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 AGREEMENT
--------------------
THIS E - Commerce Agreement dated the 1st day of February, 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 Michigan Sporting Goods Distributors, Inc., a Michigan
corporation (hereinafter referred to as "Retailer") with an address of 3070
Shaffer S.E., Grand Rapids, Michigan, 49512.
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
-----------
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 "Anticipation Discounts" shall mean discounts granted by a vendor to a
retailer in exchange for the retailer's payment of an invoice prior to
the retailer's usual terms of payment.
1.3 "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.
1.4 "Closeout Merchandise" shall mean end of season or excess merchandise
that is priced at a greater than normal discount.
1.5 "Complete URL Integration" shall mean the display of Retailer's URL in
all of Retailer's marketing and communications.
1.6 "Confidential Information" shall mean as that term is defined in
paragraph 7.1 of this Agreement.
1.7 "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.
1.8 "Customary Pricing Structure" shall mean the policy generally employed
by the Retailer in determining the prices of merchandise in its Land
Based Stores.
1.9 "Customer Data" shall mean as that term is defined in paragraph 4.1 of
this Agreement.
1.10 "Data Bases" shall mean as that term is defined in paragraph 4.2 of
this Agreement.
1.11 "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.
1.12 "Disclosing Party" shall mean the party disclosing Confidential
Information.
1.13 "Domain Name" shall mean as that term is defined in paragraph 1.1 of
the Web Site Development Agreement (as hereinafter defined).
1.14 "E-Commerce" shall mean the Retailer's specific business conducted
through the Internet.
1.15 "E-Commerce Orders" shall mean the orders for merchandise placed by
customers of the Retailer's Web Site.
1.16 "E-Commerce Outsourcing Partner" shall mean GSI.
1.17 "E-Commerce Shopping Experience" shall mean the shopping for and
purchasing of merchandise through the Internet.
1.18 "Flight Date" shall mean the date on which Retailer's advertising is
scheduled to run for the first time.
1.19 "Force Majeure Event" shall mean as that term is defined in Article 18
of this Agreement.
1.20 "GSI Content" shall mean as defined in paragraph 1.6 of the Web Site
Development Agreement.
1.21 "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.
1.22 "Internet" shall mean the collection of interconnected networks that
all use the TCP/IP protocols.
2
1.23 "Land Based Stores" shall mean the Retailer's traditional stores
located in shopping districts, strip shopping centers and shopping
malls.
1.24 "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.
1.25 "Launch Date" shall mean the date on which GSI commences operation of
the Retailer's Web Site to the public.
1.26 "Markdowns" shall mean merchandise in Retailer's inventory offered
for sale at less than the price it was originally offered for.
1.27 "Milestone Delivery Schedule" shall mean as defined in paragraph 1.5
of the Web Site Development Agreement.
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 Retailer's who is
assigned exclusively to work with GSI in supplying GSI with Retailer
Content, except as may otherwise be permitted pursuant to paragraph
3.14 below.
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 deductions for Defective
Allowances, volume allowances, freight allowances and any trade
discounts offered by vendors, but excluding cash or anticipation
discounts and any marketing funds granted to Retailer by a
manufacturer as an overall marketing allowance.
3
1.37 "Retailer's Warehouse" shall mean the place at which Retailer
receives delivery of merchandise from its vendors.
1.38 "Revenue Share" shall mean as defined in paragraph 3.8 of this
Agreement.
1.39 "Special Makeups" shall mean merchandise manufactured for the
Retailer exclusively.
1.40 "Term" shall be as defined in Section 2.2 of this Agreement.
1.41 "Term Year" shall mean a consecutive twelve month period occurring
during the Term, the first of which shall commence on the Launch Date
and terminate twelve months thereafter, and subsequently shall occur
every twelve months thereafter.
1.42 "URL" shall mean the address of the Web Site on the Internet.
1.43 "Web" shall mean the World Wide Web.
1.44 "Web Site" shall mean as defined in paragraph 1.11 of the Web Site
Development Agreement.
1.45 "Web Site Development Agreement" shall mean the agreement by and
between GSI and Retailer attached to this Agreement as Exhibit "A".
2. AGREEMENT AND TERM
------------------
2.1 Agreement. During the Term GSI shall provide the Retailer with those
---------
Web Site services as hereinafter specified.
2.2 Term. The Term of this Agreement shall commence upon the execution
----
of this Agreement by both parties and shall expire [*] years after
the Launch Date ("Expiration Date") without any notice. GSI shall use
reasonable efforts to advise Retailer ten days prior to the expected
Launch Date. 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 A 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.
4
2.3 Outside Launch Date. Notwithstanding anything contained herein to the
-------------------
contrary, in the event that the Launch Date does not occur by
December 1, 2000, and the delay is not the result of the Retailer's
failure to provide GSI with Retailer Content necessary to complete
the Retailer's Web Site, then this Agreement shall automatically
terminate and neither party shall have any further liability or
obligations hereunder.
3. OBLIGATIONS AND RIGHTS OF THE PARTIES
-------------------------------------
3.1 Creation of Retailer's Web Site.
-------------------------------
a. GSI, at no cost to the Retailer, 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.Retailer.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
5
document format; in the alternative, GSI will
provide the consumer with a form in order to
request such information from the Retailer's
investor relationship department.
3) Store Locators - Will be updated by GSI as such
information changes and is provided by Retailer.
4) Frequently Asked Questions - Will be updated by GSI
monthly as such questions changed and are provided by
Retailer.
5) Corporate Information - Will be updated by GSI as such
information changes and is provided by Retailer.
6) Community Programs - Will be updated by GSI as such
information changes and is provided by Retailer.
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, 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 is provided by Retailer.
3.2 Creation and Maintenance of the Retailer's Web Site.
---------------------------------------------------
GSI shall create and maintain a Web Site for the Retailer. Commencing
with the execution of this Agreement and continuing through the Term,
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 Retailer
Content (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 and other
assets necessary to create and maintain the Retailer's Web Site.
3.3 Sale of Merchandise on the Retailer's Web Site.
----------------------------------------------
a. GSI shall have the right to offer for sale on the Retailer's Web
Site all Categories of merchandise
6
offered for sale by the Retailer in its Land Based Stores, as
permitted by Retailer's vendors; provided however, in no event
shall GSI offer firearms for sale on the Retailer's Web Site, or
any Category of merchandise considered immoral, pornographic or
offensive in Retailer's reasonable opinion.
b. Within the Categories, GSI 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 the Retailer would not be authorized to sell
by the manufacturer in its Land Based Stores; and
3) Special Make-Ups; and
5) Closeout Merchandise; and
6) Markdowns of Retailer's inventory
7) Gift Certificates for On Line Merchandise
(Items 1) through 7) are hereinafter referred to as "On Line
Merchandise"]
c. In addition, GSI shall have the right to offer for sale Land
Based Stores Gift Certificates for merchandise available in the
Retailer's Land Based Stores. These certificates shall be
provided to GSI on consignment as set forth in Paragraph 3.6
below.
d. Notwithstanding anything contained herein to the contrary, in
those instances where Retailer is required to order merchandise
for GSI from a vendor, Retailer shall not be required to do so if
it would violate the terms of any written dealer agreement which
Retailer may have with a vendor or any verbal dealer agreement
which Retailer may have with a vendor if such verbal agreement
provides that the Retailer may sell that vendor's brands in only
certain Land Based Stores designated by the vendor; provided
however, Retailer shall use its best efforts to obtain all
consents required to permit the sale of such merchandise on the
Retailer's Web Site.
3.4 Prices of On-Line Merchandise. GSI shall offer the On-Line Merchandise
-----------------------------
for sale on the Retailer's Web Site on the following basis:
7
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
[*]; provided however, [*] Retailer acknowledges that this is
essential in order to [*].
b. If the On-line Merchandise is not offered for sale in the
Retailer's Land Based Stores, then, [*].
c. If the Retailer offers the same merchandise at different prices
in its Land Based Stores, then [*] but in no event at [*].
d. GSI shall add all applicable taxes and at its discretion, may add
reasonable handling and delivery charges which are consistent
with industry practice; provided however, GSI shall not charge
Retailer's customers any more for shipping and handling than it
charges any other retailer's customers.
e. In order to ensure that GSI may [*] Retailer shall furnish GSI
with copies of all [*] at least [*] prior to its [*] if possible,
and in all other cases, promptly after [*] is available.
f. The parties shall cooperate with each other so that the entire
pricing process between GSI and Retailer may be accomplished
electronically.
g. Retailer acknowledges that GSI, unless it elects to do so, [*].
In such event, [*] shall have the right to [*]
3.5 GSI's Supply of On Line Merchandise.
-----------------------------------
a. Invoicing and Shipping of On Line Merchandise.
---------------------------------------------
1) At such time as directed by GSI, the Retailer shall notify
its vendors of In Line Merchandise, Special Make-Ups and
Closeouts, that a) GSI is the Retailer's E - Commerce
Outsourcing Partner; b) 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 c) 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 consent not to be unreasonably delayed or
withheld.
2) 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
8
at Retailer's 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. Further, for such merchandise
which GSI purchases from Retailer at Retailer's Net Cost, if
the purchases in any Term Year exceed [*] then GSI shall pay
an annual administrative fee equal to [*] of those purchases
in excess of [*]; provided however, should the purchases in
any Term Year exceed [*], then Retailer shall have no
obligation to order any additional merchandise on GSI's
behalf during that Term Year. Such administrative fee shall
be added to Retailer's invoices to GSI for merchandise
purchased by GSI from Retailer.
3) At such time as the annual purchases exceed [*], and until
any balance owing to Retailer is reduced below [*], Retailer
may request GSI to secure such orders with a letter of
credit ("Letter of Credit") drawn on a lending institution
reasonably acceptable to Retailer. In addition, should
Retailer become dissatisfied with GSI's financial condition
applying reasonable commercial standards, then Retailer may
refuse to order merchandise for GSI unless Retailer secures
such orders with a Letter of Credit or provides Retailer
with other collateral reasonably acceptable to Retailer.
b. In Line Merchandise. The Retailer shall advise GSI, no later
-------------------
than two business days of 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 two business days after ordering
----------------
Special 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,
at Retailer's Net Cost. 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.
d. Closeout Merchandise. Retailer shall advise GSI no later than
--------------------
two business days after issuing a purchase
9
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 two business days 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.
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 to GSI to sell 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.
e. Markdowns. In the event that the Retailer has available
----------
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 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 receive [*] of the
proceeds received from the sale of any Markdowns when sold, which
shall be calculated as follows: [*] of the sale price plus the
Retailer's [*] Revenue Share. By way of example only, if Retailer
consigns an athletic shoe to GSI with an original price of $75.00
and a Markdown price of $50.00, if the Markdown is sold, Retailer
shall receive [*] ([*] of $50.00 and [*] of $50.00). GSI shall
account to Retailer for the sale of any Markdowns at the same
time that it accounts to the Retailer for Retailer's Revenue
Share.
f. Administrative and Handling Fee. With respect to any merchandise
-------------------------------
purchased by GSI pursuant to paragraphs 3.5 c. or d. above, on
which Retailer is first required to accept delivery and repack
for shipment to GSI, Retailer shall be paid an administrative fee
equal to [*] of GSI's purchase order (excluding freight and
taxes).
g. The parties shall cooperate with each other so that the entire
process set forth in paragraphs 3.5 a, b, c, d, and e between GSI
and Retailer may be accomplished electronically.
10
3.6 Land Based Stores Gift Certificates. GSI shall offer for sale on the
-----------------------------------
Retailer's Web Site gift certificates for merchandise in Retailer's
Land Based Store. Retailer shall furnish such gift certificates to GSI
on consignment. GSI shall remit to Retailer [*] of all proceeds
received from the sale of Land Based Stores Gift Certificates, the
balance being retained by GSI as its fee 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 Retailer's Revenue Share.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
-----------------------------
processing all E - Commerce business. 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 shall charge the customer's credit card at the time the
merchandise is shipped. The order will appear on the customer's credit
card under the name of "Retailer.com" and proceeds shall be deposited
into GSI's designated bank account for full credit to GSI. GSI will
make all arrangements for delivery of merchandise purchased on the
Retailer's Web Site.
3.8 Payment and Accounting of Revenue Share to Retailers.
----------------------------------------------------
The Retailer shall receive a [*] per cent share of the revenue
("Revenue Share") on the amount of all E - Commerce Orders (excluding
taxes, delivery, handling, and net of returns); provided, however,
should [*]. Within fifteen (15) days of the end of each calendar month
during the Term, GSI shall account to the Retailer for the sale of all
On Line Merchandise from the Retailer's Web Site. At the time of such
accounting, GSI shall remit to the Retailer its Revenue Share earned
from the sale of On Line Merchandise on the Retailer's Web Site during
the prior month.
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 Revenue Share earned by the Retailer
during the prior calendar year. For a period of one year 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 Revenue Share earned 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 Revenue Share was understated,
GSI shall within thirty days of completion of the audit, pay to the
Retailer the remaining balance of the Revenue Share 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 Revenue Share
is understated by more
11
than [*] per cent for the calendar year in question, GSI shall pay the
additional amount owing and pay for the reasonable audit costs and
this shall be Retailer's sole remedy.
3.9 Service of On Line Customers. GSI shall be responsible for providing
----------------------------
all customer service relating to sales from the Retailer's Web Site.
3.10 Return of On Line Merchandise. GSI's return policy shall be consistent
-----------------------------
with the Retailer's return policy, or, at GSI's option, more liberal
than Retailer's policy. 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. At the
next such time that GSI pays the Retailer pursuant to paragraph 3.8
above, and upon receipt of such merchandise, GSI shall credit the
Retailer the amount refunded by the Retailer to the customer and the
actual freight charges incurred by Retailer in order to return the
merchandise to GSI.
3.11 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. 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.
3.12 Cross Promotion. With Retailer's consent, not to be unreasonably
---------------
withheld or delayed, 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 or offensive.
3.13 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.
3.14 Project Manager. Within thirty days of the execution of this
---------------
Agreement, but in no event later than sixty days after such
12
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, 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. Notwithstanding anything contained
herein to the contrary, at such time as the Retailer's Web Site is
operating in accordance with the terms of this Agreement, the Project
Manager may attend to other duties for the Retailer provided that at
no time shall the Project Manager fail to perform the functions
required of the Project Manager hereunder to the satisfaction of GSI,
as determined by GSI in its sole discretion.
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, Retailer may request that GSI
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;
13
m. time of day traffic patterns;
n. sales by product and brand;
o. customer comments and complaints;
p. additional information at GSI's discretion.
Upon receipt of such request, 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. At Retailer's request, GSI shall make such aggregated
information, which is not retailer specific in any manner, available
to Retailer for Retailer's own use. Such information shall be
considered Confidential Information in Retailer's possession and may
not be disclosed by Retailer to any third party.
4.5 Reporting of Customer Sales. Notwithstanding anything contained
---------------------------
herein to the contrary, commencing three months after the Launch
Date, GSI shall provide Retailer with an application pursuant to
which Retailer will be able to obtain on line, information concerning
its sale of On Line Merchandise during the prior week.
5. ADVERTISING AND MARKETING
-------------------------
The Retailer shall,commencing no later than October 1, 1999, and continuing
during the Term, 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.Retailer.com.;
and
14
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.
All advertisements and marketing appearing in newspapers, circulars and
periodicals shall contain the following disclaimer: "Merchandise offered on
line may differ slightly from our retail stores".
6. ADVERTISING COOP AND DISCRETIONARY FUNDS
----------------------------------------
6.1 During the Term, 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. The Retailer
shall have forty eight hours 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
Retailer shall use its best efforts to so convince its vendors,
ultimately simplifying the purchasing process.
6.3 Retailer shall retain from vendors any non item driven marketing
funds. Retailer authorizes GSI to seek incremental marketing funds
from vendors related solely to Web Site activity. Any such
incremental marketing funds shall belong exclusively 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
the party receiving the
15
information (the "Receiving Party") knows or has reason to know is
the confidential or proprietary information of the party disclosing
the information (the "Disclosing Party"), either because such
information is marked or otherwise identified by the Disclosing Party
as confidential or proprietary, has commercial value, or 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
terminate thirty (30) months after the expiration or termination of
this Agreement.
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
16
court or other governmental body, as otherwise required by law, or as
necessary to establish the rights of either party under this
Agreement.
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 on line, 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 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. Prior to having the confidentiality agreement executed
by any employees, GSI shall submit the form of confidentiality
agreement to Retailer for its review and approval, such approval not
to be unreasonably withheld or delayed.
Further, GSI acknowledges it is presently a wholly owned subsidiary
of Global Sports, Inc., a Delaware corporation ("Global"), and
therefore affiliated with other subsidiaries of Global. 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
specifically prohibiting such disclosure of such Confidential
Information to anyone.
8. EXCLUSIVE WEB AGREEMENT
-----------------------
During the Term, 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.
9. URL, NAME AND LOGO USAGE
------------------------
17
During the Term, the Retailer hereby grants to GSI the exclusive right to
use, copy, modify 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.
The Retailer further grants to GSI the right to register a fictitious name
of "Retailer.com" for the sole purpose of conducting business on the
Retailer's Web Site and www.Retailer.com for the purpose of registering an
Internet Domain Name on behalf of the Retailer. Retailer shall execute
whatever documents are necessary in connection with such registrations.
10. REPRESENTATIONS AND WARRANTIES.
-------------------------------
10.1 Retailer represents and warrants that at all times during the
Term hereof:
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;
c. Prior to the Effective Date, if not already completed, Retailer
shall register and maintain the Domain Name "Retailer.com" with
Network Solutions or any similar successor entity. Retailer
shall list itself as the owner and billing contact for the
Domain Name "Retailer.com" and Retailer shall list GSI as the
administrative and technical contact for the Domain Name
"Retailer.com".
10.2 GSI represents and warrants that:
a. as of the execution of this Agreement, GSI is a wholly owned
subsidiary of Global Sports, Inc., which is registered under the
Securities Exchange Act of 1934, as amended; and
b. no later than the Launch Date, GSI shall own, or have the valid
right to use the software, hardware, processes, trade secrets,
or other property used or to be used in the development,
maintenance and operation of the Retailer's Web Site and that no
such use will infringe on any copyright, U.S. patent, trademark
or any other proprietary right of any third party.
18
10.3 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
(excluding vendor agreements) 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.
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 as a consequence of GSI's
services to Retailer pursuant to this Agreement, or b) from
Retailer's gross negligence, wilful 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, 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, or b) from GSI's gross negligence, wilful
or intentional misconduct and arising as a consequence of GSI
providing services pursuant to this Agreement, or c) from a claim by
any local, state or federal governmental unit that any sales or use
tax is due as a result of the sale of merchandise on Retailer's Web
Site. GSI's liability under this provision shall not be limited by
the provisions of Section 14 hereof entitled "Limitation Upon
Damages".
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 Retailer in
providing such defense.
19
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.
12. INSURANCE
---------
12.1 GSI shall maintain in full force and effect products liability
insurance coverage for merchandise sold on Retailer's Web Site in an
amount of not less than [*] per occurrence. Such policy shall name
Retailer 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 may develop during the Term of this Agreement or failure to pay
the Retailer its Revenue Share (or any other amount due to Retailer
hereunder), 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 Termination for Cause Only by GSI. GSI may terminate this Agreement
---------------------------------
without any notice to Retailer 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 the effect of which would be to substantially
impair the value of this Agreement to GSI, as determined by
GSI in its sole reasonable judgment.
20
13.3 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.
In the event that the Agreement is terminated pursuant to this
paragraph 13.3, Retailer shall have the right for a period of thirty
days after such termination, to advise GSI that it desires to obtain
a non exclusive license to utilize the software necessary for
Retailer to continue to operate its own web site. The parties shall
negotiate, in good faith, to reach an agreement which is satisfactory
to both parties; provided however, in the event that the parties are
unable to reach an agreement pursuant to which GSI would grant
Retailer a non exclusive license as aforementioned, then GSI shall
have no liability hereunder.
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 MORE
THAN THE GREATER OF A) [*], OR B) 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;
21
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.
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
22
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
-------------
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 Commonwealth of Pennsylvania (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 the other party.
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 GSI file any legal action concerning this Agreement, the exclusive
jurisdiction and venue of any dispute that arises hereunder shall be in the
Court of Common Pleas of Montgomery
23
County, Pennsylvania or the United States District Court for the Eastern
District of Pennsylvania.
Should Retailer file any legal action concerning this Agreement, the
exclusive jurisdiction and venue of any dispute that arises hereunder shall
be in the state courts of the State of Michigan or the United States
District Court for the Western District of Michigan.
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 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
24
Attention: President
Copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Penna., 19102
IF TO RETAILER: Michigan Sporting Goods Distributors, Inc.
3070 Shafer S.E.
Grand Rapids, Michigan, 49512
Copy to: Robert Diamond, Esquire
VARNUM RIDDERING SCHMIDT & HOWLETT
P.O. Box 352
Grand Rapids, MI 49501-0352
(SIGNATURES CONTAINED ON THE FOLLOWING PAGE)
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement with intent to be legally bound
hereby,the date and year written below.
GLOBAL SPORTS INTERACTIVE, INC.: MICHIGAN SPORTING GOODS
DISTRIBUTORS INC.
BY: /s/ Michael Rubin BY: /s/ Bruce A. Ullery
--------------------------- -----------------------------
Title: President Title: Pres/CEO
------------------------ -------------------------
Date: 3/19/99 Date: Feb. 1, 1999
------------------------- --------------------------
25
EXHIBIT A
WEB SITE DEVELOPMENT AGREEMENT
------------------------------
THIS Web site Development Agreement ("Agreement") dated the 1st day of
February, 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
Michigan Sorting Goods Distributors Inc.(hereinafter referred to as "Retailer")
with an address of 3070 Shaffer S.E., Grand Rapids, Michigan, 49512
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. The initial Domain Name is specified in Attachment
A.
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 A, 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 mask-works, (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,
26
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 A.
1.6 "GSI Content" means all text, pictures, sound, graphics, video and
other data and assets supplied by Retailer to 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 all text, pictures,
sound, graphics, video and other data and assets supplied by Retailer to GSI, as
such materials may be modified from time to time.
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.
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 Retailer Content, 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. Upon Retailer's request,
GSI shall assist Retailer in
27
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 A 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 A 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 ten (10) 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; (ii) Retailer's failure
to articulate any non-conformities during an Acceptance Period; or (iii)
Retailer's acceptance of the Web site.
3. WEB HOSTING AND MAINTENANCE SERVICES
Following Retailer's acceptance of the Web site pursuant to Section 2.4,
GSI shall 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, to the Web site within seven days of delivery to GSI. Upon GSI's 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 and in accordance with practices and
standards that are commercially reasonable for Internet retail sales, as they
may develop during the term of this Agreement. 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
28
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.
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, at GSI's discretion. In addition, provided that there is no
additional charges imposed, GSI shall register the Web Site on those search
engines requested by Retailer.
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.
29
6. TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be conterminous with the term
of the E- Commerce Agreement. 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 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
30
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 MAKES 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.
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 applicable Intellectual Property Rights
thereto. Except for a limited non-exclusive license during the term to use the
Retailer Content solely to perform its obligations hereunder, this Agreement
confers no ownership interest in the Retailer Content to GSI.
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 MORE THAN THE GREATER OF A) [*] OR B) 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 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
TWELVE (12) 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: (i) Retailer's gross negligence, willful or
31
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 arising from: (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. GSI's liability hereunder shall not be limited by the provisions of
Section 9 above.
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.
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.: MICHIGAN SPORTING GOODS
DISTRIBUTORS INC.
By: /s/ Michael Rubin By: /s/ Bruce A. Ullery
------------------------ -------------------------
Title: President Title: Pres/CEO
-------------------------- -------------------------
Date: 2/19/99 Date: Feb. 1, 1999
-------------------------- -------------------------
Name: Michael Rubin Name: Bruce A. Ullery
--------------------------- --------------------------
(Please type or print) (Please type or print)
32
Attachment A
(TO BE COMPLETED)
Domain Name:
Format of Retailer Content:
Project Liaisons:
For GSE.C: For Retailer:
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
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS TO
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- ----
MC SPORTS
- ----
MC Sports has their name and logo as a registered trademark.
34