SUPPLY, SERVICES AND LICENSE AGREEMENT
THIS AGREEMENT is made as of the 23rd day of August, 2002 (the "EFFECTIVE DATE")
between ADB SYSTEMS INTERNATIONAL INC. ("XXX.XXX"), a corporation having its
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxx X0X 0X0, THE BRICK WAREHOUSE CORPORATION ("THE BRICK"), a corporation
having its principal place of business at 00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx,
X0X 0X0, and ADB SYSTEMS INTERNATIONAL LTD. ("NEW ADB"), a corporation having
its principal place of business at 0000 XXXXXXX XXXX, XXXXX 000, Xxxxxxxxxxx,
Xxxxxxx X0X 0X0.
WHEREAS:
1. XXX.XXX is the registered owner of the url at xxx.xxx.xxx which is used for
the purposes of conducting on-line retail sales, and has skill and expertise in
operating on-line retail websites;
2. THE BRICK is Canada's largest volume retailer of home furnishings,
mattresses, bedding, appliances, televisions, video recorders, stereo equipment
and computers, and presently operates an on-line retail website through
xxx.xxxxxxxx.xxx;
3. XXX.XXX and THE BRICK wish to combine their respective web resources, to
establish a profitable venture which would be mutually beneficial to them;
4. XXX.XXX wishes to access THE BRICK's supply channel to operate the combined
website that will be accessible through each of the respective URLs;
5. NEW ADB (after restructuring) is the owner of the DYN@MIC
SELLER(TM) proprietary software, which enables the completion of on-line retail
transactions;
6. XXX.XXX wishes to license the DYN@MIC SELLER(TM) proprietary software for
XXX.XXX's sale of products supplied by THE BRICK, and NEW ADB wishes to license
the software to XXX.XXX for such purpose;
7. XXX.XXX wishes to have the DYN@MIC SELLER(TM) proprietary software power the
combined website;
8. THE BRICK wishes to purchase an interest in the DYN@MIC SELLER(TM)
proprietary software to ensure continued availability of the software and
XXX.XXX (prior to Restructuring) wishes to sell an interest in the software to
THE BRICK for such purpose.
NOW THEREFORE in consideration of the premises, the mutual covenants
contained in this Agreement, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties agree as
follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, unless the context otherwise requires, each capitalized term
shall have the meanings indicated below.
"AGREEMENT" means this Supply, Services and License Agreement and all schedules
annexed to this Agreement as the same may be amended from time to time in
accordance with the provisions hereof or thereof, "hereof" "hereto" and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular article or section; except where the context specifically
requires, "Article" or "Section" means and refers to the specified article or
section of this Agreement.
"AFFILIATE" means any entity controlled by, controlling or under common control
of a Party.
"BUSINESS DAY" means any day from Monday to Friday inclusive, except statutory
or civic holidays observed in Toronto, Ontario or Edmonton, Alberta.
"CONFIDENTIAL INFORMATION" means all information relating to any Party or to
such Party's business, products, sales, users, trade secrets, technology or
financial position to which access is obtained or granted hereunder, which is
treated by the disclosing Party as confidential provided, however, that
Confidential Information of the disclosing Party shall not include any data or
information which the receiving Party can demonstrate:
(a) is or becomes publicly available through no fault of the receiving
Party;
(b) is already in the rightful possession of the receiving Party prior to
its receipt from another Party;
(c) is independently developed by the receiving Party, as proven by
written documentation;
(d) is rightfully obtained by the receiving Party from a third party not
subject to an obligation of confidentiality;
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(e) is disclosed by the Receiving Party with the written consent of the
disclosing Party whose information it is; or
(f) is disclosed by the Receiving Party pursuant to court order or other
legal compulsion, provided the receiving Party gives the disclosing
Party prompt notice of any such requirement to afford, if possible,
the disclosing Party an opportunity to obtain a protective order.
"DISCLOSING PARTY" has the meaning attributed thereto in Section 5.2(a) of this
Agreement.
"EFFECTIVE DATE" has the meaning attributed thereto on the face page of this
Agreement.
"FULFILLMENT SYSTEM" means THE BRICK's system of software commonly called the
"Brick Retail System", warehouses, logistics procedures and know-how, and other
assets that establish and maintain its capability to acquire, warehouse and
deliver the Products, as currently carried out in its retail business in Canada.
"IMPROVEMENTS" means, in relation to any software, any changes, corrections,
modifications, improvements, adaptations, enhancements, and derivative works
based upon or derived from, and additions to, such software.
"INTELLECTUAL PROPERTY RIGHTS" means (A) any and all proprietary rights provided
under (i) patent law, (ii) copyright law, (iii) trademark law, (iv) design
patent or industrial design law, (v) semi-conductor chip or mask work law, or
(vi) any other statutory provision or common law principle including without
limiting the generality of the foregoing, laws protecting confidential
information, applicable to this Agreement including trade secret law, which may
provide a right in either (a) ideas, formulae, algorithms, concepts, inventions
or know-how generally, or (b) the expression or use of such ideas, formulae,
algorithms, concepts, inventions or know-how; and (B) any and all applications,
registrations, renewals, extensions, continuations, continuations-in-part,
divisions, re-issues, licenses, sub-licenses, franchises, agreements or any
other evidence of a right in any of the foregoing.
"NOTICE" has the meaning attributed thereto in Section 9.1 hereof.
"PARTIES" means XXX.XXX, THE BRICK and NEW ADB and "PARTY" means any one of
them.
"PAYMENT SYSTEM" means THE BRICK's custom point of sale system and its methods,
procedures and technology used to fund consumer sales as currently used in its
retail business in Canada.
"PERSON" includes an individual, company, corporation, partnership, government
or government agency, authority or entity howsoever designated or constituted.
"PRODUCTS" means consumer goods and related accessories as determined by THE
BRICK from time to time.
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"PROJECT MANAGER" means an individual officer or employee of a Party holding one
of the positions described in Section 5.1.
"RECEIVING PARTY" has the meaning attributed thereto in Section 5.2(a) hereof.
"RESTRUCTURING" has the meaning attributed thereto in the Co-Operation Agreement
made among the Parties dated as of the date hereof.
"RETAILER" means XXX.XXX.
"SCHEDULES" means the following schedules annexed to this Agreement, and such
other schedules as the Parties may append by mutual agreement, evidenced by
their initialing of same:
Schedule A - Software Restrictions, NEW ADB Service Descriptions and
minimum requirements.
Schedule B - NEW ADB Services, Service Level Commitment
Schedule C - XXX.XXX Services, Performance Criteria
Schedule D - DYN@MIC SELLER(TM) Joint Ownership Agreement
"SENIOR FINANCIAL EXECUTIVE" means, in the case of THE BRICK, the Senior Vice
President and Treasurer of THE BRICK and in the case of XXX.XXX, the Director of
Finance for XXX.XXX, or their respective appointees.
"SERVICES" means the services to be provided by NEW ADB pursuant to this
Agreement.
"SERVICE PROVIDER" means NEW ADB.
"SITES" means the web-sites operated at xxx.xxx.xxx and xxx.xxxxxxxx.xxx and
"SITE" means either of them.
"SOFTWARE" has the meaning attributed thereto in Section 4.1 of this Agreement.
"SOURCE MATERIALS" means, in relation to any software, all materials that would
enable a reasonably skilled programmer to compile, debug, and make Improvements
to such software in a reasonable manner including: (a) all source code related
thereto, reasonably annotated; (b) all technical and system documentation
including specifications, flowcharts, diagrams, business rules, data and
database models and structures, and compilation instructions related to such
software; (c) listings by name, version and developer of all third-party
compilers, utilities and other software relating to the software, including
sufficient information to procure a license from such developers; (d) a listing
of all relevant equipment necessary to operate the software; and (e) copies, in
source and object code form, of all compilers, utilities and other software that
are proprietary to the developer that is the owner of software and which are
used in relation to the software.
"SUPPLIER" means THE BRICK.
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"TERM" means the term during which this Agreement is in force, as set out in
Section 7.1.
"TRANSACTION DOCUMENTS" has the meaning attributed thereto in the Loan Agreement
made among the Parties and dated as of the date hereof. Transaction Documents
include, inter alia, this Agreement and the aforesaid Loan Agreement.
1.2 HEADINGS.
The use of headings in this Agreement is for convenience of reference only and
shall not affect its interpretation.
1.3 EXTENDED MEANINGS.
Words expressed in the singular include the plural and vice-versa and words in
one gender include all genders.
1.4 ENTIRE AGREEMENT.
The Transaction Documents, and any agreements and other documents to be
delivered pursuant to any Transaction Document, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, oral or written
between the Parties. The execution of this Agreement has not been induced by,
nor do either of the Parties rely upon or regard as material, any
representations, warranties, conditions, other agreements or acknowledgments not
expressly made in this Agreement, the Transaction Documents or in the agreements
or other documents to be delivered pursuant hereto.
1.5 INVALIDITY.
If in any jurisdiction a provision contained in this Agreement is found by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein, or of such provision in any other jurisdiction shall not be
affected or impaired thereby.
1.6 CONSENT.
Wherever any Party is required to obtain consent or approval from another Party,
such consent or approval shall not be unreasonably withheld or delayed and shall
be obtained in writing or electronically.
1.7 INTERPRETATION.
This Agreement has been negotiated by the parties hereto and their respective
counsel and shall be fairly interpreted in accordance with its terms and without
any rules of construction relating to which Party drafted the Agreement being
applied in favour or against any Party.
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1.8 CURRENCY.
Unless otherwise specifically provided herein, all amounts expressed or
described hereunder are in lawful currency of Canada.
ARTICLE II
XXX.XXX RESPONSIBILITIES
2.1 OPERATION OF SITES
(a) XXX.XXX will continue to operate its website at xxx.xxx.xxx.
(b) Immediately upon completion of the Restructuring, THE BRICK
will license to XXX.XXX the xxx.xxxxxxxx.xxx website for sale
of Products supplied by THE BRICK pursuant to a license
agreement, the terms of which will be agreed upon by THE BRICK
and XXX.XXX.
(c) At a time to be agreed upon by the Project Managers, XXX.XXX
will combine the xxx.xxx.xxx website and the xxx.xxxxxxxx.xxx
website. At the time the Sites are combined, the combined
website will be accessible through each of the respective
URL's.
(d) XXX.XXX will ensure it has the appropriate employees and
equipment to operate the Sites in accordance with the terms of
this Agreement.
(e) XXX.XXX will ensure the performance criteria for the Sites as
set out in Schedule C will be met to ensure continued and
uninterrupted sale of Product through the Sites. XXX.XXX shall
not be responsible for its failure to comply with these
criteria in a timely way or at all, as the case may be, where
such performance criteria depend, directly or indirectly, on
the functioning of the Fulfillment System and/or the Payment
System and where there is delay due to limits on the
functionality, or the lack of functioning, of such systems.
2.2 POSTING OF PRODUCTS AND OTHER CONTENT.
XXX.XXX will list Products for auction and fixed price sales, and post all other
content for the Sites received by it from THE BRICK pursuant to Section 3.2
hereof. XXX.XXX shall create the graphical user interfaces for the Sites through
the population of the display templates for the web pages created by NEW ADB.
2.3 TITLE TO PRODUCTS.
XXX.XXX shall be the retailer of Products sold on the Sites. THE BRICK, as
supplier, will deliver Products to XXX.XXX's customers. XXX.XXX will acquire
title to the Products from THE BRICK immediately before such purchaser accepts
delivery thereof. Risk of loss or
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damage shall follow title, and the Parties shall each be responsible for
maintaining insurance on Products as they deem appropriate.
2.4 FINANCIAL SETTLEMENT.
When a purchase is made of a Product, XXX.XXX will process the retail customer's
credit card information and receive the order information. Credit card
information will be processed by XXX.XXX using THE BRICK's existing Payment
Systems, and order information will link directly into THE BRICK's Fulfillment
System.
2.5 SHIPPING AND HANDLING.
XXX.XXX shall be responsible for paying all third party shipping and handling
charges for shipping and handling of Products in fulfillment of customer orders
accepted by XXX.XXX.
2.6 PRODUCT RETURNS.
XXX.XXX shall be responsible for processing returns of Products to retail
customers and shall remit credits and refunds as may be required. Credits and
refunds to retail customers' credit cards will be processed by XXX.XXX using THE
BRICK's Payment System.
2.7 TAX REMITTANCES.
XXX.XXX shall be responsible for collecting and remitting to the proper tax
authorities, any tax arising from the sale of Products.
2.8 FINANCIAL RESPONSIBILITIES.
XXX.XXX shall be responsible for maintaining such books and records with respect
to the Sites, for producing such financial statements and for all other
bookkeeping with respect to the Sites as would a prudent owner and operator of
such commercial web sites in Canada.
2.9 REGISTERED USER DATABASE.
XXX.XXX shall e-mail those individuals presently in its registered user database
and through an "opt-in" procedure shall allow such individuals to become
registered users of the Sites. THE BRICK shall e-mail those individuals
presently in its registered user database and through an "opt-in" procedure
shall allow such individuals to become registered users of the Sites. The
registered user database for the Sites, as modified after the "opt in" procedure
has been completed, shall be a joint asset of XXX.XXX and THE BRICK, and the
terms and conditions of the Sites shall specify as such. In furtherance of the
foregoing, each of XXX.XXX and THE BRICK hereby grants to the other a perpetual,
royalty-free, personal right to use such database for the purposes disclosed to,
and consented to by, the individuals that become registered users of the Sites.
Each of THE BRICK and XXX.XXX shall obtain the other's prior approval of the
procedures used by it to obtain the consent of the individuals presently in its
registered user databases to registration in the database for the Sites. Such
prior approval shall also be obtained
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with respect to the content of the terms communicated to such users for the
aforesaid purpose. Each of XXX.XXX and THE BRICK shall not unreasonably withhold
the granting of the aforesaid consents to the other.
2.10 NEW ADB FEES FOR SERVICES
XXX.XXX will pay all fees for NEW ADB services as provided in Schedule A.
2.11 TRADE-MARKS
The Parties acknowledge and agree that XXX.XXX will use THE BRICK's name,
trademarks, trade names, branding and "look and feel" in developing the
graphical user interfaces for the Software. XXX.XXX shall not make any of the
foregoing uses or any other use of THE BRICK's name, trademarks, trade names,
branding and "look and feel" in such a way as to significantly harm the goodwill
or reputation of THE BRICK and will not alter THE BRICK's trademarks, trade
names or branding.
ARTICLE III
THE BRICK RESPONSIBILITIES
3.1 PRODUCT SELECTION.
THE BRICK shall make available for sale through the Site the Products and THE
BRICK shall advise XXX.XXX of any minimum price applicable to each such Product
in advance of the listing of such Product on the Site. THE BRICK shall assign a
Project Manager who shall be responsible for the daily selection and management
of Products to be sold through the Site.
3.2 PRODUCT INFORMATION.
THE BRICK shall, at its expense, provide and maintain all content of the Sites
that is not otherwise specified herein as to be provided by another Party. The
content to be provided by THE BRICK shall include, without limitation, the data
required to list Products on the Site including the number of such Products
available for sale on the Site, the dates of their availability for sale, a
stock keeping unit number for each such Product and any other similar
information that is necessary, all in such form and by such means as XXX.XXX
shall advise from time to time. THE BRICK hereby grants to each of XXX.XXX and
to NEW ADB a personal, royalty-free right to use, copy, prepare derivative works
from, modify, adapt and combine throughout the Term of this Agreement all
content provided by it pursuant to this Section as necessary for the provision
of the Services pursuant to, and in accordance with, the terms and provisions of
this Agreement.
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3.3 CUSTOMER SERVICE.
THE BRICK shall be responsible for all customer relations with retail customers
purchasing Products from the Site, except that THE BRICK will refer disputes
related to the Sites and related technical issues to XXX.XXX for resolution.
3.4 ADVERTISING
THE BRICK will identify the Sites in its regularly scheduled media advertising
and will encourage customers, in such advertising and by other appropriate
marketing vehicles, to visit the Sites and to purchase Products.
3.5 TRADE-MARKS
The Parties acknowledge and agree that THE BRICK will use XXX.XXX's name,
trademarks, trade names, branding and "look and feel" in its advertising and
other appropriate communications. THE BRICK shall not make any of the foregoing
uses or any other use of XXX.XXX's name, trademarks, trade names, branding and
"look and feel" in such a way as to significantly harm the goodwill or
reputation of XXX.XXX and will not alter XXX.XXX's trademarks, trade names or
branding.
3.6 FINANCIAL SETTLEMENT.
THE BRICK shall remit all monies received on financial settlement through the
Payment System with a retail customer to a bank account for XXX.XXX (the
"XXX.XXX ACCOUNT") at such times as agreed to by the Senior Financial
Executives.
3.7 SHIPPING AND HANDLING.
Upon a customer order being entered into THE BRICK's Fulfilment System by
XXX.XXX, THE BRICK shall generate a shipping order, and pick, pack and deliver
such Product for shipping. THE BRICK shall confirm all shipments to XXX.XXX in
electronic form within 24 hours of shipment.
3.8 RIGHTS OF USE
(a) Subject to the provisions of this Agreement, THE BRICK hereby
grants to XXX.XXX a personal, royalty-free right to use the
Payment System and the Fulfillment System for the purposes set
out in this Agreement throughout the Term of this Agreement.
(b) Subject to the provisions of this Agreement, THE BRICK hereby
grants, and covenants and agrees to grant from time to time
throughout the Term of this Agreement as necessary, to each of
XXX.XXX and to NEW ADB a personal, royalty-free right to use,
copy, prepare derivative works from, modify, adapt and combine
all software, including graphic user interfaces and code
created
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specifically to display the contents of the Site, conveyed and
transferred to THE BRICK pursuant to Section 2(b) of Schedule
D, for the sole purpose of the performance of obligations as
required by them pursuant to this Agreement.
3.9 THE BRICK CHARGES
In consideration of THE BRICK's provision of the services and the supply of
Products as set out in Section 3.1 to 3.8(a) hereof, THE BRICK will charge
XXX.XXX, and XXX.XXX will pay, charges as set by the Brick from time to time.
THE BRICK agrees that the charges will be on commercial terms.
ARTICLE IV
NEW ADB RESPONSIBILITIES
4.1 GRANT OF RIGHTS
(a) On the Effective Date, XXX.XXX will grant certain rights to
the use of the most recent version, as of the date hereof, of
the Dyn@mic Seller(TM) software, including all modifications
and add-ons created by it pursuant to this Agreement (the
"SOFTWARE"), to THE BRICK pursuant to the agreement attached
hereto as Schedule D.
(b) Immediately upon completion of the Restructuring, NEW ADB will
grant the licence of the most recent version of the Software
to XXX.XXX as described in Section 1.1 of Schedule A.
4.2 SERVICES
NEW ADB will perform those services specified as being its responsibility in
Schedule A to this Agreement, as well as the pertinent Service Provider
responsibilities specified in Schedule B and C. Payment for such Services will
be as provided in Schedule A. NEW ADB, as the Service Provider, will provide the
Services specified in Schedule B as to be provided by it, at the Service levels
specified in that Schedule. The Service Provider shall not be responsible for
its failure to provide Services, in a timely way or at all, as the case may be,
where such Services depend, directly or indirectly, on the functioning of the
Fulfillment System and/or the Payment System and where the provision of such
Services is delayed due to limits on the functionality, or the lack of
functioning, of such systems.
4.3 TRANSITION
Should the computer hardware on which the Software shall operate be physically
moved at any time during the Term of this Agreement NEW ADB will cooperate in
good faith with, and provide reasonable assistance to, the other Parties hereto
in order to help minimize the resulting disruption to the other activities
contemplated by this Agreement.
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ARTICLE V
GENERAL MATTERS
5.1 MANAGEMENT AND IMPLEMENTATION.
(a) NEW ADB shall appoint a Project Manager who shall be responsible
for the implementation, management and enforcement of the
technical aspects of this Agreement on behalf of NEW ADB,
including working with the other Parties to mutually develop a
Project Charter and a Design Document, to prepare Progress/Open
Issues reports and to achieve first-line resolution of disputes
between the Parties regarding the performance or non-performance
of their technical obligations under this Agreement. The Project
Manager shall be responsible for attending all Project Review
Committee meetings and Development Team meetings and shall
cooperate with the other Parties' Project Managers in resolving
all outstanding issues in a timely manner. Upon such designation,
NEW ADB shall concurrently provide the other Parties with details
with respect to its Project Manager, including name, work and home
address, work and home telephone number, and e-mail address.
(b) The Retailer and the Supplier shall each appoint a Project Manager
from their respective companies. Upon such designations, each of
XXX.XXX and THE BRICK shall concurrently provide the other Parties
with details with respect to its Project Manager, including name,
work and home address, work and home telephone number, and e-mail
address. The Project Managers for the Retailer and the Supplier
shall each:
(i) work with the other Project Managers to develop a Project
Charter, participate in Project Review Committee meetings in
order to ensure that all Parties shall have the right to rely
upon the instructions and decisions made in the Project
Review Committee meetings, and shall be available for the
first-line resolution of disputes between the Parties
regarding the performance or non-performance of their
obligations with respect to the technical aspects of their
relationship under this Agreement; and
(ii) work with the other Project Managers to develop a Design
Document, participate in the Development Team meetings,
assist NEW ADB's Project Manager in preparing Progress/Open
Issues Reports and shall cooperate in resolving all
outstanding issues in a timely manner.
(c) Each of the Project Managers may, on written notice to the others,
delegate his or her responsibilities under this Agreement to one
or more individuals and may exercise his or her responsibilities
as a member of a committee that includes representatives of the
other Parties.
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(d) Each Party shall be entitled to replace its Project Manager on
notice to the other Parties. In the event that any Party replaces
its Project Manager it shall be the responsibility of such Party
to ensure an orderly transition and to ensure that the replacement
does not adversely affect the timely provision of the Services.
5.2 CONFIDENTIALITY.
(a) Each Party, on behalf of its advisors, agents, employees and
subcontractors (hereinafter in this section, the "RECEIVING
PARTY") covenants with the Party that has disclosed Confidential
Information to it (hereinafter in this section, the "DISCLOSING
PARTY") that it shall keep confidential the Confidential
Information of the Disclosing Party to which the Receiving Party
obtains access as a consequence of entering into this Agreement
and that it will take all reasonable precautions to protect such
Confidential Information from any use, disclosure or copying
except as expressly authorized by this Agreement. This Section 5.2
shall survive the termination of this Agreement.
(b) Confidential Information that is provided by the Disclosing Party
and all rights in and to such Confidential Information shall
remain the property of the Disclosing Party and shall be held by
the Receiving Party for the benefit of the Disclosing Party. The
Receiving Party shall not, except as permitted by Section 5.2(c),
directly or indirectly, use or exploit such Confidential
Information or disclose such Confidential Information to any third
party, for any purpose unless explicitly permitted by this
Agreement or otherwise authorized in writing by the Disclosing
Party.
(c) The Receiving Party may disclose Confidential Information to:
i) such of its directors, officers and employees who need to
know such information for the purposes of this Agreement;
ii) its professional advisors engaged to advise in connection
with the purposes of this Agreement or its potential sources
of financing;
iii) anyone whom the Disclosing Party has agreed in writing may
receive the information;
iv) any competent judicial, governmental or regulatory body
(including any stock exchange) which requires or can require
the Confidential Information to be disclosed; or
v) the public where required by any specific, applicable
requirement of law or pursuant to the requirements of any
securities regulatory body having jurisdiction.
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(d) The Receiving Party may only disclose Confidential Information
under Clauses 5.2(c)(iv) and 5.2(c)(v) if, insofar as permitted by
law, it has:
i) informed the Disclosing Party;
ii) obtained legal advice in writing that disclosure is required;
iii) advised the recipient of the confidentiality of the
information being disclosed; and
iv) in the case of disclosure to the public, used its reasonable
commercial efforts to agree on the wording of such disclosure
with the Disclosing Party.
(e) The Receiving party may only disclose Confidential Information
under Section 5.2(c) to the extent strictly necessary for the
purposes of this Agreement.
(f) The Receiving Party shall inform anyone to whom it is allowed to
disclose Confidential Information that the contents are
confidential and procure that the recipient complies with this
Section 5.2 as if the recipient was also bound by it. If required
by the Disclosing Party, the Receiving Party shall make the
recipient bound by a Confidentiality Agreement on terms equivalent
to this Section 5.2.
(g) Upon expiry or earlier termination of this Agreement, at the
written request of the Disclosing Party, the Receiving Party
shall, so far as reasonably practical:
i) return all written Confidential Information which has been
supplied;
ii) destroy or erase all Confidential Information in electronic
form or incorporated into other material and procure that
anyone to whom the Receiving Party has disclosed Confidential
Information also does so; and
iii) confirm in writing that the provisions of this Clause have
been complied with.
(h) A violation of any obligation hereunder will result in immediate
and irreparable harm and damage. In the event of such violation by
a Party hereto, the Party harmed will, in addition to any other
right to relief, be entitled to equitable relief by way of
temporary or permanent injunction and to such other relief as any
court of competent jurisdiction may deem just and proper.
5.3 AUDIT RIGHTS.
Each Party shall provide each other Party hereto, its internal auditors and
external auditors and regulators, with access to the Party's service locations
and such records and documents as may be reasonably required to audit the fees
and expenses hereunder. Each Party shall also provide
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such persons with any assistance that they may reasonably require in connection
with such audits.
5.4 PAYMENT TERMS
In respect of all payments to be made by a Party to another Party pursuant to
this Agreement:
(a) all such payments shall be invoiced by the payee Party to the
payor Party at a minimum on a monthly basis, setting out the
Services and/or expenses in respect of which the invoice relates,
and detailing the calculation thereof. The payor Party shall pay
the payee Party the amount of each invoice within the terms agreed
to between the Parties from time to time;
(b) any overdue payment hereunder shall accrue interest at the rate of
the prime rate of interest quoted by the Royal Bank of Canada for
its best commercial customers, from time to time, plus 3% per
annum calculated monthly from the date it is due until date of
payment;
(c) the payor Party shall pay all taxes, duties, customs and similar
charges respecting the Service fees and other payments to be made
by it to another Party, provided that if under local law it may
not make such payments, it shall reimburse the payee Party on
demand for all such payments made by the payee Party; and
(d) the amounts due under this Agreement by the Retailer and/or the
Supplier shall be paid without any deduction, abatement or setoff
except for income taxes required by law to be deducted at source.
5.5 BUDGET
XXX.XXX shall formalize, with THE BRICK's input, the draft budget with respect
to the revenues, expenses, changes in working capital, investments (including
capital expenditures), sources of financing and timing thereof for the initial
period commencing September, 2002 and ending December, 2003. Thereafter, the
budget will be prepared on at least an annual basis by XXX.XXX, with THE BRICK'S
input. The budgets shall include the fees payable by XXX.XXX to NEW ADB for the
implementation and customization Services provided by NEW ADB as contemplated by
Section 2.2 (a) of Schedule A and the charges payable by XXX.XXX to THE BRICK
pursuant to Section 3.9 of this Agreement. The budgets shall also reflect
XXX.XXX's costs of obtaining, hosting and maintaining necessary computer
hardware.
5.6 TRADE PRACTICES
Each Party shall conduct its business in relation to this Agreement and any
Services provided by them hereunder in a professional manner that will reflect
favourably on the good name and reputation of the Sites and the Parties. In
particular, each Party shall comply with all applicable national, international
and local laws, ordinances, and regulations in its dealings with the other
Parties and in performing its obligations under this Agreement and each Party
will refrain from
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engaging in any unfair, or deceptive trade practice, or unethical business
practice whatsoever, or any other practice that could unfavourably reflect upon
the Sites or the other Parties hereto.
5.7 OTHER RETAIL BUSINESS
(a) Neither NEW ADB nor XXX.XXX shall be permitted to enter into any
other online retail business where either NEW ADB or XXX.XXX are
the vendor of any products without the prior written consent of
THE BRICK. THE BRICK shall not operate another combined website
with another retailer without the prior written consent of
XXX.XXX.
(b) THE BRICK shall be the only supplier of furniture, mattresses,
bedding, appliances and consumer electronics for resale by
XXX.XXX.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
6.1 REPRESENTATIONS AND WARRANTIES.
(a) Each Party hereby represents and warrants to the others that it is
legally constituted and validly existing, in good standing, under
the laws of the jurisdiction of its constitution, with adequate
power to enter into this Agreement.
(b) Each Party hereby represents and warrants to the others that all
necessary action on the part of such Party has been taken to
approve and authorize the execution and delivery of this
Agreement, and that this Agreement constitutes a legal and valid
agreement binding upon such Party, enforceable in accordance with
its terms.
(c) Each Party represents, warrants and covenants to each other Party
that:
(1) it is and will be free to enter into, and to fully perform
its obligations under this Agreement and that no agreement or
understanding with any other person exists or will exist
which would interfere with its obligations hereunder;
(2) all Intellectual Property used by it in the course of
fulfilling its obligations hereunder will not infringe any
Intellectual Property Rights or moral rights of any third
party;
(3) there is no outstanding litigation, arbitration or other
dispute to which the Party is a party which if decided
unfavourably to the Party could have a material adverse
effect on the Party's ability to carry out its obligations
hereunder; and
15
(4) it shall render all services to be provided by it under this
Agreement honestly and in good faith and cause its
obligations hereunder to be performed in a professional
manner consistent with industry standards and practices by
fully trained, qualified and competent personnel who have the
appropriate skills and experience to perform the duties
assigned to them with the highest possible degree of care,
skill, diligence and responsiveness and in any case no less
than a reasonable degree of care, skill, diligence and
responsiveness.
(5) NEW ADB represents and warrants that the Software will meet
the functionalities specified in Appendix B to Schedule A.
6.2 INDEMNIFICATION
Each Party will severally, and not jointly, indemnify, defend and save each
other Party harmless from and against any and all claims, damages, liabilities,
costs and expenses including legal fees in respect of, arising from, or relating
to: (a) any breach by such Party of any representation, warranty, provision,
covenant or agreement made by such Party herein; (b) any claim or action brought
against that other Party to the extent that such claim or action is based on a
claim that the use of such indemnifying Party's Intellectual Property or other
material, documents or information provided by such Party infringes the
Intellectual Property Rights or moral rights of a third party; or (c) any death,
personal injury or loss of or damage to property caused by such Party.
6.3 GENERAL LIMITATION ON LIABILITY.
(a) UNDER NO CIRCUMSTANCES WILL ANY PARTY BE LIABLE TO ANOTHER PARTY
FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES) ARISING FROM BREACH OF THIS AGREEMENT, SUCH AS, BUT
NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST
BUSINESS.
(b) NO PARTY WILL BE LIABLE TO THE ANOTHER PARTY FOR MORE THAN
$200,000 IN DAMAGES PURSUANT TO THIS AGREEMENT.
(c) NOTWITHSTANDING SECTION 6.3(a) AND (b) OF THIS AGREEMENT, THERE
WILL BE NO LIMITATION OF LIABILITY FOR ANY PARTY WITH RESPECT TO
ANY DAMAGES ARISING AT ANY TIME IF THE DAMAGES ARISE FROM THE
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS BELONGING TO A
THIRD PARTY.
16
6.4 LIMITATION ON REPRESENTATIONS AND WARRANTIES.
Except for those representations and warranties otherwise provided in any
Transaction Document, no Party makes any representations or warranties, and
there are no conditions, express or implied, in fact or in law, including
without limitation, the implied warranties or conditions of merchantable quality
and fitness for a particular purpose and those arising by statute or otherwise
in law or from a course of dealing or usage of trade.
ARTICLE VII
DEFAULT AND TERMINATION
7.1 TERM.
This Agreement shall commence on the Effective Date and shall continue, subject
to early termination in accordance with the terms hereof, until the 10th
anniversary of the date of execution of this document (the "INITIAL TERM").
Thereafter, the Agreement shall be extended or renewed (any such extension or
renewal being a "SUBSEQUENT TERM") only upon mutual agreement of the Parties.
7.2 TERMINATION.
(a) Each of the following shall constitute an "EVENT OF DEFAULT" for
the purposes of this Agreement:
(i) if a Party fails to perform any material obligation set forth
in this Agreement and such default continues for a period of
thirty (30) days after written notice of such failure has
been given by a non-defaulting Party to all other Parties; or
(ii) if a Party declares bankruptcy or becomes insolvent or if it
is put into receivership or a trustee is appointed for the
benefit of its creditors or it ceases the operation of its
business without a successor acceptable to the remaining
Parties.
(b) Whenever an Event of Default has occurred, the non-defaulting
Party may, at its election, terminate this Agreement in writing,
in which event the non-defaulting Party shall be entitled to
pursue all legal remedies available to it, subject to the terms
and conditions hereof.
(c) In an Event of Default by the Retailer or the Supplier, the
non-defaulting Retailer or Supplier shall have the right by
written notice to assume all rights and obligations of the
defaulting Retailer or Supplier and cure such default, or, if such
default is bankruptcy or insolvency, declare a willingness to
continue to meet the obligations of the bankrupt or insolvent
Retailer or Supplier, in which case the
17
Agreement shall become one between NEW ADB and the solvent
Retailer or Supplier.
7.3 SURVIVAL.
The terms of Sections 5.2, 5.3, 5.6, 7.3 and Articles 6 and 8 shall survive any
termination or expiry of this Agreement and shall continue in force thereafter
for the period contemplated by the Agreement. Other provisions of this Agreement
which, by the nature of the rights or obligations set out therein, might
reasonably be expected to be intended to so survive, shall survive termination
or expiry of this Agreement until they are satisfied or by their nature expire.
ARTICLE VIII
DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION PROCESS.
If any dispute, disagreement, controversy or claim (a "DISPUTE") arises out of
or relating to this Agreement including, without limitation, its application,
interpretation, performance, breach, termination, enforcement or damages, or
remedies arising out of the breach of or non-compliance therewith, the Dispute
shall be referred immediately to the senior finance executive for each Party.
For the purposes of this Article 9, "senior finance executive" means, in the
case of THE BRICK, the Chief Financial Officer of THE BRICK, and in the case of
NEW ADB, the President of New ADB and in the case of XXX.XXX, a Senior Officer
of XXX.XXX. If the Dispute remains unresolved after 10 days of having been
referred to such senior executives, then the Parties shall proceed as set out
below.
All Disputes and claims arising out of this Agreement shall be finally
determined by arbitration to be commenced and conducted in the English language
in Xxxxxxx, Xxxxxxx, Xxxxxx in accordance with the rules of the Arbitration Act,
1991 (Ontario) as amended hereby. The Parties agree that:
(a) the parties shall agree on a single arbitrator (who shall be
trained as a professional arbitrator with expertise in commercial
and corporate law) within ten (10) days of notice of reference to
arbitration, failing which either party may apply to a court of
competent jurisdiction in the Province of Ontario to appoint an
arbitrator with the foregoing qualifications;
(b) the arbitration shall be held in private and no person except the
Parties and their respective representatives and witnesses shall
be present unless authorized by the arbitrator;
(c) subject to the provisions of this Section 9.1, the Parties will
agree, in consultation with the arbitrator, on the rules of the
arbitration. Absent such agreement, the arbitrator will be
entitled to establish the procedures to be followed, provided that
in doing so, the arbitrator shall be guided by the Parties' mutual
intention that
18
such procedures should be designed to expedite the proceedings and
minimize to the extent practicable the expenses for the Parties;
(d) the arbitration award shall be final and binding on the Parties
and shall not be subject to any appeal (those provisions of the
Arbitration Act, 1991 (Ontario) necessary to achieve such result
are hereby expressly excluded);
(e) the costs of the arbitration shall be in the discretion of the
arbitrator;
(f) judgment upon any award may be entered in any court having
jurisdiction or application may be made to the court for a
judicial recognition of the award or an order of enforcement, as
the case may be;
(g) the arbitrator shall be instructed that time is of the essence in
the arbitration proceeding and, in any event, the arbitration
award must be made within 15 days of the submission of the Dispute
to arbitration;
(h) all Disputes referred to arbitration (including the scope of the
agreement to arbitrate, any statute of limitations, set-off
claims, conflict of laws rules, tort claims and interest claims)
shall be governed by the substantive law of Ontario; and
(i) the Parties agree that the arbitration shall be kept confidential
and that the existence of the proceeding and any element of it
(including any pleadings, briefs or other documents submitted or
exchanged, any testimony or other oral submissions and any awards)
shall not be disclosed beyond the arbitrator, the Parties, their
counsel and any person necessary to the conduct of the proceeding,
except as may lawfully be required in judicial proceedings
relating to the arbitration or otherwise.
ARTICLE IX
GENERAL
9.1 NOTICE.
Any notice or other communication (a "NOTICE") required or permitted to be given
or made hereunder shall be in writing and shall be well and sufficiently given
or made if:
(a) delivered by overnight courier service; or
(b) sent by facsimile transmission and confirmed by prepaid first
class mail or overnight courier service.
19
in the case of a Notice to THE BRICK addressed to THE BRICK at:
The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxxxx,
Chief Financial Officer
Fax No.: 000-000-0000
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxxx Xxxxx
Fax No.: 000-000-0000
and in the case of a Notice to XXX.XXX addressed to it at:
ADB Systems International Inc.
000 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxxxx
General Counsel
Fax No.: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
and in the case of a Notice to NEW ADB, addressed to it at:
ABD Systems International Ltd.
20
201 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxxxx
General Counsel
Fax No.: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 8.1 shall be deemed to
have been given or made and to have been received on the Business Day after it
was delivered, if delivered as aforesaid.
Either Party may from time to time change its address for notice by giving
Notice to other Party in accordance with the provisions of this Section 9.1.
9.2 MERGER, AMALGAMATION AND DISSOLUTION
Except as contemplated by the Restructuring, XXX.XXX shall not amalgamate,
merge, consolidate or otherwise enter into any form of business combination with
any other Person. XXX.XXX shall not liquidate, dissolve, or windup or take any
steps or proceedings in connection therewith.
9.3 ASSIGNMENT.
No Party may assign its rights and obligations under this Agreement, in whole or
in part, without the prior consent in writing of the other Parties. Any
purported assignment by a Party made without required consent is void and of no
effect. No assignment of this Agreement by THE BRICK or NEW ADB shall relieve
such Party from any obligation under this Agreement. Notwithstanding the
foregoing, THE BRICK may, without the prior consent of XXX.XXX or NEW ADB at any
time, assign its rights and obligations under this Agreement to an Affiliate of
THE BRICK or to a bona fide purchaser of all or substantially all of THE BRICK's
business. NEW ADB may, without the prior consent of any other Party at any time,
assign its rights and obligations under this Agreement to a bona fide purchaser
of all or substantially all of NEW ADB's business.
21
9.4 BINDING ON SUCCESSORS.
This Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
9.5 FURTHER ASSURANCES.
Each Party agrees that upon the written request of any Party, it will do all
such acts and execute all such further documents, assignments, and the like, and
will cause the doing of all such acts and will cause the execution of all such
further documents as are within its power to cause the doing or execution of, as
any other Party hereto may from time to time reasonably request be done and/or
executed as may be reasonably necessary or desirable to give effect to this
Agreement or as may be requisite to enable them to have the full benefit of all
rights and remedies intended to be reserved or created hereby or as may be
required under local laws.
9.6 INDEPENDENT CONTRACTORS.
It is understood and agreed that in giving effect to this Agreement, no Party
shall be or be deemed a partner, agent or employee of any other Party for any
purpose and that their relationship to each other shall be that of independent
contractors. Nothing in this Agreement shall constitute a partnership or a joint
venture between the Parties. No Party shall have the right to enter into
contracts or pledge the credit of or incur expenses of liabilities on behalf of
any other Party.
9.7 WAIVER.
A waiver by a Party hereto of any of its rights hereunder or of the performance
by any other Party of any of its obligations hereunder shall be without
prejudice to all of the other rights hereunder of the Party so waiving and shall
not constitute a waiver of any such other rights or, in any other instance, of
the rights so waived, or a waiver of the performance by such other Party of any
of its other obligations hereunder or of the performance, in any other instance,
of the obligations so waived. No waiver shall be effective or binding upon a
Party unless the same shall be expressed in writing and executed by the Party to
be bound. Notwithstanding any forbearance or indulgence by any Party, until
complete performance of a term or condition, the waiving Party shall be entitled
to invoke any remedy available to it under this Agreement or at law.
9.8 COMPLIANCE WITH LAW.
Each Party shall, in the performance of this Agreement, fully comply with, and
abide by, all laws, regulations, regulatory rulings or directives, court orders,
and decisions of administrative tribunals of competent jurisdiction, that may,
in any manner or extent, concern, govern, or affect any Party's respective
performance of, and obligations under, this Agreement.
22
9.9 EFFECTIVE DATE.
This Agreement shall not become a valid and binding contract unless and until
each Party has duly executed and delivered this Agreement.
9.10 AMENDMENT.
No amendment of any provision of this Agreement shall be effective unless such
amendment is embodied in a written agreement which is: (i) expressly stated to
be intended to amend this Agreement; and (ii) executed by an authorized signing
officer of each of the Parties. For greater certainty, the parties acknowledge
and agree that no representations, warranties, conditions, covenants or other
statements or commitments, in each case except for those made pursuant to a
Transaction Document, whether made orally, in writing, by course of conduct or
otherwise, and whether made prior to the Effective Date of this Agreement or
thereafter, shall be binding on either of the parties.
9.11 GOVERNING LAW.
This Agreement shall be governed and construed according to the laws of the
Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract. Each of the Parties hereby
attorns to the jurisdiction of the Courts of the Province of Ontario.
9.12 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument. Counterparts may be executed either in original or faxed
form and the Parties may adopt any signatures received by a receiving fax
machine as original signatures of the Parties.
9.13 SEVERABILITY.
If any Article, Section or any portion of any Section of this Agreement is
determined to be unenforceable or invalid for any reason whatsoever, that
unenforceability or invalidity shall not affect the enforceability or validity
of the remaining portions of this Agreement and such unenforceable or invalid
Article, Section or portion thereof shall be severed from the remainder of this
Agreement.
23
IN WITNESS WHEREOF this Agreement is executed by the Parties as of the date
first written above.
ADB SYSTEMS INTERNATIONAL INC.
By:
---------------------------------------------------
(Duly Authorized Officer)
THE BRICK WAREHOUSE CORPORATION
By:
---------------------------------------------------
(Duly Authorized Officer)
ADB SYSTEMS INTERNATIONAL LTD.
By:
---------------------------------------------------
(Duly Authorized Officer)
24
SCHEDULE A
SOFTWARE RESTRICTIONS, NEW ADB SERVICE DESCRIPTIONS
AND MINIMUM REQUIREMENTS
1.0 SOFTWARE RESTRICTIONS
1.1 LICENSE GRANTED TO XXX.XXX
Subject to the provisions of the Agreement, NEW ADB hereby grants to XXX.XXX a
non-exclusive, perpetual, personal, non-transferable right to use the Software
and U.S. Patent Nos. 5,890,138 and 6,266,652 for the on-line sale of Products
under, and for the Term of, the Agreement only, which right includes the right
to use such Software in the performance of XXX.XXX's obligations to the THE
BRICK pursuant to the Agreement. The right granted in this Section 1.1
specifically excludes, however, any and all rights NEW ADB has or will have
under the Patent License Agreement made between Old ADB and XXX Xxxxxxxxxxx
dated April 17th, 2002, including, for certainty, U.S. Patent No. 5,721,906,
provided that the Parties acknowledge and agree that it is their intention that
Old ADB's benefits under Section 11.2 of the Patent License Agreement shall be
afforded to XXX.XXX.
1.2 USE LIMITATIONS ON SOFTWARE.
(a) The Retailer and the Supplier understand and acknowledge that this
Agreement only permits the Software to be used:
(i) in respect of transactions where the buyer's address for
delivery is in Canada or the United States of America, as
determined pursuant to the registration process for such
transactions; and
(ii) in connection with transactions involving consumer goods.
(b) Nothing herein shall be construed as permitting the Retailer any
right of resale of the Software. Without limitation to the
foregoing, throughout the Term of the Agreement of which this
Schedule forms a part, XXX.XXX and NEW ADB shall not license or
sub-license, or permit the licensing or sublicensing of, the right
to use the Software for retail sales purposes to a Competitor of
THE BRICK. For the purposes of this Section 1.2, "Competitor"
means any Person whose principal business to be conducted through
Dynamic Seller is comprised of sales at retail of furniture,
mattresses, appliances or consumer electronics to customers for
delivery in Canada and includes, without limitation the
competitors listed in Appendix A to Schedule A. For greater
certainty, current customers of NEW ADB exercising their rights
under existing agreements or any renewal or replacement agreements
are not Competitors. Notwithstanding the foregoing, NEW ADB may
license or sub-license, or permit the licensing or sublicensing
of, the right to use the
25
Software for retail sales purposes to a Competitor of THE BRICK
where such Competitor is not given the right to use the Software
for sales at retail of furniture, appliances or consumer
electronics to customers for delivery in Canada.
1.3 OWNERSHIP OF SOFTWARE.
(a) The Supplier and the Retailer acknowledge that, subject to the
grant of an interest contemplated by Section 4.1(a) of the
Agreement and the license granted pursuant to Section 4.1(b) of
the Agreement, NEW ADB retains ownership of the Software, that the
Software comprises commercially valuable trade secrets,
Confidential Information and proprietary data of NEW ADB, and that
no provision of this Agreement shall be construed to convey title
in the Software to the Supplier or to the Retailer save and except
for the transfer of the interest in the Software to THE BRICK to
be granted pursuant to Section 4.1(a) of the Agreement to which
this Schedule forms a part.
(b) Without limitation to any of the restrictions on the rights of the
Supplier or the Retailer with respect to the Software, the
Supplier and the Retailer each covenant and agree to disclose to
NEW ADB any desirable modifications or improvements to the
Software or any add-on computer programs or files, application
programming interfaces, bug fixes or patches as may come to their
attention. All right, title and interest in any of the foregoing
that NEW ADB first learns of from the Supplier or the Retailer or
creates for either or both of them pursuant to this Agreement,
including the Source Materials with respect thereto, shall
immediately vest as the property of NEW ADB save and except that
they shall be deemed to form part of the Software hereunder which
shall be subject to all the terms and provisions of this Agreement
with respect to the Software including, for added certainty,
Section 1.2 of this Schedule A. Where applicable, the Supplier
and/or the Retailer shall cause their employees, agents or
consultants to waive any moral rights they may have in such
modifications or improvements and shall deliver written evidence
thereof to NEW ADB promptly.
(c) Notwithstanding paragraphs (a) and (b) of this Section 1.3, but
subject to Section 3.2 of the Agreement, the Parties acknowledge
that THE BRICK shall retain all of its Intellectual Property
Rights in the "look and feel" of xxx.xxxxxxxx.xxx and in all the
content provided by it pursuant to Section 3.2 of the Agreement,
of which this Schedule forms a part.
26
2.0 SERVICE DESCRIPTIONS
2.1 IMPLEMENTATION AND CUSTOMIZATION SERVICES.
(a) NEW ADB will provide all implementation services described in
Appendix B to this Schedule A (the "IMPLEMENTATION").
(b) "ACTIVATION" means the completion by NEW ADB of a production site
incorporating the functionality set out in Appendix B to this
Schedule A. XXX.XXX agrees to provide to NEW ADB a written
acknowledgment of Activation, upon such functionality being
achieved. NEW ADB shall use commercially reasonable efforts to
achieve Activation before November 30, 2002. In the event XXX.XXX
notifies NEW ADB in writing that it does not accept that
Activation has been achieved, it must set out in writing the
reasons for its non-acceptance and deliver such reasons to NEW ADB
within 2 Business Days after NEW ADB gave it notice of Activation,
failing which it shall be deemed to have accepted the Activation.
Any dispute over Activation shall be settled amicably by the
Project Managers as defined herein, failing which the matter shall
be referred to the Presidents of each Party for resolution,
failing which the matter shall be referred to arbitration as
outlined herein.
The scope of and the schedule for the completion of NEW ADB's
implementation of a production site and the resulting
functionality thereof shall be completed by mutual agreement of
the Project Managers, acting reasonably and diligently after the
date of this Agreement, in accordance with Appendix B to this
Schedule A. NEW ADB shall use its commercially reasonable efforts
to achieve the delivery dates to be agreed by the Project Managers
pursuant to such Appendix B.
(c) The Implementation will be conducted by NEW ADB personnel, on
dates and times and at such locations as mutually determined by
the Parties. The Project Managers will act reasonably and
diligently to prepare and mutually agree on a detailed set of
procedures and a time line for the completion of acceptance
testing of the Implementation in accordance with Appendix B to
this Schedule A.
(d) NEW ADB shall develop and implement all interface requirements
reasonably necessary to permit remote electronic transfer by
XXX.XXX of product and transactional information to and from NEW
ADB's platform site in accordance with the mutual agreement of the
Project Managers pursuant to Appendix B to this Schedule A.
2.2 FEES FOR IMPLEMENTATION AND CUSTOMIZATION SERVICES
(a) XXX.XXX shall pay NEW ADB $800 per man day for the Services of NEW
ADB pursuant to Section 2.1 of this Schedule A. NEW ADB estimates
it will take
27
approximately 57 man days of work to achieve Activation. If
Activation is achieved on or before November 15, 2002, XXX.Xxx
shall pay NEW ADB an additional $200 per man day that was required
to achieve Activation.
2.3 ADDITIONAL SERVICES
(a) In the event XXX.XXX wishes to retain NEW ADB for additional
consulting, customization or implementation services beyond those
described in this Schedule at any time during the Term of the
Agreement to which this Schedule forms a part, XXX.XXX shall
provide no less than 15 days prior written notice of each such
change order, and the specific details of such additional work
must be defined and agreed in writing through a change request in
ADB's standard form, signed by all Parties before the commencement
of work. NEW ADB shall provide change order services, subject to
availability of the relevant NEW ADB personnel, at ADB's Daily
Rates, plus expenses (travel, per diem and lodging) if travel is
required. ADB's Daily Rate is CDN $1,000 per day for intermediate
developers, for senior developers and for Project Managers.
(b) Nothing herein shall obligate NEW ADB to provide any services in
connection with the Software, including without limitation video
streaming, specific functionality or customization changes to the
Software, or any additional or specific branding requirements,
beyond those specified herein. Retailer must contract separately
with NEW ADB for any such services, failing which NEW ADB assumes
no responsibility for such services.
2.4 TRAINING
(a) Where appropriate, NEW ADB agrees to provide training, at a site
designated by NEW ADB, to up to two (2) employees each of XXX.XXX
and THE BRICK for one full Business Day with respect to remote
transfer of product and transactional information to and from NEW
ADB's platform site, show production and transaction fulfilment.
NEW ADB shall reasonably determine the resources to be made
available for such consultation and training, provided that NEW
ADB shall use its commercially reasonable efforts to ensure that
Retailer and Supplier have sufficient training prior to Activation
to conduct transactions through the platform on an ongoing basis.
In the event that either Retailer or Supplier determines that more
training is necessary, NEW ADB shall provide such training at $800
per day, plus travel, lodging and expenses.
(b) The training will be conducted by NEW ADB personnel, on dates and
times and at such locations as mutually determined by the parties.
2.5 TECHNICAL SUPPORT AND ESCALATION PROCEDURES
28
New ADB agrees to provide ongoing technical support for the Sites. It
is the general intention of the Parties that this will include:
(a) Monitoring dedicated circuit to ensure that it is operational at
all times.
(b) Maintain configuration on internet access routers and make changes
where necessary.
(c) Load balancing.
(d) Security monitoring.
(e) Ensuring HTTPS access to the Supplier for access to program
reports;
however the Parties agree that the Project Managers will work together
diligently and reasonably after the Effective Date to determine
specifically what ongoing technical support will be provided for the
Sites and whether items (a) to (e) above, and/or other items, will be
provided.
2.6 SECURITY
(a) NEW ADB agrees to cooperate with XXX.XXX in the implementation of
security protocols and procedures as they are developed during the
term of this Agreement. NEW ADB shall establish reasonable and
appropriate security functionality permitting the regulation of
access to the Software and the transaction platform. XXX.XXX shall
be responsible for issuing and terminating passwords and/or
usernames and verifying the status of authorized users.
(a) NEW ADB and XXX.XXX agree to cooperate in the collection and
sharing of information about the use of the platform consistent
with applicable privacy laws and confidentiality requirements of
each Party. NEW ADB will not be required to obtain consents from
users of the Sites to the collection, retention, disclosure and
use of such user's personal information, which shall be the
responsibility and at the sole cost of XXX.XXX.
3.0 INFRINGING SOFTWARE
NEW ADB agrees that, in the event that during the Term of the Agreement the
Software or any portion thereof is held to infringe another person's rights, and
use thereof is enjoined during such Term, NEW ADB shall, at its election and
expense: (i) procure the right to use the infringing element thereof; (ii)
procure the right to an element which performs the same function without any
material loss of functionality; or (iii) replace or modify the element thereof
so that the infringing portion is no longer infringing and still performs the
same function without any material loss of functionality, performance or
efficiency, provided that NEW ADB shall not be required to take any of the
foregoing steps and shall bear no liability with respect to such an infringement
that is caused, in whole or in part, by the actions or direction of XXX.XXX or
THE
29
BRICK, including any content displayed or data processed by the Software that
was provided by either of them.
4.0 COVENANTS OF RETAILER AND SUPPLIER
(a) Without limitation to Section 5.2 of the Agreement to which this
Schedule is attached, the Retailer and the Supplier shall not
disclose, or permit any of their officers, employees,
representatives, or legal advisors to disclose, any information,
data, plans or specifications of a confidential nature concerning
the Software or the Services, during the Term or at any time
thereafter, including, without limiting the generality of the
foregoing, any designs, drawings, technical specifications or
other such information, service manuals, commercial data or
quotations, this Agreement or the terms hereof, to anyone or
assist or permit anyone in obtaining knowledge of any part of the
Software or the Services other than such as may be necessary for
competent operators trained or approved by NEW ADB to utilize the
Software as contemplated hereby, or as may be required by law.
(b) Commencing from Activation, the Retailer and the Supplier, jointly
and severally, shall indemnify and hold harmless NEW ADB from and
against any and all liabilities, claims and judgments for damage
arising out of, or for injury to or death of persons, or damage to
property occasioned by the operation or use of the Software by
them and shall obtain appropriate comprehensive general liability
insurance in this regard naming NEW ADB as an additional insured
in form and with limits reasonably acceptable to NEW ADB. The
Retailer and the Supplier hereby acknowledge that they are solely
responsible for all show production, product placement,
collection, customer service, fulfilment and other non-technical
aspects of each auction or transaction conducted through the
Software.
(c) The Retailer and the Supplier hereby acknowledge and agree that,
during the Term of the Agreement to which this Schedule forms a
part, they shall not directly or indirectly solicit, offer
employment to, or otherwise attempt to engage the services of any
employee of NEW ADB or any Affiliate of NEW ADB, and NEW ADB
hereby acknowledges and agrees that, during the Term of the
Agreement to which this Schedule forms a part, it shall not
directly or indirectly solicit, offer employment to, or otherwise
attempt to engage the services of any employee of the Retailer or
the Supplier. Nothing in this paragraph shall prevent a Party from
soliciting the employment of, or from offering employment to, the
other Parties' employees in accordance with the Transaction
Documents or through generalized searches for employees through
the publication of advertisements or other public announcements
that are not specifically targeted at the other Party's employees.
30
5.0 FORCE MAJEURE
Provided that prompt notice of the delay or failure is given to the other
Parties, NEW ADB shall not be liable for delays or failure in their performance
or observation of their covenants or obligations under the Agreement to which
this Schedule is attached including for certainty this Schedule and any other
Schedule thereto, where such delays or failure are beyond its control,
respectively, including, but not limited to, delays caused by the Payment System
or the Fulfillment System's lack of functionality for any reason, fire,
carriers, acts of God, war, insurrection, riot, e-sabotage, spamming or any
governmental authority.
31
APPENDIX A TO SCHEDULE A
COMPETITOR LIST FOR THE BRICK
Sears
Sears (Canada)
Leon's Furniture
Xxxxxx'x Bay Company
Xxxxxx'x
Wal-Mart
Wal-Mart Canada
Best Buy
Future Shop
Home Depot
Home Depot Canada
Sleep Country Canada
Visions
A&B Sound
Xxxxxxxx Furniture & Appliances
North West Company
Bad Boy Furniture & Appliances
Ikea
Ikea Canada
La-Z-Boy Furniture Galleries
Mattress Mattress
Palliser Rooms
Trail Appliances
XX Xxxxxx
Xxxxxx & Xxxxxxxxx
Centre Hi-Fi
Matelas Bon Heur
Radio Shack
2001audiovideo
CompuSmart
Dumoulin
Tangeay
International Stereo
Home & Rural Appliances
xxxxxxxxx.xxx (virtual space)
X-xxx.xx
Xxxxxx.xx
XXX.xxx
2
APPENDIX B TO SCHEDULE A
SOFTWARE FUNCTIONALITIES, SCOPE OF NEW ADB IMPLEMENTATION
SERVICES AND SOFTWARE AND HARDWARE CONNECTIVITY REQUIREMENTS
As soon as reasonably possible after the Effective Date, the Project Managers
shall work together diligently and using reasonable commercial efforts to
supplement this Appendix by mutual agreement. This Appendix, when fully
supplemented, shall set out:
1. the scope of the Implementation services to be provided by NEW ADB and the
schedule for completion thereof;
2. Acceptance testing procedures with respect to the Implementation and the
Activation;
3. the software and hardware connectivity requirements of each Party for all
purposes of the Services including detailed plans as to how such
requirements will be fulfilled; and
4. the functionality to be provided by NEW ADB for the Site,
all subject to and in accordance with the terms and provisions of the Agreement
and the Schedules thereto.
The Scope of the Implementation services to be provided by NEW ADB shall include
the following, subject to amendment or supplementation by mutual agreement of
the Project Managers:
Site Construction
o Conduct review sessions with Retailer to identify where and how the
existing Dyn@mic Seller software meets Retailers' requirements and
where enhancements will be required to meet Retailers' unique methods
of operation
o Design, develop, test and deploy the enhanced Dyn@mic Seller as
defined above
o Design, source, test and deploy a computing hardware, operating
system, database, and Dyn@mic Seller application software
infrastructure capable of supporting Retailer's business processes and
volume
Site Operation
o Provide computer hardware, operating system and database software,
Dyn@mic Seller web site application software and communications
infrastructure to support the operation of the Sites on an on-going
basis
3
o Conduct facilities monitoring activities to ensure that the sites are
available to Retailer's customers in an uninterrupted manner 24X7, and
report on site activity and availability on a periodic basis
o Provide the necessary repair and remediation services should the sites
become unavailable to Retailer's customers
The Project Managers will develop the scope for the functionality of the Site,
and supplement this Appendix to reflect the same, based on the following
objectives:
Corporate Communication
o Communicate promotional activities of Supplier's bricks-and-mortar
stores
o Communicate the Supplier's general warranties, policies and
procedures, and the special capabilities of the Supplier's specific
business units including, but not limited to, Commercial Sales,
Consumer Credit, Franchise operations, T.V. and Appliance Service, and
Customer Service.
o Communicate employment opportunities with the Supplier
o Communicate other static corporate information regarding the Supplier
as required
o Enable internet users to locate the Supplier's facilities across
Canada
o Enable connections with other third-party sites including the
Supplier's vendors and other partners as required
On-line Shopping
o Display the Supplier's Products' pictures, features and benefits,
prices, terms and conditions of sale, availability and purchase
instructions
o Organize the Supplier's Products into a number of flexible
hierarchical product groups to enable the Retailer's customers a
number of paths to quickly identify Products of interest
o Enable a site-wide search capability to assist Retailer's internet
visitors to directly access product information and/or other material
of interest to them
o Support a number of pricing models for product sale including
time-sensitive and geography-specific fixed and auction (a la xxx.xxx)
pricing
o Enable Retailer's customers to build and modify product orders
including any number of specific products with the appropriate price
4
o Solicit product-specific sale of optional add-on products and services
o Collect xxxx-to and ship-to information from Retailer's customers to
enable subsequent order fulfillment
o Display order summary information for Retailer's customer's to enable
review of products, pricing, tax and delivery information
o Collect credit card information to enable order funding
o Communicate completed order information to Supplier's Fulfillment
System
o Process delivery or cancellation confirmations from Supplier's
fulfillment system
5
SCHEDULE B
NEW ADB SERVICES,
SERVICE LEVEL COMMITMENT
1.0 STATEMENT OF INTENT
The purpose of this Schedule is to establish service level objectives,
negotiated in good faith, and to provide best in class service to meet the
expectations of the end user(s). This Schedule represents a Schedule between THE
BRICK (the "Supplier") and XXX.XXX (the "Retailer") and NEW ADB (the "Service
Provider"), describes the responsibilities of the participants named in this
Schedule, and outlines the objectives by which attainment is measured.
2.0 CHANGES TO THIS SCHEDULE
This Schedule can be re-negotiated at any time due to changes in business
requirements, operating environment, needs of the Supplier and/or the ability of
the Retailer and the Service Provider to consistently and satisfactorily meet
the objectives. Any Party can initiate renegotiations.
3.0 SYSTEM DESIGN
3.1 The Service Provider agrees that the equipment hosted by the Retailer
for the purposes of this Agreement is for the sole use of the Sites and
will not be shared with any existing or future clientele.
3.2 The Service Provider agrees to provide the Retailer and the Supplier
with 24 hours of notice prior to any change of an externally visible
TCPIP address at the hosting facility.
4.0 TECHNICAL SUPPORT PLAN AND ESCALATION PROCEDURES
4.1 The Service Provider agree to provide ongoing Software support for the
Sites throughout the Term of the Agreement. The Parties agree that the
Project Managers will work together diligently and reasonably after the
Effective Date to determine specifically what ongoing Software support
will be provided for the Sites.
4.2 The Service Provider will provide ongoing access to consulting talent,
with the general intention that such consulting talent relate to:
(a) Software Troubleshooting
6
(b) Internal Software audits
(d) Software changes and enhancements
however the Parties agree that the Project Managers will work together
diligently and reasonably after the Effective Date to determine more
specifically what shall constitute "access" and whether items (a) to
(d) above, and/or access to other consulting talent, is to be provided.
4.3 NEW ADB shall respond to any report that the Software is failing to
operate within normal operating parameters within the time frames set
out below. The severity of any particular failure shall be determined
by Retailer, acting reasonably, and communicated to the other Parties,
based on the following definitions:
SEVERITY 1: total inability to use any material part of the
Software, resulting in a critical impact on user objectives.
SEVERITY 2: ability to use the Software, but user operation is
severely restricted.
SEVERITY 3: ability to use the Software; failures relate to
functions that are not critical to overall user operations.
SEVERITY 4: failure has been bypassed or temporarily corrected and
is not affecting customer operations.
The Service Provider shall respond to each of the other Parties within
the following time frames:
SEVERITY 1: within 2 hours of notification by Retailer
SEVERITY 2: within 4 hours of notification by Retailer
SEVERITY 3: within 2 Business Days of notification by Retailer
SEVERITY 4: within 5 Business Days of notification by Retailer
The Service Provider shall use best efforts to resolve the failure
promptly upon response to the other Parties.
7
SCHEDULE C
XXX.XXX PERFORMANCE COMMITMENT
1.0 STATEMENT OF INTENT
The purpose of this Schedule is to establish performance criteria objectives,
negotiated in good faith, and to provide best functionality to meet the
expectations of the end user(s). This Schedule represents a Schedule between THE
BRICK (the "Supplier") and XXX.XXX (the "Retailer") and NEW ADB (the "Service
Provider"), describes the responsibilities of the participants named this
Schedule, and outlines the objectives by which attainment is measured.
2.0 CHANGES TO THIS SCHEDULE
THIS SCHEDULE CAN BE RE-NEGOTIATED AT ANY TIME DUE TO CHANGES IN BUSINESS
REQUIREMENTS, OPERATING ENVIRONMENT, NEEDS OF THE SUPPLIER AND/OR THE ABILITY OF
THE RETAILER AND THE SERVICE PROVIDER TO CONSISTENTLY AND SATISFACTORILY MEET
THE OBJECTIVES. ANY PARTY CAN INITIATE RENEGOTIATIONS.
3.0 SOFTWARE HOSTING
3.1 The Retailer shall host and maintain the Software and the related
hardware throughout the Term of this Agreement. The Supplier specifically
acknowledges that the Retailer's hosting and maintenance obligations hereunder
extend to the Retailer and the Supplier's complete web presence at the Sites and
to the hosting and maintenance of the server(s) hosting the same, and that the
service level commitments contained herein shall extend to all elements of the
Sites.
3.2 The Retailer agrees that the servers, hardware and third party software
used to host or service the Software shall be maintained by the Retailer at its
sole cost and expense, in accordance with the budgets prepared pursuant to the
Agreement.
3.3 The Retailer shall provide monthly reports regarding site activity in
such detail and by such means as Supplier may reasonably require.
3.4 The Supplier shall not have any access to the hosting servers, the
Software or the facilities in which same are maintained except: (a) Supplier
shall have the ability to post and access electronically "real-time"
transaction-specific; and (b) Supplier shall have the right, upon reasonable
notice and during normal business hours, to have representatives escorted by the
Retailer's employees tour the premises where the hosting servers and Software
are located to the extent reasonably necessary to ensure the Retailer's
compliance with this Agreement.
8
3.5 The Retailer shall be responsible for input of transaction-specific
data into the Software as is necessary for the purposes of this
Agreement through such means as specified by the Service Provider from
time to time. The Retailer and the Supplier, as the case may be, hereby
grant the Service Provider a royalty-free right and license to use and
to modify such data as may be necessary in the provision of the
Services to be provided by the Service Provider under the Agreement to
which this Schedule is attached.
4.0 SERVICE COMMITMENTS
4.1 The Retailer will ensure that the Sites will be available for use 24
hours a day, 7 days per week, excluding periods for Scheduled
Maintenance or Emergency Maintenance.
4.2 SCHEDULED MAINTENANCE: The Retailer will ensue that one scheduled
maintenance window per week will be available from 3:00 am to 5:00 am
ET each Sunday.
4.3 EMERGENCY MAINTENANCE: When emergency maintenance is required, the
Retailer will provide the greatest amount of lead-time and arrange, a
solution that minimises the impact on the Supplier and the Service
Provider.
4.4 AVAILABILITY COMMITMENT: The Sites will be monitored and managed to
ensure that the Sites will be available 99.5% of the time, excluding
the scheduled maintenance periods.
4.5 RESPONSE TIME COMMITMENT: The Sites and the Software will be monitored
and managed to ensure that on a monthly basis, the response time to
users will not exceed a level to be agreed on by the Project Managers
pursuant to the agreement to be made by them pursuant to paragraph
2.1(b) of Schedule A with respect to the scope and functionality of the
production site.
4.6 FILE BACKUP: The Retailer will maintain operative processes that ensure
data safekeeping and recovery and will run daily backup of user files
and system files necessary for system recovery and send them to secure
off site vault storage on a weekly basis
5.0 SYSTEM DESIGN
5.1 The Retailer will agree to provide certain hardware for operation of
the Sites as soon as reasonably possible after the Effective Date. The
Project Managers shall work together diligently and reasonably to
determine the hardware that will be necessary and how it will be
provided, and the costs thereof shall be reflected in the budgets to be
prepared pursuant to Section 5.5 of the Agreement to which this
Schedule forms a part.
5.2 The Retailer agrees to provide and maintain adequate Internet firewalls
at the selected hosting facility to ensure security of website against
unauthorized attacks and intrusions.
5.3 The Retailer agrees to maintain/upgrade/replace components as necessary
to meet all service level expectations outlined in this Schedule and
the Agreement.
9
5.4 The Retailer agrees to the system architecture detailed in Appendix B
to Schedule A. The Retailer agrees not to deviate from this design at
any time without written consent from the Supplier and the Service
Provider.
5.5 The Retailer agrees that the equipment listed above is for the sole use
of the Sites and will not be shared with any existing or future
clientele.
5.6 The Retailer agrees to provide suitable hosting facilities at its
expense for the duration of the Term of the Agreement.
5.7 The Retailer agrees to provide the Supplier access to the system
components upon request, provided that the Retailer is given a minimum
of 24 hours notice where each of such 24 hours is on a Business Day.
5.8 The Retailer agrees to provide the Supplier with 24 hours of notice
prior to any change of an externally visible TCPIP address at the
hosting facility.
6.0 DATA INTEGRITY
6.1 The Retailer shall back-up transaction data daily onto tapes at the
hosting facility. Tapes to be stored offsite and overwritten every 5th
day.
7.0 TECHNICAL SUPPORT PLAN AND ESCALATION PROCEDURES
7.1 The Retailer will provide ongoing access to consulting talent, with the
general intention that such consulting talent relate to:
(a) Troubleshooting
(b) System inquiries
(c) Internal audits
(d) Hardware, infrastructure and/or connectivity changes and
enhancements
however the Parties agree that the Project Managers will work together
diligently and reasonably after the Effective Date to determine more
specifically what shall constitute "access" and whether items (a) to
(d) above, and/or access to other consulting talent, is to be provided.
7.2 Retailer shall respond to any report that the Software or the Sites are
failing to operate within normal operating parameters within the time
frames set out below. The severity of any particular failure shall be
determined by Supplier, acting reasonably, and communicated to the
other Parties, based on the following definitions:
10
SEVERITY 1: total inability to use any material part of the
Software or the Site, resulting in a critical impact on user
objectives.
SEVERITY 2: ability to use the Software or the Site, but user
operation is severely restricted.
SEVERITY 3: ability to use the Software or the Site; failures
relate to functions that are not critical to overall user
operations.
SEVERITY 4: failure has been bypassed or temporarily corrected and
is not affecting customer operations.
The Retailer shall respond to each of the Parties within the following
time frames:
SEVERITY 1: within 2 hours of notification by Supplier
SEVERITY 2: within 4 hours of notification by Supplier
SEVERITY 3: within 2 Business Days of notification by Supplier
SEVERITY 4: within 5 Business Days of notification by Supplier
In each case the Retailer shall use best efforts to resolve the failure promptly
upon response to the other Parties.
11
SCHEDULE D
DYN@MIC SELLER(TM) JOINT OWNERSHIP AGREEMENT
THIS AGREEMENT is made as of the 23rd day of August, 2002 between ADB SYSTEMS
INTERNATIONAL INC. ("OLD ADB"), corporation having its principal place of
business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, and THE
BRICK WAREHOUSE CORPORATION ("THE BRICK"), a corporation having its principal
place of business at 00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx, X0X 0X0.
RECITALS
WHEREAS, OLD ADB is the owner of the DYN@MIC SELLER(TM) proprietary
software (the "Software") which enables the completion of on-line retail
transactions;
WHEREAS, OLD ADB, ADB Systems International Inc. ("XXX.XXX") and THE
BRICK have entered into a Supply, Services and License Agreement dated as of
August 23rd, 2002 (the "SUPPLY AND SERVICES AGREEMENT"); and
WHEREAS, OLD ADB wishes to convey to THE BRICK certain rights and grant
certain licenses in and to the Software pursuant to the Supply and Services
Agreement and subject to the terms and conditions of this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereby agree as follows:
1. Defined Terms
All capitalized terms not otherwise defined herein shall have the
meaning attributed thereto in the Supply and Services Agreement.
2. Assignment and License
(a) OLD ADB hereby assigns, conveys and transfers irrevocably,
perpetually and exclusively to THE BRICK an equal one-half interest as a tenant
in common in and to all of OLD ADB's Intellectual Property Rights including, for
greater certainty, copyright and all patent rights, if any, whether such patent
rights are now in existence or hereafter acquired, in and to the Software solely
for use by THE BRICK and its Affiliates for their internal business purposes
limited to the on-line sale of Products to buyers with addresses for delivery in
the United States of America or Canada only but such assignment, conveyance and
transfer specifically excludes any and all rights OLD ADB has under the Patent
License Agreement made between it and XXX
00
Corporation dated April 17th, 2001 (the "PATENT LICENSE AGREEMENT") including,
for certainty, U.S. Patent No. 5,721,906 and also excludes any and all
Intellectual Property Rights of OLD ADB under U.S. Patent Nos. 5,890,138 and
6,266,652 and, in addition, OLD ADB grants to THE BRICK a royalty-free,
irrevocable, perpetual, worldwide license to use the Software and all of OLD
ADB's Intellectual Property Rights therein, including for greater certainty all
copyrights, patent rights (whether such patent rights are now existing or
hereafter acquired) and trade secrets, including the right to copy, prepare
derivative works, modify, adapt and combine the Software, for use by THE BRICK
and its affiliates for the aforesaid use only, subject to the terms and
conditions of this Agreement, including any and all Intellectual Property Rights
of OLD ADB under U.S. Patent Nos. 5,890,138 and 6,266,652 but excluding any and
all rights OLD ADB has under the Patent License Agreement including, for
certainty, U.S. Patent No. 5,721,906, but provided that the Parties acknowledge
and agree that it is their intention that OLD ADB's benefits under Section 11.2
of the Patent License Agreement shall be afforded to THE BRICK; and further
provided that OLD ADB hereby reserves for itself an equal interest as tenant in
common with THE BRICK in the rights granted to THE BRICK hereunder, whether such
rights are now existing or hereafter acquired, in and to the Software and all
other Intellectual Property Rights and other property rights in and to the
Software, including the right of OLD ADB to use the Software for any purpose it
sees fit and the right to license, sub-license, convey and grant security
interests in the Software in whole or in part (but subject to the rights of THE
BRICK hereunder) to third parties and to keep all royalties and other moneys
earned through licensing and sublicensing of the Software; and provided that
nothing in the assignments and grants contained herein shall restrict the rights
of OLD ADB or its affiliates to use the Software.
(b) OLD ADB and NEW ADB covenant and agree to assign, convey and
transfer irrevocably, perpetually and exclusively to THE BRICK and its
Affiliates from time to time, upon reasonable request of THE BRICK, all
Intellectual Property Rights in all software, including graphic user interfaces
and code created specifically to display the contents of the Site, created by
OLD ADB and NEW ADB pursuant to the Supply and Services Agreement with respect
to the Site, provided this paragraph 2(b) shall exclude the Software and any
Intellectual Property Rights in the Software and, for added certainty, shall
exclude any Intellectual Property Rights of OLD ADB that existed prior to the
commencement of its Services under the Supply and Service Agreement.
(c) In addition to the license granted by OLD ADB to THE BRICK pursuant
to paragraph 2(a) above, OLD ADB agrees to provide the rights in connection with
the Software that it does for its current customers to THE BRICK, in perpetuity,
for THE BRICK's purposes limited to the on-line sale of Products to buyers with
addresses for delivery in the United States of America or Canada. For greater
certainty, this paragraph 2(c) does not constitute a license, sublicense,
transfer or assignment of any of the licenses or rights granted to OLD ADB under
the Patent License Agreement including, for certainty, U.S. Patent No.
5,721,906, provided that the Parties acknowledge and agree that it is their
intention that OLD ADB's benefits under Section 11.2 of the Patent License
Agreement shall be afforded to THE BRICK.
13
3. Transfer of Source and Executable Code
(a) Within a reasonable period of time after execution of this
Agreement, OLD ADB will deposit an executable version of the Software and
related Source Materials to THE BRICK at the address noted above, and from time
to time within a reasonable time after request by THE BRICK will deposit
compiled versions of the software described in 2(b) hereof and related Source
Materials, to THE BRICK at such address, in which THE BRICK shall have the
rights provided in Section 2(a) and 2(b) of this Agreement, respectively.
(b) In this Agreement, "SOURCE MATERIALS" means, in relation to the
Software, all materials that would enable a reasonably skilled programmer to
compile, debug, and make Improvements to such software in a reasonable manner
including: (i) all source code related thereto, reasonably annotated; (ii) all
technical and system documentation including specifications, flowcharts,
diagrams, business rules, data and database models and structures, and
compilation instructions related to such software; (iii) listings by name,
version and developer of all third-party compilers, utilities and other software
relating to the software, including sufficient information to procure a license,
from such developers; (iv) a listing of all relevant equipment necessary to
operate the Software (but not any of such equipment itself); and (v) copies, in
source and object code form, of all compilers, utilities and other software that
are proprietary to the developer that is the owner of software and which are
used in relation to the Software.
4. Representations and Warranties
OLD ADB represents and warrants that:
(a) Except as has been disclosed to THE BRICK, OLD ADB has no actual
knowledge of any alleged or actual infringement by any version of the Software,
of any copyright, patent right, trademark, trade secret or other intellectual
property rights of any third party; and
(b) OLD ADB has the right and authority to assign, convey and transfer
an equal undivided interest in and to the Software in accordance with Section 1,
and otherwise enter into this Agreement and perform its obligations hereunder.
5. Enforcement
(a) THE BRICK shall promptly bring to the attention of OLD ADB any
improper or wrongful use or infringement or suspected or threatened infringement
or violation of any Intellectual Property Right in the Software (an
"Infringement") which comes to its attention and shall assist OLD ADB, at OLD
ADB's expense, in taking all necessary steps to enforce, defend and protect such
rights. In the event of an Infringement of any Intellectual Property Right in
the Software by a third party, OLD ADB shall decide in its absolute discretion
whether and what steps should be taken to prevent or terminate such Infringement
including the institution of legal
14
proceedings where necessary and OLD ADB shall notify THE BRICK of any such
Infringement and its intended response. OLD ADB shall have sole control over and
shall conduct any such actions as it shall deem necessary and THE BRICK shall,
at OLD ADB's expense provide or procure such assistance including the furnishing
of documents and information and the execution of all necessary documents to or
conducting any legal proceedings as OLD ADB may request to protect and defend
such rights.
(b) Notwithstanding Section 5(a), THE BRICK, with the consent of OLD
ADB in writing, which consent will not be unreasonably withheld or delayed,
shall have the right, at its expense, to bring a claim, action or other
proceeding against third parties alleging infringement of copyright in the
Software. OLD ADB will, if desired, be entitled to participate in such claim at
its own expense.
6. Warranty Disclaimer
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES AND
THE OTHER PARTY RECEIVES NO WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY,
HEREUNDER AND ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS OF ANY KIND OR
NATURE, EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES
AND CONDITIONS OF MERCHANTABILITY, MERCHANTABLE OR SATISFACTORY QUALITY, FITNESS
FOR A PARTICULAR PURPOSE, DURABILITY, TITLE, AND THOSE ARISING BY STATUTE OR
OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USE OF TRADE ARE HEREBY
DISCLAIMED AND EXCLUDED.
7. Consequential Damages
WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, IN NO EVENT
SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES, INCLUDING
WITHOUT LIMITATION LOST PROFITS OR REVENUES, LOSS OF GOODWILL, WORK STOPPAGE,
LOST DATA OR COMPUTER HARDWARE OR SOFTWARE DAMAGE, FAILURE OR MALFUNCTION,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
8. Assignment
(a) Nothing in this Agreement shall prevent OLD ADB from assigning its
interest, in whole or in part, in this Agreement and the subject matter hereof
at any time and from time to time. THE BRICK and its Affiliates may not assign
this Agreement nor any rights or licenses granted hereby without OLD ADB's
written consent, which consent may be withheld by NEW ADB at its sole and
unfettered discretion, and any such assignment shall be null and void; provided
that, nothing in this subsection 8(a) shall be construed as prohibiting any
assignment of this Agreement by THE BRICK without the consent of OLD ADB if such
assignment is part of a
15
sale of substantially all of the assets of, or a majority interest in the voting
shares of, THE BRICK, or the merger or amalgamation of THE BRICK with any
entity.
(b) Subject to paragraph 8(a) above, this Agreement shall enure to the
benefit of and be binding upon any successor or assign of each party.
9. Independent Contractors
It is understood and agreed that in giving effect to this Agreement, no
party shall be or be deemed a partner, agent or employee of the other party for
any purpose and that their relationship to each other shall be that of
independent contractors. Nothing in this Agreement shall constitute a
partnership or a joint venture between the parties. No party shall have the
right to enter contracts or pledge the credit of or incur expenses of
liabilities on behalf of the other party.
10. Further Assurances
Upon the request from time to time of THE BRICK, OLD ADB shall execute
all such conveyances, bills of sale, transfers, assignments, notices and other
documents and use all reasonable efforts to secure all necessary consents and
approvals as, in the reasonable opinion of THE BRICK, may be necessary to
effectively vest title to the interest in the Software granted hereunder in THE
BRICK or otherwise to protect or perfect any rights of THE BRICK in the
Software. THE BRICK shall be responsible for the costs of preparing, executing
and registering with all necessary offices of public record any such conveyance,
xxxx of sale, transfer, assignment, notice or other document in respect of the
Software, including OLD ADB's legal and consultant's costs with respect thereto.
11. Waiver
A waiver by a party hereto of any its rights hereunder or of the
performance by the other party of any of its obligations hereunder shall be
without prejudice to all of the other rights hereunder of the party so waiving
and shall not constitute a waiver of any such other rights or, in any other
instance, of the rights so waived, or a waiver of the performance by the other
party of any of its other obligations hereunder or of the performance by the
other party of any of its other obligations hereunder or of the performance, in
any other instance, of the obligations waived. No waiver shall be effective or
binding upon a party unless the same shall be expressed in writing and executed
by the party to be bound.
12. Interpretation
This Agreement has been negotiated by the parties hereto and their
respective counsel and shall be fairly interpreted in accordance with its terms
and without any rules of construction relating to which party drafted the
agreement being applied in favour or against either party.
16
13. Amendment
No amendment of any provision of this Agreement shall be effective
unless such amendment is embodied in a written agreement which is: (i) expressly
stated to be intended to amend this Agreement; and (ii) executed by an
authorized signing officer of OLD ADB and an authorized signing officer of THE
BRICK.
14. Governing Law
This Agreement shall be governed and construed according to the laws of
the Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract, without prejudice to or
limitation of any rights or remedies available under the laws of any
jurisdiction where property or assets of either party may be found. Each of the
parties hereby attorns to the jurisdiction of the Courts of the Province of
Ontario.
15. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Counterparts may be executed either in
original or faxed form and the parties adopt any signatures received by a
receiving fax machine as original signatures of the Parties.
16. Entire Agreement
This Agreement, and any Schedules and Exhibits attached hereto,
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and cancels and supersedes any prior understandings and
agreements between the parties hereto with respect thereto. There are no
representations, warranties, terms, conditions, undertakings, licenses granted,
or collateral agreements, expressed, implied or statutory, between the parties
related to the subject matter hereof other than as expressly set forth in this
Agreement.
17
IN WITNESS WHEREOF, the parties have executed this Joint Ownership Agreement,
with all required authority, this 23rd day of August, 2002.
ADB SYSTEMS INTERNATIONAL LTD.
By:
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Name:
Title:
By:
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Name:
Title:
ADB SYSTEMS INTERNATIONAL INC.
By:
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Name:
Title:
By:
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Name:
Title:
18
THE BRICK WAREHOUSE CORPORATION
By:
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Name:
Title:
By:
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Name:
Title:
19
