Exhibit 10.12
MASTER PROJECT AGREEMENT
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This MASTER PROJECT AGREEMENT is entered into between THE PATHWAYS
GROUP, INC., a corporation, hereinafter sometimes referred to as "PATHWAYS" and
SCRIP ADVANTAGE, INC., a corporation, hereinafter sometimes referred to as
"SCRIP ADVANTAGE", for the purposes and upon the provisions, terms and
conditions stated below in this Agreement with incorporated attachments.
SECTION I.
RECITALS
1.1 Whereas PATHWAYS represents that its staff has the technical and
practical ability to provide a proprietary PATHWAYS Smart Card
Electronic Scrip System which simplifies scrip fund raising programs
for nonprofit organizations.
1.2 Whereas SCRIP ADVANTAGE is a for profit corporation which supplies
nonprofit organizations with scrip fund raising programs that rely upon
the use of paper scrip purchased from merchants and sold to members of
nonprofit organizations.
1.3 Whereas PATHWAYS and SCRIP ADVANTAGE each wish to implement a PATHWAYS
Smart Card Electronic Scrip System in geographic regions where SCRIP
ADVANTAGE currently markets a paper scrip system, for the purpose of
simplifying scrip fund raising programs for nonprofit organizations;
Now Therefore, the Parties agree as follows:
SECTION II.
PURPOSE
2.1 BASIC AGREEMENT
The purpose of this Master Project Agreement is to provide a basic
agreement for a specific project by which PATHWAYS will provide to
SCRIP ADVANTAGE the right to use and have access to the PATHWAYS Smart
Card Electronic Scrip System ("SMART SCRIP") for its scrip fund raising
programs composed of equipment, hardware and licensed software
programs, and processing services, as more fully provided in the
following sections, paragraphs and sub-paragraphs.
2.2 EXPANSION
In addition, it is the purpose of this Agreement to provide for a
method of expansion of the scope of this original project by
supplementary project agreements in which the provisions, terms and
conditions will be basically similar in order to ultimately provide a
compatible network of projects that can be administered as a single
expanded nationwide Smart Card Electronic Scrip Program.
This expansion will be in accordance with the provisions contained
herein regarding additional projects and will require the written
approval of both parties for said expansion.
SECTION III.
DEFINITIONS
The parties agree that the following words and acronyms in this
Agreement shall be understood to have the following meanings:
3.1 NONPROFIT ORGANIZATION
Nonprofit Organization means any organization which is generally
recognized under the laws of the State in which it is located as being
operated for a charitable, or educational purpose, or in support of a
charitable or educational purpose, and not as a business for profit.
3.2 PARTICIPATING NONPROFIT ORGANIZATION
Participating Nonprofit Organization or the acronym PNO shall mean a
Nonprofit Organization which has been or is actively enrolled or wishes
to become enrolled as a participant in the SCRIP ADVANTAGE Scrip
Program.
3.3 MERCHANT
Merchant means any business operated for profit, which sells or leases
or charges fees for its products, goods, and/or services to the
consumer public.
3.4 PARTICIPATING MERCHANT
Participating Merchant or the acronym PM shall mean a Merchant which
has been or is actively enrolled or wishes to become enrolled as a
participant in the SCRIP ADVANTAGE Scrip Program.
3.5 PATHWAYS SMART CARD ELECTRONIC SCRIP SYSTEM
PATHWAYS Smart Card Electronic Scrip System means:
(1) the Smart Card Terminal equipment with software designed,
developed and installed by PATHWAYS, which reads and performs
electronic scrip transactions, including
(2) the Smart Cards, with software designed, developed and
installed by PATHWAYS, which accept, hold and relinquish the
electronic scrip, and
(3) the PATHWAYS Processing Center which performs all of the
processing, electronic funds transfer, compilation of data,
and reporting for the PATHWAYS Smart Card Electronic System.
3.6 ACH
"ACH" means Automated Clearing House, which is an electronic system for
transferring funds to and from bank accounts.
3.7 PROCESSING
Processing means the total package of processing services which are
necessary for the functioning of the PATHWAYS Smart Card Electronic
Scrip System, including:
(1) the development and updating of data bases,
(2) compilation and communication of transaction data between
terminals, banks, PNOs and PMs,
(3) the electronic transfer of funds, including "ACH"
transfers, and
(4) preparation and transmittal of reports to SCRIP ADVANTAGE.
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The SCRIP ADVANTAGE, Inc. database shall remain the sole property
of SCRIP ADVANTAGE, Inc. for its exclusive use.
3.8 TRANSACTION
The word transaction when used in this Agreement means each separate
electronic transfer of funds or data between a Smart Card Terminal and
a Smart Card, or between PATHWAYS Processing Center and each Smart Card
Terminal, or between PATHWAYS Processing Center and a bank, or between
PATHWAYS Processing Center and SCRIP ADVANTAGE, or between SCRIP
ADVANTAGE and PNOs and/or PMs.
Appendix #5, attached hereto, provides a schematic of transaction flow
along with the specific identification of each chargeable transaction
in accordance with this contract. This exhibit is made a part hereto by
this reference.
SECTION IV.
DURATION
4.1 INITIAL TERM
The initial term of this Agreement shall be three (3) years, commencing
upon the execution of this Agreement.
4.2 AUTOMATIC RENEWAL/NOTICE OF NON RENEWAL
This Agreement shall be automatically and continually renewed for one
year, from year to year, after the initial term, unless the Agreement
has previously been terminated pursuant to any of the provisions of
Section XII below, or notice has been sent by one party to the other
and received at least 30 days in advance of the expiration of the
initial term, or any one year renewal term. Any such notice must be
sent pursuant to and satisfy the provisions of Section XII,
SECTION V.
OBLIGATIONS OF PATHWAYS
5.1 PATHWAYS SMART CARD ELECTRONIC SCRIP SYSTEM
PATHWAYS shall deliver to SCRIP ADVANTAGE the right to use the PATHWAYS
Smart Card Electronic Scrip System as defined in paragraph 3.5 above.
The system will include the right of PNOs and PMs who choose to
participate in that system to acquire from PATHWAYS all necessary
terminal equipment including software installed on the terminal ready
for installation at the locations of Nonprofit Organizations and
Merchants who are enrolled as part of the SCRIP ADVANTAGE specific
project, plus the right of members of PNOs to acquire Smart Cards
programmed with the relevant part of the PATHWAYS Smart Card Electronic
Scrip System and user data to enable members of the PNOs to use the
PATHWAYS Smart Card Electronic Scrip System. The system shall also
include access to the services of the PATHWAYS Processing Center,
subject to the provisions of paragraph 6.4. Prices for purchase of
terminals and with software installed are shown in Appendix No. 1,
attached hereto and incorporated herein by reference. Fees for
processing are also shown in Appendix No. 1. ACH fees, if any, shall be
paid by SCRIP ADVANTAGE, and/or may be passed on to the specific PNO or
PM, as agreed between SCRIP ADVANTAGE and the PNO or PM.
5.2 TERMINAL EQUIPMENT AND HARDWARE
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PATHWAYS will program the PATHWAYS Smart Card Electronic Scrip System
terminal equipment to be sold to PNOs AND PMs with all necessary
software to perform the following functions and processes:
a. the ability to read & credit electronic scrip value to, and
deduct electronic scrip value from, the electronic scrip smart
cards issued by SCRIP ADVANTAGE to members of the PNOs through
the PNOS, and process all credit/debit card transactions
introduced to the Electronic Smart Scrip terminals referenced
above, provided the PM is able to obtain credit approval from
a credit card depository.
b. provide the ability of the PATHWAYS Processing Center to
transmit the electronic transactions effected by each PNO from
SCRIP ADVANTAGE.
c. provide the ability to transmit all transaction information
from the terminals to the PATHWAYS Processing Center;
d. provide the ability of the PATHWAYS Processing Center to
generate transaction summary reports for delivery to the PNOs
and to receive from the PNOs their transaction records of
sales of scrip to cardholders recorded by the PNOs terminal.
e. provide for initiation of automatic transfer of funds by "ACH"
transfer to a designated bank account of the PNO in the bank
designated by the PNO on the time schedule provided in the
written agreement between SCRIP ADVANTAGE and the PNO; See
paragraph 6.2, a, below and Appendix No. 2, which is attached
hereto and is hereby incorporated by reference.
f. provide for initiation of automatic transfer of funds by "ACH"
transfer to a designated bank account of the PM in the bank
designated by the PM within 2 business days (not including
weekends or holiday); See paragraph 6.3, a below and Appendix
No. 3, which is attached hereto and is hereby incorporated by
reference.
g. provide periodic data to SCRIP ADVANTAGE in electronic form
showing each electronic scrip smart card transaction in which
any member of a PNO used the SCRIP ADVANTAGE Electronic Scrip
Smart Card issued by the PNO.
5.3 TRAINING
PATHWAYS will provide training to SCRIP ADVANTAGE personnel, and teach
them to train personnel of the PNOs and PMs of SCRIP ADVANTAGE who
enroll in the PATHWAYS Smart Card Electronic Scrip System in the use of
the Terminals and Smart Cards; pursuant to the training program
provisions described in Appendix No.
4 attached hereto and incorporated herein by reference.
5.4 OPERATIONS MANUAL
PATHWAYS will provide an Operations Manual which describes the
functions, uses and operations of the PATHWAYS Smart Card Electronic
Scrip System terminal equipment and the processing and uses of the
Smart Card with the terminal, and the interface with PATHWAYS
Processing Center.
5.5 REGISTRATION FORMS AND EXPLANATORY MATERIALS FOR PARTICIPATING PNOs
AND PMS AND MEMBERS OF PARTICIPATING PNOs
PATHWAYS will provide, to SCRIP ADVANTAGE, its PNOs and PMs and members
of PNOs the necessary registration forms, and explanatory materials to
facilitate the enrollment of PMs, PNOs, and
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members of PNOs to be used to implement the PATHWAYS Smart Card
Electronic Scrip System in cooperation with SCRIP ADVANTAGE.
SECTION VI.
OBLIGATIONS OF SCRIP ADVANTAGE
RE: IMPLEMENTATION AND OPERATION OF THE SYSTEM
6.1 SUPPLY OF DATA: DIRECT
SCRIP ADVANTAGE will provide to PATHWAYS all data and information
concerning:
a. Name of each PNO participating in a scrip program
with SCRIP ADVANTAGE, with address and current
telephone and facsimile numbers, and the name(s) of
the person(s) with authority to act on behalf of each
PNO, located in the geographic region of this
specific project; and
b. Name of each PM participating in a scrip program with
SCRIP ADVANTAGE with the address of each business
location of the PM, and the current telephone and
facsimile numbers of each business location, and the
name(s) of the person(s) with authority to act on
behalf of each PM at each business location located
in the geographic region of this specific project.
c. Provide the name of bank, the bank account number and
any other information concerning specific bank
account of SCRIP ADVANTAGE to be used to transfer
funds between SCRIP ADVANTAGE and the PNOs and PMs by
"ACH" transfer, and any other information required to
configure the software to make such transfers.
6.2 CONTRACT BETWEEN SCRIP ADVANTAGE AND PNO - SUPPLY OF DATA
INDIRECT FROM PNOS
SCRIP ADVANTAGE shall cause each PNO which agrees to participate in the
PATHWAYS Smart Card Electronic Scrip System under the sponsorship of
SCRIP ADVANTAGE to meet the following requirements of participation in
this specific project:
a. Sign an Agreement between SCRIP ADVANTAGE and the
PNO, the form and content of which shall be
substantially similar to Appendix No. 2, form No.
9701A, which is attached hereto and incorporated by
reference. However, SCRIP ADVANTAGE and Pathways
acknowledge that there many be need to adjust or
rewrite the agreement shown at appendix #2, and agree
to do so where necessary.
b. Provide other information as may be required by
PATHWAYS to configure the software on individual
terminals and the individual member's Smart Cards,
facilitate payment by "ACH" transfer, or other
processing requirements.
6.3 CONTRACT BETWEEN SCRIP ADVANTAGE AND PM - SUPPLY OF DATA
INDIRECT FROM PMS.
SCRIP ADVANTAGE shall cause each PM which agrees to
participate in the PATHWAYS Smart Card Electronic Scrip System
under the sponsorship of SCRIP ADVANTAGE to meet the following
requirements of participation in this specific project:
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a. Sign an Agreement between SCRIP ADVANTAGE and the PM,
the form and content of which shall be substantially
similar to Appendix No. 3, form No. 9701B, which is
attached hereto and incorporated by reference.
However, SCRIP ADVANTAGE and Pathways acknowledge
that there many be need to adjust or rewrite the
agreement shown at appendix #3, and agree to do so
where necessary.
b. Provide other information as may be required by
PATHWAYS to configure the software on individual
terminals, facilitate payment by "ACH" transfer, or
other processing requirements.
6.4 TELEPHONIC ACCESS LINES TO TERMINALS
Access between each Smart Card Terminal placed with SCRIP ADVANTAGE, if
any, or with any PNO and any PM shall be facilitated by that particular user of
the Smart Card Terminal providing connection(s) to telephone lines for the Smart
Card Terminal(s) used. The number of connections and telephone access lines
shall be suitable, taking into consideration the number of Smart Card Terminals
for which the access connection is provided. The access connection to the Smart
Card Terminals must be available on an as needed basis, each day of each year.
The expense of installation, if any, and the cost of service, if any, shall be
borne by the particular operator of the Smart Card Terminal.
SECTION VII.
IMPLEMENTATION OF PATHWAYS SMART CARD
ELECTRONIC SCRIP SYSTEMS - BASIC PROJECT
7.1 INITIAL DATA BASE
SCRIP ADVANTAGE shall provide to PATHWAYS the data described in
paragraph 6.1 a and b. After receipt of that data from SCRIP ADVANTAGE,
PATHWAYS will promptly develop a data base from which SCRIP ADVANTAGE
and PATHWAYS will proceed with the other implementation steps described
in the paragraphs below.
7.2 SCRIP ADVANTAGE and PATHWAYS will agree upon an acceptable graphics
design for the Smart Card which will have on it:
a. the name and/or logo of SCRIP ADVANTAGE displayed as
a primary sponsor;
b. the name or logo of PATHWAYS as the card provider;
c. an attractive picture or other graphic selected by
mutual agreement of the parties.
d. Such instructions and other information as is usual
and customary for facilitating the use of the Smart
Card, including a contact telephone number for SCRIP
ADVANTAGE.
7.3 PNO MEETING(S)
SCRIP ADVANTAGE and PATHWAYS will agree on which PNOs shall be invited
to a meeting sponsored by SCRIP ADVANTAGE for the purpose of
introducing and explaining to the PNOs the PATHWAYS Smart Card
Electronic Scrip System, including its benefits, namely its
versatility, ease of use, security and reduction of time consuming
paperwork; as well as the basis of its functions, operation, costs, and
how funds are generated for the PNOs. SCRIP ADVANTAGE and PATHWAYS will
enroll those PNOs who desire to participate in the SCRIP ADVANTAGE
sponsored PATHWAYS Smart Card Electronic Scrip Program using a contract
form substantially similar to Appendix #2, which is attached hereto and
is hereby incorporated by reference.
7.4 SOLICITATIONS OF PMs
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SCRIP ADVANTAGE and PATHWAYS will agree on which PMs should be
solicited, and which other Merchants who are not PMs should be
solicited to participate in the SCRIP ADVANTAGE sponsored electronic
scrip program using the PATHWAYS Smart Card Electronic Scrip System;
and agree upon a program of individual solicitations of each PM or
other Merchant; and if feasible, group meetings for solicitation of
Merchants in special geographic areas, or Merchants who market specific
kinds of goods or services. Initially, PATHWAYS will participate in all
such individual and group solicitations so as to be assured that the
technical and practical aspects of the PATHWAYS Smart Card Electronic
Scrip System and its operation are fully and correctly understood. As
representatives of SCRIP ADVANTAGE become more familiar with the
technical and practical aspects of the PATHWAYS Smart Card Electronic
Scrip System, it is the intent and expectation of the parties that
there will be a gradual phasing out of the need for participation by
PATHWAYS representatives in the solicitation of PMs or other Merchants
who are not yet PMs except in unusual circumstances in which the nature
or scope or importance of the solicitation justifies the participation
of one or more PATHWAYS representatives.
7.5 SOLICITATION OF MEMBERS OF PNOs
SCRIP ADVANTAGE, and PATHWAYS, and each PNO shall agree upon a suitable
method of presenting the SCRIP ADVANTAGE sponsored PATHWAYS Smart Card
Electronic Scrip Program to its members, either by a presentation at
one or more meetings, or by bulk mailings or both.
SECTION VIII.
OWNERSHIP OF INTELLECTUAL PROPERTY AND PROPRIETARY INFORMATION;
CONFIDENTIALITY AND NONDISCLOSURE; LIMITS OF USE; AND RETURN UPON
TERMINATION OF AGREEMENT.
8.1 SOFTWARE, CONCEPTS AND DESIGNS
PATHWAYS owns and shall continue to own all software, concepts and
designs on which the functions and operations of the PATHWAYS Smart
Card Electronic Scrip System are based, and all further developments,
improvements and enhancements of the software, concepts and design by
which functions and operations of the PATHWAYS Smart Card Electronic
Scrip System is modified or improved including but not limited to
documents, memoranda, booklets, instruction sheets and manuals,
displays and graphics, whether in all printed, written or electronic
form, developed by PATHWAYS to explain, promote and/or market the
PATHWAYS Smart Card Electronic Scrip System. SCRIP ADVANTAGE hereby
acknowledges the ownership of PATHWAYS of all software, concepts and
designs on which the functions and operations of the PATHWAYS Smart
Card Electronic Scrip System are based, and all documents, memoranda,
booklets and instruction sheets, manuals, displays and graphics,
whether in printed, written or electronic form, described in this
paragraph.
8.2 LICENSE TO USE SOFTWARE
The software included on the Smart Card Terminals and the Smart Cards
shall be licensed to the authorized users of the Terminals and Cards
for the limited purpose of permitting the authorized users to
participate in the PATHWAYS Smart Card Electronic Scrip System
sponsored by SCRIP ADVANTAGE. The limited license will be issued to
each authorized terminal user at the time the user acquires ownership
or other authorized possession of the terminal. The limited license
will be issued to each authorized card user when the card is issued to
that user.
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8.3 PROHIBITION AGAINST COPYING AND REVERSE ENGINEERING OF SOFTWARE OR
EQUIPMENT OR CARDS
The parties agree that neither SCRIP ADVANTAGE nor anyone acting with
authorization of SCRIP ADVANTAGE shall attempt to copy, compile,
de-compile, disassemble or reverse engineer the Smart Card Terminals,
the Smart Cards, or the Software installed on any of the Smart Card
Terminals, or Smart Cards provided by PATHWAYS to anyone who
participates in this project. Any licenses issued pursuant to paragraph
8.2 shall expressly provide that no one shall be authorized to copy,
compile, de-compile, disassemble or reverse engineer the computer
software or hardware included in the terminals or cards.
8.4 CONFIDENTIALITY AND NONDISCLOSURE OF PATHWAYS INTELLECTUAL PROPERTY AND
PROPRIETARY INFORMATION; LIMITS OF RIGHT TO USE; RETURN UPON
TERMINATION OF AGREEMENT
All trade names, trademarks, service marks, copyrights and licenses
from third parties for the use of trademarks, service marks,
copyrights, or patents, and all software, concepts and designs on which
the functions and operations of the PATHWAYS Smart Card Electronic
Scrip System are based, and all further developments, improvements and
enhancements of the software, concepts and design by which functions
and operations of the PATHWAYS Smart Card Electronic Scrip System is
modified or improved including but not limited to documents, memoranda,
booklets, instruction sheets and manuals, displays and graphics,
whether in all printed, written or electronic form, developed by
PATHWAYS to explain, promote and/or market the PATHWAYS Smart Card
Electronic Scrip System are agreed to be proprietary and confidential
and shall not be disclosed by SCRIP ADVANTAGE to any entity or
person(s) except to the extent authorized by PATHWAYS, or as part of
the implementation of this project or promotion of future projects
between SCRIP ADVANTAGE and PATHWAYS. All trade names, trademarks,
service marks, copyrights and licenses from third parties for the use
of trademarks, service marks, copyrights or patents and all software,
concepts and designs and copies of same, owned by PATHWAYS shall be
returned to PATHWAYS upon termination of this agreement, and no copies
shall be retained or used by SCRIP ADVANTAGE thereafter, except to the
extent necessary to access its business records related to this
agreement .
8.5 CONFIDENTIALITY AND NONDISCLOSURE OF SCRIP ADVANTAGE INTELLECTUAL
PROPERTY AND PROPRIETARY INFORMATION; LIMITS OF RIGHT TO USE; RETURN
UPON TERMINATION OF AGREEMENT
All trade names, trademarks, service marks, and copyrights now owned or
hereafter owned by SCRIP ADVANTAGE, and all information contained in
the existing data base or the additions of information to the data base
as a result of this project, and records of SCRIP ADVANTAGE, which are
disclosed by SCRIP ADVANTAGE to PATHWAYS for use in and adaptation of
the PATHWAYS Smart Card Electronic Scrip system to market and use
electronic scrip in SCRIP ADVANTAGE' Business are agreed to be
proprietary and confidential intangible property of SCRIP ADVANTAGE,
and shall not be disclosed by PATHWAYS to any entity(ies) or person(s)
except to the extent authorized by SCRIP ADVANTAGE or as a part of the
implementation of this project or promotion of future projects between
SCRIP ADVANTAGE and PATHWAYS. All trade names trademarks service marks,
copyrights, and information in the database and information from the
records of SCRIP ADVANTAGE owned by SCRIP ADVANTAGE, shall be returned
to SCRIP ADVANTAGE upon termination of this agreement, and no copies
shall be retained or used by PATHWAYS thereafter, except to the extent
necessary to access its business records related to this agreement
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SECTION IX.
LIMITED WARRANTIES - DISCLAIMER - PASS THROUGH
9.1 LIMITED WARRANTIES
EXCEPT AS EXPRESSLY SET FORTH BELOW, ALL EQUIPMENT, PRODUCTS, AND
SERVICES ARE DELIVERED "AS IS", WITHOUT WARRANTY OF ANY KIND.
A. PATHWAYS warrants that the Licensed Programs will conform to
PATHWAY'S specifications in effect on the date of delivery to
SCRIP ADVANTAGE, or its PNOs OR PMs for the period of twelve
(12) months from the date of delivery. PATHWAYS shall have no
responsibility to update or otherwise maintain the Licensed
Programs except that, in the case of Licensed Program errors
which are caused by PATHWAYS and which SCRIP ADVANTAGE or its
PNOs or PMs discover, substantiate, and report in writing to
PATHWAYS during such warranty period, PATHWAYS shall make
reasonable efforts promptly to produce and deliver to SCRIP
ADVANTAGE or its PNOs or its PMs a corrected version of the
portion of Licensed Programs involved. During the applicable
warranty period, PATHWAYS will make available updates to the
Licensed Programs which PATHWAYS generally releases without
charge (other than a handling charge) to all purchasers of the
Product to which Licensed Program updates apply. In no event
shall PATHWAYS have any obligation or responsibility arising
from this Agreement to correct any data base errors or
transaction errors without charge, if such errors are caused
by misuse of the Smart Card Terminals or input errors by SCRIP
ADVANTAGE, or its PNOs or its PMs or any other user. PATHWAYS
will attempt to correct data base errors or transaction errors
caused by SCRIP ADVANTAGE upon request by SCRIP ADVANTAGE, and
the agreement of SCRIP ADVANTAGE to pay for the correction
service(s).
B. Any Smart Card Terminal Equipment and Smart Cards delivered to
SCRIP ADVANTAGE, or its PNOs or PMs pursuant to this Agreement
shall be warranted as to materials and workmanship only by the
manufacturer pursuant to warranties passed through to SCRIP
ADVANTAGE, or the PNOs or the PMs who acquire the Smart Card
Terminals or Smart Cards.
9.2 PASS THROUGH OF OTHER MANUFACTURER WARRANTIES.
The PATHWAYS Smart Card Electronic Scrip System includes some equipment
and certain basic software not manufactured or designed or programmed
by PATHWAYS. Such items include but are not limited to the Smart Card
Terminals and the Smart Cards. PATHWAYS has received limited warranties
from the manufacturers of such items. Those are limited warranties of
short duration with disclaimers and limitation of liability and
damages. Such warranties will be passed through to the purchasers and
users of the Smart Card Terminals and Smart Cards.
9.3 DISCLAIMER OF ALL OTHER WARRANTIES.
PATHWAYS SPECIFICALLY DISCLAIMS THAT IT HAS MADE OR DOES MAKE ANY
REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED, AS TO THE
MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR ANY OTHER PURPOSE
EXCEPT AS STATED IN WRITING IN PARAGRAPH 9.1 AND WITH RESPECT TO PASS
THROUGH OF MANUFACTURERS' WARRANTIES IN PARAGRAPH 9.2.
9.4 LIMITATION OF LIABILITY AND DAMAGES
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PATHWAYS SHALL NOT BE LIABLE FOR CONSEQUENTIAL DAMAGES WHETHER
DESCRIBED AS DIRECT OR INDIRECT; OR SPECIAL DAMAGES; OR DAMAGES FOR
LOSS OF REVENUES OR LOSS OF DATA; OR LOSS OF BUSINESS OR BUSINESS
OPPORTUNITIES, NOR PUNITIVE DAMAGES. THE MAXIMUM AMOUNT OF DAMAGES
RECOVERABLE SHALL BE THE PRICE PAID FOR SPECIFIC PRODUCTS OR SPECIFIC
SERVICES OR THE SPECIFIC TRANSACTION ASSERTED TO BE FAULTY BY THE
CLAIMANT, WHETHER THE CLAIMANT BE SCRIP ADVANTAGE OR A PNO OR A PM.
9.5 ALL LICENSES AND AGREEMENTS BETWEEN SCRIP ADVANTAGE AND ITS PNOS AND
PMs TO INCLUDE PARAGRAPHS 9.1 - 9.4 INCLUSIVE
All licenses and agreements between SCRIP ADVANTAGE and its PNOs and
PMs with respect to products and services, including but not limited to
licensed programs and service shall contain the foregoing limited
warranty language, disclaimers, limitation of liability and damages of
paragraphs 9.1 - 9.4 inclusive.
SECTION X.
DISPUTE RESOLUTION
10.1 AGREEMENT FOR MEDIATION OF DISPUTES; THEN ARBITRATE DISPUTES: EXCEPTIONS
If any dispute shall arise between SCRIP ADVANTAGE and PATHWAYS
concerning this Agreement, its meaning, or any subject related to the
making, performance or termination of this Agreement then the parties
agree that, except as may otherwise be specifically provided in this
Agreement, all such disputes shall be referred to mediation, and if the
dispute(s) are not resolved by mediation, then the dispute(s) shall be
referred to binding arbitration, as more specifically provided below.
Claims, if any, by PATHWAYS claiming infringement of trade secrets,
copyrights, patents or trademarks shall be excluded from this Section
XI, and all paragraphs thereof; and such claims, if any, may be brought
in any state or federal court with appropriate jurisdiction and venue.
10.2 MEDIATION OF DISPUTE(S)
The parties hereby agree to use mediation services located in Santa
Rosa, California, and to attend mediation proceedings held in Santa
Rosa, California. The mediation is to be non-binding unless otherwise
agreed in writing by the parties. If the parties are unable to agree
upon the choice of mediator or mediation service, then either party may
apply to the Superior Court of Sonoma County requesting the Court to
order mediation and appoint a mediator or mediation service located in
Santa Rosa, California, to mediate the dispute(s) in Santa Rosa,
California, in fulfillment of this provision. The rules and procedures
for mediation shall be determined by the mediator or mediation service
and provided to each party prior to the first mediation meeting. Any
final resolution of the dispute(s), if any, shall be stated in writing
and signed by both parties. The parties shall each pay one-half of the
costs, expenses, and fees of the mediator or mediation service. Each
party shall pay for its own legal, accounting or other expenses
incurred in connection with the mediation.
10.3 NOTICES RE: MEDIATION
If any party issues a written request for mediation, then a copy of
such request must state:
1) Name of Requesting Party;
2) Name of other Party in the Dispute(s);
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3) Brief Description of the nature and scope of the dispute(s),
and how such dispute(s) relate to this Agreement;
4) The relief or resolution requested by the requesting party;
5) The reference to this Agreement, Section XI, paragraph 11.2,
above concerning mediation.
Such request shall be sent to the mediator or mediation service with a
copy of the request to the other party in the dispute. The original
request and the copy of the request shall each be sent by certified
mail, first class postage prepaid, with return receipt requested,
properly addressed respectively to the mediator or mediation service.
10.4 BINDING ARBITRATION TO RESOLVE DISPUTE(S)
If the parties are unsuccessful in resolving their dispute(s) through
mediation, as provided in paragraph 11.2 above, then either party may
apply to the American Arbitration Association for arbitration of the
dispute pursuant to the American Arbitration Association Rules
applicable to Commercial Disputes. The site of the arbitration shall be
Santa Rosa, California. The arbitration shall be conducted pursuant to
the American Arbitration Association Rules applicable to Commercial
disputes. The party who petitions or applies for arbitration shall pay
all initial costs and fees required by the American Arbitration
Association to commence the arbitration procedures. There shall be one
arbitrator appointed, who shall be an attorney with experience in
commercial disputes. The arbitrator shall have authority to award
actual damages to the extent permitted by this Agreement; but under no
circumstances shall have the authority or power to award punitive
damages. The arbitrator may award a reimbursement of all costs and
expenses, including accounting fees and expenses, expert witness fees
and a reasonable attorney's fee. The arbitrator's findings,
conclusions, and award may be filed in Superior Court of Sonoma County,
and judgment entered based thereon unless the arbitrator's award is
appealed within the time provided and on the limited grounds permitted
by California Law. Once an award and judgment has become final it may
be enforced by legal remedies.
SECTION XI.
EARLY TERMINATION OF AGREEMENT
11.1 EARLY TERMINATION BASED ON ADVANCEMENT OF TECHNOLOGY OR COST
CONSIDERATION; AND RIGHT OF FIRST REFUSAL
A. If SCRIP ADVANTAGE receives a bona fide proposal in writing by
another supplier of a system based on advancement of
technology, or based on improved profitability to SCRIP
ADVANTAGE or its PNOs, then SCRIP ADVANTAGE shall be entitled
to give 90 days advance written notice of early termination of
this Agreement, provided that a complete copy of the bona fide
written proposal by another supplier is delivered to Pathways
with the written notice.
B. Upon receipt of the written notice of early termination, and a
complete copy of the written proposal from another supplier,
based on paragraph 12.1,A, then Pathways shall have a right of
first refusal to equal the proposal of the other supplier by
delivery of a written proposal, within 90 days after receipt
by Pathways of the written notice of termination and the
complete copy of the written proposal from another supplier.
If Pathways does not equal the proposal of the other supplier,
then SCRIP ADVANTAGE may proceed at that time to terminate
this agreement, including provisions for final accounting
between Pathways and SCRIP ADVANTAGE.
C. The provisions of paragraphs 12.1, A and 12.1,B are not
subject to the requirements of paragraphs 11.1 through 11.4
and 12.2 or 12.3.
11.2 PRECONDITION TO EARLY TERMINATION
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Any party who desires to terminate this Agreement prior to the
expiration of the initial term of three years, or prior to the
expiration of any one year renewal term shall first have attempted to
resolve any disputes by giving notice of mediation and willingness to
participate in mediation, pursuant to paragraph 11.2 and 11.3. If
mediation does not resolve the dispute, then the party shall proceed to
arbitration pursuant to paragraph 11.4, and shall request specific
findings and conclusions by the arbitrator that (1) this Agreement has
been materially breached; and (2) the party by the material breach is
entitled to early termination of this Agreement as one of its remedies.
If all of these preconditions have been fulfilled, then the aggrieved
party may give notice of early termination as provided below.
11.3 NOTICE OF EARLY TERMINATION
Any party entitled to early termination of this Agreement as provided
in paragraph 12.2 above shall send written notice to the other party of
intention to terminate this Master Project Agreement on a specific date
not less than 90 days after receipt of the notice by the receiving
party. The written notice shall be addressed to the Chief Executive
Officer of the receiving party, at the address provided below for
written notices. The notice shall expressly state the basis for
termination by reference to the Arbitrator's findings and conclusions
of material breach and entitlement to early termination. Any such
notice shall meet all requirements in Section XIII, below.
SECTION XII.
NOTICES
12.1 METHOD OF DELIVERY OF NOTICES
All notices required by this Agreement shall be in writing and
delivered either in person, or by messenger, or by registered or
certified first class mail with return receipt requested, postage
prepaid, sent to the last known address of the party to receive the
notice.
12.2 EFFECTIVE DATE OF DELIVERY
Notices sent pursuant to paragraph 13.1 shall be deemed delivered at
the earliest of the following:
a. When actually received; or
b. On the fifth full business day after mailing of the
notice by registered or certified mail with return
receipt requested and postage prepaid.
12.3 ADDRESSES FOR NOTICES
The current address for notices sent to the respective parties pursuant
to paragraph 13.1 are:
SCRIP ADVANTAGE, INC. THE PATHWAYS GROUP, INC.
----------------------------- ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
These addresses for notice purposes may be changed by written notice
given in accordance with this paragraph.
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SECTION XIII.
MISCELLANEOUS PROVISIONS
13.1 APPLICABLE LAW
This Agreement is made pursuant to California law including choice of
law rules, and applicable federal law and regulations if appropriate to
the meaning of these provisions concerning federal tax exempt status.
13.2 ENTIRE AGREEMENT; AMENDMENTS
This is intended by the parties to be the entire Agreement between the
parties. All prior oral or written statements, negotiations and
representations are hereby deemed to be superseded by this written
agreement. This Agreement can be amended only by a written amendment or
other written agreement signed by both parties.
DATED: effective 6-19-98
SCRIP ADVANTAGE, INC. THE PATHWAYS GROUP, INC.
By By
-------------------------------- ---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇, President & CEO
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APPENDIX NO. 1
COST SCHEDULE FOR
EQUIPMENT, GOODS AND SERVICES
1. PATHWAYS Smart Card Electronic Scrip Terminal, fully programmed for a
specific Participating Nonprofit Organization including identification
of the PNO, with security and transaction capabilities . . . . . . . . . $ 1,025.00
2. PATHWAYS Smart Card Electronic Scrip Terminal fully programmed
for a specific Participating Merchant including identification of the
PM, with security and transaction capabilities. . . . . . . . . . . . . $ 1,025.00
3. Fulfillment fee for SCRIP ADVANTAGE/PATHWAYS Electronic Scrip Smart
Card for each specific member of a specific PNO, fully programmed with
identification of both the individual member and the issuing PNO, with
security and transaction capabilities . . . . . . . . . . . . . . . . . $ 10.00
4. PATHWAYS Processing Center Fees: per transaction, i.e. each and
every electronic transfer of funds to or from any terminal, or any
card, including each upload or download of data . . . . . . . . . . . . $ .35
5. Periodic electronic data summary issued to SCRIP ADVANTAGE, INC. as
provided in paragraph 5.2, g . . . . . . . . . . . . . . . . . . . . . NO CHARGE
6. If any additional data summary(ies) is/are required to be produced by
PATHWAYS in segregated parts for use by SCRIP ADVANTAGE, or its PNOs or
its PMs an additional processing fee shall be agreed upon between the
parties for the additional processing.
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APPENDIX NO. 2
SCRIP ADVANTAGE
STANDARD TERMS OF AGREEMENT
WITH PARTICIPATING NONPROFIT ORGANIZATIONS
------------------------------------------------------------------------------
This Agreement entitled SCRIP ADVANTAGE STANDARD TERMS OF AGREEMENT
WITH PARTICIPATING NONPROFIT ORGANIZATIONS is made between the SCRIP ADVANTAGE,
INC. a corporation, hereinafter referred to as "SCRIP ADVANTAGE" and
____________________, a ____________, hereinafter referred to by name or as
"Participating Nonprofit Organization or PNO." This Agreement shall be referred
to hereinafter as the "SCRIP ADVANTAGE/PNO Agreement."
1. RECITALS
1.1 Whereas, SCRIP ADVANTAGE has used and promoted the use of gift
certificates in its scrip program through SCRIP ADVANTAGE'
Participating Nonprofit Organizations (PNOs) for several
years;
1.2 Whereas, SCRIP ADVANTAGE, in cooperation with its
Participating Nonprofit Organizations wishes to modernize its
scrip program by use of modern electronic and computerized
systems for sale and use of electronic scrip;
1.3 Whereas, SCRIP ADVANTAGE has arranged with The Pathways Group,
Inc., hereinafter "PATHWAYS," for the use of the PATHWAYS
Smart Card System by which electronic scrip is placed on smart
cards sponsored and issued by SCRIP ADVANTAGE through its PNOs
for use with merchants who sign agreements with SCRIP
ADVANTAGE as Participating Merchants, hereinafter sometimes
referred to as "PMs."
1.4 Whereas SCRIP ADVANTAGE and the undersigned PNO desire to make
an agreement between them so that the PNO may participate in
SCRIP ADVANTAGE' modernized scrip program utilizing the
PATHWAYS Smart Card System(s);
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
2. PURPOSE
The purpose of this Agreement is to facilitate the use of the PATHWAYS
Smart Card System utilizing electronic scrip on smart cards issued by SCRIP
ADVANTAGE to the PNO's members through the PNO to supplement the current Scrip
program.
3. AGREEMENTS OF SCRIP ADVANTAGE
3.1 SCRIP ADVANTAGE agrees to provide to the PNO through PATHWAYS,
a fully programmed smart card terminal and other services as
specified in Exhibit A. The smart card terminal and other
services will perform the following functions:
a. the ability to read, credit electronic scrip value to, and
deduct electronic scrip value from, the electronic scrip smart
cards issued by SCRIP ADVANTAGE to members of the PNO through
the PNO.
15
b. provide the ability of SCRIP ADVANTAGE to transmit from its
terminal to the electronic scrip purchased by the PNO from
SCRIP ADVANTAGE, as provided in paragraph 3.2 below.
c. provide the ability of SCRIP ADVANTAGE to transmit
transaction summary reports to the PNO through its terminal
and to receive from the PNOs transaction summary reports
recorded by the PNO's terminal.
d. provide the ability to transmit all transaction
information to a PATHWAYS Processing Center;
e. provide for an automatic transfer of funds by "ACH"
transfer to a designated bank account of the PNO in the bank
designated by the PNO within 2 business days (not including
weekends or holiday);
f. provide monthly periodic reports pursuant to subparagraph
3.8 below, showing each electronic scrip smart card
transaction in which any member of the PNO used the electronic
scrip smart card issued by SCRIP ADVANTAGE.
3.2 SCRIP ADVANTAGE will provide to the PNO, pursuant to a
purchase order from the PNO the full value of electronic scrip
upon payment in verified funds by the PNO, of ______% of the
value of the electronic scrip ordered by the PNO, (i.e. the
PNO will purchase electronic scrip initially at a _____%
discount.) SCRIP ADVANTAGE will transmit to the PNO the full
value of the electronic scrip, as stated in the purchase
order, within 8 business day hours of receipt of the verified
funds. The electronic scrip will be transmitted to and
recorded in the electronic smart card terminal, for immediate
use by the PNO with its members for the purpose of crediting
electronic scrip smart cards as each member purchases scrip
from the PNO.
3.3 SCRIP ADVANTAGE, through PATHWAYS will provide training in the
use of the electronic scrip smart card terminal, and the
issuance and use of electronic scrip smart cards, and an
operations manual explaining the use of the electronic scrip
smart card terminal without charge to the PNO.
3.4 SCRIP ADVANTAGE will provide to the PNOs, without charge, the
registration materials to be used for enlistment of its
members in SCRIP ADVANTAGE electronic scrip smart card program
using the PATHWAYS Smart Card System. The materials will
explain the use of the electronic scrip smart card, and any
membership enrollment charges which may be required to cover
initial costs.
3.5 SCRIP ADVANTAGE will provide to each member of the PNOs who
enrolls in the electronic scrip smart card program, and pays
the enrollment fee, an electronic scrip smart card which will
be personalized for use by that member. The electronic scrip
smart card will be rechargeable (reusable) with electronic
scrip; and will be usable to pay for the goods and services at
every place of business which has signed to a contract by
SCRIP ADVANTAGE as a PM.
3.6 SCRIP ADVANTAGE will provide to the PNOs a periodically
updated list of SCRIP ADVANTAGE' PMs for use by the PNOs for
its own records.
3.7 On the 20th day of each calendar month SCRIP ADVANTAGE shall
deposit by "ACH" transfer to the designated bank account of
the PNOs, any surplus discounts obtained by SCRIP ADVANTAGE
from its PMs on the specific transactions made by all members
of this PNOs during the prior calendar month.
16
3.8 On or before the 20th day of each calendar month SCRIP
ADVANTAGE, through PATHWAYS shall deliver to the PNOs a
complete list and summary of all purchase transactions made by
members of the PNOs using the electronic scrip smart cards
issued to them. The summary shall include the total
discount(s) obtained by SCRIP ADVANTAGE from each PM, less the
discount already received by the PNOs when it purchased the
electronic scrip as provided in paragraph 3.2 above, and less
the administrative charges of SCRIP ADVANTAGE for providing
these services to the PNOs.
4. AGREEMENTS OF PNOS
4.1 PNO agrees to provide an access telephone line, at its own
expense, and without expense to SCRIP ADVANTAGE or its
designated equipment and service provider, to which the
electronic scrip smart card terminal shall be connected on an
"as needed" basis to transmit and receive electronic scrip and
any other information appropriate and reasonably necessary for
the functioning of SCRIP ADVANTAGE' electronic scrip smart
card program.
4.2 PNO agrees to provide to SCRIP ADVANTAGE the name and branch
of its designated bank, the account name, account number, and
a copy of its deposit slip for that account so as to
facilitate the transfer by SCRIP ADVANTAGE of funds to the PNO
by "ACH" transfer as provided for in Paragraph 3.7, above.
4.3 The value of the Smart Scrip Card Terminal with related
software, as provided by SCRIP ADVANTAGE to the PNOs is
$________, which will be acquired by arrangements between the
PNO and PATHWAYS by cash purchase or by leasing, or other
financing arrangement.
4.4 The PNO agrees to protect the Smart Scrip Card Terminal from
damage arising from intentional or negligent misuse for
purpose for which it is not designed or intended. In addition
PNO agrees that if the Smart Scrip Card Terminal is damaged
while in the possession of the PNO so that it will not
function correctly for any reason other than ordinary wear and
tear, or failure of parts not arising from misuse, then the
PNO shall pay for the repairs to make the Smart Scrip Card
Terminal function correctly, such repairs must be performed by
a repair facility approved by SCRIP ADVANTAGE.
4.5 The PNO agrees to replace at full value the Smart Scrip Card
Terminal if it is lost, stolen, or damaged beyond repair by
fire, or water, or other physical casualty or misuse.
5. DURATION AND TERMINATION OF AGREEMENT
5.1 Duration. This Agreement shall be for the term of _____
year(s) and shall automatically renew for one year, from year
to year until terminated by either party.
5.2 Termination for Cause. This Agreement may be terminated by
either party "for cause," for the following reasons if the
procedures stated in paragraph 5.3 are followed:
a. For default by a party for failure to perform one or more
of the obligations of that party as stated in the Agreement.
Upon termination, a final accounting and payment shall be provided to
the PNOs as provided for in paragraphs 3.7 and 3.8.
17
5.3 Notice of Termination for Cause. If either party believes it
has a basis for termination of this Agreement for cause which
it wishes to exercise, it must first send a written notice to
the other party giving notice of the intent to terminate this
agreement for cause, and stating briefly the reason(s) for
such termination for cause. The party receiving the notice of
termination for cause shall have 30 days after receipt of the
written notice to cure or find a cure for the cause stated in
the written notice. If the cause stated is immediate jeopardy
of the loss of the tax exempt status of either party then this
Agreement shall be suspended during the 30 day period. The
written notice(s) shall be delivered pursuant to Section 7,
and paragraph 7.1 below.
5.4 Termination Without Cause. If either party desires to
terminate this Agreement without cause, it shall send written
notice to the other party 120 days in advance of the intended
termination date, stating that the sending party intends to
terminate this Agreement on the specific date certain stated
in the notice, which must be at least 120 days after delivery
of the notice. The written notice shall be delivered pursuant
to Section 7 and paragraph 7.1 below. Upon the expiration of
notice period, the Agreement shall terminate. Upon
termination, the electronic scrip and terminal provided to PNO
as identified below shall be returned to SCRIP ADVANTAGE, and
a final accounting and payment shall be provided to the PNO as
provided for in paragraphs 3.7 and 3.8.
6. NOTICES
6.1 Method of Delivery of Notices. All notices required by this
Agreement shall be in writing and delivered either in person,
or by messenger, or by registered or certified first class
mail with return receipt requested, postage prepaid, sent to
the last known address of the party to receive the notice.
6.2 Effective Date of Delivery. Notices sent pursuant to
paragraph 7.1 shall be deemed delivered at the earliest of the
following:
a. When actual received; or
b. On the fifth full business day after mailing of the notice
by registered or certified mail with return receipt requested and
postage prepaid.
6.3 Addresses for Notices. The current address for notices sent to
the respective parties pursuant to paragraph 6.1 are:
[Name of PNO] SCRIP ADVANTAGE, Inc.
[Address] -----------------------
-----------------------
These addresses for notice purposes may be changed by written notice
given in accordance with this paragraph.
7. MISCELLANEOUS PROVISIONS
7.1 Applicable Law.
This Agreement is made pursuant to California law including
choice of law rules, and applicable federal law and
regulations if appropriate to the meaning of these provisions
concerning federal tax exempt status.
7.2 Dispute Resolution by Binding Arbitration.
18
If any dispute shall arise between SCRIP ADVANTAGE and PNO
concerning this Agreement, its meaning, or any subject related
to the making, performance or termination of this Agreement
then the parties agree that all such disputes shall be
referred to binding arbitration, as more specifically provided
below. Either party may apply to the American Arbitration
Association for arbitration of the dispute pursuant to the
American Arbitration Association Rules applicable to
Commercial Disputes. The site of the arbitration shall be
Fresno, California, unless otherwise agreed by the parties.
The arbitration shall be conducted pursuant to the American
Arbitration Association Rules applicable to Commercial
disputes. The party who petitions or applies for arbitration
shall pay all initial costs and fees required by the American
Arbitration Association to commence the arbitration
procedures. There shall be one arbitrator appointed, who shall
be an attorney with experience in arbitration of commercial
disputes. The arbitrator shall have authority to award actual
damages to the extent permitted by this Agreement; but under
no circumstances shall have the authority or power to award
punitive damages. The arbitrator may award a reimbursement of
all costs and expenses, including accounting fees and
expenses, expert witness fees and a reasonable attorney's fee.
The arbitrator's findings, conclusions, and award may be filed
in Superior Court in the County where the arbitration occurs
and judgment entered based thereon unless the arbitrator's
award is appealed within the time provided and on the limited
grounds permitted by California Law. Once an award and
judgment has become final it may be enforced by legal
remedies.
7.3 Entire Agreement; Amendments.
This is intended by the parties to be the entire Agreement
between the parties. All prior oral or written statements,
negotiations and representations are hereby deemed to be
superseded by this written Agreement. The Agreement can be
amended only by a written amendment or other written agreement
signed by both parties.
Smart Scrip Card Terminal (_______,________) Serial number:___________________
Dated: ______________, 199___.
PNO:_____________________________ SCRIP ADVANTAGE, Inc.
Name of PNO
By_________________________________ By___________________________
(Print Name of Authorized
Signature)
------------------------------------
TITLE OR POSITION
19
EXHIBIT A
Attachment to SCRIP ADVANTAGE Standard Terms of Agreement
With Participating Non Profit Organization
SCRIP ADVANTAGE, INC. (SCRIP ADVANTAGE) hereby identifies and names THE
PATHWAYS GROUP, INC. hereinafter referred to as PATHWAYS, as SCRIP ADVANTAGE'
service and technology provider for the Smart Card System and Services to be
provided with respect to the SCRIP ADVANTAGE Standard Terms of Agreement with
NPOs, until and unless SCRIP ADVANTAGE provides written notice otherwise.
PATHWAYS shall provide (1) the availability of all Smart Card
Terminals, properly programmed to integrate each terminal into the SCRIP
ADVANTAGE/PATHWAYS Smart Card Electronic Scrip System; and (2) availability of
all SCRIP ADVANTAGE/PATHWAYS Electronic Scrip Smart cards properly programmed
with data specific for security of the cards, and the software necessary to use
the card in the SCRIP ADVANTAGE Smart Card Electronic Scrip System; and (3) the
PATHWAYS Processing Center to which all Smart Card Terminals in the system will
be connected pursuant to the agreements between SCRIP ADVANTAGE and the PNOs and
SCRIP ADVANTAGE and the PMs, and SCRIP ADVANTAGE and PATHWAYS.
Under no circumstance within the control of SCRIP ADVANTAGE during the
existence of this agreement to which this Exhibit A is attached, will SCRIP
ADVANTAGE fail to provide the Non Profit Organization (PNOs) with the full
products services provided for under Part 3, Agreements of SCRIP ADVANTAGE, of
this agreement, either directly or through a service and technology provider.
20
APPENDIX No. 3
SCRIP ADVANTAGE
STANDARD TERMS OF AGREEMENT
WITH PARTICIPATING MERCHANTS
This Agreement entitled SCRIP ADVANTAGE STANDARD TERMS OF AGREEMENT
WITH PARTICIPATING MERCHANTS is made between the SCRIP ADVANTAGE, INC., a
California corporation, hereinafter referred as "SCRIP ADVANTAGE," and
___________________, a __________________, hereinafter referred to by name or as
"PM." This Agreement shall be referred to hereinafter as the "SCRIP ADVANTAGE/PM
Agreement."
1. RECITALS
1.1 Whereas, the SCRIP ADVANTAGE has used and promoted the use of
gift certificates in its scrip program through SCRIP
ADVANTAGE' participating nonprofit organizations, hereinafter
"PNOs," for several years:
1.2 Whereas, the SCRIP ADVANTAGE, in cooperation with its PNOs
wishes to modernize its scrip program by use of modern
electronic and computerized systems for sale and use of
electronic scrip;
1.3 Whereas, SCRIP ADVANTAGE has arranged with The Pathways Group,
Inc., hereinafter "PATHWAYS" for the use of the Pathways Smart
Card Electronic Scrip System by which electronic scrip is
placed on smart cards sponsored and issued by SCRIP ADVANTAGE
through its PNOs for use with Merchants who sign agreements
with SCRIP ADVANTAGE as Participating Merchants," hereinafter
sometimes referred to as "PMs."
1.4 Whereas SCRIP ADVANTAGE and the undersigned PM desire to make
an agreement between them so that the PM may participate as a
Merchant in the SCRIP ADVANTAGE modernized scrip program
utilizing the Pathways Smart Card Electronic Scrip System;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
2. PURPOSE
The purpose of this Agreement is to facilitate the use of the Pathways
Smart Card Electronic Scrip System with the PM to replace the outmoded and labor
intensive use of paper scrip previously commonly used, such as merchant gift
certificates.
3. AGREEMENTS OF SCRIP ADVANTAGE
3.1 SCRIP ADVANTAGE agrees to provide to PM through PATHWAYS,
access to the Pathways Smart Card Electronic Scrip System
which will perform the following functions:
a. the ability to read the smart cards issued by SCRIP
ADVANTAGE through its PNOs;
b. deduct the purchase price including sales taxes, if
any, for any purchase from the electronic scrip on
smart cards issued by SCRIP ADVANTAGE through its
PNOs;
21
c. store all transaction information necessary to do a
complete accounting report for each transaction,
including the purchase price, the sales tax, if any,
the identity of the card user, the identity of the
PNO though which the electronic scrip on the current
card was issued;
d. provide the technical ability to transmit all
transaction information to the PATHWAYS Processing
Center;
e. provide for initiating an automatic transfer of
accrued funds by "ACH" transfer to a designated bank
account of the PM in the bank designated by the PM
within 2 business days (not including weekends or
holidays);
f. provide _____ periodic reports showing each
electronic scrip smart card transaction which
occurred during the period and the amount disbursed
to the PM by the SCRIP ADVANTAGE for each transaction
and the total number of transactions with respect to
the total amount of disbursements and the balance of
any disbursements to be made with respect to those
transactions.
3.2 SCRIP ADVANTAGE will provide appropriate placards, signs
and/or window appliques which advise the purchasing public
that the SCRIP ADVANTAGE electronic scrip smart card is
honored at the PM's business location for all purchasers.
SCRIP ADVANTAGE will also provide, through PATHWAYS, a
hardware reference manual and an operators guidebook for the
PATHWAYS Smart Card Electronic Scrip System.
3.3 The SCRIP ADVANTAGE will, acting through PATHWAYS, access the
electronic scrip smart card terminals at a specific agreed
time each day, on a daily basis, and collect and upload the
records of each electronic scrip smart card transaction
recorded by PM's electronic scrip smart card terminals and not
previously uploaded during a prior day. The SCRIP ADVANTAGE
will, on the next day of banking operations, submit the
electronic scrip smart card transaction information through
its accounting department to SCRIP ADVANTAGE' bank, which
will, within the next banking day, disburse to PM _____% of
the total proceeds of each daily compilation of each of the
electronic scrip smart card transactions.
4. AGREEMENTS OF PM
4.1 PM agrees to accept and honor any electronic scrip smart card
issued by SCRIP ADVANTAGE through its PNOs during the term of
this SCRIP ADVANTAGE/PM/Agreement, without restriction for
payment of goods and/or services offered to the purchasing
public by the PM.
4.2 PM agrees to acquire from or through PATHWAYS, at PM's own
expense, one or more electronic scrip smart card terminals for
the purpose of reading the electronic scrip smart cards, and
processing the transactions using such cards. The acquisition
may be by purchase or lease.
4.3 PM agrees to provide an access telephone line at its own
expense to which each electronic scrip smart card terminal
shall be connected on an "as needed" basis to transmit the
transaction information to and receive compiled transaction
information from SCRIP ADVANTAGE, through the PATHWAYS
Processing Center. This telephone line is not required to be a
dedicated line, but it must be available for contacts between
the PM's Smart Card Terminals and the Pathways Processing
Center in order to upload transaction data and permit access
for confirmation purposes when necessary to validate
transactions.
22
4.4 PM agrees that it will charge against the electronic scrip
smart cards issued by SCRIP ADVANTAGE through its PNOs as if
each transaction were for cash, i.e., any special
merchandising or sale offered to any cash purchaser shall be
available to the electronic scrip smart card user including
"specials," "coupons," or other sales promotion offerings.
4.5 PM agrees that with respect to any purchase by a holder of an
electronic scrip smart card issued by SCRIP ADVANTAGE through
its PNOs that PM will honor a full exchange and/or refund
policy as to such purchases identical to that offered for cash
purchases with a sales receipt.
4.6 PM agrees to accept the electronic scrip smart card issued by
SCRIP ADVANTAGE through its PNOs without restriction to pay
the card holder's charge accounts or contracts of any kind,
including but not limited to, open account obligations,
monthly installment account obligations, or installment
contract obligations.
5. DURATION AND TERMINATION OF AGREEMENT
5.1 Duration. This Agreement shall be for the term of ____
month(s) and shall automatically renew for one year, from year
to year thereafter until terminated by either party.
5.2 Termination for Cause. This Agreement may be terminated by
either party "for cause," for the following reasons if the
procedures stated in paragraph 5.3 are followed: For default
by a party for failure to perform one or more of the
obligations of that party as stated in the agreement.
5.2.1 Upon termination, a final upload of information pursuant to
paragraph 3.3 shall occur as soon as possible, and a final
report shall be sent to the PM as provided for in paragraph
3.1(f). SCRIP ADVANTAGE will pick up and PM agrees to return
all materials provided pursuant to paragraph 3.2 above. SCRIP
ADVANTAGE and PM shall cooperate in good faith to accomplish
these activities without delay. Upon completion of those
activities, all software licenses and sublicenses by which PM
is authorized to use the SCRIP ADVANTAGE sponsored electronic
scrip smart card program shall be automatically terminated
without further notice or delay.
5.3 Notice of Termination for Cause. If either party believes it
has a basis for termination of this Agreement for cause which
it wishes to exercise, it must first send a written notice to
the other party giving notice of the intent to terminate this
agreement for cause, and stating briefly the reason(s) for
such termination for cause. The party receiving the notice of
termination for cause shall have 30 days after receipt of the
written notice to cure or find a cure for the cause stated in
the written notice. The written notice(s) shall be delivered
pursuant to Section 7, and paragraph 7.1 below.
5.4 Termination Without Cause. If either party desires to
terminate this Agreement without cause, it shall send written
notice to the other party 120 days in advance of the intended
termination date, stating that the sending party intends to
terminate this Agreement on the specific date certain stated
in the notice, which must be at least 120 days after delivery
of the notice. The written notice shall be delivered pursuant
to Section 7 and paragraph 7.1 below.
5.4.1 Upon the expiration of notice period, the agreement shall
terminate. Upon termination, a final upload of information
pursuant to paragraph 3.3 shall occur as soon as possible, and
a final report shall be sent to the PM as provided for in
paragraph 3.1(f). SCRIP ADVANTAGE will pick up and PM agrees
to return all printed materials provided pursuant to paragraph
3.2 above. PM and SCRIP ADVANTAGE shall cooperate in good
faith to accomplish these activities without delay. Upon
completion of those activities, all software licenses and
sublicenses by which PM is authorized to use the SCRIP
ADVANTAGE sponsored electronic scrip smart card program shall
be automatically terminated without further notice or delay.
23
6. NOTICES
6.1 Method of Delivery of Notices. All notices required by this
Agreement shall be in writing and delivered either in person,
or by messenger, or by registered or certified first class
mail with return receipt requested, postage prepaid, sent to
the last known address of the party to receive the notice.
6.2 Effective Date of Delivery. Notices sent pursuant to
paragraph 7.1 shall be deemed delivered at the earliest of the
following:
a. When actually received; or
b. On the fifth full business day after mailing of
the notice by registered or certified mail with
return receipt requested and postage prepaid.
6.3 Addresses for Notices. The current address for notices sent to
the respective parties pursuant to paragraph 7.1 are:
[Name of PM] SCRIP ADVANTAGE, INC.
[Address] --------------------------
--------------------------
--------------------------
These addresses for notice purposes may be changed by
written notice given in accordance with this
paragraph.
7. MISCELLANEOUS PROVISIONS
7.1 Applicable Law. This Agreement is made pursuant to California
law including choice of law rules, and applicable federal law
and regulations if appropriate to the meaning of these
provisions concerning federal tax exempt status.
7.2 Dispute Resolution. (The parties hereby agree to and shall use
mediation services available within the State of California
prior to bringing any proceeding for arbitration. If all
issues are not resolved to the satisfaction of both parties by
mediation, then either party may request arbitration pursuant
to the American Arbitration Associations Commercial Rules and
pursuant to California law. The parties agree that the
arbitrator shall have no authority or power to award punitive
damages. The arbitration award from such arbitration
proceedings shall be binding upon both parties except for any
limited rights of appeal provided by California law. All
mediations and arbitrations shall be held in California unless
otherwise mutually agreed to be held elsewhere by both
parties.
7.3 Entire Agreement; Amendments. This is intended by the parties
to be the entire agreement between the parties. All prior oral
or written statements, negotiations and representations are
hereby deemed to be superseded by this written Agreement. This
Agreement can be amended only by a written amendment or other
written agreement signed by both parties.
Smart Scrip Card Terminal (_________,________) Serial number:_________
Dated:_____________, 199___.
PM:________________ SCRIP ADVANTAGE, INC.
Name of PM
24
By_______________________ By_________________________
(Print Name of Authorized President
Signature)
----------------------
TITLE OR POSITION
25
APPENDIX NO. 4
ATTACHED TO MASTER PROJECT AGREEMENT
BETWEEN SCRIP ADVANTAGE AND PATHWAYS
DATED: _____/_____/_____
PATHWAYS SMART CARD ELECTRONIC SCRIP SYSTEM
TRAINING PROGRAM DESCRIPTION
PATHWAYS will provide training to SCRIP ADVANTAGE key employees and
representatives on the following subjects in the following manner:
1. PATHWAYS will conduct a basic original Training seminar complete with
oral, visual and printed materials which will explain and demonstrate
all procedures and steps which the SCRIP ADVANTAGE key personnel and
representatives need to know and understand:
a) The functions and uses of the Smart Card Terminals program by
PATHWAYS use in the PATHWAYS Smart Card Electronic Scrip System
(hereinafter referred to as the PATHWAYS SYSTEM.).
b) The functions and use of Smart Cards programmed by PATHWAYS for
use in the PATHWAYS SYSTEM.
c) The basic information needed from each PNO so that its fund
raising program can be included in the PATHWAYS SYSTEM.
d) The basic information needed from a member of a PNO to enroll as
a cardholder in the PATHWAYS SYSTEM.
e) The basic information needed from each PM to enroll each PM in
the PATHWAYS SYSTEM.
2. PATHWAYS will conduct a second seminar, separate from the basic original
training seminar, in which key employees and representatives of SCRIP
ADVANTAGE will be taught how to present the PATHWAYS system as part of
the SCRIP ADVANTAGE program offered to its PNOs. The purpose of this
seminar will be to teach SCRIP ADVANTAGE personnel how to enroll PNO
members in the new SCRIP ADVANTAGE/PATHWAYS SYSTEM; and thereafter train
the key personnel of each enrolled PNO in the functions and uses of the
Smart Card Terminals and the Smart Card that are part of the PATHWAYS
SYSTEM.
3. PATHWAYS will conduct a third seminar, separate from the above two
listed seminars, in which the key employees and representatives of SCRIP
ADVANTAGE will be taught how to present the PATHWAYS SYSTEM to a
Merchant in order to encourage the Merchant to enroll as a PM, and
thereafter train the key personnel of each PM in the functions and uses
of the Smart Card Terminals and Smart Cards that are part of the SCRIP
ADVANTAGE/PATHWAYS SYSTEM.
4. PATHWAYS will provide a reasonable amount of follow-up training to
insure that SCRIP ADVANTAGE key personnel are trained to use any
upgrades of Smart Card Terminals or Smart Cards, regarding both
equipment and cards, as well as any upgrades in software as developed
from time to time.
5. It is the intent and expectation of PATHWAYS and SCRIP ADVANTAGE that
both parties will cooperate to schedule and hold the seminars listed
herein, promptly after signing the Master Project Agreement, in order to
implement the Master Project Agreement with reasonable efficiency and
speed.
Approval of SCRIP ADVANTAGE - Initials:_______________
Approval of PATHWAYS - initials: ______________
26
27
APPENDIX NO. 5
SCRIP ADVANTAGE/PATHWAYS TRANSACTION FLOW
Chargeable to SPI
Reference
1. Non-Profit Organizations: Order Smart Scrip, Receive Smart Scrip
2. SCRIP Merchants: Accept Smart Scrip, Accept Credit/Debit Cards, Transmit
Claim Batch to TPG
3. Pathways Group: ACH from PNO to SAI, ACH from SPI to Merchant, Forward
CC/DR Batch, Smart Card "Auto" Reload (E-Bank)
4. SCRIP ADVANTAGE: Receive ACH from PNO, Send ACH to Merchant
5. Non Profit Account: Send ACH to SAI for purchases
6. Merchant Account: Receive ACH for claims, Receive ACH for CC payment/
charge back
7. Credit Card Switch: All credit/debit transactions, all charge back
transactions
[GRAPHIC]
28
PROMISSORY NOTE WITH OPTION TO CONVERT
DEBT OBLIGATION TO EQUITY INVESTMENT
PROMISSORY NOTE
Date: June 19, 1998 _________________, California
For value received of $50,000.00, receipt of which is hereby
acknowledged, Scrip Advantage Inc., a corporation, promises to pay to the order
of The Pathways Group, Inc., upon demand the sum of Fifty Thousand Dollars
($50,000.00), with interest at the rate of Ten Percent (10%) interest per annum
beginning June 19, 1998, payable quarterly on the last day of each quarter,
payments beginning September 30, 1998; and thereafter on December 31, March 31,
June 30, and September 30, of each year until the note is fully paid.
This note may be paid by the maker, in whole or in part, at
any time prior to and without demand by holder; but must be paid upon demand by
holder.
In the event any action is brought by the holder of this note
to collect payment of this note, the maker corporation agrees to pay reasonable
attorney fees and court costs.
The promissory note is an unconditional obligation of the
maker corporation. The Payee has the right to be fully paid according to its
terms.
This is not a negotiable promissory note. It is coupled with
attached "Continuing Option To Convert Debt Obligation To Equity Investment",
which is a separate but related right of the payee named above or
assignee/holder of this note, which cannot be separately assigned without this
note. This note may be converted, in whole or in part, into shares of Scrip
Advantage Inc. upon fulfillment of and pursuant to conditions, terms and
provisions of the attached "Continuing Option To Convert Debt Obligation To
Equity Investment."
The maker corporation hereby agrees that until such time as
this note is fully paid or otherwise satisfied, that The Pathways Group, Inc.
shall be entitled to designate and appoint one Director to Board of Directors of
the maker corporation.
Dated this 14th day of July, 1998
SCRIP ADVANTAGE INC.
By /s/ ▇.▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CONTINUING OPTION TO CONVERT
DEBT OBLIGATION TO EQUITY INVESTMENT
Scrip Advantage, Inc., hereby grants to The Pathways Group,
Inc., the Payee/holder of the attached promissory note, or its assignee, a
Continuing Option To Convert any part or all of the debt obligation represented
by the above attached demand promissory note, including any accrued interest, if
any, to an equity investment in the voting common shares, or voting preferred
shares of stock of Scrip Advantage, Inc., on the following conditions, terms,
and provisions stated below. This Continuing Option To Convert, (etc.) including
all conditions terms and provisions shall hereinafter be referred to as " Option
to Convert."
The Pathways Group, Inc., may request at any time, in support
of its right to evaluate this Option to Convert, a copy of any or all of the
following records of Scrip Advantage, Inc., or its successor in interest:
A. A copy of the Articles of Incorporation;
B. A copy of the Bylaws of the Corporation;
C A copy of the Minutes of Meetings of the Board of
Directors,
D. A copy of the Minutes of Meetings of Shareholders;
E. A copy of the financial statements of Scrip Advantage,
Inc.;
F. A copy of a complete list of the shareholders of
Scrip Advantage, Inc., showing the name and number of
shares held by each shareholder; and
G. Such other information related to and in support of or
confirmation of any of the above information.
The determination of price per share and other terms and conditions of
this Option to Convert shall be negotiated in good faith between the parties
without undue delay, and within not more than thirty (30) days after delivery to
Scrip Advantage Inc., of a written notice from The Pathways Group, Inc., or its
assignee, that the holder of this Option to Convert desires to consider the
exercise thereof. If negotiations produce a price, terms and conditions
acceptable to The Pathways Group, Inc., then upon acceptance of the price, terms
and conditions by The Pathways Group, Inc., or its assignee, the Option to
Convert shall be deemed exercised, and the shares shall be issued to the option
holder, at which time so much of the debt obligation as has been converted to
equity investment shall be deemed paid. If the holder of the Promissory Note and
Option to Convert does not convert the entire unpaid debt at the time of the
exercise of the option, then, the balance of the debt represented by the
Promissory Note shall remain due and owing until paid, and the Option to Convert
shall remain in effect as to such remaining debt.
This Option to Convert shall continue in effect until the attached
promissory note is paid in full. The Option to Convert may be repeatedly
exercised as to part or all of the then unpaid debt remaining due pursuant to
the terms of the promissory note, in the discretion of the holder of the
Promissory Note and Option to Convert.
This Option to Convert is not assignable except if assigned together
with the Promissory Note to which it is attached. Any attempt to assign this
Option to Convert except with the Promissory Note shall be void and the Option
to Convert shall continue to be held by the holder of the Promissory Note. J
Dated this 19th day of June , 1998
Scrip Advantage, Inc.
By /s/ ▇.▇. ▇▇▇▇▇, ▇▇.
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President