AGREEMENT FOR SYSTEM SUPPLY AND SERVICES

1.

DEFINITIONS . In this Agreement, the following terms have the definitions set forth below. Other terms are defined in other sections of this Agreement.

1.1.

The term “Buyer” as used herein, shall be defined to include any Buyer subsidiary.

1.2.

“Cartridges” means the special ink cartridge for the System described in the Specifications.

1.3.

“Consumables” means the Cartridges and the Paper.

1.4.

“Customer” means any chain, retailer or other business in which Buyer installs the System for purposes of producing marketing incentives and communications.

1.5.

“Firmware” means the Printer firmware described in the Specifications, including the ASB feature. The ASB (Answer Status Back) feature is an Epson proprietary feature which allows the Printer in the System to communicate information about transactions and status with the host.

1.6.

“Launch Date” has the meaning stated in section 11.4.

1.7.

“Paper” means the Epson-provided paper for the System described in the Specifications.

1.8.

“POS” means point of sale.

1.9.

“Printer” means the special printing device for the System described in the Specifications, including the printer’s interface board.

1.10.

“Schedule” means the schedule for development of the System, stated on Attachment C, as it may be revised from time to time in writing by agreement of the parties.

1.11.

“Services” means the Consumables supply and management services described in section 6, the warranty services described in section 8, and the technical support services described in section 9.

1.12.

“Specifications” means the specifications stated on Attachment B, as they may be revised from time to time in writing by agreement of the parties.

1.13.

“System” means the coupon-printing system described in the Specifications, including the Printer, Firmware, Consumables and other components and elements.

2.

DEVELOPMENT .

2.1

Development Schedule. Epson, with the cooperation of Buyer as called for under this Agreement, shall develop the System. The System shall meet the Specifications in all material respects. Development shall proceed according to the Schedule. The parties will cooperate so that the development can be completed expeditiously and according to the Schedule. Buyer shall provide Epson with the POS system test bed and other items described in the Schedule. Epson shall obtain all safety certifications and approvals for the final System.

2.2

Prototype Approval. Epson will provide the Version 1 prototype (as defined in the Development Schedule of the System, for Buyer’s evaluation and approval for final sign off by Buyer prior to releasing the System to mass production (“Buyer Production Approval”). Development will be done in substantially the same manner as for other Epson POS products. Buyer will conduct acceptance testing of candidate prototypes for compliance with the Specifications, according to the Development Schedule. Epson will keep Buyer informed as to Epson’s progress on prototype development, providing reports at such times, and containing such details, as Buyer reasonably requires. Buyer shall have thirty (30) days from the date of receipt of the mass production prototype to deliver the written Buyer Production Approval to Epson or reject the prototype.

3.

SYSTEM SUPPLY AND SERVICES . When development has been completed, Epson will sell and Buyer will purchase the System, and Epson will provide the Services, all in accordance with this Agreement. The Services are provided at no extra charge to Buyer.

4.

PRICES AND PAYMENT

4.1.

Prices . The prices for the System’s Printer and Consumables are as stated in Attachment A. Prices are exclusive of sales, use and similar taxes, which shall be paid by Buyer if applicable.

4.2.

Payment . At the Effective Date, payment terms are net 30 days from date of invoice, with a discount of one percent for payment in 10 days or sooner; provided that Epson shall not issue any invoice prior to delivery of the Printer or Consumable. Epson reserves the right to change the payment terms if Buyer is not meeting the 30-day terms and continues to fail to meet those terms after 10 days’ written notice from Epson, or if there is a material adverse change in Buyer’s financial condition. All payments shall be made in U.S. Dollars unless otherwise agreed in writing by the parties. Epson reserves the right to exercise any of its lawful remedies if Buyer does not make payments when due.

4.3.

Performance by Third Parties . Catalina Marketing Corporation (“CMC”) hereby guarantees the performance (whether of payment obligations or other obligations hereunder) of any subsidiary purchasing under this Agreement under section 1.1, and of any third party purchasing under section 5.7. A failure of any such purchaser to comply with this Agreement as if that purchaser were CMC, shall be deemed a failure of CMC. Before Epson is obligated to sell to such a purchaser, the purchaser shall agree in writing to be bound by this Agreement as if it were CMC.

5.

PRINTER SUPPLY

5.1.

Forecasts . Buyer shall provide Epson, by the third day of each month, with a rolling forecast of anticipated requirements for Printers for the coming 180 days. Forecasts are not purchase commitments and shall be used by Epson for planning purposes only.

5.2.

Purchase Orders . Buyer shall issue purchase orders for its Printer requirements. Purchase orders shall be sent to Epson’s offices in Atlanta and shall state requested delivery date(s), shipment destinations and shipping instructions. Epson will reply to each proposed purchase order that is submitted by Buyer by notifying Buyer of its acceptance or rejection within five (5) business days of receipt of such purchase order. In the event of Epson’s rejection of a proposed purchase order, Epson’s notice of rejection will specify the basis for such rejection. Any purchase order not rejected by Epson within five (5) business days shall be deemed accepted by Epson. Preprinted terms on the parties’ respective forms, including, but not limited to purchase order forms, invoices and other form documentation and additional terms contained in the “Confidentiality” and “Cautions” sections of the Specifications in Attachment B to this Agreement do not apply and shall be of no force or effect. Standard lead time for Printer orders is 90 days (from receipt of order to shipment out), with accurate forecasts. Buyer shall purchase [***************************************************** **************************************************] Minimum quantity for any Printer order is [**********] units. For purposes of the above, the first year of the Initial Term ends on the date that is one year after the Launch Date; the remaining four years are 12-month periods that follow in succession.

5.3.

Shipment . Shipment of all Printer orders is FOB Epson’s California facility or any alternate location agreed upon by the parties in writing. Title and risk of loss pass to Buyer upon delivery to the carrier at the FOB point. Invoices shall be issued at shipment.

5.4.

Inspection . Buyer shall inspect shipments of Printers promptly upon receipt by Buyer. Buyer will be deemed to have irrevocably accepted shipments 30 days after receipt, unless Epson has received a written notice describing in detail all alleged grounds for rejection before that time. Acceptance does not limit Buyer’s other remedies.

5.5.

Reschedules, Cancellations and Flexibility . Buyer may reschedule or cancel shipments and increase orders above forecasted levels in accordance with Attachment E.

5.6.

Shipments Outside the U.S . Sections 5.1 through 5.5 above and 5.7 below govern Printer supply for the United States. Printer supply for locations outside the United States shall be handled in the same manner as described above, with the following exceptions:

a)

For some locations, Printers shall be shipped without ancillary items such as cables and/or power supplies. The parties will agree in writing in each case on these items for particular locations and any corresponding reduction in price resulting from the elimination of ancillary items.

b)

For orders to be delivered to non-U.S. locations, Epson may drop-ship from an Epson-affiliated factory or other non-U.S. site designated by Epson; provided that Epson shall deliver the shipment DDP (Incoterms 2000) to Buyer’s designated country and the delivery point within Buyer’s designated country shall be mutually agreed by the parties in writing.

5.7.

Authorized Purchasers. Buyer shall be permitted to designate authorized third-party purchasers of Printers and Consumables under this Agreement provided that: (i) items purchased by such parties shall be for the use and benefit of Buyer, (ii) such Printers and Consumables shall count towards the minimum purchase commitment of Buyer, and (iii) Buyer shall have the same rights with respect to such Printers and Consumables, including, but not limited to, the warranty obligations of Epson. Any such purchases are subject to section 4.3.

6.

CONSUMABLES SUPPLY AND MANAGEMENT

6.1.

Monitoring of Consumables Usage . Epson will monitor and manage the supply of Epson supplied Consumables to Customer locations where Buyer has installed Systems in order to furnish needed quantities of Consumables to the Customer locations so that Buyer’s Systems can be operated in a satisfactory manner. [*************************************************************************** ***************************].

6.2.

Shipment .

a)

Epson will ship Paper to Buyer or Customer locations designated by Buyer for purchase orders placed by Buyer. Shipment is FOB Epson’s California facility. Title and risk of loss pass to Buyer upon delivery to the carrier at the FOB point. Invoices for Paper and for related shipping cost shall be issued at time of shipment.

b)

Based on usage information, Epson will ship Cartridges to Customer locations designated by Buyer. Buyer will promptly report, or use commercially reasonable efforts to have Customers report, incorrect or damaged shipments received. Shipping cost is for Buyer’s account and will be invoiced at time of shipment. The initial quantity of Cartridges to be shipped will be agreed upon. [*********************************************************************** ****************************].

6.3.

Customer Inventories . Buyer shall take, and make commercially reasonable efforts to cause each Customer to take, all reasonable steps to prevent and cover loss and damage to Cartridges, including, for example, promptly reporting loss or damage to Epson, conducting periodic physical inventory counts as reasonably requested by Epson and generally cooperating with Epson in monitoring loss or damage to Cartridges at Customer locations. [************************************************************************ ******************************].

6.4.

[*********************************************************************** *******************************].

6.5.

[******************************************************************** **********************************].

6.6.

Consumables for Use Outside U.S. Sections 6.1 through 6.5 above govern Consumables supply for the United States. Consumables supply for locations outside the United States shall be handled in the same manner as described above, with the following exceptions:

a)

For orders to be delivered to non-U.S. locations, Epson may drop-ship from an Epson-affiliated factory or other non-U.S. site; provided that Epson shall deliver the shipment DDP (Incoterms 2000) to Buyer’s designated country and the delivery point within Buyer’s designated country shall be mutually agreed by the parties in writing.

b)

For used Cartridges, Epson may designate a non-U.S. location for returns. Epson has the option to offer a recycling program.

7.

[***************************]

7.1.

[****************************************************************************** ***********************].

7.2.

[******************************************************************************* **********************].

7.3.

[****************************************************************************** ***********************].

7.4.

[****************************************************************************** ***********************].

8.

WARRANTY, ETC.

8.1.

Limited Warranty . Epson warrants to Buyer that each System will, for the warranty period, be free from defects in design, material and workmanship and conform to the Specifications. The warranty period is [**************************************************************************] (the “Warranty Period”). This warranty covers only normal use, conditions and service. It does not cover any System in which cartridges other than new (non-refilled) Cartridges supplied by Epson have been used. It does not cover any System from which the Epson label or logo or the rating label or serial number has been removed, or any System that fails as a result of misuse or abuse, improper installation, improper maintenance, neglect, any improper shipping by Buyer, or damage caused by disasters such as fire, flood, and lightning, improper electrical current, third-party software, parts, components or peripheral devices added to the System without Epson’s authorization, paper that has not been qualified in advance by Epson, or service other than by Epson or a servicer authorized by Epson. Epson makes no warranties in this Agreement except as stated in this section 8.1. Epson disclaims all other representations and warranties, express or implied, including, but not limited to, any implied warranties of merchantability and fitness for a particular purpose.

8.2.

Exclusive Warranty Remedy . Epson will repair or replace (Epson to select the option) within [****************************************] at Epson’s designated repair location or give a credit (subject to mutual agreement of Epson and Buyer) for any System or component in breach of the warranty in the previous section. [*********************************************************]. Buyer shall bear all freight charges for Systems returned to Epson; Epson shall bear all freight costs for S