so as to enable such facilities to function in full
conformance herewith.
(iv) iParty is, to its knowledge, and at all time during the
term of this Agreement shall be, in material compliance with all applicable
laws, rules and regulations, including but not limited to, the laws, rules and
regulations of the Federal Trade Commission.
(v) iParty has (a) obtained the sufficient rights to all the
code, documentation, trademarks, trade names, copyrights and other intellectual
properties that are contained on the
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iParty Site or to be placed on the Products to be sold, and (b) has the right to
grant the rights contemplated by this Agreement.
(vi) iParty will use its best efforts to assure that, with
respect to any computer hardware, software, and any other items, in whatever
form or medium and notwithstanding the manner provided (including, without
limitation, any reports or other information or items transmitted in any manner)
(collectively, the "iParty Technology"), such iParty Technology does not and
will not contain any Disabling Procedures. iParty agrees to notify Taymark
immediately upon discovery of any Disabling Procedures that are or may be
included in any iParty Technology. If Disabling Procedures are discovered or
reasonably suspected to be present in any iParty Technology, iParty agrees to
take immediate action, at its own expense, to identify and eradicate such
Disabling Procedures and carry out any recovery necessary to remedy any input of
such Disabling Procedures.
9. OWNERSHIP OF MATERIALS; SECURITY AND PRIVACY
9.1 OWNERSHIP OF MATERIALS.
9.1.1 iParty shall retain all rights, title and interest in
and to (i) all of its Intellectual Property Rights existing as of the date
hereof, (ii) all Customer Information, and (iii) all Intellectual Property
Rights developed solely by iParty (collectively, the "iParty Materials").
9.1.2 Xxxxxx Corporation shall retain all rights, title and
interest in and to (i) all its Intellectual Property Rights existing as of the
date hereof, and (ii) all other Intellectual Property Rights developed solely by
Taymark (collectively, the "Taymark Materials").
9.1.3 For the purposes of this Section 9.1, a party shall be
considered as having "solely" developed a work if such work has been developed
utilizing such party's own resources, including financial resources and
personnel, notwithstanding the input of general concepts, ideas and suggestions
by the other party.
9.1.4 Subject to the terms and conditions contained in this
Agreement, iParty hereby grants Taymark a non-exclusive, non-transferable,
non-assignable license to use, at no cost, (i) the Order Information, solely for
the purpose of shipping Orders pursuant to the terms of this Agreement, and (ii)
any other iParty Materials provided by iParty, solely for the purpose of
providing services under this Agreement to which the iParty Materials relate.
Taymark may use and copy the iParty trademark and service xxxx for the purpose
of manufacturing Products by Taymark pursuant to this Agreement and in preparing
other materials to include with Orders. Xxxxxx Corporation acknowledges that use
of iParty Materials by Xxxxxx Corporation for any purpose other than as set
forth in this Section 9.1.4 shall constitute an infringement and
misappropriation by Xxxxxx Corporation of the rights of iParty, including
without limitation, Intellectual Property Rights. All use of the iParty
Materials by Xxxxxx Corporation, including
13
without limitation any goodwill generated by such use, shall inure to the
benefit of iParty. All Customer Information shall be deemed Confidential
Information of iParty.
9.2 SECURITY; PRIVACY. iParty has established a Customer privacy policy
(a copy of which is attached hereto as Schedule 9.2, and which may be amended by
iParty from time to time) relating to all information obtained from Customers
via the iParty Site. Xxxxxx Corporation agrees to comply with the provisions of
Schedule 9.2. Both parties shall use best efforts to maximum security of all
information, including, without limitation, Customer Information being
transferred or exchanged via the Information Exchange System, gathered over the
telephone, or otherwise. Xxxxxx Corporation shall not use Customer Information,
including, but not limited to, the name, mailing address, e-mail address, or
telephone number of any Customer, for any purpose except pursuant to the terms
hereof.
10. INDEMNIFICATION
10.1 INDEMNIFICATION BY XXXXXX CORPORATION. Subject to the
limitations in this Section 10.1, Xxxxxx Corporation shall indemnify, hold
harmless and defend iParty and each person or entity that is a stockholder,
officer, director, partner, employee, affiliate or agent of iParty from and
against any and all losses, claims, damages, liabilities, whether joint or
several, expenses (including reasonable legal fees and expenses) judgments,
fines and other amounts paid in settlement, as and when incurred or suffered by
any such person or entity arising out of or in connection with (i) the
inaccuracy of any representation or warranty made by Xxxxxx Corporation
hereunder, (ii) any breach of this Agreement by Xxxxxx Corporation, (iii) any
negligent act or omission by Xxxxxx Corporation or its employees or agents,
provided such negligent act or omission was not committed at the direction of
iParty, (iv) Xxxxxx Corporation's improper use of any Customer Information or
Xxxxxx Corporation's failure to adequately safeguard same, and (v) any claim or
action for personal injury, death, property damage or other cause of action (1)
involving a Products liability claim arising from or relating to Products
provided to iParty or any Customers by Xxxxxx Corporation hereunder, or (2)
resulting from alleged defects in, or the inherently dangerous nature of,
Products which are the subject of this Agreement.
10.2 INDEMNIFICATION BY iPARTY. Subject to the limitations in this
Section 10.2, iParty shall indemnify, hold harmless and defend Xxxxxx
Corporation and each person or entity that is a stockholder, officer, director,
partner, employee, affiliate or agent of Xxxxxx Corporation from and against any
and all losses, claims, damages, liabilities, whether joint or several, expenses
(including reasonable legal fees and expenses) judgments, fines and other
amounts paid in settlement, as and when incurred or suffered by any such person
or entity arising out of or in connection with (i) the inaccuracy of any
representation or warranty made by iParty hereunder, (ii) any breach of this
Agreement by iParty, (iii) any negligent act or omission by iParty or its
employees or agents, provided such negligent act or omission was not committed
at the direction of Xxxxxx Corporation, and (iv) any claim that any intellectual
property designated
14
by iParty for reproduction or use by Taymark in connection with this Agreement
infringes upon the intellectual party rights of any third party.
10.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. The party seeking
indemnification pursuant to this Section 10 (the "Indemnified Party") shall
promptly notify the other party (the "Indemnifying Party") upon becoming aware
of any subject claim, demand, suit, action or proceeding ("Claim"). Failure of
the Indemnified Party to promptly notify the Indemnifying Party of any such
Claim shall only relieve the Indemnifying Party of its obligations hereunder to
the extent that such Indemnifying Party is actually prejudiced by such failure.
If the Indemnifying Party fails to undertake and continue the defense of the
Claim, the Indemnified Party shall have the right (but not the obligation) to
make and continue such defense as it considers appropriate, and the expenses and
costs thereof, including without limitation, attorneys' fees, out-of-pocket
expenses and the costs of an appeal and bond thereof, together with the amounts
of any judgment rendered against the Indemnified Party, shall be paid by the
Indemnifying Party. The Indemnified Party shall provide the Indemnifying Party,
at the Indemnifying Party's expense, all reasonable assistance in connection
with the Indemnifying Party's defense of any Claim. The Indemnifying Party shall
not be liable for any settlement of any Claim effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such written consent, or if there be a final judgment against any Indemnified
Party in any such Claim, the Indemnifying Party agrees to indemnify and hold
harmless any Indemnified Party as provided above.
11. TERMINATION.
11.1 TERMINATION. This Agreement may be terminated as follows:
11.1.1 BREACH. By either party, upon 30 days prior written
notice to the other party, in the event of a material breach of this Agreement
by the other party. The written notice shall specify the precise nature of the
breach. In the event the breaching party cures the breach within the 30 day
notice period, this Agreement shall not terminate pursuant to this Section
11.1.1.
11.1.2 INSOLVENCY. By either party, immediately upon written
notice to the other party, in the event the other party voluntarily files or has
filed involuntarily against it a petition under the United States Bankruptcy
Code, including a petition under the United States Bankruptcy Code.
11.1.3 CERTAIN ACTIONS BY XXXXXX CORPORATION. By iParty,
immediately upon written notice to Xxxxxx Corporation, in the event that Xxxxxx
Corporation sells, conveys, eliminates, or otherwise disposes of more than 50
percent of the property or assets of Taymark to an unrelated third-party and
such disposition renders Taymark unable to provide the services contemplated
hereunder.
15
11.1.4 FORCE MAJEURE. By either party, immediately upon
written notice to the other party, in the event that the party receiving the
notice has failed to perform its material obligations hereunder in accordance
with the terms of this Agreement for a period of 60 days due to a Force Majeure
event (defined in Section 1).
11.2 POST TERMINATION PERFORMANCE. The parties will have the following
obligations to each other following the expiration or termination of this
Agreement.
11.2.1 Upon the termination or expiration of this Agreement
for any reason, Taymark shall provide iParty, at iParty's request, with
reasonable assistance to facilitate the orderly transition of the services
provided hereunder to iParty or its designee ("Termination Assistance"). In the
event of a termination of this Agreement due to a material breach by iParty,
iParty will pay Taymark, in advance, its reasonable fees in connection with such
Termination Assistance and for any goods or services provided hereunder for
which payment had not been made. Upon the expiration or termination of this
Agreement for any reason, other than non payment by iParty in accordance with
the terms hereof, Taymark shall continue to provide iParty all services
hereunder, without interruption or adverse effect, at the rates and on the terms
set forth in this Agreement, for the period of time necessary (not to exceed 30
days) for iParty to find an alternative source for services. In connection with
the Termination Assistance, each party shall utilize commercially reasonable
efforts to complete such transition in an expeditious manner.
11.2.2 Upon the termination or expiration of this Agreement,
iParty will purchase from Taymark, at a price equal to the price paid by
Taymark, all inventory held by Taymark (a) which is branded with the iParty name
or logo, and (b) which Taymark reasonably determines was purchased specifically
for the purposes of this Agreement and which Taymark did not at the time of
purchase of such inventory, and does not at the time of termination or
expiration of this Agreement, sell through any of its other marketing channels;
provided, however, that in no event shall the aggregate dollar amount to be paid
by iParty to Taymark pursuant to this Section 11.2.2 exceed the two (2) month
average cost of inventory of Orders fulfilled hereunder for the twelve (12)
months preceding the termination or expiration of this Agreement (or such
shorter period if this Agreement had not been in effect for such twelve (12)
month period).
11.3 EFFECT OF TERMINATION. Upon expiration or termination of this
Agreement, each party shall return or destroy any items which embody any
Intellectual Property Rights of the other party. Commercial distribution of any
such items shall constitute an infringement and misappropriation of the other
parties Intellectual Property Rights of the other party.
16
12. COMMON STOCK PURCHASE WARRANTS.
12.1 GRANT OF WARRANTS. As additional consideration for the services
to be provided hereunder by Taymark, iParty shall issue to Taymark warrants (the
"Warrants") to purchase Three Million (3,000,000) shares of Common Stock of
iParty. Such Warrants shall contain customary anti-dilution provisions regarding
stock splits, recapitalizations, etc. occurring following the grant of the
Warrants. Such Warrants shall be evidenced by a warrant certificate issued by
the Company in the form attached as Schedule 12.1 hereto.
12.2 EXERCISE PRICE. Such Warrants shall have an exercise price of
$3.75 per share.
12.3 VESTING OF WARRANT. Subject to the provisions of Section 12.5
hereof, the Warrants shall vest as follow:
o Warrants to purchase 500,000 shares of Common Stock shall vest on
October 1, 1999
o Warrants to purchase 1,000,000 shares of Common Stock shall vest
on January 1, 2000
o Warrants to purchase 750,000 shares of Common Stock shall vest on
July 1, 2000
o Warrants to purchase 750,000 shares of Common Stock shall vest on
January 1, 2001
12.4 TERM OF WARRANTS. All unexercised Warrants shall expire and
terminate on October 1, 2002.
12.5 SPECIAL PROVISIONS REGARDING WARRANTS. Notwithstanding
anything to the contrary in this Section 12, the Warrants shall be subject to
the following provisions:
12.5.1 If iParty terminates this Agreement pursuant to
Sections 11.1.1, 11.1.2, 11.1.3, or 11.1.4, then, after applicable notice and
cure periods, all non-vested Warrants shall immediately terminate and shall no
longer be exercisable and, in addition, if so requested by iParty in writing
within ten (10) days of such termination, Taymark shall sell to iParty all
vested Warrants at a price equal to the greater of (x) the exercise price of the
Warrants on the date of termination or (y) the difference between the fair
market value of the Common Stock and the exercise price of the Warrants on the
date of termination.
12.5.2 If Taymark terminates this Agreement pursuant to
Sections 11.1.1, 11.1.2, 11.1.3, or 11.1.4, then all non-vested Warrants shall
immediately vest upon termination of this Agreement, after applicable notice and
cure periods.
12.5.3 If iParty (a) enters into an agreement to sell all or
substantially all of its assets or capital stock, or (b) enters into an
agreement to merge with an entity that is not a
17
subsidiary of iParty in a transaction in which iParty is not the surviving
entity, then all non-vested warrants shall vest simultaneously with the closing
of any such transaction.
12.6 REGISTRATION RIGHTS. iParty covenants and agrees that if at any
time iParty proposes to register any of its securities under the Securities Act
of 1933, as amended (the "Act" (other than employee stock options) it will give
written notice, at least thirty (30) days prior to the filing of such
registration statement, to Taymark of is intention to do so. If Taymark notifies
the iParty in writing within twenty (20) days after mailing of any such notice
of its desire to include the shares of Common Stock underlying the Warrants in
such proposed registration statement, the iParty shall afford Taymark the
opportunity to have the shares of Common Stock underlying the Warrants included
in such registration statement (subject, in the case of an underwritten
offering, to the approval of the managing underwriter). In the event that iParty
does not file a registration statement under the Act within 180 days of the date
of this Agreement, iParty will, if requested in writing by Taymark, file a
registration statement with respect to the shares of Common Stock underlying the
Warrants.
13. MISCELLANEOUS.
13.1 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOST DATA OR
CONTENT, LOST PROFITS, BUSINESS INTERRUPTION, OR EXCEPT FOR DAMAGES PAYABLE TO
THIRD PARTIES ARISING OUT OF SECTION 10, DAMAGES ARISING OUT OF A PARTY'S BREACH
OF ITS OBLIGATIONS UNDER SECTION 7.1, 9.1 OR 11.3, FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING
TO THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, OR OTHERWISE FOR ANY SUCH CLAIM.
13.2 RELATIONSHIP OF THE PARTIES. iParty and Taymark are independent
parties and nothing in this Agreement shall be construed as constituting iParty
and Taymark as partners, joint venturers, or as creating the relationship of
employer and employee, franchiser and franchisee, principal and agent, or any
other form of legal association that would impose liability on one party for the
failure of the other party.
13.3 ASSIGNMENT. This Agreement and the rights and obligations
hereunder shall not be assigned by either party without the prior written
consent of the other party.
13.4 ENTIRE AGREEMENT. This Agreement, and the Warrant Certificate
issued in connection herewith pursuant to Section 12 hereof, constitute the
final and complete understandings and agreements of the parties concerning the
subject matter hereof, superseding all prior proposals, negotiations and
agreements concerning the subject matter hereof.
18
13.5 SURVIVAL. The provisions and covenants of this Agreement which, by
their terms, expressed or implied, require performance by the parties after the
expiration or termination of this Agreement shall be enforceable notwithstanding
said expiration or termination for any reason whatsoever.
13.6 FURTHER ASSURANCES. iParty and Taymark will execute such other
documents and take such actions as the other may reasonably request in order to
effect the services and activities contemplated by this Agreement.
13.7 WAIVER. No waiver by either party hereto of any breach or series
of breaches or defaults in performance shall constitute a waiver of any such
provisions of this Agreement with respect to any subsequent breach thereof or
waiver by such party of its rights at any time thereafter to require strict
compliance with the provisions thereof.
13.8 INTERPRETATION. Each party acknowledges it has participated in the
negotiation and preparation of this Agreement and has reviewed this Agreement
and had the opportunity to consult with its counsel and accountants with respect
to its terms. Therefore, each Party agrees that the rule of construction to the
effect that any ambiguities in a document shall be interpreted against the
drafting party, will not be utilized in the interpretation, construction, or
enforcement if this Agreement, and no consideration shall be given to the issue
of which party hereto actually prepared, drafted or requested any term or
condition of this Agreement.
13.9 SEVERABILITY. The provisions of this Agreement shall be severable
if any of the provisions hereof (including any provision within a single
section, paragraph or sentence) are held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law.
13.10 COUNTERPARTS. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts (and by facsimile
signature), and each of such counterparts shall, for all purposes, constitute
one agreement binding on all parties, notwithstanding that all parties are not
signatories to the same counterpart.
13.11 MODIFICATION. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
13.12 HEADINGS. Headings of particular Sections or clauses of this
Agreement are inserted for convenience and are in no way to be construed as part
of this Agreement or a limitation of the scope of the particular Sections or
clauses to which they refer.
13.13 NOTICES. All notices, authorizations, demands or requests
required or permitted to be delivered to any party in connection with this
Agreement, other than those
19
which pursuant to the Term of this Agreement are to be sent via the Information
Exchange System or in any other manner specifically provided herein, shall be in
writing and shall be deemed to have been duly given if personally delivered, if
sent by facsimile transmission (with receipt confirmed by automatic transmission
report), if sent by a nationally-recognized overnight courier with charges
prepaid, if sent by registered or certified mail, return receipt requested and
postage prepaid (or by the most nearly comparable method if mailed from or to a
location outside the United States), or addressed as follows:
If to iParty, to:
iParty Corp.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attn: CEO
Fax: (000) 000-0000
With copies (which copies shall not constitute notice) to:
Camhy Karlinsky & Xxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. XxXxxx, Esq.
Fax: 000-000-0000
If to Xxxxxx Corporation or Taymark to both:
Taymark
0000 Xxxxx Xxxx Xxxxxxx
Xxxxx Xxxx Xxxx, Xxxxxxxxx, 00000
Attention: President
Fax: (000) 000-0000
and
Xxxxxx Corporation
0000 Xxx Xxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxx, 00000
Attention: General Counsel
Fax: (000) 000-0000
Or, in every case, to such other address as the party to whom the notice is to
be given may have furnished to the other party hereto in writing in accordance
with the provisions of this Section 13.13. Any such notice or communication
shall be deemed to have been received (i)
20
in the case of personal delivery, on the date of such delivery, (ii) in the case
of facsimile transmission (with receipt confirmed by automatic transmission
report), on the date of such transmission, (iii) in the case of a
nationally-recognized overnight courier, on the next business day after the date
when delivered to such courier, and (iv) in the case of mailing, on the third
business day following that on which the piece of mail containing such
communication is posted.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly signed in duplicate originals by their duly authorized representatives as
of the day and year first above written.
iPARTY CORP. TAYMARK, A DIVISION OF
XXXXXX CORPORATION
By: /s/ Xxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxxx
------------------------- ----------------------------
Name: Xxx Xxxxxxxx Name: Xxxx Xxxxxxxxx
Title: CEO Title: President
22
SCHEDULE 5.2
iParty Return Policy
Our goal is to offer outstanding products and service, and our return policy is
simple. Within 30 days of receipt of your order, you may return any unopened
merchandise in new condition, with its original packaging, for a full refund.
Please note that we can process returns and refund only for items purchased from
xXxxxx.xxx.
You may also cancel any item from an order that has not yet entered the shipping
process, by calling Customer Service at 1-800-4iParty.
We will notify you via e-mail once we have received and processed the returned
item. Please note that we can refund shipping costs only if the return is a
result of our error.
Please write the reason for your return on the back of your packing slip.
Include the slip in the box containing the returned merchandise, wrap the
package securely and send it to the address listed on the back of the packing
slip. If you do not have your packing slip, please include a sheet of paper
detailing the buyer's name, the order number and the reason for the return, and
send the package to the following address:
xXxxxx.xxx
Returns Department
{address}
Be sure to include your name, address and phone number. For your protection,
please use UPS or Insured Parcel Post.
If you have any questions, please contact Customer Service at 1-800-4iParty or
e-mail us at Customer Xxxxxxx@xXxxxx.xxx.
1
SCHEDULE 9.2
Your Privacy
At iParty, we are committed to protecting your privacy. We use the information
we collect about you to process orders and to provide a more personalized
shopping experience. Please read on for more details about our privacy policy.
What information do we collect? How do we use it?
When you order, we need to know your name, e-mail address, mailing address,
credit card number, and expiration date. This allows us to process and fulfill
your order and to notify you if necessary, of your order status.
When you submit a customer review, we also ask for your e-mail address, although
you can choose not to have your e-mail address displayed with your review.
When you enter a contest or other promotional feature, we may ask for your name,
address, and e-mail address so we can administer the contest and notify winners.
We personalize your shopping experience by using your purchases to shape our
recommendations about party goods and other merchandise that might be of
interest to you. We also monitor customer traffic patterns and site usage to
help us develop the design features to optimize your shopping experience.
We may also use the information we collect to occasionally notify you about
important functionality changes to the Web site, new iParty services, and
special offers we think you'll find valuable.
When you send a greeting through the StarGreetings digital service, we ask for
your e-mail address and that of the recipient in order to complete your request.
iParty will never disclose or send promotional e-mail to recipient addresses
provided only to the StarGreetings service.
How does iParty protect customer information?
When you place orders or access your account information, we offer the use of a
secure server. The secure server software (SSL) encrypts all information you
input before it is sent to us. Furthermore, all of the customer data we collect
is protected against unauthorized access.
What about "cookies"?
1
"Cookies" are small pieces of information that are stored by your browser on
your computer's hard drive. Our cookies do not contain any personally
identifying information. Most Web browsers automatically accept cookies, but you
can usually change your browser to prevent that.
Even without a cookie, you can still use most of the features in our store,
including placing items in your shopping cart and purchasing them.
Will iParty disclose the information it collects to outside parties?
iParty does not sell, trade, or rent your personal information to others. We may
choose to do so in the future with trustworthy third parties, but you can tell
us not too by sending a blank e-mail message to xxxxxxxx_xxxxxxx@xxxxxx.xxx. (If
you use more than one e-mail address to shop with us, send this message from
each e-mail account you use.) Also, iParty may provide aggregate statistics
about our
customers, sales, traffic patterns, and related site information to reputable
third-party vendors, but these statistics will include no personally identifying
information.
In summary
We are committed to protecting your privacy. We use the information we collect
on the site to make shopping at iParty possible and to enhance your overall
shopping experience. We do not sell, trade, or rent your personal information to
others. We may choose to do so in the future with trustworthy third parties, but
you can tell us not too by sending a blank e-mail message to
xxxxxxxx_xxxxxxx@xxxxxx.xxx.
Your consent
By using our Web site, you consent to the collection and use of this information
by iParty. If we decide to change our privacy policy, we will post those changes
on this page so that you are always aware of what information we collect, how we
use it, and under what circumstances we disclose it.
Tell us what you think
IParty welcomes your questions and comments about privacy. Please send e-mail to
xxxxxxxx_xxxxxxx@xxxxxx.xxx.
2
SCHEDULE 12.1
THIS WARRANT AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE PLEDGED,
SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT AND SHARES ISSUABLE UPON THE
EXERCISE HEREOF IS RESTRICTED AS DESCRIBED HEREIN.
WARRANT CERTIFICATE TO PURCHASE UP TO 3,000,000 SHARES
OF COMMON STOCK
OF
iPARTY CORP.
THIS CERTIFIES THAT, FOR VALUE RECEIVED, and in accordance with that certain
Fulfillment Agreement of even date herewith by and between iParty Corp. and
Taymark, a division of Xxxxxx Corporation, a Minnesota Corporation ("Taymark")
(the "Fulfillment Agreement"), Taymark is the owner of one Warrant (the
"Warrant") which shall initially entitle Taymark to purchase, subject to the
terms and conditions set forth in this Warrant Certificate, up to Three Million
(3,000,000) shares of common stock, par value $.001 per share (each, a
"Conversion Share" and collectively, the "Warrant Shares"), of iParty Corp., a
Delaware corporation (the "Company"), from time to time as provided herein,
commencing October 1, 1999, until 5:00 p.m., New York City time on October 1,
2002 (the "Expiration Date").
1. (a) Subject to the acceleration and termination provisions
contained in Section 9 hereof and the adjustment provisions contained in Section
8 hereof, this Warrant is exercisable by Taymark, as to the following number of
Conversion Shares on the following dates: (i) as to 500,000 Conversion Shares
commencing as of October 1, 1999; (ii) as to an additional 1,000,000 Conversion
Shares commencing as of January 1, 2000; (iii) as to an additional 750,000
Conversion Shares commencing as of July 1, 2000; and (iv)
1
as to the remaining 750,000 Conversion Shares commencing as of January 1, 2001.
Subject to the foregoing, this Warrant is exercisable upon the presentation and
surrender of this Warrant Certificate with the Form of Election attached hereto
duly executed, at the offices of the Company, accompanied by payment of $3.75
per Conversion Share subject to adjustment (the "Purchase Price"), in lawful
money of the United States of America in cash or by check made payable to the
Company.
2. In the event of certain contingencies provided for herein,
the Purchase Price and the number of Conversion Shares subject to purchase upon
the exercise of the Warrant represented hereby are subject to modification or
adjustment.
3. The Warrant represented hereby is exercisable at the option
of Taymark, but no fractional Conversion Shares will be issued. In the case of
the exercise as to less than all of the Warrant Shares, the Company shall cancel
this Warrant Certificate upon the surrender hereof and shall execute and deliver
a new Warrant Certificate or Warrant Certificates of like tenor, for the balance
of the Warrant Shares.
4. Neither this Warrant nor any Conversion Shares issuable
upon the exercise of this Warrant have been registered under the securities act
of 1933, as amended (the "Act"), nor under any state securities law and such
securities may not be pledged, sold, assigned, hypothecated, or otherwise
transferred until (i) a registration statement with respect thereto is effective
under the Act and any applicable state securities law or (ii) the Company
receives an opinion of counsel to the Company or counsel to Taymark of such
securities, which counsel and opinion are reasonably satisfactory to the
Company, that such securities may be pledged, sold, assigned, hypothecated, or
transferred without an effective registration statement under the Act and
applicable state securities laws. Upon exercise of this Warrant, in whole or in
part, each certificate issued representing Conversion Shares underlying this
Warrant shall, if then applicable, bear a legend to the foregoing effect.
5. This Warrant Certificate is exchangeable, upon the
surrender hereof by Taymark at the corporate office of the Company, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrant Shares covered by the Warrant, each of such new
Warrant Certificates to represent such number of Warrant Shares covered by the
Warrant as shall be designated by Taymark at the time of such surrender. Upon
due presentment and payment of any tax or other charge imposed in connection
therewith or incident thereto, for registration of transfer of this Warrant
Certificate at such office, a new Warrant Certificate or Warrant Certificates
representing an equal aggregate number of Warrant Shares covered by the Warrant
will be issued to the transferee in exchange therefor.
6. Prior to the exercise of the Warrant represented hereby,
Taymark shall not be entitled to any rights of a stockholder of the Company by
virtue of this Warrant, including, without limitation, the right to vote or to
receive dividends or other distributions, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.
7. The Company shall at all times reserve and keep available
out of its authorized and unissued shares of common stock, solely for the
purpose of providing for the exercise of the rights to purchase all Warrants
Shares granted pursuant to the Warrant, such number of Conversion Shares as
shall then be issuable upon the exercise of the Warrant.
8. The Purchase Price in effect at any time and the number and
kind of securities issuable
2
upon the exercise of this Warrant shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
(a) In case the Company shall (i) declare a dividend or
make a distribution on its outstanding common shares, (ii) subdivide or
reclassify its outstanding common shares into a greater number of shares, or
(iii) combine or reclassify its outstanding common shares into a smaller number
of shares, the Purchase Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Purchase Price by a fraction, the
denominator of which shall be the number of common shares outstanding after
giving effect to such action, and the numerator of which shall be the number of
common shares outstanding immediately prior to such action. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) Upon each adjustment of the Purchase Price pursuant
to the provisions of this Section 8, the number of Warrant Shares issuable upon
the exercise at the adjusted Purchase Price of the Warrant shall be adjusted to
the nearest number of whole Shares by multiplying a number equal to the Purchase
Price in effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of the Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Purchase Price.
(c) In case of any consolidation of the Company with,
or merger of the Company into, another corporation (other than a consolidation
or merger which does not result in any reclassification or change of the
outstanding common shares), the corporation formed by such consolidation or
merger shall execute and deliver to the Holder a supplemental warrant agreement
providing that the Holder of the Warrant shall have the right thereafter (until
the expiration of such Warrant) to receive, upon exercise of such Warrant, the
kind and amount of shares of stock and other securities and property receivable
upon such consolidation or merger by a holder of the number of Conversion Shares
for which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall provide for adjustments which shall be identical to the adjustments
provided in this Section 8. The above provision of this paragraph shall
similarly apply to successive consolidations or mergers.
(d) No adjustment in the number of Warrant Shares shall
be required if such adjustment is less than one; provided, however, that any
adjustments which by reason of this paragraph are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 8 shall be made to the nearest one-thousandth of
a share.
(e) In any case in which this Section 8 shall require
that an adjustment in the number of Warrant Shares be made effective as of a
record date for a specified event, the Company may elect to defer, until the
occurrence of such event, issuing to the Holder, if the Holder exercised the
Warrant after the record date, the Warrant Shares, if any, issuable upon such
exercise over and above the Warrant Shares, if any, issuable upon such exercise
prior to such adjustment; provided, however, that the Company shall deliver to
the Holder a due xxxx or other appropriate instrument evidencing the Holder's
right to receive such additional Warrant Shares upon the occurrence of the event
requiring such adjustment.
(f) Whenever there shall be an adjustment as provided
in this Section 8, the Company shall promptly cause written notice thereof to be
sent by certified mail, postage prepaid, to the
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Holder, at its address as it shall appear in the Warrant Register, which notice
shall be accompanied by an officer's certificate setting forth the number of
Warrant Shares issuable upon the exercise of the Warrant if such Warrant were
exercisable on the date of such notice, and setting forth a brief statement of
the facts requiring such adjustment and the computation thereof, which officer's
certificate shall be conclusive evidence of the correctness of any such
adjustment absent manifest error.
9. Notwithstanding anything to the contrary contained herein,
this Warrant shall be subject to the following provisions:
(a) If, prior to the Expiration Date, the Fulfillment
Agreement is terminated by the Company in accordance with the provisions of
Sections 11.1.1, 11.1.2, 11.1.3, or 11.1.4 thereof, then, after applicable
notice and cure periods, this Warrant shall immediately terminate as to any and
all such Conversion Shares which are not exercisable on such date, and in
addition, if so requested by the Company, within ten (10) days of such
termination, Taymark shall deliver this Warrant to the Company in exchange for a
cash payment equal to the greater of (i) the product of the Purchase Price then
in effect and the number of Conversion Shares as to which this Warrant is then
exercisable, or (ii) the product of (y) the number of Conversion Shares as to
which this Warrant is then exercisable and (z) the difference between the fair
market value of the common shares of the Company and Purchase Price on such
date.
(b) If, prior to the Expiration Date, the Fulfillment
Agreement is terminated by Taymark in accordance with the provisions of Sections
11.1.1, 11.1.2, 11.1.3, or 11.1.4 thereof, then, all of the Warrant Shares which
not yet then exercisable shall become exercisable upon the effective date of
such termination, after applicable notice and cure periods.
(c) If, prior to the Expiration Date, the Company
enters into an agreement to (i) sell all or substantially all of its assets or
capital stock, or (ii) merge with an entity that is not a subsidiary of the
Company in a transaction in which the Company is not the surviving entity, then
all of the Warrant Shares which not yet then exercisable shall become
exercisable upon the closing of any such transaction.
10. In case at any time the Company shall propose
(a) to pay any dividend or make any distribution on
common shares in common shares or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of common shares; or
(b) to issue any rights, warrants, or other securities
to all holders of Shares entitling them to purchase any additional common shares
or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of
outstanding Shares, or any consolidation or merger as described in Section 8;
or
(d) to effect any liquidation, dissolution, or
winding-up of the Company, then, and in any one or more of such cases,
the Company shall give written notice thereof, not less than 90 days prior to
the effective date of such action (or, if the Company is not aware of such
action 90 days prior to the effective date, within three days after
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such action is approved the Company's Board of Directors) by registered mail,
postage prepaid, to the Holder at the Holder's address as it shall appear in the
Warrant Register, of (i) the date as of which the holders of record of common
shares to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, or (ii) the date on which
any such reclassification, change of outstanding common shares, consolidation,
merger, liquidation, dissolution, or winding-up is expected to become effective,
and the date as of which it is expected that holders of record of common shares
shall be entitled to exchange their shares for securities or other property, if
any, deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up.
11. The issuance of any Conversion Shares or other securities
upon the exercise of the Warrant, and the delivery of certificates or other
instruments representing such Conversion Shares or other securities, shall be
made without charge to the Holder for any tax or other charge in respect of such
issuance, other than applicable transfer taxes. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of any certificate in a name other than that
of the Holder, and the Company shall not be required to issue or deliver any
such certificate unless and until the person or persons requesting the issue
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
12. Prior to due presentment for registration of transfer
hereof, the Company may deem and treat Taymark as the absolute owner hereof and
of the Warrant represented hereby (notwithstanding any notations of ownership or
writing hereon made by anyone other than a duly authorized officer of the
Company) for all purposes and shall not be affected by any notice to the
contrary.
13. This Warrant Certificate and the Fulfillment Agreement
constitute the final and complete understandings and agreements of the parties
concerning the subject matter hereof, superseding all prior proposals,
negotiations and agreements concerning the subject matter hereof.
14. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to conflicts of laws.
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IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by one of its officers
thereunto duly authorized and a facsimile of its corporate seal to be imprinted
hereon.
Dated:_________________
iPARTY CORP.
By:
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Name: Xxx Xxxxxxxx
Title: Chief Executive Officer
ACCEPTED AND AGREED
TAYMARK, a Division of XXXXXX CORPORATION
By:
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Name:
Title:
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