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
-------------------------------
THIS E - Commerce Agreement dated the 10th day of March, 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 The Athlete's Foot Stores, Inc., a Pennsylvania
corporation (hereinafter referred to as "Retailer") with an address of 1950
Vaughn Road, Kennesaw, Georgia, 30144.
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 "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 19
of this Agreement.
1.19 "GSI Content" shall mean as defined in paragraph 1.5 of the Web Site
Development Agreement.
-2-
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 "Private Label" shall mean a tradename owned by the Retailer under
which name the Retailer manufactures merchandise for sale in its
retail stores.
1.33 "Production Schedule" shall mean as defined in paragraph 1.9 of the
Web Site Development Agreement.
-3-
1.34 "Project Manager" shall mean an employee of Retailers who is assigned
exclusively to work with GSI in supplying GSI with Retailer Content.
1.35 "Receiving Party" shall mean the party receiving Confidential
Information.
1.36 "Retailer Content" shall mean as defined in paragraph 1.10 of the Web
Site Development Agreement.
1.37 "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.
1.38 "Retailer's Warehouse" shall mean the place at which Retailer receives
delivery of merchandise from its vendors.
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 "URL" shall mean the address of the Web Site on the Internet.
1.42 "Web" shall mean the World Wide Web.
1.43 "Web Site" shall mean as defined in paragraph 1.12 of the Web Site
Development Agreement.
1.44 "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 and shall expire [*] years after the Launch Date
("Expiration Date"). GSI shall use reasonable efforts to advise
Retailer ten days prior to
-4-
the expected Launch Date. The Launch Date shall occur between the
period of October 1, 1999 and December 1, 1999 ("Commencement
Period"); provided however, GSI shall use reasonable efforts to have a
"soft launch" at some time during September, 1999. 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 Extension of Term. At the end of the Term, this Agreement shall
-----------------
automatically renew itself for an additional [*] period ("First
Renewal Period") unless at least ninety (90) days prior to the
expiration of the original Term, either party advises the other that
they have elected not to renew this Agreement for the "First Renewal
Period" in which event, this Agreement shall terminate at the end of
the original [*] year Term.
Thereafter, 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
-------------------------------------
3.1 Creation of Retailer's Web Site.
-------------------------------
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.The Athlete's Foot.com.
In addition, the Web Site shall contain any or all of the
-5-
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.
-6-
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) "Tom Brunick Section" - Will include "tech tips", research
and development information, and a rating system in addition
to a "link" to any new relevant articles published by
Brunick (in the alternative, GSI may publish the article on
the Web Site). This section will be updated as information
is furnished to GSI by the Retailer.
10) Miscellaneous - In addition, Retailer shall have the right
to have GSI add additional content for the benefit of
selling merchandise on the Retailer's Web Site.
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.
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, 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 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 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
-7-
relates to Special Make - Ups, it shall be GSI's responsibility to
produce and maintain all camera ready product information 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.
-----------------------------------------------
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 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 listed 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.
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")
-8-
[Items 1) through 6) are hereinafter referred to as "On Line
Merchandise"]
c. 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 ("Notification
Deadline"); provided however, Retailer may extend the
Notification Deadline until January 1, 2000 by notifying GSI of
its election to do so no later than August 1, 1999.
d. 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.
3.4 Prices of On-Line Merchandise. GSI, on behalf of the Retailer, shall
-----------------------------
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
[*]. 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.
-9-
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 [*] 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. Retailer shall
----------------------------------------------
make available merchandise to GSI in one of the following three
manners:
1) GSI, after consulting with the Retailer, will advise
Retailer of the merchandise that it desires to order and Retailer
will place such order with the vendor and invoice GSI at its net
cost and direct the vendor to drop ship the merchandise to GSI;
or
2) GSI, after consulting with the Retailer, will advise
Retailer of the merchandise that it desires to order and the
Retailer will direct the vendor to sell its merchandise directly
to GSI at the same prices as the merchandise as is sold to
Retailer, with the same Advertising Co-op and Discretionary Funds
and on the same terms and conditions as they sell their
merchandise to the Retailer; or
3) If either alternative 1) or 2) is not available, then
the Retailer shall order the merchandise for GSI along with the
Retailer's regular order, having it delivered to the Retailer's
warehouse and thereafter shipped to GSI, and invoice GSI at its
net cost, plus the pro rata cost of the freight from the vendor
to the Retailer 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). Thereafter, the
Retailer shall ship the merchandise to GSI, freight collect, per
GSI's instructions.
b. In Line Merchandise. The Retailer shall advise GSI, no later
--------------------
than ten days after placing a purchase order with a vendor, of
the Category, item ordered, net cost, Retailer's retail price and
-10-
expected day of delivery to the Retailer's Warehouse.
c. Special Make-Ups. No later than ten days after ordering Special
-----------------
Make-Ups or Private Labels, Retailer shall advise GSI and furnish
GSI with a sample of the Special Make-Ups or Private Labels 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 or Private Label, 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 or Private Labels and, if so, the quantity
thereof. Special Make-Ups and Private Labels 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
and Private Labels 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 or
Private Labels to warrant selling such merchandise on line. In
such instances the Retailer shall not be required to offer such
Special Make-Ups or Private Labels for sale on line; provided
however, the Retailer acknowledges that with respect to Special
Make-Ups or Private Labels 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 or
Private Labels which are not available in all of the Retailer's
stores.
d. Closeout Merchandise. Retailer shall advise GSI no later than
---------------------
ten 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
-11-
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 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
----------
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 arkdowns 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.
-12-
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 the entire
process set forth in paragraphs 3.5 a, b, c, d and e between GSI
and Retailer may be accomplished electronically.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
-----------------------------
processing all E - Commerce 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 "Retailer
tradename.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.
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 and Land Based Gift Certificates, the
management fee for which shall be governed by paragraphs 3.5 e. and
3.6 a. respectively. GSI's Management Fee, including any management
fee to GSI as a result of the sale of Markdowns or Land Based Gift
-13-
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. 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 and shall require two signatures in
order to withdraw funds. Signatures on such account shall be one
employee of GSI and one employee of the Retailer. Notwithstanding
anything contained herein to the contrary GSI's designated employee
shall have an irrevocable power of attorney over the Web Account and
the Tax Account, as hereinafter discussed. No other funds shall be
deposited into the Web Account except for credit card proceeds from
the sale of On Line Merchandise, Land Based Stores Gift Certificates
and On Line Gift Certificates on Retailer's Web Site and no other sums
shall be deposited into the Tax Account except applicable taxes
collected from the sale of On Line Merchandise, Land Based Stores Gift
Certificates and On Line Gift Certificates on the Retailer's Web Site.
From each transaction, GSI shall be paid daily the sum of a) the cost
([*] of the sale amount) of the On Line Merchandise sold to Retailer's
On Line Customers, b) Retailer's Management Fee ([*] of the sale
amount) and c) GSI's shipping and handling charge to the On Line
Customer (collectively, "GSI's Entitlement"), if any. Retailer shall
give the Bank irrevocable instructions 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 or
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. Retailer
shall have no right to 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 (as they may vary from time to time)
and deliver to GSI within fifteen days of the execution of this
Agreement by Retailer, a waiver to claim a security interest in either
the Web Account or the Tax Account. In addition, Retailer shall give
the Bank irrevocable instructions to wire to the Retailer the amount
determined ("Retailer's Operating Income") by GSI to be remaining from
the sale of On Line Merchandise, Land Based Stores Gift Certificates
and On Line Gift Certificates from the Retailer's Web Site after the
-14-
deduction of GSI's Entitlement on the fifteenth day following the end
of each month; provided however, effective October 1, 2000, the
Retailer may request that it receive Retailer's Operating Income
weekly and in such event, GSI agrees that the payments shall be made
weekly to Retailer commencing within thirty days after receipt of such
notice.
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 no later than the
fifteenth day following the end of each month.
Retailer shall not be entitled to receive any revenue related to the
operation of the Retailer's Web Site other than the Retailer's
Operating Income. Any other revenue generated in connection with the
operation of the Retailer's Web Site shall belong solely to GSI.
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. GSI's Entitlement
shall be [*]([*] of $100.00, [*] of $100.00 and reimbursement of the
$5.00 shipping and handling fee) and Retailer's Operating Income shall
equal the remaining [*] after payment of the Retailer's cost of On
Line Merchandise, GSI's management fee and the shipping and handling
charge.
The Retailer's Operating Income and GSI's Entitlement shall also take
into account the amounts owing pursuant to paragraph 3.5 e. and 3.6
above.
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.
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
-15-
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 and
this shall be Retailer's sole remedy.
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,
which shall be provided in a manner consistent with that provided by
other reputable on line retailers.
Retailer reserves the right, to conduct, no more than four times
annually, surveys of its on line customers for the purpose of
providing its On Line Customers with better customer service. The
surveys shall be conducted in a manner consistent with those then
being conducted by the Retailer in its Land Based Stores, as
applicable to e-commerce.
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 the amount of GSI's Entitlement with respect to
such merchandise, as well as an amount equal to the Retailer's
-16-
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 the applicable tax
refunded to the On Line Customer, and such sums shall be deposited to
the Web Account.
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 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.
The Retailer recognizes that it may be beneficial to each party to
consolidate the customer loyalty programs. GSI therefore agrees that
should the Retailer elect to do so, then GSI will work with the
Retailer in good faith to develop such a program provided that it does
not have a substantial negative economic impact on GSI.
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 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. Retailer shall respond to a request for such
approval from GSI within seven days of receiving the request. In
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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; provided however, that should
Retailer provide GSI with Databases or other assets, then upon the
termination of this Agreement, such Databases and other assets shall
be returned to Retailer.
-18-
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 of certain information collected from the
Customer Data; provided however, GSI shall provide Retailer with on-
line access to such information which Retailer shall have the ability
to access at such times as it desires.
The type of information which shall be available from Retailer's
Customer Data shall be as follows:
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;
o. customer comments and complaints (shall be furnished on a
monthly basis);
p. additional information at GSI's discretion.
If the Retailer requests that GSI provide such information, 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
-19-
retailers' Customer Data to form trends and overall research as to the
on line shopping habits of consumers. 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.
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.Retailer.com.; 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.
All advertisements and marketing appearing in newspapers, circulars and
periodicals shall contain the following disclaimer: "On Line Merchandise
offerings may vary from products offered in The Athlete's Foot store.
6. ADVERTISING CO-OP AND DISCRETIONARY FUNDS
-----------------------------------------
6.1 In the event that GSI purchases merchandise pursuant to paragraph
3.5a.1) or 3.5a.3) above, and in the event that the Retailer receives
from any vendor an Advertising Co-op or Discretionary Funds, the
Retailer shall pay or credit to GSI an amount equal to the Advertising
Co-op or Discretionary Funds received by the Retailer for merchandise
for and on behalf of GSI. The amount to be paid or credited to GSI
shall be determined by multiplying the amount of merchandise purchased
by the Retailer from that vendor by a fraction, the numerator of which
is the amount of purchases derived from that vendor's product on the
Retailer's On-Line Shopping Pages, and the denominator of which is the
sum of the amount of the Retailer's purchases derived from that vendor
from both in-store and on-line sales ("GSI's Share"). Within sixty
(60) days of the end of each
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calendar year, the Retailer shall provide GSI with a statement
certified by its chief financial officer as to such sums received by
the Retailer from vendors during the prior calendar year, and such
supporting data so as to support the conclusions set forth in the
statement. At the same time, the Retailer shall pay to GSI an amount
equal to the GSI's Share. GSI shall have the right to audit the books
and records of the Retailer with respect to such sums. Such audit
shall be conducted at the Retailer's principal office located in the
continental United States.
6.2 In the event that GSI purchases merchandise from Retailer's vendors
pursuant to paragraph 3.5a. 2) above and GSI receives Advertising Co-
op or Discretionary Funds from such vendor as a result of such
purchase, then such funds received by GSI shall belong to GSI.
6.3 During the Term and any extensions thereof, GSI shall use all
Advertising Co-op and Discretionary Funds received by GSI pursuant to
paragraph 6.1 and 6.2 above, to exclusively promote the Retailer's Web
Site, as recommended by GSI and approved by GSI. This shall include
both on line and traditional advertising of the Retailer's Web Site.
All such proposed advertisements shall be submitted to the Retailer
for the Retailer's approval as to content and design. The Retailer
shall have five 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.
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
-21-
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 terminate
five (5) years 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
-22-
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 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
specifically prohibiting such disclosure of such
-23-
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 franchise or corporate information, the Retailer shall have the right to
establish a second web site incorporating the name "The Athlete's Foot"
which GSI shall provide a link to from the Retailer's Web Site; provided
however, under no circumstances shall Retailer sell any merchandise on such
second web site.
9. URL, NAME AND LOGO USAGE
------------------------
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.
GSI acknowledges that Retailer has already registered and owns the URL,"The
Athlete's Foot.com". The Retailer, however, grants to GSI the right to
register the fictitious name of "The Athlete's Foot.com" for the sole
purpose of conducting business on the Retailer's Web Site and to use the
URL, "The Athlete's Foot.com", for the sole purpose of operating the
Retailer's Web Site in accordance with the terms of this Agreement. The
Retailer also gives GSI the right to register other URLs containing the
name "The Athlete's Foot" provided that GSI first obtains Retailer's
consent. Retailer shall execute whatever documents are necessary in
connection with such registration.
-24-
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;
c. Prior to the Launch 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".
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.
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
-25-
Agreement a) from or related to a claim that GSI infringes a third
party copyright, trademark or trade secret relating to Retailer's
tradename or any other name set forth on Schedule 1 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, 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, wilful or intentional misconduct and arising
as a consequence of GSI providing 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 Retailer 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.
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. 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. RETAILER'S FRANCHISEES
----------------------
The Retailer has both company owned and franchised locations. The Retailer
represents and warrants to GSI that its franchise agreements prohibit its
franchisees from selling merchandise
-26-
on the Internet. The Retailer shall enforce all its rights under its
franchise agreements to prevent its franchisees from selling merchandise on
the Internet. In addition, the Retailer shall use its best efforts to
obtain the same Complete URL Integration from its franchisees as the
Retailer is introducing in all of its marketing and communications.
14. TERMINATION
-----------
14.1 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, or any of its
representations or warranties being materially false or misleading at
the time given, 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.
14.2 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; or
14.3 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.
-27-
15. 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.
16. 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.
16.1 Retailer's URL shall be owned solely by the Retailer;
16.2 Retailer's Web Site shall be owned solely by GSI; provided
however any assets furnished to GSI by Retailer shall remain the
exclusive property of Retailer and shall be returned to Retailer
upon the termination of this Agreement;
16.3 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.
-28-
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; provided
however, that GSI acknowledges that, except with the prior written consent
of the Retailer, which Retailer may withhold in its discretion, GSI shall
have no right to copyright, license or trademark the Retailer's tradename,
trademark or logo.
17. 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".
18. 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.
19. 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.
20. 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.
-29-
21. 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.
22. 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.
23. 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 Georgia (excluding the choice of law rules
thereof).
24. 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.
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In addition, at the request of GSI, the Retailer shall establish a wholly
owned subsidiary for the purpose of operating the Retailer's on line
business in accordance with the terms of this Agreement, and at that time,
the Retailer shall assign its rights under this Agreement to the subsidiary
and the subsidiary shall assume all of the Retailer's obligations
hereunder; provided however, the Retailer shall not be released from the
performance of any of its obligations hereunder. GSI shall make such
recommendation only if it believes, in good faith, and acting upon the
advise of its regularly retained certified public accountant, that such an
assignment would minimize the sales tax that may be required to be charged
to the users of the Retailer's Web Site, thereby benefitting the Retailer's
business.
25. 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.
26. 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.
27. JURISDICTION
------------
Should either party commence any proceeding pursuant to this Agreement,
the exclusive jurisdiction and venue of any such dispute shall be in the
state courts of Georgia or the United States District Court for the
______________ District of Georgia.
28. 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.
29. SIGNING
-------
-31-
The parties executing this Agreement represents and warrants that they have
full corporate authority to do so.
30. BINDING EFFECT
--------------
This Agreement shall be binding upon the parties hereto, their successors
and permitted assigns.
31. 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.
32. DISCLAIMER OF WARRANTIES, EXCLUDING EXPRESS 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.
33. 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
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: 1950 Vaughn Road,
Kennesaw, Georgia, 30144.
Attention: President
-32-
Copy to: James W. Butler, III, Esquire
Arnall, Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia, 30309
[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]
-33-
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.: THE ATHLETE'S FOOT STORES, INC.:
BY: /s/ Michael Rubin BY: /s/ Douglas P. Haensel
--------------------------- ---------------------------
Title: President Title: Executive VP & CFO
------------------------ ------------------------
Date: 3/19/99 Date: 3/10/99
------------------------- -------------------------
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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 The
Athlete's Foot Group, Inc. (hereinafter referred to as "Retailer") with an
address of 1950 Vaughn Road, Kennesaw, Georgia, 30144.
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
B.
1.2 "E-Commerce Agreement" means the E-Commerce Management 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,
-35-
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,
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 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
-36-
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 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. Any
Retailer Data furnished by Retailer to GSI, shall be returned by GSI upon the
termination of this Agreement.
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 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, 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)
Retailer's acceptance of the Web site;
-37-
or (iv) GSI's demonstration that all non-conformities have been corrected.
The acceptance procedures set forth in this Paragraph 2.4 shall also apply
to any material modifications made to the Retailer's Web site during the Term of
the E-Commerce Agreement. As used herein, "material modifications" shall mean
alterations which significantly change the overall design of the Retailer's Web
site and do not include the changes contemplated by Paragraph 3.1 c. of the E -
Commerce Agreement.
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, 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. 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.
-38-
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, 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. 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 14 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
-39-
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 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.
-40-
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 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. 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
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 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
-41-
party claim, action, suit or proceeding: (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 18 through 30, 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.: THE ATHLETE'S FOOT STORES, INC.:
By: /s/ Michael Rubin By: /s/ Douglas P. Haensel
-------------------------- ----------------------------
Title: President Title: Executive VP & CFO
------------------------ -------------------------
Date: 3/19/99 Date: 3/10/99
------------------------
Name: Michael G. Rubin Name: Douglas P. Haensel
------------------------ -------------------------
(Please type or print) (Please type or print)
-42-
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.
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.
-43-
Attachment B
(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
-44-
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
- ------------------------------------------------------------------------------
-45-
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.
-46-
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS
--------------------------------------------
-47-
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTRY MARK NAME CLASS/DESCRIPTION APPL'N NO./
FILING DATE
- -----------------------------------------------------------------------------------------------------------------------------------
U.S.A. Footprints Design 42--retail shoe stores. 74/716,312
8/16/95
U.S.A. Make It Fly 35--retail store services featuring footwear and clothing. 75/309,378
6/16/97
U.S.A. Nobody Knows The Athlete's Foot 42--retail athletic clothing and footwear store services. 74/647,424
Like The Athlete's Foot 3/16/95
U.S.A. Old Winged Foot Design 25--athletic footwear. 75/199,624
11/18/96
U.S.A. Old Winged Foot Design 25--t-shirts, warm-up suits, tennis suits, running or jogging 74/267,064
suits, socks, headwear, wrist bands, athletic jerseys, golf 4/20/92
shirts, running shorts and running singlets.
U.S.A. Old Winged Foot Design 42--retail athletic clothing and footwear store services. 74/375,449
5/5/93
U.S.A. Sports Wrap 42--retail athletic clothing and footwear store services. 74/419,293
8/2/93
U.S.A. The Athlete's Foot 42--retail athletic clothing and footwear store services. 73/813,640
7/20/89
U.S.A. The Athlete's Foot 35--rendering assistance in connection with the establishment 15,491
and/or operation of retail stores for selling athletic shoes, 3/11/74
and athletic clothing, which stores do business under the
prominently displayed term "The Athlete's Foot"
- ---------------------------------------------------------
COUNTRY MARK NAME REG. NO./
REG. DATE
- ---------------------------------------------------------
U.S.A. Footprints Design 1,988,625
7/23/96
U.S.A. Make It Fly 2,193,462
10/6/98
U.S.A. Nobody Knows The Athlete's Foot 1,953,326
Like The Athlete's Foot 1/30/96
U.S.A. Old Winged Foot Design 2,201,976
11/3/98
U.S.A. Old Winged Foot Design 1,781,509
7/13/93
U.S.A. Old Winged Foot Design 1,821,855
2/15/94
U.S.A. Sports Wrap 1,889,497
4/11/95
U.S.A. The Athlete's Foot 1,631,948
1/15/91
U.S.A. The Athlete's Foot 1,094,685
6/27/78
1
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTRY MARK NAME CLASS/DESCRIPTION APPL'N NO./ REG. NO./
FILING DATE REG. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.A. The Athlete's Foot 25--athletic wear such as t-shirts, warm-up suits, tennis suits, 73/282,193 1,634,135
running and jogging suits, socks, headwear, wrist bands, jerseys 10/17/80 2/5/91
and shirts sold through stores specializing in the sale of
athletic shoes and clothing.
U.S.A. The Athlete's Foot 25--athletic footwear. 74/592,031 2,209,347
10/28/94 12/8/98
U.S.A. The Athlete's Foot and 42--retail athletic clothing and footwear store services. 73/816,593 1,632,670
Old Winged Foot Design 8/1/89 1/22/91
U.S.A. The Athlete's Foot and 25--t-shirts, warm-up suits, tennis suits, running or jogging suits, 74/028,604 1,631,686
Old Winged Foot Design socks, headwear, wrist bands, athletic jerseys, golf shirts, running 2/13/90 1/15/91
shorts and running singlets.
U.S.A. The Athlete's Foot and 41--providing a web site featuring educational information about 75/506,670
Old Winged Foot Design Applicant's business and about athletic footwear and associated 6/22/98
physical and sporting activities
U.S.A. The Locker Room 35--retail store services. 75/639,474
2/5/99
2
SCHEDULE 2 TO E-COMMERCE MANAGEMENT AGREEMENT
TYPE OF ON LINE RETAILER'S OPERATING MANAGEMENT COST OF GOODS
MERCHANDISE INCOME FEE 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"
WARRRANT 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 Warrants 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.