EXHIBIT 10.4
Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E COMMERCE MANAGEMENT AGREEMENT
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THIS E - Commerce Agreement dated the ___ day of ______________, 1999 by
and between Global Sports Interactive, Inc., a Pennsylvania corporation
(hereinafter referred to as "GSI") with an address of 555 South Henderson Road,
King of Prussia, PA 19406 and Sport Chalet, Inc., a Delaware corporation
(hereinafter referred to as "Retailer") with an address of 920 Foothill
Boulevard, La Canada, California, 91011.
W I T N E S S E T H:
WHEREAS, GSI is in the business of creating and operating all aspects of an
E-Commerce Shopping Experience, including servicing and fulfilling the on-line
retail sales of selected merchants; and
WHEREAS, Retailer desires to enter into an exclusive agreement with GSI
pursuant to which GSI will act as an Outsourcing Company providing the
Retailer's on-line customers the complete E-Commerce Shopping Experience, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the following
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meaning:
1.1 "Advertising Co-op and Discretionary Funds" shall mean amounts earned
by or allocated to the Retailer by its vendors, the purpose of which
is to advertise that vendor's brand or to use at the Retailer's
discretion.
1.2 "Categories" shall mean the various types of product groups (e.g.
athletic footwear, camping, in line skates, etc.) offered for sale by
the Retailer in its Land Based stores.
1.3 "Closeout Merchandise" shall mean end of season or excess merchandise
that is priced at a greater than normal discount.
1.4 "Complete URL Integration" shall mean the display of Retailer's URL in
all of Retailer's marketing and communications.
1.5 "Confidential Information" shall mean as that term is defined in
paragraph 7.1 of this Agreement.
1.6 "Cross Promotion" shall mean the use of the Retailer's URL, name and
logo on other than the Retailer's Web Site for the purpose of
promoting the Retailer's Web Site.
1.7 "Customary Pricing Structure" shall mean the policy generally employed
by the Retailer in determining the prices of merchandise in its Land
Based Stores.
1.8 "Customer Data" shall mean as that term is defined in paragraph 4.1 of
this Agreement.
1.9 "Data Bases" shall mean as that term is defined in paragraph 4.2 of
this Agreement.
1.10 "Defective Allowance" shall mean a discount granted by a manufacturer
to a retailer as a result of defective merchandise received by the
retailer and pursuant to which, the retailer also retains the
merchandise.
1.11 "Disclosing Party" shall mean the party disclosing Confidential
Information.
1.12 "Domain Name" shall mean as that term is defined in paragraph 1.1 of
the Web Site Development Agreement (as hereinafter defined).
1.13 "E-Commerce" shall mean the Retailer's specific business conducted
through the Internet.
1.14 "E-Commerce Orders" shall mean the orders for merchandise placed by
customers of the Retailer's Web Site.
1.15 "E-Commerce Outsourcing Manager" shall mean GSI.
1.16 "E-Commerce Shopping Experience" shall mean the shopping for and
purchasing of merchandise through the Internet.
1.17 "Flight Date" shall mean the date on which Retailer's advertising is
scheduled to run for the first time.
1.18 "Force Majeure Event" shall mean as that term is defined in Article 18
of this Agreement.
1.19 "GSI Content" shall mean as defined in paragraph 1.6 of the Web Site
Development Agreement.
1.20 "In Line Merchandise" shall mean current merchandise available to be
carried by the Retailer in its Land Based Stores from Retailer's
current or future vendors.
1.21 "Internet" shall mean the collection of interconnected networks that
all use the TCP/IP protocols.
1.22 "Land Based Stores" shall mean the Retailer's stores located in
shopping districts, strip shopping centers and shopping malls.
1.23 "Land Based Stores Gift Certificates" shall mean gift certificates
offered for sale on the Retailer's Web Site for merchandise sold only
in Retailer's Land Based Stores.
1.24 "Launch Date" shall mean the date on which GSI commences operation of
the Retailer's Web Site to the public.
1.25 "Markdowns" shall mean merchandise in Retailer's inventory offered for
sale at less than the price it was originally offered for.
1.26 "Milestone Delivery Schedule" shall mean as defined in paragraph 1.5
of the Web Site Development Agreement.
1.27 "On Line Customer" shall mean Retailer's customer who browses for or
purchases On Line Merchandise on the Retailer's Web Site.
1.28 "On Line Customer Loyalty Programs" shall mean programs established to
encourage repeat business from On Line Customers.
1.29 "On Line Merchandise" shall mean merchandise to be sold on the
Retailer's Web Site.
1.30 "Outsourcing Company" shall mean a company which provides E-Commerce
Services for traditional Retailers.
1.31 "Price Matching" shall mean a Retailer's policy pursuant to which it
addresses another retailer's lower price on a particular item of
merchandise.
1.32 "Production Schedule" shall mean as defined in paragraph 1.9 of the
Web Site Development Agreement.
1.33 "Project Manager" shall mean an employee of Retailers who is assigned
exclusively to work with GSI in supplying GSI with Retailer Content.
1.34 "Receiving Party" shall mean the party receiving Confidential
Information.
1.35 "Retailer Content" shall mean as defined in paragraph 1.10 of the Web
Site Development Agreement.
1.36 "Retailer's Net Cost" shall mean the amount paid by the Retailer for
merchandise from its vendors after deduction of cash or anticipation
discounts, marketing allowance, Defective Allowance, volume allowance
and any other discount offered by vendors, but excluding any marketing
funds granted to Retailer by a manufacturer as an overall marketing
allowance and not based upon the number of units or dollars purchased.
1.37 "Retailer's Warehouse" shall mean the place at which Retailer receives
delivery of merchandise from its vendors.
1.38 "Special Makeups" shall mean merchandise manufactured for the Retailer
exclusively.
1.39 "Term" shall be as defined in Section 2.2 of this Agreement.
1.40 "URL" shall mean the address of the Web Site on the Internet.
1.41 "Web" shall mean the World Wide Web.
1.42 "Web Site" shall mean as defined in paragraph 1.12 of the Web Site
Development Agreement.
1.43 "Web Site Development Agreement" shall mean the agreement by and
between GSI and Retailer attached to this Agreement as Exhibit "A".
1.44 Product Information" shall mean as defined in paragraph 1.14 of the
Web Site Development Agreement.
2. AGREEMENT AND TERM
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2.1 Agreement. During the Term GSI shall provide the Retailer with those
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Web Site services as hereinafter specified.
2.2 Term. The Term of this Agreement shall commence upon the execution of
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this Agreement and shall expire five (5) years after the Launch Date
("Expiration Date"). GSI shall use reasonable efforts to advise
Retailer ten days prior to the expected Launch Date. Notwithstanding
any other dates and/or schedules in the attached Web Site Development
Agreement, the Launch Date shall occur between the period of October
1, 1999 and December 1, 1999 ("Commencement Period"). GSI's obligation
to commence operation of the Web Site during the Commencement Period
shall be contingent on Retailer complying with the deadlines set forth
on the Milestone Delivery Schedule set forth on Attachment B to the
Web Site Development Agreement and on the Production Schedule to be
agreed upon by the parties. Retailer acknowledges the urgency of
complying with the deadlines set forth in the Milestone Delivery
Schedule and the Production Schedule and shall give GSI its full
cooperation to ensure that such deadlines are satisfied.
Notwithstanding anything contained herein to the contrary, in the
event that the Retailer does not comply with such deadlines and GSI
has given Retailer written notice of its failure to comply, then, for
each day of such non compliance, the Commencement Period shall be
extended by one day.
2.3 Extensions of Term.
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a. This Agreement shall automatically renew itself for an additional
five years ("First Option Period") unless terminated by GSI or
Retailer with written notice to the other party no later than ninety
(90) days prior to the expiration of the then current Term, as such
Term may have been extended.
b. After the expiration of the First Option Period, this Agreement
shall automatically renew itself from year to year unless terminated
by GSI or Retailer with written notice to the other party no later
than ninety (90) days prior to the
expiration of the then current Term, as such Term may have been
extended.
3. OBLIGATIONS AND RIGHTS OF THE PARTIES
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3.1 Creation of Retailer's Web Site.
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a. GSI, at its own expense, shall create, maintain and operate a Web
Site for the Retailer on the Web in accordance with the
specifications attached to the Web Site Development Agreement. In
connection therewith, simultaneous herewith, Retailer and GSI
shall execute the Web Site Development Agreement.
b. The Web Site shall contain the Retailer's E-Commerce Shopping
Experience, the URL of which shall be www.Sportchalet.com. In
addition, the Web Site shall contain any or all of the following
information, as the Retailer shall elect: corporate information
(e.g. historic background, mission statement, names of officers
and directors), store locator, public financial information (e.g.
SEC filings, annual reports), press releases, community programs,
employment opportunities for in store or corporate positions,
frequently asked questions and a "contact us" section.
c. Following the initial completion of the Web Site, the Retailer
shall have the right to update the content thereof as follows:
1) Employment Opportunities - GSI will provide the Retailer
with the technology necessary so that the Retailer will be
able to update the employment opportunity portion of the Web
Site as frequently as it desires.
2) Public Financial Information -
a) Stock Prices - Will be updated daily by a link to
another web site offering such information.
b) SEC Filings and Annual Reports - SEC filings will be
provided by a link so long as the government makes such
filings available at no cost. Both SEC filings and
annual reports will be provided only if available in
portable document format; in the alternative, GSI will
provide the consumer with a form in order to request
such information from the Retailer's investor relations
department.
3) Store Locators - Will be updated by GSI as such information
changes and Retailer provides GSI with such information.
4) Frequently Asked Questions - Will be updated by GSI monthly
and Retailer provides GSI with such information.
5) Corporate Information - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
6) Community Programs - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
7) Press Releases - GSI will provide the Retailer with the
technology necessary so that the Retailer will be able to
post press releases on its Web site as it desires. Retailer
shall defend and hold harmless GSI, its employees, officers
and directors, agents and representatives from any liability
arising from the posting of press releases on the Retailer's
Web Site.
8) "Contact Us" Section - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
9) Automatic Links to Retailer's Secondary Web Site -Such links
shall be established in accordance with the parameters set
forth in paragraph 8 below.
d. GSI's use of Retailer's URL, Retailer's Content and any other
Retailer information or material, whether confidential or not,
shall be granted and continue only for the Term of this Agreement
and shall not be used beyond the end of such Term, and shall be
subject to the confidentiality provisions of paragraph 7 of this
agreement, and shall be subject to Retailer's approval and
quality control rights contained in this agreement and Website
Development Agreement.
3.2 Creation and Maintenance of the Retailer's Web Site.
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GSI shall create and maintain a Web Site at all times during the term
for the Retailer. Commencing with the execution of this Agreement and
continuing through the Term, as may be extended, the Retailer, shall
cooperate with GSI so as to enable GSI to create and maintain for the
Retailer's consumers, the Retailer's Web Site. In connection
therewith, the Retailer shall supply GSI with the Product Information
as that term is defined in the Web Site Development Agreement)
required pursuant to the terms of the Web Site Development Agreement.
This shall include, but not be limited to printed marketing
information, data, text, audio files, video files, graphics, copy and
other assets necessary to create and maintain the Retailer's Web Site
as more fully set forth on Attachment A to the Web Site Development
Agreement. Notwithstanding anything contained herein to the contrary,
and except as it relates to Special Make - Ups, it shall be GSI's
responsibility to produce and maintain all camera ready product
information including high resolution images and appropriate product
description text and data for use on the Retailer's Web Site and
Retailer shall have no responsibility therefor. With respect to
Special Make -Ups, Retailer shall be responsible to provide GSI with
sample
product only in a sufficient amount of time to allow GSI to produce
camera ready product information.
3.3 Sale of Merchandise on the Retailer's Web Site.
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a. GSI, on behalf of the Retailer shall offer for sale on the
Retailer's Web Site all Categories of merchandise offered for
sale by the Retailer in its Land Based Stores. Notwithstanding
anything contained herein to the contrary, in no event shall GSI
offer firearms and related accessories for sale on the Retailer's
Web Site. In addition, if, as a result of a legitimate stated
business purpose, should Retailer disapprove of any item listed
for sale on the Retailer's Web Site, and which is not offered for
sale in the Retailer's Land Based Stores, upon five days prior
notice from Retailer, GSI shall remove such item from the
Retailer's Web Site.
To protect Retailer's image with its current customers of selling
top quality high specialty sporting goods equipment and apparel,
all such items shall be of a quality equal to or greater than
that carried in Retailer's Land Based Stores. GSI shall promptly
e-mail Retailer the same product information that will appear on
the Retailer's web site.
b. Within the Categories, GSI, on behalf of the Retailer shall have
the right to offer for sale:
1) current in line merchandise ordered by the Retailer from its
vendors; and
2) current in line merchandise not carried by the Retailer in
its Land Based Stores, but available in those Categories
carried by the Retailer; provided however, no products will
be offered for sale on Retailer's Web Site which a) the
Retailer would not be authorized by the manufacturer to sell
in its Land Based Stores; and b) would not be in accordance
with the same type, quality and price of merchandise carried
by the Retailer in its Land Based Stores; and
3) Special Make-Ups (manufactured for the Retailer exclusively
and not carried on any other retailer's web site; and
4) Closeout Merchandise (but only if the Retailer sells
Closeout Merchandise in its Land Based Stores; otherwise GSI
shall not offer for sale Closeout Merchandise on the
Retailer's Web Site); and
5) Markdowns of Retailer's inventory; and
6) Gift Certificates for On Line Merchandise
("On Line Gift Certificates")
[Items 1) through 6) are hereinafter referred to as "On Line
Merchandise"]
c. Retailer agrees to the addition of logical line extensions to
existing product bases specifically within the existing Retailer
vendor structure; provided that the
individual item within such line extension is approved by
Retailer in advance of use on the website. For example, if
Retailer sells 15 of the 40 tents manufactured by a particular
vendor in its land-based stores, and GSI desires to add the
remaining 25 inline tents to its on-line mix, such approval will
not be withheld by Retailer. However, should the vendor offer GSI
closeouts, seconds, blemishes, or customer returns to GSI to sell
on-line, Retailer would not automatically grant permission, as
this is not in keeping with Retailer's stated goal of selling top
of the line, first run, high quality merchandise. In addition,
product manufactured by the same vendor under a private label
program for another retailer, such as Coleman manufactured tents
sold as a private label under the Ozark Trails brand in Wal-Mart
stores, would not be permitted in the on-line store.
d. In addition, GSI, on behalf of the Retailer, shall offer for sale
on the Retailer's Web Site, Land Based Stores Gift Certificates
for merchandise available in the Retailer's Land Based Stores.
Notwithstanding anything contained herein to the contrary,
Retailer may elect not to offer Land Based Stores Gift
Certificates for sale on its Web Site by notifying GSI of its
decision not to do so no later than August 1, 1999.
e. In addition, GSI, if requested by Retailer, will advertise on the
Retailer's Web Site merchandise that is for sale only in the
Retailer's Land Based Stores provided, 1) No later than February
1, 2000 the item has a minimum retail selling price of $20.00;
and 2) Retailer furnishes GSI with a description and sample of
the item to be advertised.
f. In those instance where a written dealer agreement prohibits
Retailer from selling a particular vendor's merchandise except in
the Retailer's Land Based Stores, Retailer shall use its
reasonable efforts to obtain all consents required to permit the
sale of such merchandise on the Retailer's Web Site, but until
the required consent is obtained, GSI will comply and not offer
the restricted merchandise for sale on the Web Site.
3.4 Prices of On-Line Merchandise. GSI, on behalf of the Retailer, shall
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offer the On-Line Merchandise for sale on the Retailer's Web Site on
the following basis:
a. If the On-Line Merchandise is the same as offered for sale in the
Retailer's Land Based Stores, then it shall be offered for sale
on-line [*]. In order to facilitate this pricing, Retailer shall
[*]. GSI agrees to [*]. Retailer acknowledges that this is
essential in order to [*]; and
b. If the On-line Merchandise is not offered for sale in the
Retailer's Land Based Stores, then, [*] will use
reasonable efforts to [*]; provided however, upon five days prior
notice to [*].
c. If the Retailer offers the same merchandise at different prices
in its Land Based Stores, then [*], but in no event at [*].
d. GSI, on behalf of Retailer, shall add and collect all applicable
taxes and GSI, at its discretion and for its own account, may add
reasonable handling and delivery charges which are consistent
with industry practice.
e. In order to ensure that GSI may [*] Retailer shall furnish GSI
with copies of all [*] at least [*] prior to its [*].
f. The parties shall cooperate with each other so that the entire
pricing process between GSI and Retailer may be accomplished
electronically.
g. The parties agree that from time to time, the Retailer may carry
an item of merchandise at [*]. In those instances, [*] shall have
the right to [*]; provided however, GSI [*]. In such event, [*]
shall have the right to request [*].
3.5 GSI's Supply of On Line Merchandise.
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a. Invoicing and Shipping of On Line Merchandise. At such time as
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directed by GSI, the Retailer shall notify all of its vendors
that 1) GSI is the Retailer's E - Commerce Outsourcing Manager;
2) the vendors, for the benefit of the Retailer, should sell
their merchandise to GSI at the same prices, with the same
Advertising Co-op and Discretionary Funds and on the same terms
and conditions as they sell their merchandise to Retailer; and 3)
such merchandise should be shipped and invoiced directly to GSI.
The form of such notification shall be prepared by GSI and
approved by Retailer, such approval not to be unreasonably
withheld or delayed. In the event that a vendor deems it more
efficient to invoice Retailer for such merchandise, then the
Retailer shall place the order for GSI, invoice GSI at its net
cost, and GSI shall pay Retailer within thirty days of shipment
to GSI. In such instances, GSI shall also pay the Retailer its
pro rata share (based upon that portion of the shipment purchased
by the Retailer for GSI as it relates to the entire shipment
received by the Retailer from that vendor) of the actual freight
costs from the manufacturer to the Retailer's point of receipt
and the actual freight costs from the Retailer's point of receipt
to GSI's fulfillment facility.
b. In Line Merchandise. The Retailer shall advise GSI, no later
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than ten days after placing a purchase order with a vendor, of
the Category, item ordered, net cost, Retailer's retail price and
expected day of delivery to the Retailer's Warehouse.
c. Special Make-Ups. No later than ten days after ordering Special
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Make-Ups, Retailer shall advise GSI and furnish GSI with a sample
of the Special Make-Ups and advise GSI of the net cost, color
selection and size range. GSI shall have the right to purchase up
to [*] per cent of the Special Make-Up, proportionately as to
size and color, as ordered by the Retailer. GSI shall have five
business days to advise Retailer whether it desires to order any
of the Special Make-Ups and, if so, the quantity thereof. Special
Make-Ups shall be exclusive to Retailer's Web Site and shall not
be made available for sale on the web site of any other retailer
for whom GSI operates a web site. Retailer shall supply GSI with
a sample of the Special Make-Ups ordered by GSI for sale on the
Retailer's Web Site within ten days of obtaining such sample.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Special Make-Ups to
warrant selling such merchandise on line. In such instances the
Retailer shall not be required to offer such Special Make-Ups for
sale on line; provided however, the Retailer acknowledges that
with respect to Special Make-Ups ordered by Retailer for
chainwide distribution, GSI does not anticipate that this will
occur on a regular basis and this should be the exception rather
than the usual occurrence. Further, GSI acknowledges that the
Retailer may not be able to offer for sale on line certain
Special Make-Ups which are not available in all of the Retailer's
stores.
d. Closeout Merchandise. Retailer shall advise GSI no later than
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five business days after issuing a purchase order for Closeout
Merchandise from a vendor. At that time, Retailer shall advise
GSI of the cost, sizes and colors available and GSI shall have
five business days after receipt of such information to advise
Retailer that it will purchase, at Retailer's net cost, up to [*]
per cent of the Closeout Merchandise to be received by Retailer,
proportionately as to size and color, as ordered by Retailer.
Inasmuch as Retailer operates one Warehouse Outlet Store
specializing in one of a kind buys, including individual sales
representatives' merchandise, any items ordered for this
Warehouse Outlet or any future Warehouse outlet location are
excluded from as this provision.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Closeout Merchandise
to warrant selling such merchandise on line. In such instances
the Retailer shall not be required to offer such items of
Closeout Merchandise for sale on line; provided however, the
Retailer acknowledges that GSI does not anticipate
that this will occur on a regular basis and this should be the
exception rather than the usual occurrence.
Any Closeout Merchandise purchased by GSI from Retailer shall be
offered for sale by Retailer only on the Retailer's Web Site.
e. Markdowns. In the event that the Retailer has available
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Markdowns which it would like to offer for sale on its Web Site
solely at its discretion, it shall notify GSI and ship the
Markdowns to GSI's fulfillment center. The Markdowns shall be
shipped to GSI on consignment only. Retailer shall set the
selling prices on the Markdowns; provided however, that GSI on
behalf of the Retailer shall have no obligation to offer any
Markdowns for sale on the Retailer's Web Site which GSI deems, in
its sole discretion, would be inappropriate. Retailer shall
retain [*] of the selling price received from the sale of any
Markdowns when sold (excluding applicable taxes and shipping and
handling charges; the remainder of [*] plus shipping and handling
charges shall be retained by GSI as its management fee in
connection with the sale of the Markdowns. Any applicable tax
collected by GSI on behalf of Retailer shall be deposited into a
separate account as more fully discussed in paragraph 3.9 below,
and remitted by GSI to the appropriate taxing authority. GSI
shall account to Retailer for the sale of any Markdowns at the
same time that it accounts to the Retailer for sale of other On
Line Merchandise on the Retailer's Web Site. The amount of
proceeds from the sale of Markdowns shall not be considered the
sale of On Line Merchandise for the purpose of determining the
amount to be remitted to Retailer pursuant to paragraph 3.8
below.
f. With the exception of Markdowns and Land Based Gift Certificates,
which shall be governed by the provisions of paragraphs 3.5 e.
and 3.6 hereof respectively, and as part of the performance of
its obligations under this Agreement, GSI shall sell to the
Retailer, and the Retailer shall purchase from GSI all
merchandise to be sold by the Retailer on the Retailer's Web Site
at a price equal to [*] per cent of the selling price (excluding
applicable taxes, shipping and handling) at which such On Line
Merchandise is sold to the Retailer's On Line Customer.
g. Attached hereto as Schedule "2" is a schedule which summarizes
the various levels of management fees to be paid to GSI by the
Retailer depending upon the type of On Line Merchandise sold on
the Retailer's Web Site.
h. The parties shall cooperate with each other so that to the
maximum extent commercially reasonable the entire process set
forth in paragraphs 3.5 a, b, c, d and e between GSI and Retailer
may be accomplished electronically.
3.6 Gift Certificates
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a. Land Based Stores Gift Certificates. Subject to Retailer's
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rights set forth in 3.3 c. above, GSI, on behalf of the Retailer,
shall offer for sale on the Retailer's Web Site gift certificates
for merchandise in Retailer's Land Based Store. In order that
Retailer may fulfill customer orders for Land Based Stores Gift
Certificate, Retailer shall furnish GSI such gift certificates on
an "as requested" basis. The Retailer shall retain [*] per cent
of the proceeds received by the Retailer form the sale of Land
Based Stores Gift Certificates (excluding applicable taxes) and
the balance shall be paid to GSI as its management fee with
respect to the sale of such gift certificates and to cover all
costs, including credit card fees. GSI shall account to Retailer
for all sales of such certificates at the same time as it
accounts to Retailer for the sale of other On Line Merchandise.
The amount of proceeds from the sale of Land Based Stores Gift
Certificates shall not be considered the sale of On Line
Merchandise for the purpose of determining the amount to be
remitted to Retailer pursuant to paragraph 3.8 below.
b. Online Gift Certificates. GSI on behalf of the Retailer shall
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offer for sale on the Retailer's Web Site gift certificates for
On Line Merchandise. GSI shall supply the On Line Gift
Certificates which shall not be redeemable for merchandise
purchased in the Retailer's Land Based Stores. From each On Line
Gift Certificate purchased, the Retailer shall retain as its
operating income from the sale of the On Line Gift Certificate,
[*] per cent of the proceeds received by the Retailer from such
sale (excluding applicable taxes) and the balance shall be paid
to GSI as its management fee with respect to the sale of such
gift certificates and to cover all costs, including credit card
fees and the cost of the merchandise redeemed with the gift
certificate. GSI shall account to Retailer for all sales of such
certificates at the same time as it accounts to Retailer for the
sale of other On Line Merchandise. The amount of proceeds from
the sale of On Line Gift Certificates shall not be considered the
sale of On Line Merchandise for the purpose of determining the
amount to be paid to GSI pursuant to paragraph 3.8 below. The
proceeds shall be accounted for pursuant to paragraph 3.9 below;
provided however, should the On Line Gift Certificate be redeemed
for Markdowns, then at such time as the On Line Gift Certificate
is redeemed, GSI shall pay to the Retailer an additional amount
equal to [*] of the On Line Gift Certificate redeemed and the
Retailer shall supply the Markdown item requested by the
customer.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
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processing all on line merchandise sales business for the Retailer.
GSI will promptly process E -Commerce Orders received from the
Retailer's Web Site. GSI shall take the customer's credit card number
at such time as the merchandise is ordered. GSI, on behalf of the
Retailer's account discussed in paragraph 3.9 below, shall charge the
customer's credit card
with the amount of the order (including taxes, shipping and handling)
at the time the merchandise is shipped. The order will appear on the
customer's credit card under the name of "www.sportchalet.com" and
proceeds from the sale shall be deposited into Retailer's designated
bank account at the bank designated by GSI for full credit to
Retailer. GSI will make all arrangements for delivery of merchandise
purchased on the Retailer's Web Site.
a. Retailer and GSI shall jointly agree to the formula to be used
for computing shipping and handling charges for customer orders
submitted to GSI as the outsource operator of
www.sportschalet.com. Such approval will not be unreasonably
withheld or delayed.
b. As of February 1, 2000 GSI will track and report to Retailer the
elapsed time between customer orders and submission for picking
("Front -Office Processing Time") for each customer order. GSI
will provide Retailer with reports of average and longest Front-
Office Processing Time monthly by the 15/th/ of the month
following.
c. Retailer and GSI shall agree to the back order policies that GSI
will administer for customer orders submitted to GSI as the
outsource operator of www.sportchalet.com. Such approval will not
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be unreasonably withheld or delayed.
d. GSI will provide a facility for the acceptance of
Visa/MasterCard/American Express and all other credit card
accepted by the other clients of GSI, but excluding proprietary
cards of each such retailer.
1) GSI will perform authorization, settlement, and post-
settlement operations independently of Retailer;
2) GSI will at all times operate in conformance with the
Operating Rules and Regulations of each national credit
card;
3) GSI will implement procedures as required by each
national credit card for merchants engaged in non-face-
to-face transactions;
4) GSI will at its own cost install and staff an inbound
toll-free number to respond to inquiries and customer
service issues from credit card customers. The customer
service facility shall be staffed no fewer hours per
week than the total number of hours that Retailer
stores are open;
5) GSI will submit appropriate data with each credit card
settlement file to enable display on the customer's
credit card statement of the
merchant name "Sportchalet.com" and the toll free
number described in subsection 4) above.
e. Order Fill Performance Standards
1) Service level standards-GSI will guarantee that
more than [*] of items ordered will be shipped to
customers within the Visa/MasterCard time limit or
credit authorizations;
2) GSI will provide service level reports monthly to
Retailer by the 15/th/ of each month following,
and
3) Any two months in a 12-month period where GSI
fails to meet the standard shall be considered a
breach of this Agreement by GSI.
f. Customer Service Standards
1) GSI will submit to Retailer for review and
approval the policies that GSI will implement with
respect to customer returns and refunds. GSI will
not make any substantive changes to these policies
and procedures without prior consent from
Retailer. Approval will not be unreasonably
withheld or delayed.
2) GSI will provide a systematic capability to track
and monitor customer service activity to include
such information as original order number, order
date, reason for the customer contact, and
resolution.
a) For phone calls, time to answer and call
duration;
b) For e-mail, elapsed time from customer send
time/date to GSI response time/date.
3) GSI will provide Retailer with summary reporting
of customer service activity each month by the
fifteenth day of the following month.
3.8 GSI's Management Fee For and in consideration of the services to be
--------------------
rendered by GSI to Retailer hereunder, GSI shall be paid a management
fee ("Management Fee") equal to [*] per cent of the sales price of all
On Line Merchandise for all On Line Merchandise sold, excluding
however, the sale of Markdowns, Land Based Gift Certificates and On
Line Gift Certificates, the management fee for which shall be governed
by paragraphs 3.5 e. and 3.6 a. and 3.6 b., respectively. GSI's
Management Fee, including any management fee to GSI as a result of the
sale of Markdowns, Land Based Gift Certificates or On Line Gift
Certificates, shall be paid pursuant to the provisions of paragraph
3.9 below.
3.9 Payment and Accounting from the Sale of On - Line Merchandise.
--------------------------------------------------------------
a. The proceeds from the sale of On Line Merchandise on the
Retailer's Web Site shall be deposited into a bank account ("Web
Account") in the Retailer's name at GSI's designated bank
("Bank"). The Web Account shall be owned by the Retailer; provided
however, the only signatures on such account shall be employees of
GSI and GSI's designated employees shall have an irrevocable power
of attorney, and such power will be exercised solely in conformity
with this agreement and for the benefit of GSI and Retailer
pursuant to this Agreement's terms governing the Web Account and
the Tax Account, as hereinafter discussed, unless this Agreement
is terminated in accordance with the terms of this Agreement. No
other funds shall be deposited into the Web Account except for
credit and debit card proceeds from the sale of On Line
Merchandise on Retailer's Web Site and no other sums shall be
deposited into the Tax Account except applicable taxes collected
from the sale of merchandise on the Retailer's Web Site. From each
transaction, GSI shall be paid daily the sum of a) the cost of the
On Line Merchandise sold to Retailer's On Line Customers, b) GSI's
Management Fee and c) GSI's shipping and handling charge to the On
Line Customer (collectively, "GSI's Entitlement"), if any.
Retailer shall give the Bank instructions that will stand for the
term of this Agreement, as such term may be extended, to a) debit
the Web Account daily for the amount owed to GSI, as so directed
by GSI, and to credit GSI's designated account for such amount;
and b) to debit the Retailer's Web Account and to credit the
Retailer's especially established tax account ("Tax Account")
daily with the amount of any applicable tax collected. Any
interest earned on the Web Account and Tax Account shall belong
solely to GSI, and any interest earned on the Tax Account shall
belong solely to GSI and any charges imposed by the bank as a
result of such accounts, shall be paid by GSI. Prior to
termination of this Agreement, as permitted herein, Retailer shall
have no right to unilaterally offset from GSI's Entitlement any
amount which Retailer may believe is owing to Retailer from GSI
and Retailer shall obtain from its secured lenders a waiver to
claim a security interest in either the Web Account or the Tax
Account. In addition, Retailer shall give the Bank instructions
that will stand for the term of this Agreement, as such term may
be extended, to wire to the Retailer the amount determined
("Retailer's Operating Income") by GSI to be remaining from the
sale of On Line Merchandise from the Retailer's Web Site after the
deduction of GSI's Entitlement on the fifteenth day following the
end of each month. The amount of the Retailer's Operating Income
each month shall be certified by GSI's chief financial officer and
a copy of the accounting shall be furnished to the Retailer at the
same time that the Retailer's monthly Retailer Proceeds are wired
to the Retailer.
By way of example only, if Retailer sells a pair of athletic
shoes on its Web Site for one hundred ($100.00) dollars, plus a
five ($5.00) dollar shipping and handling charge, the total
deposit to the Bank account is one hundred and five ($105.00)
dollars. Retailer's Operating Income shall equal [*] after
payment of the Retailer's cost of On Line Merchandise, GSI's
management fee and the shipping and handling charge. GSI's
Entitlement shall be [*]([*] of $100.00, [*] of $100.00 and [*].
The Retailer's Operating and GSI's Entitlement shall also take
into account the amounts owing pursuant to paragraph 3.5 e. and
3.6 above and 3.11 below.
GSI shall be responsible to collect any applicable sales taxes
resulting from the sale of On Line Merchandise, if any. GSI shall
complete all required sales tax forms and submit them on the
Retailer's behalf. GSI shall indemnify, save and hold harmless
Retailer from any taxes, interest and penalties which may arise
as a result of GSI's failure to pay or timely pay any sales tax
resulting from the sale of On Line Merchandise. GSI shall be in
charge of any audit conducted by any taxing authority as it
relates to the sale of On Line Merchandise.
b. Within ninety (90) days of the end of each calendar year, GSI
shall provide the Retailer with a statement certified by its
independent auditors and setting forth the total On Line Sales,
the Retailer's Operating Income and GSI's Entitlement therefrom.
For a period of two years after the Retailer receives such
certified statement from GSI, Retailer, on one occasion, shall
have the right to audit the books and records of GSI with respect
to the Retailer's Operating Income and GSI's Entitlement paid
during the calendar year to which the certified statement
relates. Such audit shall be conducted at GSI's principal office
located in the continental United States on two weeks prior
notice to GSI. In the event that the audit reveals that the
Retailer's Operating Income were understated, GSI shall within
thirty days of completion of the audit, pay to the Retailer the
remaining balance of the Retailer's Operating Income for the
period audited plus interest at the prime rate of interest as
provided for in The Wall Street Journal on the date of the
audit's certification. In addition, in the event that the audit
reveals that the Retailer's Operating Income is understated by
more than [*] per cent for the calendar year in question, GSI
shall pay the additional amount owing and pay for the reasonable
audit costs. In the event GSI's annual accounting is off more
than [*]in two successive years, or more than [*] in one year,
Retailer shall have the option to terminate this Agreement by
giving to GSI written notice of its election to do so no later
than thirty days after receipt of the Audited results.
In addition, GSI will provide Retailer a statement certified by
independent auditors setting forth the total On Line Sales,
Retailer's Operating Income, and GSI's Entitlement therefrom
within forty-five (45) days of the conclusion of retailers fiscal
year ending 3/31/xx each fiscal year for the prior 12 months.
c. GSI takes full responsibility for all credit card chargebacks for
all occurrences resulting from an on-line purchase, and will
accordingly operate with merchant ID numbers different from
those used by Retailer for its land-based business.
d. GSI warrants to Retailer that, [*], no other Full Line Sporting
Goods Retailer (as hereinafter defined) which has or will enter
into an E - Commerce Management Agreement with GSI [*].
As used herein, a "Full Line Sporting Goods Retailer" shall refer
to a sporting goods retailer which carries in its Land Based
Stores merchandise in a variety of Categories such as (by way of
example only) baseball, basketball, golf, bowling, football,
hockey, aerobics and fishing).
In the event that GSI [*].
3.10 Service of On Line Customers. GSI shall be responsible for providing
----------------------------
all customer service relating to sales from the Retailer's Web Site,
including one click ordering, which shall be provided in a manner
consistent with that provided by other reputable on line retailers
representative of the then current state of the art E-Commerce
standards.
3.11 Return of On Line Merchandise. Retailer's return policy for On Line
------------------------------
Merchandise shall be consistent with the Retailer's return policy for
its Land Based Stores. With each shipment of merchandise, GSI shall
specifically instruct all customers that all merchandise purchased on
line may not be returned to the Retailer's Land Based Stores and may
only be returned in accordance with the instructions enclosed;
provided however, in the rare instance a customer desires to return On
Line Merchandise to one of the Retailer's Land Based Stores, the
Retailer, in order to maximize customer relations, shall accept such
merchandise for return in accordance with the Retailer's return
policy, and return the merchandise to GSI's fulfillment center. GSI
shall pay the Retailer for the full amount credited to the customer by
Retailer's land-based stores with respect to such merchandise, as well
as an amount equal to the Retailer's freight cost for returning the
merchandise to GSI's fulfillment center.
Should GSI receive the return of On Line Merchandise, GSI shall
reimburse the Retailer the amount of the GSI Entitlement paid to GSI
with respect to that transaction, as well as applicable tax refunded
to the On Line Customer.
3.12 On Line Customer Loyalty Programs. GSI shall have the right to
---------------------------------
establish On Line Customer Loyalty Programs in order to encourage
continued on line purchases. The On Line Customer Loyalty Programs
established by GSI for Retailer shall be consistent with that program
established by Retailer for use in its Land Based Stores. In addition,
the Customer Loyalty Programs established by GSI shall be used only in
connection with on line purchases and Retailer's customer loyalty
programs shall be used only in connection with purchases at the
Retailer's Land Based Stores. Notwithstanding anything contained
herein to the contrary, GSI shall not establish any On Line Customer
Loyalty Programs without first obtaining the approval of Retailer,
which approval shall not be unreasonably withheld. Retailer shall
respond to a request for such approval from GSI within fourteen days
of receiving the request. In the event Retailer fails to timely
respond, GSI shall furnish Retailer with a notice marked "second
request". If Retailer does not respond within two business days, GSI's
request shall be deemed granted. GSI will be solely and completely
responsible for all costs occurring as a result of creating and
operating an on line customer loyalty program.
3.13 Cross Promotion. GSI shall have the right to use Retailer's URL, name
---------------
and logo to cross promote Retailer's Web Site with other businesses in
order to promote Retailer's Web Site; provided however, GSI shall not
promote Retailer's Web Site on any other sporting good retailer's web
site, or on any other web site which would generally be considered
immoral, pornographic, political or offensive. Notwithstanding
anything contained herein to the contrary, GSI shall not establish any
Cross Promotions without first obtaining the approval of Retailer,
which shall not be unreasonably withheld. Withholding such consent in
order to protect or preserve Retailer's reputation and/or intellectual
property rights shall not be deemed unreasonable. Retailer shall
respond to a request for such approval from GSI within seven days of
receiving the request. In the event Retailer fails to timely respond,
GSI shall furnish Retailer with a notice marked "second request". If
Retailer does not respond within two business days, GSI's request
shall be deemed granted.
3.14 Price Matching. In the event that the Retailer, at its Land Based
--------------
Stores offers a "Price Matching" policy, GSI's management shall have
the right to use and adopt such policy for the Retailer's Web Site;
provided however, GSI shall not under any circumstance, advertise or
market the availability of this policy, and may offer it to customers
only in GSI's sole discretion.
3.15 Project Manager. Promptly after the execution of this Agreement, but
---------------
in no event later than sixty days after such execution, Retailer, at
its expense, shall hire or reassign one of its existing employees, to
act as Project Manager to work exclusively with GSI in creating and
maintaining the Retailer's Web Site. Commencing with the Project
Manager's hiring and continuing through the Term, as may be extended,
the Project Manager shall be the Retailer's liaison with GSI and shall
be
responsible for supplying GSI with the Retailer Content and such other
information as may reasonably be required of the Retailer in order to
create and maintain the Retailer's Web Site in the most efficient
manner.
4. ON-LINE DATA AND DATABASES
--------------------------
4.1 Ownership of Data. Any and all data ("Customer Data") related to
-----------------
Retailer's customers (including customer names and other identifying
information such as addresses, phone numbers and e-mail addresses,
credit card numbers, and descriptions of the items and quantities of
items purchased) that is collected by GSI shall be owned [*].
4.2 Ownership of Databases. All data structures, data schema, database
----------------------
dictionaries, attributes, validation tests for each element, table
sizes and formats, access requirements, data dependencies and other
elements involving the storage of Data on the Web Site and all
refinements, updates, releases, improvements and enhancements thereto,
all intellectual property rights embedded therein and all applications
created specifically for use of the data and Retailer Content
(collectively, the "Databases") shall, as between GSI and Retailer, be
the sole and exclusive property of GSI.
4.3 Delivery of Customer Data to Retailer. From time to time, but no more
-------------------------------------
than four (4) times per calendar year, GSI shall provide to Retailer
any or all of the following information collected from the Customer
Data:
a. customer's names;
b. customer's addresses;
c. customer's phone number;
d. customer's e-mail address;
e. items purchased;
f. amount spent;
g. information as to how customer reached Web Site;
h. refers;
i. unique visitors to site;
j. page views per site;
k. top ten most viewed pages;
l. bottom ten least viewed pages;
m. time of day traffic patterns;
n. sales by product and brand;
customer comments and complaints (shall be furnished on a
monthly basis); additional information at GSI's discretion.
GSI shall provide the Customer Data to Retailer in a mutually
agreeable, commercially standard format, either via diskette, CD-ROM,
electronically, or via another mutually agreeable method. GSI shall
use commercially reasonable efforts to ensure that the Customer Data
provided to Retailer accurately and completely reflects the Customer
Data in the Web Site, but GSI shall have no obligation to check the
accuracy, validity or integrity of the Customer Data and except as set
forth in this Section 4.3, the Customer Data is provided "AS-IS".
4.4 Restrictions on Use of Customer Data. Each party shall treat the
------------------------------------
Customer Data as Confidential Information of the other party in
accordance with the provisions of Article 7. Neither party may sell,
lend, or license the Customer Data to third parties without the prior
written consent of the other party, which consent may be withheld at
the sole discretion of the other party; provided however, Retailer
grants to GSI the right to combine all Retailers' Customer Data to
form trends and overall research as to the on line shopping habits of
consumers. In addition, Retailer may use the Customer Data relating to
Retailer in connection with the operation of its Land Based Stores
only. As set forth above, Retailer may not sell, lend or license the
Customer Data to any third party without GSI's consent, which consent
may be withheld by GSI in its sole discretion. The parties acknowledge
that the Customer Data referred to herein refers only to Customer Data
gathered from On Line Customers and shall not be applicable to
customer data gathered by the Retailer from its customers at its Land
Based Stores.
Retailer, as co-owner of the online customer database, will be
provided with the results of such data aggregation and analysis, in
the form of comparative profiles. GSI will provide the Retailer online
customer profile as well as the aggregated online customer profile. In
addition, Retailer will be allowed to promote to its own database of
land based customers.
5. ADVERTISING AND MARKETING
-------------------------
The Retailer shall, commencing no later than October 1, 1999, and
continuing during the Term, and any extensions thereof, at no cost to GSI
provide for Complete URL Integration in its advertising and marketing by:
5.1 prominently including as part of all of its print media (including but
not limited to newspapers, periodicals, circulars, billboards, print
materials, letterhead, business cards, shopping bags, cash register
receipts and arena advertising) its URL, www.Sportschalet.com.;
provided however, Retailer shall not be required to include the URL on
print materials such as letterhead, business cards, shopping bags and
cash register receipts until it exhausts its present supply of each
such item at which time it will promptly replace that item with items
containing the Retailer's URL; and
5.2 prominently including, at the end of its television advertising, its
URL; and
5.3 mentioning its URL at the end of all radio advertisements; provided
however, Retailer may request GSI's consent not to use the URL in up
to [*] per cent of its annual radio advertisements, which consent GSI
shall not unreasonably withhold.
Notwithstanding anything contained herein to the contrary, Retailer shall
be permitted to exhaust its existing supply of each item of
printed materials before instituting the Complete URL Integration with
respect to that item.
6. ADVERTISING CO-OP AND DISCRETIONARY FUNDS
-----------------------------------------
6.1 During the Term and any extensions thereof, GSI shall use all
Advertising Co-op and Discretionary Funds received by GSI directly
from vendors as a result of the purchase of merchandise for the
Retailer's Web Site exclusively, to promote the Retailer's Web Site,
as GSI shall elect. All such proposed advertisements shall be
submitted to the Retailer for the Retailer's approval as to content
and design along with placement information. The Retailer shall have
seven days from receipt to either approve or disapprove. In the event
that the Retailer disapproves, it shall advise GSI specifically as to
why and GSI shall attempt to address the Retailer's concerns and
resubmit the proposal to Retailer for its approval, which shall again
have forty eight hours from receipt to approve or disapprove. This
procedure shall continue until the advertisement has been approved or
replaced. In all instances where approval is requested of the
Retailer, in the event the Retailer does not respond within the
aforementioned forty-eight hours, Retailer shall be deemed to have
granted approval.
6.2 Any Advertising Co-op and Discretionary Funds received by the Retailer
through the Retailer's purchase of product for GSI, ultimately for the
Retailer's Web Site, may be retained by the Retailer; provided
however, Retailer acknowledges that it is preferential for Retailer's
vendors to sell to GSI directly and both Retailer and GSI shall
request Retailer's vendors to do so.
6.3 Retailer shall retain from vendors any non item driven marketing
funds; however, Retailer shall use its reasonable efforts to obtain
from vendors incremental marketing funds based upon an increase in the
sale of the vendor's merchandise on the Retailer's Web Site. Any such
incremental marketing funds shall belong to GSI and shall be used in
accordance with paragraph 6.1 above.
7. CONFIDENTIALITY
---------------
7.1 Confidential Information. Each party acknowledges that, in connection
------------------------
with the performance of this Agreement, it may receive Confidential
Information of the other party. For the purpose of this Agreement,
"Confidential Information" shall mean information or materials that is
clearly marked "confidential" or the Receiving Party knows has reason
to know is the confidential or proprietary information of the
Disclosing Party, either because a) such information is marked or
otherwise identified by the Disclosing Party as confidential or
proprietary, or b) such information has commercial value and is not
generally known in the Disclosing Party's trade or industry.
Confidential Information shall include, without limitation: (a)
concepts and ideas relating to the development and distribution of
content in any medium; (b) trade secrets, drawings, inventions, know-
how, software programs, and software source documents; (c) information
regarding plans for research,
development, new service offerings or products, marketing and selling,
business plans, business forecasts, budgets and unpublished financial
statements, licenses and distribution arrangements, prices and costs,
suppliers and customers; and (d) existence of any business
discussions, negotiations or agreements between the parties.
7.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all Confidential Information of the
Disclosing Party and not to disclose it to any third party; and (ii)
not to use any Confidential Information of the Disclosing Party except
as permitted by this Agreement or as may be necessary for the
Receiving Party to perform its obligations under this Agreement. The
Receiving Party will use at least the same degree of care to protect
the Disclosing Party's Confidential Information as it uses to protect
its own Confidential Information of like importance, and in no event
shall such degree of care be less than reasonable care. The
obligations and restrictions imposed by this Article 7 shall not
expire.
7.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information will not include any information that: (i)
was in the public domain at the time it was communicated to the
Receiving Party by the Disclosing Party; (ii) entered the public
domain subsequent to the time it was communicated to the Recipient by
the Disclosing Party through no fault of the Receiving Party; (iii)
was in the Receiving Party's possession free of any obligation of
confidence at the time it was communicated to the Receiving Party by
the Disclosing Party; (iv) was rightfully communicated to the
Receiving Party by a third party, free of any obligation of
confidence, subsequent to the time it was communicated to the
Receiving Party by the Disclosing Party; (v) was developed by
employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving
Party by the Disclosing Party; or (vi) was communicated by the
Disclosing Party to an unaffiliated third party free of any obligation
of confidence. In addition, the Receiving Party may disclose the
Disclosing Party's Confidential Information in response to a valid
order by a court or other governmental body, as otherwise required by
law, or as necessary to establish the rights of either party under
this Agreement; provided however, in the event that the Receiving
Party receives a demand to disclose such Confidential Information in
connection with a legal action or proceeding, the Receiving Party, if
possible, shall first notify the Disclosing Party of the demand in
order to provide the Disclosing Party an opportunity to seek a
protective order.
7.4 Confidentiality of this Agreement. Retailer acknowledges that the
---------------------------------
terms and conditions of this Agreement constitute Confidential
Information which shall be governed by the terms of this Article 7.
7.5 Confidentiality of Customer Data and Retailer's Policies.
--------------------------------------------------------
GSI acknowledges that it will be receiving from Retailer, and
generating from the performance of its obligations under this
Agreement, Confidential Information critical to the Retailer's
business and concerning Retailer's customers and various information
concerning the operation of Retailer's business including but not
limited to net purchasing prices, advertising co-op and discretionary
fund amounts, specific marketing plans, specific on line sales and
delivery dates of merchandise. GSI recognizes its obligation to keep
such information confidential. Therefore, all GSI employees who may
have access to any such Confidential Information will be required to
execute confidentiality agreements with GSI with respect to which
Retailer will be a third party beneficiary and GSI shall use its best
efforts to enforce the terms thereof. Such confidentiality agreements
will specifically provide that the employee shall not discuss with any
other retailers who may or may not be customers of GSI, any
information concerning the Retailer or its customers.
Further, GSI acknowledges it is associated with other subsidiaries of
GSI's parent corporation, Global Sports, Inc. GSI therefore represents
and warrants to Retailer that it will establish a "Need to Know"
policy with respect to such Confidential Information and only
disseminate such Confidential Information to those employees and
members of GSI's management who have a specific need to know such
Confidential Information. In those instances, prior to the
dissemination of such Confidential Information to those individuals,
they will be required to execute confidentiality agreements with GSI
with respect to which Retailer will be a third party beneficiary
specifically prohibiting such disclosure of such Confidential
Information to anyone, except as otherwise permitted by the terms of
this Agreement.
8. EXCLUSIVE WEB AGREEMENT
-----------------------
During the Term and any extensions thereof, the Retailer, any subsidiary of
the Retailer, shall not sell any sporting goods merchandise on the Internet
(including the Web), nor use itself or allow a third party to use its URL,
name or logo on the Web for the purpose of facilitating the sale of
merchandise on the Web other than through GSI. Notwithstanding anything
contained herein to the contrary, should GSI be unable to satisfy the
Retailer's web site requirements with respect to specialized matters such
as corporate information, or special services the Retailer shall have the
right to establish a second web site incorporating the name "Sport Chalet"
which GSI shall provide a link from the Retailer's Web Site; provided
however, under no circumstances shall Retailer sell any merchandise on such
second web site.
8.1 GSI will include in the website development agreement at no charge to
Retailer, links that will enable Retailer's customers to link to a
product expert, which expert shall be selected and engaged solely by
Retailer; provided however, that should any such product expert a) be
engaged in e-commerce; b) be linked to another site which is engaged
in e-commerce; or c) recommend that a consumer patronize another
retailer's Land Based Stores, then GSI, shall have the absolute right,
which right shall not
be subject to dispute by Retailer, not to link the Retailer's website
to the web site of such product expert. Links will be provided by GSI
to such product experts or vendors for informational purposes and not
for the purpose of conducting any e-commerce business.
8.2 Inasmuch Retailer's land based business includes services and
guarantees not specifically related to the actual selling of
traditional, off the shelf retail merchandise, such as equipment
rental, SCUBA Boat Charters, individually customized team sales
equipment and apparel, and other services, Retailer reserves the right
to create its own web page(s) to allow customers to reserve such
equipment and/or charters, order customized team products, and take
advantage of other land-based services. These pages will be consistent
with the look and feel of the GSI-created www.sportchalet.com web
--------------------
site, and furthermore these pages would in no way offer for sale
similar or competing product available on the GSI web site; provided
however, that should any such product expert a) be engaged in e-
commerce; b) be linked to another site which is engaged in e-commerce;
or c) recommend that a consumer patronize another retailer's Land
Based Stores, then GSI, shall have the absolute right, which right
shall not be subject to dispute by Retailer, not to link the
Retailer's website to such other web site Links will be provided by
GSI to such product experts or vendors for informational purposes and
not for the purpose of conducting any e-commerce business. Retailer
will bear the cost of developing and maintaining these sites.
Retailer will not be obligated to let GSI operate these particular web
pages as/when GSI is capable of doing so. At Retailer's request, GSI
will provide a link to these additional pages.
In addition, GSI will support and implement Retailer's ongoing program
of providing links from its web site to those web sites of Retailer's
vendors, as well as links to sports related publications such as
newspaper and magazine web sites, along with weather forecasting web
sites so as to add value to a customer's on-line shopping experience
by providing more detailed product information, descriptions and
information. These vendor sites will not be E-Commerce enabled nor
provide links to competitive E-Commerce sites; provided however, that
should any such product expert a) be engaged in e-commerce; b) be
linked to another site which is engaged in e-commerce; or c) recommend
that a consumer patronize another retailer's Land Based Stores, then
GSI, shall have the absolute right, which right shall not be subject
to dispute by Retailer, not to link the Retailer's website to such
other web site Links will be provided by GSI to such product experts
or vendors for informational purposes and not for the purpose of
conducting any e-commerce business.
9. URL, NAME AND LOGO USAGE
------------------------
9.1 During the Term, the Retailer hereby grants to GSI the right to
use, copy, and display the Retailer's name, logo and URL
and such other names and logos as the Retailer owns and as may be
listed on Schedule "1" attached hereto and made a part hereof, on the
Retailer's Web Site, on invoices and packing slips, in connection with
credit card charges, a toll free Web site customer service telephone
line, and generally in connection with the operation of GSI's on-line
business; provided however, GSI shall have no right to modify
Retailer's name, logo or URL without Retailer's consent. Such Schedule
shall be modified from time to time during the Term to add any new
names and logos which the Retailer may register with the United States
Patent and Trademark Office.
9.2 GSI has the right to use a toll-free number for web site customer
service and credit card calls. This number may be used on the web
site, invoices, packing lists, and credit card statements.
10. REPRESENTATIONS AND WARRANTIES.
-------------------------------
10.1 Retailer represents and warrants that at all times during the Term
hereof or any extensions thereof:
a. it has or will have the full right to grant to GSI the right to
use its URL, names and logos as discussed in Article 9 above,
including its Domain Name; and
b. Retailer is authorized to advertise and market on its Web Site
the brands of merchandise to be sold thereon; and
c. Prior to the Launch Date, if not already completed, Retailer
shall register and maintain the Domain Name "sportchalet.com"
with Network Solutions or any similar successor entity. Retailer
shall list itself as the owner for the Domain Name
"sportchalet.com" and Retailer shall list GSI as the
administrative and technical contact and billing contact for the
Domain Name "sportchalet.com";
d. neither the Retailer nor its secured lenders shall at any time
have any interest in the Web Account or Tax Account.
10.2 Each party represents and warrants to the other party that: (i) it is
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the power
and authority to enter into this Agreement and the transactions
contemplated herein; (ii) the consummation of the transactions
described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles
of Incorporation or Bylaws, or any statute or administrative
regulation or of any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement or
instrument to which it is a party or by which it is bound or
constitute a default thereunder; and (iii) this Agreement has been
duly authorized, executed and delivered by it and this Agreement is
valid, enforceable and binding upon each party in accordance with its
terms.
10.3 GSI represents and warrants that during the term of the contract, it
is financially responsible for all costs of operating the Retailer's
web site, except as specified in Section 8.2.
11. INDEMNIFICATION
---------------
11.1 Retailer, at its own cost and expense, shall defend, indemnify and
hold harmless GSI and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising as
a consequence of GSI providing services pursuant to this Agreement a)
from or related to a claim that GSI infringes a third party copyright,
trademark or trade secret due to use of Retailer's tradename or any
other name set forth on Schedule 1 to this Agreement; with the
exception of modifications made to Retailer's marks, names or logos
made by GSI without Retailer's consent or b) from Retailer's gross
negligence, willful or intentional misconduct.
11.2 GSI, at its own cost and expense, shall defend, indemnify and hold
harmless Retailer and any of its officers, directors, employees or
agents from and against all damages, expenses, fines, penalties,
exactments, liabilities and other costs (including reasonable
attorneys fees and court costs arising a) from a claim made by any
consumer that is related in any way to the Retailer's Web Site or
GSI's services to Retailer provided pursuant to this Agreement, but
excluding a claim for which GSI would have the right to
indemnification pursuant to Paragraph 11.1 above, or b) from GSI's
gross negligence, willful or intentional misconduct, or c) arising as
a consequence of GSI providing or failing to provide services pursuant
to this Agreement.
11.3 Retailer shall have sole control of any defense of any claim made
pursuant to Section 11.1 above, but GSI shall cooperate with Retailer
in providing such defense.
11.4 GSI shall have sole control of any defense of any claim made pursuant
to Section 11.2 above, but Retailer shall cooperate with GSI in
providing such defense.
11.5 Any party seeking indemnification shall notify the other party as soon
as possible after such party seeking indemnification becomes aware of
the claim.
11.6 GSI will process all credit card orders through its own processor
under it's own merchant ID number - chargebacks shall be the sole
responsibility of GSI.
11.7 Retailer maintains a risk management program with respect to its land
based businesses which includes, without limitation, the use of
written waivers and releases from customers of certain products and
the obtaining of written indemnification agreements from vendors of
certain products. Accordingly, the parties agree:
a. Retailer shall provide GSI from time to time with a list of those
products for which it requires a waiver or release from the
customer and the form of waiver and release it currently uses;
b. GSI shall design the web site such that a customer is required to
give valid and binding legal assent to a waiver and release
substantially equivalent to that used by Retailer in its land
based business before he or she may purchase these products;
c. GSI shall obtain from vendors of merchandise it purchases for
sale on Retailer's web site indemnities of the nature and type
then being furnished by such vendors to Retailer with respect to
its land based business; provided, however, that such indemnities
so obtained by GSI shall, by their terms, protect both GSI and
Retailer;
d. GSI shall comply with any requirements of the vendor indemnities
mentioned above to the end that such indemnities are enforceable
in accordance with their terms.
12. INSURANCE
---------
12.1 GSI, at its expense, shall maintain in full force and effect products
liability insurance coverage for merchandise sold on Retailer's Web
Site. The amount of product liability insurance will be equal to the
amount Retailer requires of its vendors, with at least a minimum of
[*], and shall be updated as required. Such policy shall insure
Retailer and name GSI as an additional insured.
12.2 GSI shall deliver to Retailer certificates of insurance which
stipulate that no less than ten days notice will be given to Retailer
prior to the termination of the policy.
13. TERMINATION
-----------
13.1 Termination for Cause by Either Party. This Agreement may be
-------------------------------------
terminated by either party in the event of any material breach of any
of the terms and conditions of this Agreement by the other party which
breach continues in effect after the breaching party has been provided
with written notice of breach and ninety (90) days to cure such breach
and fails to cure such breach. As used herein, "material breach" shall
mean a failure by a party to this Agreement to perform any of its
obligations the effect of which would substantially impair the value
of this Agreement to the other party. By way of example only and not
by way of limitation, GSI's failure to operate the Retailer's Web Site
according to commercially reasonable standards as they are established
today and as they may continue to develop during the Term of this
Agreement or failure to provide customer service equivalent to that
provided by other reputable on line retailers, would be a material
breach of this Agreement by GSI. Retailer's failure to comply with its
obligations pursuant to Section 5 above, or failure to
provide GSI with the Retailer Content necessary to construct and/or
maintain the Retailer's Web Site, would be a material breach of the
Retailer's obligations under this Agreement.
13.2 Measures of Performance. In addition, the web site will need to have a
-----------------------
large assortment of merchandise as depicted in Retailer Land Based
Stores. The Retailer recognizes time will be required to build an
assortment on-line which accurately represents the land-based stores.
The percentage of on-line vs. land based SKU assortments will be as
follows:
Oct. 1, 1999 - the lesser of [*] or [*] of the Retailer's active land-
based SKUs.
Oct. 1, 2000 - the lesser of [*] or [*] of the Retailer's active land-
based SKUs.
Oct. 1, 2001 - the lesser of [*] or [*] of the Retailer's active land-
based SKUs.
The above thresholds have been agreed upon based upon the Retailer
having [*] active land based SKUs.Both parties acknowledge that if
vendors restrict or prohibit the sale of their merchandise on line,
thereby significantly reducing the number of SKUs available for sale
on line, then the parties will renegotiate the thresholds set forth
above, acting in good faith.
GSI will be required to report SKU levels monthly by the 15/th/ of the
month following, and during any month in a twelve-month period where
GSI fails to meet the standard, this failure will be considered to be
a breach (without requirement of notice by Retailer). GSI's SKU count
of offered SKU's may include items that are listed on the web site
with the notation, "available in retail stores only.
13.3 Termination for Cause Only by GSI. GSI may terminate this
---------------------------------
Agreement by giving sixty days prior written notice to Retailer
of its election to terminate upon the occurrence of any of the
following events:
a. any representation or warranty contained herein becomes
materially false or misleading; or
b. a material change in the Retailer's business or business
policies as determined by GSI in its sole reasonable
judgment.
13.4 Termination for Cause by Retailer. Retailer may terminate
---------------------------------
this agreement by giving 60 days prior notice to GSI upon the
occurrence of:
a. a default under 13.2 above; or
b. if during the first three years of the Term of this Agreement,
there is a change in control of the ownership of GSI,
including a spin off as a public company so that Michael G.
Rubin ceases to function as the chairman of the board or chief
executive officer of both GSI and its parent corporation,
Global Sports, Inc.; or
c. there is a material adverse change in GSI's financial
condition directly causing an uncured material breach and/or
filing pursuant to Chapter 7 or 11 of the Bankruptcy Code.
13.5 Termination Without Cause by Either Party. In the absence of a
-----------------------------------------
material breach, this Agreement may only be terminated by the
expiration of the Term, as may be extended pursuant to Section 2.3
above.
14. LIMITATIONS UPON LIABILITY
--------------------------
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF
WHETHER SUCH DAMAGES ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER
LEGAL THEORIES) ARISING FROM OR RELATED TO RETAILER'S OR RETAILER'S
CUSTOMERS' USE OF OR INABILITY TO ACCESS ANY PART OF THE INTERNET OR
RETAILER'S OR RETAILER'S CUSTOMERS' RELIANCE ON OR USE OF INFORMATION,
SERVICES OR MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR THE
SERVICES, OR THAT RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS,
THEFT, OR DELETION OF FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR
TRANSMISSION, OR ANY FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE
LIABLE UNDER THIS AGREEMENT FOR AN AMOUNT THAT EXCEEDS, IN THE
AGGREGATE THE AMOUNTS PAID TO RETAILER DURING THE [*] MONTHS PRECEDING
THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY. IN ADDITION,
RETAILER SHALL BE ENTITLED TO SEEK EQUITABLE RELIEF FROM THE COURT. THE
REMEDIES SET FORTH IN THIS ARTICLE 14 CONSTITUTE THE SOLE AND EXCLUSIVE
REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO EVENT SHALL
EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN
TWELVE (12) MONTHS AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH
LIABILITY.
15. PROPERTY RIGHTS AND OWNERSHIP
-----------------------------
The Retailer's Web Site shall consist of, and shall operate in
conjunction with, multiple elements, all of which are subject to
certain intellectual property rights. The parties' respective rights
with respect to such elements shall be as set forth below. For purposes
of this Agreement, the term "Ownership" shall refer to ownership of all
right, title and interest in and to the respective elements, including,
but not limited to, all patent, copyright, trade secret, trademark and
any other similar intellectual property rights therein, as applicable.
15.1 Retailer's URL shall be owned solely by the Retailer;
15.2 Retailer's Web Site shall be owned solely by GSI;
15.3 Software developed for the Retailer's Web Site, shall be
owned solely by GSI subject to any authorizations to use and
approvals obtained by the Retailer and granted to GSI.
15.4 Upon Retailer's request, GSI will provide Retailer with
digital images and copy for each and every item offered on
the Retailer web site at no charge.
15.5 Retailer's Content shall be owned exclusively by Retailer.
15.6 Customer Data shall be owned jointly by Retailer and GSI.
With respect to intellectual property owned by each of them, Retailer
and GSI shall both have rights associated with the ownership of
intellectual property, including the right to copyright web sites and
domains.
16. GSI'S TWENTY DAY PERIOD TO EXECUTE
----------------------------------
Retailer shall execute this Agreement first and deliver such executed
Agreement to GSI which shall thereafter have twenty days from receipt
to countersign the Agreement. During such twenty-day period, Retailer
shall have no right to withdraw the agreements which it executed and
delivered to GSI.
17. DISCONTINUANCE OR REGULATION OF THE INTERNET.
---------------------------------------------
Retailer acknowledges and agrees that the Internet (including without
limitation the Web) is a network of private and public networks, that
GSI has no control over the Internet, and that GSI is not liable for
the discontinuance of operation of any portion of the Internet or
possible regulation of the Internet which might restrict or prohibit
the operation of the Web site.
18. FORCE MAJEURE
-------------
In the event that either party is unable to perform any of its
obligations under this Agreement or to enjoy any of its benefits
because of any event beyond the control of the affected party
including, but not limited to, natural disaster, acts of God, actions
or decrees of governmental bodies or failure of communications lines or
networks (a "Force Majeure Event"), the party who has been so affected
shall promptly give written notice to the other party and shall use its
best efforts to resume performance. Upon receipt of such notice, all
obligations under this Agreement shall be immediately suspended for the
duration of such Force Majeure Event.
19. WAIVER
------
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such
right, power or
privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing
and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified.
20. PRESS RELEASES
--------------
All voluntary public announcements concerning the transactions
contemplated by this Agreement shall be mutually acceptable to both GSI
and Retailer. Unless required by law, neither GSI on the one hand, and
Retailer on the other hand, shall make any public announcement or issue
any press release concerning the transactions contemplated by this
Agreement without the prior written consent of GSI or Retailer,
respectively. With respect to any announcement that any of the parties
is required by law to issue, such party shall, to the extent possible
under the circumstances, review the necessity for and the contents of
the announcement with the other party before issuing the announcement;
provided however, if either party cannot obtain the consent of the
other party in a timely manner, the party required to comply with law
may issue the press release or public announcement without obtaining
the consent of the other party.
21. GOVERNING LAW
-------------
In the event that either party commences any proceeding pursuant to
this Agreement, the rights and obligations of the parties hereto, and
any claims or disputes thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware (excluding the choice
of law rules thereof).
22. ASSIGNMENT
----------
Retailer shall have no right to assign this Agreement without the prior
written consent of GSI; provided, that Retailer shall have the right to
assign this Agreement to any person or entity that acquires or succeeds
to all or substantially all of such party's business or assets upon
written notice to GSI.
In addition, should GSI assign this Agreement to a third party and not
as part of the sale of all or substantially all its e-commerce
business, then Retailer shall have the right to approve the assignee to
ensure that the assignee is experienced in the operation of a web site.
23. COUNTERPARTS
------------
This Agreement may be signed in several counterparts, each of which
shall be deemed an original, and all of which when taken together,
shall be deemed a complete instrument.
24. ENTIRE AGREEMENT
----------------
This Agreement, including the Web Development Agreement, represents
the entire agreement of the parties with respect to the subject matter
hereof and may not be modified, except in writing, executed by all of
the parties hereto. This Agreement supersedes all prior writings of
the parties with respect to this subject matter.
25. JURISDICTION
------------
Should either party commence any proceeding pursuant to this
Agreement, the exclusive jurisdiction and venue of any such dispute
shall be in the United States District Court for the Disrict of
Delaware
26. INDEPENDENT CONTRACTORS
-----------------------
The relationship of the parties herein shall hereunder be that of
independent contractors and nothing herein shall be construed to
create a joint venture or partnership.
27. SIGNING
-------
The parties executing this Agreement represents and warrants that they
have full corporate authority to do so.
28. BINDING EFFECT
--------------
This Agreement shall be binding upon the parties hereto, their
successors and permitted assigns.
29. HEADINGS
--------
Section headings contained in this Agreement are inserted for
convenience or reference only and shall not be deemed to be a part of
this Agreement for any other purpose.
30. DISCLAIMER OF WARRANTIES
------------------------
EXCEPT AS TO THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, GSI
MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR
IN LAW WITH RESPECT TO THE CREATION AND MAINTENANCE OF THE PRODUCT AND
SERVICES PROVIDED FOR HEREUNDER, AND DISCLAIMS ALL OTHER WARRANTIES.
RETAILER ACKNOWLEDGES AND AGREES THAT GSI HAS NOT MADE, NOR DOES
HEREBY MAKE, ANY OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY
KIND OR CHARACTER, EXPRESSED OR IMPLIED.
31. NOTICES
-------
Any notices or writings to be sent hereunder shall be in writing and
shall be by personal delivery, facsimile transmission if accompanied
by e-mail and/or telephone transmission or by certified or registered
mail, return receipt requested, and shall be deemed given upon the
earlier of actual receipt, five (5) days after deposit in the mail, or
receipt by sender of confirmation of facsimile transmission. Notices
shall be sent to the following addresses (or such other address as
either party may specify in writing):
IF TO GSI: 555 South Henderson Road
King of Prussia, PA 19406
Attention: President
Copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Penna., 19102
PH. 215-893-4959
FAX 215-790-0509
IF TO RETAILER: 920 Foothill Boulevard
La Canada, CA., 91011
Attention: President/Chief Operating
Officer
Copy to: James G. Jones, Esq.
Knapp, Marsh, Jones and Doran
515 South Figueroa Street
Los Angeles, CA 90071
PH. (213) 627-8471
FAX (213) 627-7897
32. GRANT OF WARRANT TO RETAILER
----------------------------
Upon execution of this Agreement by Retailer, and acceptance thereof
by GSI, prior to the announcement of GSI's e-commerce initiative, GSI
will deliver to Retailer a warrant to purchase shares of Global
Sports, Inc., the parent corporation of GSI, in accordance with the
terms set forth in the Warrant Term Sheet attached hereto as Exhibit
"B".
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement with intent to be legally bound
hereby, the date and year first above written.
GLOBAL SPORTS INTERACTIVE, INC.: SPORT CHALET, INC.:
BY: /s/ Michael Rubin BY: /s/ Craig Levra
---------------------------- ----------------------------
Title: President Title: President/C.O.O.
------------------------ -------------------------
Date: 4/1/99 Date: 3/31/99
------------------------- ---------------------------
EXHIBIT A
WEB SITE DEVELOPMENT AGREEMENT
------------------------------
THIS Web site Development Agreement ("Agreement") dated the ____ day of
______________, 1999 (the "Services Start Date") by and between Global Sports
Interactive, Inc., a Pennsylvania corporation (hereinafter referred to as "GSI")
with an address of 555 South Henderson Road, King of Prussia, PA 19406 and Sport
Chalet, Inc., a Delaware corporation (hereinafter referred to as "Retailer")
with an address of 920 Foothill Boulevard, La Canada, California, 91011.
W I T N E S S E T H:
WHEREAS, GSI and Retailer have entered into a E - Commerce Agreement
pursuant to which GSI shall provided certain E - Commerce services to Retailer,
including the development and maintenance of a web site; and
WHEREAS, the parties have elected to enter into this Agreement in order to
set forth the terms and conditions pursuant to which GSI shall develop a web
site for Retailer.
NOW, THEREFORE, in consideration of the mutual promises and terms herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged; and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Domain Name" means the domain name specified for the Web site by
Retailer from time to time, each of which is owned by the retailer. The initial
Domain Name is specified in Attachment B.
1.2 "E-Commerce Agreement" means the E-Commerce Agreement by and between
Retailer to which this Agreement is attached as Exhibit A.
1.3 "Features Set" means the requirements set forth in Attachment B, as
amended or supplemented in accordance with this Agreement.
1.4 "Intellectual Property Rights" means any and all now known or
hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the universe, including but not limited to copyrights,
moral rights, and, (b) trademark and trade name rights and similar rights, (c)
trade secret rights, (d) patents, designs, algorithms and other industrial
property rights, (e) all other intellectual and industrial property rights (of
every kind and nature throughout the universe and however designated) (including
logos, "rental" rights and rights to remuneration), whether arising by operation
of law, contract, license, or otherwise, and (f) all registrations, initial
applications, renewals, extensions, continuations, divisions or reissues hereof
now or hereafter in force (including any rights in any of the foregoing).
1.5 "Milestone Delivery Schedule" means the schedule for development of
the Web site set forth in Attachment B.
1.6 "GSI Content" means product information, text, pictures, sound,
graphics, video and other data and assets supplied by GSI, as such materials may
be modified from time to time.
1.7 "GSI Products" means, collectively, the GSI Tools, the GSI Content and
the GSI Work Product.
1.8 "GSI Tools" means any tools, both in object code and source code form,
which GSI has already developed or which GSI independently develops or licenses
from a third party, excluding any tools which GSI creates pursuant to this
Agreement. By way of example, GSI Tools may include, without limitation,
toolbars for maneuvering between pages, search engines, Java applets, and
ActiveX controls.
1.9 "Production Schedule" shall mean the schedule agreed upon by the
parties for the production of the Retailer's Web site, including the delivery of
the Retailer Content and GSI Content by Retailer to GSI.
1.10 "Retailer Content" means the Domain Name, and the contents of the
Retailer's web site pages that describe or are unique to Retailer and does not
include product information that is GSI's responsibility. Such retailer content
includes, without limitation, Retailer's trademark, copyrights, trade secrets,
and confidential information.
1.11 "Services" means the services provided by GSI hereunder to develop,
host and maintain the Web site, in accordance with this Agreement.
1.12 "Web site" means, collectively, the E - Commerce Shopping Experience
and the Retailer Content made available on web pages under the Domain Name.
1.13 "GSI Work Product" means all HTML files, Java files, graphics files,
animation files, data files, technology, scripts and programs, both in object
code and source code form, all documentation and any other deliverable used by
GSI to create the Web site.
1.14 "Product Information" shall mean the camera ready image, and
descriptive text associated with each and every item of merchandise offered for
sale on the web site, plus any sound graphics, or video that may also be
supplied by GSI for some or all of these same items of merchandise.
2. WEB SITE DEVELOPMENT SERVICES
2.1 Delivery of Initial Retailer Content. As soon as reasonably possible,
GSI and Retailer shall agree upon a Production Schedule for the delivery by
Retailer to GSI of the Retailer Content that Retailer intends for GSI to
incorporate into the Web site. The parties acknowledge that Retailer will be
able to deliver certain "static" information, such as store locations, promptly
to GSI, and other product information, such as certain merchandise to be sold on
the Retailer's Web site, at a later date closer to the Launch Date. The Retailer
Content shall be in the format(s)
designated by GSI as set forth on Attachment C hereto. Upon Retailer's request,
GSI shall assist Retailer in the conversion of the Retailer Content into an
acceptable form for use by the Web site.
2.2 Web site Development Services. At no cost to Retailer, GSI shall
provide design, programming and other consulting Services as specified in
Attachment B to create the Web site. GSI will provide the Web site to Retailer
in accordance with the Milestone Delivery Schedule.
2.3 Project Liaisons. Each party's primary contact for development
efforts shall be the project liaisons specified in Attachment B or the person
otherwise designated in writing by Retailer or GSI, as the case may be.
2.4 Acceptance. GSI shall make available final versions of the Web site
for Retailer's review and acceptance. Retailer shall have fifteen (15) days to
review and evaluate the Web site (the "Acceptance Period") to assess whether it
substantially meets the Features Set. During the Acceptance Period, Retailer
shall identify in writing to GSI all aspects of the Web site that do not
substantially conform to the Features Set. Upon receipt of Retailer's list of
non-conformities, GSI shall correct promptly all such non-conformities so that
the Web site does substantially conform to the Features Set and GSI shall extend
the Acceptance Period for a second ten (10) day Acceptance Period during which
Retailer shall confirm that all non-conformities that were previously identified
have been corrected. Notwithstanding the foregoing, the Web site shall be
deemed accepted upon the earlier of: (i) its use in commerce, provided however,
GSI shall not use the Retailer's Web site in commerce without the Retailer's
consent, which shall not be unreasonably withheld or delayed; (ii) Retailer's
failure to articulate any non-conformities during an Acceptance Period; or (iii)
Retailers acceptance of the Web site; or (iv) GSI's demonstration that all non-
conformities have been corrected to Retailer's reasonable satisfaction.
2.5 The entire web site design, as viewed on-line by customers, including
typeset, coloration, backgrounds, and overall look are subject to Retailer's
approval, which shall not be unreasonably withheld.
3. WEB HOSTING AND MAINTENANCE SERVICES
Following Retailer's acceptance of the Web site pursuant to Section 2.4,
GSI shall, at no cost to Retailer, provide the following web hosting and
maintenance Services:
3.1 Hosting Services. GSI shall load the Web site onto server(s) that
are connected to the Internet and readily accessible via the Web through use of
the Domain Names. GSI shall ensure that the Web site is functional and ready to
process transactions in a reasonably efficient manner.
3.2 Retailer Content. GSI shall upload all Retailer Content, including
updates, and product information to the Web site within seven
days of delivery to GSI. Upon GSIs prior written consent, Retailer may
electronically transmit or upload Retailer Content directly to the Web site.
3.3 Maintenance Services. GSI shall maintain the Web site so that it
functions in a reasonably error free manner. Upon notification of an error in
the Web site or of a non-conformity between the Web site and the Features Set,
whether from Retailer or from any user of the Web site, GSI shall promptly
commence an investigation into the reported error, and GSI shall, upon
reproducing such error, use reasonable commercial efforts to correct such error
in a timely fashion. During such Maintenance Services, GSI shall ensure that the
Web site is functional and ready to process transactions in a reasonably
efficient manner, provided, however, GSI may, during low usage periods,
-------- -------
temporarily block access to the Web site to perform Web site maintenance during
periodic maintenance windows.
GSI shall use its best efforts to notify Retailer not less than forty-eight
hours in advance of any planned maintenance of the Retailer's Web site which
will cause GSI to close down the Web site.
In the event that GSI is forced to close the Retailer's Web site as a
result of an emergency, GSI shall use its best efforts to advise Retailer of the
emergency within twenty-four hours after it occurs.
4. ADDITIONAL SERVICES
4.1 Search Engine Registration. When GSI makes the Web site available to
Retailer, GSI shall register the Web Site and Domain Name with all applicable
search engines, but at least the top five search engines as rated by frequency
of use at GSI's discretion.
4.2 Domain Name Assistance. If requested by Retailer, GSI shall
cooperate with Retailer in registering the Domain Name with InterNIC. Retailer
shall own all right, title and interest in and to the Domain Name and all
Intellectual Property Rights related thereto. Unless otherwise specified by
Retailer, GSI shall, at Retailer's expense, assist Retailer in registration of
the Domain Name.
5. CONSIDERATION
In consideration for Retailer entering into the E Commerce Agreement, at no cost
to Retailer, GSI shall perform the Services set forth in this Agreement.
6. TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be conterminous with the term
of the E- Commerce Agreement and controlled by the provision of Section 2
thereof. In absence of a material breach, this Agreement may only be terminated
by the expiration of the term.
6.2 Termination. Termination of this Agreement shall be governed by the
terms of Article 13 of the E - Commerce Agreement.
7. WARRANTIES AND DISCLAIMERS.
7.1 Cross Warranties. Retailer warrants as to the Retailer Content, and
GSI warrants as to the GSI Products, that any materials and updates or
enhancements there to shall not: (a) infringe on the Intellectual Property
Rights of any third party or any rights of publicity or privacy; (b) violate any
law, statute, ordinance or regulation (including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising); (c) be defamatory, trade libelous, unlawfully threatening or
unlawfully harassing; (d) be obscene, pornographic, political, or indecent.
7.2 Representations and Warranties of Each Party. Each party represents
and warrants to the other party that: (i) it is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and that it has the power and authority to enter into this
Agreement and the transactions contemplated herein; (ii) the consummation of the
transactions described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles of
Incorporation or Bylaws, or any statute or administrative regulation or of any
order, writ, injunction, judgment or decree of any court, regulatory or
governmental authority or of any agreement or instrument to which it is a party
or by which it is bound or constitute a default thereunder; and (iii) this
Agreement has been duly authorized, executed and delivered by it and this
Agreement is valid, enforceable and binding upon each party in accordance with
its terms.
7.3 Year 2000. GSI warrants that the Web site shall not suffer any
material adverse effect as a result of a failure in any GSI Work Product or GSI
Tools to be Y2K Compliant. A product or service which is "Y2K Compliant" is one
that provides accurate results using data having date ranges spanning from
January 1, 1980 through December 31, 2019 (the "Y2K Period"). By way of example
and not of limitation, "Y2K Compliant" means, with respect to a product or
service, that it can currently and shall, during the Y2K Period, continue to (a)
manage and manipulate data involving all dates within the Y2K Period (including
the fact that the year 2000 is a leap year) without functional or data
abnormality related to such dates; (b) manage and manipulate data involving all
dates within the Y2K Period without inaccurate results related to such dates;
(c) have user interfaces and data fields formatted to distinguish between dates
within the Y2K Period; and (d) accurately identify and either reject or correct
invalid date data during the Y2K Period. Provided a party otherwise complies
with this Section 7.4, it will not be liable to the other party for any failure
to perform obligations under this Agreement to the extent such failure arises
from a failure to be Y2K Compliant that (1) affects the non-performing party's
customers or
suppliers or (2) is beyond its reasonable control (e.g., a failure to be Y2K
---
Compliant affecting a governmental entity).
7.4 Disclaimer. THE WARRANTIES MADE IN THIS SECTION 7 ARE MADE IN LIEU OF
ALL OTHER EXPRESS WARRANTIES, WHETHER ORAL OR WRITTEN AND EXCEPT AS SET FORTH IN
THIS SECTION 7, GSI AND RETAILER MAKE NO OTHER REPRESENTATIONS OR WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.5 GSI warrants that the web site developed by GSI for Retailer will be
fit for E-Commerce as defined in the E-Commerce Management Agreement and will be
equivalent to the then current, state of the art standards of web sites selling
on-line merchandise.
8. OWNERSHIP
8.1 Ownership of GSI Products. Retailer hereby acknowledges and agrees
that as between Retailer and GSI, GSI owns all right, title and interest in and
to the GSI Products and all applicable Intellectual Property Rights thereto.
This Agreement confers no ownership interest in the GSI Products to Retailer.
8.2 Ownership of Retailer Content. GSI hereby acknowledges and agrees
that as between GSI and Retailer, Retailer owns all right, title and interest in
and to the Retailer Content and all Product Information as defined in paragraph
1.44 and all applicable Intellectual Property Rights thereto. Except for a
limited non-exclusive license during the term to use the Retailer Content and
product information solely to perform its obligations hereunder, this Agreement
confers no ownership interest in the Retailer Content to GSI. This includes all
content on each product page, and copy including, but not limited to, pictures,
descriptions, features, benefits, about each and every item offered for sale on-
line, to the extent Retailer provides such content and such content is not
generally available elsewhere.
9. LIMITATION UPON LIABILITY.
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER SUCH DAMAGES
ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES) ARISING FROM OR
RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS USE OF OR INABILITY TO ACCESS ANY
PART OF THE INTERNET OR RETAILER'S OR RETAILER'S CUSTOMERS RELIANCE ON OR USE OF
INFORMATION, SERVICES OR MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR THE
SERVICES, OR THAT RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS, THEFT,
OR DELETION OF FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR TRANSMISSION, OR
ANY FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE UNDER THIS
AGREEMENT FOR AN AMOUNT THAT EXCEEDS, IN THE AGGREGATE THE AMOUNTS PAID TO
RETAILER DURING THE TWELVE (12) MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING
RISE TO SUCH LIABILITY. SHOULD A MATERIAL FAILURE OCCUR, THE RETAILER HAS AT
ITS SOLE DISCRETION, THE OPTION TO MODIFY THE TERM OF THE E-COMMERCE MANAGEMENT
AGREEMENT TO A NEW TERM ACCEPTABLE TO
RETAILER. THE REMEDIES SET FORTH IN THIS SECTION 9 CONSTITUTE THE SOLE AND
EXCLUSIVE REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO EVENT SHALL
EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN [*] MONTHS
AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
10. INDEMNITY.
10.1 Retailer Indemnity. Subject to Section 10.3, Retailer shall defend,
indemnify and hold GSI harmless against any third party claim, action, suit or
proceeding connected with or arising out of (i) Retailer's gross negligence,
willful or intentional misconduct; or (ii) any breach by Retailer of the
warranties set forth in Sections 7.1 or 7.2.
10.2 GSI Indemnity. Subject to Section 10.3, GSI shall defend, indemnify
and hold Retailer harmless against any third party claim, action, suit or
proceeding connected with or arising out of: (i) GSI's gross negligence, willful
or intentional misconduct; or (ii) any breach by GSI of the warranties set forth
in Sections 7.1 or 7.2.
10.3 Mechanic of Indemnities. The indemnifying party's obligations are
conditioned upon the indemnified party: (a) giving the indemnifying party prompt
written notice of any claim, action, suit or proceeding for which the
indemnified party is seeking indemnity; (b) granting control of the defense and
settlement to the indemnifying party; and (c) reasonably cooperating with the
indemnifying party at the indemnifying party's expense.
11. MISCELLANEOUS.
11.1 Incorporation of Certain Provisions of the E-Commerce Agreement.
Sections 7, 8, 12, and Sections 17 through 29, inclusive, of the E-Commerce
Agreement are hereby incorporated in their entirety into this Agreement.
11.2 Interpretation of Agreements. With respect to the subject matter
hereof, the E-Commerce Agreement shall control any conflict between the terms of
this Agreement and the E-Commerce Agreement.
11.3 Definitions. Any terms not specifically defined in this Agreement
shall be construed in accordance with the definitions given such terms in the E-
Commerce Agreement, or if such terms are not defined in the E-Commerce
Agreement, then such terms shall be construed in accordance with their every
day, common meaning.
12. MEASURE OF PERFORMANCE.
GSI shall be responsible to comply with the provisions of Paragraph 13.2 of
the E-Commerce Management Agreement, the terms of which are incorporated by
reference. GSI's failure to do so shall be a default of both the E-Commerce
Management Agreement and this agreement
agreement permitting the Retailer to exercis its remedies set forth in
paragraph 13.4 of the E-Commerce Management Agreement.
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
representatives to enter into this Agreement to be effected on the Services
Start Date.
GLOBAL SPORTS INTERACTIVE, INC.: SPORT CHALET, INC.:
By: /s/ Michael Rubin By: /s/ Craig Levra
--------------------------- -------------------------
Title: President Title: President/C.O.O.
------------------------- -----------------------
Date: 4/1/99 Date: 3/31/99
-------------------------- -----------------------
Name: Michael Rubin Name: Craig Levra
------------------------- ------------------------
(Please type or print) (Please type or print)
ATTACHMENT A
RETAILER'S ASSET REQUIREMENTS
Product Assets
Elements: Product Assets should include names, UPCs and prices. No product
photography or description are required.
Store Locations
Store location information should include address, phone number and fax numbers
store manager's name, store hours (which vary by mall).
Corporate Assets
Corporate Assets may include the following:
Press Releases
Frequently Asked Questions
Contact Information
Jobs Information
Community Programs Information
Annual Reports
Corporate Identity materials including logo
All above information may be submitted at the retailer's discretion, excluding
the corporate identity materials and logos, which are mandatory.
* Please define corporate identity materials.
Attachment B
(TO BE COMPLETED)
Domain Name:
Format of Retailer Content:
Project Liaisons:
For GSE.C: For Retailer: T.B.A.
FEATURES SET
- ------------
1. PRODUCT SEARCH
2. BROWSE CATEGORIES
3. RECOMMENDATION TOOLS
4. ADVANCE PRODUCT PRESENTATION
5. SHOPPING CART
6. GIFT GIVING FUNCTIONALITY
7. REMOTE PUBLISHING TOOLS FOR HUMAN RESOURCES AND PRESS ROOM
8. SALES TAX CONFIGURATION
9. PRODUCT REVIEWS
10. 24/7 CUSTOMER SUPPORT
11. AFFILIATE PROGRAM FUNCTIONALITY
12. ON LINE GIFT CERTIFICATES
13. LAND BASED STORES GIFT CERTIFICATES
14. STORE LOCATOR
15. FINANCIAL INFORMATION
16. FREQUENTLY ASKED QUESTIONS
17. COMMUNITY PROGRAMS
18. COMPANY PROFILE
19. ON LINE ORDER STATUS
MILESTONE DELIVERY SCHEDULE:
- ---------------------------
TASK ESTIMATED COMPLETION DATE
- ---- -------------------------
DISCOVERY AND PLANNING MARCH 15, 1999
COMMENCE ENGINE ENGINEERING JULY 31, 1999
ESTABLISH FULFILLMENT CAPABILITIES APRIL 30, 1999
RETAILER WEB SITE DEVELOPMENT JULY 31, 1999
QUALITY CONTROL REVIEW AND REVISIONS AUGUST 21, 1999
ALPHA TESTING SEPTEMBER 1, 1999
BETA (SOFT LAUNCH) SEPTEMBER 30, 1999
WEB SITE LAUNCH TO GENERAL PUBLIC OCTOBER 1 - DECEMBER 1,1999
MEDIA AND PROMOTIONS OCTOBER 1 - DECEMBER 1,1999
ATTACHMENT C
ASSET SUBMISSION GUIDELINES
This section details how to submit assets.
Source Assets and Final Assets
- ------------------------------------------------------------------
We require source files for all assets. This means if an image is originally
constructed as a layered RGB Photoshop file at 100x500 pixels, we need that
file, even if the final file is a flattened 4-bit GIF at 20x100.
We allow the submission of final assets in some cases, but only by prior
arrangement and only in addition to an up-to-date source file. All submitted
assets are subject to review and verification by production staff.
Media and Format
- ------------------------------------------------------------------
We routinely receive assets in the following media and formats.
Digital Media
- ------------------------------------------------------------------
Media:
SyQuest 44mb, 88mb, 200mb, CD-ROM (including PhotoCD), Zip, Jaz, 3.5"
floppy.
Format:
Win16, Win-32, or Macintosh
File Formats:
Text: Raw, MS Word 95, RTF, HTML
Bitmap Graphics:
Photoshop, TIFF, PCD (PhotoCD), EPS, PICT (JPEG and GIF for final files
only and only along with source files)
PostScript Graphics:
EPS, Illustrator (7.0 preferred)
Video:
QuickTime
Audio:
WAV, AIFF, MIDI
Non-Digital Media
- -------------------------------------------------------------------
Contact us to discuss needs and capabilities before submitting any non-digital
assets.
Asset Submission
- ------------------------------------------------------------------
We prefer to receive assets via FTP (file transfer protocol) although we gladly
accept assets via standard package delivery services (i.e., FedEx, USPS, UPS,
etc.).
Submission via FTP
FTP Area: ftp.globalsportsinteractive.com
Assets should be left in "Incoming" which is a level below the initial
directory. Once assets have been transferred, e-mail confirmation is required.
Submission via Package Delivery
If you wish to submit assets via standard package delivery services, please
address the package to this address:
Address TBD
If you are submitting hard assets like brochures, photographs, etc. please be
sure to ship them in a reinforced container to prevent damage to the assets
while in transit.
If you are submitting digital media like SyQuests, Zip disks, Jaz disks, etc.,
be sure to ship them in a well-padded, reinforced container.
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS TO
-----------------------------------------------
SPORT CHALET
------------
. Pacific Extreme
. Sportland
. Sport Chalet
. Sport Chalet Divers
. III (Romam Numeral Three) Sets
. Classic Cottonworks
. Classic Bodyworks
SCHEDULE 2 TO E-COMMERCE MANAGEMENT AGREEMENT
---------------------------------------------
TYPE OF ON RETAILER'S MANAGEMENT COST OF
LINE GOODS OPERATING FEE MERCHANDISE
- ---------- INCOME --- TO RETAILER
------ -----------
IN LINE [*]% [*]% [*]%
SPECIAL MAKE-UPS [*]% [*]% [*]%
CLOSEOUTS [*]% [*]% [*]%
MARKDOWNS [*]%* [*]% N/A
LAND BASED GIFT
CERTIFICATES [*]%** [*]% N/A
ON LINE GIFT
CERTIFICATES*** [*]%**** [*]% [*]%
* Retailer supplies markdown inventory
** Retailer supplies gift certificates
*** Excluding those redeemed for Markdowns, which shall be
treated as a sale of Markdowns as indicated above,
**** GSI supplies gift certificate, and Retailer
purchases inventory from GSI at such time as
the certificate is purchased
EXHIBIT "B"
-----------
WARRANT TERM SHEET
1. Grant of Warrants As part of its E-Commerce Initiative, Global
Sports, Inc. ("Global") intends to provide all
sporting goods and/or athletic footwear and
apparel retailers who execute a contract with
Global to become part of Global's E-Commerce
Initiative (the "Retailers") prior to the public
announcement of such initiative the opportunity to
receive warrants to purchase shares of Global
common stock based on the terms and conditions
outlined in this Term Sheet.
2. Amount of Warrants Warrants will be granted for a total exercise
amount of [*]. Each Retailer will receive a
warrant to purchase its pro rata share of the
total exercise amount based on the proportion that
such Retailer's net sales (including sales by such
Retailer's franchisees, if any) for its most
recent fiscal year bears to the total net sales of
all Retailers participating in the E-Commerce
Initiative (including sales by all such Retailers'
franchisees, if any).
3. Security Warrant to purchase Global common stock. The
period during which the warrant may be exercised
will be one year from the date of public
announcement of Global's E-Commerce Initiative.
The warrant and the shares of common stock
issuable upon exercise of the warrant will be
offered and sold to the Retailers pursuant to an
exemption from the Securities Act of 1933, as
amended. As a result, such shares will be
restricted securities within the meaning of that
Act, and the resale of such shares will be subject
to certain restrictions, including a one year
holding period.
4. Warrant Exercise Price The warrant exercise price will be equal to the
average of the closing bid and asked prices for a
share of Common Stock for the 20 trading days
ending on the trading day immediately preceding
the public announcement of Global's E-Commerce
Initiative.
5. Issuance of Warrant Global will issue the warrants to participating
Retailers effective as of the public announcement
of Global's E-Commerce Initiative which is
expected to occur by March 31, 1999.
6. Confidentiality This Term Sheet is not to be disclosed to any
party other than the employees or advisors of the
Retailers receiving this Term Sheet who need to
know the terms set forth herein for the purpose of
evaluating such Retailer's participation in
Global's E-Commerce Initiative.
7. Other This Term Sheet is only intended to serve as a
general outline of the major terms of Global's
proposed grant of warrants in accordance with the
terms and conditions set forth herein. This Term
Sheet does not constitute an offer or sale of the
shares by Global. This Term Sheet does not
constitute a commitment or binding agreement to
grant such securities. such commitment or binding
agreement can only be created by definitive
agreements which will need to be negotiated and
executed.