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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934.
Date of Report: February 1, 1999
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(Date of earliest event reported)
GLOBAL SPORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-16611 04-2958132
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification Number)
1075 First Avenue, King of Prussia, PA 19406
(Address of principal executive offices) (Zip Code)
(610) 265-3229
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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PURPOSE OF AMENDMENT
The Registrant previously filed certain of its material contracts as exhibits
to its Current Report on Form 8-K filed December 28, 1999. The Registrant
requested confidential treatment as to certain portions of the contracts. The
Registrant hereby amends Item 7 of its Current Report on Form 8-K, as set forth
in the pages attached hereto.
ITEM 7
Exhibit No. Description
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10.1 + E-Commerce Agreement dated February 1, 1999 by and between Global
Sports Interactive, Inc. ("GSI") and Michigan Sporting Goods
Distributors, Inc.
10.2 + E-Commerce Management Agreement dated March 10, 1999 by and between
GSI and The Athlete's Foot Stores, Inc.
10.3 + E-Commerce Agreement dated March 23, 1999 by and between GSI and
Dunham's Athleisure Corporation
10.4 + E-Commerce Management Agreement by and between GSI and Sport Chalet,
Inc.
10.5 +** E-Commerce Venture Agreement (the "TSA Venture Agreement") dated May
7, 1999 by and between GSI and The Sports Authority, Inc. ("TSA")
10.6 +** Amendment No. 1 to E-Commerce Venture Agreement dated May 14, 1999 by
and between GSI and TSA
10.7 +** License Agreement dated May 14, 1999 by and among TSA, The Sports
Authority Michigan, Inc. and TheSportsAuthority.com, Inc. ("TSA.com")
10.8 + E-Commerce Services Agreement dated May 14, 1999 by and between GSI
and TSA.com
10.9 + E-Commerce Agreement dated May 14, 1999 by and among TSA and TSA.com
**Previously filed.
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+ Confidential treatment has been requested as to certain portions of this
exhibit. The omitted portions have been separately filed with the
Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, hereunto duly authorized.
GLOBAL SPORTS, INC.
DATE: April 26, 2000 By: /s/ Michael G. Rubin
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Michael G. Rubin
Chairman of the Board &
Chief Executive Officer
DATE: April 26, 2000 By: /s/ Jordan M. Copland
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Jordan M. Copland
Executive Vice President &
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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10.1+ E-Commerce Agreement dated February 1, 1999 by and between Global
Sports Interactive, Inc. ("GSI") and Michigan Sporting Goods
Distributors, Inc.
10.2+ E-Commerce Management Agreement dated March 10, 1999 by and between
GSI and The Athlete's Foot Stores, Inc.
10.3+ E-Commerce Agreement dated March 23, 1999 by and between GSI and
Dunham's Athleisure Corporation
10.4+ E-Commerce Management Agreement by and between GSI and Sport Chalet,
Inc.
10.5+** E-Commerce Venture Agreement (the "TSA Venture Agreement") dated May
7, 1999 by and between GSI and The Sports Authority, Inc. ("TSA")
10.6+** Amendment No. 1 to E-Commerce Venture Agreement dated May 14, 1999 by
and between GSI and TSA
10.7+** License Agreement dated May 14, 1999 by and among TSA, The Sports
Authority Michigan, Inc. and TheSportsAuthority.com, Inc. ("TSA.com")
10.8+ E-Commerce Services Agreement dated May 14, 1999 by and between GSI
and TSA.com
10.9+ E-Commerce Agreement dated May 14, 1999 by and among TSA and TSA.com
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**Previously filed.
+ Confidential treatment has been requested as to certain portions of this
exhibit. The omitted portions have been separately filed with the
Securities and Exchange Commission.
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Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E COMMERCE AGREEMENT
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THIS E - Commerce Agreement dated the 1st day of February, 1999 by and
between Global Sports Interactive, Inc., a Pennsylvania corporation (hereinafter
referred to as "GSI") with an address of 555 South Henderson Road, King of
Prussia, PA 19406 and Michigan Sporting Goods Distributors, Inc., a Michigan
corporation (hereinafter referred to as "Retailer") with an address of 3070
Shaffer S.E., Grand Rapids, Michigan, 49512.
W I T N E S S E T H:
WHEREAS, GSI is in the business of creating and operating all aspects of an
E-Commerce Shopping Experience, including servicing and fulfilling the on-line
retail sales of selected merchants; and
WHEREAS, Retailer desires to enter into an exclusive agreement with GSI
pursuant to which GSI will act as an Outsourcing Company providing the
Retailer's on-line customers the complete E-Commerce Shopping Experience, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the following
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meaning:
1.1 "Advertising Co-op and Discretionary Funds" shall mean amounts earned
by or allocated to the Retailer by its vendors, the purpose of which
is to advertise that vendor's brand or to use at the Retailer's
discretion.
1.2 "Anticipation Discounts" shall mean discounts granted by a vendor to a
retailer in exchange for the retailer's payment of an invoice prior to
the retailer's usual terms of payment.
1.3 "Categories" shall mean the various types of product groups (e.g.
athletic footwear, camping, in line skates, etc.) offered for sale by
the Retailer in its Land Based stores.
1.4 "Closeout Merchandise" shall mean end of season or excess merchandise
that is priced at a greater than normal discount.
1.5 "Complete URL Integration" shall mean the display of Retailer's URL in
all of Retailer's marketing and communications.
1.6 "Confidential Information" shall mean as that term is defined in
paragraph 7.1 of this Agreement.
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1.7 "Cross Promotion" shall mean the use of the Retailer's URL, name and
logo on other than the Retailer's Web Site for the purpose of
promoting the Retailer's Web Site.
1.8 "Customary Pricing Structure" shall mean the policy generally employed
by the Retailer in determining the prices of merchandise in its Land
Based Stores.
1.9 "Customer Data" shall mean as that term is defined in paragraph 4.1 of
this Agreement.
1.10 "Data Bases" shall mean as that term is defined in paragraph 4.2 of
this Agreement.
1.11 "Defective Allowance" shall mean a discount granted by a manufacturer
to a retailer as a result of defective merchandise received by the
retailer and pursuant to which, the retailer also retains the
merchandise.
1.12 "Disclosing Party" shall mean the party disclosing Confidential
Information.
1.13 "Domain Name" shall mean as that term is defined in paragraph 1.1 of
the Web Site Development Agreement (as hereinafter defined).
1.14 "E-Commerce" shall mean the Retailer's specific business conducted
through the Internet.
1.15 "E-Commerce Orders" shall mean the orders for merchandise placed by
customers of the Retailer's Web Site.
1.16 "E-Commerce Outsourcing Partner" shall mean GSI.
1.17 "E-Commerce Shopping Experience" shall mean the shopping for and
purchasing of merchandise through the Internet.
1.18 "Flight Date" shall mean the date on which Retailer's advertising is
scheduled to run for the first time.
1.19 "Force Majeure Event" shall mean as that term is defined in Article 18
of this Agreement.
1.20 "GSI Content" shall mean as defined in paragraph 1.6 of the Web Site
Development Agreement.
1.21 "In Line Merchandise" shall mean current merchandise available to be
carried by the Retailer in its Land Based Stores from Retailer's
current or future vendors.
1.22 "Internet" shall mean the collection of interconnected networks that
all use the TCP/IP protocols.
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1.23 "Land Based Stores" shall mean the Retailer's traditional stores
located in shopping districts, strip shopping centers and shopping
malls.
1.24 "Land Based Stores Gift Certificates" shall mean gift certificates
offered for sale on the Retailer's Web Site for merchandise sold only
in Retailer's Land Based Stores.
1.25 "Launch Date" shall mean the date on which GSI commences operation of
the Retailer's Web Site to the public.
1.26 "Markdowns" shall mean merchandise in Retailer's inventory offered
for sale at less than the price it was originally offered for.
1.27 "Milestone Delivery Schedule" shall mean as defined in paragraph 1.5
of the Web Site Development Agreement.
1.28 "On Line Customer Loyalty Programs" shall mean programs established
to encourage repeat business from on line customers.
1.29 "On Line Merchandise" shall mean merchandise to be sold on the
Retailer's Web Site.
1.30 "Outsourcing Company" shall mean a company which provides E-Commerce
Services for traditional Retailers.
1.31 "Price Matching" shall mean a Retailer's policy pursuant to which it
addresses another retailer's lower price on a particular item of
merchandise.
1.32 "Production Schedule" shall mean as defined in paragraph 1.9 of the
Web Site Development Agreement.
1.33 "Project Manager" shall mean an employee of Retailer's who is
assigned exclusively to work with GSI in supplying GSI with Retailer
Content, except as may otherwise be permitted pursuant to paragraph
3.14 below.
1.34 "Receiving Party" shall mean the party receiving Confidential
Information.
1.35 "Retailer Content" shall mean as defined in paragraph 1.10 of the Web
Site Development Agreement.
1.36 "Retailer's Net Cost" shall mean the amount paid by the Retailer for
merchandise from its vendors after deductions for Defective
Allowances, volume allowances, freight allowances and any trade
discounts offered by vendors, but excluding cash or anticipation
discounts and any marketing funds granted to Retailer by a
manufacturer as an overall marketing allowance.
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1.37 "Retailer's Warehouse" shall mean the place at which Retailer
receives delivery of merchandise from its vendors.
1.38 "Revenue Share" shall mean as defined in paragraph 3.8 of this
Agreement.
1.39 "Special Makeups" shall mean merchandise manufactured for the
Retailer exclusively.
1.40 "Term" shall be as defined in Section 2.2 of this Agreement.
1.41 "Term Year" shall mean a consecutive twelve month period occurring
during the Term, the first of which shall commence on the Launch Date
and terminate twelve months thereafter, and subsequently shall occur
every twelve months thereafter.
1.42 "URL" shall mean the address of the Web Site on the Internet.
1.43 "Web" shall mean the World Wide Web.
1.44 "Web Site" shall mean as defined in paragraph 1.11 of the Web Site
Development Agreement.
1.45 "Web Site Development Agreement" shall mean the agreement by and
between GSI and Retailer attached to this Agreement as Exhibit "A".
2. AGREEMENT AND TERM
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2.1 Agreement. During the Term GSI shall provide the Retailer with those
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Web Site services as hereinafter specified.
2.2 Term. The Term of this Agreement shall commence upon the execution
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of this Agreement by both parties and shall expire ten (10) years
after the Launch Date ("Expiration Date") without any notice. GSI
shall use reasonable efforts to advise Retailer ten days prior to the
expected Launch Date. The Launch Date shall occur between the period
of October 1, 1999 and December 1, 1999 ("Commencement Period").
GSI's obligation to commence operation of the Web Site during the
Commencement Period shall be contingent on Retailer complying with
the deadlines set forth on the Milestone Delivery Schedule set forth
on Attachment A to the Web Site Development Agreement and on the
Production Schedule to be agreed upon by the parties. Retailer
acknowledges the urgency of complying with the deadlines set forth in
the Milestone Delivery Schedule and the Production Schedule and shall
give GSI its full cooperation to ensure that such deadlines are
satisfied. Notwithstanding anything contained herein to the contrary,
in the event that the Retailer does not comply with such deadlines
and GSI has given Retailer written notice of its failure to comply,
then, for each day of such non compliance, the Commencement Period
shall be extended by one day.
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2.3 Outside Launch Date. Notwithstanding anything contained herein to the
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contrary, in the event that the Launch Date does not occur by
December 1, 2000, and the delay is not the result of the Retailer's
failure to provide GSI with Retailer Content necessary to complete
the Retailer's Web Site, then this Agreement shall automatically
terminate and neither party shall have any further liability or
obligations hereunder.
3. OBLIGATIONS AND RIGHTS OF THE PARTIES
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3.1 Creation of Retailer's Web Site.
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a. GSI, at no cost to the Retailer, shall create, maintain and
operate a Web Site for the Retailer on the Web in accordance with
the specifications attached to the Web Site Development
Agreement. In connection therewith, simultaneous herewith,
Retailer and GSI shall execute the Web Site Development
Agreement.
b. The Web Site shall contain the Retailer's E-Commerce Shopping
Experience, the URL of which shall be www.Retailer.com. In
addition, the Web Site shall contain any or all of the following
information, as the Retailer shall elect: corporate information
(e.g. historic background, mission statement, names of officers
and directors), store locator, public financial information (e.g.
SEC filings, annual reports), press releases, community programs,
employment opportunities for in store or corporate positions,
frequently asked questions and a "contact us" section.
c. Following the initial completion of the Web Site, the Retailer
shall have the right to update the content thereof as follows:
1) Employment Opportunities - GSI will provide the
Retailer with the technology necessary so that the
Retailer will be able to update the employment
opportunity portion of the Web Site as frequently as it
desires.
2) Public Financial Information -
a) Stock Prices - Will be updated daily by a link to
another web site offering such information.
b) SEC Filings and Annual Reports - SEC filings will
be provided by a link so long as the government
makes such filings available at no cost. Both SEC
filings and annual reports will be provided only
if available in portable
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document format; in the alternative, GSI will
provide the consumer with a form in order to
request such information from the Retailer's
investor relationship department.
3) Store Locators - Will be updated by GSI as such
information changes and is provided by Retailer.
4) Frequently Asked Questions - Will be updated by GSI
monthly as such questions changed and are provided by
Retailer.
5) Corporate Information - Will be updated by GSI as such
information changes and is provided by Retailer.
6) Community Programs - Will be updated by GSI as such
information changes and is provided by Retailer.
7) Press Releases - GSI will provide the Retailer with the
technology necessary so that the Retailer will be able
to post press releases on its Web site as it desires.
Retailer shall defend and hold harmless GSI, its
employees, officers and directors, from any liability
arising from the posting of press releases on the
Retailer's Web Site.
8) "Contact Us" Section - Will be updated by GSI as such
information changes and is provided by Retailer.
3.2 Creation and Maintenance of the Retailer's Web Site.
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GSI shall create and maintain a Web Site for the Retailer. Commencing
with the execution of this Agreement and continuing through the Term,
the Retailer, shall cooperate with GSI so as to enable GSI to create
and maintain for the Retailer's consumers, the Retailer's Web Site. In
connection therewith, the Retailer shall supply GSI with the Retailer
Content (as that term is defined in the Web Site Development
Agreement) required pursuant to the terms of the Web Site Development
Agreement. This shall include, but not be limited to printed marketing
information, data, text, audio files, video files, graphics and other
assets necessary to create and maintain the Retailer's Web Site.
3.3 Sale of Merchandise on the Retailer's Web Site.
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a. GSI shall have the right to offer for sale on the Retailer's Web
Site all Categories of merchandise
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offered for sale by the Retailer in its Land Based Stores, as
permitted by Retailer's vendors; provided however, in no event
shall GSI offer firearms for sale on the Retailer's Web Site, or
any Category of merchandise considered immoral, pornographic or
offensive in Retailer's reasonable opinion.
b. Within the Categories, GSI shall have the right to offer for
sale:
1) current in line merchandise ordered by the Retailer
from its vendors; and
2) current in line merchandise not carried by the Retailer
in its Land Based Stores, but available in those
Categories carried by the Retailer; provided however,
no products will be offered for sale on Retailer's Web
Site which the Retailer would not be authorized to sell
by the manufacturer in its Land Based Stores; and
3) Special Make-Ups; and
5) Closeout Merchandise; and
6) Markdowns of Retailer's inventory
7) Gift Certificates for On Line Merchandise
(Items 1) through 7) are hereinafter referred to as "On Line
Merchandise"]
c. In addition, GSI shall have the right to offer for sale Land
Based Stores Gift Certificates for merchandise available in the
Retailer's Land Based Stores. These certificates shall be
provided to GSI on consignment as set forth in Paragraph 3.6
below.
d. Notwithstanding anything contained herein to the contrary, in
those instances where Retailer is required to order merchandise
for GSI from a vendor, Retailer shall not be required to do so if
it would violate the terms of any written dealer agreement which
Retailer may have with a vendor or any verbal dealer agreement
which Retailer may have with a vendor if such verbal agreement
provides that the Retailer may sell that vendor's brands in only
certain Land Based Stores designated by the vendor; provided
however, Retailer shall use its best efforts to obtain all
consents required to permit the sale of such merchandise on the
Retailer's Web Site.
3.4 Prices of On-Line Merchandise. GSI shall offer the On-Line Merchandise
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for sale on the Retailer's Web Site on the following basis:
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a. If the On-Line Merchandise is the same as offered for sale in the
Retailer's Land Based Stores, then it shall be offered for sale
on-line [*]. In order to facilitate this pricing, Retailer shall
[*]; provided however, [*] Retailer acknowledges that this is
essential in order to [*].
b. If the On-line Merchandise is not offered for sale in the
Retailer's Land Based Stores, then, [*].
c. If the Retailer offers the same merchandise at different prices
in its Land Based Stores, then [*] but in no event at [*].
d. GSI shall add all applicable taxes and at its discretion, may add
reasonable handling and delivery charges which are consistent
with industry practice; provided however, GSI shall not charge
Retailer's customers any more for shipping and handling than it
charges any other retailer's customers.
e. In order to ensure that GSI may [*] Retailer shall furnish GSI
with copies of all [*] at least [*] prior to its [*] if possible,
and in all other cases, promptly after [*] is available.
f. The parties shall cooperate with each other so that the entire
pricing process between GSI and Retailer may be accomplished
electronically.
g. Retailer acknowledges that GSI, unless it elects to do so, [*].
In such event, [*] shall have the right to [*]
3.5 GSI's Supply of On Line Merchandise.
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a. Invoicing and Shipping of On Line Merchandise.
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1) At such time as directed by GSI, the Retailer shall notify
its vendors of In Line Merchandise, Special Make-Ups and
Closeouts, that a) GSI is the Retailer's E - Commerce
Outsourcing Partner; b) the vendors, for the benefit of the
Retailer, should sell their merchandise to GSI at the same
prices, with the same Advertising Co-op and Discretionary
Funds and on the same terms and conditions as they sell
their merchandise to Retailer; and c) such merchandise
should be shipped and invoiced directly to GSI. The form of
such notification shall be prepared by GSI and approved by
Retailer, such consent not to be unreasonably delayed or
withheld.
2) In the event that a vendor deems it more efficient to
invoice Retailer for such merchandise, then the Retailer
shall place the order for GSI, invoice GSI
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at Retailer's Net Cost, and GSI shall pay Retailer within
thirty days of shipment to GSI. In such instances, GSI shall
also pay the Retailer its pro rata share (based upon that
portion of the shipment purchased by the Retailer for GSI as
it relates to the entire shipment received by the Retailer
from that vendor) of the actual freight costs from the
manufacturer to the Retailer's point of receipt and the
actual freight costs from the Retailer's point of receipt to
GSI's fulfillment facility. Further, for such merchandise
which GSI purchases from Retailer at Retailer's Net Cost, if
the purchases in any Term Year exceed [*] then GSI shall pay
an annual administrative fee equal to [*] of those purchases
in excess of [*]; provided however, should the purchases in
any Term Year exceed [*], then Retailer shall have no
obligation to order any additional merchandise on GSI's
behalf during that Term Year. Such administrative fee shall
be added to Retailer's invoices to GSI for merchandise
purchased by GSI from Retailer.
3) At such time as the annual purchases exceed [*], and until
any balance owing to Retailer is reduced below [*], Retailer
may request GSI to secure such orders with a letter of
credit ("Letter of Credit") drawn on a lending institution
reasonably acceptable to Retailer. In addition, should
Retailer become dissatisfied with GSI's financial condition
applying reasonable commercial standards, then Retailer may
refuse to order merchandise for GSI unless Retailer secures
such orders with a Letter of Credit or provides Retailer
with other collateral reasonably acceptable to Retailer.
b. In Line Merchandise. The Retailer shall advise GSI, no later
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than two business days of placing a purchase order with a vendor,
of the Category, item ordered, net cost, Retailer's retail price
and expected day of delivery to the Retailer's Warehouse.
c. Special Make-Ups. No later than two business days after ordering
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Special Make-Ups, Retailer shall advise GSI and furnish GSI with
a sample of the Special Make-Ups and advise GSI of the net cost,
color selection and size range. GSI shall have the right to
purchase up to [*] per cent of the Special Make-Up,
proportionately as to size and color, as ordered by the Retailer,
at Retailer's Net Cost. GSI shall have five business days to
advise Retailer whether it desires to order any of the Special
Make-Ups and, if so, the quantity thereof.
d. Closeout Merchandise. Retailer shall advise GSI no later than
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two business days after issuing a purchase
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order for Closeout Merchandise from a vendor. At that time,
Retailer shall advise GSI of the cost, sizes and colors available
and GSI shall have two business days to advise Retailer that it
will purchase, at Retailer's Net Cost, up to [*] per cent of the
Closeout Merchandise to be received by Retailer, proportionately
as to size and color, as ordered by Retailer.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Closeout Merchandise
to warrant selling such merchandise on line. In such instances
the Retailer shall not be required to offer such items of
Closeout Merchandise to GSI to sell on line; provided however,
the Retailer acknowledges that GSI does not anticipate that this
will occur on a regular basis and this should be the exception
rather than the usual occurrence.
e. Markdowns. In the event that the Retailer has available
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Markdowns which it would like to offer for sale on its Web Site
solely at its discretion, it shall notify GSI and ship the
Markdowns to GSI's fulfillment center. The Markdowns shall be
shipped to GSI on consignment only. Retailer shall set the
selling prices on the Markdowns; provided however, that GSI shall
have no obligation to offer any Markdowns for sale on the
Retailer's Web Site which GSI deems, in its sole discretion,
would be inappropriate. Retailer shall receive [*] of the
proceeds received from the sale of any Markdowns when sold, which
shall be calculated as follows: [*] of the sale price plus the
Retailer's [*] Revenue Share. By way of example only, if Retailer
consigns an athletic shoe to GSI with an original price of $75.00
and a Markdown price of $50.00, if the Markdown is sold, Retailer
shall receive [*] ([*] of $50.00 and [*] of $50.00). GSI shall
account to Retailer for the sale of any Markdowns at the same
time that it accounts to the Retailer for Retailer's Revenue
Share.
f. Administrative and Handling Fee. With respect to any merchandise
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purchased by GSI pursuant to paragraphs 3.5 c. or d. above, on
which Retailer is first required to accept delivery and repack
for shipment to GSI, Retailer shall be paid an administrative fee
equal to [*] of GSI's purchase order (excluding freight and
taxes).
g. The parties shall cooperate with each other so that the entire
process set forth in paragraphs 3.5 a, b, c, d, and e between GSI
and Retailer may be accomplished electronically.
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3.6 Land Based Stores Gift Certificates. GSI shall offer for sale on the
-----------------------------------
Retailer's Web Site gift certificates for merchandise in Retailer's
Land Based Store. Retailer shall furnish such gift certificates to GSI
on consignment. GSI shall remit to Retailer [*] of all proceeds
received from the sale of Land Based Stores Gift Certificates, the
balance being retained by GSI as its fee and to cover all costs,
including credit card fees. GSI shall account to Retailer for all
sales of such certificates at the same time as it accounts to Retailer
for Retailer's Revenue Share.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
-----------------------------
processing all E - Commerce business. GSI will promptly process E -
Commerce Orders received from the Retailer's Web Site. GSI shall take
the customer's credit card number at such time as the merchandise is
ordered. GSI shall charge the customer's credit card at the time the
merchandise is shipped. The order will appear on the customer's credit
card under the name of "Retailer.com" and proceeds shall be deposited
into GSI's designated bank account for full credit to GSI. GSI will
make all arrangements for delivery of merchandise purchased on the
Retailer's Web Site.
3.8 Payment and Accounting of Revenue Share to Retailers.
----------------------------------------------------
The Retailer shall receive a [*] per cent share of the revenue
("Revenue Share") on the amount of all E - Commerce Orders (excluding
taxes, delivery, handling, and net of returns); provided, however,
should [*]. Within fifteen (15) days of the end of each calendar month
during the Term, GSI shall account to the Retailer for the sale of all
On Line Merchandise from the Retailer's Web Site. At the time of such
accounting, GSI shall remit to the Retailer its Revenue Share earned
from the sale of On Line Merchandise on the Retailer's Web Site during
the prior month.
Within ninety (90) days of the end of each calendar year, GSI shall
provide the Retailer with a statement certified by its independent
auditors and setting forth the Revenue Share earned by the Retailer
during the prior calendar year. For a period of one year after the
Retailer receives such certified statement from GSI, Retailer, on one
occasion, shall have the right to audit the books and records of GSI
with respect to the Retailer's Revenue Share earned during the
calendar year to which the certified statement relates. Such audit
shall be conducted at GSI's principal office located in the
continental United States on two weeks prior notice to GSI. In the
event that the audit reveals that the Revenue Share was understated,
GSI shall within thirty days of completion of the audit, pay to the
Retailer the remaining balance of the Revenue Share for the period
audited plus interest at the prime rate of interest as provided for in
The Wall Street Journal on the date of the audit's certification. In
addition, in the event that the audit reveals that the Revenue Share
is understated by more
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than [*] per cent for the calendar year in question, GSI shall pay the
additional amount owing and pay for the reasonable audit costs and
this shall be Retailer's sole remedy.
3.9 Service of On Line Customers. GSI shall be responsible for providing
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all customer service relating to sales from the Retailer's Web Site.
3.10 Return of On Line Merchandise. GSI's return policy shall be consistent
-----------------------------
with the Retailer's return policy, or, at GSI's option, more liberal
than Retailer's policy. With each shipment of merchandise, GSI shall
specifically instruct all customers that all merchandise purchased on
line may not be returned to the Retailer's Land Based Stores and may
only be returned in accordance with the instructions enclosed;
provided however, in the rare instance a customer desires to return On
Line Merchandise to one of the Retailer's Land Based Stores, the
Retailer, in order to maximize customer relations, shall accept such
merchandise for return in accordance with the Retailer's return
policy, and return the merchandise to GSI's fulfillment center. At the
next such time that GSI pays the Retailer pursuant to paragraph 3.8
above, and upon receipt of such merchandise, GSI shall credit the
Retailer the amount refunded by the Retailer to the customer and the
actual freight charges incurred by Retailer in order to return the
merchandise to GSI.
3.11 On Line Customer Loyalty Programs. GSI shall have the right to
---------------------------------
establish On Line Customer Loyalty Programs in order to encourage
continued on line purchases. Customer Loyalty Programs established by
GSI shall be used only in connection with on line purchases and
Retailer's customer loyalty programs shall be used only in connection
with purchases at the Retailer's Land Based Stores.
3.12 Cross Promotion. With Retailer's consent, not to be unreasonably
---------------
withheld or delayed, GSI shall have the right to use Retailer's URL,
name and logo to cross promote Retailer's Web Site with other
businesses in order to promote Retailer's Web Site; provided however,
GSI shall not promote Retailer's Web Site on any other sporting good
retailer's web site, or on any other web site which would generally be
considered immoral, pornographic or offensive.
3.13 Price Matching. In the event that the Retailer, at its Land Based
--------------
Stores offers a "Price Matching" policy, GSI's management shall have
the right to use and adopt such policy for the Retailer's Web Site;
provided however, GSI shall not under any circumstance, advertise or
market the availability of this policy, and may offer it to customers
only in GSI's sole discretion.
3.14 Project Manager. Within thirty days of the execution of this
---------------
Agreement, but in no event later than sixty days after such
12
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execution, Retailer, at its expense, shall hire or reassign one of
its existing employees, to act as Project Manager to work exclusively
with GSI in creating and maintaining the Retailer's Web Site.
Commencing with the Project Manager's hiring and continuing through
the Term, the Project Manager shall be the Retailer's liaison with
GSI and shall be responsible for supplying GSI with the Retailer
Content and such other information as may reasonably be required of
the Retailer in order to create and maintain the Retailer's Web Site
in the most efficient manner. Notwithstanding anything contained
herein to the contrary, at such time as the Retailer's Web Site is
operating in accordance with the terms of this Agreement, the Project
Manager may attend to other duties for the Retailer provided that at
no time shall the Project Manager fail to perform the functions
required of the Project Manager hereunder to the satisfaction of GSI,
as determined by GSI in its sole discretion.
4. ON-LINE DATA AND DATABASES
--------------------------
4.1 Ownership of Data. Any and all data ("Customer Data") related to
-----------------
Retailer's customers (including customer names and other identifying
information such as addresses, phone numbers and e-mail addresses,
credit card numbers, and descriptions of the items and quantities of
items purchased) that is collected by GSI shall be owned [*].
4.2 Ownership of Databases. All data structures, data schema, database
----------------------
dictionaries, attributes, validation tests for each element, table
sizes and formats, access requirements, data dependencies and other
elements involving the storage of Data on the Web Site and all
refinements, updates, releases, improvements and enhancements
thereto, all intellectual property rights embedded therein and all
applications created specifically for use of the data and Retailer
Content (collectively, the "Databases") shall, as between GSI and
Retailer, be the sole and exclusive property of GSI.
4.3 Delivery of Customer Data to Retailer. From time to time, but no more
-------------------------------------
than four (4) times per calendar year, Retailer may request that GSI
provide to Retailer any or all of the following information collected
from the Customer Data:
a. customer's names;
b. customer's addresses;
c. customer's phone number;
d. customer's e-mail address;
e. items purchased;
f. amount spent;
g. information as to how customer reached Web Site;
h. refers;
i. unique visitors to site;
j. page views per site;
k. top ten most viewed pages;
l. bottom ten least viewed pages;
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m. time of day traffic patterns;
n. sales by product and brand;
o. customer comments and complaints;
p. additional information at GSI's discretion.
Upon receipt of such request, GSI shall provide the Customer Data to
Retailer in a mutually agreeable, commercially standard format,
either via diskette, CD-ROM, electronically, or via another mutually
agreeable method. GSI shall use commercially reasonable efforts to
ensure that the Customer Data provided to Retailer accurately and
completely reflects the Customer Data in the Web Site, but GSI shall
have no obligation to check the accuracy, validity or integrity of
the Customer Data and except as set forth in this Section 4.3, the
Customer Data is provided "AS-IS".
4.4 Restrictions on Use of Customer Data. Each party shall treat the
------------------------------------
Customer Data as Confidential Information of the other party in
accordance with the provisions of Article 7. Neither party may sell,
lend, or license the Customer Data to third parties without the prior
written consent of the other party, which consent may be withheld at
the sole discretion of the other party; provided however, Retailer
grants to GSI the right to combine all retailers' Customer Data to
form trends and overall research as to the on line shopping habits of
consumers. At Retailer's request, GSI shall make such aggregated
information, which is not retailer specific in any manner, available
to Retailer for Retailer's own use. Such information shall be
considered Confidential Information in Retailer's possession and may
not be disclosed by Retailer to any third party.
4.5 Reporting of Customer Sales. Notwithstanding anything contained
---------------------------
herein to the contrary, commencing three months after the Launch
Date, GSI shall provide Retailer with an application pursuant to
which Retailer will be able to obtain on line, information concerning
its sale of On Line Merchandise during the prior week.
5. ADVERTISING AND MARKETING
-------------------------
The Retailer shall,commencing no later than October 1, 1999, and continuing
during the Term, at no cost to GSI provide for Complete URL Integration in
its advertising and marketing by:
5.1 prominently including as part of all of its print media (including
but not limited to newspapers, periodicals, circulars, billboards,
print materials, letterhead, business cards, shopping bags, cash
register receipts and arena advertising) its URL, www.Retailer.com.;
and
14
<PAGE>
5.2 prominently including, at the end of its television advertising, its
URL; and
5.3 mentioning its URL at the end of all radio advertisements.
All advertisements and marketing appearing in newspapers, circulars and
periodicals shall contain the following disclaimer: "Merchandise offered on
line may differ slightly from our retail stores".
6. ADVERTISING COOP AND DISCRETIONARY FUNDS
----------------------------------------
6.1 During the Term, GSI shall use all Advertising Co-op and
Discretionary Funds received by GSI directly from vendors as a result
of the purchase of merchandise for the Retailer's Web Site
exclusively, to promote the Retailer's Web Site, as GSI shall elect.
All such proposed advertisements shall be submitted to the Retailer
for the Retailer's approval as to content and design. The Retailer
shall have forty eight hours from receipt to either approve or
disapprove. In the event that the Retailer disapproves, it shall
advise GSI specifically as to why and GSI shall attempt to address
the Retailer's concerns and resubmit the proposal to Retailer for its
approval, which shall again have forty eight hours from receipt to
approve or disapprove. This procedure shall continue until the
advertisement has been approved or replaced. In all instances where
approval is requested of the Retailer, in the event the Retailer does
not respond within the aforementioned forty eight hours, Retailer
shall be deemed to have granted approval.
6.2 Any Advertising Co-op and Discretionary Funds received by the
Retailer through the Retailer's purchase of product for GSI,
ultimately for the Retailer's Web Site, may be retained by the
Retailer; provided however, Retailer acknowledges that it is
preferential for Retailer's vendors to sell to GSI directly and
Retailer shall use its best efforts to so convince its vendors,
ultimately simplifying the purchasing process.
6.3 Retailer shall retain from vendors any non item driven marketing
funds. Retailer authorizes GSI to seek incremental marketing funds
from vendors related solely to Web Site activity. Any such
incremental marketing funds shall belong exclusively to GSI and shall
be used in accordance with paragraph 6.1 above.
7. CONFIDENTIALITY
---------------
7.1 Confidential Information. Each party acknowledges that, in connection
------------------------
with the performance of this Agreement, it may receive Confidential
Information of the other party. For the purpose of this Agreement,
"Confidential Information" shall mean information or materials that
the party receiving the
15
<PAGE>
information (the "Receiving Party") knows or has reason to know is
the confidential or proprietary information of the party disclosing
the information (the "Disclosing Party"), either because such
information is marked or otherwise identified by the Disclosing Party
as confidential or proprietary, has commercial value, or is not
generally known in the Disclosing Party's trade or industry.
Confidential Information shall include, without limitation: (a)
concepts and ideas relating to the development and distribution of
content in any medium; (b) trade secrets, drawings, inventions, know-
how, software programs, and software source documents; (c)
information regarding plans for research, development, new service
offerings or products, marketing and selling, business plans,
business forecasts, budgets and unpublished financial statements,
licenses and distribution arrangements, prices and costs, suppliers
and customers; and (d) existence of any business discussions,
negotiations or agreements between the parties.
7.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all Confidential Information of the
Disclosing Party and not to disclose it to any third party; and (ii)
not to use any Confidential Information of the Disclosing Party
except as permitted by this Agreement or as may be necessary for the
Receiving Party to perform its obligations under this Agreement. The
Receiving Party will use at least the same degree of care to protect
the Disclosing Party's Confidential Information as it uses to protect
its own Confidential Information of like importance, and in no event
shall such degree of care be less than reasonable care. The
obligations and restrictions imposed by this Article 7 shall
terminate thirty (30) months after the expiration or termination of
this Agreement.
7.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information will not include any information that: (i)
was in the public domain at the time it was communicated to the
Receiving Party by the Disclosing Party; (ii) entered the public
domain subsequent to the time it was communicated to the Recipient by
the Disclosing Party through no fault of the Receiving Party; (iii)
was in the Receiving Party's possession free of any obligation of
confidence at the time it was communicated to the Receiving Party by
the Disclosing Party; (iv) was rightfully communicated to the
Receiving Party by a third party, free of any obligation of
confidence, subsequent to the time it was communicated to the
Receiving Party by the Disclosing Party; (v) was developed by
employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving
Party by the Disclosing Party; or (vi) was communicated by the
Disclosing Party to an unaffiliated third party free of any
obligation of confidence. In addition, the Receiving Party may
disclose the Disclosing Party's Confidential Information in response
to a valid order by a
16
<PAGE>
court or other governmental body, as otherwise required by law, or as
necessary to establish the rights of either party under this
Agreement.
7.4 Confidentiality of this Agreement. Retailer acknowledges that
---------------------------------
the terms and conditions of this Agreement constitute Confidential
Information which shall be governed by the terms of this Article 7.
7.5 Confidentiality of Customer Data and Retailer's Policies.
--------------------------------------------------------
GSI acknowledges that it will be receiving from Retailer, and
generating on line, Confidential Information critical to the
Retailer's business and concerning Retailer's customers and various
information concerning the operation of Retailer's business including
but not limited to net purchasing prices, advertising co-op and
discretionary fund amounts, specific marketing plans, specific on
line sales and delivery dates of merchandise. GSI recognizes its
obligation to keep such information confidential. Therefore, all GSI
employees who may have access to any such Confidential Information
will be required to execute confidentiality agreements and GSI shall
use its best efforts to enforce the terms thereof. Such
confidentiality agreements will specifically provide that the
employee shall not discuss with any other retailers who may or may
not be customers of GSI, any information concerning the Retailer or
its customers. Prior to having the confidentiality agreement executed
by any employees, GSI shall submit the form of confidentiality
agreement to Retailer for its review and approval, such approval not
to be unreasonably withheld or delayed.
Further, GSI acknowledges it is presently a wholly owned subsidiary
of Global Sports, Inc., a Delaware corporation ("Global"), and
therefore affiliated with other subsidiaries of Global. GSI therefore
represents and warrants to Retailer that it will establish a "Need to
Know" policy with respect to such Confidential Information and only
disseminate such Confidential Information to those employees and
members of GSI's management who have a specific need to know such
Confidential Information. In those instances, prior to the
dissemination of such Confidential Information to those individuals,
they will be required to execute confidentiality agreements
specifically prohibiting such disclosure of such Confidential
Information to anyone.
8. EXCLUSIVE WEB AGREEMENT
-----------------------
During the Term, the Retailer, any subsidiary of the Retailer, shall not
sell any sporting goods merchandise on the Internet (including the Web),
nor use itself or allow a third party to use its URL, name or logo on the
Web for the purpose of facilitating the sale of merchandise on the Web
other than through GSI.
9. URL, NAME AND LOGO USAGE
------------------------
17
<PAGE>
During the Term, the Retailer hereby grants to GSI the exclusive right to
use, copy, modify and display the Retailer's name, logo and URL and such
other names and logos as the Retailer owns and as may be listed on Schedule
"1" attached hereto and made a part hereof, on the Retailer's Web Site, on
invoices and packing slips, in connection with credit card charges, a toll
free Web site customer service telephone line, and generally in connection
with the operation of GSI's on-line business; provided however, GSI shall
have no right to modify Retailer's name, logo or URL without Retailer's
consent. Such Schedule shall be modified from time to time during the Term
to add any new names and logos which the Retailer may register with the
United States Patent and Trademark Office.
The Retailer further grants to GSI the right to register a fictitious name
of "Retailer.com" for the sole purpose of conducting business on the
Retailer's Web Site and www.Retailer.com for the purpose of registering an
Internet Domain Name on behalf of the Retailer. Retailer shall execute
whatever documents are necessary in connection with such registrations.
10. REPRESENTATIONS AND WARRANTIES.
-------------------------------
10.1 Retailer represents and warrants that at all times during the
Term hereof:
a. it has or will have the full right to grant to GSI the right to
use its URL, names and logos as discussed in Article 9 above,
including its Domain Name; and
b. Retailer is authorized to advertise and market on its Web Site
the brands of merchandise to be sold thereon;
c. Prior to the Effective Date, if not already completed, Retailer
shall register and maintain the Domain Name "Retailer.com" with
Network Solutions or any similar successor entity. Retailer
shall list itself as the owner and billing contact for the
Domain Name "Retailer.com" and Retailer shall list GSI as the
administrative and technical contact for the Domain Name
"Retailer.com".
10.2 GSI represents and warrants that:
a. as of the execution of this Agreement, GSI is a wholly owned
subsidiary of Global Sports, Inc., which is registered under the
Securities Exchange Act of 1934, as amended; and
b. no later than the Launch Date, GSI shall own, or have the valid
right to use the software, hardware, processes, trade secrets,
or other property used or to be used in the development,
maintenance and operation of the Retailer's Web Site and that no
such use will infringe on any copyright, U.S. patent, trademark
or any other proprietary right of any third party.
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<PAGE>
10.3 Each party represents and warrants to the other party that: (i) it is
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the
power and authority to enter into this Agreement and the transactions
contemplated herein; (ii) the consummation of the transactions
described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles
of Incorporation or Bylaws, or any statute or administrative
regulation or of any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement
(excluding vendor agreements) or instrument to which it is a party or
by which it is bound or constitute a default thereunder; and (iii)
this Agreement has been duly authorized, executed and delivered by it
and this Agreement is valid, enforceable and binding upon each party
in accordance with its terms.
11. INDEMNIFICATION
---------------
11.1 Retailer, at its own cost and expense, shall defend, indemnify and
hold harmless GSI and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising
as a consequence of GSI providing services pursuant to this Agreement
a) from or related to a claim that GSI infringes a third party
copyright, trademark or trade secret as a consequence of GSI's
services to Retailer pursuant to this Agreement, or b) from
Retailer's gross negligence, wilful or intentional misconduct.
11.2 GSI, at its own cost and expense, shall defend, indemnify and hold
harmless Retailer and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising
a) from a claim made by any consumer that is related in any way to
the Retailer's Web Site or GSI's services to Retailer provided
pursuant to this Agreement, or b) from GSI's gross negligence, wilful
or intentional misconduct and arising as a consequence of GSI
providing services pursuant to this Agreement, or c) from a claim by
any local, state or federal governmental unit that any sales or use
tax is due as a result of the sale of merchandise on Retailer's Web
Site. GSI's liability under this provision shall not be limited by
the provisions of Section 14 hereof entitled "Limitation Upon
Damages".
11.3 Retailer shall have sole control of any defense of any claim made
pursuant to Section 11.1 above, but GSI shall cooperate with Retailer
in providing such defense.
11.4 GSI shall have sole control of any defense of any claim made pursuant
to Section 11.2 above, but Retailer shall cooperate with Retailer in
providing such defense.
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11.5 Any party seeking indemnification shall notify the other party as
soon as possible after such party seeking indemnification becomes
aware of the claim.
12. INSURANCE
---------
12.1 GSI shall maintain in full force and effect products liability
insurance coverage for merchandise sold on Retailer's Web Site in an
amount of not less than [*] per occurrence. Such policy shall name
Retailer as an additional insured.
12.2 GSI shall deliver to Retailer certificates of insurance which
stipulate that no less than ten days notice will be given to Retailer
prior to the termination of the policy.
13. TERMINATION
-----------
13.1 Termination for Cause by Either Party. This Agreement may be
-------------------------------------
terminated by either party in the event of any material breach of any
of the terms and conditions of this Agreement by the other party
which breach continues in effect after the breaching party has been
provided with written notice of breach and ninety (90) days to cure
such breach and fails to cure such breach. As used herein, "material
breach" shall mean a failure by a party to this Agreement to perform
any of its obligations the effect of which would substantially impair
the value of this Agreement to the other party. By way of example
only and not by way of limitation, GSI's failure to operate the
Retailer's Web Site according to commercially reasonable standards as
they may develop during the Term of this Agreement or failure to pay
the Retailer its Revenue Share (or any other amount due to Retailer
hereunder), would be a material breach of this Agreement by GSI.
Retailer's failure to comply with its obligations pursuant to Section
5 above, or failure to provide GSI with the Retailer Content
necessary to construct and/or maintain the Retailer's Web Site, would
be a material breach of the Retailer's obligations under this
Agreement.
13.2 Termination for Cause Only by GSI. GSI may terminate this Agreement
---------------------------------
without any notice to Retailer upon the occurrence of any of the
following events:
a. any representation or warranty contained herein becomes
materially false or misleading; or
b. a material change in the Retailer's business or business
policies the effect of which would be to substantially
impair the value of this Agreement to GSI, as determined by
GSI in its sole reasonable judgment.
20
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13.3 Termination Without Cause by Either Party. In the absence of a
-----------------------------------------
material breach, this Agreement may only be terminated by the
expiration of the Term, as may be extended pursuant to Section 2.3
above.
In the event that the Agreement is terminated pursuant to this
paragraph 13.3, Retailer shall have the right for a period of thirty
days after such termination, to advise GSI that it desires to obtain
a non exclusive license to utilize the software necessary for
Retailer to continue to operate its own web site. The parties shall
negotiate, in good faith, to reach an agreement which is satisfactory
to both parties; provided however, in the event that the parties are
unable to reach an agreement pursuant to which GSI would grant
Retailer a non exclusive license as aforementioned, then GSI shall
have no liability hereunder.
14. LIMITATIONS UPON LIABILITY
--------------------------
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER SUCH
DAMAGES ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES)
ARISING FROM OR RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS' USE OF OR
INABILITY TO ACCESS ANY PART OF THE INTERNET OR RETAILER'S OR RETAILER'S
CUSTOMERS' RELIANCE ON OR USE OF INFORMATION, SERVICES OR MERCHANDISE
PROVIDED ON OR THROUGH THE WEB SITE OR THE SERVICES, OR THAT RESULT FROM
MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS, THEFT, OR DELETION OF FILES,
ERRORS, DEFECTS, DELAYS IN OPERATION, OR TRANSMISSION, OR ANY FAILURE OF
PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE UNDER THIS AGREEMENT FOR MORE
THAN THE GREATER OF A) [*], OR B) THE AMOUNTS PAID TO RETAILER DURING THE
[*] MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING RISE TO SUCH
LIABILITY. IN ADDITION, RETAILER SHALL BE ENTITLED TO SEEK EQUITABLE RELIEF
FROM THE COURT. THE REMEDIES SET FORTH IN THIS ARTICLE 14 CONSTITUTE THE
SOLE AND EXCLUSIVE REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN
NO EVENT SHALL EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT
MORE THAN TWELVE (12) MONTHS AFTER THE LAST ACT OR OMISSION GIVING RISE TO
SUCH LIABILITY.
15. PROPERTY RIGHTS AND OWNERSHIP
-----------------------------
The Retailer's Web Site shall consist of, and shall operate in conjunction
with, multiple elements, all of which are subject to certain intellectual
property rights. The parties' respective rights with respect to such
elements shall be as set forth below. For purposes of this Agreement, the
term "Ownership" shall refer to ownership of all right, title and interest
in and to the respective elements, including, but not limited to, all
patent, copyright, trade secret, trademark and any other similar
intellectual property rights therein, as applicable.
15.1 Retailer's URL shall be owned solely by the Retailer;
21
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15.2 Retailer's Web Site shall be owned solely by GSI;
15.3 Software developed for the Retailer's Web Site, shall be owned
solely by GSI, subject to any authorizations to use and approvals
obtained by the Retailer and granted to GSI.
With respect to intellectual property owned by each of them, Retailer and
GSI shall both have rights associated with the ownership of intellectual
property, including the right to copyright web sites and domains.
16. GSI'S TWENTY DAY PERIOD TO EXECUTE
----------------------------------
Retailer shall execute this Agreement first and deliver such executed
Agreement to GSI which shall thereafter have twenty days from receipt to
countersign the Agreement. During such twenty day period, Retailer shall
have no right to withdraw the agreements which it executed and delivered to
GSI.
17. DISCONTINUANCE OR REGULATION OF THE INTERNET.
---------------------------------------------
Retailer acknowledges and agrees that the Internet (including without
limitation the Web) is a network of private and public networks, that GSI
has no control over the Internet, and that GSI is not liable for the
discontinuance of operation of any portion of the Internet or possible
regulation of the Internet which might restrict or prohibit the operation
of the Web site.
18. FORCE MAJEURE
-------------
In the event that either party is unable to perform any of its obligations
under this Agreement or to enjoy any of its benefits because of any event
beyond the control of the affected party including, but not limited to,
natural disaster, acts of God, actions or decrees of governmental bodies or
failure of communications lines or networks (a "Force Majeure Event"), the
party who has been so affected shall promptly give written notice to the
other party and shall use its best efforts to resume performance. Upon
receipt of such notice, all obligations under this Agreement shall be
immediately suspended for the duration of such Force Majeure Event.
19. WAIVER
------
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power
or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and
signed by the party
22
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against whom enforcement of such waiver is sought and then only to the
extent expressly specified.
20. PRESS RELEASES
--------------
All voluntary public announcements concerning the transactions contemplated
by this Agreement shall be mutually acceptable to both GSI and Retailer.
Unless required by law, neither GSI on the one hand, and Retailer on the
other hand, shall make any public announcement or issue any press release
concerning the transactions contemplated by this Agreement without the
prior written consent of GSI or Retailer, respectively. With respect to any
announcement that any of the parties is required by law to issue, such
party shall, to the extent possible under the circumstances, review the
necessity for and the contents of the announcement with the other party
before issuing the announcement; provided however, if either party cannot
obtain the consent of the other party in a timely manner, the party
required to comply with law may issue the press release or public
announcement without obtaining the consent of the other party.
21. GOVERNING LAW
-------------
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes thereto, shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (excluding the
choice of law rules thereof).
22. ASSIGNMENT
----------
Retailer shall have no right to assign this Agreement without the prior
written consent of GSI; provided, that Retailer shall have the right to
assign this Agreement to any person or entity that acquires or succeeds to
all or substantially all of such party's business or assets upon written
notice to the other party.
23. COUNTERPARTS
------------
This Agreement may be signed in several counterparts, each of which shall
be deemed an original, and all of which when taken together, shall be
deemed a complete instrument.
24. ENTIRE AGREEMENT
----------------
This Agreement, including the Web Development Agreement, represents the
entire agreement of the parties with respect to the subject matter hereof
and may not be modified, except in writing, executed by all of the parties
hereto. This Agreement supersedes all prior writings of the parties with
respect to this subject matter.
25. JURISDICTION
------------
Should GSI file any legal action concerning this Agreement, the exclusive
jurisdiction and venue of any dispute that arises hereunder shall be in the
Court of Common Pleas of Montgomery
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County, Pennsylvania or the United States District Court for the Eastern
District of Pennsylvania.
Should Retailer file any legal action concerning this Agreement, the
exclusive jurisdiction and venue of any dispute that arises hereunder shall
be in the state courts of the State of Michigan or the United States
District Court for the Western District of Michigan.
26. INDEPENDENT CONTRACTORS
-----------------------
The relationship of the parties herein shall hereunder be that of
independent contractors and nothing herein shall be construed to create a
joint venture or partnership.
27. SIGNING
-------
The parties executing this Agreement represents and warrants that they have
full corporate authority to do so.
28. BINDING EFFECT
--------------
This Agreement shall be binding upon the parties hereto, their successors
and permitted assigns.
29. HEADINGS
--------
Section headings contained in this Agreement are inserted for convenience
or reference only and shall not be deemed to be a part of this Agreement
for any other purpose.
30. DISCLAIMER OF WARRANTIES
------------------------
EXCEPT AS TO THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, GSI MAKES
NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR IN LAW
WITH RESPECT TO THE CREATION AND MAINTENANCE OF THE PRODUCT AND SERVICES
PROVIDED FOR HEREUNDER, AND DISCLAIMS ALL OTHER WARRANTIES. RETAILER
ACKNOWLEDGES AND AGREES THAT GSI HAS NOT MADE, NOR DOES HEREBY MAKE, ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER,
EXPRESSED OR IMPLIED.
31. NOTICES
-------
Any notices or writings to be sent hereunder shall be in writing and shall
be by personal delivery, facsimile transmission or by certified or
registered mail, return receipt requested, and shall be deemed given upon
the earlier of actual receipt, five (5) days after deposit in the mail, or
receipt by sender of confirmation of facsimile transmission. Notices shall
be sent to the following addresses (or such other address as either party
may specify in writing):
IF TO GSI: 555 South Henderson Road
King of Prussia, PA 19406
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Attention: President
Copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Penna., 19102
IF TO RETAILER: Michigan Sporting Goods Distributors, Inc.
3070 Shafer S.E.
Grand Rapids, Michigan, 49512
Copy to: Robert Diamond, Esquire
VARNUM RIDDERING SCHMIDT & HOWLETT
P.O. Box 352
Grand Rapids, MI 49501-0352
(SIGNATURES CONTAINED ON THE FOLLOWING PAGE)
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement with intent to be legally bound
hereby,the date and year written below.
GLOBAL SPORTS INTERACTIVE, INC.: MICHIGAN SPORTING GOODS
DISTRIBUTORS INC.
BY: /s/ Michael Rubin BY: /s/ Bruce A. Ullery
--------------------------- -----------------------------
Title: President Title: Pres/CEO
------------------------ -------------------------
Date: 3/19/99 Date: Feb. 1, 1999
------------------------- --------------------------
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EXHIBIT A
WEB SITE DEVELOPMENT AGREEMENT
------------------------------
THIS Web site Development Agreement ("Agreement") dated the 1st day of
February, 1999 (the "Services Start Date") by and between Global Sports
Interactive, Inc., a Pennsylvania corporation (hereinafter referred to as "GSI")
with an address of 555 South Henderson Road, King of Prussia, PA 19406 and
Michigan Sorting Goods Distributors Inc.(hereinafter referred to as "Retailer")
with an address of 3070 Shaffer S.E., Grand Rapids, Michigan, 49512
W I T N E S S E T H:
WHEREAS, GSI and Retailer have entered into a E - Commerce Agreement
pursuant to which GSI shall provided certain E - Commerce services to Retailer,
including the development and maintenance of a web site; and
WHEREAS, the parties have elected to enter into this Agreement in order to
set forth the terms and conditions pursuant to which GSI shall develop a web
site for Retailer.
NOW, THEREFORE, in consideration of the mutual promises and terms herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged; and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Domain Name" means the domain name specified for the Web site by
Retailer from time to time. The initial Domain Name is specified in Attachment
A.
1.2 "E-Commerce Agreement" means the E-Commerce Agreement by and
between Retailer to which this Agreement is attached as Exhibit A.
1.3 "Features Set" means the requirements set forth in Attachment A, as
amended or supplemented in accordance with this Agreement.
1.4 "Intellectual Property Rights" means any and all now known or
hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the universe, including but not limited to copyrights,
moral rights, and mask-works, (b) trademark and trade name rights and similar
rights, (c) trade secret rights, (d) patents, designs, algorithms and other
industrial property rights, (e) all other intellectual and industrial property
rights (of every kind and nature throughout the universe and however designated)
(including logos, "rental" rights and rights to remuneration), whether arising
by operation of law, contract, license, or otherwise, and (f) all registrations,
initial applications, renewals,
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extensions, continuations, divisions or reissues hereof now or hereafter in
force (including any rights in any of the foregoing).
1.5 "Milestone Delivery Schedule" means the schedule for development of
the Web site set forth in Attachment A.
1.6 "GSI Content" means all text, pictures, sound, graphics, video and
other data and assets supplied by Retailer to GSI, as such materials may be
modified from time to time.
1.7 "GSI Products" means, collectively, the GSI Tools, the GSI Content and
the GSI Work Product.
1.8 "GSI Tools" means any tools, both in object code and source code form,
which GSI has already developed or which GSI independently develops or licenses
from a third party, excluding any tools which GSI creates pursuant to this
Agreement. By way of example, GSI Tools may include, without limitation,
toolbars for maneuvering between pages, search engines, Java applets, and
ActiveX controls.
1.9 "Production Schedule" shall mean the schedule agreed upon by the
parties for the production of the Retailer's Web site, including the delivery of
the Retailer Content and GSI Content by Retailer to GSI.
1.10 "Retailer Content" means the Domain Name and all text, pictures,
sound, graphics, video and other data and assets supplied by Retailer to GSI, as
such materials may be modified from time to time.
1.11 "Services" means the services provided by GSI hereunder to develop,
host and maintain the Web site, in accordance with this Agreement.
1.12 "Web site" means, collectively, the E - Commerce Shopping Experience
and the Retailer Content made available on web pages under the Domain Name.
1.13 "GSI Work Product" means all HTML files, Java files, graphics files,
animation files, data files, technology, scripts and programs, both in object
code and source code form, all documentation and any other deliverable used by
GSI to create the Web site.
2. WEB SITE DEVELOPMENT SERVICES
2.1 Delivery of Initial Retailer Content. As soon as reasonably possible,
GSI and Retailer shall agree upon a Production Schedule for the delivery by
Retailer to GSI of the Retailer Content that Retailer intends for GSI to
incorporate into the Web site. The parties acknowledge that Retailer will be
able to deliver certain "static" information, such as store locations, promptly
to GSI, and other Retailer Content, such as certain merchandise to be sold on
the Retailer's Web site, at a later date closer to the Launch Date. The Retailer
Content shall be in the format(s) designated by GSI. Upon Retailer's request,
GSI shall assist Retailer in
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the conversion of the Retailer Content into an acceptable form for use by the
Web site.
2.2 Web site Development Services. At no cost to Retailer, GSI shall
provide design, programming and other consulting Services as specified in
Attachment A to create the Web site. GSI will provide the Web site to Retailer
in accordance with the Milestone Delivery Schedule.
2.3 Project Liaisons. Each party's primary contact for development efforts
shall be the project liaisons specified in Attachment A or the person otherwise
designated in writing by Retailer or GSI, as the case may be.
2.4 Acceptance. GSI shall make available final versions of the Web site
for Retailer's review and acceptance. Retailer shall have ten (10) days to
review and evaluate the Web site (the "Acceptance Period") to assess whether it
substantially meets the Features Set. During the Acceptance Period, Retailer
shall identify in writing to GSI all aspects of the Web site that do not
substantially conform to the Features Set. Upon receipt of Retailer's list of
non-conformities, GSI shall correct promptly all such non-conformities so that
the Web site does substantially conform to the Features Set and GSI shall extend
the Acceptance Period for a second ten (10) day Acceptance Period during which
Retailer shall confirm that all non-conformities that were previously identified
have been corrected. Notwithstanding the foregoing, the Web site shall be deemed
accepted upon the earlier of: (i) its use in commerce; (ii) Retailer's failure
to articulate any non-conformities during an Acceptance Period; or (iii)
Retailer's acceptance of the Web site.
3. WEB HOSTING AND MAINTENANCE SERVICES
Following Retailer's acceptance of the Web site pursuant to Section 2.4,
GSI shall provide the following web hosting and maintenance Services:
3.1 Hosting Services. GSI shall load the Web site onto server(s) that are
connected to the Internet and readily accessible via the Web through use of the
Domain Names. GSI shall ensure that the Web site is functional and ready to
process transactions in a reasonably efficient manner.
3.2 Retailer Content. GSI shall upload all Retailer Content, including
updates, to the Web site within seven days of delivery to GSI. Upon GSI's prior
written consent, Retailer may electronically transmit or upload Retailer Content
directly to the Web site.
3.3 Maintenance Services. GSI shall maintain the Web site so that it
functions in a reasonably error free manner and in accordance with practices and
standards that are commercially reasonable for Internet retail sales, as they
may develop during the term of this Agreement. Upon notification of an error in
the Web site or of a non-conformity between the Web site and the Features Set,
whether from Retailer or from any user of the Web site, GSI shall promptly
commence an investigation into the reported error, and GSI shall, upon
reproducing such error, use reasonable commercial
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efforts to correct such error in a timely fashion. During such Maintenance
Services, GSI shall ensure that the Web site is functional and ready to process
transactions in a reasonably efficient manner, provided, however, GSI may,
-------- -------
during low usage periods, temporarily block access to the Web site to perform
Web site maintenance during periodic maintenance windows.
4. ADDITIONAL SERVICES
4.1 Search Engine Registration. When GSI makes the Web Site available to
Retailer, GSI shall register the Web Site and Domain Name with all applicable
search engines, at GSI's discretion. In addition, provided that there is no
additional charges imposed, GSI shall register the Web Site on those search
engines requested by Retailer.
4.2 Domain Name Assistance. If requested by Retailer, GSI shall cooperate
with Retailer in registering the Domain Name with InterNIC. Retailer shall own
all right, title and interest in and to the Domain Name and all Intellectual
Property Rights related thereto. Unless otherwise specified by Retailer, GSI
shall, at Retailer's expense, assist Retailer in registration of the Domain
Name.
5. CONSIDERATION
In consideration for Retailer entering into the E Commerce Agreement, at no cost
to Retailer, GSI shall perform the Services set forth in this Agreement.
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6. TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be conterminous with the term
of the E- Commerce Agreement. In absence of a material breach, this Agreement
may only be terminated by the expiration of the term.
6.2 Termination. Termination of this Agreement shall be governed by the
terms of Article 13 of the E -Commerce Agreement.
7. WARRANTIES AND DISCLAIMERS.
7.1 Cross Warranties. Retailer warrants as to the Retailer Content, and
GSI warrants as to the GSI Products, that any materials and updates or
enhancements there to shall not: (a) infringe on the Intellectual Property
Rights of any third party or any rights of publicity or privacy; (b) violate any
law, statute, ordinance or regulation (including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising); (c) be defamatory, trade libelous, unlawfully threatening or
unlawfully harassing; (d) be obscene, pornographic or indecent.
7.2 Representations and Warranties of Each Party. Each party represents
and warrants to the other party that: (i) it is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and that it has the power and authority to enter into this
Agreement and the transactions contemplated herein; (ii) the consummation of the
transactions described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles of
Incorporation or Bylaws, or any statute or administrative regulation or of any
order, writ, injunction, judgment or decree of any court, regulatory or
governmental authority or of any agreement or instrument to which it is a party
or by which it is bound or constitute a default thereunder; and (iii) this
Agreement has been duly authorized, executed and delivered by it and this
Agreement is valid, enforceable and binding upon each party in accordance with
its terms.
7.3 Year 2000. GSI warrants that the Web site shall not suffer any
material adverse effect as a result of a failure in any GSI Work Product or GSI
Tools to be Y2K Compliant. A product or service which is "Y2K Compliant" is one
that provides accurate results using data having date ranges spanning from
January 1, 1980 through December 31, 2019 (the "Y2K Period"). By way of example
and not of limitation, "Y2K Compliant" means, with respect to a product or
service, that it can currently and shall, during the Y2K Period, continue to (a)
manage and manipulate data involving all dates within the Y2K Period (including
the fact that the year 2000 is a leap year) without functional or data
abnormality related to such dates; (b) manage and manipulate data involving all
dates within the Y2K Period without inaccurate results related to such dates;
(c) have user interfaces and data fields formatted to distinguish between dates
within the Y2K Period; and (d) accurately identify and either reject or correct
invalid date data during the Y2K Period. Provided a party otherwise complies
with this Section 7.4, it will not be liable to the other party for any failure
to perform obligations under this Agreement to the extent such failure arises
from a
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failure to be Y2K Compliant that (1) affects the non-performing party's
customers or suppliers or (2) is beyond its reasonable control (e.g., a failure
----
to be Y2K Compliant affecting a governmental entity).
7.4 Disclaimer. THE WARRANTIES MADE IN THIS SECTION 7 ARE MADE IN LIEU OF
ALL OTHER EXPRESS WARRANTIES, WHETHER ORAL OR WRITTEN AND EXCEPT AS SET FORTH IN
THIS SECTION 7, GSI MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8. OWNERSHIP
8.1 Ownership of GSI Products. Retailer hereby acknowledges and agrees
that as between Retailer and GSI, GSI owns all right, title and interest in and
to the GSI Products and all applicable Intellectual Property Rights thereto.
This Agreement confers no ownership interest in the GSI Products to Retailer.
8.2 Ownership of Retailer Content. GSI hereby acknowledges and agrees
that as between GSI and Retailer, Retailer owns all right, title and interest in
and to the Retailer Content and all applicable Intellectual Property Rights
thereto. Except for a limited non-exclusive license during the term to use the
Retailer Content solely to perform its obligations hereunder, this Agreement
confers no ownership interest in the Retailer Content to GSI.
9. LIMITATION UPON LIABILITY.
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER SUCH DAMAGES
ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES) ARISING FROM OR
RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS' USE OF OR INABILITY TO ACCESS ANY
PART OF THE INTERNET OR RETAILER'S OR RETAILER'S CUSTOMERS' RELIANCE ON OR USE
OF INFORMATION, SERVICES OR MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR
THE SERVICES, OR THAT RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS,
THEFT, OR DELETION OF FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR
TRANSMISSION, OR ANY FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE
UNDER THIS AGREEMENT FOR MORE THAN THE GREATER OF A) [*] OR B) THE AMOUNTS PAID
TO RETAILER DURING THE [*] MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING RISE
TO SUCH LIABILITY. IN ADDITION, RETAILER SHALL BE ENTITLED TO SEEK EQUITABLE
RELIEF FROM THE COURT. THE REMEDIES SET FORTH IN THIS ARTICLE 9 CONSTITUTE THE
SOLE AND EXCLUSIVE REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO
EVENT SHALL EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN
TWELVE (12) MONTHS AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
10. INDEMNITY.
10.1 Retailer Indemnity. Subject to Section 10.3, Retailer shall defend,
indemnify and hold GSI harmless against any third party claim, action, suit or
proceeding: (i) Retailer's gross negligence, willful or
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intentional misconduct; or (ii) any breach by Retailer of the warranties set
forth in Sections 7.1 or 7.2.
10.2 GSI Indemnity. Subject to Section 10.3, GSI shall defend, indemnify
and hold Retailer harmless against any third party claim, action, suit or
proceeding arising from: (i) GSI's gross negligence, willful or intentional
misconduct; or (ii) any breach by GSI of the warranties set forth in Sections
7.1 or 7.2. GSI's liability hereunder shall not be limited by the provisions of
Section 9 above.
10.3 Mechanic of Indemnities. The indemnifying party's obligations are
conditioned upon the indemnified party: (a) giving the indemnifying party prompt
written notice of any claim, action, suit or proceeding for which the
indemnified party is seeking indemnity; (b) granting control of the defense and
settlement to the indemnifying party; and (c) reasonably cooperating with the
indemnifying party at the indemnifying party's expense
11. MISCELLANEOUS.
11.1 Incorporation of Certain Provisions of the E-Commerce Agreement.
Sections 7, 8, 12, and Sections 17 through 29, inclusive, of the E-Commerce
Agreement are hereby incorporated in their entirety into this Agreement.
11.2 Interpretation of Agreements. With respect to the subject matter
hereof, the E-Commerce Agreement shall control any conflict between the terms of
this Agreement and the E-Commerce Agreement.
11.3 Definitions. Any terms not specifically defined in this Agreement
shall be construed in accordance with the definitions given such terms in the
E-Commerce Agreement, or if such terms are not defined in the E-Commerce
Agreement, then such terms shall be construed in accordance with their every
day, common meaning.
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
representatives to enter into this Agreement to be effected on the Services
Start Date.
GLOBAL SPORTS INTERACTIVE, INC.: MICHIGAN SPORTING GOODS
DISTRIBUTORS INC.
By: /s/ Michael Rubin By: /s/ Bruce A. Ullery
------------------------ -------------------------
Title: President Title: Pres/CEO
-------------------------- -------------------------
Date: 2/19/99 Date: Feb. 1, 1999
-------------------------- -------------------------
Name: Michael Rubin Name: Bruce A. Ullery
--------------------------- --------------------------
(Please type or print) (Please type or print)
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Attachment A
(TO BE COMPLETED)
Domain Name:
Format of Retailer Content:
Project Liaisons:
For GSE.C: For Retailer:
FEATURES SET
- ------------
1. PRODUCT SEARCH
2. BROWSE CATEGORIES
3. RECOMMENDATION TOOLS
4. ADVANCE PRODUCT PRESENTATION
5. SHOPPING CART
6. GIFT GIVING FUNCTIONALITY
7. REMOTE PUBLISHING TOOLS FOR HUMAN RESOURCES AND PRESS ROOM
8. SALES TAX CONFIGURATION
9. PRODUCT REVIEWS
10. 24/7 CUSTOMER SUPPORT
11. AFFILIATE PROGRAM FUNCTIONALITY
12. ON LINE GIFT CERTIFICATES
13. LAND BASED STORES GIFT CERTIFICATES
14. STORE LOCATOR
15. FINANCIAL INFORMATION
16. FREQUENTLY ASKED QUESTIONS
17. COMMUNITY PROGRAMS
18. COMPANY PROFILE
19. ON LINE ORDER STATUS
MILESTONE DELIVERY SCHEDULE:
- ---------------------------
TASK ESTIMATED COMPLETION DATE
- ---- -------------------------
DISCOVERY AND PLANNING MARCH 15, 1999
COMMENCE ENGINE ENGINEERING JULY 31, 1999
ESTABLISH FULFILLMENT CAPABILITIES APRIL 30, 1999
RETAILER WEB SITE DEVELOPMENT JULY 31, 1999
QUALITY CONTROL REVIEW AND REVISIONS AUGUST 21, 1999
ALPHA TESTING SEPTEMBER 1, 1999
BETA (SOFT LAUNCH) SEPTEMBER 30, 1999
WEB SITE LAUNCH TO GENERAL PUBLIC OCTOBER 1 - DECEMBER 1,1999
MEDIA AND PROMOTIONS OCTOBER 1 - DECEMBER 1,1999
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS TO
----------------------------------------------
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- ----
MC SPORTS
- ----
MC Sports has their name and logo as a registered trademark.
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Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E COMMERCE MANAGEMENT AGREEMENT
-------------------------------
THIS E - Commerce Agreement dated the 10th day of March, 1999 by and
between Global Sports Interactive, Inc., a Pennsylvania corporation (hereinafter
referred to as "GSI") with an address of 555 South Henderson Road, King of
Prussia, PA 19406 and The Athlete's Foot Stores, Inc., a Pennsylvania
corporation (hereinafter referred to as "Retailer") with an address of 1950
Vaughn Road, Kennesaw, Georgia, 30144.
W I T N E S S E T H:
WHEREAS, GSI is in the business of creating and operating all aspects of an
E-Commerce Shopping Experience, including servicing and fulfilling the on-line
retail sales of selected merchants; and
WHEREAS, Retailer desires to enter into an exclusive agreement with GSI
pursuant to which GSI will act as an Outsourcing Company providing the
Retailer's on-line customers the complete E-Commerce Shopping Experience, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the following
-----------
meaning:
1.1 "Advertising Co-op and Discretionary Funds" shall mean amounts earned
by or allocated to the Retailer by its vendors, the purpose of which
is to advertise that vendor's brand or to use at the Retailer's
discretion.
1.2 "Categories" shall mean the various types of product groups (e.g.
athletic footwear, camping, in line skates, etc.) offered for sale by
the Retailer in its Land Based stores.
1.3 "Closeout Merchandise" shall mean end of season or excess merchandise
that is priced at a greater than normal discount.
1.4 "Complete URL Integration" shall mean the display of Retailer's URL in
all of Retailer's marketing and communications.
<PAGE>
1.5 "Confidential Information" shall mean as that term is defined in
paragraph 7.1 of this Agreement.
1.6 "Cross Promotion" shall mean the use of the Retailer's URL, name and
logo on other than the Retailer's Web Site for the purpose of
promoting the Retailer's Web Site.
1.7 "Customary Pricing Structure" shall mean the policy generally employed
by the Retailer in determining the prices of merchandise in its Land
Based Stores.
1.8 "Customer Data" shall mean as that term is defined in paragraph 4.1 of
this Agreement.
1.9 "Data Bases" shall mean as that term is defined in paragraph 4.2 of
this Agreement.
1.10 "Defective Allowance" shall mean a discount granted by a manufacturer
to a retailer as a result of defective merchandise received by the
retailer and pursuant to which, the retailer also retains the
merchandise.
1.11 "Disclosing Party" shall mean the party disclosing Confidential
Information.
1.12 "Domain Name" shall mean as that term is defined in paragraph 1.1 of
the Web Site Development Agreement (as hereinafter defined).
1.13 "E-Commerce" shall mean the Retailer's specific business conducted
through the Internet.
1.14 "E-Commerce Orders" shall mean the orders for merchandise placed by
customers of the Retailer's Web Site.
1.15 "E-Commerce Outsourcing Manager" shall mean GSI.
1.16 "E-Commerce Shopping Experience" shall mean the shopping for and
purchasing of merchandise through the Internet.
1.17 "Flight Date" shall mean the date on which Retailer's advertising is
scheduled to run for the first time.
1.18 "Force Majeure Event" shall mean as that term is defined in Article 19
of this Agreement.
1.19 "GSI Content" shall mean as defined in paragraph 1.5 of the Web Site
Development Agreement.
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1.20 "In Line Merchandise" shall mean current merchandise available to be
carried by the Retailer in its Land Based Stores from Retailer's
current or future vendors.
1.21 "Internet" shall mean the collection of interconnected networks that
all use the TCP/IP protocols.
1.22 "Land Based Stores" shall mean the Retailer's stores located in
shopping districts, strip shopping centers and shopping malls.
1.23 "Land Based Stores Gift Certificates" shall mean gift certificates
offered for sale on the Retailer's Web Site for merchandise sold only
in Retailer's Land Based Stores.
1.24 "Launch Date" shall mean the date on which GSI commences operation of
the Retailer's Web Site to the public.
1.25 "Markdowns" shall mean merchandise in Retailer's inventory offered for
sale at less than the price it was originally offered for.
1.26 "Milestone Delivery Schedule" shall mean as defined in paragraph 1.5
of the Web Site Development Agreement.
1.27 "On Line Customer" shall mean Retailer's customer who browses for or
purchases On Line Merchandise on the Retailer's Web Site.
1.28 "On Line Customer Loyalty Programs" shall mean programs established to
encourage repeat business from On Line Customers.
1.29 "On Line Merchandise" shall mean merchandise to be sold on the
Retailer's Web Site.
1.30 "Outsourcing Company" shall mean a company which provides E-Commerce
Services for traditional Retailers.
1.31 "Price Matching" shall mean a Retailer's policy pursuant to which it
addresses another retailer's lower price on a particular item of
merchandise.
1.32 "Private Label" shall mean a tradename owned by the Retailer under
which name the Retailer manufactures merchandise for sale in its
retail stores.
1.33 "Production Schedule" shall mean as defined in paragraph 1.9 of the
Web Site Development Agreement.
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1.34 "Project Manager" shall mean an employee of Retailers who is assigned
exclusively to work with GSI in supplying GSI with Retailer Content.
1.35 "Receiving Party" shall mean the party receiving Confidential
Information.
1.36 "Retailer Content" shall mean as defined in paragraph 1.10 of the Web
Site Development Agreement.
1.37 "Retailer's Net Cost" shall mean the amount paid by the Retailer for
merchandise from its vendors after deduction of cash or anticipation
discounts, marketing allowance, Defective Allowance, volume allowance
and any other discount offered by vendors, but excluding any marketing
funds granted to Retailer by a manufacturer as an overall marketing
allowance and not based upon the number of units or dollars purchased.
1.38 "Retailer's Warehouse" shall mean the place at which Retailer receives
delivery of merchandise from its vendors.
1.39 "Special Makeups" shall mean merchandise manufactured for the Retailer
exclusively.
1.40 "Term" shall be as defined in Section 2.2 of this Agreement.
1.41 "URL" shall mean the address of the Web Site on the Internet.
1.42 "Web" shall mean the World Wide Web.
1.43 "Web Site" shall mean as defined in paragraph 1.12 of the Web Site
Development Agreement.
1.44 "Web Site Development Agreement" shall mean the agreement by and
between GSI and Retailer attached to this Agreement as Exhibit "A".
2. AGREEMENT AND TERM
------------------
2.1 Agreement. During the Term GSI shall provide the Retailer with those
---------
Web Site services as hereinafter specified.
2.2 Term. The Term of this Agreement shall commence upon the execution of
this Agreement and shall expire five (5) years after the Launch Date
("Expiration Date"). GSI shall use reasonable efforts to advise
Retailer ten days prior to
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the expected Launch Date. The Launch Date shall occur between the
period of October 1, 1999 and December 1, 1999 ("Commencement
Period"); provided however, GSI shall use reasonable efforts to have a
"soft launch" at some time during September, 1999. GSI's obligation to
commence operation of the Web Site during the Commencement Period
shall be contingent on Retailer complying with the deadlines set forth
on the Milestone Delivery Schedule set forth on Attachment B to the
Web Site Development Agreement and on the Production Schedule to be
agreed upon by the parties. Retailer acknowledges the urgency of
complying with the deadlines set forth in the Milestone Delivery
Schedule and the Production Schedule and shall give GSI its full
cooperation to ensure that such deadlines are satisfied.
Notwithstanding anything contained herein to the contrary, in the
event that the Retailer does not comply with such deadlines and GSI
has given Retailer written notice of its failure to comply, then, for
each day of such non compliance, the Commencement Period shall be
extended by one day.
2.3 Extension of Term. At the end of the Term, this Agreement shall
-----------------
automatically renew itself for an additional five year (5) period
("First Renewal Period") unless at least ninety (90) days prior to the
expiration of the original Term, either party advises the other that
they have elected not to renew this Agreement for the "First Renewal
Period" in which event, this Agreement shall terminate at the end of
the original five year Term.
Thereafter, this Agreement shall automatically renew itself from
year to year unless terminated by GSI or Retailer with written notice
to the other party no later than ninety (90) days prior to the
expiration of the then current Term, as such Term may have been
extended.
3. OBLIGATIONS AND RIGHTS OF THE PARTIES
-------------------------------------
3.1 Creation of Retailer's Web Site.
-------------------------------
a. GSI, at its own expense, shall create, maintain and operate a Web
Site for the Retailer on the Web in accordance with the
specifications attached to the Web Site Development Agreement. In
connection therewith, simultaneous herewith, Retailer and GSI
shall execute the Web Site Development Agreement.
b. The Web Site shall contain the Retailer's E-Commerce Shopping
Experience, the URL of which shall be www.The Athlete's Foot.com.
In addition, the Web Site shall contain any or all of the
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following information, as the Retailer shall elect: corporate
information (e.g. historic background, mission statement, names
of officers and directors), store locator, public financial
information (e.g. SEC filings, annual reports), press releases,
community programs, employment opportunities for in store or
corporate positions, frequently asked questions and a "contact
us" section.
c. Following the initial completion of the Web Site, the Retailer
shall have the right to update the content thereof as follows:
1) Employment Opportunities - GSI will provide the Retailer
with the technology necessary so that the Retailer will be
able to update the employment opportunity portion of the Web
Site as frequently as it desires.
2) Public Financial Information -
a) Stock Prices - Will be updated daily by a link to
another web site offering such information.
b) SEC Filings and Annual Reports - SEC filings will be
provided by a link so long as the government makes such
filings available at no cost. Both SEC filings and
annual reports will be provided only if available in
portable document format; in the alternative, GSI will
provide the consumer with a form in order to request
such information from the Retailer's investor relations
department.
3) Store Locators - Will be updated by GSI as such information
changes and Retailer provides GSI with such information.
4) Frequently Asked Questions - Will be updated by GSI monthly
and Retailer provides GSI with such information.
5) Corporate Information - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
6) Community Programs - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
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7) Press Releases - GSI will provide the Retailer with the
technology necessary so that the Retailer will be able to
post press releases on its Web site as it desires. Retailer
shall defend and hold harmless GSI, its employees, officers
and directors, agents and representatives from any liability
arising from the posting of press releases on the Retailer's
Web Site.
8) "Contact Us" Section - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
9) "Tom Brunick Section" - Will include "tech tips", research
and development information, and a rating system in addition
to a "link" to any new relevant articles published by
Brunick (in the alternative, GSI may publish the article on
the Web Site). This section will be updated as information
is furnished to GSI by the Retailer.
10) Miscellaneous - In addition, Retailer shall have the right
to have GSI add additional content for the benefit of
selling merchandise on the Retailer's Web Site.
d. GSI's use of Retailer's URL, Retailer's Content and any other
Retailer information or material, whether confidential or not,
shall be granted and continue only for the Term of this Agreement
and shall not be used beyond the end of such Term.
3.2 Creation and Maintenance of the Retailer's Web Site. GSI shall create
---------------------------------------------------
and maintain a Web Site for the Retailer. Commencing with the
execution of this Agreement and continuing through the Term, as may be
extended, the Retailer, shall cooperate with GSI so as to enable GSI
to create and maintain for the Retailer's consumers, the Retailer's
Web Site. In connection therewith, the Retailer shall supply GSI with
the Retailer Content (as that term is defined in the Web Site
Development Agreement) required pursuant to the terms of the Web Site
Development Agreement. This shall include, but not be limited to
printed marketing information, data, text, audio files, video files,
graphics and other assets necessary to create and maintain the
Retailer's Web Site as more fully set forth on Attachment A to the Web
Site Development Agreement. Notwithstanding anything contained herein
to the contrary, and except as it
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relates to Special Make - Ups, it shall be GSI's responsibility to
produce and maintain all camera ready product information for use on
the Retailer's Web Site and Retailer shall have no responsibility
therefor. With respect to Special Make - Ups, Retailer shall be
responsible to provide GSI with sample product only in a sufficient
amount of time to allow GSI to produce camera ready product
information.
3.3 Sale of Merchandise on the Retailer's Web Site.
-----------------------------------------------
a. GSI, on behalf of the Retailer shall offer for sale on the
Retailer's Web Site all Categories of merchandise offered for
sale by the Retailer in its Land Based Stores. Notwithstanding
anything contained herein to the contrary, in no event shall GSI
offer firearms for sale on the Retailer's Web Site. In addition,
if, as a result of a legitimate stated business purpose, should
Retailer disapprove of any item listed for sale on the Retailer's
Web Site, and which is not listed for sale in the Retailer's Land
Based Stores, upon five days prior notice from Retailer, GSI
shall remove such item from the Retailer's Web Site.
b. Within the Categories, GSI, on behalf of the Retailer shall have
the right to offer for sale:
1) current in line merchandise ordered by the Retailer from its
vendors; and
2) current in line merchandise not carried by the Retailer in
its Land Based Stores, but available in those Categories
carried by the Retailer; provided however, no products will
be offered for sale on Retailer's Web Site which a) the
Retailer would not be authorized by the manufacturer to sell
in its Land Based Stores, ; and b) would not be in
accordance with the same type, quality and price of
merchandise carried by the Retailer in its Land Based
Stores; and
3) Special Make-Ups (manufactured for the Retailer exclusively
and not carried on any other retailer's web site; and
4) Closeout Merchandise (but only if the Retailer sells
Closeout Merchandise in its Land Based Stores; otherwise GSI
shall not offer for sale Closeout Merchandise on the
Retailer's Web Site); and
5) Markdowns of Retailer's inventory; and
6) Gift Certificates for On Line Merchandise ("On Line Gift
Certificates")
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<PAGE>
[Items 1) through 6) are hereinafter referred to as "On Line
Merchandise"]
c. In addition, GSI, on behalf of the Retailer, shall offer for sale
on the Retailer's Web Site, Land Based Stores Gift Certificates
for merchandise available in the Retailer's Land Based Stores.
Notwithstanding anything contained herein to the contrary,
Retailer may elect not to offer Land Based Stores Gift
Certificates for sale on its Web Site by notifying GSI of its
decision not to do so no later than August 1, 1999 ("Notification
Deadline"); provided however, Retailer may extend the
Notification Deadline until January 1, 2000 by notifying GSI of
its election to do so no later than August 1, 1999.
d. In those instance where a written dealer agreement prohibits
Retailer from selling a particular vendor's merchandise except in
the Retailer's Land Based Stores, Retailer shall use its
reasonable efforts to obtain all consents required to permit the
sale of such merchandise on the Retailer's Web Site.
3.4 Prices of On-Line Merchandise. GSI, on behalf of the Retailer, shall
-----------------------------
offer the On-Line Merchandise for sale on the Retailer's Web Site on
the following basis:
a. If the On-Line Merchandise is the same as offered for sale in the
Retailer's Land Based Stores, then it shall be offered for sale
on-line [*]. In order to facilitate this pricing, Retailer shall
[*]. Retailer acknowledges that this is essential in order to
[*]; and
b. If the On-line Merchandise is not offered for sale in the
Retailer's Land Based Stores, then, [*] will use reasonable
efforts to [*]; provided however, upon five days prior notice to
[*].
c. If the Retailer offers the same merchandise at different prices
in its Land Based Stores, then [*] but in no event at [*].
d. GSI, on behalf of Retailer, shall add and collect all applicable
taxes and GSI, at its discretion and for its own account, may add
reasonable handling and delivery charges which are consistent
with industry practice.
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<PAGE>
e. In order to ensure that GSI may [*], Retailer shall furnish GSI
with copies of all [*] at least [*] prior to its [*].
f. The parties shall cooperate with each other so that the entire
pricing process between GSI and Retailer may be accomplished
electronically.
g. The parties agree that from time to time, the Retailer may carry
an item of merchandise at [*]. In those instances, [*] shall have
the right to [*] In such event, [*] shall have the right to [*].
3.5 GSI's Supply of On Line Merchandise.
-----------------------------------
a. Invoicing and Shipping of On Line Merchandise. Retailer shall
----------------------------------------------
make available merchandise to GSI in one of the following three
manners:
1) GSI, after consulting with the Retailer, will advise
Retailer of the merchandise that it desires to order and Retailer
will place such order with the vendor and invoice GSI at its net
cost and direct the vendor to drop ship the merchandise to GSI;
or
2) GSI, after consulting with the Retailer, will advise
Retailer of the merchandise that it desires to order and the
Retailer will direct the vendor to sell its merchandise directly
to GSI at the same prices as the merchandise as is sold to
Retailer, with the same Advertising Co-op and Discretionary Funds
and on the same terms and conditions as they sell their
merchandise to the Retailer; or
3) If either alternative 1) or 2) is not available, then
the Retailer shall order the merchandise for GSI along with the
Retailer's regular order, having it delivered to the Retailer's
warehouse and thereafter shipped to GSI, and invoice GSI at its
net cost, plus the pro rata cost of the freight from the vendor
to the Retailer based upon that portion of the shipment purchased
by the Retailer for GSI as it relates to the entire shipment
received by the Retailer from that vendor). Thereafter, the
Retailer shall ship the merchandise to GSI, freight collect, per
GSI's instructions.
b. In Line Merchandise. The Retailer shall advise GSI, no later
--------------------
than ten days after placing a purchase order with a vendor, of
the Category, item ordered, net cost, Retailer's retail price and
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expected day of delivery to the Retailer's Warehouse.
c. Special Make-Ups. No later than ten days after ordering Special
-----------------
Make-Ups or Private Labels, Retailer shall advise GSI and furnish
GSI with a sample of the Special Make-Ups or Private Labels and
advise GSI of the net cost, color selection and size range. GSI
shall have the right to purchase up to [*] per cent of the
Special Make-Up or Private Label, proportionately as to size and
color, as ordered by the Retailer. GSI shall have five business
days to advise Retailer whether it desires to order any of the
Special Make-Ups or Private Labels and, if so, the quantity
thereof. Special Make-Ups and Private Labels shall be exclusive
to Retailer's Web Site and shall not be made available for sale
on the web site of any other retailer for whom GSI operates a web
site.
Retailer shall supply GSI with a sample of the Special Make-Ups
and Private Labels ordered by GSI for sale on the Retailer's Web
Site within ten days of obtaining such sample.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Special Make-Ups or
Private Labels to warrant selling such merchandise on line. In
such instances the Retailer shall not be required to offer such
Special Make-Ups or Private Labels for sale on line; provided
however, the Retailer acknowledges that with respect to Special
Make-Ups or Private Labels ordered by Retailer for chainwide
distribution, GSI does not anticipate that this will occur on a
regular basis and this should be the exception rather than the
usual occurrence. Further, GSI acknowledges that the Retailer may
not be able to offer for sale on line certain Special Make-Ups or
Private Labels which are not available in all of the Retailer's
stores.
d. Closeout Merchandise. Retailer shall advise GSI no later than
---------------------
ten business days after issuing a purchase order for Closeout
Merchandise from a vendor. At that time, Retailer shall advise
GSI of the cost, sizes and colors available and GSI shall have
five business days after receipt of such information to advise
Retailer that it will
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<PAGE>
purchase, at Retailer's net cost, up to [*] per cent of the
Closeout Merchandise to be received by Retailer, proportionately
as to size and color, as ordered by Retailer.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Closeout Merchandise
to warrant selling such merchandise on line. In such instances
the Retailer shall not be required to offer such items of
Closeout Merchandise for sale on line; provided however, the
Retailer acknowledges that GSI does not anticipate that this will
occur on a regular basis and this should be the exception rather
than the usual occurrence.
Any Closeout Merchandise purchased by GSI from Retailer shall be
offered for sale by Retailer only on the Retailer's Web Site.
e. Markdowns. In the event that the Retailer has available
----------
Markdowns which it would like to offer for sale on its Web Site
solely at its discretion, it shall notify GSI and ship the
Markdowns to GSI's fulfillment center. The Markdowns shall be
shipped to GSI on consignment only. Retailer shall set the
selling prices on the Markdowns; provided however, that GSI on
behalf of the Retailer shall have no obligation to offer any
Markdowns for sale on the Retailer's Web Site which GSI deems, in
its sole discretion, would be inappropriate. Retailer shall
retain [*] of the selling price received from the sale of any
Markdowns when sold (excluding applicable taxes and shipping and
handling charges; the remainder of [*] plus shipping and handling
charges shall be retained by GSI as its management fee in
connection with the sale of the Markdowns. Any applicable tax
collected by GSI on behalf of Retailer shall be deposited into a
separate account as more fully discussed in paragraph 3.9 below,
and remitted by GSI to the appropriate taxing authority. GSI
shall account to Retailer for the sale of any Markdowns at the
same time that it accounts to the Retailer for sale of other On
Line Merchandise on the Retailer's Web Site. The amount of
proceeds from the sale of arkdowns shall not be considered the
sale of On Line Merchandise for the purpose of determining the
amount to be remitted to Retailer pursuant to paragraph 3.8
below.
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<PAGE>
f. With the exception of Markdowns and Land Based Gift Certificates,
which shall be governed by the provisions of paragraphs 3.5 e.
and 3.6 hereof respectively, and as part of the performance of
its obligations under this Agreement, GSI shall sell to the
Retailer, and the Retailer shall purchase from GSI all
merchandise to be sold by the Retailer on the Retailer's Web Site
at a price equal to [*] per cent of the selling price (excluding
applicable taxes, shipping and handling) at which such On Line
Merchandise is sold to the Retailer's On Line Customer.
g. Attached hereto as Schedule "2" is a schedule which summarizes
the various levels of management fees to be paid to GSI by the
Retailer depending upon the type of On Line Merchandise sold on
the Retailer's Web Site.
h. The parties shall cooperate with each other so that the entire
process set forth in paragraphs 3.5 a, b, c, d and e between GSI
and Retailer may be accomplished electronically.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
-----------------------------
processing all E - Commerce business for the Retailer. GSI will
promptly process E - Commerce Orders received from the Retailer's Web
Site. GSI shall take the customer's credit card number at such time as
the merchandise is ordered. GSI, on behalf of the Retailer's account
discussed in paragraph 3.9 below, shall charge the customer's credit
card with the amount of the order (including taxes, shipping and
handling) at the time the merchandise is shipped. The order will
appear on the customer's credit card under the name of "Retailer
tradename.com" and proceeds from the sale shall be deposited into
Retailer's designated bank account at the bank designated by GSI for
full credit to Retailer. GSI will make all arrangements for delivery
of merchandise purchased on the Retailer's Web Site.
3.8 GSI's Management Fee. For and in consideration of the services to be
--------------------
rendered by GSI to Retailer hereunder, GSI shall be paid a management
fee ("Management Fee") equal to [*] per cent of the sales price of all
On Line Merchandise for all On Line Merchandise sold, excluding
however, the sale of Markdowns and Land Based Gift Certificates, the
management fee for which shall be governed by paragraphs 3.5 e. and
3.6 a. respectively. GSI's Management Fee, including any management
fee to GSI as a result of the sale of Markdowns or Land Based Gift
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<PAGE>
Certificates shall be paid pursuant to the provisions of paragraph 3.9
below.
3.9 Payment and Accounting from the Sale of On - Line Merchandise. The
-------------------------------------------------------------
proceeds from the sale of On Line Merchandise on the Retailer's Web
Site shall be deposited into a bank account ("Web Account") in the
Retailer's name at GSI's designated bank ("Bank"). The Web Account
shall be owned by the Retailer and shall require two signatures in
order to withdraw funds. Signatures on such account shall be one
employee of GSI and one employee of the Retailer. Notwithstanding
anything contained herein to the contrary GSI's designated employee
shall have an irrevocable power of attorney over the Web Account and
the Tax Account, as hereinafter discussed. No other funds shall be
deposited into the Web Account except for credit card proceeds from
the sale of On Line Merchandise, Land Based Stores Gift Certificates
and On Line Gift Certificates on Retailer's Web Site and no other sums
shall be deposited into the Tax Account except applicable taxes
collected from the sale of On Line Merchandise, Land Based Stores Gift
Certificates and On Line Gift Certificates on the Retailer's Web Site.
From each transaction, GSI shall be paid daily the sum of a) the cost
([*] of the sale amount) of the On Line Merchandise sold to Retailer's
On Line Customers, b) Retailer's Management Fee ([*] of the sale
amount) and c) GSI's shipping and handling charge to the On Line
Customer (collectively, "GSI's Entitlement"), if any. Retailer shall
give the Bank irrevocable instructions to a) debit the Web Account
daily for the amount owed to GSI, as so directed by GSI, and to credit
GSI's designated account for such amount; and b) to debit the
Retailer's Web Account and to credit the Retailer's especially
established tax account ("Tax Account") daily with the amount of any
applicable tax collected. Any interest earned on the Web Account or
the Tax Account shall belong solely to GSI and any charges imposed by
the Bank as a result of such accounts, shall be paid by GSI. Retailer
shall have no right to offset from GSI's Entitlement any amount which
Retailer may believe is owing to Retailer from GSI and Retailer shall
obtain from its secured lenders (as they may vary from time to time)
and deliver to GSI within fifteen days of the execution of this
Agreement by Retailer, a waiver to claim a security interest in either
the Web Account or the Tax Account. In addition, Retailer shall give
the Bank irrevocable instructions to wire to the Retailer the amount
determined ("Retailer's Operating Income") by GSI to be remaining from
the sale of On Line Merchandise, Land Based Stores Gift Certificates
and On Line Gift Certificates from the Retailer's Web Site after the
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<PAGE>
deduction of GSI's Entitlement on the fifteenth day following the end
of each month; provided however, effective October 1, 2000, the
Retailer may request that it receive Retailer's Operating Income
weekly and in such event, GSI agrees that the payments shall be made
weekly to Retailer commencing within thirty days after receipt of such
notice.
The amount of the Retailer's Operating Income each month shall be
certified by GSI's chief financial officer and a copy of the
accounting shall be furnished to the Retailer no later than the
fifteenth day following the end of each month.
Retailer shall not be entitled to receive any revenue related to the
operation of the Retailer's Web Site other than the Retailer's
Operating Income. Any other revenue generated in connection with the
operation of the Retailer's Web Site shall belong solely to GSI.
By way of example only, if Retailer sells a pair of athletic shoes on
its Web Site for one hundred ($100.00) dollars, plus a five ($5.00)
dollar shipping and handling charge, the total deposit to the Bank
account is one hundred and five ($105.00) dollars. GSI's Entitlement
shall be [*]([*] of $100.00, [*] of $100.00 and reimbursement of the
$5.00 shipping and handling fee) and Retailer's Operating Income shall
equal the remaining [*] after payment of the Retailer's cost of On
Line Merchandise, GSI's management fee and the shipping and handling
charge.
The Retailer's Operating Income and GSI's Entitlement shall also take
into account the amounts owing pursuant to paragraph 3.5 e. and 3.6
above.
GSI shall be responsible to collect any applicable sales taxes
resulting from the sale of On Line Merchandise, if any. GSI shall
complete all required sales tax forms and submit them on the
Retailer's behalf. GSI shall indemnify, save and hold harmless
Retailer from any taxes, interest and penalties which may arise as a
result of GSI's failure to pay or timely pay any sales tax resulting
from the sale of On Line Merchandise. GSI shall be in charge of any
audit conducted by any taxing authority as it relates to the sale of
On Line Merchandise.
Within ninety (90) days of the end of each calendar year, GSI shall
provide the Retailer with a statement certified by its independent
auditors and setting forth the total On Line Sales, the Retailer's
Operating Income and GSI's
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Entitlement therefrom. For a period of two years after the Retailer
receives such certified statement from GSI, Retailer, on one occasion,
shall have the right to audit the books and records of GSI with
respect to the Retailer's Operating Income and GSI's Entitlement paid
during the calendar year to which the certified statement relates.
Such audit shall be conducted at GSI's principal office located in the
continental United States on two weeks prior notice to GSI. In the
event that the audit reveals that the Retailer's Operating Income were
understated, GSI shall within thirty days of completion of the audit,
pay to the Retailer the remaining balance of the Retailer's Operating
Income for the period audited plus interest at the prime rate of
interest as provided for in The Wall Street Journal on the date of the
audit's certification. In addition, in the event that the audit
reveals that the Retailer's Operating Income is understated by more
than [*] per cent for the calendar year in question, GSI shall pay the
additional amount owing and pay for the reasonable audit costs and
this shall be Retailer's sole remedy.
3.10 Service of On Line Customers. GSI shall be responsible for providing
----------------------------
all customer service relating to sales from the Retailer's Web Site,
which shall be provided in a manner consistent with that provided by
other reputable on line retailers.
Retailer reserves the right, to conduct, no more than four times
annually, surveys of its on line customers for the purpose of
providing its On Line Customers with better customer service. The
surveys shall be conducted in a manner consistent with those then
being conducted by the Retailer in its Land Based Stores, as
applicable to e-commerce.
3.11 Return of On Line Merchandise. Retailer's return policy for On Line
-----------------------------
Merchandise shall be consistent with the Retailer's return policy for
its Land Based Stores. With each shipment of merchandise, GSI shall
specifically instruct all customers that all merchandise purchased on
line may not be returned to the Retailer's Land Based Stores and may
only be returned in accordance with the instructions enclosed;
provided however, in the rare instance a customer desires to return On
Line Merchandise to one of the Retailer's Land Based Stores, the
Retailer, in order to maximize customer relations, shall accept such
merchandise for return in accordance with the Retailer's return
policy, and return the merchandise to GSI's fulfillment center. GSI
shall pay the Retailer the amount of GSI's Entitlement with respect to
such merchandise, as well as an amount equal to the Retailer's
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<PAGE>
freight cost for returning the merchandise to GSI's fulfillment
center.
Should GSI receive the return of On Line Merchandise, GSI shall
reimburse the Retailer the amount of the GSI Entitlement paid to GSI
with respect to that transaction, as well as the applicable tax
refunded to the On Line Customer, and such sums shall be deposited to
the Web Account.
3.12 On Line Customer Loyalty Programs. GSI shall have the right to
---------------------------------
establish On Line Customer Loyalty Programs in order to encourage
continued on line purchases. The On Line Customer Loyalty Programs
established by GSI for Retailer shall be consistent with that program
established by Retailer for use in its Land Based Stores. In addition,
the Customer Loyalty Programs established by GSI shall be used only in
connection with on line purchases and Retailer's customer loyalty
programs shall be used only in connection with purchases at the
Retailer's Land Based Stores. Notwithstanding anything contained
herein to the contrary, GSI shall not establish any On Line Customer
Loyalty Programs without first obtaining the approval of Retailer,
which approval shall not be unreasonably withheld. Retailer shall
respond to a request for such approval from GSI within seven days of
receiving the request. In the event Retailer fails to timely respond,
GSI shall furnish Retailer with a notice marked "second request". If
Retailer does not respond within two business days, GSI's request
shall be deemed granted.
The Retailer recognizes that it may be beneficial to each party to
consolidate the customer loyalty programs. GSI therefore agrees that
should the Retailer elect to do so, then GSI will work with the
Retailer in good faith to develop such a program provided that it does
not have a substantial negative economic impact on GSI.
3.13 Cross Promotion. GSI shall have the right to use Retailer's URL, name
---------------
and logo to cross promote Retailer's Web Site with other businesses in
order to promote Retailer's Web Site; provided however, GSI shall not
promote Retailer's Web Site on any other sporting good retailer's web
site, or on any other web site which would generally be considered
immoral, pornographic or offensive. Notwithstanding anything contained
herein to the contrary, GSI shall not establish any Cross Promotions
without first obtaining the approval of Retailer, which shall not be
unreasonably withheld. Retailer shall respond to a request for such
approval from GSI within seven days of receiving the request. In
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the event Retailer fails to timely respond, GSI shall furnish Retailer
with a notice marked "second request". If Retailer does not respond
within two business days, GSI's request shall be deemed granted.
3.14 Price Matching. In the event that the Retailer, at its Land Based
--------------
Stores offers a "Price Matching" policy, GSI's management shall have
the right to use and adopt such policy for the Retailer's Web Site;
provided however, GSI shall not under any circumstance, advertise or
market the availability of this policy, and may offer it to customers
only in GSI's sole discretion.
3.15 Project Manager. Promptly after the execution of this Agreement, but
---------------
in no event later than sixty days after such execution, Retailer, at
its expense, shall hire or reassign one of its existing employees, to
act as Project manager to work exclusively with GSI in creating and
maintaining the Retailer's Web Site. Commencing with the Project
Manager's hiring and continuing through the Term, as may be extended,
the Project Manager shall be the Retailer's liaison with GSI and shall
be responsible for supplying GSI with the Retailer Content and such
other information as may reasonably be required of the Retailer in
order to create and maintain the Retailer's Web Site in the most
efficient manner.
4. ON-LINE DATA AND DATABASES
--------------------------
4.1 Ownership of Data. Any and all data ("Customer Data") related to
-----------------
Retailer's customers (including customer names and other identifying
information such as addresses, phone numbers and e-mail addresses,
credit card numbers, and descriptions of the items and quantities of
items purchased) that is collected by GSI shall be owned [*].
4.2 Ownership of Databases. All data structures, data schema, database
----------------------
dictionaries, attributes, validation tests for each element, table
sizes and formats, access requirements, data dependencies and other
elements involving the storage of Data on the Web Site and all
refinements, updates, releases, improvements and enhancements thereto,
all intellectual property rights embedded therein and all applications
created specifically for use of the data and Retailer Content
(collectively, the "Databases") shall, as between GSI and Retailer, be
the sole and exclusive property of GSI; provided however, that should
Retailer provide GSI with Databases or other assets, then upon the
termination of this Agreement, such Databases and other assets shall
be returned to Retailer.
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4.3 Delivery of Customer Data to Retailer. From time to time, but no more
-------------------------------------
than four (4) times per calendar year, Retailer may request that GSI
provide to Retailer any of certain information collected from the
Customer Data; provided however, GSI shall provide Retailer with on-
line access to such information which Retailer shall have the ability
to access at such times as it desires.
The type of information which shall be available from Retailer's
Customer Data shall be as follows:
a. customer's names;
b. customer's addresses;
c. customer's phone number;
d. customer's e-mail address;
e. items purchased;
f. amount spent;
g. information as to how customer reached Web Site;
h. refers;
i. unique visitors to site;
j. page views per site;
k. top ten most viewed pages;
l. bottom ten least viewed pages;
m. time of day traffic patterns;
n. sales by product and brand;
o. customer comments and complaints (shall be furnished on a
monthly basis);
p. additional information at GSI's discretion.
If the Retailer requests that GSI provide such information, GSI shall
provide the Customer Data to Retailer in a mutually agreeable,
commercially standard format, either via diskette, CD-ROM,
electronically, or via another mutually agreeable method. GSI shall
use commercially reasonable efforts to ensure that the Customer Data
provided to Retailer accurately and completely reflects the Customer
Data in the Web Site, but GSI shall have no obligation to check the
accuracy, validity or integrity of the Customer Data and except as set
forth in this Section 4.3, the Customer Data is provided "AS-IS".
4.4 Restrictions on Use of Customer Data. Each party shall treat the
------------------------------------
Customer Data as Confidential Information of the other party in
accordance with the provisions of Article 7. Neither party may sell,
lend, or license the Customer Data to third parties without the prior
written consent of the other party, which consent may be withheld at
the sole discretion of the other party; provided however, Retailer
grants to GSI the right to combine all
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retailers' Customer Data to form trends and overall research as to the
on line shopping habits of consumers. The parties acknowledge that the
Customer Data referred to herein refers only to Customer Data gathered
from On Line Customers and shall not be applicable to customer data
gathered by the Retailer from its customers at its Land Based Stores.
5. ADVERTISING AND MARKETING
-------------------------
The Retailer shall, commencing no later than October 1, 1999, and
continuing during the Term, and any extensions thereof, at no cost to GSI
provide for Complete URL Integration in its advertising and marketing by:
5.1 prominently including as part of all of its print media including but
not limited to newspapers, periodicals, circulars, billboards, print
materials, letterhead, business cards, shopping bags, cash register
receipts and arena advertising) its URL, www.Retailer.com.; and
5.2 prominently including, at the end of its television advertising, its
URL; and
5.3 mentioning its URL at the end of all radio advertisements.
All advertisements and marketing appearing in newspapers, circulars and
periodicals shall contain the following disclaimer: "On Line Merchandise
offerings may vary from products offered in The Athlete's Foot store.
6. ADVERTISING CO-OP AND DISCRETIONARY FUNDS
-----------------------------------------
6.1 In the event that GSI purchases merchandise pursuant to paragraph
3.5a.1) or 3.5a.3) above, and in the event that the Retailer receives
from any vendor an Advertising Co-op or Discretionary Funds, the
Retailer shall pay or credit to GSI an amount equal to the Advertising
Co-op or Discretionary Funds received by the Retailer for merchandise
for and on behalf of GSI. The amount to be paid or credited to GSI
shall be determined by multiplying the amount of merchandise purchased
by the Retailer from that vendor by a fraction, the numerator of which
is the amount of purchases derived from that vendor's product on the
Retailer's On-Line Shopping Pages, and the denominator of which is the
sum of the amount of the Retailer's purchases derived from that vendor
from both in-store and on-line sales ("GSI's Share"). Within sixty
(60) days of the end of each
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calendar year, the Retailer shall provide GSI with a statement
certified by its chief financial officer as to such sums received by
the Retailer from vendors during the prior calendar year, and such
supporting data so as to support the conclusions set forth in the
statement. At the same time, the Retailer shall pay to GSI an amount
equal to the GSI's Share. GSI shall have the right to audit the books
and records of the Retailer with respect to such sums. Such audit
shall be conducted at the Retailer's principal office located in the
continental United States.
6.2 In the event that GSI purchases merchandise from Retailer's vendors
pursuant to paragraph 3.5a. 2) above and GSI receives Advertising Co-
op or Discretionary Funds from such vendor as a result of such
purchase, then such funds received by GSI shall belong to GSI.
6.3 During the Term and any extensions thereof, GSI shall use all
Advertising Co-op and Discretionary Funds received by GSI pursuant to
paragraph 6.1 and 6.2 above, to exclusively promote the Retailer's Web
Site, as recommended by GSI and approved by GSI. This shall include
both on line and traditional advertising of the Retailer's Web Site.
All such proposed advertisements shall be submitted to the Retailer
for the Retailer's approval as to content and design. The Retailer
shall have five days from receipt to either approve or disapprove. In
the event that the Retailer disapproves, it shall advise GSI
specifically as to why and GSI shall attempt to address the Retailer's
concerns and resubmit the proposal to Retailer for its approval, which
shall again have forty eight hours from receipt to approve or
disapprove. This procedure shall continue until the advertisement has
been approved or replaced. In all instances where approval is
requested of the Retailer, in the event the Retailer does not respond
within the aforementioned forty eight hours, Retailer shall be deemed
to have granted approval.
7. CONFIDENTIALITY
---------------
7.1 Confidential Information. Each party acknowledges that, in connection
------------------------
with the performance of this Agreement, it may receive Confidential
Information of the other party. For the purpose of this Agreement,
"Confidential Information" shall mean information or materials that is
clearly marked "confidential" or the Receiving Party knows has reason
to know is the confidential or proprietary information of the
Disclosing Party, either because a) such information is marked or
otherwise
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identified by the Disclosing Party as confidential or proprietary, or
b) such information has commercial value and is not generally known in
the Disclosing Party's trade or industry. Confidential Information
shall include, without limitation: (a) concepts and ideas relating to
the development and distribution of content in any medium; (b) trade
secrets, drawings, inventions, know-how, software programs, and
software source documents; (c) information regarding plans for
research, development, new service offerings or products, marketing
and selling, business plans, business forecasts, budgets and
unpublished financial statements, licenses and distribution
arrangements, prices and costs, suppliers and customers; and (d)
existence of any business discussions, negotiations or agreements
between the parties.
7.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all Confidential Information of the
Disclosing Party and not to disclose it to any third party; and (ii)
not to use any Confidential Information of the Disclosing Party except
as permitted by this Agreement or as may be necessary for the
Receiving Party to perform its obligations under this Agreement. The
Receiving Party will use at least the same degree of care to protect
the Disclosing Party's Confidential Information as it uses to protect
its own Confidential Information of like importance, and in no event
shall such degree of care be less than reasonable care. The
obligations and restrictions imposed by this Article 7 shall terminate
five (5) years after the expiration or termination of this Agreement.
7.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information will not include any information that: (i)
was in the public domain at the time it was communicated to the
Receiving Party by the Disclosing Party; (ii) entered the public
domain subsequent to the time it was communicated to the Recipient by
the Disclosing Party through no fault of the Receiving Party; (iii)
was in the Receiving Party's possession free of any obligation of
confidence at the time it was communicated to the Receiving Party by
the Disclosing Party; (iv) was rightfully communicated to the
Receiving Party by a third party, free of any obligation of
confidence, subsequent to the time it was communicated to the
Receiving Party by the Disclosing Party; (v) was developed by
employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving
Party by the Disclosing Party; or (vi) was communicated by the
Disclosing Party
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to an unaffiliated third party free of any obligation of confidence.
In addition, the Receiving Party may disclose the Disclosing Party's
Confidential Information in response to a valid order by a court or
other governmental body, as otherwise required by law, or as necessary
to establish the rights of either party under this Agreement; provided
however, in the event that the Receiving Party receives a demand to
disclose such Confidential Information in connection with a legal
action or proceeding, the Receiving Party, if possible, shall first
notify the Disclosing Party of the demand in order to provide the
Disclosing Party an opportunity to seek a protective order.
7.4 Confidentiality of this Agreement. Retailer acknowledges that the
---------------------------------
terms and conditions of this Agreement constitute Confidential
Information which shall be governed by the terms of this Article 7.
7.5 Confidentiality of Customer Data and Retailer's Policies. GSI
--------------------------------------------------------
acknowledges that it will be receiving from Retailer, and generating
from the performance of its obligations under this Agreement,
Confidential Information critical to the Retailer's business and
concerning Retailer's customers and various information concerning the
operation of Retailer's business including but not limited to net
purchasing prices, advertising co-op and discretionary fund amounts,
specific marketing plans, specific on line sales and delivery dates of
merchandise. GSI recognizes its obligation to keep such information
confidential. Therefore, all GSI employees who may have access to any
such Confidential Information will be required to execute
confidentiality agreements and GSI shall use its best efforts to
enforce the terms thereof. Such confidentiality agreements will
specifically provide that the employee shall not discuss with any
other retailers who may or may not be customers of GSI, any
information concerning the Retailer or its customers.
Further, GSI acknowledges it is associated with other subsidiaries of
GSI's parent corporation, Global Sports, Inc. GSI therefore represents
and warrants to Retailer that it will establish a "Need to Know"
policy with respect to such Confidential Information and only
disseminate such Confidential Information to those employees and
members of GSI's management who have a specific need to know such
Confidential Information. In those instances, prior to the
dissemination of such Confidential Information to those individuals,
they will be required to execute confidentiality agreements
specifically prohibiting such disclosure of such
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Confidential Information to anyone, except as otherwise permitted by
the terms of this Agreement.
8. EXCLUSIVE WEB AGREEMENT
-----------------------
During the Term and any extensions thereof, the Retailer, any subsidiary of
the Retailer, shall not sell any sporting goods merchandise on the Internet
(including the Web), nor use itself or allow a third party to use its URL,
name or logo on the Web for the purpose of facilitating the sale of
merchandise on the Web other than through GSI. Notwithstanding anything
contained herein to the contrary, should GSI be unable to satisfy the
Retailer's web site requirements with respect to specialized matters such
as franchise or corporate information, the Retailer shall have the right to
establish a second web site incorporating the name "The Athlete's Foot"
which GSI shall provide a link to from the Retailer's Web Site; provided
however, under no circumstances shall Retailer sell any merchandise on such
second web site.
9. URL, NAME AND LOGO USAGE
------------------------
During the Term, the Retailer hereby grants to GSI the exclusive right to
use, copy, modify and display the Retailer's name, logo and URL and such
other names and logos as the Retailer owns and as may be listed on Schedule
"1" attached hereto and made a part hereof, on the Retailer's Web Site, on
invoices and packing slips, in connection with credit card charges, a toll
free Web site customer service telephone line, and generally in connection
with the operation of GSI's on-line business; provided however, GSI shall
have no right to modify Retailer's name, logo or URL without Retailer's
consent. Such Schedule shall be modified from time to time during the Term
to add any new names and logos which the Retailer may register with the
United States Patent and Trademark Office.
GSI acknowledges that Retailer has already registered and owns the URL,"The
Athlete's Foot.com". The Retailer, however, grants to GSI the right to
register the fictitious name of "The Athlete's Foot.com" for the sole
purpose of conducting business on the Retailer's Web Site and to use the
URL, "The Athlete's Foot.com", for the sole purpose of operating the
Retailer's Web Site in accordance with the terms of this Agreement. The
Retailer also gives GSI the right to register other URLs containing the
name "The Athlete's Foot" provided that GSI first obtains Retailer's
consent. Retailer shall execute whatever documents are necessary in
connection with such registration.
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10. REPRESENTATIONS AND WARRANTIES.
-------------------------------
10.1 Retailer represents and warrants that at all times during the Term
hereof or any extensions thereof:
a. it has or will have the full right to grant to GSI the right to
use its URL, names and logos as discussed in Article 9 above,
including its Domain Name; and
b. Retailer is authorized to advertise and market on its Web Site
the brands of merchandise to be sold thereon;
c. Prior to the Launch Date, if not already completed, Retailer
shall register and maintain the Domain Name "Retailer.com" with
Network Solutions or any similar successor entity. Retailer
shall list itself as the owner and billing contact for the Domain
Name "Retailer.com" and Retailer shall list GSI as the
administrative and technical contact for the Domain Name
"Retailer.com".
d. neither the Retailer nor its secured lenders shall at any time
have any interest in the Web Account or Tax Account.
10.2 Each party represents and warrants to the other party that: (i) it is
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the power
and authority to enter into this Agreement and the transactions
contemplated herein; (ii) the consummation of the transactions
described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles
of Incorporation or Bylaws, or any statute or administrative
regulation or of any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement or
instrument to which it is a party or by which it is bound or
constitute a default thereunder; and (iii) this Agreement has been
duly authorized, executed and delivered by it and this Agreement is
valid, enforceable and binding upon each party in accordance with its
terms.
11. INDEMNIFICATION
---------------
11.1 Retailer, at its own cost and expense, shall defend, indemnify and
hold harmless GSI and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising as
a consequence of GSI providing services pursuant to this
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Agreement a) from or related to a claim that GSI infringes a third
party copyright, trademark or trade secret relating to Retailer's
tradename or any other name set forth on Schedule 1 to this Agreement;
or b) from Retailer's gross negligence, wilful or intentional
misconduct.
11.2 GSI, at its own cost and expense, shall defend, indemnify and hold
harmless Retailer and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising a)
from a claim made by any consumer that is related in any way to the
Retailer's Web Site or GSI's services to Retailer provided pursuant to
this Agreement, but excluding a claim for which GSI would have the
right to indemnification pursuant to Paragraph 11.1 above, or b) from
GSI's gross negligence, wilful or intentional misconduct and arising
as a consequence of GSI providing services pursuant to this Agreement.
11.3 Retailer shall have sole control of any defense of any claim made
pursuant to Section 11.1 above, but GSI shall cooperate with Retailer
in providing such defense.
11.4 GSI shall have sole control of any defense of any claim made pursuant
to Section 11.2 above, but Retailer shall cooperate with Retailer in
providing such defense.
11.5 Any party seeking indemnification shall notify the other party as soon
as possible after such party seeking indemnification becomes aware of
the claim.
12. INSURANCE
---------
12.1 GSI, at its expense, shall maintain in full force and effect products
liability insurance coverage for merchandise sold on Retailer's Web
Site. Such policy shall insure Retailer and name GSI as an additional
insured.
12.2 GSI shall deliver to Retailer certificates of insurance which
stipulate that no less than ten days notice will be given to Retailer
prior to the termination of the policy.
13. RETAILER'S FRANCHISEES
----------------------
The Retailer has both company owned and franchised locations. The Retailer
represents and warrants to GSI that its franchise agreements prohibit its
franchisees from selling merchandise
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on the Internet. The Retailer shall enforce all its rights under its
franchise agreements to prevent its franchisees from selling merchandise on
the Internet. In addition, the Retailer shall use its best efforts to
obtain the same Complete URL Integration from its franchisees as the
Retailer is introducing in all of its marketing and communications.
14. TERMINATION
-----------
14.1 Termination for Cause by Either Party. This Agreement may be
-------------------------------------
terminated by either party in the event of any material breach of any
of the terms and conditions of this Agreement by the other party which
breach continues in effect after the breaching party has been provided
with written notice of breach and ninety (90) days to cure such breach
and fails to cure such breach. As used herein, "material breach" shall
mean a failure by a party to this Agreement to perform any of its
obligations the effect of which would substantially impair the value
of this Agreement to the other party. By way of example only and not
by way of limitation, GSI's failure to operate the Retailer's Web Site
according to commercially reasonable standards as they are established
today and as they may continue to develop during the Term of this
Agreement or failure to provide customer service equivalent to that
provided by other reputable on line retailers, or any of its
representations or warranties being materially false or misleading at
the time given, would be a material breach of this Agreement by GSI.
Retailer's failure to comply with its obligations pursuant to Section
5 above, or failure to provide GSI with the Retailer Content necessary
to construct and/or maintain the Retailer's Web Site, would be a
material breach of the Retailer's obligations under this Agreement.
14.2 Termination for Cause Only by GSI. GSI may terminate this Agreement
---------------------------------
by giving sixty days prior written notice to Retailer of its election
to terminate upon the occurrence of any of the following events:
a. any representation or warranty contained herein becomes materially
false or misleading; or
b. a material change in the Retailer's business or business policies
as determined by GSI in its sole reasonable judgment; or
14.3 Termination Without Cause by Either Party. In the absence of a
-----------------------------------------
material breach, this Agreement may only be terminated by the
expiration of the Term, as may be extended pursuant to Section 2.3
above.
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15. LIMITATIONS UPON LIABILITY
--------------------------
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER SUCH
DAMAGES ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES)
ARISING FROM OR RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS' USE OF OR
INABILITY TO ACCESS ANY PART OF THE INTERNET OR RETAILER'S OR RETAILER'S
CUSTOMERS' RELIANCE ON OR USE OF INFORMATION, SERVICES OR MERCHANDISE
PROVIDED ON OR THROUGH THE WEB SITE OR THE SERVICES, OR THAT RESULT FROM
MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS, THEFT, OR DELETION OF FILES,
ERRORS, DEFECTS, DELAYS IN OPERATION, OR TRANSMISSION, OR ANY FAILURE OF
PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE UNDER THIS AGREEMENT FOR AN
AMOUNT THAT EXCEEDS, IN THE AGGREGATE THE AMOUNTS PAID TO RETAILER DURING
THE [*] MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING RISE TO SUCH
LIABILITY. IN ADDITION, RETAILER SHALL BE ENTITLED TO SEEK EQUITABLE RELIEF
FROM THE COURT. THE REMEDIES SET FORTH IN THIS ARTICLE 14 CONSTITUTE THE
SOLE AND EXCLUSIVE REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN
NO EVENT SHALL EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT
MORE THAN TWELVE (12) MONTHS AFTER THE LAST ACT OR OMISSION GIVING RISE TO
SUCH LIABILITY.
16. PROPERTY RIGHTS AND OWNERSHIP
-----------------------------
The Retailer's Web Site shall consist of, and shall operate in conjunction
with, multiple elements, all of which are subject to certain intellectual
property rights. The parties' respective rights with respect to such
elements shall be as set forth below. For purposes of this Agreement, the
term "Ownership" shall refer to ownership of all right, title and interest
in and to the respective elements, including, but not limited to, all
patent, copyright, trade secret, trademark and any other similar
intellectual property rights therein, as applicable.
16.1 Retailer's URL shall be owned solely by the Retailer;
16.2 Retailer's Web Site shall be owned solely by GSI; provided
however any assets furnished to GSI by Retailer shall remain the
exclusive property of Retailer and shall be returned to Retailer
upon the termination of this Agreement;
16.3 Software developed for the Retailer's Web Site, shall be owned
solely by GSI, subject to any authorizations to use and approvals
obtained by the Retailer and granted to GSI.
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With respect to intellectual property owned by each of them, Retailer and
GSI shall both have rights associated with the ownership of intellectual
property, including the right to copyright web sites and domains; provided
however, that GSI acknowledges that, except with the prior written consent
of the Retailer, which Retailer may withhold in its discretion, GSI shall
have no right to copyright, license or trademark the Retailer's tradename,
trademark or logo.
17. GRANT OF WARRANT TO RETAILER
----------------------------
Upon execution of this Agreement by Retailer, and acceptance thereof by
GSI, prior to the announcement of GSI's e-commerce initiative, GSI will
deliver to Retailer a warrant to purchase shares of Global Sports, Inc.,
the parent corporation of GSI, in accordance with the terms set forth in
the Warrant Term Sheet attached hereto as Exhibit "B".
18. GSI'S TWENTY DAY PERIOD TO EXECUTE
----------------------------------
Retailer shall execute this Agreement first and deliver such executed
Agreement to GSI which shall thereafter have twenty days from receipt to
countersign the Agreement. During such twenty day period, Retailer shall
have no right to withdraw the agreements which it executed and delivered
to GSI.
19. DISCONTINUANCE OR REGULATION OF THE INTERNET.
---------------------------------------------
Retailer acknowledges and agrees that the Internet (including without
limitation the Web) is a network of private and public networks, that GSI
has no control over the Internet, and that GSI is not liable for the
discontinuance of operation of any portion of the Internet or possible
regulation of the Internet which might restrict or prohibit the operation
of the Web site.
20. FORCE MAJEURE
-------------
In the event that either party is unable to perform any of its obligations
under this Agreement or to enjoy any of its benefits because of any event
beyond the control of the affected party including, but not limited to,
natural disaster, acts of God, actions or decrees of governmental bodies or
failure of communications lines or networks (a "Force Majeure Event"), the
party who has been so affected shall promptly give written notice to the
other party and shall use its best efforts to resume performance. Upon
receipt of such notice, all obligations under this Agreement shall be
immediately suspended for the duration of such Force Majeure Event.
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21. WAIVER
------
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power
or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and
signed by the party against whom enforcement of such waiver is sought and
then only to the extent expressly specified.
22. PRESS RELEASES
--------------
All voluntary public announcements concerning the transactions contemplated
by this Agreement shall be mutually acceptable to both GSI and Retailer.
Unless required by law, neither GSI on the one hand, and Retailer on the
other hand, shall make any public announcement or issue any press release
concerning the transactions contemplated by this Agreement without the
prior written consent of GSI or Retailer, respectively. With respect to any
announcement that any of the parties is required by law to issue, such
party shall, to the extent possible under the circumstances, review the
necessity for and the contents of the announcement with the other party
before issuing the announcement; provided however, if either party cannot
obtain the consent of the other party in a timely manner, the party
required to comply with law may issue the press release or public
announcement without obtaining the consent of the other party.
23. GOVERNING LAW
-------------
In the event that either party commences any proceeding pursuant to this
Agreement, the rights and obligations of the parties hereto, and any claims
or disputes thereto, shall be governed by and construed in accordance with
the laws of the State of Georgia (excluding the choice of law rules
thereof).
24. ASSIGNMENT
----------
Retailer shall have no right to assign this Agreement without the prior
written consent of GSI; provided, that Retailer shall have the right to
assign this Agreement to any person or entity that acquires or succeeds to
all or substantially all of such party's business or assets upon written
notice to GSI.
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In addition, at the request of GSI, the Retailer shall establish a wholly
owned subsidiary for the purpose of operating the Retailer's on line
business in accordance with the terms of this Agreement, and at that time,
the Retailer shall assign its rights under this Agreement to the subsidiary
and the subsidiary shall assume all of the Retailer's obligations
hereunder; provided however, the Retailer shall not be released from the
performance of any of its obligations hereunder. GSI shall make such
recommendation only if it believes, in good faith, and acting upon the
advise of its regularly retained certified public accountant, that such an
assignment would minimize the sales tax that may be required to be charged
to the users of the Retailer's Web Site, thereby benefitting the Retailer's
business.
25. COUNTERPARTS
------------
This Agreement may be signed in several counterparts, each of which shall
be deemed an original, and all of which when taken together, shall be
deemed a complete instrument.
26. ENTIRE AGREEMENT
----------------
This Agreement, including the Web Development Agreement, represents the
entire agreement of the parties with respect to the subject matter hereof
and may not be modified, except in writing, executed by all of the parties
hereto. This Agreement supersedes all prior writings of the parties with
respect to this subject matter.
27. JURISDICTION
------------
Should either party commence any proceeding pursuant to this Agreement,
the exclusive jurisdiction and venue of any such dispute shall be in the
state courts of Georgia or the United States District Court for the
______________ District of Georgia.
28. INDEPENDENT CONTRACTORS
-----------------------
The relationship of the parties herein shall hereunder be that of
independent contractors and nothing herein shall be construed to create a
joint venture or partnership.
29. SIGNING
-------
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The parties executing this Agreement represents and warrants that they have
full corporate authority to do so.
30. BINDING EFFECT
--------------
This Agreement shall be binding upon the parties hereto, their successors
and permitted assigns.
31. HEADINGS
--------
Section headings contained in this Agreement are inserted for convenience
or reference only and shall not be deemed to be a part of this Agreement
for any other purpose.
32. DISCLAIMER OF WARRANTIES, EXCLUDING EXPRESS WARRANTIES
------------------------------------------------------
EXCEPT AS TO THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, GSI MAKES
NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR IN LAW
WITH RESPECT TO THE CREATION AND MAINTENANCE OF THE PRODUCT AND SERVICES
PROVIDED FOR HEREUNDER, AND DISCLAIMS ALL OTHER WARRANTIES. RETAILER
ACKNOWLEDGES AND AGREES THAT GSI HAS NOT MADE, NOR DOES HEREBY MAKE, ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER,
EXPRESSED OR IMPLIED.
33. NOTICES
-------
Any notices or writings to be sent hereunder shall be in writing and shall
be by personal delivery, facsimile transmission or by certified or
registered mail, return receipt requested, and shall be deemed given upon
the earlier of actual receipt, five (5) days after deposit in the mail, or
receipt by sender of confirmation of facsimile transmission. Notices shall
be sent to the following addresses (or such other address as either party
may specify in writing):
IF TO GSI: 555 South Henderson Road
King of Prussia, PA 19406
Attention: President
Copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Penna., 19102
IF TO RETAILER: 1950 Vaughn Road,
Kennesaw, Georgia, 30144.
Attention: President
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Copy to: James W. Butler, III, Esquire
Arnall, Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia, 30309
[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement with intent to be legally bound
hereby, the date and year first above written.
GLOBAL SPORTS INTERACTIVE, INC.: THE ATHLETE'S FOOT STORES, INC.:
BY: /s/ Michael Rubin BY: /s/ Douglas P. Haensel
--------------------------- ---------------------------
Title: President Title: Executive VP & CFO
------------------------ ------------------------
Date: 3/19/99 Date: 3/10/99
------------------------- -------------------------
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EXHIBIT A
WEB SITE DEVELOPMENT AGREEMENT
------------------------------
THIS Web site Development Agreement ("Agreement") dated the ____ day of
______________, 1999 (the "Services Start Date") by and between Global Sports
Interactive, Inc., a Pennsylvania corporation (hereinafter referred to as "GSI")
with an address of 555 South Henderson Road, King of Prussia, PA 19406 and The
Athlete's Foot Group, Inc. (hereinafter referred to as "Retailer") with an
address of 1950 Vaughn Road, Kennesaw, Georgia, 30144.
W I T N E S S E T H:
WHEREAS, GSI and Retailer have entered into a E - Commerce Agreement
pursuant to which GSI shall provided certain E - Commerce services to Retailer,
including the development and maintenance of a web site; and
WHEREAS, the parties have elected to enter into this Agreement in order to set
forth the terms and conditions pursuant to which GSI shall develop a web site
for Retailer.
NOW, THEREFORE, in consideration of the mutual promises and terms herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged; and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Domain Name" means the domain name specified for the Web site by
Retailer from time to time. The initial Domain Name is specified in Attachment
B.
1.2 "E-Commerce Agreement" means the E-Commerce Management Agreement by
and between Retailer to which this Agreement is attached as Exhibit A.
1.3 "Features Set" means the requirements set forth in Attachment B, as
amended or supplemented in accordance with this Agreement.
1.4 "Intellectual Property Rights" means any and all now known or
hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the universe,
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including but not limited to copyrights, moral rights, and mask-works, (b)
trademark and trade name rights and similar rights, (c) trade secret rights, (d)
patents, designs, algorithms and other industrial property rights, (e) all other
intellectual and industrial property rights (of every kind and nature throughout
the universe and however designated) (including logos, "rental" rights and
rights to remuneration), whether arising by operation of law, contract, license,
or otherwise, and (f) all registrations, initial applications, renewals,
extensions, continuations, divisions or reissues hereof now or hereafter in
force (including any rights in any of the foregoing).
1.5 "Milestone Delivery Schedule" means the schedule for development of
the Web site set forth in Attachment B.
1.6 "GSI Content" means all text, pictures, sound, graphics, video and
other data and assets supplied by Retailer to GSI, as such materials may be
modified from time to time.
1.7 "GSI Products" means, collectively, the GSI Tools, the GSI Content and
the GSI Work Product.
1.8 "GSI Tools" means any tools, both in object code and source code form,
which GSI has already developed or which GSI independently develops or licenses
from a third party, excluding any tools which GSI creates pursuant to this
Agreement. By way of example, GSI Tools may include, without limitation,
toolbars for maneuvering between pages, search engines, Java applets, and
ActiveX controls.
1.9 "Production Schedule" shall mean the schedule agreed upon by the
parties for the production of the Retailer's Web site, including the delivery of
the Retailer Content and GSI Content by Retailer to GSI.
1.10 "Retailer Content" means the Domain Name and all text, pictures,
sound, graphics, video and other data and assets supplied by Retailer to GSI, as
such materials may be modified from time to time.
1.11 "Services" means the services provided by GSI hereunder to develop,
host and maintain the Web site, in accordance with this Agreement.
1.12 "Web site" means, collectively, the E - Commerce Shopping Experience
and the Retailer Content made available on web pages under the Domain Name.
1.13 "GSI Work Product" means all HTML files, Java files, graphics files,
animation files, data files, technology, scripts and programs, both in object
code and source code form, all
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documentation and any other deliverable used by GSI to create the Web site.
2. WEB SITE DEVELOPMENT SERVICES
2.1 Delivery of Initial Retailer Content. As soon as reasonably possible,
GSI and Retailer shall agree upon a Production Schedule for the delivery by
Retailer to GSI of the Retailer Content that Retailer intends for GSI to
incorporate into the Web site. The parties acknowledge that Retailer will be
able to deliver certain "static" information, such as store locations, promptly
to GSI, and other Retailer Content, such as certain merchandise to be sold on
the Retailer's Web site, at a later date closer to the Launch Date. The Retailer
Content shall be in the format(s) designated by GSI as set forth on Attachment C
hereto. Upon Retailer's request, GSI shall assist Retailer in the conversion of
the Retailer Content into an acceptable form for use by the Web site. Any
Retailer Data furnished by Retailer to GSI, shall be returned by GSI upon the
termination of this Agreement.
2.2 Web site Development Services. At no cost to Retailer, GSI shall
provide design, programming and other consulting Services as specified in
Attachment B to create the Web site. GSI will provide the Web site to Retailer
in accordance with the Milestone Delivery Schedule.
2.3 Project Liaisons. Each party's primary contact for development
efforts shall be the project liaisons specified in Attachment B or the person
otherwise designated in writing by Retailer or GSI, as the case may be.
2.4 Acceptance. GSI shall make available final versions of the Web site
for Retailer's review and acceptance. Retailer shall have ten (10) days to
review and evaluate the Web site (the "Acceptance Period") to assess whether
it substantially meets the Features Set. During the Acceptance Period, Retailer
shall identify in writing to GSI all aspects of the Web site that do not
substantially conform to the Features Set. Upon receipt of Retailer's list of
non-conformities, GSI shall correct promptly all such non-conformities so that
the Web site does substantially conform to the Features Set and GSI shall extend
the Acceptance Period for a second ten (10) day Acceptance Period during which
Retailer shall confirm that all non-conformities that were previously identified
have been corrected. Notwithstanding the foregoing, the Web site shall be
deemed accepted upon the earlier of: (i) its use in commerce, provided however,
GSI shall not use the Retailer's Web site in commerce without the Retailer's
consent, which shall not be unreasonably withheld or delayed; (ii) Retailer's
failure to articulate any non-conformities during an Acceptance Period; or (iii)
Retailer's acceptance of the Web site;
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or (iv) GSI's demonstration that all non-conformities have been corrected.
The acceptance procedures set forth in this Paragraph 2.4 shall also apply
to any material modifications made to the Retailer's Web site during the Term of
the E-Commerce Agreement. As used herein, "material modifications" shall mean
alterations which significantly change the overall design of the Retailer's Web
site and do not include the changes contemplated by Paragraph 3.1 c. of the E -
Commerce Agreement.
3. WEB HOSTING AND MAINTENANCE SERVICES
Following Retailer's acceptance of the Web site pursuant to Section 2.4,
GSI shall, at no cost to Retailer, provide the following web hosting and
maintenance Services:
3.1 Hosting Services. GSI shall load the Web site onto server(s) that
are connected to the Internet and readily accessible via the Web through use of
the Domain Names. GSI shall ensure that the Web site is functional and ready to
process transactions in a reasonably efficient manner.
3.2 Retailer Content. GSI shall upload all Retailer Content, including
updates, to the Web site within seven days of delivery to GSI. Upon GSI's prior
written consent, Retailer may electronically transmit or upload Retailer Content
directly to the Web site.
3.3 Maintenance Services. GSI shall maintain the Web site so that it
functions in a reasonably error free manner. Upon notification of an error in
the Web site or of a non-conformity between the Web site and the Features Set,
whether from Retailer or from any user of the Web site, GSI shall promptly
commence an investigation into the reported error, and GSI shall, upon
reproducing such error, use reasonable commercial efforts to correct such error
in a timely fashion. During such Maintenance Services, GSI shall ensure that the
Web site is functional and ready to process transactions in a reasonably
efficient manner, provided, however, GSI may, during low usage periods,
-------- -------
temporarily block access to the Web site to perform Web site maintenance during
periodic maintenance windows.
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GSI shall use its best efforts to notify Retailer not less than forty eight
hours in advance of any planned maintenance of the Retailer's Web site which
will cause GSI to close down the Web site.
In the event that GSI is forced to close the Retailer's Web site as a
result of an emergency, GSI shall use its best efforts to advise Retailer of the
emergency within twenty four hours after it occurs.
4. ADDITIONAL SERVICES
4.1 Search Engine Registration. When GSI makes the Web site available to
Retailer, GSI shall register the Web Site and Domain Name with all applicable
search engines, at GSI's discretion.
4.2 Domain Name Assistance. If requested by Retailer, GSI shall
cooperate with Retailer in registering the Domain Name with InterNIC. Retailer
shall own all right, title and interest in and to the Domain Name and all
Intellectual Property Rights related thereto. Unless otherwise specified by
Retailer, GSI shall, at Retailer's expense, assist Retailer in registration of
the Domain Name.
5. CONSIDERATION
In consideration for Retailer entering into the E Commerce Agreement, at no cost
to Retailer, GSI shall perform the Services set forth in this Agreement.
6. TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be conterminous with the term
of the E- Commerce Agreement. In absence of a material breach, this Agreement
may only be terminated by the expiration of the term.
6.2 Termination. Termination of this Agreement shall be governed by the
terms of Article 14 of the E - Commerce Agreement.
7. WARRANTIES AND DISCLAIMERS.
7.1 Cross Warranties. Retailer warrants as to the Retailer Content, and
GSI warrants as to the GSI Products, that any materials and updates or
enhancements there to shall not: (a) infringe on the Intellectual Property
Rights of any third party or any rights of publicity or privacy; (b) violate any
law, statute, ordinance or regulation (including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising); (c) be defamatory, trade
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libelous, unlawfully threatening or unlawfully harassing; (d) be obscene,
pornographic or indecent.
7.2 Representations and Warranties of Each Party. Each party represents
and warrants to the other party that: (i) it is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and that it has the power and authority to enter into this
Agreement and the transactions contemplated herein; (ii) the consummation of the
transactions described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles of
Incorporation or Bylaws, or any statute or administrative regulation or of any
order, writ, injunction, judgment or decree of any court, regulatory or
governmental authority or of any agreement or instrument to which it is a party
or by which it is bound or constitute a default thereunder; and (iii) this
Agreement has been duly authorized, executed and delivered by it and this
Agreement is valid, enforceable and binding upon each party in accordance with
its terms.
7.3 Year 2000. GSI warrants that the Web site shall not suffer any
material adverse effect as a result of a failure in any GSI Work Product or GSI
Tools to be Y2K Compliant. A product or service which is "Y2K Compliant" is one
that provides accurate results using data having date ranges spanning from
January 1, 1980 through December 31, 2019 (the "Y2K Period"). By way of example
and not of limitation, "Y2K Compliant" means, with respect to a product or
service, that it can currently and shall, during the Y2K Period, continue to (a)
manage and manipulate data involving all dates within the Y2K Period (including
the fact that the year 2000 is a leap year) without functional or data
abnormality related to such dates; (b) manage and manipulate data involving all
dates within the Y2K Period without inaccurate results related to such dates;
(c) have user interfaces and data fields formatted to distinguish between dates
within the Y2K Period; and (d) accurately identify and either reject or correct
invalid date data during the Y2K Period. Provided a party otherwise complies
with this Section 7.4, it will not be liable to the other party for any failure
to perform obligations under this Agreement to the extent such failure arises
from a failure to be Y2K Compliant that (1) affects the non-performing party's
customers or suppliers or (2) is beyond its reasonable control (e.g., a failure
---
to be Y2K Compliant affecting a governmental entity).
7.4 Disclaimer. THE WARRANTIES MADE IN THIS SECTION 7 ARE MADE IN LIEU OF
ALL OTHER EXPRESS WARRANTIES, WHETHER ORAL OR WRITTEN AND EXCEPT AS SET FORTH IN
THIS SECTION 7, GSI MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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<PAGE>
8. OWNERSHIP
8.1 Ownership of GSI Products. Retailer hereby acknowledges and agrees
that as between Retailer and GSI, GSI owns all right, title and interest in and
to the GSI Products and all applicable Intellectual Property Rights thereto.
This Agreement confers no ownership interest in the GSI Products to Retailer.
8.2 Ownership of Retailer Content. GSI hereby acknowledges and agrees
that as between GSI and Retailer, Retailer owns all right, title and interest in
and to the Retailer Content and all applicable Intellectual Property Rights
thereto. Except for a limited non-exclusive license during the term to use the
Retailer Content solely to perform its obligations hereunder, this Agreement
confers no ownership interest in the Retailer Content to GSI.
9. LIMITATION UPON LIABILITY.
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER SUCH DAMAGES
ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES) ARISING FROM OR
RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS' USE OF OR INABILITY TO ACCESS ANY
PART OF THE INTERNET OR RETAILER'S OR RETAILER'S CUSTOMERS' RELIANCE ON OR USE
OF INFORMATION, SERVICES OR MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR
THE SERVICES, OR THAT RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS,
THEFT, OR DELETION OF FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR
TRANSMISSION, OR ANY FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE
UNDER THIS AGREEMENT FOR AN AMOUNT THAT EXCEEDS, IN THE AGGREGATE THE AMOUNTS
PAID TO RETAILER DURING THE [*] MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING
RISE TO SUCH LIABILITY. THE REMEDIES SET FORTH IN THIS SECTION 9 CONSTITUTE THE
SOLE AND EXCLUSIVE REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO
EVENT SHALL EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN
TWELVE (12) MONTHS AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
10. INDEMNITY.
10.1 Retailer Indemnity. Subject to Section 10.3, Retailer shall defend,
indemnify and hold GSI harmless against any third party claim, action, suit or
proceeding: (i) Retailer's gross negligence, willful or intentional misconduct;
or (ii) any breach by Retailer of the warranties set forth in Sections 7.1 or
7.2.
10.2 GSI Indemnity. Subject to Section 10.3, GSI shall defend, indemnify
and hold Retailer harmless against any third
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party claim, action, suit or proceeding: (i) GSI's gross negligence, willful or
intentional misconduct; or (ii) any breach by GSI of the warranties set forth in
Sections 7.1 or 7.2.
10.3 Mechanic of Indemnities. The indemnifying party's obligations are
conditioned upon the indemnified party: (a) giving the indemnifying party prompt
written notice of any claim, action, suit or proceeding for which the
indemnified party is seeking indemnity; (b) granting control of the defense and
settlement to the indemnifying party; and (c) reasonably cooperating with the
indemnifying party at the indemnifying party's expense
11. MISCELLANEOUS.
11.1 Incorporation of Certain Provisions of the E-Commerce Agreement.
Sections 7, 8, 12, and Sections 18 through 30, inclusive, of the E-Commerce
Agreement are hereby incorporated in their entirety into this Agreement.
11.2 Interpretation of Agreements. With respect to the subject matter
hereof, the E-Commerce Agreement shall control any conflict between the terms of
this Agreement and the E-Commerce Agreement.
11.3 Definitions. Any terms not specifically defined in this Agreement
shall be construed in accordance with the definitions given such terms in the E-
Commerce Agreement, or if such terms are not defined in the E-Commerce
Agreement, then such terms shall be construed in accordance with their every
day, common meaning.
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
representatives to enter into this Agreement to be effected on the Services
Start Date.
GLOBAL SPORTS INTERACTIVE, INC.: THE ATHLETE'S FOOT STORES, INC.:
By: /s/ Michael Rubin By: /s/ Douglas P. Haensel
-------------------------- ----------------------------
Title: President Title: Executive VP & CFO
------------------------ -------------------------
Date: 3/19/99 Date: 3/10/99
------------------------
Name: Michael G. Rubin Name: Douglas P. Haensel
------------------------ -------------------------
(Please type or print) (Please type or print)
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<PAGE>
ATTACHMENT A
RETAILER'S ASSET REQUIREMENTS
Product Assets
Elements: Product Assets should include names, UPCs and prices. No product
photography or description are required.
Store Locations
Store location information should include address, phone number and fax numbers.
Corporate Assets
Corporate Assets may include the following:
. Press Releases
. Frequently Asked Questions
. Contact Information
. Jobs Information
. Community Programs Information
. Annual Reports
. Corporate Identity materials including logo
All above information may be submitted at the retailer's discretion, excluding
the corporate identity materials and logos, which are mandatory.
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Attachment B
(TO BE COMPLETED)
Domain Name:
Format of Retailer Content:
Project Liaisons:
For GSE.C: For Retailer:
FEATURES SET
- ------------
1. PRODUCT SEARCH
2. BROWSE CATEGORIES
3. RECOMMENDATION TOOLS
4. ADVANCE PRODUCT PRESENTATION
5. SHOPPING CART
6. GIFT GIVING FUNCTIONALITY
7. REMOTE PUBLISHING TOOLS FOR HUMAN RESOURCES AND PRESS ROOM
8. SALES TAX CONFIGURATION
9. PRODUCT REVIEWS
10. 24/7 CUSTOMER SUPPORT
11. AFFILIATE PROGRAM FUNCTIONALITY
12. ON LINE GIFT CERTIFICATES
13. LAND BASED STORES GIFT CERTIFICATES
14. STORE LOCATOR
15. FINANCIAL INFORMATION
16. FREQUENTLY ASKED QUESTIONS
17. COMMUNITY PROGRAMS
18. COMPANY PROFILE
19. ON LINE ORDER STATUS
MILESTONE DELIVERY SCHEDULE:
- ---------------------------
TASK ESTIMATED COMPLETION DATE
- ---- -------------------------
DISCOVERY AND PLANNING MARCH 15, 1999
COMMENCE ENGINE ENGINEERING JULY 31, 1999
ESTABLISH FULFILLMENT CAPABILITIES APRIL 30, 1999
RETAILER WEB SITE DEVELOPMENT JULY 31, 1999
QUALITY CONTROL REVIEW AND REVISIONS AUGUST 21, 1999
ALPHA TESTING SEPTEMBER 1, 1999
BETA (SOFT LAUNCH) SEPTEMBER 30, 1999
WEB SITE LAUNCH TO GENERAL PUBLIC OCTOBER 1 - DECEMBER 1,1999
MEDIA AND PROMOTIONS OCTOBER 1 - DECEMBER 1,1999
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ATTACHMENT C
ASSET SUBMISSION GUIDELINES
This section details how to submit assets.
Source Assets and Final Assets
- -----------------------------------------------------------------------------
We require source files for all assets. This means if an image is originally
constructed as a layered RGB Photoshop file at 100x500 pixels, we need that
file, even if the final file is a flattened 4-bit GIF at 20x100.
We allow the submission of final assets in some cases, but only by prior
arrangement and only in addition to an up-to-date source file. All submitted
assets are subject to review and verification by production staff.
Media and Format
- -----------------------------------------------------------------------------
We routinely receive assets in the following media and formats.
Digital Media
- -----------------------------------------------------------------------------
Media:
SyQuest 44mb, 88mb, 200mb, CD-ROM (including PhotoCD), Zip, Jaz, 3.5"
floppy.
Format:
Win16, Win-32, or Macintosh
File Formats:
Text: Raw, MS Word 95, RTF, HTML
Bitmap Graphics:
Photoshop, TIFF, PCD (PhotoCD), EPS, PICT (JPEG and GIF for final files
only and only along with source files)
PostScript Graphics:
EPS, Illustrator (7.0 preferred)
Video:
QuickTime
Audio:
WAV, AIFF, MIDI
Non-Digital Media
- ------------------------------------------------------------------------------
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<PAGE>
Contact us to discuss needs and capabilities before submitting any non-digital
assets.
Asset Submission
- ------------------------------------------------------------------------------
We prefer to receive assets via FTP (file transfer protocol) although we gladly
accept assets via standard package delivery services (i.e., FedEx, USPS, UPS,
etc.).
Submission via FTP
FTP Area: ftp.globalsportsinteractive.com
Assets should be left in "Incoming" which is a level below the initial
directory. Once assets have been transferred, e-mail confirmation is required.
Submission via Package Delivery
If you wish to submit assets via standard package delivery services, please
address the package to this address:
Address TBD
If you are submitting hard assets like brochures, photographs, etc. please be
sure to ship them in a reinforced container to prevent damage to the assets
while in transit.
If you are submitting digital media like SyQuests, Zip disks, Jaz disks, etc.,
be sure to ship them in a well-padded, reinforced container.
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<PAGE>
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS
--------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTRY MARK NAME CLASS/DESCRIPTION APPL'N NO./
FILING DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S.A. Footprints Design 42--retail shoe stores. 74/716,312
8/16/95
U.S.A. Make It Fly 35--retail store services featuring footwear and clothing. 75/309,378
6/16/97
U.S.A. Nobody Knows The Athlete's Foot 42--retail athletic clothing and footwear store services. 74/647,424
Like The Athlete's Foot 3/16/95
U.S.A. Old Winged Foot Design 25--athletic footwear. 75/199,624
11/18/96
U.S.A. Old Winged Foot Design 25--t-shirts, warm-up suits, tennis suits, running or jogging 74/267,064
suits, socks, headwear, wrist bands, athletic jerseys, golf 4/20/92
shirts, running shorts and running singlets.
U.S.A. Old Winged Foot Design 42--retail athletic clothing and footwear store services. 74/375,449
5/5/93
U.S.A. Sports Wrap 42--retail athletic clothing and footwear store services. 74/419,293
8/2/93
U.S.A. The Athlete's Foot 42--retail athletic clothing and footwear store services. 73/813,640
7/20/89
U.S.A. The Athlete's Foot 35--rendering assistance in connection with the establishment 15,491
and/or operation of retail stores for selling athletic shoes, 3/11/74
and athletic clothing, which stores do business under the
prominently displayed term "The Athlete's Foot"
<CAPTION>
- ---------------------------------------------------------
COUNTRY MARK NAME REG. NO./
REG. DATE
- ---------------------------------------------------------
<S> <C> <C>
U.S.A. Footprints Design 1,988,625
7/23/96
U.S.A. Make It Fly 2,193,462
10/6/98
U.S.A. Nobody Knows The Athlete's Foot 1,953,326
Like The Athlete's Foot 1/30/96
U.S.A. Old Winged Foot Design 2,201,976
11/3/98
U.S.A. Old Winged Foot Design 1,781,509
7/13/93
U.S.A. Old Winged Foot Design 1,821,855
2/15/94
U.S.A. Sports Wrap 1,889,497
4/11/95
U.S.A. The Athlete's Foot 1,631,948
1/15/91
U.S.A. The Athlete's Foot 1,094,685
6/27/78
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTRY MARK NAME CLASS/DESCRIPTION APPL'N NO./ REG. NO./
FILING DATE REG. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S.A. The Athlete's Foot 25--athletic wear such as t-shirts, warm-up suits, tennis suits, 73/282,193 1,634,135
running and jogging suits, socks, headwear, wrist bands, jerseys 10/17/80 2/5/91
and shirts sold through stores specializing in the sale of
athletic shoes and clothing.
U.S.A. The Athlete's Foot 25--athletic footwear. 74/592,031 2,209,347
10/28/94 12/8/98
U.S.A. The Athlete's Foot and 42--retail athletic clothing and footwear store services. 73/816,593 1,632,670
Old Winged Foot Design 8/1/89 1/22/91
U.S.A. The Athlete's Foot and 25--t-shirts, warm-up suits, tennis suits, running or jogging suits, 74/028,604 1,631,686
Old Winged Foot Design socks, headwear, wrist bands, athletic jerseys, golf shirts, running 2/13/90 1/15/91
shorts and running singlets.
U.S.A. The Athlete's Foot and 41--providing a web site featuring educational information about 75/506,670
Old Winged Foot Design Applicant's business and about athletic footwear and associated 6/22/98
physical and sporting activities
U.S.A. The Locker Room 35--retail store services. 75/639,474
2/5/99
</TABLE>
2
<PAGE>
SCHEDULE 2 TO E-COMMERCE MANAGEMENT AGREEMENT
TYPE OF ON LINE RETAILER'S OPERATING MANAGEMENT COST OF GOODS
MERCHANDISE INCOME FEE TO RETAILER
IN LINE [*] [*] [*]
SPECIAL MAKE-UPS [*] [*] [*]
CLOSEOUTS [*] [*] [*]
MARKDOWNS [*] [*] N/A
LAND BASED GIFT
CERTIFICATES [*]** [*] N/A
ON LINE GIFT
CERTIFICATES*** [*]**** [*] [*]
* Retailer supplies markdown inventory
** Retailer supplies gift certificates
*** Excluding those redeemed for Markdowns, which shall be treated as a sale of
Markdowns as indicated above,
**** GSI supplies gift certificate, and Retailer purchases inventory from GSI at
such time as the certificate is purchased
<PAGE>
EXHIBIT "B"
WARRRANT TERM SHEET
1. Grant of Warrants As part of its E-Commerce Initiative, Global Sports,
Inc. ("Global") intends to provide all sporting
goods and/or athletic footwear and apparel retailers
who execute a contract with Global to become part of
Global's E-Commerce Initiative (the "Retailers")
prior to the public announcement of such initiative
the opportunity to receive warrants to purchase
shares of Global common stock based on the terms and
conditions outlined in this Term Sheet.
2. Amount of Warrants Warrants will be granted for a total exercise amount
of [*]. Each Retailer will receive a warrant to
purchase its pro rata share of the total exercise
amount based on the proportion that such Retailer's
net sales (including sales by such Retailer's
franchisees, if any) for its most recent fiscal year
bears to the total net sales of all Retailers
participating in the E-Commerce Initiative
(including sales by all such Retailers' franchisees,
if any).
3. Security Warrant to purchase Global common stock. The period
during which the warrant may be exercised will be
one year from the date of public announcement of
Global's E-Commerce Initiative. The warrant and the
shares of common stock issuable upon exercise of the
warrant will be offered and sold to the Retailers
pursuant to an exemption from the Securities Act of
1933, as amended. As a result, such shares will be
restricted securities within the meaning of that
Act, and the resale of such shares will be subject
to certain restrictions, including a one year
holding period.
<PAGE>
4. Warrant Exercise Price The warrant exercise price will be equal to the
average of the closing bid and asked prices for a
share of Common Stock for the 20 trading days ending
on the trading day immediately preceding the public
announcement of Global's E-Commerce Initiative.
5. Issuance of Warrants Global will issue the warrants to participating
Retailers effective as of the public announcement of
Global's E-Commerce Initiative which is expected to
occur by March 31, 1999.
6. Confidentiality This Term Sheet is not to be disclosed to any party
other than the employees or advisors of the
Retailers receiving this Term Sheet who need to know
the terms set forth herein for the purpose of
evaluating such Retailer's participation in Global's
E-Commerce Initiative.
7. Other This Term Sheet is only intended to serve as a
general outline of the major terms of Global's
proposed grant of warrants in accordance with the
terms and conditions set forth herein. This Term
Sheet does not constitute an offer or sale of the
shares by Global. This Term Sheet does not
constitute a commitment or binding agreement to
grant such securities. such commitment or binding
agreement can only be created by definitive
agreements which will need to be negotiated and
executed.
<PAGE>
Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E COMMERCE AGREEMENT
--------------------
THIS E - Commerce Agreement dated the 23rd day of March, 1999 by and
between Global Sports Interactive, Inc., a Pennsylvania corporation (hereinafter
referred to as "GSI") with an address of 555 South Henderson Road, King of
Prussia, PA 19406 and Dunham's Athleisure Corporation (hereinafter referred to
as "Retailer") with an address of 5000 Dixie Highway, Waterford, Michigan.
W I T N E S S E T H:
WHEREAS, GSI is in the business of creating and operating all aspects of an
E-Commerce Shopping Experience, including servicing and fulfilling the on-line
retail sales of selected merchants; and
WHEREAS, Retailer desires to enter into an exclusive agreement with GSI
pursuant to which GSI will act as an Outsourcing Company providing the
Retailer's on-line customers the complete E-Commerce Shopping Experience, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the following
-----------
meaning:
1.1 "Advertising Co-op and Discretionary Funds" shall mean amounts earned
by or allocated to the Retailer by its vendors, the purpose of which
is to advertise that vendor's brand or to use at the Retailer's
discretion.
1.2 "Categories" shall mean the various types of product groups (e.g.
athletic footwear, camping, in line skates, etc.) offered for sale by
the Retailer in its Land Based stores.
1.3 "Closeout Merchandise" shall mean end of season or excess merchandise
that is priced at a greater than normal discount.
1.4 "Complete URL Integration" shall mean the display of Retailer's URL in
all of Retailer's marketing and communications.
<PAGE>
1.5 "Confidential Information" shall mean as that term is defined in
paragraph 7.1 of this Agreement.
1.6 "Cross Promotion" shall mean the use of the Retailer's URL, name and
logo on other than the Retailer's Web Site for the purpose of
promoting the Retailer's Web Site.
1.7 "Customary Pricing Structure" shall mean the policy generally employed
by the Retailer in determining the prices of merchandise in its Land
Based Stores.
1.8 "Customer Data" shall mean as that term is defined in paragraph 4.1 of
this Agreement.
1.9 "Data Bases" shall mean as that term is defined in paragraph 4.2 of
this Agreement.
1.10 "Defective Allowance" shall mean a discount granted by a manufacturer
to a retailer as a result of defective merchandise received by the
retailer and pursuant to which, the retailer also retains the
merchandise.
1.11 "Disclosing Party" shall mean the party disclosing Confidential
Information.
1.12 "Domain Name" shall mean as that term is defined in paragraph 1.1 of
the Web Site Development Agreement (as hereinafter defined).
1.13 "E-Commerce" shall mean the Retailer's specific business conducted
through the Internet.
1.14 "E-Commerce Orders" shall mean the orders for merchandise placed by
customers of the Retailer's Web Site.
1.15 "E-Commerce Outsourcing Partner" shall mean GSI.
1.16 "E-Commerce Shopping Experience" shall mean the shopping for and
purchasing of merchandise through the Internet.
1.17 "Flight Date" shall mean the date on which Retailer's advertising is
scheduled to run for the first time.
1.18 "Force Majeure Event" shall mean as that term is defined in Article 18
of this Agreement.
1.19 "GSI Content" shall mean as defined in paragraph 1.6 of the Web Site
Development Agreement.
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1.20 "In Line Merchandise" shall mean current merchandise available to be
carried by the Retailer in its Land Based Stores from Retailer's
current or future vendors.
1.21 "Internet" shall mean the collection of interconnected networks that
all use the TCP/IP protocols.
1.22 "Land Based Stores" shall mean the Retailer's stores located in
shopping districts, strip shopping centers and shopping malls.
1.23 "Land Based Stores Gift Certificates" shall mean gift certificates
offered for sale on the Retailer's Web Site for merchandise sold only
in Retailer's Land Based Stores.
1.24 "Launch Date" shall mean the date on which GSI commences operation of
the Retailer's Web Site to the public.
1.25 "Markdowns" shall mean merchandise in Retailer's inventory offered for
sale at less than the price it was originally offered for.
1.26 "Milestone Delivery Schedule" shall mean as defined in paragraph 1.5
of the Web Site Development Agreement.
1.27 "On Line Customer Loyalty Programs" shall mean programs established to
encourage repeat business from on line customers.
1.28 "On Line Merchandise" shall mean merchandise to be sold on the
Retailer's Web Site.
1.29 "Outsourcing Company" shall mean a company which provides E-Commerce
Services for traditional Retailers.
1.30 "Price Matching" shall mean a Retailer's policy pursuant to which it
addresses another retailer's lower price on a particular item of
merchandise.
1.31 "Production Schedule" shall mean as defined in paragraph 1.9 of the
Web Site Development Agreement.
1.32 "Project Manager" shall mean an employee of Retailers who is assigned
exclusively to work with GSI in supplying GSI with Retailer Content.
1.33 "Receiving Party" shall mean the party receiving Confidential
Information.
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1.34 "Retailer Content" shall mean as defined in paragraph 1.10 of the Web
Site Development Agreement.
1.35 "Retailer's Net Cost" shall mean the amount paid by the Retailer for
merchandise from its vendors after deduction of cash or anticipation
discounts, marketing allowance, Defective Allowance, volume allowance
and any other discount offered by vendors, but excluding any marketing
funds granted to Retailer by a manufacturer as an overall marketing
allowance and not based upon the number of units or dollars purchased.
1.36 "Retailer's Warehouse" shall mean the place at which Retailer receives
delivery of merchandise from its vendors.
1.37 "Revenue Share" shall mean as defined in paragraph 3.8 of this
Agreement.
1.38 "Special Make-Ups" shall mean merchandise manufactured for the
Retailer exclusively.
1.39 "Term" shall be as defined in Section 2.2 of this Agreement.
1.40 "URL" shall mean the address of the Web Site on the Internet.
1.41 "Web" shall mean the World Wide Web.
1.42 "Web Site" shall mean as defined in paragraph 1.12 of the Web Site
Development Agreement.
1.43 "Web Site Development Agreement" shall mean the agreement by and
between GSI and Retailer attached to this Agreement as Exhibit "A".
2. AGREEMENT AND TERM
------------------
2.1 Agreement. During the Term GSI shall provide the Retailer with those
---------
Web Site services as hereinafter specified.
2.2 Term. The Term of this Agreement shall commence upon the execution of
----
this Agreement and shall expire ten (10) years after the Launch Date
("Expiration Date"). GSI shall use reasonable efforts to advise
Retailer ten days prior to the expected Launch Date. The Launch Date
shall occur between the period of October 1, 1999 and December 1, 1999
("Commencement Period"); provided however, unless
4
<PAGE>
the delay is caused by Retailer, in no event shall the Launch Date of
Retailer's Web Site be later than thirty days after GSI launches its
first retailer's web site. GSI's obligation to commence operation of
the Web Site during the Commencement Period shall be contingent on
Retailer complying with the deadlines set forth on the Milestone
Delivery Schedule set forth on Attachment B to the Web Site
Development Agreement and on the Production Schedule to be agreed upon
by the parties. Retailer acknowledges the urgency of complying with
the deadlines set forth in the Milestone Delivery Schedule and the
Production Schedule and shall give GSI its full cooperation to ensure
that such deadlines are satisfied. Notwithstanding anything contained
herein to the contrary, in the event that the Retailer does not comply
with such deadlines and GSI has given Retailer written notice of its
failure to comply,then, for each day of such non compliance, the
Commencement Period shall be extended by one day.
2.3 Extension of Term. At the expiration of the Term, this Agreement
-----------------
shall automatically terminate unless extended by the mutual agreement
of both parties.
3. OBLIGATIONS AND RIGHTS OF THE PARTIES
-------------------------------------
3.1 Creation of Retailer's Web Site.
-------------------------------
a. GSI, at its own expense, shall create, maintain and operate a Web
Site for the Retailer on the Web in accordance with the
specifications attached to the Web Site Development Agreement. In
connection therewith, simultaneous herewith, Retailer and GSI
shall execute the Web Site Development Agreement.
b. The Web Site shall contain the Retailer's E-Commerce hopping
Experience, the URL of which shall be www.Retailer.com. In
addition, the Web Site shall contain any or all of the following
information, as the Retailer shall elect: corporate information
(e.g. historic background, mission statement, names of officers
and directors), store locator, public financial information (e.g.
SEC filings, annual reports), press releases, community programs,
employment opportunities for in store or corporate positions,
frequently asked questions and a "contact us" section.
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c. Following the initial completion of the Web Site, the Retailer
shall have the right to update the content thereof as follows:
1) Employment Opportunities - GSI will provide the Retailer
with the technology necessary so that the Retailer will be
able to update the employment opportunity portion of the Web
Site as frequently as it desires.
2) Public Financial Information -
a) Stock Prices - Will be updated daily by a link to
another web site offering such information.
b) SEC Filings and Annual Reports - SEC filings will be
provided by a link so long as the government makes such
filings available at no cost. Both SEC filings and
annual reports will be provided only if available in
portable document format; in the alternative, GSI will
provide the consumer with a form in order to request
such information from the Retailer's investor relations
department.
3) Store Locators - Will be updated by GSI as such information
changes and Retailer provides GSI with such information.
4) Frequently Asked Questions - Will be updated by GSI monthly
and Retailer provides GSI with such information.
5) Corporate Information - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
6) Community Programs - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
7) Press Releases - GSI will provide the Retailer with the
technology necessary so that the Retailer will be able to
post press releases on its Web site as it desires. Retailer
shall defend and hold harmless GSI, its employees, officers
and directors, agents and representatives from any liability
arising from the posting of press releases on the Retailer's
Web Site.
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8) "Contact Us" Section - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
d. GSI's use of Retailer's URL, Retailer's Content and any other
Retailer information or material, whether confidential or not,
shall be granted and continue only for the Term of this Agreement
and shall not be used beyond the end of such Term.
3.2 Creation and Maintenance of the Retailer's Web Site.
----------------------------------------------------
GSI shall create and maintain a Web Site for the Retailer. Commencing
with the execution of this Agreement and continuing through the Term,
as may be extended, the Retailer, shall cooperate with GSI so as to
enable GSI to create and maintain for the Retailer's consumers, the
Retailer's Web Site. In connection therewith, the Retailer shall
supply GSI with the Retailer Content (as that term is defined in the
Web Site Development Agreement) required pursuant to the terms of the
Web Site Development Agreement. This shall include, but not be limited
to printed marketing information, data, text, audio files, video
files, graphics and other assets necessary to create and maintain the
Retailer's Web Site as more fully set forth on Attachment A to the Web
Site Development Agreement. Notwithstanding anything contained herein
to the contrary, and except as it relates to Special Make- Ups, it
shall be GSI's responsibility to produce and maintain all camera ready
product information for use on the Retailer's Web Site and Retailer
shall have no responsibility therefor. With respect to Special Make-
Ups, Retailer shall be responsible to provide GSI with sample product
only in a sufficient amount of time to allow GSI to produce camera
ready product information.
3.3 Sale of Merchandise on the Retailer's Web Site.
------------------------------------------------
a. GSI shall have the right to offer for sale on the Retailer's Web
Site all Categories of merchandise offered for sale by the
Retailer in its Land Based Stores Notwithstanding anything
contained herein to the contrary, in no event shall GSI offer
firearms for sale on the Retailer's Web Site. In addition, should
Retailer disapprove of any items listed for sale on the
Retailer's Web Site, and which are not listed for sale in the
Retailer's Land Based Stores, upon five days prior notice from
Retailer, GSI shall remove such item from the Retailer's Web
Site.
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b. Within the Categories, GSI shall have the right to offer for
sale:
1) current in line merchandise ordered by the Retailer from its
vendors; and
2) current in line merchandise not carried by the Retailer in
its Land Based Stores, but available in those Categories
carried by the Retailer; provided however, no products will
be offered for sale on Retailer's Web Site which the
Retailer would not be authorized to sell by the manufacturer
in its Land Based Stores; and
3) Special Make-Ups; and
5) Closeout Merchandise; and
6) Markdowns of Retailer's inventory
7) Gift Certificates for On Line Merchandise
[Items 1) through 7) are hereinafter referred to as "On Line
Merchandise"]
c. In addition, GSI shall have the right to offer for sale Land
Based Stores Gift Certificates for merchandise available in the
Retailer's Land Based Stores. These certificates shall be
provided to GSI on consignment as set forth in Paragraph 3.6
below. Notwithstanding anything contained herein to the contrary,
Retailer may elect not to offer Land Based Stores Gift
Certificates for sale on its Web Site by notifying GSI of its
decision no later than August 1, 1999.
d. In those instance where a written dealer agreement prohibits
Retailer from selling a particular vendor's merchandise except in
the Retailer's Land Based Stores, Retailer shall use its
reasonable efforts to obtain all consents required to permit the
sale of such merchandise on the Retailer's Web Site.
e. Within each Category, 1) provided that Retailer is authorized by
the vendor to carry such item of merchandise; and 2) subject to
GSI's rights pursuant to paragraph 3.4 g. below, GSI shall offer
for sale on the Retailer's Web Site any item of merchandise
offered for sale by a retailer on its web site and for whom GSI
operates its web site.
3.4 Prices of On-Line Merchandise. GSI shall offer the On-Line
-----------------------------
Merchandise for sale on the Retailer's Web Site on the following
basis:
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<PAGE>
a. If the On-Line Merchandise is the same as offered for sale in the
Retailer's Land Based Stores, then it shall be offered for sale
on-line at the same price as offered in Retailer's Land Based
Stores. In order to facilitate this pricing, Retailer shall [*].
Retailer acknowledges that this is essential in order to [*]; and
b. If the On-line Merchandise is not offered for sale in the
Retailer's Land Based Stores, but is offered for sale on another
retailer's web site operated by GSI then, subject to GSI's rights
pursuant to paragraph 3.4 g. below, [*] at a price equal to [*]
c. If the Retailer offers the same merchandise at different prices
in its Land Based Stores, then [*], but in no event shall such
price be [*]; provided however, upon five days prior notice from
Retailer, GSI may [*].
d. GSI shall add all applicable taxes and at its discretion, may add
reasonable handling and delivery charges which are consistent
with industry practice.
e. In order to ensure that GSI may [*] Retailer shall furnish GSI
with copies of all [*] at least [*] prior to its [*].
f. The parties shall cooperate with each other so that the entire
pricing process between GSI and Retailer may be accomplished
electronically.
g. Retailer acknowledges that GSI, unless it elects to do so, [*].
In such event, [*] shall have the right to [*]. In addition, if
pursuant to this paragraph, GSI elects not to carry an item on a
retailer's web site, GSI shall promptly remove such item from
Retailer's Web Site.
h. In the event that [*] subject to GSI's rights pursuant to
paragraph 3.4 g. above, [*] shall have the right to [*].
3.5 GSI's Supply of On Line Merchandise.
-----------------------------------
a. Invoicing and Shipping of On Line Merchandise. At such time as
----------------------------------------------
directed by GSI, the Retailer shall notify its vendors of In Line
Merchandise, Special Make-Ups and Closeouts, that 1) GSI is the
Retailer's E-Commerce Outsourcing Partner; 2) the vendors, for
the benefit of the Retailer, should
9
<PAGE>
sell their merchandise to GSI at the same prices, with the same
Advertising Co-op and Discretionary Funds and on the same terms
and conditions as they sell their merchandise to Retailer;
provided however, Retailer cannot assure GSI that with respect to
merchandise shipped to Retailer on consignment, that vendors will
provide GSI the same accommodation; and 3) such merchandise
should be shipped and invoiced directly to GSI. The form of such
notification shall be prepared by GSI and approved by Retailer.
In the event that a vendor deems it more efficient to invoice
Retailer for such merchandise, then the Retailer and GSI shall
agree on the terms and conditions on which Retailer is willing to
place such order for GSI at the Retailer's net cost. If the
parties are able to agree on such terms and conditions, then
Retailer shall thereafter order the merchandise and GSI shall pay
for it as agreed. In such instances, GSI shall also pay the
Retailer its pro rata share (based upon that portion of the
shipment purchased by the Retailer for GSI as it relates to the
entire shipment received by the Retailer from that vendor) of the
actual freight costs from the manufacturer to the Retailer's
point of receipt and the actual freight costs from the Retailer's
point of receipt to GSI's fulfillment facility.
b. In Line Merchandise. The Retailer shall advise GSI, no later
--------------------
than ten days after placing a purchase order with a vendor, of
the Category, item ordered, net cost, Retailer's retail price and
expected day of delivery to the Retailer's Warehouse.
c. Special Make-Ups. No later than five business days after ordering
-----------------
Special Make-Ups, Retailer shall advise GSI of the net cost,
color selection and size range of such Special Make-Ups. GSI
shall have the right to purchase up to [*] per cent of the
Special Make-Up, proportionately as to size and color, as ordered
by the Retailer. GSI shall have five business days to advise
Retailer whether it desires to order any of the Special Make-Ups
and, if so, the quantity thereof. Special Make-Ups shall be
exclusive to Retailer's Web Site and shall not be made available
for sale on the web site of any other retailer for whom GSI
operates a web site. Retailer shall supply GSI with a sample of
the Special Make-Ups ordered by GSI for sale on the Retailer's
Web Site within ten days of obtaining such sample.
10
<PAGE>
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Special Make-Ups to
warrant selling such merchandise on line. In such instances the
Retailer shall not be required to offer such Special Make-Ups to
GSI to sell on line; provided however, the Retailer acknowledges
that with respect to Special Make-Ups ordered by Retailer for
chainwide distribution, GSI does not anticipate that this will
occur on a regular basis and this should be the exception rather
than the usual occurrence. Further, GSI acknowledges that the
Retailer may not be able to offer GSI certain Special Make-Ups
which are not available in all of the Retailer's stores.
d. Closeout Merchandise. Retailer shall advise GSI no later than
---------------------
five business days after issuing a purchase order for Closeout
Merchandise from a vendor. At that time, Retailer shall advise
GSI of the cost, sizes and colors available and GSI shall have
five business days after receipt of such information to advise
Retailer that it will purchase, at Retailer's net cost, up to [*]
per cent of the Closeout Merchandise to be received by Retailer,
proportionately as to size and color, as ordered by Retailer.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Closeout Merchandise
to warrant selling such merchandise on line. In such instances
the Retailer shall not be required to offer such items of
Closeout Merchandise to GSI to sell on line; provided however,
the Retailer acknowledges that GSI does not anticipate that this
will occur on a regular basis and this should be the exception
rather than the usual occurrence.
Any Closeout Merchandise purchased by GSI from Retailer shall be
offered for sale by Retailer only on the Retailer's Web Site.
e. Markdowns. In the event that the Retailer has available Markdowns
----------
which it would like to offer for sale on its Web Site solely at
its discretion, it shall notify GSI and ship the Markdowns to
GSI's fulfillment center. The Markdowns shall be shipped to GSI
on consignment only. Retailer shall set the selling prices on the
Markdowns; provided however,
11
<PAGE>
that GSI shall have no obligation to offer any Markdowns for sale
on the Retailer's Web Site which GSI deems, in its sole
discretion, would be inappropriate. Retailer shall receive [*] of
the proceeds received from the sale of any Markdowns when sold,
which shall be calculated as follows: [*]of the sale price plus
the Retailer's [*] Revenue Share. By way of example only, if
Retailer consigns an athletic shoe to GSI with an original price
of $75.00 and a Markdown price of $50.00, if the Markdown is sold,
Retailer shall receive [*] ([*] of $50.00 and [*] of $50.00). GSI
shall account to Retailer for the sale of any Markdowns at the
same time that it accounts to the Retailer for Retailer's Revenue
Share.
f. The parties shall cooperate with each other so that the entire
process set forth in paragraphs 3.3 a, b, c, and d between GSI and
Retailer may be accomplished electronically.
g. In the event that GSI elects to open retail outlets in order to
sell remaining On Line Merchandise, GSI covenants that during the
Term of this Agreement, it will not open such an outlet within a
ten mile radius of any Land Based Store owned and operated by the
Retailer.
3.6 Land Based Stores Gift Certificates. Subject to Retailer's rights set
------------------------------------
forth in 3.3 c. above, GSI shall offer for sale on the Retailer's Web
Site gift certificates for merchandise in Retailer's Land Based Store.
Retailer shall furnish such gift certificates to GSI on consignment.
GSI shall remit to Retailer 90.5% of all proceeds received from the
sale of Land Based Stores Gift Certificates, the balance being
retained by GSI as its fee and to cover all costs, including credit
card fees. GSI shall account to Retailer for all sales of such
certificates at the same time as it accounts to Retailer for
Retailer's Revenue Share from the sale of On Line Merchandise
(excluding Land Based Stores Gift Certificates). The amount of
proceeds from the sale of Land Based Stores gift certificates shall
not be included in calculating Revenue Share.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
-----------------------------
processing all E - Commerce business. GSI will promptly process E -
Commerce Orders received from the Retailer's Web Site. GSI shall take
the customer's credit card number at such time as the merchandise is
ordered. GSI shall charge the customer's credit card at the time the
merchandise is shipped. The
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order will appear on the customer's credit card under the name of
"Retailer.com" and proceeds shall be deposited into GSI's designated
bank account for full credit to GSI. GSI will make all arrangements
for delivery of merchandise purchased on the Retailer's Web Site.
3.8 Payment and Accounting of Revenue Share to Retailers.
----------------------------------------------------
The Retailer shall receive a [*] per cent share of the revenue
("Revenue Share") on the amount of all E-Commerce Orders (excluding
taxes, delivery, handling, and net of returns); provided, however,
should [*] Within ten (10) days after the end of each calendar month
during the Term (with the exception of the end of December, which
shall be thirty days), GSI shall account to the Retailer for the sale
of all On Line Merchandise from the Retailer's Web Site. At the time
of such accounting, GSI shall remit to the Retailer its Revenue Share
earned from the sale of On Line Merchandise on the Retailer's Web Site
during the prior month. Remittance shall be by the wire transfer of
funds to an account designated by Retailer.
Within ninety (90) days of the end of each calendar year, GSI shall
provide the Retailer with a statement certified by its independent
auditors and setting forth the Revenue Share earned by the Retailer
during the prior calendar year. For a period of two years after the
Retailer receives such certified statement from GSI, Retailer, on one
occasion, shall have the right to audit the books and records of GSI
with respect to the Retailer's Revenue Share earned during the
calendar year to which the certified statement relates. Such audit
shall be conducted at GSI's principal office located in the
continental United States on two weeks prior notice to GSI. In the
event that the audit reveals that the Revenue Share was understated,
GSI shall within thirty days of completion of the audit, pay to the
Retailer the remaining balance of the Revenue Share for the period
audited plus interest at the prime rate of interest as provided for in
The Wall Street Journal on the date of the audit's certification. In
addition, in the event that the audit reveals that the Revenue Share
is understated by more than [*] per cent for the calendar year in
question, GSI shall pay the additional amount owing and pay for the
reasonable audit costs and this shall be Retailer's sole remedy. In
the event that the audit reveals that the Revenue Share is
underreported by more than [*] per cent in any year, then that shall
be considered a material breach of this Agreement by GSI entitling
Retailer to exercise its remedies set forth in paragraph 13.1 below.
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3.9 Service of On Line Customers. GSI shall be responsible for providing
----------------------------
all customer service relating to sales from the Retailer's Web Site.
3.10 Return of On Line Merchandise. GSI's return policy shall be
-----------------------------
consistent with the Retailer's return policy. With each shipment of
merchandise, GSI shall specifically instruct all customers that all
merchandise purchased on line may not be returned to the Retailer's
Land Based Stores and may only be returned in accordance with the
instructions enclosed; provided however, in the rare instance a
customer desires to return On Line Merchandise to one of the
Retailer's Land Based Stores, the Retailer, in order to maximize
customer relations, shall accept such merchandise for return in
accordance with the Retailer's return policy, and return the
merchandise to GSI's fulfillment center. At the next such time that
GSI pays the Retailer pursuant to paragraph 3.8 above, and upon
receipt of such merchandise, GSI shall credit the Retailer the amount
refunded by the Retailer to the customer and the actual freight
charges incurred by Retailer in order to return the merchandise to
GSI.
3.11 On Line Customer Loyalty Programs. GSI shall have the right to
---------------------------------
establish On Line Customer Loyalty Programs in order to encourage
continued on line purchases. Customer Loyalty Programs established by
GSI shall be used only in connection with on line purchases and
Retailer's customer loyalty programs shall be used only in connection
with purchases at the Retailer's Land Based Stores.
Notwithstanding anything contained herein to the contrary, GSI shall
not establish any On Line Customer Loyalty Programs without first
obtaining the approval of Retailer. Retailer shall respond to a
request for such approval from GSI within seven days of receiving the
request. In the event Retailer fails to timely respond, GSI shall
furnish Retailer with a notice marked "second request". If Retailer
does not respond within two business days, GSI's request shall be
deemed granted.
3.12 Cross Promotion. GSI shall have the right to use Retailer's URL, name
---------------
and logo to cross promote Retailer's Web Site with other businesses in
order to promote Retailer's Web Site; provided however, GSI shall not
promote Retailer's Web Site on any other sporting good retailer's web
site, or on any other web site which would generally be considered
immoral, pornographic or offensive. Notwithstanding anything contained
herein to the contrary, GSI shall not establish any Cross Promotions
without first obtaining the approval of Retailer. Retailer shall
respond to a request for such
14
<PAGE>
approval from GSI within seven days of receiving the request. In the
event Retailer fails to timely respond, GSI shall furnish Retailer
with a notice marked "second request". If Retailer does not respond
within two business days, GSI's request shall be deemed granted.
3.13 Price Matching. In the event that the Retailer, at its Land Based
--------------
Stores offers a "Price Matching" policy, GSI's management shall have
the right to use and adopt such policy for the Retailer's Web Site;
provided however, GSI shall not under any circumstance, advertise or
market the availability of this policy, and may offer it to customers
only in GSI's sole discretion.
3.14 Project Manager. Promptly after the execution of this Agreement, but
---------------
in no event later than sixty days after such execution, Retailer, at
its expense, shall hire or reassign one of its existing employees, to
act as Project Manager to work exclusively with GSI in creating and
maintaining the Retailer's Web Site. Commencing with the Project
Manager's hiring and continuing through the Term, as may be extended,
the Project Manager shall be the Retailer's liaison with GSI and shall
be responsible for supplying GSI with the Retailer Content and such
other information as may reasonably be required of the Retailer in
order to create and maintain the Retailer's Web Site in the most
efficient manner.
4. ON-LINE DATA AND DATABASES
--------------------------
4.1 Ownership of Data. Any and all data ("Customer Data") related to
-----------------
Retailer's customers (including customer names and other identifying
information such as addresses, phone numbers and e-mail addresses,
credit card numbers, and descriptions of the items and quantities of
items purchased) that is collected by GSI shall be owned [*].
4.2 Ownership of Databases. All data structures, data schema, database
----------------------
dictionaries, attributes, validation tests for each element, table
sizes and formats, access requirements, data dependencies and other
elements involving the storage of Data on the Web Site and all
refinements, updates, releases, improvements and enhancements thereto,
all intellectual property rights embedded therein and all applications
created specifically for use of the data and Retailer Content
(collectively, the "Databases") shall, as between GSI and Retailer, be
the sole and exclusive property of GSI.
4.3 Delivery of Customer Data to Retailer. From time to time, but no more
-------------------------------------
than four (4) times per calendar year,
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Retailer may request that GSI provide to Retailer any or all of the
following information collected from the Customer Data:
a. customer's names;
b. customer's addresses;
c. customer's phone number;
d. customer's e-mail address;
e. items purchased;
f. amount spent;
g. information as to how customer reached Web Site;
h. refers;
i. unique visitors to site;
j. page views per site;
k. top ten most viewed pages;
l. bottom ten least viewed pages;
m. time of day traffic patterns;
n. sales by product and brand;
o. customer comments and complaints (shall be furnished on a monthly
basis);
p. additional information at GSI's discretion.
Upon receipt of such request, GSI shall provide the Customer Data to
Retailer in a mutually agreeable, commercially standard format, either via
diskette, CD-ROM, electronically, or via another mutually agreeable method.
GSI shall use commercially reasonable efforts to ensure that the Customer
Data provided to Retailer accurately and completely reflects the Customer
Data in the Web Site, but GSI shall have no obligation to check the
accuracy, validity or integrity of the Customer Data and except as set
forth in this Section 4.3, the Customer Data is provided "AS-IS".
4.4 Restrictions on Use of Customer Data. Each party shall treat the
------------------------------------
Customer Data as Confidential Information of the other party in
accordance with the provisions of Article 7. Neither party may sell,
lend, or license the Customer Data to third parties without the prior
written consent of the other party, which consent may be withheld at
the sole discretion of the other party; provided however, Retailer
grants to GSI the right to combine all retailers' Customer Data to
form trends and overall research as to the on line shopping habits of
consumers. Prior to furnishing such Customer Data to a third party,
GSI shall provide Retailer a copy thereof, which Retailer may retain
for its own personal use in connection with the operation of its
business. If Retailer finds any Customer Data reported therein which
is so regionally specific that an executive in the sporting goods
industry could reasonably identify the Retailer from such Customer
Data, Retailer may, within ten days of receipt, notify GSI, and GSI
shall amend the Customer Data to delete such
16
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references which are objectionable to Retailer on those grounds.
5. ADVERTISING AND MARKETING
-------------------------
The Retailer shall,commencing no later than October 1, 1999, and continuing
during the Term, and any extensions thereof, at no cost to GSI provide for
Complete URL Integration in its advertising and marketing by:
5.1 prominently including as part of all of its print media including but
not limited to newspapers, periodicals, circulars, billboards, print
materials, letterhead, business cards, shopping bags, cash register
receipts and arena advertising) its URL, www.Retailer.com.; and
5.2 prominently including, at the end of its television advertising, its
URL; and
5.3 mentioning its URL at the end of all radio advertisements.
Notwithstanding anything contained herein to the contrary, the Retailer may
a) exhaust its present inventory of print media and b) rerun existing
television and radio advertisements that do not contain the Retailer's URL,
but all new orders of print media and all new productions of television
and/or radio advertisements shall prominently contain the Retailer's URL.
All advertisements and marketing appearing in newspapers, circulars and
periodicals shall contain the following disclaimer: "On Line Merchandise
offerings may vary from products offered in Dunham's store."
6. ADVERTISING COOP AND DISCRETIONARY FUNDS
----------------------------------------
6.1 During the Term and any extensions thereof, GSI shall use all
Advertising Co-op and Discretionary Funds received by GSI directly
from vendors as a result of the purchase of merchandise for the
Retailer's Web Site exclusively, to promote the Retailer's Web Site,
as GSI shall elect. All such proposed advertisements shall be
submitted to the Retailer for the Retailer's approval as to content
and design. The Retailer shall have five business days from receipt to
either approve or disapprove. In the event that the Retailer
disapproves, it shall advise GSI specifically as to why and GSI shall
attempt to address the Retailer's concerns and resubmit the proposal
to Retailer for its approval, which shall again have forty eight hours
from receipt to approve or disapprove. This procedure shall continue
until the advertisement has been
17
<PAGE>
approved or replaced. In all instances where approval is requested of
the Retailer, in the event the Retailer does not respond within the
aforementioned forty eight hours, Retailer shall be deemed to have
granted approval.
6.2 Any Advertising Co-op and Discretionary Funds received by the Retailer
through the Retailer's purchase of product for GSI, ultimately for the
Retailer's Web Site, may be retained by the Retailer; provided
however, Retailer acknowledges that it is preferential for Retailer's
vendors to sell to GSI directly and both Retailer and GSI shall
request Retailer's vendors to do so.
6.3 Retailer shall retain from vendors any non item driven marketing
funds; however, Retailer shall use its reasonable efforts to obtain
from vendors incremental marketing funds based upon an increase in the
sale of the vendor's merchandise on the Retailer's Web Site. Any such
incremental marketing funds shall belong to GSI and shall be used in
accordance with paragraph 6.1 above.
7. CONFIDENTIALITY
---------------
7.1 Confidential Information. Each party acknowledges that, in connection
------------------------
with the performance of this Agreement, it may receive Confidential
Information of the other party. For the purpose of this Agreement,
"Confidential Information" shall mean information or materials that is
clearly marked "confidential" or the Receiving Party knows has reason
to know is the confidential or proprietary information of the
Disclosing Party, either because a) such information is marked or
otherwise identified by the Disclosing Party as confidential or
proprietary, or b) such information has commercial value and is not
generally known in the Disclosing Party's trade or industry.
Confidential Information shall include, without limitation: (a)
concepts and ideas relating to the development and distribution of
content in any medium; (b) trade secrets, drawings, inventions, know-
how, software programs, and software source documents; (c) information
regarding plans for research, development, new service offerings or
products, marketing and selling, business plans, business forecasts,
budgets and unpublished financial statements, licenses and
distribution arrangements, prices and costs, suppliers and customers;
and (d) existence of any business discussions, negotiations or
agreements between the parties.
7.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all
18
<PAGE>
Confidential Information of the Disclosing Party and not to disclose it to
any third party; and (ii) not to use any Confidential Information of the
Disclosing Party except as permitted by this Agreement or as may be
necessary for the Receiving Party to perform its obligations under this
Agreement. The Receiving Party will use at least the same degree of care to
protect the Disclosing Party's Confidential Information as it uses to
protect its own Confidential Information of like importance, and in no
event shall such degree of care be less than reasonable care. The
obligations and restrictions imposed by this Article 7 shall terminate five
(5) years after the expiration or termination of this Agreement.
7.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information will not include any information that: (i)
was in the public domain at the time it was communicated to the
Receiving Party by the Disclosing Party; (ii) entered the public
domain subsequent to the time it was communicated to the Recipient by
the Disclosing Party through no fault of the Receiving Party; (iii)
was in the Receiving Party's possession free of any obligation of
confidence at the time it was communicated to the Receiving Party by
the Disclosing Party; (iv) was rightfully communicated to the
Receiving Party by a third party, free of any obligation of
confidence, subsequent to the time it was communicated to the
Receiving Party by the Disclosing Party; (v) was developed by
employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving
Party by the Disclosing Party; or (vi) was communicated by the
Disclosing Party to an unaffiliated third party free of any obligation
of confidence. In addition, the Receiving Party may disclose the
Disclosing Party's Confidential Information in response to a valid
order by a court or other governmental body, as otherwise required by
law, or as necessary to establish the rights of either party under
this Agreement; provided however, in the event that the Receiving
Party receives a demand to disclose such Confidential Information in
connection with a legal action or proceeding, the Receiving Party, if
possible, shall first notify the Disclosing Party of the demand in
order to provide the Disclosing Party an opportunity to seek a
protective order.
7.4 Confidentiality of this Agreement. Retailer and GSI acknowledge that
---------------------------------
the terms and conditions of this Agreement constitute Confidential
Information which shall be governed by the terms of this Article 7.
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<PAGE>
7.5 Confidentiality of Customer Data and Retailer's Policies.
--------------------------------------------------------
GSI acknowledges that it will be receiving from Retailer, and
generating from the performance of its obligations under this
Agreement, Confidential Information critical to the Retailer's
business and concerning Retailer's customers and various information
concerning the operation of Retailer's business may include net
purchasing prices, advertising co-op and discretionary fund amounts,
specific marketing plans, specific on line sales and delivery dates of
merchandise. GSI recognizes its obligation to keep such information
confidential. Therefore, all GSI employees who may have access to any
such Confidential Information will be required to execute
confidentiality agreements and GSI shall use its best efforts to
enforce the terms thereof. Such confidentiality agreements will
specifically provide that the employee shall not discuss with any
other retailers who may or may not be customers of GSI, any
information concerning the Retailer or its customers.
Further, GSI acknowledges it is associated with other subsidiaries of
GSI's parent corporation, Global Sports, Inc. GSI therefore represents
and warrants to Retailer that it will establish a "Need to Know"
policy with respect to such Confidential Information and only
disseminate such Confidential Information to those employees and
members of GSI's management who have a specific need to know such
Confidential Information. In those instances, prior to the
dissemination of such Confidential Information to those individuals,
they will be required to execute confidentiality agreements
specifically prohibiting such disclosure of such Confidential
Information to anyone, except as otherwise permitted by the terms of
this Agreement.
8. EXCLUSIVE WEB AGREEMENT
-----------------------
During the Term and any extensions thereof, the Retailer, any subsidiary of
the Retailer, shall not sell any sporting goods merchandise on the Internet
(including the Web), nor use itself or allow a third party to use its URL,
name or logo on the Web for the purpose of facilitating the sale of
merchandise on the Web other than through GSI.
Notwithstanding anything contained herein to the contrary, should Retailer
be acquired by another established retailer who changes the name of
Retailer to the acquirer's tradename, and should such acquirer have an
existing web site,then this Agreement shall become non exclusive for the
remainder of the Term. In addition, should Retailer acquire another
retailer which has a web site, and change the name of that retailer to
20
<PAGE>
Retailer's tradename, then Retailer shall cease to use the acquired
retailer's web site. If Retailer acquires another retailer which has a web
site, and does not change the name of that Retailer to Retailer's
tradename, then Retailer may continue to use the acquired retailer's web
site.
9. URL, NAME AND LOGO USAGE
------------------------
During the Term, the Retailer hereby grants to GSI the exclusive right to
use, copy, modify and display the Retailer's name, logo and URL and such
other names and logos as the Retailer owns and as may be listed on Schedule
"1" attached hereto and made a part hereof, on the Retailer's Web Site, on
invoices and packing slips, in connection with credit card charges, a toll
free Web site customer service telephone line, and generally in connection
with the operation of GSI's on-line business; provided however, GSI shall
have no right to modify Retailer's name, logo or URL without Retailer's
consent. Such Schedule shall be modified from time to time during the Term
to add any new names and logos which the Retailer may register with the
United States Patent and Trademark Office.
Retailer shall register the fictitious name "Retailer.com" and grants to
GSI the exclusive right to use such name for the sole purpose of conducting
business on the Retailer's Web Site. Retailer shall also register the
domain name www.Retailer.com and grants to GSI the exclusive right to use
such domain name in connection with the operation of the Retailer's Web
Site. GSI's exclusive rights shall terminate at the end of the Term of this
Agreement.
10. REPRESENTATIONS AND WARRANTIES.
-------------------------------
10.1 Retailer represents and warrants that at all times during the Term
hereof or any extensions thereof:
a. it has or will have the full right to grant to GSI the right to
use its URL, names and logos as discussed in Article 9 above,
including its Domain Name; and
b. Prior to the Launch Date, if not already completed, Retailer
shall register and maintain the Domain Name "Retailer.com" with
Network Solutions or any similar successor entity. Retailer shall
list itself as the owner and billing contact for the Domain Name
"Retailer.com" and Retailer shall list GSI as the administrative
and technical contact for the Domain Name "Retailer.com".
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<PAGE>
10.2 Each party represents and warrants to the other party that: (i) it is
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the power
and authority to enter into this Agreement and the transactions
contemplated herein; (ii) the consummation of the transactions
described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles
of Incorporation or Bylaws, or any statute or administrative
regulation or of any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement or
instrument to which it is a party or by which it is bound or
constitute a default thereunder; and (iii) this Agreement has been
duly authorized, executed and delivered by it and this Agreement is
valid, enforceable and binding upon each party in accordance with its
terms.
10.3 GSI represents and warrants that at all times during the term hereof
or any extensions thereof:
a. No other Full Line Sporting Goods E-Commerce Partner (as
hereinafter defined) of GSI [*]. Notwithstanding anything
contained herein to the contrary, Retailer acknowledges that, a
Full Line Sporting Goods E-Commerce Partner of GSI [*] and, as
such, should that Full Line Sporting Goods E-Commerce Partner of
GSI [*]. By way of example only, the terms of this representation
and warranty shall not apply to [*]. As used herein, a Full Line
Sporting Goods E-Commerce Partner shall refer to a sporting goods
retailer which carries in its Land Based Stores, merchandise in a
variety of Categories such as (by way of example only) baseball,
basketball, golf, bowling, football, hockey, aerobics and
fishing.
b. As of the Launch Date and continuing throughout the Term, GSI
shall have a minimum, including Retailer, of 1) [*] Full Line
Sporting Goods E-Commerce Partners, each (excluding Retailer)
with annual Land Based Store Sales of more than [*] dollars [*] ;
and 2) [*] other sporting good E-Commerce partners, which are
either a) Full Line Sporting Goods E-Commerce Partners or b)
Specialty Store E-Commerce Partners (as hereinafter defined) so
that the total Land Based Store sales of all of GSI's E-Commerce
Partners annually exceed [*] dollars [*]. As used herein,
"Specialty Store E-Commerce Partners" shall mean sporting goods
retailers which sell limited categories of sporting goods (i.e.
22
<PAGE>
athletic footwear) and are not considered a Full Line Sporting
Goods E-Commerce Partner. In determining the annual Land Based
Store Sales of a retailer, the sales of all franchisees shall be
included. In the event that GSI is notified by Retailer that it
is in violation of this representation and warranty, then,
notwithstanding anything contained in this Agreement to the
contrary, GSI shall have one year from the date of such
notification to make such agreements as are necessary to make
this representation true and correct. This shall not include a
violation of this representation and warranty as of the Launch
Date, which shall be deemed a breach of this provision with no
cure period.
Should any of the representations and warranties made by GSI in
Section 10.3 a. above become materially false and not corrected within
the time permitted, then Retailer's sole remedy shall be to terminate
this Agreement and neither party shall have any further liability
hereunder.
11. INDEMNIFICATION
---------------
11.1 Retailer, at its own cost and expense, shall defend, indemnify and
hold harmless GSI and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising as
a consequence of GSI providing services pursuant to this Agreement a)
from or related to a claim that GSI infringes a third party copyright,
trademark or trade secret relating to Retailer's tradename or any
other name set forth on Schedule 1 to this Agreement; or b) from
Retailer's gross negligence, wilful or intentional misconduct.
11.2 GSI, at its own cost and expense, shall defend, indemnify and hold
harmless Retailer and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising a)
from a claim made by any consumer that is related in any way to the
Retailer's Web Site or GSI's services to Retailer provided pursuant to
this Agreement, but excluding a claim for which GSI would have the
right to indemnification pursuant to Paragraph 11.1 above, or b) from
GSI's gross negligence, wilful or intentional misconduct and arising
as a consequence of GSI providing services pursuant to this Agreement.
23
<PAGE>
11.3 Retailer shall have sole control of any defense of any claim made
pursuant to Section 11.1 above, but GSI shall cooperate with Retailer
in providing such defense.
11.4 GSI shall have sole control of any defense of any claim made pursuant
to Section 11.2 above, but Retailer shall cooperate with Retailer in
providing such defense.
11.5 Any party seeking indemnification shall notify the other party as soon
as possible after such party seeking indemnification becomes aware of
the claim.
12. INSURANCE
---------
12.1 GSI shall maintain in full force and effect products liability
insurance coverage for merchandise sold on Retailer's Web Site. Such
policy shall name Retailer as an additional insured.
12.2 GSI shall deliver to Retailer certificates of insurance which
stipulate that no less than ten days notice will be given to Retailer
prior to the termination of the policy.
13. TERMINATION
-----------
13.1 Termination for Cause by Either Party.
-------------------------------------
a. This Agreement may be terminated by either party in the event of
any material breach of any of the terms and conditions of this
Agreement by the other party which breach continues in effect
after the breaching party has been provided with written notice
of breach and ninety (90) days to cure such breach and fails to
cure such breach. As used herein, "material breach" shall mean a
failure by a party to this Agreement to perform any of its
obligations the effect of which would substantially impair the
value of this Agreement to the other party. By way of example
only and not by way of limitation, GSI's failure to operate the
Retailer's Web Site according to commercially reasonable
standards as they are established today and as they may continue
to develop during the Term of this Agreement, failure to pay the
Retailer its Revenue Share (or any other amount due to Retailer
hereunder) or failure to provide customer service equivalent to
that provided by other reputable on line retailers, would be a
material breach of this Agreement by GSI. Retailer's failure to
comply with its obligations pursuant to Section 5 above, or
failure to provide GSI with the Retailer Content
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<PAGE>
necessary to construct and/or maintain the Retailer's Web Site,
would be a material breach of the Retailer's obligations under
this Agreement.
b. In addition to the right to terminate this Agreement as a result
of a material breach of this Agreement, either party may
terminate this Agreement in the event that the sale of On Line
Merchandise on the Retailer's Web Site does not equal or exceed
the following minimum requirements ("Inadequate Sales"):
YEAR WEB SITE SALES
---- --------------
2001 $[*]
2002 $[*]
2003 $[*]
2004 $[*]
2005 $[*]
2006 $[*]
2007 $[*]
2008 $[*]
2009 $[*]
In the event that a party desires to terminate this Agreement as
a result of Inadequate Sales it shall do so by notifying the
other party within thirty days of receiving the audited report of
sales on the Retailer's Web Site from GSI's independent auditor
by sending written notice to the other party of its intention to
do so. In such event the termination shall be effective sixty
days after receipt of such notice by the party receiving it.
Notwithstanding anything contained herein to the contrary, should
the Retailer elect to terminate this Agreement as a result of
Inadequate Sales, GSI shall have the option to void the
termination notice by paying to the Retailer [*] dollars within
thirty days of receipt of the Retailer's termination notice. In
such event, the Retailer's termination notice shall be null and
void and this Agreement shall remain in full force and effect.
RETAILER ACKNOWLEDGES THAT RETAILER'S RIGHT TO TERMINATE THIS
AGREEMENT AS A RESULT OF INADEQUATE SALES IS UNIQUE TO THE
RETAILER AND DISCLOSURE OF SUCH WOULD CAUSE GSI IRREPARABLE HARM.
ACCORDINGLY RETAILER REAFFIRMS ITS OBLIGATION SET FORTH IN
ARTICLE SEVEN ABOVE TO KEEP THIS PROVISION AND THE OTHER TERMS OF
THIS AGREEMENT CONFIDENTIAL, EXCEPT AS DISCLOSURE MAY BE
PERMITTED PURSUANT TO ARTICLE SEVEN ABOVE.
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13.2 Termination for Cause Only by GSI. GSI may terminate this Agreement
---------------------------------
by giving five days prior written notice to Retailer of its election
to terminate upon the occurrence of any of the following events:
a. any representation or warranty contained herein becomes
materially false or misleading; or
b. closure by Retailer of more than one third of its Land
Based Stores; or
c. the filing for protection by the Retailer under any federal
or state bankruptcy law.
13.3 Termination Without Cause by Either Party. In the absence of a
-----------------------------------------
material breach, this Agreement may only be terminated by the
expiration of the Term, as may be extended pursuant to Section 2.3
above.
14. LIMITATIONS UPON LIABILITY
--------------------------
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE TO RETAILER FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF
WHETHER SUCH DAMAGES ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL
THEORIES) ARISING FROM OR RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS'
USE OF OR INABILITY TO ACCESS ANY PART OF THE INTERNET OR RETAILER'S OR
RETAILER'S CUSTOMERS' RELIANCE ON OR USE OF INFORMATION, SERVICES OR
MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR THE SERVICES, OR THAT
RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS, THEFT, OR DELETION OF
FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR TRANSMISSION, OR ANY
FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE TO RETAILER UNDER
THIS AGREEMENT FOR AN AMOUNT THAT EXCEEDS, IN THE AGGREGATE THE AMOUNTS
PAID TO RETAILER DURING THE [*] MONTHS PRECEDING THE LAST ACT OR
OMISSION GIVING RISE TO SUCH LIABILITY. IN ADDITION, RETAILER SHALL BE
ENTITLED TO SEEK EQUITABLE RELIEF FROM THE COURT. THE REMEDIES SET FORTH IN
THIS ARTICLE 14 CONSTITUTE THE SOLE AND EXCLUSIVE REMEDIES AVAILABLE TO
RETAILER UNDER THIS AGREEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE IN
ANY RESPECT FOR CLAIMS BROUGHT MORE THAN TWELVE (12) MONTHS AFTER THE LAST
ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
15. PROPERTY RIGHTS AND OWNERSHIP
-----------------------------
The Retailer's Web Site shall consist of, and shall operate in conjunction
with, multiple elements, all of which are subject to certain intellectual
property rights. The parties'
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respective rights with respect to such elements shall be as set forth
below. For purposes of this Agreement, the term "Ownership" shall refer to
ownership of all right, title and interest in and to the respective
elements, including, but not limited to, all patent, copyright, trade
secret, trademark and any other similar intellectual property rights
therein, as applicable.
15.1 Retailer's URL shall be owned solely by the Retailer;
15.2 Retailer's Web Site shall be owned solely by GSI;
15.3 Software developed for the Retailer's Web Site, shall be owned
solely by GSI, subject to any authorizations to use and
approvals obtained by the Retailer and granted to GSI.
With respect to intellectual property owned by each of them, Retailer and
GSI shall both have rights associated with the ownership of intellectual
property, including the right to copyright web sites and domains.
16. GSI'S TWENTY DAY PERIOD TO EXECUTE
----------------------------------
Retailer shall execute this Agreement first and deliver such executed
Agreement to GSI which shall thereafter have twenty days from receipt to
countersign the Agreement. During such twenty day period, Retailer shall
have no right to withdraw the agreements which it executed and delivered to
GSI.
17. DISCONTINUANCE OR REGULATION OF THE INTERNET.
---------------------------------------------
Retailer acknowledges and agrees that the Internet (including without
limitation the Web) is a network of private and public networks, that GSI
has no control over the Internet, and that GSI is not liable for the
discontinuance of operation of any portion of the Internet or possible
regulation of the Internet which might restrict or prohibit the operation
of the Web site.
18. FORCE MAJEURE
-------------
In the event that either party is unable to perform any of its obligations
under this Agreement or to enjoy any of its benefits because of any event
beyond the control of the affected party including, but not limited to,
natural disaster, acts of God, actions or decrees of governmental bodies or
failure of communications lines or networks (a "Force Majeure Event"), the
party who has been so affected shall promptly give written notice to the
other party and
27
<PAGE>
shall use its best efforts to resume performance. Upon receipt of such
notice, all obligations under this Agreement shall be immediately suspended
for the duration of such Force Majeure Event.
19. WAIVER
------
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power
or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and
signed by the party against whom enforcement of such waiver is sought and
then only to the extent expressly specified.
20. PRESS RELEASES
--------------
Notwithstanding anything in this Agreement to the contrary, GSI shall not
make any announcement, advertisement, statement or press release
(collectively "Announcement") concerning the existence of this Agreement,
that Retailer and GSI are developing a Web Site or the fact that Retailer
and GSI are E-Commerce partners, prior to the Launch Date. If GSI desires
to disclose the existence of this Agreement to any third party including
but not limited to an investor, potential investor, analyst, professional
advisor, business affiliate, business associate, lender, or employee that
individual or entity must first enter into a Confidentiality Agreement with
GSI, in a form acceptable to Retailer, or substantially similar to that
attached hereto as Exhibit "B" agreeing not to make any disclosure as set
forth above. If this particular restriction is violated by an individual
or entity other than a member of the senior management of GSI, Retailer
agrees not to take action against GSI and enforce its rights directly
against the individual or entity and GSI will cooperate with Retailer in
enforcing those rights. Notwithstanding anything contained herein to the
contrary, GSI may disclose in an Announcement the fact that an E-Commerce
partner is a "non-disclosed retailer with sales in excess of $200,000,000."
If GSI or a member of its senior management breaches this particular
restriction, GSI shall be required to pay Retailer [*] as liquidated
damages, and Retailer may terminate this Agreement. After the Launch Date,
all voluntary public announcements concerning the transactions contemplated
by this Agreement shall be mutually acceptable to both GSI and Retailer.
Unless required by law, neither GSI on the one hand, and Retailer on the
other hand, shall make any public announcement or issue
28
<PAGE>
any press release concerning the transactions contemplated by this
Agreement without the prior written consent of GSI or Retailer,
respectively. With respect to any announcement that any of the parties is
required by law to issue, such party shall, to the extent possible under
the circumstances, review the necessity for and the contents of the
announcement with the other party before issuing the announcement; provided
however, if either party cannot obtain the consent of the other party in a
timely manner, the party required to comply with law may issue the press
release or public announcement without obtaining the consent of the other
party.
21. GOVERNING LAW
-------------
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes thereto, shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (excluding the
choice of law rules thereof).
22. ASSIGNMENT
----------
Retailer shall have no right to assign this Agreement without the prior
written consent of GSI; provided, that Retailer shall have the right to
assign this Agreement to any person or entity that acquires or succeeds to
all or substantially all of such party's business or assets upon written
notice to GSI.
GSI shall not assign this Agreement to any traditional land based sporting
goods retailer or any manufacturer of sporting goods without the Retailer's
consent.
23. COUNTERPARTS
------------
This Agreement may be signed in several counterparts, each of which shall
be deemed an original, and all of which when taken together, shall be
deemed a complete instrument.
24. ENTIRE AGREEMENT
----------------
This Agreement, including the Web Development Agreement, represents the
entire agreement of the parties with respect to the subject matter hereof
and may not be modified, except in writing, executed by all of the parties
hereto. This Agreement supersedes all prior writings of the parties with
respect to this subject matter.
25. JURISDICTION
------------
29
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The parties agree that the exclusive jurisdiction and venue of any dispute
that arises hereunder shall be in the Court of Common Pleas of Montgomery
County, Pennsylvania or the United States District Court for the Eastern
District of Pennsylvania.
26. INDEPENDENT CONTRACTORS
-----------------------
The relationship of the parties herein shall hereunder be that of
independent contractors and nothing herein shall be construed to create a
joint venture or partnership.
27. SIGNING
-------
The parties executing this Agreement represents and warrants that they have
full corporate authority to do so.
28. BINDING EFFECT
--------------
This Agreement shall be binding upon the parties hereto, their successors
and permitted assigns.
29. HEADINGS
--------
Section headings contained in this Agreement are inserted for convenience
or reference only and shall not be deemed to be a part of this Agreement
for any other purpose.
30. DISCLAIMER OF WARRANTIES
------------------------
EXCEPT AS TO THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, GSI MAKES
NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR IN LAW
WITH RESPECT TO THE CREATION AND MAINTENANCE OF THE PRODUCT AND SERVICES
PROVIDED FOR HEREUNDER, AND DISCLAIMS ALL OTHER WARRANTIES. RETAILER
ACKNOWLEDGES AND AGREES THAT GSI HAS NOT MADE, NOR DOES HEREBY MAKE, ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER,
EXPRESSED OR IMPLIED.
31. NOTICES
-------
Any notices or writings to be sent hereunder shall be in writing and shall
be by personal delivery, facsimile transmission or by certified or
registered mail, return receipt requested, and shall be deemed given upon
the earlier of actual receipt, five (5) days after deposit in the mail, or
receipt by sender of confirmation of facsimile transmission. Notices shall
be sent to the following addresses (or such other address as either party
may specify in writing):
IF TO GSI: 555 South Henderson Road
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King of Prussia, PA 19406
Attention: President
Copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Penna., 19102
IF TO RETAILER: 5000 Dixie Highway
Waterford, Michigan, 48329
Attn: Sr. Vice President, Marketing
Copy to: 5000 Dixie Highway
Waterford, Michigan, 48329
Attn: Legal Department
(SIGNATURES CONTAINED ON THE FOLLOWING PAGE)
31
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement with intent to be legally bound
hereby, the date and year first above written.
GLOBAL SPORTS INTERACTIVE, INC.: DUNHAM'S ATHLEISURE CORPORATION:
BY: /s/ Michael Rubin BY: /s/ Jeffrey G. Lynn
-------------------------- --------------------------
Title: President Title: President & CEO
----------------------- -----------------------
Date: 3/28/99 Date: 3/23/99
------------------------ -----------------------
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<PAGE>
EXHIBIT A
WEB SITE DEVELOPMENT AGREEMENT
------------------------------
THIS Web site Development Agreement ("Agreement") dated the ____ day of
______________, 1999 (the "Services Start Date") by and between Global Sports
Interactive, Inc., a Pennsylvania corporation (hereinafter referred to as "GSI")
with an address of 555 South Henderson Road, King of Prussia, PA 19406 and
Dunham's Athleisure Corporation (hereinafter referred to as "Retailer") with an
address of 5000 Dixie Highway, Waterford, Michigan, 48329.
W I T N E S S E T H:
WHEREAS, GSI and Retailer have entered into a E - Commerce Agreement
pursuant to which GSI shall provided certain E - Commerce services to Retailer,
including the development and maintenance of a web site; and
WHEREAS, the parties have elected to enter into this Agreement in order to
set forth the terms and conditions pursuant to which GSI shall develop a web
site for Retailer.
NOW, THEREFORE, in consideration of the mutual promises and terms herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged; and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Domain Name" means the domain name specified for the Web site by
Retailer from time to time. The initial Domain Name is specified in Attachment
B.
1.2 "E-Commerce Agreement" means the E-Commerce Agreement by and between
Retailer to which this Agreement is attached as Exhibit A.
1.3 "Features Set" means the requirements set forth in Attachment B, as
amended or supplemented in accordance with this Agreement.
1.4 "Intellectual Property Rights" means any and all now known or
hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the universe,
33
<PAGE>
including but not limited to copyrighs, moral rights, and mask-works, (b)
trademark and trade name rights and similar rights, (c) trade secret rights, (d)
patents, designs, algorithms and other industrial property rights, (e) all other
intellectual and industrial property rights (of every kind and nature throughout
the universe and however designated) (including logos, "rental" rights and
rights to remuneration), whether arising by operation of law, contract, license,
or otherwise, and (f) all registrations, initial applications, renewals,
extensions, continuations, divisions or reissues hereof now or hereafter in
force (including any rights in any of the foregoing).
1.5 "Milestone Delivery Schedule" means the schedule for development of
the Web site set forth in Attachment B.
1.6 "GSI Content" means all text, pictures, sound, graphics, video and
other data and assets supplied by Retailer to GSI, as such materials may be
modified from time to time.
1.7 "GSI Products" means, collectively, the GSI Tools, the GSI Content and
the GSI Work Product.
1.8 "GSI Tools" means any tools, both in object code and source code form,
which GSI has already developed or which GSI independently develops or licenses
from a third party, excluding any tools which GSI creates pursuant to this
Agreement. By way of example, GSI Tools may include, without limitation,
toolbars for maneuvering between pages, search engines, Java applets, and
ActiveX controls.
1.9 "Production Schedule" shall mean the schedule agreed upon by the
parties for the production of the Retailer's Web site, including the delivery of
the Retailer Content and GSI Content by Retailer to GSI.
1.10 "Retailer Content" means the Domain Name and all text, pictures,
sound, graphics, video and other data and assets supplied by Retailer to GSI, as
such materials may be modified from time to time.
1.11 "Services" means the services provided by GSI hereunder to develop,
host and maintain the Web site, in accordance with this Agreement.
1.12 "Web site" means, collectively, the E - Commerce Shopping Experience
and the Retailer Content made available on web pages under the Domain Name.
1.13 "GSI Work Product" means all HTML files, Java files, graphics files,
animation files, data files, technology, scripts and programs, both in object
code and source code form, all
34
<PAGE>
documentation and any other deliverable used by GSI to create the Web site.
2. WEB SITE DEVELOPMENT SERVICES
2.1 Delivery of Initial Retailer Content. As soon as reasonably possible,
GSI and Retailer shall agree upon a Production Schedule for the delivery by
Retailer to GSI of the Retailer Content that Retailer intends for GSI to
incorporate into the Web site. The parties acknowledge that Retailer will be
able to deliver certain "static" information, such as store locations, promptly
to GSI, and other Retailer Content, such as certain merchandise to be sold on
the Retailer's Web site, at a later date closer to the Launch Date. The Retailer
Content shall be in the format(s) designated by GSI as set forth on Attachment C
hereto. Upon Retailer's request, GSI shall assist Retailer in the conversion of
the Retailer Content into an acceptable form for use by the Web site.
2.2 Web site Development Services. At no cost to Retailer, GSI shall
provide design, programming and other consulting Services as specified in
Attachment B to create the Web site. GSI will provide the Web site to Retailer
in accordance with the Milestone Delivery Schedule.
2.3 Project Liaisons. Each party's primary contact for development
efforts shall be the project liaisons specified in Attachment B or the person
otherwise designated in writing by Retailer or GSI, as the case may be.
2.4 Acceptance. GSI shall make available final versions of the Web site
for Retailer's review and acceptance. Retailer shall have ten (10) days to
review and evaluate the Web site (the "Acceptance Period") to assess whether
it substantially meets the Features Set. During the Acceptance Period, Retailer
shall identify in writing to GSI all aspects of the Web site that do not
substantially conform to the Features Set. Upon receipt of Retailer's list of
non-conformities, GSI shall correct promptly all such non-conformities so that
the Web site does substantially conform to the Features Set and GSI shall extend
the Acceptance Period for a second ten (10) day Acceptance Period during which
Retailer shall confirm that all non-conformities that were previously identified
have been corrected. Notwithstanding the foregoing, the Web site shall be
deemed accepted upon the earlier of: (i) its use in commerce, provided however,
GSI shall not use the Retailer's Web site in commerce without the Retailer's
consent, which shall not be unreasonably withheld or delayed; (ii) Retailer's
failure to articulate any non-conformities during an Acceptance Period; or (iii)
Retailer's acceptance of the Web site; or (iv) GSI's demonstration that all non-
conformities have been corrected.
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<PAGE>
3. WEB HOSTING AND MAINTENANCE SERVICES
Following Retailer's acceptance of the Web site pursuant to Section 2.4,
GSI shall, at no cost to Retailer, provide the following web hosting and
maintenance Services:
3.1 Hosting Services. GSI shall load the Web site onto server(s) that are
connected to the Internet and readily accessible via the Web through use of the
Domain Names. GSI shall ensure that the Web site is functional and ready to
process transactions in a reasonably efficient manner.
3.2 Retailer Content. GSI shall upload all Retailer Content, including
updates, to the Web site within seven days of delivery to GSI. Upon GSI's prior
written consent, Retailer may electronically transmit or upload Retailer Content
directly to the Web site.
3.3 Maintenance Services. GSI shall maintain the Web site so that it
functions in a reasonably error free manner. Upon notification of an error in
the Web site or of a non-conformity between the Web site and the Features Set,
whether from Retailer or from any user of the Web site, GSI shall promptly
commence an investigation into the reported error, and GSI shall, upon
reproducing such error, use reasonable commercial efforts to correct such error
in a timely fashion. During such Maintenance Services, GSI shall ensure that the
Web site is functional and ready to process transactions in a reasonably
efficient manner, provided, however, GSI may, during low usage periods,
-------- -------
temporarily block access to the Web site to perform Web site maintenance during
periodic maintenance windows.
4. ADDITIONAL SERVICES
4.1 Search Engine Registration. When GSI makes the Web site available to
Retailer, GSI shall register the Web Site and Domain Name with all applicable
search engines, at GSI's discretion.
4.2 Domain Name Assistance. If requested by Retailer, GSI shall cooperate
with Retailer in registering the Domain Name with InterNIC. Retailer shall own
all right, title and interest in and to the Domain Name and all Intellectual
Property Rights related thereto. Unless otherwise specified by Retailer, GSI
shall, at Retailer's expense, assist Retailer in registration of the Domain
Name.
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<PAGE>
5. CONSIDERATION
In consideration for Retailer entering into the E Commerce Agreement, at no cost
to Retailer, GSI shall perform the Services set forth in this Agreement.
6. TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be conterminous with the term
of the E- Commerce Agreement. In absence of a material breach, this Agreement
may only be terminated by the expiration of the term.
6.2 Termination. Termination of this Agreement shall be governed by the
terms of Article 13 of the E - Commerce Agreement.
7. WARRANTIES AND DISCLAIMERS.
7.1 Cross Warranties. Retailer warrants as to the Retailer Content, and
GSI warrants as to the GSI Products, that any materials and updates or
enhancements there to shall not: (a) infringe on the Intellectual Property
Rights of any third party or any rights of publicity or privacy; (b) violate any
law, statute, ordinance or regulation (including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising); (c) be defamatory, trade libelous, unlawfully threatening or
unlawfully harassing; (d) be obscene, pornographic or indecent.
7.2 Representations and Warranties of Each Party. Each party represents
and warrants to the other party that: (i) it is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and that it has the power and authority to enter into this
Agreement and the transactions contemplated herein; (ii) the consummation of the
transactions described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles of
Incorporation or Bylaws, or any statute or administrative regulation or of any
order, writ, injunction, judgment or decree of any court, regulatory or
governmental authority or of any agreement or instrument to which it is a party
or by which it is bound or constitute a default thereunder; and (iii) this
Agreement has been duly authorized, executed and delivered by it and this
Agreement is valid, enforceable and binding upon each party in accordance with
its terms.
7.3 Year 2000. GSI warrants that the Web site shall not suffer any
material adverse effect as a result of a failure in any GSI Work Product or GSI
Tools to be Y2K Compliant. A product or service which is "Y2K Compliant" is one
that provides accurate results using data having date ranges spanning from
January 1, 1980
37
<PAGE>
through December 31, 2019 (the "Y2K Period"). By way of example and not of
limitation, "Y2K Compliant" means, with respect to a product or service, that it
can currently and shall, during the Y2K Period, continue to (a) manage and
manipulate data involving all dates within the Y2K Period (including the fact
that the year 2000 is a leap year) without functional or data abnormality
related to such dates; (b) manage and manipulate data involving all dates within
the Y2K Period without inaccurate results related to such dates; (c) have user
interfaces and data fields formatted to distinguish between dates within the Y2K
Period; and (d) accurately identify and either reject or correct invalid date
data during the Y2K Period. Provided a party otherwise complies with this
Section 7.4, it will not be liable to the other party for any failure to perform
obligations under this Agreement to the extent such failure arises from a
failure to be Y2K Compliant that (1) affects the non-performing party's
customers or suppliers or (2) is beyond its reasonable control (e.g., a failure
---
to be Y2K Compliant affecting a governmental entity).
7.4 Disclaimer. THE WARRANTIES MADE IN THIS SECTION 7 ARE MADE IN LIEU OF
ALL OTHER EXPRESS WARRANTIES, WHETHER ORAL OR WRITTEN AND EXCEPT AS SET FORTH IN
THIS SECTION 7, GSI MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8. OWNERSHIP
8.1 Ownership of GSI Products. Retailer hereby acknowledges and agrees
that as between Retailer and GSI, GSI owns all right, title and interest in and
to the GSI Products and all applicable Intellectual Property Rights thereto.
This Agreement confers no ownership interest in the GSI Products to Retailer.
8.2 Ownership of Retailer Content. GSI hereby acknowledges and agrees
that as between GSI and Retailer, Retailer owns all right, title and interest in
and to the Retailer Content and all applicable Intellectual Property Rights
thereto. Except for a limited non-exclusive license during the term to use the
Retailer Content solely to perform its obligations hereunder, this Agreement
confers no ownership interest in the Retailer Content to GSI.
9. LIMITATION UPON LIABILITY.
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE TO RETAILER FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER
SUCH DAMAGES ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES)
ARISING FROM OR RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS' USE OF OR
INABILITY TO ACCESS ANY PART OF THE INTERNET OR RETAILER'S OR RETAILER'S
CUSTOMERS' RELIANCE ON OR USE OF INFORMATION, SERVICES OR
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<PAGE>
MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR THE SERVICES, OR THAT RESULT
FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS, THEFT, OR DELETION OF FILES,
ERRORS, DEFECTS, DELAYS IN OPERATION, OR TRANSMISSION, OR ANY FAILURE OF
PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE UNDER THIS AGREEMENT TO RETAILER
FOR AN AMOUNT THAT EXCEEDS, IN THE AGGREGATE THE AMOUNTS PAID TO RETAILER DURING
THE [*] MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
THE REMEDIES SET FORTH IN THIS SECTION 9 CONSTITUTE THE SOLE AND EXCLUSIVE
REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO EVENT SHALL EITHER
PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN TWELVE (12) MONTHS
AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
10. INDEMNITY.
10.1 Retailer Indemnity. Subject to Section 10.3, Retailer shall defend,
indemnify and hold GSI harmless against any third party claim, action, suit or
proceeding: (i) Retailer's gross negligence, willful or intentional misconduct;
or (ii) any breach by Retailer of the warranties set forth in Sections 7.1 or
7.2.
10.2 GSI Indemnity. Subject to Section 10.3, GSI shall defend, indemnify
and hold Retailer harmless against any third party claim, action, suit or
proceeding: (i) GSI's gross negligence, willful or intentional misconduct; or
(ii) any breach by GSI of the warranties set forth in Sections 7.1 or 7.2.
10.3 Mechanic of Indemnities. The indemnifying party's obligations are
conditioned upon the indemnified party: (a) giving the indemnifying party prompt
written notice of any claim, action, suit or proceeding for which the
indemnified party is seeking indemnity; (b) granting control of the defense and
settlement to the indemnifying party; and (c) reasonably cooperating with the
indemnifying party at the indemnifying party's expense
11. MISCELLANEOUS.
11.1 Incorporation of Certain Provisions of the E-Commerce Agreement.
Sections 7, 8, 12, and Sections 17 through 29, inclusive, of the E-Commerce
Agreement are hereby incorporated in their entirety into this Agreement.
11.2 Interpretation of Agreements. With respect to the subject matter
hereof, the E-Commerce Agreement shall control any conflict between the terms of
this Agreement and the E-Commerce Agreement.
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11.3 Definitions. Any terms not specifically defined in this Agreement
shall be construed in accordance with the definitions given such terms in the E-
Commerce Agreement, or if such terms are not defined in the E-Commerce
Agreement, then such terms shall be construed in accordance with their every
day, common meaning.
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
representatives to enter into this Agreement to be effected on the Services
Start Date.
GLOBAL SPORTS INTERACTIVE, INC.: DUNHAM'S ATHLEISURE CORPORATION:
By: /s/ Michael Rubin By: /s/ Jeffrey G. Lynn
---------------------------- --------------------------
Title: President Title: President & CEO
------------------------- ----------------------
Date: 3/25/99 Date: 3/23/99
-------------------------- ------------------------
Name: Michael Rubin Name: Jeff Lynn
-------------------------- ------------------------
(Please type or print) (Please type or print)
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ATTACHMENT A
RETAILER'S ASSET REQUIREMENTS
FOR GLOBAL SPORTS INTERACTIVE'S PARTNERS
----------------------------------------
Product Assets
Elements: Product Assets should include names and prices. No product photography
or description are required.
Store Locations
Store location information should include address, phone number and fax numbers.
Corporate Assets
Corporate Assets may include the following:
. Press Releases
. Frequently Asked Questions
. Contact Information
. Jobs Information
. Community Programs Information
. Annual Reports
. Corporate Identity materials including logo
All above information may be submitted at the retailers discretion, excluding
the corporate identity materials and logos, which are mandatory.
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ATTACHMENT B
(TO BE COMPLETED)
Domain Name:
Format of Retailer Content:
Project Liaisons:
For GSE.C: For Retailer:
FEATURES SET
- ------------
1. PRODUCT SEARCH
2. BROWSE CATEGORIES
3. RECOMMENDATION TOOLS
4. ADVANCE PRODUCT PRESENTATION
5. SHOPPING CART
6. GIFT GIVING FUNCTIONALITY
7. REMOTE PUBLISHING TOOLS FOR HUMAN RESOURCES AND PRESS ROOM
8. SALES TAX CONFIGURATION
9. PRODUCT REVIEWS
10. 24/7 CUSTOMER SUPPORT
11. AFFILIATE PROGRAM FUNCTIONALITY
12. ON LINE GIFT CERTIFICATES
13. LAND BASED STORES GIFT CERTIFICATES
14. STORE LOCATOR
15. FINANCIAL INFORMATION
16. FREQUENTLY ASKED QUESTIONS
17. COMMUNITY PROGRAMS
18. COMPANY PROFILE
19. ON LINE ORDER STATUS
MILESTONE DELIVERY SCHEDULE:
- ---------------------------
TASK ESTIMATED COMPLETION DATE
- ---- -------------------------
DISCOVERY AND PLANNING MARCH 15, 1999
COMMENCE ENGINE ENGINEERING JULY 31, 1999
ESTABLISH FULFILLMENT CAPABILITIES APRIL 30, 1999
RETAILER WEB SITE DEVELOPMENT JULY 31, 1999
QUALITY CONTROL REVIEW AND REVISIONS AUGUST 21, 1999
ALPHA TESTING SEPTEMBER 1, 1999
BETA (SOFT LAUNCH) SEPTEMBER 30, 1999
WEB SITE LAUNCH TO GENERAL PUBLIC OCTOBER 1 - DECEMBER 1,1999
MEDIA AND PROMOTIONS OCTOBER 1 - DECEMBER 1,1999
42
<PAGE>
ATTACHMENT C
ASSET SUBMISSION GUIDELINES
This section details how to submit assets.
Source Assets and Final Assets
- --------------------------------------------------------------------------------
We require source files for all assets. This means if an image is originally
constructed as a layered RGB Photoshop file at 100x500 pixels, we need that
file, even if the final file is a flattened 4-bit GIF at 20x100.
We allow the submission of final assets in some cases, but only by prior
arrangement and only in addition to an up-to-date source file. All submitted
assets are subject to review and verification by production staff.
Media and Format
- --------------------------------------------------------------------------------
We routinely receive assets in the following media and formats.
Digital Media
- --------------------------------------------------------------------------------
Media:
SyQuest 44mb, 88mb, 200mb, CD-ROM (including PhotoCD), Zip, Jaz, 3.5"
floppy.
Format:
Win16, Win-32, or Macintosh
File Formats:
Text: Raw, MS Word 95, RTF, HTML
Bitmap Graphics:
Photoshop, TIFF, PCD (PhotoCD), EPS, PICT (JPEG and GIF for final files
only and only along with source files)
PostScript Graphics:
EPS, Illustrator (7.0 preferred)
Video:
QuickTime
Audio:
WAV, AIFF, MIDI
Non-Digital Media
- --------------------------------------------------------------------------------
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<PAGE>
Contact us to discuss needs and capabilities before submitting any non-digital
assets.
Asset Submission
- -----------------------------------------------------------------
We prefer to receive assets via FTP (file transfer protocol) although we gladly
accept assets via standard package delivery services (i.e., FedEx, USPS, UPS,
etc.).
Submission via FTP
FTP Area: ftp.globalsportsinteractive.com
Assets should be left in "Incoming" which is a level below the initial
directory. Once assets have been transferred, e-mail confirmation is required.
Submission via Package Delivery
If you wish to submit assets via standard package delivery services, please
address the package to this address:
Address TBD
If you are submitting hard assets like brochures, photographs, etc. please be
sure to ship them in a reinforced container to prevent damage to the assets
while in transit.
If you are submitting digital media like SyQuests, Zip disks, Jaz disks, etc.,
be sure to ship them in a well-padded, reinforced container.
44
<PAGE>
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS
--------------------------------------------
45
<PAGE>
DUNHAM'S ATHLEISURE CORPORATION
. Dunham's
. Dunham's Sports
. Dunham's Sporting Goods
. Since 1917 Dunham's Sports Outfitters
. DSO Sport
. Mega Sports
. Get in the Game
46
<PAGE>
EXHIBIT "B"
-----------
CONFIDENTIALITY AGREEMENT
-------------------------
[DATE]
[Company]
[Company Address]
In connection with the disclosure to you of certain confidential information,
this document sets forth the confidentiality agreement (the "Agreement") by and
between Global Sports Interactive, Inc. ("GSI") and [Company Name](the
"Recipient").
In consideration of the release of certain valuable and confidential information
relating to GSI's E-Commerce arrangements ("Material"), Recipient hereby agrees
to keep such Material strictly confidential and to (1) use the Material only for
the purpose of ____________________________________________; (2) not to
reproduce the Material in whole or in part without the prior written consent of
GSI; and (3) return the Material and any analysis prepared using the Material to
GSI upon request.
In addition, Recipient agrees that they shall not disclose to, nor allow access
to the Material or the names of GSI's E-Commerce partner(s) to any other party
or make any announcement, statement or press release with regard to the name(s)
of GSI's E-Commerce partner(s) prior to the Launch Date of the E-Commerce
partners. Recipient understands that it has represented to one of its E-Commerce
Partners that it would not release any Materials to any third party without that
third party executing a confidentiality agreement, and that should the Material
become public, then GSI could be liable for [*]. Accordingly, if Recipient
breaches this agreement, Recipient shall pay GSI [*] as liquidated damages and
the E-Commerce partner whose confidentiality was breached may collect the same
amount directly from the Recipient in the place of and on GSI's behalf.
Recipient agrees to take all measures, including, but not limited to, court
proceedings, at it's own expense, to restrain any such party; including
employees or former employees, from unauthorized use or disclosure of the
Material.
The Agreement shall be governed by and construed in accordance with the law of
the State of Pennsylvania.
(SIGNATURES CONTAINED ON THE FOLLOWING PAGE)
Agreed to on this ____ day of [DATE], 1999.
47
<PAGE>
GLOBAL SPORTS INTERACTIVE, INC. RECIPIENT:
BY:___________________________ BY:_________________________
Its:__________________________ Its:________________________
Date:_________________________ Date:_______________________
<PAGE>
EXHIBIT 10.4
Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E COMMERCE MANAGEMENT AGREEMENT
-------------------------------
THIS E - Commerce Agreement dated the ___ day of ______________, 1999 by
and between Global Sports Interactive, Inc., a Pennsylvania corporation
(hereinafter referred to as "GSI") with an address of 555 South Henderson Road,
King of Prussia, PA 19406 and Sport Chalet, Inc., a Delaware corporation
(hereinafter referred to as "Retailer") with an address of 920 Foothill
Boulevard, La Canada, California, 91011.
W I T N E S S E T H:
WHEREAS, GSI is in the business of creating and operating all aspects of an
E-Commerce Shopping Experience, including servicing and fulfilling the on-line
retail sales of selected merchants; and
WHEREAS, Retailer desires to enter into an exclusive agreement with GSI
pursuant to which GSI will act as an Outsourcing Company providing the
Retailer's on-line customers the complete E-Commerce Shopping Experience, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the following
-----------
meaning:
1.1 "Advertising Co-op and Discretionary Funds" shall mean amounts earned
by or allocated to the Retailer by its vendors, the purpose of which
is to advertise that vendor's brand or to use at the Retailer's
discretion.
1.2 "Categories" shall mean the various types of product groups (e.g.
athletic footwear, camping, in line skates, etc.) offered for sale by
the Retailer in its Land Based stores.
1.3 "Closeout Merchandise" shall mean end of season or excess merchandise
that is priced at a greater than normal discount.
1.4 "Complete URL Integration" shall mean the display of Retailer's URL in
all of Retailer's marketing and communications.
1.5 "Confidential Information" shall mean as that term is defined in
paragraph 7.1 of this Agreement.
<PAGE>
1.6 "Cross Promotion" shall mean the use of the Retailer's URL, name and
logo on other than the Retailer's Web Site for the purpose of
promoting the Retailer's Web Site.
1.7 "Customary Pricing Structure" shall mean the policy generally employed
by the Retailer in determining the prices of merchandise in its Land
Based Stores.
1.8 "Customer Data" shall mean as that term is defined in paragraph 4.1 of
this Agreement.
1.9 "Data Bases" shall mean as that term is defined in paragraph 4.2 of
this Agreement.
1.10 "Defective Allowance" shall mean a discount granted by a manufacturer
to a retailer as a result of defective merchandise received by the
retailer and pursuant to which, the retailer also retains the
merchandise.
1.11 "Disclosing Party" shall mean the party disclosing Confidential
Information.
1.12 "Domain Name" shall mean as that term is defined in paragraph 1.1 of
the Web Site Development Agreement (as hereinafter defined).
1.13 "E-Commerce" shall mean the Retailer's specific business conducted
through the Internet.
1.14 "E-Commerce Orders" shall mean the orders for merchandise placed by
customers of the Retailer's Web Site.
1.15 "E-Commerce Outsourcing Manager" shall mean GSI.
1.16 "E-Commerce Shopping Experience" shall mean the shopping for and
purchasing of merchandise through the Internet.
1.17 "Flight Date" shall mean the date on which Retailer's advertising is
scheduled to run for the first time.
1.18 "Force Majeure Event" shall mean as that term is defined in Article 18
of this Agreement.
1.19 "GSI Content" shall mean as defined in paragraph 1.6 of the Web Site
Development Agreement.
1.20 "In Line Merchandise" shall mean current merchandise available to be
carried by the Retailer in its Land Based Stores from Retailer's
current or future vendors.
1.21 "Internet" shall mean the collection of interconnected networks that
all use the TCP/IP protocols.
1.22 "Land Based Stores" shall mean the Retailer's stores located in
shopping districts, strip shopping centers and shopping malls.
<PAGE>
1.23 "Land Based Stores Gift Certificates" shall mean gift certificates
offered for sale on the Retailer's Web Site for merchandise sold only
in Retailer's Land Based Stores.
1.24 "Launch Date" shall mean the date on which GSI commences operation of
the Retailer's Web Site to the public.
1.25 "Markdowns" shall mean merchandise in Retailer's inventory offered for
sale at less than the price it was originally offered for.
1.26 "Milestone Delivery Schedule" shall mean as defined in paragraph 1.5
of the Web Site Development Agreement.
1.27 "On Line Customer" shall mean Retailer's customer who browses for or
purchases On Line Merchandise on the Retailer's Web Site.
1.28 "On Line Customer Loyalty Programs" shall mean programs established to
encourage repeat business from On Line Customers.
1.29 "On Line Merchandise" shall mean merchandise to be sold on the
Retailer's Web Site.
1.30 "Outsourcing Company" shall mean a company which provides E-Commerce
Services for traditional Retailers.
1.31 "Price Matching" shall mean a Retailer's policy pursuant to which it
addresses another retailer's lower price on a particular item of
merchandise.
1.32 "Production Schedule" shall mean as defined in paragraph 1.9 of the
Web Site Development Agreement.
1.33 "Project Manager" shall mean an employee of Retailers who is assigned
exclusively to work with GSI in supplying GSI with Retailer Content.
1.34 "Receiving Party" shall mean the party receiving Confidential
Information.
1.35 "Retailer Content" shall mean as defined in paragraph 1.10 of the Web
Site Development Agreement.
1.36 "Retailer's Net Cost" shall mean the amount paid by the Retailer for
merchandise from its vendors after deduction of cash or anticipation
discounts, marketing allowance, Defective Allowance, volume allowance
and any other discount offered by vendors, but excluding any marketing
funds granted to Retailer by a manufacturer as an overall marketing
allowance and not based upon the number of units or dollars purchased.
1.37 "Retailer's Warehouse" shall mean the place at which Retailer receives
delivery of merchandise from its vendors.
1.38 "Special Makeups" shall mean merchandise manufactured for the Retailer
exclusively.
<PAGE>
1.39 "Term" shall be as defined in Section 2.2 of this Agreement.
1.40 "URL" shall mean the address of the Web Site on the Internet.
1.41 "Web" shall mean the World Wide Web.
1.42 "Web Site" shall mean as defined in paragraph 1.12 of the Web Site
Development Agreement.
1.43 "Web Site Development Agreement" shall mean the agreement by and
between GSI and Retailer attached to this Agreement as Exhibit "A".
1.44 Product Information" shall mean as defined in paragraph 1.14 of the
Web Site Development Agreement.
2. AGREEMENT AND TERM
------------------
2.1 Agreement. During the Term GSI shall provide the Retailer with those
---------
Web Site services as hereinafter specified.
2.2 Term. The Term of this Agreement shall commence upon the execution of
----
this Agreement and shall expire five (5) years after the Launch Date
("Expiration Date"). GSI shall use reasonable efforts to advise
Retailer ten days prior to the expected Launch Date. Notwithstanding
any other dates and/or schedules in the attached Web Site Development
Agreement, the Launch Date shall occur between the period of October
1, 1999 and December 1, 1999 ("Commencement Period"). GSI's obligation
to commence operation of the Web Site during the Commencement Period
shall be contingent on Retailer complying with the deadlines set forth
on the Milestone Delivery Schedule set forth on Attachment B to the
Web Site Development Agreement and on the Production Schedule to be
agreed upon by the parties. Retailer acknowledges the urgency of
complying with the deadlines set forth in the Milestone Delivery
Schedule and the Production Schedule and shall give GSI its full
cooperation to ensure that such deadlines are satisfied.
Notwithstanding anything contained herein to the contrary, in the
event that the Retailer does not comply with such deadlines and GSI
has given Retailer written notice of its failure to comply, then, for
each day of such non compliance, the Commencement Period shall be
extended by one day.
2.3 Extensions of Term.
------------------
a. This Agreement shall automatically renew itself for an additional
five years ("First Option Period") unless terminated by GSI or
Retailer with written notice to the other party no later than ninety
(90) days prior to the expiration of the then current Term, as such
Term may have been extended.
b. After the expiration of the First Option Period, this Agreement
shall automatically renew itself from year to year unless terminated
by GSI or Retailer with written notice to the other party no later
than ninety (90) days prior to the
<PAGE>
expiration of the then current Term, as such Term may have been
extended.
3. OBLIGATIONS AND RIGHTS OF THE PARTIES
-------------------------------------
3.1 Creation of Retailer's Web Site.
-------------------------------
a. GSI, at its own expense, shall create, maintain and operate a Web
Site for the Retailer on the Web in accordance with the
specifications attached to the Web Site Development Agreement. In
connection therewith, simultaneous herewith, Retailer and GSI
shall execute the Web Site Development Agreement.
b. The Web Site shall contain the Retailer's E-Commerce Shopping
Experience, the URL of which shall be www.Sportchalet.com. In
addition, the Web Site shall contain any or all of the following
information, as the Retailer shall elect: corporate information
(e.g. historic background, mission statement, names of officers
and directors), store locator, public financial information (e.g.
SEC filings, annual reports), press releases, community programs,
employment opportunities for in store or corporate positions,
frequently asked questions and a "contact us" section.
c. Following the initial completion of the Web Site, the Retailer
shall have the right to update the content thereof as follows:
1) Employment Opportunities - GSI will provide the Retailer
with the technology necessary so that the Retailer will be
able to update the employment opportunity portion of the Web
Site as frequently as it desires.
2) Public Financial Information -
a) Stock Prices - Will be updated daily by a link to
another web site offering such information.
b) SEC Filings and Annual Reports - SEC filings will be
provided by a link so long as the government makes such
filings available at no cost. Both SEC filings and
annual reports will be provided only if available in
portable document format; in the alternative, GSI will
provide the consumer with a form in order to request
such information from the Retailer's investor relations
department.
3) Store Locators - Will be updated by GSI as such information
changes and Retailer provides GSI with such information.
4) Frequently Asked Questions - Will be updated by GSI monthly
and Retailer provides GSI with such information.
<PAGE>
5) Corporate Information - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
6) Community Programs - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
7) Press Releases - GSI will provide the Retailer with the
technology necessary so that the Retailer will be able to
post press releases on its Web site as it desires. Retailer
shall defend and hold harmless GSI, its employees, officers
and directors, agents and representatives from any liability
arising from the posting of press releases on the Retailer's
Web Site.
8) "Contact Us" Section - Will be updated by GSI as such
information changes and Retailer provides GSI with such
information.
9) Automatic Links to Retailer's Secondary Web Site -Such links
shall be established in accordance with the parameters set
forth in paragraph 8 below.
d. GSI's use of Retailer's URL, Retailer's Content and any other
Retailer information or material, whether confidential or not,
shall be granted and continue only for the Term of this Agreement
and shall not be used beyond the end of such Term, and shall be
subject to the confidentiality provisions of paragraph 7 of this
agreement, and shall be subject to Retailer's approval and
quality control rights contained in this agreement and Website
Development Agreement.
3.2 Creation and Maintenance of the Retailer's Web Site.
----------------------------------------------------
GSI shall create and maintain a Web Site at all times during the term
for the Retailer. Commencing with the execution of this Agreement and
continuing through the Term, as may be extended, the Retailer, shall
cooperate with GSI so as to enable GSI to create and maintain for the
Retailer's consumers, the Retailer's Web Site. In connection
therewith, the Retailer shall supply GSI with the Product Information
as that term is defined in the Web Site Development Agreement)
required pursuant to the terms of the Web Site Development Agreement.
This shall include, but not be limited to printed marketing
information, data, text, audio files, video files, graphics, copy and
other assets necessary to create and maintain the Retailer's Web Site
as more fully set forth on Attachment A to the Web Site Development
Agreement. Notwithstanding anything contained herein to the contrary,
and except as it relates to Special Make - Ups, it shall be GSI's
responsibility to produce and maintain all camera ready product
information including high resolution images and appropriate product
description text and data for use on the Retailer's Web Site and
Retailer shall have no responsibility therefor. With respect to
Special Make -Ups, Retailer shall be responsible to provide GSI with
sample
<PAGE>
product only in a sufficient amount of time to allow GSI to produce
camera ready product information.
3.3 Sale of Merchandise on the Retailer's Web Site.
-----------------------------------------------
a. GSI, on behalf of the Retailer shall offer for sale on the
Retailer's Web Site all Categories of merchandise offered for
sale by the Retailer in its Land Based Stores. Notwithstanding
anything contained herein to the contrary, in no event shall GSI
offer firearms and related accessories for sale on the Retailer's
Web Site. In addition, if, as a result of a legitimate stated
business purpose, should Retailer disapprove of any item listed
for sale on the Retailer's Web Site, and which is not offered for
sale in the Retailer's Land Based Stores, upon five days prior
notice from Retailer, GSI shall remove such item from the
Retailer's Web Site.
To protect Retailer's image with its current customers of selling
top quality high specialty sporting goods equipment and apparel,
all such items shall be of a quality equal to or greater than
that carried in Retailer's Land Based Stores. GSI shall promptly
e-mail Retailer the same product information that will appear on
the Retailer's web site.
b. Within the Categories, GSI, on behalf of the Retailer shall have
the right to offer for sale:
1) current in line merchandise ordered by the Retailer from its
vendors; and
2) current in line merchandise not carried by the Retailer in
its Land Based Stores, but available in those Categories
carried by the Retailer; provided however, no products will
be offered for sale on Retailer's Web Site which a) the
Retailer would not be authorized by the manufacturer to sell
in its Land Based Stores; and b) would not be in accordance
with the same type, quality and price of merchandise carried
by the Retailer in its Land Based Stores; and
3) Special Make-Ups (manufactured for the Retailer exclusively
and not carried on any other retailer's web site; and
4) Closeout Merchandise (but only if the Retailer sells
Closeout Merchandise in its Land Based Stores; otherwise GSI
shall not offer for sale Closeout Merchandise on the
Retailer's Web Site); and
5) Markdowns of Retailer's inventory; and
6) Gift Certificates for On Line Merchandise
("On Line Gift Certificates")
[Items 1) through 6) are hereinafter referred to as "On Line
Merchandise"]
c. Retailer agrees to the addition of logical line extensions to
existing product bases specifically within the existing Retailer
vendor structure; provided that the
<PAGE>
individual item within such line extension is approved by
Retailer in advance of use on the website. For example, if
Retailer sells 15 of the 40 tents manufactured by a particular
vendor in its land-based stores, and GSI desires to add the
remaining 25 inline tents to its on-line mix, such approval will
not be withheld by Retailer. However, should the vendor offer GSI
closeouts, seconds, blemishes, or customer returns to GSI to sell
on-line, Retailer would not automatically grant permission, as
this is not in keeping with Retailer's stated goal of selling top
of the line, first run, high quality merchandise. In addition,
product manufactured by the same vendor under a private label
program for another retailer, such as Coleman manufactured tents
sold as a private label under the Ozark Trails brand in Wal-Mart
stores, would not be permitted in the on-line store.
d. In addition, GSI, on behalf of the Retailer, shall offer for sale
on the Retailer's Web Site, Land Based Stores Gift Certificates
for merchandise available in the Retailer's Land Based Stores.
Notwithstanding anything contained herein to the contrary,
Retailer may elect not to offer Land Based Stores Gift
Certificates for sale on its Web Site by notifying GSI of its
decision not to do so no later than August 1, 1999.
e. In addition, GSI, if requested by Retailer, will advertise on the
Retailer's Web Site merchandise that is for sale only in the
Retailer's Land Based Stores provided, 1) No later than February
1, 2000 the item has a minimum retail selling price of $20.00;
and 2) Retailer furnishes GSI with a description and sample of
the item to be advertised.
f. In those instance where a written dealer agreement prohibits
Retailer from selling a particular vendor's merchandise except in
the Retailer's Land Based Stores, Retailer shall use its
reasonable efforts to obtain all consents required to permit the
sale of such merchandise on the Retailer's Web Site, but until
the required consent is obtained, GSI will comply and not offer
the restricted merchandise for sale on the Web Site.
3.4 Prices of On-Line Merchandise. GSI, on behalf of the Retailer, shall
-----------------------------
offer the On-Line Merchandise for sale on the Retailer's Web Site on
the following basis:
a. If the On-Line Merchandise is the same as offered for sale in the
Retailer's Land Based Stores, then it shall be offered for sale
on-line [*]. In order to facilitate this pricing, Retailer shall
[*]. GSI agrees to [*]. Retailer acknowledges that this is
essential in order to [*]; and
b. If the On-line Merchandise is not offered for sale in the
Retailer's Land Based Stores, then, [*] will use
<PAGE>
reasonable efforts to [*]; provided however, upon five days prior
notice to [*].
c. If the Retailer offers the same merchandise at different prices
in its Land Based Stores, then [*], but in no event at [*].
d. GSI, on behalf of Retailer, shall add and collect all applicable
taxes and GSI, at its discretion and for its own account, may add
reasonable handling and delivery charges which are consistent
with industry practice.
e. In order to ensure that GSI may [*] Retailer shall furnish GSI
with copies of all [*] at least [*] prior to its [*].
f. The parties shall cooperate with each other so that the entire
pricing process between GSI and Retailer may be accomplished
electronically.
g. The parties agree that from time to time, the Retailer may carry
an item of merchandise at [*]. In those instances, [*] shall have
the right to [*]; provided however, GSI [*]. In such event, [*]
shall have the right to request [*].
3.5 GSI's Supply of On Line Merchandise.
-----------------------------------
a. Invoicing and Shipping of On Line Merchandise. At such time as
----------------------------------------------
directed by GSI, the Retailer shall notify all of its vendors
that 1) GSI is the Retailer's E - Commerce Outsourcing Manager;
2) the vendors, for the benefit of the Retailer, should sell
their merchandise to GSI at the same prices, with the same
Advertising Co-op and Discretionary Funds and on the same terms
and conditions as they sell their merchandise to Retailer; and 3)
such merchandise should be shipped and invoiced directly to GSI.
The form of such notification shall be prepared by GSI and
approved by Retailer, such approval not to be unreasonably
withheld or delayed. In the event that a vendor deems it more
efficient to invoice Retailer for such merchandise, then the
Retailer shall place the order for GSI, invoice GSI at its net
cost, and GSI shall pay Retailer within thirty days of shipment
to GSI. In such instances, GSI shall also pay the Retailer its
pro rata share (based upon that portion of the shipment purchased
by the Retailer for GSI as it relates to the entire shipment
received by the Retailer from that vendor) of the actual freight
costs from the manufacturer to the Retailer's point of receipt
and the actual freight costs from the Retailer's point of receipt
to GSI's fulfillment facility.
b. In Line Merchandise. The Retailer shall advise GSI, no later
-------------------
than ten days after placing a purchase order with a vendor, of
the Category, item ordered, net cost, Retailer's retail price and
expected day of delivery to the Retailer's Warehouse.
<PAGE>
c. Special Make-Ups. No later than ten days after ordering Special
-----------------
Make-Ups, Retailer shall advise GSI and furnish GSI with a sample
of the Special Make-Ups and advise GSI of the net cost, color
selection and size range. GSI shall have the right to purchase up
to [*] per cent of the Special Make-Up, proportionately as to
size and color, as ordered by the Retailer. GSI shall have five
business days to advise Retailer whether it desires to order any
of the Special Make-Ups and, if so, the quantity thereof. Special
Make-Ups shall be exclusive to Retailer's Web Site and shall not
be made available for sale on the web site of any other retailer
for whom GSI operates a web site. Retailer shall supply GSI with
a sample of the Special Make-Ups ordered by GSI for sale on the
Retailer's Web Site within ten days of obtaining such sample.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Special Make-Ups to
warrant selling such merchandise on line. In such instances the
Retailer shall not be required to offer such Special Make-Ups for
sale on line; provided however, the Retailer acknowledges that
with respect to Special Make-Ups ordered by Retailer for
chainwide distribution, GSI does not anticipate that this will
occur on a regular basis and this should be the exception rather
than the usual occurrence. Further, GSI acknowledges that the
Retailer may not be able to offer for sale on line certain
Special Make-Ups which are not available in all of the Retailer's
stores.
d. Closeout Merchandise. Retailer shall advise GSI no later than
---------------------
five business days after issuing a purchase order for Closeout
Merchandise from a vendor. At that time, Retailer shall advise
GSI of the cost, sizes and colors available and GSI shall have
five business days after receipt of such information to advise
Retailer that it will purchase, at Retailer's net cost, up to [*]
per cent of the Closeout Merchandise to be received by Retailer,
proportionately as to size and color, as ordered by Retailer.
Inasmuch as Retailer operates one Warehouse Outlet Store
specializing in one of a kind buys, including individual sales
representatives' merchandise, any items ordered for this
Warehouse Outlet or any future Warehouse outlet location are
excluded from as this provision.
Notwithstanding anything contained herein to the contrary, GSI
recognizes that there may be instances where there will be an
insufficient amount of a particular item of Closeout Merchandise
to warrant selling such merchandise on line. In such instances
the Retailer shall not be required to offer such items of
Closeout Merchandise for sale on line; provided however, the
Retailer acknowledges that GSI does not anticipate
<PAGE>
that this will occur on a regular basis and this should be the
exception rather than the usual occurrence.
Any Closeout Merchandise purchased by GSI from Retailer shall be
offered for sale by Retailer only on the Retailer's Web Site.
e. Markdowns. In the event that the Retailer has available
----------
Markdowns which it would like to offer for sale on its Web Site
solely at its discretion, it shall notify GSI and ship the
Markdowns to GSI's fulfillment center. The Markdowns shall be
shipped to GSI on consignment only. Retailer shall set the
selling prices on the Markdowns; provided however, that GSI on
behalf of the Retailer shall have no obligation to offer any
Markdowns for sale on the Retailer's Web Site which GSI deems, in
its sole discretion, would be inappropriate. Retailer shall
retain [*] of the selling price received from the sale of any
Markdowns when sold (excluding applicable taxes and shipping and
handling charges; the remainder of [*] plus shipping and handling
charges shall be retained by GSI as its management fee in
connection with the sale of the Markdowns. Any applicable tax
collected by GSI on behalf of Retailer shall be deposited into a
separate account as more fully discussed in paragraph 3.9 below,
and remitted by GSI to the appropriate taxing authority. GSI
shall account to Retailer for the sale of any Markdowns at the
same time that it accounts to the Retailer for sale of other On
Line Merchandise on the Retailer's Web Site. The amount of
proceeds from the sale of Markdowns shall not be considered the
sale of On Line Merchandise for the purpose of determining the
amount to be remitted to Retailer pursuant to paragraph 3.8
below.
f. With the exception of Markdowns and Land Based Gift Certificates,
which shall be governed by the provisions of paragraphs 3.5 e.
and 3.6 hereof respectively, and as part of the performance of
its obligations under this Agreement, GSI shall sell to the
Retailer, and the Retailer shall purchase from GSI all
merchandise to be sold by the Retailer on the Retailer's Web Site
at a price equal to [*] per cent of the selling price (excluding
applicable taxes, shipping and handling) at which such On Line
Merchandise is sold to the Retailer's On Line Customer.
g. Attached hereto as Schedule "2" is a schedule which summarizes
the various levels of management fees to be paid to GSI by the
Retailer depending upon the type of On Line Merchandise sold on
the Retailer's Web Site.
h. The parties shall cooperate with each other so that to the
maximum extent commercially reasonable the entire process set
forth in paragraphs 3.5 a, b, c, d and e between GSI and Retailer
may be accomplished electronically.
3.6 Gift Certificates
-----------------
<PAGE>
a. Land Based Stores Gift Certificates. Subject to Retailer's
------------------------------------
rights set forth in 3.3 c. above, GSI, on behalf of the Retailer,
shall offer for sale on the Retailer's Web Site gift certificates
for merchandise in Retailer's Land Based Store. In order that
Retailer may fulfill customer orders for Land Based Stores Gift
Certificate, Retailer shall furnish GSI such gift certificates on
an "as requested" basis. The Retailer shall retain [*] per cent
of the proceeds received by the Retailer form the sale of Land
Based Stores Gift Certificates (excluding applicable taxes) and
the balance shall be paid to GSI as its management fee with
respect to the sale of such gift certificates and to cover all
costs, including credit card fees. GSI shall account to Retailer
for all sales of such certificates at the same time as it
accounts to Retailer for the sale of other On Line Merchandise.
The amount of proceeds from the sale of Land Based Stores Gift
Certificates shall not be considered the sale of On Line
Merchandise for the purpose of determining the amount to be
remitted to Retailer pursuant to paragraph 3.8 below.
b. Online Gift Certificates. GSI on behalf of the Retailer shall
------------------------
offer for sale on the Retailer's Web Site gift certificates for
On Line Merchandise. GSI shall supply the On Line Gift
Certificates which shall not be redeemable for merchandise
purchased in the Retailer's Land Based Stores. From each On Line
Gift Certificate purchased, the Retailer shall retain as its
operating income from the sale of the On Line Gift Certificate,
[*] per cent of the proceeds received by the Retailer from such
sale (excluding applicable taxes) and the balance shall be paid
to GSI as its management fee with respect to the sale of such
gift certificates and to cover all costs, including credit card
fees and the cost of the merchandise redeemed with the gift
certificate. GSI shall account to Retailer for all sales of such
certificates at the same time as it accounts to Retailer for the
sale of other On Line Merchandise. The amount of proceeds from
the sale of On Line Gift Certificates shall not be considered the
sale of On Line Merchandise for the purpose of determining the
amount to be paid to GSI pursuant to paragraph 3.8 below. The
proceeds shall be accounted for pursuant to paragraph 3.9 below;
provided however, should the On Line Gift Certificate be redeemed
for Markdowns, then at such time as the On Line Gift Certificate
is redeemed, GSI shall pay to the Retailer an additional amount
equal to [*] of the On Line Gift Certificate redeemed and the
Retailer shall supply the Markdown item requested by the
customer.
3.7 Processing of Customer Orders. GSI shall be solely responsible for
-----------------------------
processing all on line merchandise sales business for the Retailer.
GSI will promptly process E -Commerce Orders received from the
Retailer's Web Site. GSI shall take the customer's credit card number
at such time as the merchandise is ordered. GSI, on behalf of the
Retailer's account discussed in paragraph 3.9 below, shall charge the
customer's credit card
<PAGE>
with the amount of the order (including taxes, shipping and handling)
at the time the merchandise is shipped. The order will appear on the
customer's credit card under the name of "www.sportchalet.com" and
proceeds from the sale shall be deposited into Retailer's designated
bank account at the bank designated by GSI for full credit to
Retailer. GSI will make all arrangements for delivery of merchandise
purchased on the Retailer's Web Site.
a. Retailer and GSI shall jointly agree to the formula to be used
for computing shipping and handling charges for customer orders
submitted to GSI as the outsource operator of
www.sportschalet.com. Such approval will not be unreasonably
withheld or delayed.
b. As of February 1, 2000 GSI will track and report to Retailer the
elapsed time between customer orders and submission for picking
("Front -Office Processing Time") for each customer order. GSI
will provide Retailer with reports of average and longest Front-
Office Processing Time monthly by the 15/th/ of the month
following.
c. Retailer and GSI shall agree to the back order policies that GSI
will administer for customer orders submitted to GSI as the
outsource operator of www.sportchalet.com. Such approval will not
--------------------
be unreasonably withheld or delayed.
d. GSI will provide a facility for the acceptance of
Visa/MasterCard/American Express and all other credit card
accepted by the other clients of GSI, but excluding proprietary
cards of each such retailer.
1) GSI will perform authorization, settlement, and post-
settlement operations independently of Retailer;
2) GSI will at all times operate in conformance with the
Operating Rules and Regulations of each national credit
card;
3) GSI will implement procedures as required by each
national credit card for merchants engaged in non-face-
to-face transactions;
4) GSI will at its own cost install and staff an inbound
toll-free number to respond to inquiries and customer
service issues from credit card customers. The customer
service facility shall be staffed no fewer hours per
week than the total number of hours that Retailer
stores are open;
5) GSI will submit appropriate data with each credit card
settlement file to enable display on the customer's
credit card statement of the
<PAGE>
merchant name "Sportchalet.com" and the toll free
number described in subsection 4) above.
e. Order Fill Performance Standards
1) Service level standards-GSI will guarantee that
more than [*] of items ordered will be shipped to
customers within the Visa/MasterCard time limit or
credit authorizations;
2) GSI will provide service level reports monthly to
Retailer by the 15/th/ of each month following,
and
3) Any two months in a 12-month period where GSI
fails to meet the standard shall be considered a
breach of this Agreement by GSI.
f. Customer Service Standards
1) GSI will submit to Retailer for review and
approval the policies that GSI will implement with
respect to customer returns and refunds. GSI will
not make any substantive changes to these policies
and procedures without prior consent from
Retailer. Approval will not be unreasonably
withheld or delayed.
2) GSI will provide a systematic capability to track
and monitor customer service activity to include
such information as original order number, order
date, reason for the customer contact, and
resolution.
a) For phone calls, time to answer and call
duration;
b) For e-mail, elapsed time from customer send
time/date to GSI response time/date.
3) GSI will provide Retailer with summary reporting
of customer service activity each month by the
fifteenth day of the following month.
3.8 GSI's Management Fee For and in consideration of the services to be
--------------------
rendered by GSI to Retailer hereunder, GSI shall be paid a management
fee ("Management Fee") equal to [*] per cent of the sales price of all
On Line Merchandise for all On Line Merchandise sold, excluding
however, the sale of Markdowns, Land Based Gift Certificates and On
Line Gift Certificates, the management fee for which shall be governed
by paragraphs 3.5 e. and 3.6 a. and 3.6 b., respectively. GSI's
Management Fee, including any management fee to GSI as a result of the
sale of Markdowns, Land Based Gift Certificates or On Line Gift
Certificates, shall be paid pursuant to the provisions of paragraph
3.9 below.
<PAGE>
3.9 Payment and Accounting from the Sale of On - Line Merchandise.
--------------------------------------------------------------
a. The proceeds from the sale of On Line Merchandise on the
Retailer's Web Site shall be deposited into a bank account ("Web
Account") in the Retailer's name at GSI's designated bank
("Bank"). The Web Account shall be owned by the Retailer; provided
however, the only signatures on such account shall be employees of
GSI and GSI's designated employees shall have an irrevocable power
of attorney, and such power will be exercised solely in conformity
with this agreement and for the benefit of GSI and Retailer
pursuant to this Agreement's terms governing the Web Account and
the Tax Account, as hereinafter discussed, unless this Agreement
is terminated in accordance with the terms of this Agreement. No
other funds shall be deposited into the Web Account except for
credit and debit card proceeds from the sale of On Line
Merchandise on Retailer's Web Site and no other sums shall be
deposited into the Tax Account except applicable taxes collected
from the sale of merchandise on the Retailer's Web Site. From each
transaction, GSI shall be paid daily the sum of a) the cost of the
On Line Merchandise sold to Retailer's On Line Customers, b) GSI's
Management Fee and c) GSI's shipping and handling charge to the On
Line Customer (collectively, "GSI's Entitlement"), if any.
Retailer shall give the Bank instructions that will stand for the
term of this Agreement, as such term may be extended, to a) debit
the Web Account daily for the amount owed to GSI, as so directed
by GSI, and to credit GSI's designated account for such amount;
and b) to debit the Retailer's Web Account and to credit the
Retailer's especially established tax account ("Tax Account")
daily with the amount of any applicable tax collected. Any
interest earned on the Web Account and Tax Account shall belong
solely to GSI, and any interest earned on the Tax Account shall
belong solely to GSI and any charges imposed by the bank as a
result of such accounts, shall be paid by GSI. Prior to
termination of this Agreement, as permitted herein, Retailer shall
have no right to unilaterally offset from GSI's Entitlement any
amount which Retailer may believe is owing to Retailer from GSI
and Retailer shall obtain from its secured lenders a waiver to
claim a security interest in either the Web Account or the Tax
Account. In addition, Retailer shall give the Bank instructions
that will stand for the term of this Agreement, as such term may
be extended, to wire to the Retailer the amount determined
("Retailer's Operating Income") by GSI to be remaining from the
sale of On Line Merchandise from the Retailer's Web Site after the
deduction of GSI's Entitlement on the fifteenth day following the
end of each month. The amount of the Retailer's Operating Income
each month shall be certified by GSI's chief financial officer and
a copy of the accounting shall be furnished to the Retailer at the
same time that the Retailer's monthly Retailer Proceeds are wired
to the Retailer.
<PAGE>
By way of example only, if Retailer sells a pair of athletic
shoes on its Web Site for one hundred ($100.00) dollars, plus a
five ($5.00) dollar shipping and handling charge, the total
deposit to the Bank account is one hundred and five ($105.00)
dollars. Retailer's Operating Income shall equal [*] after
payment of the Retailer's cost of On Line Merchandise, GSI's
management fee and the shipping and handling charge. GSI's
Entitlement shall be [*]([*] of $100.00, [*] of $100.00 and [*].
The Retailer's Operating and GSI's Entitlement shall also take
into account the amounts owing pursuant to paragraph 3.5 e. and
3.6 above and 3.11 below.
GSI shall be responsible to collect any applicable sales taxes
resulting from the sale of On Line Merchandise, if any. GSI shall
complete all required sales tax forms and submit them on the
Retailer's behalf. GSI shall indemnify, save and hold harmless
Retailer from any taxes, interest and penalties which may arise
as a result of GSI's failure to pay or timely pay any sales tax
resulting from the sale of On Line Merchandise. GSI shall be in
charge of any audit conducted by any taxing authority as it
relates to the sale of On Line Merchandise.
b. Within ninety (90) days of the end of each calendar year, GSI
shall provide the Retailer with a statement certified by its
independent auditors and setting forth the total On Line Sales,
the Retailer's Operating Income and GSI's Entitlement therefrom.
For a period of two years after the Retailer receives such
certified statement from GSI, Retailer, on one occasion, shall
have the right to audit the books and records of GSI with respect
to the Retailer's Operating Income and GSI's Entitlement paid
during the calendar year to which the certified statement
relates. Such audit shall be conducted at GSI's principal office
located in the continental United States on two weeks prior
notice to GSI. In the event that the audit reveals that the
Retailer's Operating Income were understated, GSI shall within
thirty days of completion of the audit, pay to the Retailer the
remaining balance of the Retailer's Operating Income for the
period audited plus interest at the prime rate of interest as
provided for in The Wall Street Journal on the date of the
audit's certification. In addition, in the event that the audit
reveals that the Retailer's Operating Income is understated by
more than [*] per cent for the calendar year in question, GSI
shall pay the additional amount owing and pay for the reasonable
audit costs. In the event GSI's annual accounting is off more
than [*]in two successive years, or more than [*] in one year,
Retailer shall have the option to terminate this Agreement by
giving to GSI written notice of its election to do so no later
than thirty days after receipt of the Audited results.
<PAGE>
In addition, GSI will provide Retailer a statement certified by
independent auditors setting forth the total On Line Sales,
Retailer's Operating Income, and GSI's Entitlement therefrom
within forty-five (45) days of the conclusion of retailers fiscal
year ending 3/31/xx each fiscal year for the prior 12 months.
c. GSI takes full responsibility for all credit card chargebacks for
all occurrences resulting from an on-line purchase, and will
accordingly operate with merchant ID numbers different from
those used by Retailer for its land-based business.
d. GSI warrants to Retailer that, [*], no other Full Line Sporting
Goods Retailer (as hereinafter defined) which has or will enter
into an E - Commerce Management Agreement with GSI [*].
As used herein, a "Full Line Sporting Goods Retailer" shall refer
to a sporting goods retailer which carries in its Land Based
Stores merchandise in a variety of Categories such as (by way of
example only) baseball, basketball, golf, bowling, football,
hockey, aerobics and fishing).
In the event that GSI [*].
3.10 Service of On Line Customers. GSI shall be responsible for providing
----------------------------
all customer service relating to sales from the Retailer's Web Site,
including one click ordering, which shall be provided in a manner
consistent with that provided by other reputable on line retailers
representative of the then current state of the art E-Commerce
standards.
3.11 Return of On Line Merchandise. Retailer's return policy for On Line
------------------------------
Merchandise shall be consistent with the Retailer's return policy for
its Land Based Stores. With each shipment of merchandise, GSI shall
specifically instruct all customers that all merchandise purchased on
line may not be returned to the Retailer's Land Based Stores and may
only be returned in accordance with the instructions enclosed;
provided however, in the rare instance a customer desires to return On
Line Merchandise to one of the Retailer's Land Based Stores, the
Retailer, in order to maximize customer relations, shall accept such
merchandise for return in accordance with the Retailer's return
policy, and return the merchandise to GSI's fulfillment center. GSI
shall pay the Retailer for the full amount credited to the customer by
Retailer's land-based stores with respect to such merchandise, as well
as an amount equal to the Retailer's freight cost for returning the
merchandise to GSI's fulfillment center.
Should GSI receive the return of On Line Merchandise, GSI shall
reimburse the Retailer the amount of the GSI Entitlement paid to GSI
with respect to that transaction, as well as applicable tax refunded
to the On Line Customer.
<PAGE>
3.12 On Line Customer Loyalty Programs. GSI shall have the right to
---------------------------------
establish On Line Customer Loyalty Programs in order to encourage
continued on line purchases. The On Line Customer Loyalty Programs
established by GSI for Retailer shall be consistent with that program
established by Retailer for use in its Land Based Stores. In addition,
the Customer Loyalty Programs established by GSI shall be used only in
connection with on line purchases and Retailer's customer loyalty
programs shall be used only in connection with purchases at the
Retailer's Land Based Stores. Notwithstanding anything contained
herein to the contrary, GSI shall not establish any On Line Customer
Loyalty Programs without first obtaining the approval of Retailer,
which approval shall not be unreasonably withheld. Retailer shall
respond to a request for such approval from GSI within fourteen days
of receiving the request. In the event Retailer fails to timely
respond, GSI shall furnish Retailer with a notice marked "second
request". If Retailer does not respond within two business days, GSI's
request shall be deemed granted. GSI will be solely and completely
responsible for all costs occurring as a result of creating and
operating an on line customer loyalty program.
3.13 Cross Promotion. GSI shall have the right to use Retailer's URL, name
---------------
and logo to cross promote Retailer's Web Site with other businesses in
order to promote Retailer's Web Site; provided however, GSI shall not
promote Retailer's Web Site on any other sporting good retailer's web
site, or on any other web site which would generally be considered
immoral, pornographic, political or offensive. Notwithstanding
anything contained herein to the contrary, GSI shall not establish any
Cross Promotions without first obtaining the approval of Retailer,
which shall not be unreasonably withheld. Withholding such consent in
order to protect or preserve Retailer's reputation and/or intellectual
property rights shall not be deemed unreasonable. Retailer shall
respond to a request for such approval from GSI within seven days of
receiving the request. In the event Retailer fails to timely respond,
GSI shall furnish Retailer with a notice marked "second request". If
Retailer does not respond within two business days, GSI's request
shall be deemed granted.
3.14 Price Matching. In the event that the Retailer, at its Land Based
--------------
Stores offers a "Price Matching" policy, GSI's management shall have
the right to use and adopt such policy for the Retailer's Web Site;
provided however, GSI shall not under any circumstance, advertise or
market the availability of this policy, and may offer it to customers
only in GSI's sole discretion.
3.15 Project Manager. Promptly after the execution of this Agreement, but
---------------
in no event later than sixty days after such execution, Retailer, at
its expense, shall hire or reassign one of its existing employees, to
act as Project Manager to work exclusively with GSI in creating and
maintaining the Retailer's Web Site. Commencing with the Project
Manager's hiring and continuing through the Term, as may be extended,
the Project Manager shall be the Retailer's liaison with GSI and shall
be
<PAGE>
responsible for supplying GSI with the Retailer Content and such other
information as may reasonably be required of the Retailer in order to
create and maintain the Retailer's Web Site in the most efficient
manner.
4. ON-LINE DATA AND DATABASES
--------------------------
4.1 Ownership of Data. Any and all data ("Customer Data") related to
-----------------
Retailer's customers (including customer names and other identifying
information such as addresses, phone numbers and e-mail addresses,
credit card numbers, and descriptions of the items and quantities of
items purchased) that is collected by GSI shall be owned [*].
4.2 Ownership of Databases. All data structures, data schema, database
----------------------
dictionaries, attributes, validation tests for each element, table
sizes and formats, access requirements, data dependencies and other
elements involving the storage of Data on the Web Site and all
refinements, updates, releases, improvements and enhancements thereto,
all intellectual property rights embedded therein and all applications
created specifically for use of the data and Retailer Content
(collectively, the "Databases") shall, as between GSI and Retailer, be
the sole and exclusive property of GSI.
4.3 Delivery of Customer Data to Retailer. From time to time, but no more
-------------------------------------
than four (4) times per calendar year, GSI shall provide to Retailer
any or all of the following information collected from the Customer
Data:
a. customer's names;
b. customer's addresses;
c. customer's phone number;
d. customer's e-mail address;
e. items purchased;
f. amount spent;
g. information as to how customer reached Web Site;
h. refers;
i. unique visitors to site;
j. page views per site;
k. top ten most viewed pages;
l. bottom ten least viewed pages;
m. time of day traffic patterns;
n. sales by product and brand;
customer comments and complaints (shall be furnished on a
monthly basis); additional information at GSI's discretion.
GSI shall provide the Customer Data to Retailer in a mutually
agreeable, commercially standard format, either via diskette, CD-ROM,
electronically, or via another mutually agreeable method. GSI shall
use commercially reasonable efforts to ensure that the Customer Data
provided to Retailer accurately and completely reflects the Customer
Data in the Web Site, but GSI shall have no obligation to check the
accuracy, validity or integrity of the Customer Data and except as set
forth in this Section 4.3, the Customer Data is provided "AS-IS".
<PAGE>
4.4 Restrictions on Use of Customer Data. Each party shall treat the
------------------------------------
Customer Data as Confidential Information of the other party in
accordance with the provisions of Article 7. Neither party may sell,
lend, or license the Customer Data to third parties without the prior
written consent of the other party, which consent may be withheld at
the sole discretion of the other party; provided however, Retailer
grants to GSI the right to combine all Retailers' Customer Data to
form trends and overall research as to the on line shopping habits of
consumers. In addition, Retailer may use the Customer Data relating to
Retailer in connection with the operation of its Land Based Stores
only. As set forth above, Retailer may not sell, lend or license the
Customer Data to any third party without GSI's consent, which consent
may be withheld by GSI in its sole discretion. The parties acknowledge
that the Customer Data referred to herein refers only to Customer Data
gathered from On Line Customers and shall not be applicable to
customer data gathered by the Retailer from its customers at its Land
Based Stores.
Retailer, as co-owner of the online customer database, will be
provided with the results of such data aggregation and analysis, in
the form of comparative profiles. GSI will provide the Retailer online
customer profile as well as the aggregated online customer profile. In
addition, Retailer will be allowed to promote to its own database of
land based customers.
5. ADVERTISING AND MARKETING
-------------------------
The Retailer shall, commencing no later than October 1, 1999, and
continuing during the Term, and any extensions thereof, at no cost to GSI
provide for Complete URL Integration in its advertising and marketing by:
5.1 prominently including as part of all of its print media (including but
not limited to newspapers, periodicals, circulars, billboards, print
materials, letterhead, business cards, shopping bags, cash register
receipts and arena advertising) its URL, www.Sportschalet.com.;
provided however, Retailer shall not be required to include the URL on
print materials such as letterhead, business cards, shopping bags and
cash register receipts until it exhausts its present supply of each
such item at which time it will promptly replace that item with items
containing the Retailer's URL; and
5.2 prominently including, at the end of its television advertising, its
URL; and
5.3 mentioning its URL at the end of all radio advertisements; provided
however, Retailer may request GSI's consent not to use the URL in up
to [*] per cent of its annual radio advertisements, which consent GSI
shall not unreasonably withhold.
Notwithstanding anything contained herein to the contrary, Retailer shall
be permitted to exhaust its existing supply of each item of
<PAGE>
printed materials before instituting the Complete URL Integration with
respect to that item.
6. ADVERTISING CO-OP AND DISCRETIONARY FUNDS
-----------------------------------------
6.1 During the Term and any extensions thereof, GSI shall use all
Advertising Co-op and Discretionary Funds received by GSI directly
from vendors as a result of the purchase of merchandise for the
Retailer's Web Site exclusively, to promote the Retailer's Web Site,
as GSI shall elect. All such proposed advertisements shall be
submitted to the Retailer for the Retailer's approval as to content
and design along with placement information. The Retailer shall have
seven days from receipt to either approve or disapprove. In the event
that the Retailer disapproves, it shall advise GSI specifically as to
why and GSI shall attempt to address the Retailer's concerns and
resubmit the proposal to Retailer for its approval, which shall again
have forty eight hours from receipt to approve or disapprove. This
procedure shall continue until the advertisement has been approved or
replaced. In all instances where approval is requested of the
Retailer, in the event the Retailer does not respond within the
aforementioned forty-eight hours, Retailer shall be deemed to have
granted approval.
6.2 Any Advertising Co-op and Discretionary Funds received by the Retailer
through the Retailer's purchase of product for GSI, ultimately for the
Retailer's Web Site, may be retained by the Retailer; provided
however, Retailer acknowledges that it is preferential for Retailer's
vendors to sell to GSI directly and both Retailer and GSI shall
request Retailer's vendors to do so.
6.3 Retailer shall retain from vendors any non item driven marketing
funds; however, Retailer shall use its reasonable efforts to obtain
from vendors incremental marketing funds based upon an increase in the
sale of the vendor's merchandise on the Retailer's Web Site. Any such
incremental marketing funds shall belong to GSI and shall be used in
accordance with paragraph 6.1 above.
7. CONFIDENTIALITY
---------------
7.1 Confidential Information. Each party acknowledges that, in connection
------------------------
with the performance of this Agreement, it may receive Confidential
Information of the other party. For the purpose of this Agreement,
"Confidential Information" shall mean information or materials that is
clearly marked "confidential" or the Receiving Party knows has reason
to know is the confidential or proprietary information of the
Disclosing Party, either because a) such information is marked or
otherwise identified by the Disclosing Party as confidential or
proprietary, or b) such information has commercial value and is not
generally known in the Disclosing Party's trade or industry.
Confidential Information shall include, without limitation: (a)
concepts and ideas relating to the development and distribution of
content in any medium; (b) trade secrets, drawings, inventions, know-
how, software programs, and software source documents; (c) information
regarding plans for research,
<PAGE>
development, new service offerings or products, marketing and selling,
business plans, business forecasts, budgets and unpublished financial
statements, licenses and distribution arrangements, prices and costs,
suppliers and customers; and (d) existence of any business
discussions, negotiations or agreements between the parties.
7.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all Confidential Information of the
Disclosing Party and not to disclose it to any third party; and (ii)
not to use any Confidential Information of the Disclosing Party except
as permitted by this Agreement or as may be necessary for the
Receiving Party to perform its obligations under this Agreement. The
Receiving Party will use at least the same degree of care to protect
the Disclosing Party's Confidential Information as it uses to protect
its own Confidential Information of like importance, and in no event
shall such degree of care be less than reasonable care. The
obligations and restrictions imposed by this Article 7 shall not
expire.
7.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information will not include any information that: (i)
was in the public domain at the time it was communicated to the
Receiving Party by the Disclosing Party; (ii) entered the public
domain subsequent to the time it was communicated to the Recipient by
the Disclosing Party through no fault of the Receiving Party; (iii)
was in the Receiving Party's possession free of any obligation of
confidence at the time it was communicated to the Receiving Party by
the Disclosing Party; (iv) was rightfully communicated to the
Receiving Party by a third party, free of any obligation of
confidence, subsequent to the time it was communicated to the
Receiving Party by the Disclosing Party; (v) was developed by
employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving
Party by the Disclosing Party; or (vi) was communicated by the
Disclosing Party to an unaffiliated third party free of any obligation
of confidence. In addition, the Receiving Party may disclose the
Disclosing Party's Confidential Information in response to a valid
order by a court or other governmental body, as otherwise required by
law, or as necessary to establish the rights of either party under
this Agreement; provided however, in the event that the Receiving
Party receives a demand to disclose such Confidential Information in
connection with a legal action or proceeding, the Receiving Party, if
possible, shall first notify the Disclosing Party of the demand in
order to provide the Disclosing Party an opportunity to seek a
protective order.
7.4 Confidentiality of this Agreement. Retailer acknowledges that the
---------------------------------
terms and conditions of this Agreement constitute Confidential
Information which shall be governed by the terms of this Article 7.
7.5 Confidentiality of Customer Data and Retailer's Policies.
--------------------------------------------------------
<PAGE>
GSI acknowledges that it will be receiving from Retailer, and
generating from the performance of its obligations under this
Agreement, Confidential Information critical to the Retailer's
business and concerning Retailer's customers and various information
concerning the operation of Retailer's business including but not
limited to net purchasing prices, advertising co-op and discretionary
fund amounts, specific marketing plans, specific on line sales and
delivery dates of merchandise. GSI recognizes its obligation to keep
such information confidential. Therefore, all GSI employees who may
have access to any such Confidential Information will be required to
execute confidentiality agreements with GSI with respect to which
Retailer will be a third party beneficiary and GSI shall use its best
efforts to enforce the terms thereof. Such confidentiality agreements
will specifically provide that the employee shall not discuss with any
other retailers who may or may not be customers of GSI, any
information concerning the Retailer or its customers.
Further, GSI acknowledges it is associated with other subsidiaries of
GSI's parent corporation, Global Sports, Inc. GSI therefore represents
and warrants to Retailer that it will establish a "Need to Know"
policy with respect to such Confidential Information and only
disseminate such Confidential Information to those employees and
members of GSI's management who have a specific need to know such
Confidential Information. In those instances, prior to the
dissemination of such Confidential Information to those individuals,
they will be required to execute confidentiality agreements with GSI
with respect to which Retailer will be a third party beneficiary
specifically prohibiting such disclosure of such Confidential
Information to anyone, except as otherwise permitted by the terms of
this Agreement.
8. EXCLUSIVE WEB AGREEMENT
-----------------------
During the Term and any extensions thereof, the Retailer, any subsidiary of
the Retailer, shall not sell any sporting goods merchandise on the Internet
(including the Web), nor use itself or allow a third party to use its URL,
name or logo on the Web for the purpose of facilitating the sale of
merchandise on the Web other than through GSI. Notwithstanding anything
contained herein to the contrary, should GSI be unable to satisfy the
Retailer's web site requirements with respect to specialized matters such
as corporate information, or special services the Retailer shall have the
right to establish a second web site incorporating the name "Sport Chalet"
which GSI shall provide a link from the Retailer's Web Site; provided
however, under no circumstances shall Retailer sell any merchandise on such
second web site.
8.1 GSI will include in the website development agreement at no charge to
Retailer, links that will enable Retailer's customers to link to a
product expert, which expert shall be selected and engaged solely by
Retailer; provided however, that should any such product expert a) be
engaged in e-commerce; b) be linked to another site which is engaged
in e-commerce; or c) recommend that a consumer patronize another
retailer's Land Based Stores, then GSI, shall have the absolute right,
which right shall not
<PAGE>
be subject to dispute by Retailer, not to link the Retailer's website
to the web site of such product expert. Links will be provided by GSI
to such product experts or vendors for informational purposes and not
for the purpose of conducting any e-commerce business.
8.2 Inasmuch Retailer's land based business includes services and
guarantees not specifically related to the actual selling of
traditional, off the shelf retail merchandise, such as equipment
rental, SCUBA Boat Charters, individually customized team sales
equipment and apparel, and other services, Retailer reserves the right
to create its own web page(s) to allow customers to reserve such
equipment and/or charters, order customized team products, and take
advantage of other land-based services. These pages will be consistent
with the look and feel of the GSI-created www.sportchalet.com web
--------------------
site, and furthermore these pages would in no way offer for sale
similar or competing product available on the GSI web site; provided
however, that should any such product expert a) be engaged in e-
commerce; b) be linked to another site which is engaged in e-commerce;
or c) recommend that a consumer patronize another retailer's Land
Based Stores, then GSI, shall have the absolute right, which right
shall not be subject to dispute by Retailer, not to link the
Retailer's website to such other web site Links will be provided by
GSI to such product experts or vendors for informational purposes and
not for the purpose of conducting any e-commerce business. Retailer
will bear the cost of developing and maintaining these sites.
Retailer will not be obligated to let GSI operate these particular web
pages as/when GSI is capable of doing so. At Retailer's request, GSI
will provide a link to these additional pages.
In addition, GSI will support and implement Retailer's ongoing program
of providing links from its web site to those web sites of Retailer's
vendors, as well as links to sports related publications such as
newspaper and magazine web sites, along with weather forecasting web
sites so as to add value to a customer's on-line shopping experience
by providing more detailed product information, descriptions and
information. These vendor sites will not be E-Commerce enabled nor
provide links to competitive E-Commerce sites; provided however, that
should any such product expert a) be engaged in e-commerce; b) be
linked to another site which is engaged in e-commerce; or c) recommend
that a consumer patronize another retailer's Land Based Stores, then
GSI, shall have the absolute right, which right shall not be subject
to dispute by Retailer, not to link the Retailer's website to such
other web site Links will be provided by GSI to such product experts
or vendors for informational purposes and not for the purpose of
conducting any e-commerce business.
9. URL, NAME AND LOGO USAGE
------------------------
9.1 During the Term, the Retailer hereby grants to GSI the right to
use, copy, and display the Retailer's name, logo and URL
<PAGE>
and such other names and logos as the Retailer owns and as may be
listed on Schedule "1" attached hereto and made a part hereof, on the
Retailer's Web Site, on invoices and packing slips, in connection with
credit card charges, a toll free Web site customer service telephone
line, and generally in connection with the operation of GSI's on-line
business; provided however, GSI shall have no right to modify
Retailer's name, logo or URL without Retailer's consent. Such Schedule
shall be modified from time to time during the Term to add any new
names and logos which the Retailer may register with the United States
Patent and Trademark Office.
9.2 GSI has the right to use a toll-free number for web site customer
service and credit card calls. This number may be used on the web
site, invoices, packing lists, and credit card statements.
10. REPRESENTATIONS AND WARRANTIES.
-------------------------------
10.1 Retailer represents and warrants that at all times during the Term
hereof or any extensions thereof:
a. it has or will have the full right to grant to GSI the right to
use its URL, names and logos as discussed in Article 9 above,
including its Domain Name; and
b. Retailer is authorized to advertise and market on its Web Site
the brands of merchandise to be sold thereon; and
c. Prior to the Launch Date, if not already completed, Retailer
shall register and maintain the Domain Name "sportchalet.com"
with Network Solutions or any similar successor entity. Retailer
shall list itself as the owner for the Domain Name
"sportchalet.com" and Retailer shall list GSI as the
administrative and technical contact and billing contact for the
Domain Name "sportchalet.com";
d. neither the Retailer nor its secured lenders shall at any time
have any interest in the Web Account or Tax Account.
10.2 Each party represents and warrants to the other party that: (i) it is
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the power
and authority to enter into this Agreement and the transactions
contemplated herein; (ii) the consummation of the transactions
described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles
of Incorporation or Bylaws, or any statute or administrative
regulation or of any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement or
instrument to which it is a party or by which it is bound or
constitute a default thereunder; and (iii) this Agreement has been
duly authorized, executed and delivered by it and this Agreement is
valid, enforceable and binding upon each party in accordance with its
terms.
<PAGE>
10.3 GSI represents and warrants that during the term of the contract, it
is financially responsible for all costs of operating the Retailer's
web site, except as specified in Section 8.2.
11. INDEMNIFICATION
---------------
11.1 Retailer, at its own cost and expense, shall defend, indemnify and
hold harmless GSI and any of its officers, directors, employees or
agents from and against all damages, expenses, liabilities and other
costs (including reasonable attorneys fees and court costs) arising as
a consequence of GSI providing services pursuant to this Agreement a)
from or related to a claim that GSI infringes a third party copyright,
trademark or trade secret due to use of Retailer's tradename or any
other name set forth on Schedule 1 to this Agreement; with the
exception of modifications made to Retailer's marks, names or logos
made by GSI without Retailer's consent or b) from Retailer's gross
negligence, willful or intentional misconduct.
11.2 GSI, at its own cost and expense, shall defend, indemnify and hold
harmless Retailer and any of its officers, directors, employees or
agents from and against all damages, expenses, fines, penalties,
exactments, liabilities and other costs (including reasonable
attorneys fees and court costs arising a) from a claim made by any
consumer that is related in any way to the Retailer's Web Site or
GSI's services to Retailer provided pursuant to this Agreement, but
excluding a claim for which GSI would have the right to
indemnification pursuant to Paragraph 11.1 above, or b) from GSI's
gross negligence, willful or intentional misconduct, or c) arising as
a consequence of GSI providing or failing to provide services pursuant
to this Agreement.
11.3 Retailer shall have sole control of any defense of any claim made
pursuant to Section 11.1 above, but GSI shall cooperate with Retailer
in providing such defense.
11.4 GSI shall have sole control of any defense of any claim made pursuant
to Section 11.2 above, but Retailer shall cooperate with GSI in
providing such defense.
11.5 Any party seeking indemnification shall notify the other party as soon
as possible after such party seeking indemnification becomes aware of
the claim.
11.6 GSI will process all credit card orders through its own processor
under it's own merchant ID number - chargebacks shall be the sole
responsibility of GSI.
11.7 Retailer maintains a risk management program with respect to its land
based businesses which includes, without limitation, the use of
written waivers and releases from customers of certain products and
the obtaining of written indemnification agreements from vendors of
certain products. Accordingly, the parties agree:
<PAGE>
a. Retailer shall provide GSI from time to time with a list of those
products for which it requires a waiver or release from the
customer and the form of waiver and release it currently uses;
b. GSI shall design the web site such that a customer is required to
give valid and binding legal assent to a waiver and release
substantially equivalent to that used by Retailer in its land
based business before he or she may purchase these products;
c. GSI shall obtain from vendors of merchandise it purchases for
sale on Retailer's web site indemnities of the nature and type
then being furnished by such vendors to Retailer with respect to
its land based business; provided, however, that such indemnities
so obtained by GSI shall, by their terms, protect both GSI and
Retailer;
d. GSI shall comply with any requirements of the vendor indemnities
mentioned above to the end that such indemnities are enforceable
in accordance with their terms.
12. INSURANCE
---------
12.1 GSI, at its expense, shall maintain in full force and effect products
liability insurance coverage for merchandise sold on Retailer's Web
Site. The amount of product liability insurance will be equal to the
amount Retailer requires of its vendors, with at least a minimum of
[*], and shall be updated as required. Such policy shall insure
Retailer and name GSI as an additional insured.
12.2 GSI shall deliver to Retailer certificates of insurance which
stipulate that no less than ten days notice will be given to Retailer
prior to the termination of the policy.
13. TERMINATION
-----------
13.1 Termination for Cause by Either Party. This Agreement may be
-------------------------------------
terminated by either party in the event of any material breach of any
of the terms and conditions of this Agreement by the other party which
breach continues in effect after the breaching party has been provided
with written notice of breach and ninety (90) days to cure such breach
and fails to cure such breach. As used herein, "material breach" shall
mean a failure by a party to this Agreement to perform any of its
obligations the effect of which would substantially impair the value
of this Agreement to the other party. By way of example only and not
by way of limitation, GSI's failure to operate the Retailer's Web Site
according to commercially reasonable standards as they are established
today and as they may continue to develop during the Term of this
Agreement or failure to provide customer service equivalent to that
provided by other reputable on line retailers, would be a material
breach of this Agreement by GSI. Retailer's failure to comply with its
obligations pursuant to Section 5 above, or failure to
<PAGE>
provide GSI with the Retailer Content necessary to construct and/or
maintain the Retailer's Web Site, would be a material breach of the
Retailer's obligations under this Agreement.
13.2 Measures of Performance. In addition, the web site will need to have a
-----------------------
large assortment of merchandise as depicted in Retailer Land Based
Stores. The Retailer recognizes time will be required to build an
assortment on-line which accurately represents the land-based stores.
The percentage of on-line vs. land based SKU assortments will be as
follows:
Oct. 1, 1999 - the lesser of [*] or [*] of the Retailer's active land-
based SKUs.
Oct. 1, 2000 - the lesser of [*] or [*] of the Retailer's active land-
based SKUs.
Oct. 1, 2001 - the lesser of [*] or [*] of the Retailer's active land-
based SKUs.
The above thresholds have been agreed upon based upon the Retailer
having [*] active land based SKUs.Both parties acknowledge that if
vendors restrict or prohibit the sale of their merchandise on line,
thereby significantly reducing the number of SKUs available for sale
on line, then the parties will renegotiate the thresholds set forth
above, acting in good faith.
GSI will be required to report SKU levels monthly by the 15/th/ of the
month following, and during any month in a twelve-month period where
GSI fails to meet the standard, this failure will be considered to be
a breach (without requirement of notice by Retailer). GSI's SKU count
of offered SKU's may include items that are listed on the web site
with the notation, "available in retail stores only.
13.3 Termination for Cause Only by GSI. GSI may terminate this
---------------------------------
Agreement by giving sixty days prior written notice to Retailer
of its election to terminate upon the occurrence of any of the
following events:
a. any representation or warranty contained herein becomes
materially false or misleading; or
b. a material change in the Retailer's business or business
policies as determined by GSI in its sole reasonable
judgment.
13.4 Termination for Cause by Retailer. Retailer may terminate
---------------------------------
this agreement by giving 60 days prior notice to GSI upon the
occurrence of:
a. a default under 13.2 above; or
<PAGE>
b. if during the first three years of the Term of this Agreement,
there is a change in control of the ownership of GSI,
including a spin off as a public company so that Michael G.
Rubin ceases to function as the chairman of the board or chief
executive officer of both GSI and its parent corporation,
Global Sports, Inc.; or
c. there is a material adverse change in GSI's financial
condition directly causing an uncured material breach and/or
filing pursuant to Chapter 7 or 11 of the Bankruptcy Code.
13.5 Termination Without Cause by Either Party. In the absence of a
-----------------------------------------
material breach, this Agreement may only be terminated by the
expiration of the Term, as may be extended pursuant to Section 2.3
above.
14. LIMITATIONS UPON LIABILITY
--------------------------
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF
WHETHER SUCH DAMAGES ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER
LEGAL THEORIES) ARISING FROM OR RELATED TO RETAILER'S OR RETAILER'S
CUSTOMERS' USE OF OR INABILITY TO ACCESS ANY PART OF THE INTERNET OR
RETAILER'S OR RETAILER'S CUSTOMERS' RELIANCE ON OR USE OF INFORMATION,
SERVICES OR MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR THE
SERVICES, OR THAT RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS,
THEFT, OR DELETION OF FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR
TRANSMISSION, OR ANY FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE
LIABLE UNDER THIS AGREEMENT FOR AN AMOUNT THAT EXCEEDS, IN THE
AGGREGATE THE AMOUNTS PAID TO RETAILER DURING THE [*] MONTHS PRECEDING
THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY. IN ADDITION,
RETAILER SHALL BE ENTITLED TO SEEK EQUITABLE RELIEF FROM THE COURT. THE
REMEDIES SET FORTH IN THIS ARTICLE 14 CONSTITUTE THE SOLE AND EXCLUSIVE
REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO EVENT SHALL
EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN
TWELVE (12) MONTHS AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH
LIABILITY.
15. PROPERTY RIGHTS AND OWNERSHIP
-----------------------------
The Retailer's Web Site shall consist of, and shall operate in
conjunction with, multiple elements, all of which are subject to
certain intellectual property rights. The parties' respective rights
with respect to such elements shall be as set forth below. For purposes
of this Agreement, the term "Ownership" shall refer to ownership of all
right, title and interest in and to the respective elements, including,
but not limited to, all patent, copyright, trade secret, trademark and
any other similar intellectual property rights therein, as applicable.
<PAGE>
15.1 Retailer's URL shall be owned solely by the Retailer;
15.2 Retailer's Web Site shall be owned solely by GSI;
15.3 Software developed for the Retailer's Web Site, shall be
owned solely by GSI subject to any authorizations to use and
approvals obtained by the Retailer and granted to GSI.
15.4 Upon Retailer's request, GSI will provide Retailer with
digital images and copy for each and every item offered on
the Retailer web site at no charge.
15.5 Retailer's Content shall be owned exclusively by Retailer.
15.6 Customer Data shall be owned jointly by Retailer and GSI.
With respect to intellectual property owned by each of them, Retailer
and GSI shall both have rights associated with the ownership of
intellectual property, including the right to copyright web sites and
domains.
16. GSI'S TWENTY DAY PERIOD TO EXECUTE
----------------------------------
Retailer shall execute this Agreement first and deliver such executed
Agreement to GSI which shall thereafter have twenty days from receipt
to countersign the Agreement. During such twenty-day period, Retailer
shall have no right to withdraw the agreements which it executed and
delivered to GSI.
17. DISCONTINUANCE OR REGULATION OF THE INTERNET.
---------------------------------------------
Retailer acknowledges and agrees that the Internet (including without
limitation the Web) is a network of private and public networks, that
GSI has no control over the Internet, and that GSI is not liable for
the discontinuance of operation of any portion of the Internet or
possible regulation of the Internet which might restrict or prohibit
the operation of the Web site.
18. FORCE MAJEURE
-------------
In the event that either party is unable to perform any of its
obligations under this Agreement or to enjoy any of its benefits
because of any event beyond the control of the affected party
including, but not limited to, natural disaster, acts of God, actions
or decrees of governmental bodies or failure of communications lines or
networks (a "Force Majeure Event"), the party who has been so affected
shall promptly give written notice to the other party and shall use its
best efforts to resume performance. Upon receipt of such notice, all
obligations under this Agreement shall be immediately suspended for the
duration of such Force Majeure Event.
19. WAIVER
------
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such
right, power or
<PAGE>
privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing
and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified.
20. PRESS RELEASES
--------------
All voluntary public announcements concerning the transactions
contemplated by this Agreement shall be mutually acceptable to both GSI
and Retailer. Unless required by law, neither GSI on the one hand, and
Retailer on the other hand, shall make any public announcement or issue
any press release concerning the transactions contemplated by this
Agreement without the prior written consent of GSI or Retailer,
respectively. With respect to any announcement that any of the parties
is required by law to issue, such party shall, to the extent possible
under the circumstances, review the necessity for and the contents of
the announcement with the other party before issuing the announcement;
provided however, if either party cannot obtain the consent of the
other party in a timely manner, the party required to comply with law
may issue the press release or public announcement without obtaining
the consent of the other party.
21. GOVERNING LAW
-------------
In the event that either party commences any proceeding pursuant to
this Agreement, the rights and obligations of the parties hereto, and
any claims or disputes thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware (excluding the choice
of law rules thereof).
22. ASSIGNMENT
----------
Retailer shall have no right to assign this Agreement without the prior
written consent of GSI; provided, that Retailer shall have the right to
assign this Agreement to any person or entity that acquires or succeeds
to all or substantially all of such party's business or assets upon
written notice to GSI.
In addition, should GSI assign this Agreement to a third party and not
as part of the sale of all or substantially all its e-commerce
business, then Retailer shall have the right to approve the assignee to
ensure that the assignee is experienced in the operation of a web site.
23. COUNTERPARTS
------------
This Agreement may be signed in several counterparts, each of which
shall be deemed an original, and all of which when taken together,
shall be deemed a complete instrument.
24. ENTIRE AGREEMENT
----------------
<PAGE>
This Agreement, including the Web Development Agreement, represents
the entire agreement of the parties with respect to the subject matter
hereof and may not be modified, except in writing, executed by all of
the parties hereto. This Agreement supersedes all prior writings of
the parties with respect to this subject matter.
25. JURISDICTION
------------
Should either party commence any proceeding pursuant to this
Agreement, the exclusive jurisdiction and venue of any such dispute
shall be in the United States District Court for the Disrict of
Delaware
26. INDEPENDENT CONTRACTORS
-----------------------
The relationship of the parties herein shall hereunder be that of
independent contractors and nothing herein shall be construed to
create a joint venture or partnership.
27. SIGNING
-------
The parties executing this Agreement represents and warrants that they
have full corporate authority to do so.
28. BINDING EFFECT
--------------
This Agreement shall be binding upon the parties hereto, their
successors and permitted assigns.
29. HEADINGS
--------
Section headings contained in this Agreement are inserted for
convenience or reference only and shall not be deemed to be a part of
this Agreement for any other purpose.
30. DISCLAIMER OF WARRANTIES
------------------------
EXCEPT AS TO THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, GSI
MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR
IN LAW WITH RESPECT TO THE CREATION AND MAINTENANCE OF THE PRODUCT AND
SERVICES PROVIDED FOR HEREUNDER, AND DISCLAIMS ALL OTHER WARRANTIES.
RETAILER ACKNOWLEDGES AND AGREES THAT GSI HAS NOT MADE, NOR DOES
HEREBY MAKE, ANY OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY
KIND OR CHARACTER, EXPRESSED OR IMPLIED.
31. NOTICES
-------
Any notices or writings to be sent hereunder shall be in writing and
shall be by personal delivery, facsimile transmission if accompanied
by e-mail and/or telephone transmission or by certified or registered
mail, return receipt requested, and shall be deemed given upon the
earlier of actual receipt, five (5) days after deposit in the mail, or
receipt by sender of confirmation of facsimile transmission. Notices
<PAGE>
shall be sent to the following addresses (or such other address as
either party may specify in writing):
IF TO GSI: 555 South Henderson Road
King of Prussia, PA 19406
Attention: President
<PAGE>
Copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Penna., 19102
PH. 215-893-4959
FAX 215-790-0509
IF TO RETAILER: 920 Foothill Boulevard
La Canada, CA., 91011
Attention: President/Chief Operating
Officer
Copy to: James G. Jones, Esq.
Knapp, Marsh, Jones and Doran
515 South Figueroa Street
Los Angeles, CA 90071
PH. (213) 627-8471
FAX (213) 627-7897
32. GRANT OF WARRANT TO RETAILER
----------------------------
Upon execution of this Agreement by Retailer, and acceptance thereof
by GSI, prior to the announcement of GSI's e-commerce initiative, GSI
will deliver to Retailer a warrant to purchase shares of Global
Sports, Inc., the parent corporation of GSI, in accordance with the
terms set forth in the Warrant Term Sheet attached hereto as Exhibit
"B".
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement with intent to be legally bound
hereby, the date and year first above written.
GLOBAL SPORTS INTERACTIVE, INC.: SPORT CHALET, INC.:
BY: /s/ Michael Rubin BY: /s/ Craig Levra
---------------------------- ----------------------------
Title: President Title: President/C.O.O.
------------------------ -------------------------
Date: 4/1/99 Date: 3/31/99
------------------------- ---------------------------
EXHIBIT A
WEB SITE DEVELOPMENT AGREEMENT
------------------------------
<PAGE>
THIS Web site Development Agreement ("Agreement") dated the ____ day of
______________, 1999 (the "Services Start Date") by and between Global Sports
Interactive, Inc., a Pennsylvania corporation (hereinafter referred to as "GSI")
with an address of 555 South Henderson Road, King of Prussia, PA 19406 and Sport
Chalet, Inc., a Delaware corporation (hereinafter referred to as "Retailer")
with an address of 920 Foothill Boulevard, La Canada, California, 91011.
W I T N E S S E T H:
WHEREAS, GSI and Retailer have entered into a E - Commerce Agreement
pursuant to which GSI shall provided certain E - Commerce services to Retailer,
including the development and maintenance of a web site; and
WHEREAS, the parties have elected to enter into this Agreement in order to
set forth the terms and conditions pursuant to which GSI shall develop a web
site for Retailer.
NOW, THEREFORE, in consideration of the mutual promises and terms herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged; and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Domain Name" means the domain name specified for the Web site by
Retailer from time to time, each of which is owned by the retailer. The initial
Domain Name is specified in Attachment B.
1.2 "E-Commerce Agreement" means the E-Commerce Agreement by and between
Retailer to which this Agreement is attached as Exhibit A.
1.3 "Features Set" means the requirements set forth in Attachment B, as
amended or supplemented in accordance with this Agreement.
1.4 "Intellectual Property Rights" means any and all now known or
hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the universe, including but not limited to copyrights,
moral rights, and, (b) trademark and trade name rights and similar rights, (c)
trade secret rights, (d) patents, designs, algorithms and other industrial
property rights, (e) all other intellectual and industrial property rights (of
every kind and nature throughout the universe and however designated) (including
logos, "rental" rights and rights to remuneration), whether arising by operation
of law, contract, license, or otherwise, and (f) all registrations, initial
applications, renewals, extensions, continuations, divisions or reissues hereof
now or hereafter in force (including any rights in any of the foregoing).
1.5 "Milestone Delivery Schedule" means the schedule for development of
the Web site set forth in Attachment B.
<PAGE>
1.6 "GSI Content" means product information, text, pictures, sound,
graphics, video and other data and assets supplied by GSI, as such materials may
be modified from time to time.
1.7 "GSI Products" means, collectively, the GSI Tools, the GSI Content and
the GSI Work Product.
1.8 "GSI Tools" means any tools, both in object code and source code form,
which GSI has already developed or which GSI independently develops or licenses
from a third party, excluding any tools which GSI creates pursuant to this
Agreement. By way of example, GSI Tools may include, without limitation,
toolbars for maneuvering between pages, search engines, Java applets, and
ActiveX controls.
1.9 "Production Schedule" shall mean the schedule agreed upon by the
parties for the production of the Retailer's Web site, including the delivery of
the Retailer Content and GSI Content by Retailer to GSI.
1.10 "Retailer Content" means the Domain Name, and the contents of the
Retailer's web site pages that describe or are unique to Retailer and does not
include product information that is GSI's responsibility. Such retailer content
includes, without limitation, Retailer's trademark, copyrights, trade secrets,
and confidential information.
1.11 "Services" means the services provided by GSI hereunder to develop,
host and maintain the Web site, in accordance with this Agreement.
1.12 "Web site" means, collectively, the E - Commerce Shopping Experience
and the Retailer Content made available on web pages under the Domain Name.
1.13 "GSI Work Product" means all HTML files, Java files, graphics files,
animation files, data files, technology, scripts and programs, both in object
code and source code form, all documentation and any other deliverable used by
GSI to create the Web site.
1.14 "Product Information" shall mean the camera ready image, and
descriptive text associated with each and every item of merchandise offered for
sale on the web site, plus any sound graphics, or video that may also be
supplied by GSI for some or all of these same items of merchandise.
2. WEB SITE DEVELOPMENT SERVICES
2.1 Delivery of Initial Retailer Content. As soon as reasonably possible,
GSI and Retailer shall agree upon a Production Schedule for the delivery by
Retailer to GSI of the Retailer Content that Retailer intends for GSI to
incorporate into the Web site. The parties acknowledge that Retailer will be
able to deliver certain "static" information, such as store locations, promptly
to GSI, and other product information, such as certain merchandise to be sold on
the Retailer's Web site, at a later date closer to the Launch Date. The Retailer
Content shall be in the format(s)
<PAGE>
designated by GSI as set forth on Attachment C hereto. Upon Retailer's request,
GSI shall assist Retailer in the conversion of the Retailer Content into an
acceptable form for use by the Web site.
2.2 Web site Development Services. At no cost to Retailer, GSI shall
provide design, programming and other consulting Services as specified in
Attachment B to create the Web site. GSI will provide the Web site to Retailer
in accordance with the Milestone Delivery Schedule.
2.3 Project Liaisons. Each party's primary contact for development
efforts shall be the project liaisons specified in Attachment B or the person
otherwise designated in writing by Retailer or GSI, as the case may be.
2.4 Acceptance. GSI shall make available final versions of the Web site
for Retailer's review and acceptance. Retailer shall have fifteen (15) days to
review and evaluate the Web site (the "Acceptance Period") to assess whether it
substantially meets the Features Set. During the Acceptance Period, Retailer
shall identify in writing to GSI all aspects of the Web site that do not
substantially conform to the Features Set. Upon receipt of Retailer's list of
non-conformities, GSI shall correct promptly all such non-conformities so that
the Web site does substantially conform to the Features Set and GSI shall extend
the Acceptance Period for a second ten (10) day Acceptance Period during which
Retailer shall confirm that all non-conformities that were previously identified
have been corrected. Notwithstanding the foregoing, the Web site shall be
deemed accepted upon the earlier of: (i) its use in commerce, provided however,
GSI shall not use the Retailer's Web site in commerce without the Retailer's
consent, which shall not be unreasonably withheld or delayed; (ii) Retailer's
failure to articulate any non-conformities during an Acceptance Period; or (iii)
Retailers acceptance of the Web site; or (iv) GSI's demonstration that all non-
conformities have been corrected to Retailer's reasonable satisfaction.
2.5 The entire web site design, as viewed on-line by customers, including
typeset, coloration, backgrounds, and overall look are subject to Retailer's
approval, which shall not be unreasonably withheld.
3. WEB HOSTING AND MAINTENANCE SERVICES
Following Retailer's acceptance of the Web site pursuant to Section 2.4,
GSI shall, at no cost to Retailer, provide the following web hosting and
maintenance Services:
3.1 Hosting Services. GSI shall load the Web site onto server(s) that
are connected to the Internet and readily accessible via the Web through use of
the Domain Names. GSI shall ensure that the Web site is functional and ready to
process transactions in a reasonably efficient manner.
3.2 Retailer Content. GSI shall upload all Retailer Content, including
updates, and product information to the Web site within seven
<PAGE>
days of delivery to GSI. Upon GSIs prior written consent, Retailer may
electronically transmit or upload Retailer Content directly to the Web site.
3.3 Maintenance Services. GSI shall maintain the Web site so that it
functions in a reasonably error free manner. Upon notification of an error in
the Web site or of a non-conformity between the Web site and the Features Set,
whether from Retailer or from any user of the Web site, GSI shall promptly
commence an investigation into the reported error, and GSI shall, upon
reproducing such error, use reasonable commercial efforts to correct such error
in a timely fashion. During such Maintenance Services, GSI shall ensure that the
Web site is functional and ready to process transactions in a reasonably
efficient manner, provided, however, GSI may, during low usage periods,
-------- -------
temporarily block access to the Web site to perform Web site maintenance during
periodic maintenance windows.
GSI shall use its best efforts to notify Retailer not less than forty-eight
hours in advance of any planned maintenance of the Retailer's Web site which
will cause GSI to close down the Web site.
In the event that GSI is forced to close the Retailer's Web site as a
result of an emergency, GSI shall use its best efforts to advise Retailer of the
emergency within twenty-four hours after it occurs.
4. ADDITIONAL SERVICES
4.1 Search Engine Registration. When GSI makes the Web site available to
Retailer, GSI shall register the Web Site and Domain Name with all applicable
search engines, but at least the top five search engines as rated by frequency
of use at GSI's discretion.
4.2 Domain Name Assistance. If requested by Retailer, GSI shall
cooperate with Retailer in registering the Domain Name with InterNIC. Retailer
shall own all right, title and interest in and to the Domain Name and all
Intellectual Property Rights related thereto. Unless otherwise specified by
Retailer, GSI shall, at Retailer's expense, assist Retailer in registration of
the Domain Name.
5. CONSIDERATION
In consideration for Retailer entering into the E Commerce Agreement, at no cost
to Retailer, GSI shall perform the Services set forth in this Agreement.
6. TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be conterminous with the term
of the E- Commerce Agreement and controlled by the provision of Section 2
thereof. In absence of a material breach, this Agreement may only be terminated
by the expiration of the term.
<PAGE>
6.2 Termination. Termination of this Agreement shall be governed by the
terms of Article 13 of the E - Commerce Agreement.
7. WARRANTIES AND DISCLAIMERS.
7.1 Cross Warranties. Retailer warrants as to the Retailer Content, and
GSI warrants as to the GSI Products, that any materials and updates or
enhancements there to shall not: (a) infringe on the Intellectual Property
Rights of any third party or any rights of publicity or privacy; (b) violate any
law, statute, ordinance or regulation (including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising); (c) be defamatory, trade libelous, unlawfully threatening or
unlawfully harassing; (d) be obscene, pornographic, political, or indecent.
7.2 Representations and Warranties of Each Party. Each party represents
and warrants to the other party that: (i) it is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and that it has the power and authority to enter into this
Agreement and the transactions contemplated herein; (ii) the consummation of the
transactions described by this Agreement shall not conflict with or result in a
breach of any of the terms, provisions or conditions of its Articles of
Incorporation or Bylaws, or any statute or administrative regulation or of any
order, writ, injunction, judgment or decree of any court, regulatory or
governmental authority or of any agreement or instrument to which it is a party
or by which it is bound or constitute a default thereunder; and (iii) this
Agreement has been duly authorized, executed and delivered by it and this
Agreement is valid, enforceable and binding upon each party in accordance with
its terms.
7.3 Year 2000. GSI warrants that the Web site shall not suffer any
material adverse effect as a result of a failure in any GSI Work Product or GSI
Tools to be Y2K Compliant. A product or service which is "Y2K Compliant" is one
that provides accurate results using data having date ranges spanning from
January 1, 1980 through December 31, 2019 (the "Y2K Period"). By way of example
and not of limitation, "Y2K Compliant" means, with respect to a product or
service, that it can currently and shall, during the Y2K Period, continue to (a)
manage and manipulate data involving all dates within the Y2K Period (including
the fact that the year 2000 is a leap year) without functional or data
abnormality related to such dates; (b) manage and manipulate data involving all
dates within the Y2K Period without inaccurate results related to such dates;
(c) have user interfaces and data fields formatted to distinguish between dates
within the Y2K Period; and (d) accurately identify and either reject or correct
invalid date data during the Y2K Period. Provided a party otherwise complies
with this Section 7.4, it will not be liable to the other party for any failure
to perform obligations under this Agreement to the extent such failure arises
from a failure to be Y2K Compliant that (1) affects the non-performing party's
customers or
<PAGE>
suppliers or (2) is beyond its reasonable control (e.g., a failure to be Y2K
---
Compliant affecting a governmental entity).
7.4 Disclaimer. THE WARRANTIES MADE IN THIS SECTION 7 ARE MADE IN LIEU OF
ALL OTHER EXPRESS WARRANTIES, WHETHER ORAL OR WRITTEN AND EXCEPT AS SET FORTH IN
THIS SECTION 7, GSI AND RETAILER MAKE NO OTHER REPRESENTATIONS OR WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.5 GSI warrants that the web site developed by GSI for Retailer will be
fit for E-Commerce as defined in the E-Commerce Management Agreement and will be
equivalent to the then current, state of the art standards of web sites selling
on-line merchandise.
8. OWNERSHIP
8.1 Ownership of GSI Products. Retailer hereby acknowledges and agrees
that as between Retailer and GSI, GSI owns all right, title and interest in and
to the GSI Products and all applicable Intellectual Property Rights thereto.
This Agreement confers no ownership interest in the GSI Products to Retailer.
8.2 Ownership of Retailer Content. GSI hereby acknowledges and agrees
that as between GSI and Retailer, Retailer owns all right, title and interest in
and to the Retailer Content and all Product Information as defined in paragraph
1.44 and all applicable Intellectual Property Rights thereto. Except for a
limited non-exclusive license during the term to use the Retailer Content and
product information solely to perform its obligations hereunder, this Agreement
confers no ownership interest in the Retailer Content to GSI. This includes all
content on each product page, and copy including, but not limited to, pictures,
descriptions, features, benefits, about each and every item offered for sale on-
line, to the extent Retailer provides such content and such content is not
generally available elsewhere.
9. LIMITATION UPON LIABILITY.
UNDER NO CIRCUMSTANCES SHALL GSI BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (REGARDLESS OF WHETHER SUCH DAMAGES
ARISE OUT OF CONTRACTUAL, NEGLIGENCE OR OTHER LEGAL THEORIES) ARISING FROM OR
RELATED TO RETAILER'S OR RETAILER'S CUSTOMERS USE OF OR INABILITY TO ACCESS ANY
PART OF THE INTERNET OR RETAILER'S OR RETAILER'S CUSTOMERS RELIANCE ON OR USE OF
INFORMATION, SERVICES OR MERCHANDISE PROVIDED ON OR THROUGH THE WEB SITE OR THE
SERVICES, OR THAT RESULT FROM MISTAKES, OMISSIONS, INTERRUPTIONS, LOSS, THEFT,
OR DELETION OF FILES, ERRORS, DEFECTS, DELAYS IN OPERATION, OR TRANSMISSION, OR
ANY FAILURE OF PERFORMANCE. IN NO EVENT SHALL GSI BE LIABLE UNDER THIS
AGREEMENT FOR AN AMOUNT THAT EXCEEDS, IN THE AGGREGATE THE AMOUNTS PAID TO
RETAILER DURING THE TWELVE (12) MONTHS PRECEDING THE LAST ACT OR OMISSION GIVING
RISE TO SUCH LIABILITY. SHOULD A MATERIAL FAILURE OCCUR, THE RETAILER HAS AT
ITS SOLE DISCRETION, THE OPTION TO MODIFY THE TERM OF THE E-COMMERCE MANAGEMENT
AGREEMENT TO A NEW TERM ACCEPTABLE TO
<PAGE>
RETAILER. THE REMEDIES SET FORTH IN THIS SECTION 9 CONSTITUTE THE SOLE AND
EXCLUSIVE REMEDIES AVAILABLE TO RETAILER UNDER THIS AGREEMENT. IN NO EVENT SHALL
EITHER PARTY BE LIABLE IN ANY RESPECT FOR CLAIMS BROUGHT MORE THAN [*] MONTHS
AFTER THE LAST ACT OR OMISSION GIVING RISE TO SUCH LIABILITY.
10. INDEMNITY.
10.1 Retailer Indemnity. Subject to Section 10.3, Retailer shall defend,
indemnify and hold GSI harmless against any third party claim, action, suit or
proceeding connected with or arising out of (i) Retailer's gross negligence,
willful or intentional misconduct; or (ii) any breach by Retailer of the
warranties set forth in Sections 7.1 or 7.2.
10.2 GSI Indemnity. Subject to Section 10.3, GSI shall defend, indemnify
and hold Retailer harmless against any third party claim, action, suit or
proceeding connected with or arising out of: (i) GSI's gross negligence, willful
or intentional misconduct; or (ii) any breach by GSI of the warranties set forth
in Sections 7.1 or 7.2.
10.3 Mechanic of Indemnities. The indemnifying party's obligations are
conditioned upon the indemnified party: (a) giving the indemnifying party prompt
written notice of any claim, action, suit or proceeding for which the
indemnified party is seeking indemnity; (b) granting control of the defense and
settlement to the indemnifying party; and (c) reasonably cooperating with the
indemnifying party at the indemnifying party's expense.
11. MISCELLANEOUS.
11.1 Incorporation of Certain Provisions of the E-Commerce Agreement.
Sections 7, 8, 12, and Sections 17 through 29, inclusive, of the E-Commerce
Agreement are hereby incorporated in their entirety into this Agreement.
11.2 Interpretation of Agreements. With respect to the subject matter
hereof, the E-Commerce Agreement shall control any conflict between the terms of
this Agreement and the E-Commerce Agreement.
11.3 Definitions. Any terms not specifically defined in this Agreement
shall be construed in accordance with the definitions given such terms in the E-
Commerce Agreement, or if such terms are not defined in the E-Commerce
Agreement, then such terms shall be construed in accordance with their every
day, common meaning.
12. MEASURE OF PERFORMANCE.
GSI shall be responsible to comply with the provisions of Paragraph 13.2 of
the E-Commerce Management Agreement, the terms of which are incorporated by
reference. GSI's failure to do so shall be a default of both the E-Commerce
Management Agreement and this agreement
<PAGE>
agreement permitting the Retailer to exercis its remedies set forth in
paragraph 13.4 of the E-Commerce Management Agreement.
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
representatives to enter into this Agreement to be effected on the Services
Start Date.
GLOBAL SPORTS INTERACTIVE, INC.: SPORT CHALET, INC.:
By: /s/ Michael Rubin By: /s/ Craig Levra
--------------------------- -------------------------
Title: President Title: President/C.O.O.
------------------------- -----------------------
Date: 4/1/99 Date: 3/31/99
-------------------------- -----------------------
Name: Michael Rubin Name: Craig Levra
------------------------- ------------------------
(Please type or print) (Please type or print)
<PAGE>
ATTACHMENT A
RETAILER'S ASSET REQUIREMENTS
Product Assets
Elements: Product Assets should include names, UPCs and prices. No product
photography or description are required.
Store Locations
Store location information should include address, phone number and fax numbers
store manager's name, store hours (which vary by mall).
Corporate Assets
Corporate Assets may include the following:
Press Releases
Frequently Asked Questions
Contact Information
Jobs Information
Community Programs Information
Annual Reports
Corporate Identity materials including logo
All above information may be submitted at the retailer's discretion, excluding
the corporate identity materials and logos, which are mandatory.
* Please define corporate identity materials.
<PAGE>
Attachment B
(TO BE COMPLETED)
Domain Name:
Format of Retailer Content:
Project Liaisons:
For GSE.C: For Retailer: T.B.A.
FEATURES SET
- ------------
1. PRODUCT SEARCH
2. BROWSE CATEGORIES
3. RECOMMENDATION TOOLS
4. ADVANCE PRODUCT PRESENTATION
5. SHOPPING CART
6. GIFT GIVING FUNCTIONALITY
7. REMOTE PUBLISHING TOOLS FOR HUMAN RESOURCES AND PRESS ROOM
8. SALES TAX CONFIGURATION
9. PRODUCT REVIEWS
10. 24/7 CUSTOMER SUPPORT
11. AFFILIATE PROGRAM FUNCTIONALITY
12. ON LINE GIFT CERTIFICATES
13. LAND BASED STORES GIFT CERTIFICATES
14. STORE LOCATOR
15. FINANCIAL INFORMATION
16. FREQUENTLY ASKED QUESTIONS
17. COMMUNITY PROGRAMS
18. COMPANY PROFILE
19. ON LINE ORDER STATUS
MILESTONE DELIVERY SCHEDULE:
- ---------------------------
TASK ESTIMATED COMPLETION DATE
- ---- -------------------------
DISCOVERY AND PLANNING MARCH 15, 1999
COMMENCE ENGINE ENGINEERING JULY 31, 1999
ESTABLISH FULFILLMENT CAPABILITIES APRIL 30, 1999
RETAILER WEB SITE DEVELOPMENT JULY 31, 1999
QUALITY CONTROL REVIEW AND REVISIONS AUGUST 21, 1999
ALPHA TESTING SEPTEMBER 1, 1999
BETA (SOFT LAUNCH) SEPTEMBER 30, 1999
WEB SITE LAUNCH TO GENERAL PUBLIC OCTOBER 1 - DECEMBER 1,1999
MEDIA AND PROMOTIONS OCTOBER 1 - DECEMBER 1,1999
<PAGE>
ATTACHMENT C
ASSET SUBMISSION GUIDELINES
This section details how to submit assets.
Source Assets and Final Assets
- ------------------------------------------------------------------
We require source files for all assets. This means if an image is originally
constructed as a layered RGB Photoshop file at 100x500 pixels, we need that
file, even if the final file is a flattened 4-bit GIF at 20x100.
We allow the submission of final assets in some cases, but only by prior
arrangement and only in addition to an up-to-date source file. All submitted
assets are subject to review and verification by production staff.
Media and Format
- ------------------------------------------------------------------
We routinely receive assets in the following media and formats.
Digital Media
- ------------------------------------------------------------------
Media:
SyQuest 44mb, 88mb, 200mb, CD-ROM (including PhotoCD), Zip, Jaz, 3.5"
floppy.
Format:
Win16, Win-32, or Macintosh
File Formats:
Text: Raw, MS Word 95, RTF, HTML
Bitmap Graphics:
Photoshop, TIFF, PCD (PhotoCD), EPS, PICT (JPEG and GIF for final files
only and only along with source files)
PostScript Graphics:
EPS, Illustrator (7.0 preferred)
Video:
QuickTime
Audio:
WAV, AIFF, MIDI
Non-Digital Media
- -------------------------------------------------------------------
Contact us to discuss needs and capabilities before submitting any non-digital
assets.
<PAGE>
Asset Submission
- ------------------------------------------------------------------
We prefer to receive assets via FTP (file transfer protocol) although we gladly
accept assets via standard package delivery services (i.e., FedEx, USPS, UPS,
etc.).
Submission via FTP
FTP Area: ftp.globalsportsinteractive.com
Assets should be left in "Incoming" which is a level below the initial
directory. Once assets have been transferred, e-mail confirmation is required.
Submission via Package Delivery
If you wish to submit assets via standard package delivery services, please
address the package to this address:
Address TBD
If you are submitting hard assets like brochures, photographs, etc. please be
sure to ship them in a reinforced container to prevent damage to the assets
while in transit.
If you are submitting digital media like SyQuests, Zip disks, Jaz disks, etc.,
be sure to ship them in a well-padded, reinforced container.
<PAGE>
SCHEDULE 1 TO E - COMMERCE AGREEMENT
------------------------------------
RETAILER'S TRADEMARKS, TRADENAMES AND LOGOS TO
-----------------------------------------------
<PAGE>
SPORT CHALET
------------
. Pacific Extreme
. Sportland
. Sport Chalet
. Sport Chalet Divers
. III (Romam Numeral Three) Sets
. Classic Cottonworks
. Classic Bodyworks
<PAGE>
SCHEDULE 2 TO E-COMMERCE MANAGEMENT AGREEMENT
---------------------------------------------
TYPE OF ON RETAILER'S MANAGEMENT COST OF
LINE GOODS OPERATING FEE MERCHANDISE
- ---------- INCOME --- TO RETAILER
------ -----------
IN LINE [*]% [*]% [*]%
SPECIAL MAKE-UPS [*]% [*]% [*]%
CLOSEOUTS [*]% [*]% [*]%
MARKDOWNS [*]%* [*]% N/A
LAND BASED GIFT
CERTIFICATES [*]%** [*]% N/A
ON LINE GIFT
CERTIFICATES*** [*]%**** [*]% [*]%
* Retailer supplies markdown inventory
** Retailer supplies gift certificates
*** Excluding those redeemed for Markdowns, which shall be
treated as a sale of Markdowns as indicated above,
**** GSI supplies gift certificate, and Retailer
purchases inventory from GSI at such time as
the certificate is purchased
<PAGE>
EXHIBIT "B"
-----------
WARRANT TERM SHEET
1. Grant of Warrants As part of its E-Commerce Initiative, Global
Sports, Inc. ("Global") intends to provide all
sporting goods and/or athletic footwear and
apparel retailers who execute a contract with
Global to become part of Global's E-Commerce
Initiative (the "Retailers") prior to the public
announcement of such initiative the opportunity to
receive warrants to purchase shares of Global
common stock based on the terms and conditions
outlined in this Term Sheet.
2. Amount of Warrants Warrants will be granted for a total exercise
amount of [*]. Each Retailer will receive a
warrant to purchase its pro rata share of the
total exercise amount based on the proportion that
such Retailer's net sales (including sales by such
Retailer's franchisees, if any) for its most
recent fiscal year bears to the total net sales of
all Retailers participating in the E-Commerce
Initiative (including sales by all such Retailers'
franchisees, if any).
3. Security Warrant to purchase Global common stock. The
period during which the warrant may be exercised
will be one year from the date of public
announcement of Global's E-Commerce Initiative.
The warrant and the shares of common stock
issuable upon exercise of the warrant will be
offered and sold to the Retailers pursuant to an
exemption from the Securities Act of 1933, as
amended. As a result, such shares will be
restricted securities within the meaning of that
Act, and the resale of such shares will be subject
to certain restrictions, including a one year
holding period.
<PAGE>
4. Warrant Exercise Price The warrant exercise price will be equal to the
average of the closing bid and asked prices for a
share of Common Stock for the 20 trading days
ending on the trading day immediately preceding
the public announcement of Global's E-Commerce
Initiative.
5. Issuance of Warrant Global will issue the warrants to participating
Retailers effective as of the public announcement
of Global's E-Commerce Initiative which is
expected to occur by March 31, 1999.
6. Confidentiality This Term Sheet is not to be disclosed to any
party other than the employees or advisors of the
Retailers receiving this Term Sheet who need to
know the terms set forth herein for the purpose of
evaluating such Retailer's participation in
Global's E-Commerce Initiative.
7. Other This Term Sheet is only intended to serve as a
general outline of the major terms of Global's
proposed grant of warrants in accordance with the
terms and conditions set forth herein. This Term
Sheet does not constitute an offer or sale of the
shares by Global. This Term Sheet does not
constitute a commitment or binding agreement to
grant such securities. such commitment or binding
agreement can only be created by definitive
agreements which will need to be negotiated and
executed.
<PAGE>
Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E-COMMERCE SERVICES AGREEMENT
-----------------------------
THIS E-Commerce Services Agreement dated the 14th day of May, 1999 (the
"Effective Date"), is by and between GLOBAL SPORTS INTERACTIVE, INC., a
Pennsylvania corporation ("GSI"), and THESPORTSAUTHORITY.COM, INC., a Delaware
corporation ("TSA.com").
WHEREAS, TSA.com has entered into an E-Commerce Agreement, a copy of which
is attached hereto (the "E-Commerce Agreement"), with The Sports Authority,
Inc., a Delaware corporation ("Retailer"), pursuant to which TSA.com has agreed
to create and manage the e-commerce business of Retailer; and
WHEREAS, GSI is in the business of creating, developing, operating,
maintaining, advertising and promoting all aspects of e-commerce business; and
WHEREAS, TSA.com desires to enter into an agreement with GSI pursuant to
which GSI shall provide certain services to TSA.com, all upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS
Terms used in this Agreement shall have the same meanings as set forth in
Article I and elsewhere within the E-Commerce Agreement.
ARTICLE II
GSI SERVICES
2.1 Services. GSI agrees to perform all of the services and obligations on
--------
behalf of TSA.com which TSA.com has agreed to perform for Retailer pursuant to
Articles II - IX and Article 10.2 of the E-Commerce Agreement (the "Services").
2.2 Payment and Accounting to GSI from TSA.com. For the services rendered
------------------------------------------
hereunder, TSA.com shall pay to GSI an amount equal to all of GSI's commercially
reasonable actual direct costs (without markup) ("GSI's Direct Costs") of
creating and operating the TSA Site and TSA.com's pro rata share of GSI's
commercially reasonable actual indirect costs (without markup)("GSI's Indirect
Costs"). The sum of GSI's Direct Costs and GSI's Indirect Costs shall be
referred to as "GSI's Entitlement." GSI's Direct Costs shall include but not be
limited to fulfillment costs (as discussed in Articles V and VI of the E-
Commerce Agreement), credit card
<PAGE>
costs, direct employee costs including salary and benefits, front end
development costs of the TSA Site and advertising and marketing costs. Indirect
Costs shall be determined in accordance with GAAP and shall include, without
limitation, GSI employee salary allocation, including benefits, overhead
allocation of GSI including rent, taxes (other than income taxes) and utilities,
GSI management personnel allocation, capital expenditures, including hardware
and software costs, common engine allocation and hosting allocation. GSI shall
not allocate or charge to TSA.com any sums as either GSI's Direct Costs or GSI's
Indirect Costs if the underlying Services, costs or expenses were not directly
or indirectly provided in relation to, or incurred for, the TSA Site or
performed or paid by GSI on behalf of TSA.com or Retailer as otherwise provided
in the E-Commerce Agreement.
2.3 TSA.com's Payments. GSI's Entitlement shall be calculated and charged by
------------------
GSI to TSA.com on a monthly basis. TSA.com agrees to pay GSI all charges within
thirty (30) days after the receipt of any GSI Entitlement charges or invoice
from GSI.
ARTICLE III
CUSTOMER DATA, FINANCIAL DATA AND DATABASES
3.1 Ownership and Use of Customer Data. TSA shall own all right, title and
----------------------------------
interest in and to the Customer Data, while TSA.com shall have an irrevocable
right and license under the E-Commerce Agreement to use the Customer Data in its
business operations. GSI shall adhere to all United States privacy and data
protection laws applicable to its gathering, processing, storing and
transmitting of Customer Data. GSI shall use its best efforts to adhere to all
such privacy and data protection laws of all other nations and shall indemnify
TSA for any loss, damage or expense caused by its failure to do so; provided,
however, that the parties agree that such failure to do so shall not be deemed a
breach of this Agreement.
3.2 Confidentiality of the Customer Data. Under the E-Commerce Agreement, both
------------------------------------
Retailer and TSA.com have agreed that each Party shall treat the Customer Data
as Confidential Information of the other Party, that TSA.com may use Customer
Data in the operation of the TSA Site and the E-Commerce Business, and that
Retailer may use the Customer Data in the operation of Retailer's land based
stores, but that neither Retailer nor TSA.com shall furnish, rent, sell or
otherwise disclose Customer Data to any person or entity whatsoever without the
prior written consent of the other Party. Further, under the E-Commerce
Agreement, both Retailer and TSA.com have agreed not to furnish, rent, sell or
otherwise disclose to any person or entity whatsoever any Financial Data,
without the other Party's prior written consent and subject to such terms and
conditions as the Parties may mutually determine. Notwithstanding the foregoing,
Retailer and TSA.com have agreed that TSA.com may permit GSI, at no charge to
GSI, to use Financial Data (but not Customer Data) to form trends and overall
research as to the on-line shopping habits of consumers. GSI agrees to treat the
Customer Data as Confidential Information and shall not furnish, rent, sell or
otherwise disclose Customer Data to any person or entity whatsoever without the
prior written consent of Retailer.
3.3 Ownership and Use of Financial Data. TSA.com, Retailer and GSI shall
-----------------------------------
jointly and severally own all right, title and interest in and to the Financial
Data, except that all use of the Financial Data by any of them shall always be
subject to the restrictions set forth in the E-Commerce Agreement.
2
<PAGE>
3.4 Ownership of Databases. GSI shall own all right, title and interest in and
----------------------
to the Databases, while Retailer and TSA.com may use the Databases subject to
other restrictions set forth in the E-Commerce Agreement.
ARTICLE IV
CONFIDENTIALITY
4.1 Confidential Information. Each Party acknowledges that, in connection with
------------------------
the performance of this Agreement, it may receive Confidential Information of
the other Party and that GSI may receive Confidential Information of Retailer
(which shall be deemed a "Disclosing Party for purposes of this Agreement). For
the purpose of this Agreement, "Confidential Information" shall mean information
or materials that is marked "confidential" or which the Receiving Party knows
has reason to know is the confidential or proprietary information of the
Disclosing Party, either because a) such information is marked or otherwise
identified by the Disclosing Party as confidential or proprietary, or b) such
information has commercial value and is not generally known in the Disclosing
Party's trade or industry. Confidential Information shall include, without
limitation: (a) concepts and ideas relating to the development and distribution
of content in any medium; (b) trade secrets, drawings, inventions, know-how,
software programs, and software source documents; (c) information regarding
plans for research, development, new service offerings or products, marketing
and selling, business plans, business forecasts, budgets and unpublished
financial statements, licenses and distribution arrangements, prices and costs,
suppliers and customers; (d) existence of any business discussions, negotiations
or agreements between the parties; (e) the terms and conditions of this
Agreement; (f) all information with respect to Retailer's vendors, Retailer's
price and cost structures, TSA.com's vendors, TSA.com's merchandise price and
cost structures, the cost of merchandise sold by TSA.com, the existence or
amount of any cooperative advertising subsidy or rebate; and (g) all prices of
merchandise to be sold on the TSA Site prior to publication of such prices on
the TSA Site; provided, however, that Retailer shall be provided with the
information referred to in clauses (f) and (g).
4.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all Confidential Information of the Disclosing
Party and, except as otherwise permitted herein, not to disclose it to any third
party; and (ii) not to use any Confidential Information of the Disclosing Party
except as permitted by this Agreement or as may be necessary for the Receiving
Party to perform its obligations under this Agreement. The Receiving Party
shall use at least the same degree of care to protect the Disclosing Party's
Confidential Information as it uses to protect its own Confidential Information
of like importance, and in no event shall such degree of care be less than
reasonable care. The obligations and restrictions imposed by this Article IV
shall terminate five (5) years after the expiration or termination of this
Agreement.
4.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information shall not include any information that: (i) was in the
public domain at the time it was communicated to the Receiving Party by the
Disclosing Party; (ii) entered the public domain subsequent to the time it was
communicated to the Recipient by the Disclosing Party through no
3
<PAGE>
fault of the Receiving Party; (iii) was in the Receiving Party's possession free
of any obligation of confidence at the time it was communicated to the Receiving
Party by the Disclosing Party; (iv) was rightfully communicated to the Receiving
Party by a third party, free of any obligation of confidence, subsequent to the
time it was communicated to the Receiving Party by the Disclosing Party; (v) was
developed by employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving Party by the
Disclosing Party; or (vi) was communicated by the Disclosing Party to an
unaffiliated third party free of any obligation of confidence. In addition, the
Receiving Party may disclose the Disclosing Party's Confidential Information in
response to a valid order by a court or other governmental body, as otherwise
required by law, or as necessary to establish the rights of either party under
this Agreement; provided, however, in the event that the Receiving Party
receives a demand to disclose such Confidential Information in connection with a
legal action or proceeding, the Receiving Party, if possible, shall first notify
the Disclosing Party of the demand in order to provide the Disclosing Party an
opportunity to seek a protective order. TSA.com may also disclose certain of
Retailer's Confidential Information to GSI in connection with the performance by
GSI of its duties, but only to the extent expressly permitted herein.
4.4 Confidentiality of this Agreement. The Parties acknowledge that the terms
---------------------------------
and conditions of this Agreement constitute Confidential Information which shall
be governed by the terms of this Article 4.
ARTICLE V
APPROVALS
5.1 Approval Process. Except as otherwise expressly set forth in the E-
----------------
Commerce Agreement and herein, and except with respect to any use of "Licensed
Property" (as defined in the License Agreement) which requires approval under
the License Agreement, when a given provision calls for prior review and
approval by one Party of a submission by the other Party, the Party receiving
the submission shall review it in a timely manner and use its best efforts to
communicate in writing its approval or disapproval as soon as practicable after
receiving the same. Failure to communicate approval within five (5) Business
Days of receipt of the submission shall be deemed a disapproval. The submitting
Party may re-start the approval process by making a second submission marked
"Second Request." The Party receiving the second submission shall again review
it in a timely manner and use its best efforts to communicate in writing its
approval or disapproval as soon as practicable after receiving the same. Failure
to communicate approval within five (5) Business Days of receipt of the
submission shall be deemed an approval. In no event, shall the Party seeking
approval produce, distribute, or otherwise follow through on or implement the
subject of the submission until approval is granted in writing by the Party
charged with the right of approval, or until the applicable period has expired
after a Second Request and the Party receiving the second submission has failed
to reply.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
4
<PAGE>
6.1 Both Parties. Each Party represents and warrants to the other Party that:
------------
(i) it is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the power and
authority to enter into this Agreement and the transactions contemplated herein;
(ii) the consummation of the transactions described by this Agreement shall not
conflict with or result in a breach of any of the terms, provisions or
conditions of its Articles of Incorporation or Bylaws, or any statute or
administrative regulation or any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement or
instrument to which it is a party or by which it is bound or constitute a
default thereunder; and (iii) this Agreement has been duly authorized, executed
and delivered by it and this Agreement is valid, enforceable and binding upon
each Party in accordance with its terms.
6.2 Year 2000. GSI warrants to TSA.com and Retailer that the TSA Site shall
---------
not suffer any material adverse effect as a result of a failure in any TSA.com
Work Product or TSA.com Tools to be Y2K Compliant. A product or service which
is "Y2K Compliant" is one that provides accurate results using data having date
ranges spanning from January 1, 1980 through December 31, 2019 ("Y2K Period").
By way of example and not of limitation, "Y2K Compliant" means, with respect to
a product or service, that it can currently and shall, during the Y2K Period,
continue to (a) manage and manipulate data involving all dates within the Y2K
Period (including the fact that the year 2000 is a leap year) without functional
or data abnormality related to such dates; (b) manage and manipulate data
involving all dates within the Y2K Period without inaccurate results related to
such dates; (c) have user interfaces and data fields formatted to distinguish
between dates within the Y2K Period; and (d) accurately identify and either
reject or correct invalid date data during the Y2K Period. Provided TSA.com
otherwise complies with this Article 14.2, it shall not be liable to Retailer
for any failure to perform obligations under this Agreement to the extent such
failure arises from a failure to be Y2K Compliant that: (i) affects the non-
performing party's customers or suppliers; or (ii) is beyond its reasonable
control.
ARTICLE VII
INDEMNIFICATION
7.1 GSI, at its own cost and expense, shall defend, indemnify and hold harmless
TSA.com and Retailer and any of their officers, directors, employees or agents
from and against all damages, expenses, liabilities and other costs (including
reasonable attorneys' fees and court costs) arising: (a) from a claim made by
any party (other than TSA.com or Retailer) that is related in any way to
services furnished by GSI with respect to the TSA Site or GSI's services to
TSA.com or Retailer provided pursuant to this Agreement; or (b) from GSI's gross
negligence, willful or intentional misconduct. TSA.com or Retailer shall notify
GSI as soon as possible after TSA.com becomes aware of a claim. GSI shall have
the sole right to defend any claim pursuant to this Article VII. TSA.com and
Retailer shall cooperate with such defense and, at its option, may also defend
such claim to the extent that its interests in any way vary from that of GSI.
ARTICLE VIII
INSURANCE
5
<PAGE>
8.1 GSI shall, during the Term of this Agreement, maintain the following
insurance coverages as indicated or as required by law, whichever shall be
greater, with insurers in good standing and authorized to do business under the
laws of the State(s) where performance shall occur:
(a) Comprehensive General Liability, naming Retailer and TSA.com as an
additional insured, including without limitation Contractual Liability and
Products Liability, with broad form property damage and bodily injury (including
Personal Injury) coverage. The minimum limits for each shall be [*] per
occurrence and [*] annual aggregate;
(b) Workers' Compensation and Employers' Liability with minimum limits of
[*]per accident, [*] disease (each employee) and [*] disease (policy limit).
Upon TSA.com's or Retailer's request, GSI shall tender to TSA.com and/or
Retailer certificates of insurance evidencing the coverages required to be
maintained by GSI hereunder. The certificates must provide that no change or
cancellation of insurance shall be made without thirty (30) days prior written
notice to Retailer.
ARTICLE IX
TERM AND TERMINATION
9.1 This Agreement shall commence on the Effective Date and automatically
terminate upon termination of the E-Commerce Agreement, or terminate pursuant to
Article 9.1(a) or (b) below:
(a) By either party if the other party shall materially default in the
performance of any of the covenants, terms and conditions of this Agreement and
shall fail to cure such default within 60 days after receipt of notice in
writing from the terminating party of such default, giving reasonable
particulars of such default and of the intention of the party serving the notice
to terminate this Agreement unless such default is cured; provided, however,
that if such default cannot reasonably be cured within 60 days, no termination
shall occur so long as the party against which default has been declared
continues to use its best efforts to cure such default.
(b) By either party if the other party shall be judicially declared
bankrupt or insolvent, make an assignment for the benefit of, or enter into a
compromise with, its creditors; initiate bankruptcy or insolvency proceedings of
any kind or proceedings for the appointment of a receiver, manager, judicial
manager, or similar official with respect to it or any of its assets or become a
party to dissolution proceedings; provided, however, that no termination shall
occur if any such action is stayed, dismissed or reversed within 60 days of the
initiation of such action and the other party provides satisfactory evidence of
the same within such period.
ARTICLE X
NO IMPLIED WARRANTIES; LIMITATIONS UPON LIABILITY
10.1 Neither Party shall be liable to the other party for incidental,
consequential, punitive or exemplary damages arising in connection with this
agreement or the performance, omission of performance or termination hereof,
even if the said Party has been advised of the possibility of
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such damages and without regard to the nature of the claim or the underlying
theory or cause of action (whether in contract, tort or otherwise). Neither
Party makes any representation or warranty to the other except as specifically
set forth herein.
ARTICLE XI
PROPERTY RIGHTS AND OWNERSHIP
11.1 General. The TSA Site shall consist of, and shall operate in conjunction
-------
with, multiple elements, all of which are subject to certain Intellectual
Property Rights. The Parties' respective rights with respect to such elements
shall be as set forth below. For purposes of this Agreement, the term
"ownership" shall refer to ownership of all right, title and interest in and to
the respective elements, including, but not limited to, all patent, copyright,
trade secret, trademark and any other similar Intellectual Property Rights
therein, as applicable.
11.2 Retailer's URL shall be owned solely by Retailer (or its licensor).
11.3 The TSA Site shall be owned solely by TSA.com. Except with respect to each
whole page of the TSA Site (which TSA.com shall own). TSA.com disclaims all
right, title and interest, and Retailer shall own all right, title and interest,
in and to all TSA Content and all works derivative of the TSA Content which are
incorporated into the TSA Site, whether such works are copyright or trademark
subject matter or otherwise, and even if such works are not created by Retailer.
11.4 Software. Software developed by GSI for the TSA Site, shall be owned
--------
solely by GSI, subject to any authorizations to use and approvals obtained and
granted to TSA.com and Retailer.
11.5 Ownership of TSA.com Products. As between Retailer and TSA.com, TSA.com
-----------------------------
owns the TSA.com Products.
11.6 Ownership of TSA Content. As between TSA.com, GSI and Retailer, Retailer
------------------------
owns the TSA Content. Except for a limited non-exclusive license to use the TSA
Content (during the Term and subject to the terms of the License Agreement)
solely to perform TSA.com's obligations under the E-Commerce Agreement, this
Agreement confers no ownership or other beneficial interest in TSA Content to
TSA.com or to GSI.
ARTICLE XII
MISCELLANEOUS
12.1 Discontinuance Or Regulation Of The Internet. TSA.com acknowledges and
--------------------------------------------
agrees that the Internet (including without limitation the Web) is a network of
private and public networks, that GSI has no control over the Internet, and that
GSI is not liable for the discontinuance of operation of any portion of the
Internet or possible regulation of the Internet which might restrict or prohibit
the operation of the TSA Site.
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12.2 Force Majeure. In the event that either party is unable to perform any of
-------------
its obligations under this Agreement or to enjoy any of its benefits because of
any event beyond the control of the affected party including, but not limited
to, natural disaster, acts of God, actions or decrees of governmental bodies or
failure of communications lines or networks (a "Force Majeure Event"), the party
who has been so affected shall promptly give written notice to the other party
and shall use its best efforts to resume performance. Upon receipt of such
notice, all obligations under this Agreement shall be immediately suspended for
the duration of such Force Majeure Event.
12.3 Waiver. No delay or failure on the part of any party hereto in exercising
------
any right, power or privilege under this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be
valid against any party hereto unless made in writing and signed by the party
against whom enforcement of such waiver is sought and then only to the extent
expressly specified.
12.4. Choice of Law. This Agreement shall be construed, interpreted and
-------------
enforced under and in accordance with the internal laws of the State of Delaware
12.5 Binding Effect; Assignment; GSI's Use of Outsourcing Partners. This
-------------------------------------------------------------
Agreement shall be binding upon the Parties hereto, their successors and
permitted assigns and approved Outsourcing Partners. Subject to the following
provisions, neither Party may assign its rights and/or duties under this
Agreement without the prior written consent of the other Party, except as
provided below.
(a) GSI may employ Outsourcing Partners to perform certain Services
hereunder, provided, however, that for any Outsourcing Partner proposed by GSI
to perform web site development or fulfillment services, and for any Outsourcing
Partner proposed by GSI under an agreement which will pay such Outsourcing
Partner over [*] in any year, GSI shall notify Retailer and obtain its prior
written consent with respect to the material terms of engagement of any such
Outsourcing Partner, which consent shall not be unreasonably withheld.
(b) All Outsourcing Partners must be fully informed by GSI and bound in
writing and agree (i) to all of the applicable restrictions upon GSI hereunder,
and (i) to perform all of the applicable obligations of GSI with respect to
TSA.com hereunder and with respect to Retailer under the E-Commerce Agreement.
TSA.com and Retailer shall each be deemed a third party beneficiary of all such
agreements between GSI and its Outsourcing Partners, and shall be entitled to
enforce such agreements as against any Outsourcing Partner in its own name and
on its own behalf. Notwithstanding the foregoing, as between Retailer and
TSA.com on the one hand, and GSI on the other hand, GSI shall be responsible for
all acts or omissions of any Outsourcing Partner.
(c) Retailer acknowledges that it has approved ClientLogic and Organic On
Line, Inc. as Outsourcing Partners.
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12.6 Counterparts. This Agreement may be signed in several counterparts, each
------------
of which shall be deemed an original, and all of which when taken together,
shall be deemed a complete instrument.
12.7 Entire Agreement. This Agreement represents the entire agreement of the
----------------
Parties with respect to the subject matter hereof and may not be modified,
except in writing, executed by both of the Parties hereto. This Agreement
supersedes all prior writings of the Parties with respect to this subject
matter.
12.8 No Partnership. The relationship of the Parties herein shall be that of
--------------
independent contractors and nothing herein shall be construed to create a joint
venture or partnership.
12.9 Headings. Section headings contained in this Agreement are inserted for
--------
convenience or reference only and shall not be deemed to be a part of this
Agreement for any other purpose.
12.10 Notices. Any notices or writings to be sent hereunder shall be in
-------
writing and shall be by personal delivery or facsimile transmission and shall be
deemed given upon the earlier of actual receipt or receipt by sender of
confirmation of facsimile transmission. Notices shall be sent to the following
addresses (or such other address as either party may specify in writing):
if to TSA.com: TheSportsAuthority.com, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Attention: President
Fax No.: (610) 768-0981
copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Pennsylvania 19102
Fax No.: (215) 790-0509
copy to: The Sports Authority, Inc.
3383 North State Road 7
Fort Lauderdale, Florida 33319
Attention: General Counsel
Fax No.: (954) 730-4288
if to GSI: Global Sports Interactive, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Attention: President
Fax No.: (610) 768-0981
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IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement with intent to be legally bound
hereby, the date and year first above written.
GLOBAL SPORTS INTERACTIVE, INC. THESPORTSAUTHORITY.COM, INC.
By: /s/ Michael Rubin By: /s/ Michael Rubin
------------------------------- ------------------------------------
Print Name:________________________ Print Name:_____________________________
Title:_____________________________ Title:__________________________________
Date:______________________________ Date:___________________________________
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EXHIBIT 10.9
Confidential Treatment has been requested with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
E-COMMERCE AGREEMENT
--------------------
THIS E-Commerce Agreement dated the 14th day of May, 1999 (the "Effective
Date") is by and between THESPORTSAUTHORITY.COM, INC., a Delaware corporation
("TSA.com"), and THE SPORTS AUTHORITY, INC., a Delaware corporation
("Retailer").
WHEREAS, Retailer is a full line sporting goods retailer and operates TSA
Stores (as defined below) in the U.S. and Canada under the trade name, trademark
and service mark THE SPORTS AUTHORITY;
WHEREAS, Retailer has entered into a certain E-Commerce Venture Agreement
with Global Sports Interactive, Inc. for the purpose of cooperatively forming
and operating the company which is TSA.com;
WHEREAS, TSA.com is in the business of creating, developing, operating,
maintaining, advertising and promoting all aspects of the E-Commerce Business;
and
WHEREAS, Retailer desires to enter into an agreement with TSA.com pursuant
to which TSA.com shall provide certain services to Retailer, all upon the terms
and conditions hereinafter set forth;
WHEREAS, Retailer and its subsidiary THE SPORTS AUTHORITY MICHIGAN, INC.
(as "Licensor") have entered into a certain License Agreement with TSA.com under
which TSA.com as Licensee has been granted certain rights to use the Marks,
Names, TSA Buying Power and TSA Content (all as defined in the License
Agreement) in connection with creating, developing, operating, maintaining,
advertising and promoting the TSA Site; and
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meaning:
1.1 "Advertising Co-op and Discretionary Funds" shall mean amounts earned by or
allocated to Retailer by its vendors, the purpose of which is to advertise
or market a given vendor's brand or goods, or for advertising, marketing,
promotional or other use at Retailer's discretion.
<PAGE>
1.2 "Advertising and Marketing Partners of TSA.com" shall mean operators or
proprietors of search engines, portals, community sites, content sites, on-
line retailers, shopping, regional and industry directories, push sites,
and other Internet sites capable of attracting Customers for the TSA Site,
or desirous of attracting Customers from the TSA Site to their sites, with
whom TSA.com contracts for exchanges of advertising and promotional
services and any form of compensation. For purposes of this Agreement,
TSA.com shall not contract with TSA Competitors and the same shall be
excluded from the definition of Advertising and Marketing Partners of
TSA.com.
1.3 "Business Day(s)" shall mean any day which is not a Saturday, Sunday or
official federal holiday in the U.S.
1.4 "Closeout Merchandise" shall mean end of season, out of style, broken stock
or excess merchandise that is currently carried by Retailer in a
substantial number of its TSA Stores, or merchandise which is available for
purchase from a given vendor on a closeout basis for sale in a substantial
number of Retailer's TSA Stores, and priced by Retailer at a greater than
normal discount for the purpose of reducing inventory or turning inventory
quickly, without replenishment.
1.5 "Confidential Information" shall mean as that term is defined in Article XI
of this Agreement.
1.6 "Cross Promotion" shall mean the use by Advertising and Marketing Partners
of TSA.com of certain of Retailer's Names and Marks (as defined in and
subject to the License Agreement) on other than the TSA Site for the
purpose of promoting the TSA Site and the goods and services offered on the
TSA Site.
1.7 "Customer" shall mean a consumer who purchases or otherwise receives any
merchandise or services furnished by TSA.com from the TSA Site as permitted
hereunder.
1.8 "Customer Data" shall mean any and all data relating to Customers or
potential Customers of the TSA Site, including without limitation, data
relating to persons referred by or through the Advertising and Marketing
Partners of TSA.com to the TSA Site. Such data may include, without
limitation, names and other identifying information such as addresses,
phone numbers and e-mail addresses, credit card numbers and related data,
preferences, gift and shipping information, purchase, payment and
connection histories, correspondence, inquiries, and descriptions of the
items and quantities of items purchased by any such persons.
1.9 "Databases" shall mean all data structures, data schema, database
dictionaries, attributes, validation tests for each element, table sizes
and formats, access requirements, data dependencies and other elements
involving the management or storage of data on the TSA Site, and all
refinements, updates, releases, improvements and enhancements thereto, all
Intellectual Property Rights embedded therein (except those belonging to
Retailer or TSA.com) and all applications created specifically for
management and use of the Customer Data, Financial Data and TSA Content,
but excluding the Customer Data,
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Financial Data and TSA Content per se. GSI shall own all right, title and
interest in and to the Databases, while Retailer and TSA.com may use the
Databases subject to other restrictions set forth herein.
1.10 "Defective Allowance" shall mean a discount or rebate granted by a vendor
to a retailer as a result of defective merchandise received by the retailer
and pursuant to which, the retailer also retains or destroys the
merchandise.
1.11 "Disclosing Party" shall mean the party disclosing Confidential Information
as permitted under this Agreement.
1.12 "E-Commerce Business" shall mean the business of creating, developing,
operating, advertising and promoting the TSA Site as further described
herein.
1.13 "E-Commerce Orders" shall mean any orders for On-Line Merchandise or
services placed by Customers from the TSA Site.
1.14 "E-Commerce Shopping Experience" shall mean the unique and highly
interactive experience of shopping for and purchasing merchandise from the
TSA Site, including, without limitation, the experience of a functional
(little or no fluff), streamlined, easy to navigate, on-line sporting goods
store with the Features Set described herein and in Attachment A. As much
------------
as practicable, the TSA Site shall draw from the "look and feel" of
Retailer's TSA Stores and reinforce Retailer's mission of offering high
quality, high performance, innovative products, in fashion and on trend as
to style, color, materials and makeup, supporting beginner, intermediate
and enthusiast participants through superior value and service. The E-
Commerce Shopping Experience is intended to help make the TSA Site the e-
commerce shopping site for sporting goods, athletic apparel and athletic
footwear.
1.15 "Features Set" shall mean the features, characteristics and requirements
for the TSA Site as set forth throughout this Agreement and in Attachment
----------
A, as the latter may be amended or supplemented in accordance with this
--
Agreement.
1.16 "Financial Data" shall mean all data relating to the financial performance
or operations of the TSA Site, including the financial information
generated pursuant to Article 8.1 below, and any aggregates of data which
are Customer Data, except that any names and other information identifying
Customers in any manner shall not be considered and be excluded from
Financial Data.
1.17 "Fiscal Year" shall mean TSA.com's fiscal year. TSA.com shall give at
least ninety (90) days advance notice to Retailer of any change in
designation of TSA.com's Fiscal Year.
1.18 "In Line Merchandise" shall mean current merchandise carried by Retailer in
a substantial number of its TSA Stores (excluding test merchandise,
Markdowns, Closeouts and Special Makeups), or merchandise which Retailer
intends in the near future to carry in a substantial number of its TSA
Stores, or which is offered by the same vendors and is
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closely related to foregoing merchandise and available to Retailer but not
currently carried in its TSA Stores.
1.19 "Intellectual Property Rights" shall mean any and all now known or
hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the universe, including but not limited to
copyrights, moral rights, and mask-works, (b) trademark and trade name
rights and similar rights, (c) trade secret rights, (d) patents, designs,
algorithms and other industrial property rights, (e) all other intellectual
and industrial property rights (of every kind and nature throughout the
universe and however designated) (including logos, "rental" rights and
rights to remuneration), whether arising by operation of law, contract,
license, or otherwise, and (f) all registrations, initial applications,
renewals, extensions, continuations, divisions or reissues hereof now or
hereafter in force (including any rights in any of the foregoing).
1.20 "Internet" shall mean a global network of interconnected computer networks,
each using the Transmission Control Protocol/Internet Protocol and/or such
other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit content that is directly or
indirectly delivered to a computer or other digital electronic device for
display to an end-user, whether such content is delivered through on-line
browsers, off-line browsers, or through "push" technology, electronic mail,
broadband distribution, satellite, wireless or other successor technologies
or means. Internet shall also mean on-line services such as AOL,
CompuServe and Prodigy.
1.21 "Launch Date" shall mean the date on which TSA.com commences normal
operation of the TSA Site with the Core Functionality as further described
in Attachment A.
------------
1.22 "Markdowns" shall mean merchandise currently in Retailer's inventory in a
substantial number of its TSA Stores which is systematically offered for
sale at prices less than the original retail prices at which Retailer
offered such merchandise, in response to low demand, seasonality,
obsolescence or other market conditions.
1.23 "Milestone Delivery Schedule" shall mean the major dates and deliverables
in creating, developing and launching the TSA Site, which may be
incorporated into the Production Schedule, as further described in
Attachment A.
------------
1.24 "On Line Customer Loyalty Programs" shall mean programs established by
TSA.com with Retailer's prior review and approval to encourage repeat
business at the TSA Site from Customers.
1.25 "On Line Gift Certificates" shall mean gift certificates bearing the mark
THESPORTSAUTHORITY.COM, distributed electronically under the auspices of
TSA.com (subject to Retailer's approval and the terms of the License
Agreement), offered by TSA.com and redeemable only through or on the TSA
Site, but not at Retailer's TSA Stores.
4
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1.26 "On Line Merchandise" shall mean the merchandise offered and sold by
TSA.com on the TSA Site as further defined in Article 4.3.
1.27 "Outsourcing Partner(s)" shall mean any person or entity which, subject to
Article 20.11 and other applicable terms of this Agreement, TSA.com engages
to perform any of the obligations, duties or services which TSA.com has
undertaken or promised to perform under this Agreement.
1.28 "Own Brand Merchandise" shall mean any and all goods bearing, or sold under
or in connection with packaging or labels bearing the mark THE SPORTS
AUTHORITY or the mark THE SPORTS AUTHORITY & Design, as either offered and
sold by Retailer in its TSA Stores, or offered and sold by TSA.com from the
TSA Site. All such sales by TSA.com are subject to the terms of the
License Agreement.
1.29 "Party" shall mean Retailer or TSA.com; "Parties" shall mean both of them.
1.30 "Production Schedule" shall mean the schedule to be agreed upon by the
Parties for the creation, development, and production (both before and
after the Launch Date) of the TSA Site, including the delivery of TSA
Content and TSA.com Products.
1.31 "Receiving Party" shall mean the party receiving Confidential Information
as permitted under this Agreement.
1.32 "Retailer's Warehouse" shall mean the place or places at which Retailer
receives bulk delivery of any merchandise from its vendors.
1.33 "Special Makeups" shall mean merchandise currently carried by Retailer in a
substantial number of its TSA Stores (excluding test merchandise, Markdowns
and In-Line Merchandise), or merchandise which Retailer plans to carry in a
substantial number of its TSA Stores, which is manufactured and sold to
Retailer on a temporarily exclusive basis, and not otherwise available in
the market or for purchase by other retailers during the period of
exclusivity.
1.34 "Term" shall mean the period commencing with the Effective Date and
continuing until this Agreement is terminated as provided in Article XVII
below.
1.35 "TSA Competitor" shall mean: (a) any person, firm or corporation or other
entity (other than TSA and its retailing subsidiaries) which either
directly or indirectly derives twenty percent (20%) or more of its revenues
from the sales or distribution of sporting goods, athletic apparel,
athletic footwear or related goods and services, whether operating from
stores located in the U.S., Canada or Japan or any other nation in which
the predominant language is English, whether by mail order, home shopping
through audio or video programming, over the Internet or otherwise; and (b)
any retailing entity which would clearly be regarded as a competitor of TSA
by the U.S. Department of Justice under federal antitrust and competition
laws and regulations.
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1.36 "TSA.com Products" shall mean, collectively, the TSA.com Tools and the
TSA.com Work Product.
1.37 "TSA.com Tools" shall mean any tools, both in object code and source code
form, which TSA.com has already developed or which TSA.com independently
develops or licenses from a third party, excluding any tools which TSA.com
creates pursuant to this Agreement. By way of example, TSA.com Tools may
include, without limitation, search engines, Java servlets and ActiveX
controls.
1.38 "TSA.com Work Product" shall mean all HTML files and Java files (or
derivatives of either), graphics files, animation files, data files,
technology, scripts and programs, both in object code and source code form,
all documentation and any other items used by TSA.com to create the TSA
Site.
1.39 "TSA Content" shall mean the following content or information, as furnished
by Retailer to TSA.com subject to the terms of this Agreement and the
License Agreement:
(a) text, graphics, photographs, video, audio and/or other data or
information relating to any subject furnished by Retailer to
TSA.com and intended solely for use in connection with the TSA
Site;
(b) Retailer selected print advertisements for the TSA Stores or the
goods and services offered by Retailer in the TSA Stores,
including run of press and insert advertisements which appear in
newspapers and magazines, as well as printed in store signage,
point of sale and display signage and information promoting
events and the goods and services offered in the TSA Stores; and
(c) such information concerning the goods and services offered by
Retailer in the TSA Stores in the U.S. as Retailer possesses and
has the right to transfer and license to TSA.com, and which
Retailer deems necessary to successful operation of the TSA Site,
including, without limitation, information which is related to
the sourcing, manufacturing, development, design, fabrication,
construction, test procedures, performance features, quality
control standards, merchandise specifications, reliability
standards, distribution, product costs, other costs, allowances,
rebates, sizes, colors, decoration, display, pricing, margins,
vendor economic information, and similar information and know-how
necessary to the procurement, merchandising, inventory management
and sales of such goods and services in the TSA Stores.
1.40 "TSA Gift Certificates" shall mean gift certificates bearing the marks THE
SPORTS AUTHORITY and THE SPORTS AUTHORITY & Design, printed and distributed
under the auspices of Retailer, offered by Retailer for redemption at its
TSA Stores, or if by TSA.com on the TSA Site, redeemable only at Retailer's
TSA Stores.
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1.41 "TSA Site" shall mean that certain Internet site currently accessible
through the URL "http://www.thesportsauthority.com," and any backup or
mirror Internet site; it being understood that the TSA Site shall be
primarily targeted by TSA.com at Customers, and not at persons, entities or
activities otherwise described in Article 2.6 of the License Agreement.
Further, the TSA Site shall not be used by TSA.com to furnish, sell,
advertise or promote the goods or services of any TSA Competitor. The TSA
Site shall include, without limitation, the E-Commerce Shopping Experience,
the Features Set and other aspects, features and characteristics as set
forth in this Agreement and its Attachments.
1.42 "TSA Stores" shall mean any sporting goods retail store established and/or
operated by Retailer or Retailer's wholly-owned retailing subsidiaries and
devoted to the sale of a broad assortment of sporting goods, athletic
footwear, athletic apparel and related goods, and to provision of related
services.
1.43 "URL" shall mean the uniform resource locator of the TSA Site on the
Internet.
1.44 "URL Integration" shall mean the display of Retailer's URL in Retailer's
prepared advertising, marketing, public relations and investor relations
communications as further described in Article 7.5.
1.45 "Web" or "web" shall mean the World Wide Web, a network protocol for
accessing and viewing text, graphics, sound and other media and engaging in
e-commerce via the Internet.
ARTICLE II
DEVELOPMENT OF THE TSA SITE
2.1 Services. TSA.com, at its own expense and at no cost to Retailer, shall
--------
provide all creative, design, programming and other consulting services,
including all applicable TSA.com Products, necessary to the successful
realization of the TSA Site, including without limitation, services in the Core
Functionality as specified in Attachment A and incorporation of at least the
------------
core aspects (as agreed by the Parties) of the Features Set, in accordance with
the Milestone Delivery Schedule and the Production Schedule, and as is necessary
in order to deliver the TSA Site in condition acceptable to Retailer on or
before the Launch Date. After initial acceptance by Retailer and full scale
launch of the TSA Site, TSA.com's development and maintenance services shall
continue throughout the Term of this Agreement.
2.2 TSA Content. (a) Initial TSA Content. As soon as reasonably possible
----------- -------------------
after the Effective Date, TSA.com and Retailer shall agree upon a Production
Schedule for the delivery by Retailer to TSA.com of that TSA Content which
Retailer intends for TSA.com to incorporate into the TSA Site. The Parties
acknowledge that Retailer shall be able to deliver certain "static" information,
such as TSA Store locations, promptly to TSA.com, and that other TSA Content,
such as TSA Content concerning the merchandise to be sold on the TSA Site, may
be delivered at a later date, closer to the Launch Date. TSA Content shall be
in the format(s) designated by TSA.com as set forth in Attachment B hereto or in
------------
such other formats as the Parties may
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mutually agree. Upon Retailer's request, TSA.com shall assist Retailer in the
conversion of TSA Content into an acceptable form for use by TSA.com for the TSA
Site.
(b) Subsequent TSA Content. Retailer shall supply TSA.com with updated TSA
----------------------
Content as it becomes available to Retailer and necessary to updating the TSA
Site. Notwithstanding anything contained herein to the contrary, and except as
it relates to Special Make-Ups, it shall be TSA.com's responsibility to produce
and maintain all camera ready product information for use on the TSA Site and
Retailer shall have no responsibility therefor. With respect to Special Make-
Ups, Retailer shall furnish sample products to TSA.com with sufficient lead time
to allow TSA.com to produce camera ready product information as and when needed.
2.3 Project Liaisons. Each party's primary contacts for development efforts
----------------
shall be the project liaisons specified in Attachment A or the persons otherwise
------------
designated in writing by Retailer or TSA.com from time to time, as the case may
be.
2.4 Acceptance. TSA.com shall make available to Retailer Alpha and Beta
----------
versions of the TSA Site for Retailer's review and, with respect to the Beta
version, annotation and approval, and Retailer shall provide the latter, all
according to the Milestone Delivery Schedule, if not earlier. Retailer shall
review and comment upon the Alpha version within two Business Days after
delivery of the Alpha version. TSA.com shall make any necessary changes and
furnish the Beta version of the TSA Site for Retailer's review and acceptance on
or before September 21, 1999. Retailer shall have seven (7) Business Days after
delivery of the Beta version to review and evaluate the TSA Site (the
"Acceptance Period") in order to assess whether it successfully incorporates the
Features Set, captures the desired E-Commerce Shopping Experience and otherwise
complies with the terms of this Agreement and of the License Agreement. During
the Acceptance Period, Retailer shall identify in writing to TSA.com all aspects
of the TSA Site that do not substantially conform as described above. Upon
receipt of Retailer's list of non-conformities, TSA.com shall correct promptly
all such non-conformities so that the TSA Site does conform in all material
respects, and substantially conforms in all lesser respects, after which
Retailer and TSA.com shall extend the Acceptance Period for a second seven (7)
Business Day Acceptance Period during which Retailer shall confirm that all non-
conformities that were previously identified have been corrected.
Notwithstanding the foregoing, the TSA Site shall be deemed accepted upon the
earlier of: (i) its use in commerce with all Core Functionality, provided,
however, TSA.com shall not use the TSA Site in commerce without Retailer's prior
approval and consent; (ii) Retailer's failure to give notice of any non-
conformities during an Acceptance Period; or (iii) Retailer's acceptance of the
TSA Site.
The acceptance procedures set forth in this Article 2.4 shall also apply to any
material modifications made to the TSA Site during the Term of this Agreement.
As used herein, "material modifications" shall mean alterations which
significantly change the overall design, "look and feel" or functionality of the
TSA Site, or which extend or reduce the Features Set.
2.5 Additional Features of the TSA Site; Updates. TSA.com, at its own expense
--------------------------------------------
and at no cost to Retailer shall provide such content and features on the TSA
Site as Retailer elects, which contain or make accessible as part of the TSA
Site such information as: corporate information
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(e.g., historic background, mission statement, names of officers and directors),
store locator, public financial information (e.g., SEC filings, annual reports,
etc.), press releases, community programs, employment opportunities for in store
or corporate positions, frequently asked questions, a "contact us" section,
customer reviews, product reviews and any other information which serves to
enhance the TSA Site and help the TSA Site and Retailer attract and retain
Customers.
Without limiting the foregoing, following the initial completion, acceptance and
launch of the TSA Site, TSA.com, at its own expense and at no cost to Retailer,
shall update non-shopping aspects of the TSA Site, as requested from time to
time by Retailer, as follows:
(a) Employment Opportunities - TSA.com shall furnish technology to allow
Retailer to update as frequently as Retailer desires.
(b) Public Financial Information -
i) Stock Prices - to be updated daily or more frequently by a link
to another web site offering such information.
ii) SEC Filings and Annual Reports - SEC filings shall be provided by
a link so long as the government (or Retailer) makes such filings
available at no cost. Both SEC filings and annual reports shall
be provided only if available in portable document format; in the
alternative, TSA.com shall provide the consumer with a form and
format in order facilitate efficient delivery of such information
from Retailer's investor relations or legal departments.
(c) Store Locators - to be updated as such information changes and is
received from Retailer.
(d) Frequently Asked Questions - to be updated by TSA.com monthly, from
TSA.com's experience in hosting, managing and operating the TSA Site,
and from any information which Retailer provides.
(e) Corporate Information - to be updated as such information changes and
is received from Retailer.
(f) Retailer's Community Programs - to be updated as such information
changes and is received from Retailer.
(g) Press Releases - TSA.com shall furnish technology to allow Retailer to
update and post on the TSA Site directly. Retailer shall be able to
post press releases on the TSA Site as it desires.
(h) "Contact Us" Section - to be updated as such information changes and
is received from Retailer.
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ARTICLE III
HOSTING AND MAINTENANCE OF THE TSA SITE
3.1 Data Center and Services. TSA.com, at its own expense and at no cost to
------------------------
Retailer, shall furnish a data center and all "back-end" operations for the
purpose of hosting and maintaining the TSA Site, either directly, or through an
Outsourcing Partner (the "Data Center"). The Data Center shall be configured to
meet or exceed the standards and specifications set forth in Attachment C. The
------------
Data Center shall host the TSA Site and data servers in a secure environment.
The Data Center shall provide a commercially reasonable communications link to
the public Internet that is monitored at all times with wide area network
management tools. The Data Center shall include all necessary resources,
including backup and mirror systems, to make the Data Center highly reliable and
allow the TSA Site to be operational on a 24 hours/7 days a week basis but for
scheduled down time for maintenance and backup purposes. The Data Center shall
be supported and managed by TSA.com and TSA.com's operations and systems
administration staff shall maintain all servers and provide all technical and
support resources required to resolve any technical issues or failures of
equipment. TSA.com shall operate the Data Center and all servers, all in
accordance with Attachment C.
------------
Retailer may request changes in the hosting operation or services provided under
this Agreement in order to meet the changing needs of Retailer and of the TSA
Site. Such requests shall be made in writing. Retailer and TSA.com shall
evaluate the needs and proposed changes to determine the best course of action
and amend Attachment C, if necessary and agreed to by the Parties.
------------
3.2 TSA.com shall make the Data Center ready for acceptance testing on or
before October 14, 1999. Retailer or its representatives may conduct acceptance
tests during the following two-week period to verify that the Data Center meets
the agreed upon acceptance criteria. If at the end of such two-week period, the
Data Center has failed to meet such criteria, the Parties shall work together to
determine the reasons for such failure. The Party whose action or inaction is
determined to be the cause of such failure, shall, with the cooperation and
assistance of the other Party, work to promptly remedy such failure. If the
Data Center has not passed the acceptance criteria within thirty (30) days after
the end of such two-week period, and if the cause has been attributed to TSA.com
or its Outsourcing Partner, Retailer shall have the right, upon written notice
to TSA.com, to terminate this Agreement at the end of such thirty day period.
Once Retailer has accepted the Data Center in accordance with the agreed upon
acceptance criteria, TSA.com shall immediately staff its operations team and
begin operating the Data Center.
3.3 Performance Monitoring. TSA.com and Retailer shall work together during
----------------------
the implementation of the Data Center to mutually agree upon the reports that
TSA.com shall prepare and deliver as part of normal operations to document
performance once the Data Center has been accepted and gone into operation.
TSA.com shall permit Retailer to track performance and derive statistics via
remote access to the Data Center.
3.4 Hosting Services. TSA.com shall load the TSA Site onto server(s) that are
----------------
connected to the Internet and readily accessible via the Web through use of the
URL. TSA.com shall ensure
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that the TSA Site is functional and ready to process transactions in an
efficient manner, and that it is compatible with all major software platforms,
including the major web browsers and helping applications and plug-ins. TSA.com
shall upload all TSA Content, including updates, to the TSA Site within three
(3) Business Days of delivery to TSA.com. With TSA.com's prior written consent
and cooperation, Retailer may electronically transmit or upload TSA Content
directly to the Web Site.
3.5 Maintenance Services. TSA.com shall maintain the TSA Site so that it
--------------------
functions in a reasonably error free manner and according to the standards and
specifications set forth in Attachment C. Upon notification of an error in the
------------
TSA Site or of a non-conformity between the TSA Site and the Features Set or
Attachment C, whether from Retailer or from any Customer or user of the TSA
- ------------
Site, TSA.com shall promptly commence an investigation into the reported error,
and TSA.com shall, upon reproducing such error, use reasonable commercial
efforts to correct such error in a timely fashion. While providing any
maintenance services, TSA.com shall ensure that the TSA Site is functional and
ready to process transactions in a reasonably efficient manner, provided,
however, that TSA.com may, during low usage periods and as mutually determined
by the Parties, temporarily take down or block access to the TSA Site to perform
maintenance.
3.6 Search Engine Registration. On or before the Launch Date, and from time to
--------------------------
time as requested by Retailer during the Term of this Agreement, TSA.com shall
write professional meta tags and register the TSA Site and Retailer's URL with
the as many of the leading search engines and directories, as well as many of
the leading shopping, industry and regional directories, as practicable. The
Parties acknowledge that submission of registration materials does not guarantee
that registration will actually take place.
ARTICLE IV
MERCHANDISING THE TSA SITE
4.1 In General. The Parties acknowledge that Retailer's core competencies lie,
----------
in part, in the selection, sourcing, purchasing, distribution, presentation,
advertising and sale of merchandise, including without limitation, the
establishment and maintenance of favorable relationships with merchandise
vendors, all in relation to operating land-based sporting goods stores.
Similarly, TSA.com's (or GSI's) core competencies lie, in part, in the creation,
development and operation of e-commerce businesses, including, without
limitation, making it possible for land-based retailers to successfully migrate
to and operate e-commerce businesses which may differ, especially as to
merchandising, from their land-based stores. The Parties anticipate that the
majority of merchandise to be offered and sold on the TSA Site shall be
merchandise which Retailer originally selects and orders for its TSA Stores.
Under this Agreement, TSA.com shall be kept informed of Retailer's selection and
ordering processes and shall be entitled, subject to the restrictions set forth
herein, to select from the full range of merchandise offered in Retailer's TSA
Stores the merchandise to be offered on the TSA Site. TSA.com's selection may
be supplemented in part, as provided herein, with merchandise not otherwise
offered or sold in Retailer's TSA Stores.
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4.2 Restrictions. In no event shall TSA.com offer or sell on the TSA Site, and
------------
Retailer shall not be required to assist TSA.com in obtaining:
(a) firearms, ammunition, explosives and explosive materials, weapons, and
any related items, equipment and accessories which may be subject to
licensing, permitting and or other governmental restrictions on sales,
distribution and/or exports of the same;
(b) counterfeit merchandise or merchandise which infringes the valid
Intellectual Property Rights of others within an applicable
jurisdiction;
(c) any merchandise for which merchants are charged with in-person
verification of identity or age or other qualifications to own or
purchase the subject merchandise;
(d) any merchandise which is subject to any export prohibition from the
U.S., or which is barred or otherwise prohibited from use in any
export destination country outside the U.S., unless such merchandise
is offered, sold and delivered to Customers only within the U.S.;
(e) any merchandise, which if offered or sold on the TSA Site, would
violate the terms of any agreement between the subject vendor and
Retailer, including, without limitation, any term restricting
distribution to the territories served by Retailer's TSA Stores, or
which would otherwise materially damage the relationship between the
subject vendor and Retailer; and
(f) any merchandise which Retailer requests in writing be removed from the
TSA Site, if for legitimate business purposes set forth in Retailer's
notice to TSA.com; provided that Retailer purchases such merchandise
from TSA.com at TSA.com's cost if such merchandise cannot be returned
to the vendor.
The above restrictions shall apply at all times to the TSA Site. Retailer and
TSA.com agree to communicate in good faith, as needed, concerning the
construction, application and enforcement of the above restrictions.
4.3 Available Merchandise. Subject to the above restrictions, TSA.com shall
---------------------
have the right to offer and sell on the TSA Site, and Retailer shall assist
TSA.com in obtaining:
(a) In Line Merchandise;
(b) Special Make-Ups;
(c) Closeout Merchandise, but only such Closeout Merchandise as Retailer
currently carries, or places orders for sale in its TSA Stores;
(d) Markdowns;
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(e) On Line Gift Certificates; and
(f) TSA Gift Certificates.
Merchandise in categories 4.3(a) through (f) above shall be referred to as "On-
Line Merchandise."
4.4 Vendor Relations; Orders by TSA.com. (a) At such time and by means of a
-----------------------------------
form of written or electronic notice which is mutually agreed upon by the
Parties, Retailer shall notify all of its vendors: (i) of the formation of
TSA.com as a venture of Retailer and GSI; (ii) that the TSA Site is operated by
TSA.com; (iii) that TSA.com shall be coordinating its purchases with Retailer
and purchasing additional quantities of merchandise as ordered by Retailer; (iv)
that each vendor, for the benefit of Retailer, should sell its merchandise to
TSA.com at the same prices, with the same Advertising Co-op and Discretionary
Funds and on the same terms and conditions as it sells the same merchandise to
Retailer; and (v) that such merchandise should be shipped and invoiced directly
to TSA.com. If a given vendor refuses to directly ship to and invoice TSA.com,
TSA.com shall notify Retailer. If the vendor cannot be persuaded to deal
directly with TSA.com, then subject to Retailer's consent, which it may withhold
as it sees fit, Retailer may place the order for TSA.com and such vendor may
ship to and invoice Retailer for such merchandise. Retailer shall then invoice
TSA.com at Retailer's net cost, and TSA.com shall pay Retailer the purchase
price and all freight and handling charges within thirty days of any such
shipment by Retailer to TSA.com. TSA.com shall pay Retailer its pro rata share
(based upon that portion of the shipment purchased by Retailer for TSA.com as it
relates to the entire shipment received by Retailer from that vendor) of the
actual freight costs from the vendor's facility to Retailer's Warehouse, as well
as any handling and freight costs incurred by Retailer in packing and shipping
the subject merchandise from Retailer's Warehouse to TSA.com's fulfillment
facility. Retailer shall include a detailed bill of lading or invoice with each
such shipment.
(b) In Line Merchandise. Retailer shall use its best efforts to advise
-------------------
TSA.com within ten (10) Business Days after placing a purchase order with a
vendor for any In Line Merchandise, identifying the vendor and the item (by
category, class, UPC and/or Retailer's sku number), and setting forth Retailer's
net cost, Retailer's proposed original retail price and expected date of receipt
at Retailer's Warehouse.
(c) Special Make-Ups; Own Brand Merchandise. Retailer shall use its best
---------------------------------------
efforts to advise TSA.com within ten (10) Business Days after placing a purchase
order with a vendor for any Special Make-Ups or Own Brand Merchandise,
identifying the vendor and the item (by category, class, UPC and/or Retailer's
sku number), and setting forth Retailer's net cost, Retailer's proposed original
retail price and expected date of receipt at Retailer's Warehouse. Further,
Retailer shall advise TSA.com and, if possible, furnish TSA.com with a sample of
the Special Make-Ups or Own Brand Merchandise and advise TSA.com of the color
selection and size range. TSA.com shall have the right to purchase up to five
per cent of the Special Make-Up or Own Brand Merchandise, proportionately as to
size and color, as ordered by Retailer. TSA.com shall have five (5) business
days after receipt of notice from Retailer to place its order for Special Make-
Ups or Own Brand Merchandise and, if so, the quantity thereof.
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Notwithstanding anything contained herein to the contrary, TSA.com recognizes
that there may be instances where there shall be an insufficient amount of a
particular item of Special Make-Ups or Own Brand Merchandise to warrant selling
such merchandise on-line. In such instances Retailer shall not be required to
offer such Special Make-Ups or Own Brand Merchandise to TSA.com. Further,
TSA.com acknowledges that Retailer may not be able to offer to TSA.com certain
Special Make-Ups or Own Brand Merchandise which is not available in all of
Retailer's TSA Stores.
(d) Closeout Merchandise. Retailer shall use its best efforts to advise
--------------------
TSA.com within ten (10) Business Days after issuing a purchase order for
Closeout Merchandise from a vendor. Retailer may from time to time agree to
sell Closeout Merchandise to TSA.com on such terms and in such amounts as may be
determined by the Parties, provided, however, that Retailer shall use
commercially reasonable efforts to make Closeout Merchandise available to
TSA.com, subject to availability.
(e) Markdowns. Retailer may from time to time agree to sell Markdowns to
---------
TSA.com on such terms and conditions and in such amounts as may be determined by
the Parties.
(f) The Parties shall cooperate with each other so that, as between
TSA.com and Retailer, as much of the processes set forth in Article 4.4(a)-(f)
above as possible may be accomplished electronically.
4.5 Prices of On-Line Merchandise. Subject to the terms of this paragraph and
-----------------------------
to any applicable laws, Retailer shall [*]. [*] shall adopt and be responsible
for implementing such price determinations. Retailer shall use its best efforts
to [*]; provided, however, that for any item which [*]. TSA.com may assist
Retailer in [*]. Retailer acknowledges that TSA.com, unless it elects to do so,
[*]. In such event, Retailer shall nevertheless have the right to [*] The
Parties shall cooperate with each other so that the entire pricing process
between TSA.com and Retailer may be accomplished electronically.
4.6 On-Line Gift Certificates; TSA Gift Certificates. Subject to Retailer's
------------------------------------------------
prior review and approval of the form and content of any proposed On-Line Gift
Certificate and of TSA.com's redemption policy, and subject to the terms of the
"License Guidelines and Restrictions" under the License Agreement, TSA.com may
develop, publish and offer for sale On-Line Gift Certificates on the TSA Site.
TSA.com shall clearly and conspicuously state in connection with any offer to
purchase or sell such On-Line Gift Certificates, and state on the On-Line Gift
Certificates themselves, that On-Line Gift Certificates are redeemable only on
the TSA Site and not at TSA Stores. In addition, subject to the prior
negotiation and agreement of the Parties as to all terms, TSA.com may offer TSA
Gift Certificates for sale on the TSA Site, but only with the clear and
conspicuous statement that such TSA Gift Certificates are redeemable only in TSA
Stores. As between TSA.com and Retailer, TSA.com shall bear any escheat duties
with respect to On-Line Gift Certificates.
ARTICLE V
ORDER PROCESSING AND CUSTOMER SERVICE
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5.1 Processing of Customer Orders. Except as otherwise provided in Article
-----------------------------
6.3, TSA.com shall be solely responsible for processing all E-Commerce Business.
TSA.com shall enter into merchant agreements in its own name and on its own
account with at least the credit card providers VISA, Master Card and American
Express. Further, TSA.com shall use commercially reasonable efforts to provide
the functionality to accept Retailer's forthcoming private label credit card, on
the same terms and conditions as accepted by Retailer at Retailer's TSA Stores.
TSA.com shall provide secure systems for submitting and processing all credit
card transactions, as well as systems for immediate confirmation of all E-
Commerce Orders, and confirmation of shipments, out of stock or back orders via
mail and/or email. TSA.com shall promptly process all E-Commerce Orders
received from Customers via the TSA Site. TSA.com shall take the Customer's
credit card number at such time as On-Line Merchandise or related services are
ordered. TSA.com shall charge the Customer's credit card at the time the On-
Line Merchandise is shipped or the related services are furnished. The
transaction shall appear on the Customer's credit card under the merchant name
"TheSportsAuthority.com" and proceeds shall be deposited into TSA.com's
designated bank account for full credit to TSA.com. TSA.com shall make all
arrangements for delivery of all On-Line Merchandise and related services
purchased on the TSA Site.
5.2 Customer Relations. TSA.com shall be responsible for providing all
------------------
Customer service relating to the TSA Site, which shall be provided in a
courteous and professional manner consistent with that provided by other
reputable on-line retailers. TSA.com shall invite Customer feedback via a
"Contact us" or "How are we doing?" feature. Beginning on and after the Launch
Date, TSA.com shall maintain an email reply service and a toll-free telephone
number and furnish adequate staff on a 24 hours a day/7 days a week basis to
receive and handle telephone inquiries, requests and complaints from Customers.
TSA.com shall periodically summarize and share Customers' on-line and telephone
feedback with Retailer, and continuously use it to improve TSA.com's operations,
as applicable.
5.3 On-Line Customer Loyalty Programs. Subject to Retailer's prior review and
---------------------------------
approval, which shall no be unreasonably withheld, TSA.com shall have the right
to establish On-Line Customer Loyalty Programs in order to encourage continued
E-Commerce Orders. Customer Loyalty Programs established by TSA.com shall be
used only in connection with E-Commerce Orders and Retailer's customer loyalty
programs shall be used only in connection with purchases at Retailer's TSA
Stores.
5.4 Return of On-Line Merchandise. TSA.com's return policy shall be consistent
-----------------------------
with Retailer's return policy. With each shipment of merchandise, TSA.com shall
specifically instruct all Customers that no On-Line Merchandise purchased from
the TSA Site may be returned to Retailer's TSA Stores and may only be returned
to TSA.com in accordance with the instructions enclosed; provided, however, that
Retailer at its sole discretion, in order to maximize its own customer goodwill,
may accept any such On-Line Merchandise for return in accordance with Retailer's
return policy, and thereafter return the On-Line Merchandise (or destroy for
credit, as agreed by the Parties) to TSA.com's fulfillment center. Once each
quarter, or more often as Retailer sees fit, it shall prepare and send an
itemized invoice describing all returns of On-Line Merchandise which it has
accepted at TSA Stores during the period elapsed since the
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last such invoice, setting forth the items returned, quantities, amounts
refunded or values exchanged, and any packing, handling and freight charges
incurred by Retailer in shipping such On-Line Merchandise to TSA.com. TSA.com
shall pay each invoice in full within 30 days of receipt from Retailer. The
Parties shall negotiate in good faith and mutually agree to an appropriate
service charge which Retailer may add to all such invoices.
ARTICLE VI
FULFILLMENT
6.1 Fulfillment Duties of TSA.com. TSA.com shall use commercially reasonable
-----------------------------
efforts commensurate with leading e-commerce retail fulfillment operations to
provide fulfillment services for the TSA Site, according to the service
standards set forth in Attachment C. These fulfillment services shall include,
------------
without limitation:
(a) Order Receipt: accept all Customer orders (and order inquiries and
-------------
cancellations) on-line from TSA Site, and via dedicated toll-free
telephone number(s) on a 24 hours/day, seven days a week basis.
Process credit cards, verify authorizations and track frauds. Compute
and collect applicable taxes and shipping and handling charges.
Track, verify and confirm all orders by phone, mail or email as
appropriate.
(b) Credit Card Authorization and Billing: Process credit card payments,
-------------------------------------
verify authorizations and track frauds. Reauthorize initial denials.
Bill credit cards at time of shipment.
(c) Merchandise Receiving and Inspection: Receive, count and inspect
------------------------------------
merchandise at warehouse or distribution center. Issue and track
backorders.
(d) Inventory Control: Track all merchandise on order, in warehouse or
-----------------
distribution center, and as sold to Customers. Manage shrinkage.
(e) Pick, Pack and Ship: Pick merchandise to fill orders from warehouse or
-------------------
distribution center. Pack and seal merchandise for safe shipment.
Ship via Customer designated method within the time frames selected by
or promised to Customers.
(f) Shipping Verification and Manifesting: Select appropriate shipping
-------------------------------------
carriers, apply appropriate shipping labels, and communicate with
carriers and Customers to verify and track all shipments.
(g) Returns Processing: Provide on-line and toll-free telephone support
------------------
for processing merchandise returns. Issue RA numbers, UPS call tags
and the like. Verify, confirm and track returns. Issue credit card
credits (or refunds or exchanges) to Customers promptly upon receipt
of returned merchandise. Process returns of defective merchandise to
recover from vendors.
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(h) Customer Service: In addition to the services afforded to Customers
----------------
above and as described in Article V, invite, track and respond as
appropriate to Customer feedback. Provide systematic capability to
track and monitor customer service activity to include such
information as original order number, order date, reason for Customer
contact, and resolution. For phone calls, track time to answer and
call duration. For e-mail, track elapsed time from Customer send
time/date to TSA.com response time/date.
(i) Reporting: Provide reports to Retailer, including, without limitation,
---------
concerning daily, weekly and monthly performance in each of the above
categories, demand by page in the TSA Site, demand by item in the TSA
Site, cancellations and returns, defectives, and the like.
6.2 Retailer's Option to Assume Fulfillment Duties. The parties agree that, at
----------------------------------------------
the option of Retailer, at any time after the second anniversary of the Launch
Date, and upon nine months' prior written notice given by Retailer to TSA.com
and GSI, Retailer may assume all fulfillment duties with respect to the E-
Commerce Business and the TSA Site, provided that Retailer is able to satisfy
the following conditions:
(a) Retailer demonstrates to TSA.com's reasonable satisfaction that it has
the ability to provide the same or better fulfillment services as
TSA.com's then current fulfillment Outsourcing Partner at the same or
better cost;
(b) Retailer demonstrates to GSI's reasonable satisfaction that any
resulting modifications needed in GSI's engineering architecture shall
seamlessly integrate Retailer's fulfillment systems with GSI's
operations. Further, if modifications are needed to integrate with
GSI's operations, Retailer shall bear the costs of making such
modifications; and
(c) If Retailer desires to outsource fulfillment after satisfying the
foregoing conditions, it may only do so: (i) if Retailer also
outsources all of its other e-commerce, mail order and catalog
fulfillment services; and (ii) the costs charged by Retailer to
TSA.com for the outsourced fulfillment services for the TSA Site does
not include any markup by Retailer.
ARTICLE VII
ADVERTISING AND MARKETING THE TSA SITE
7.1 Prior Approval of Agreements. TSA.com agrees to obtain the written
----------------------------
approval of Retailer prior to entering into any agreement or arrangement with
Advertising and Marketing Partners of TSA.com, including, without limitation,
all agreements for on-line or off-line links, cross promotion, exclusive
arrangements, affiliate arrangements, and all other advertising exchange,
traffic accumulation, aggregation and distribution methods or arrangements.
7.2 Use Of Advertising Co-op And Discretionary Funds. (a) TSA.com shall use
------------------------------------------------
all Advertising Co-op and Discretionary Funds received by TSA.com directly from
vendors as a
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result of the purchase of On-Line Merchandise for the TSA Site, exclusively to
promote the TSA Site, in the manner and according to strategies as the Parties
shall mutually determine. All proposed advertisements shall be submitted to
Retailer for Retailer's prior review and approval.
(b) Any Advertising Co-op and Discretionary Funds received by Retailer due
to a given vendor's refusal to deal directly with TSA.com, and arising from
Retailer's purchase of any On-Line Merchandise for TSA.com, shall be passed
through to TSA.com by Retailer. In any event, Retailer and TSA.com each prefer
that vendors deal directly with TSA.com, and each shall request Retailer's
vendors to do so.
7.3 TSA.com's Additional Advertising Commitment. TSA.com shall spend, prior to
-------------------------------------------
December 31, 2007, not less than [*] in excess of the amount of Advertising Co-
op and Discretionary Funds spent by TSA.com for advertising of TSA's Site, of
which at least [*] shall be spent by December 31, 2001 and the balance remaining
will be spent at the rate of at least [*] per Fiscal Year until all [*] is
spent. In the event of a breach of this Article 7.3, TSA.com shall have the
right to cure such breach within 30 days of receipt of written notice of breach
from Retailer.
7.4 Cross Promotion. Subject to Retailer's prior review and approval, and
---------------
subject to the terms of the License Agreement, TSA.com shall have the right to
use Retailer's URL, the name and mark "TheSportsAuthority.com" and certain other
Marks (as defined in the License Agreement) to cross promote the TSA Site with
Advertising and Marketing Partners of TSA.com.
7.5 URL Integration by Retailer. Retailer, commencing no later than October 1,
---------------------------
1999 and on a rolling basis as it orders or prepares new printed materials or
advertisements or other communications pieces, and continuing during throughout
the Term, at no cost to TSA.com, shall use its best efforts to provide for URL
Integration in its prepared advertising, marketing and public and investor
relations communications pieces, as follows:
(a) by including its URL within substantially all of its print media
advertising (including, without limitation, in newspapers,
periodicals, circulars, billboards, print materials, shopping bags,
cash register receipts and print sponsorship advertising);
(b) by including its URL in substantially all of Retailer's television
advertising; and
(c) by mentioning its URL during substantially all of Retailer's radio
advertisements.
Retailer shall not be required to use the URL in any formats or applications
where it deems such use to be inappropriate, poor design, unreasonable or
awkward (e.g., in a radio spot which is too short) or where such use is rejected
or unacceptable under the terms of any applicable advertising, marketing or
sponsorship agreement. Retailer may use the following disclaimer together with
the URL if appropriate and necessary: "On Line Merchandise offerings may vary
from products offered in The Sports Authority stores."
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ARTICLE VIII
ADMINISTRATIVE SERVICES
8.1. Administrative Services to be Provided by TSA.com. TSA.com shall provide
-------------------------------------------------
the following services to support the TSA Site and the E-Commerce Business:
(a) TSA.com shall, as required by law, or as requested by Retailer, GSI or
both:
(i) formulate operating plans and budgets and share these with GSI
and Retailer, at least semi-annually;
(ii) provide long range forecasting and statistical analyses and
share these with GSI and Retailer;
(iii) establish policies, provide technical support for and prepare
and maintain financial books, coordinate financial audits,
maintain statutory records and registers, and prepare and file
financial reports, accounts and returns and income tax and other
taxation returns required by the U.S. and other national, state
and local governments;
(iv) obtain and administer national, state, and local licenses and
permits necessary to conduct the E-Commerce Business and to
operate the TSA Site;
(v) install and maintain various financial reporting systems,
including general accounting, sales audit, inventory control,
internal control, asset accounting and other like systems as are
customary and usual for similar enterprises;
(vi) assist with public affairs and corporate communications services
involving the TSA Site and the E-Commerce Business; and
(vii) assist with developing advertising and marketing strategies and
plans, and buying and managing print, electronic, sponsorship
and other advertising and signage programs.
(b) Financial Statements. TSA.com shall provide Retailer with monthly
--------------------
unaudited financial statements in such detail as Retailer may from time to time
require and shall provide Retailer with real-time electronic access on a 24
hour/7 days a week basis to its books and records to the extent the same are
maintained in an electronic media and accessible on-line.
(c) Audits. During the term of this Agreement and for a period of two (2)
------
years thereafter, each Party shall keep and maintain accurate books and records
relating to this Agreement. Upon request, Retailer or its agent(s) may inspect,
audit and analyze copies of those records of TSA.com relating to this Agreement.
Upon request, TSA.com or its agent(s) may inspect, audit and analyze copies of
those records of Retailer relating to this Agreement. Any
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such audit by a Party (the "Auditing Party") shall be conducted at the Auditing
Party's own cost and expense, during normal business hours at the regular place
of business of the other Party (the "Audited Party") upon at least ten (10) days
prior written notice. Each Party may exercise its right to audit hereunder no
more than once per year, unless a material discrepancy (i.e., a discrepancy in
excess of [*] or [*]) was discovered in an audit. In such cases, the Auditing
Party may audit every six (6) months until the results of the audit show that a
material discrepancy no longer exists. All underpayments shall be promptly
remitted to the Auditing Party. No payments rendered under this Agreement shall
be subject to audit more than two (2) years from the date of its presentation.
Neither Party shall exercise its audit rights unless it has a reasonable basis
to believe the information provided by the other Party is inaccurate.
ARTICLE IX
RETAILER'S SERVICES
9.1 Project Manager; Merchandising Manager. Retailer shall make two of its
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employees available to serve as a full-time project manager and a full-time
merchandising manager to work with TSA.com with respect to all aspects of
Retailer's rights and obligations pursuant to the TSA Site, the E-Commerce
Business and this Agreement. Such "Dedicated Employees" shall be hired,
employed, managed and compensated by Retailer, and TSA.com shall reimburse
Retailer for each such Dedicated Employee's services in the manner set forth
below.
9.2 Charges. TSA.com shall reimburse Retailer for all commercially reasonable
-------
compensation costs incurred by Retailer in connection with the Dedicated
Employees, including, without limitation, TSA.com's allocable share of the
wages, salary, bonus, 401(k), profit sharing and other standard compensation and
employee benefits as paid or furnished by Retailer, and of any employment based
sums that Retailer as an employer is required by law to contribute on behalf of
such Dedicated Employees to local, state and federal agencies. Each Dedicated
Employee shall keep track of all work time that he or she devotes to working for
any party other than TSA.com and periodically report the same to Retailer. At
least once each month Retailer shall prepare a written statement (a "Dedicated
Employee Invoice") identifying each Dedicated Employee employed on TSA.com's
behalf during the preceding month, itemizing the compensation furnished by
Retailer for each Dedicated Employee, totaling the amounts by Dedicated
Employee, and reducing such totals proportionately for the time each Dedicated
Employee spent working for parties other than TSA.com during the subject month.
9.3 TSA.com's Payments. Dedicated Employee Invoices shall be calculated and
------------------
sent by Retailer to TSA.com on a monthly basis. Less frequent billing may be
appropriate for periods in which minimal time has been spent or minimal costs
have been incurred. TSA.com agrees to pay Retailer all charges within thirty
(30) days after the receipt of any Dedicated Employee Invoice from Retailer.
ARTICLE X
CUSTOMER DATA, FINANCIAL DATA AND DATABASES
10.1 Ownership and Use of Customer Data. (a) TSA shall own all right, title and
----------------------------------
interest in and to the Customer Data, while TSA.com shall have an irrevocable
right and license hereunder touse the Customer Date in its business operations.
TSA.com shall adhere to all United States and Canadian privacy
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and data protection laws applicable to its gathering, processing, storing and
transmitting of Customer Data. TSA.com shall use its best efforts to adhere to
all such privacy and data protection laws of all other nations and shall
indemnify TSA for any loss, damage or expense caused by its failure to do so;
provided, however, that the parties agree that such failure to do so shall not
be deemed a breach of this Agreement.
(b) Each Party shall treat the Customer Data as Confidential Information
of the other Party in accordance with the provisions of Article 11.1. The
Parties agree that TSA.com may use Customer Data in the operation of the TSA
Site and the E-Commerce Business, and that Retailer may use the Customer Data in
the operation of Retailer's land based stores, but neither Party shall furnish,
rent, sell or otherwise disclose Customer Data to any person or entity
whatsoever without the prior written consent of the other Party. Further, the
Parties agree not to furnish, rent, sell or otherwise disclose to any person or
entity whatsoever any Financial Data, without the other Party's prior written
consent and subject to such terms and conditions as the Parties may mutually
determine. Notwithstanding the foregoing, TSA.com may permit GSI, at no charge
to GSI, to use Financial Data (but not Customer Data) to form trends and overall
research as to the on-line shopping habits of consumers.
10.2 Delivery of Customer Data and Financial Data to Retailer. From time to
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time, Retailer may request that TSA.com provide to Retailer any or all of the
Customer Data or the Financial Data as Retailer shall specify, including,
without limitation, the following information:
(a) Customers' names;
(b) Customers' addresses;
(c) Customers' phone numbers;
(d) Customers' e-mail addresses;
(e) items purchased;
(f) amount spent;
(g) information as to how and from where Customers reached TSA Site;
(h) "refers";
(i) unique visitors to site;
(j) page views per site;
(k) top ten most viewed pages;
(l) bottom ten least viewed pages;
(m) time of day traffic patterns;
(n) sales by product and brand in the aggregate;
(o) Customer comments and complaints (shall be furnished on a monthly
basis or more often as requested); and
(p) such additional information as requested by Retailer.
Upon receipt of such request, TSA.com shall provide the Customer Data or
Financial Data to Retailer in a commercially standard format, either via
diskette, CD-ROM, electronically, or via another mutually agreeable method.
TSA.com shall use commercially reasonable efforts to ensure that the Customer
Data and Financial Data provided to Retailer accurately and completely reflects
the Customer Data and Financial Data in the TSA Site, but until such data is
audited and
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TSA.com's books are closed for the applicable period, TSA.com shall have no
obligation to check the accuracy, validity or integrity of the Customer Data or
Financial Data.
10.3 Ownership and Use of Financial Data. TSA.com, Retailer and GSI shall
-----------------------------------
jointly and severally own all right, title and interest in and to the Financial
Data, except that all use of the Financial Data by any of them shall always be
subject to the restrictions set forth herein.
10.4 Ownership of Databases. GSI shall own all right, title and interest in and
----------------------
to the Databases, while Retailer and TSA.com may use the Databases subject to
other restrictions set forth herein.
ARTICLE XI
CONFIDENTIALITY
11.1 Confidential Information. Each Party acknowledges that, in connection with
------------------------
the performance of this Agreement, it may receive Confidential Information of
the other Party. For the purpose of this Agreement, "Confidential Information"
shall mean information or materials that is marked "confidential" or which the
Receiving Party knows or has reason to know is the confidential or proprietary
information of the Disclosing Party, either because (i) such information is
marked or otherwise identified by the Disclosing Party as confidential or
proprietary, or (ii) such information has commercial value and is not generally
known in the Disclosing Party's trade or industry. Confidential Information
shall include, without limitation: (a) concepts and ideas relating to the
development and distribution of content in any medium; (b) trade secrets,
drawings, inventions, know-how, software programs, and software source
documents; (c) information regarding plans for research, development, new
service offerings or products, marketing and selling, business plans, business
forecasts, budgets and unpublished financial statements, licenses and
distribution arrangements, prices and costs, suppliers and customers; (d)
existence of any business discussions, negotiations or agreements between the
parties; (e) the terms and conditions of this Agreement; (f) all information
with respect to Retailer's vendors, Retailer's price and cost structures,
TSA.com's vendors, TSA.com's merchandise price and cost structures, the cost of
merchandise sold by TSA.com, the existence or amount of any cooperative
advertising subsidy or rebate; and (g) all prices of merchandise to be sold on
the TSA Site prior to publication of such prices on the TSA Site; provided,
however, that Retailer shall be provided with the information referred to in
clauses (f) and (g).
11.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and
---------------
maintain in strict confidence all Confidential Information of the Disclosing
Party and, except as otherwise permitted herein, not to disclose it to any third
party; and (ii) not to use any Confidential Information of the Disclosing Party
except as permitted by this Agreement or as may be necessary for the Receiving
Party to perform its obligations under this Agreement. The Receiving Party
shall use at least the same degree of care to protect the Disclosing Party's
Confidential Information as it uses to protect its own Confidential Information
of like importance, and in no event shall such degree of care be less than
reasonable care. The obligations and restrictions imposed by this Article 11
shall terminate five (5) years after the expiration or termination of this
Agreement.
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11.3 Exceptions. Notwithstanding the foregoing, the parties agree that
----------
Confidential Information shall not include any information that: (a) was in the
public domain at the time it was communicated to the Receiving Party by the
Disclosing Party; (b) entered the public domain subsequent to the time it was
communicated to the Recipient by the Disclosing Party through no fault of the
Receiving Party; (c) was in the Receiving Party's possession free of any
obligation of confidence at the time it was communicated to the Receiving Party
by the Disclosing Party; (d) was rightfully communicated to the Receiving Party
by a third party, free of any obligation of confidence, subsequent to the time
it was communicated to the Receiving Party by the Disclosing Party; (e) was
developed by employees or agents of the Receiving Party independently of and
without reference to any information communicated to the Receiving Party by the
Disclosing Party; or (f) was communicated by the Disclosing Party to an
unaffiliated third party free of any obligation of confidence. In addition, the
Receiving Party may disclose the Disclosing Party's Confidential Information in
response to a valid order by a court or other governmental body, as otherwise
required by law, or as necessary to establish the rights of either party under
this Agreement; provided, however, in the event that the Receiving Party
receives a demand to disclose such Confidential Information in connection with a
legal action or proceeding, the Receiving Party, if possible, shall first notify
the Disclosing Party of the demand in order to provide the Disclosing Party an
opportunity to seek a protective order. TSA.com may also disclose certain of
Retailer's Confidential Information to GSI in connection with the performance by
GSI of its duties, but only to the extent expressly permitted in the E-Commerce
Services Agreement by and among TSA.com, GSI and Retailer of even date herewith.
11.4 Confidentiality of this Agreement. The Parties acknowledge that the terms
---------------------------------
and conditions of this Agreement constitute Confidential Information which shall
be governed by the terms of this Article 11.
ARTICLE XII
APPROVALS
12.1 Approval Process. Except as otherwise expressly set forth herein, and
----------------
except with respect to any use of "Licensed Property" (as defined in the License
Agreement) which requires approval under the License Agreement, when a given
provision calls for prior review and approval by one Party of a submission by
the other Party, the Party receiving the submission shall review it in a timely
manner and use its best efforts to communicate in writing its approval or
disapproval as soon as practicable after receiving the same. Failure to
communicate approval within five (5) Business Days of receipt of the submission
shall be deemed a disapproval. The submitting Party may re-start the approval
process by making a second submission marked "Second Request." The Party
receiving the second submission shall again review it in a timely manner and use
its best efforts to communicate in writing its approval or disapproval as soon
as practicable after receiving the same. Failure to communicate approval within
five (5) Business Days of receipt of the submission shall be deemed an approval.
In no event, shall the Party seeking approval produce, distribute, or otherwise
follow through on or implement the subject of the submission until approval is
granted in writing by the Party charged with the right of approval, or until the
applicable period has expired after a Second Request and the Party receiving the
second submission has failed to reply.
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ARTICLE XIII
EXCLUSIVITY
13.1 Retailer. During the term of this Agreement, except as otherwise permitted
--------
under Article 2.6(a) of the License Agreement, Retailer agrees to not engage in
the business of creating, developing, operating, advertising and promoting a
business-to-consumer e-commerce business on the Internet which directly or
indirectly generates in excess of 20% of its revenues from the sale of sporting
goods, athletic footwear, athletic apparel and related goods and services
("Restricted Business"), except that if Retailer acquires another business
selling sporting goods, athletic footwear and/or athletic apparel and related
goods and services either through land based stores or through catalog sales
which is engaged in e-commerce business, Retailer can continue to operate the e-
commerce business of the acquired business until such time, if ever, that
Retailer changes 50% or more of the acquired business's land based stores to
stores operating under the name "The Sports Authority" or any variation thereof
or changes the catalog name to "the Sports Authority" or any variation thereof.
If Retailer desires to engage in any Restricted Business during the term of this
Agreement, it shall only do so through TSA.com and such business shall be
conducted on the terms and conditions set forth in this Agreement.
13.2 TSA.com. During the Term of this Agreement, TSA.com agrees to not engage
-------
in the sale of goods over the Internet as a shareholder, partner or investor in
any corporation, partnership, limited liability company or other entity or
venture which directly or indirectly generates in excess of 20% of its revenues
from the sale of sporting goods, athletic footwear, athletic apparel and related
goods and services.
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
14.1 Both Parties. Each Party represents and warrants to the other Party that:
------------
(a) it is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and that it has the power and
authority to enter into this Agreement and the transactions contemplated herein;
(b) the consummation of the transactions described by this Agreement shall not
conflict with or result in a breach of any of the terms, provisions or
conditions of its Articles of Incorporation or Bylaws, or any statute or
administrative regulation or any order, writ, injunction, judgment or decree of
any court, regulatory or governmental authority or of any agreement or
instrument to which it is a party or by which it is bound, or constitute a
default thereunder; and (c) this Agreement has been duly authorized, executed
and delivered by it and this Agreement is valid, enforceable and binding upon
each Party in accordance with its terms.
14.2 Year 2000. TSA.com warrants that the TSA Site shall not suffer any
---------
material adverse effect as a result of a failure in any TSA.com Work Product or
TSA.com Tools to be Y2K Compliant. A product or service which is "Y2K
Compliant" is one that provides accurate results using data having date ranges
spanning from January 1, 1980 through December 31, 2019 ("Y2K Period"). By way
of example and not of limitation, "Y2K Compliant" means, with respect to a
product or service, that it can currently and shall, during the Y2K Period,
continue to (a) manage and manipulate data involving all dates within the Y2K
Period (including the fact that the year
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2000 is a leap year) without functional or data abnormality related to such
dates; (b) manage and manipulate data involving all dates within the Y2K Period
without inaccurate results related to such dates; (c) have user interfaces and
data fields formatted to distinguish between dates within the Y2K Period; and
(d) accurately identify and either reject or correct invalid date data during
the Y2K Period. Provided TSA.com otherwise complies with this Article 14.2, it
shall not be liable to Retailer for any failure to perform obligations under
this Agreement to the extent such failure arises from a failure to be Y2K
Compliant that: (i) affects the non-performing party's customers or suppliers;
or (ii) is beyond its reasonable control.
ARTICLE XV
INDEMNIFICATION
15.1 Retailer. Retailer, at its own cost and expense, shall defend, indemnify
--------
and hold harmless TSA.com and any of its officers, directors, employees or
agents from and against any and all actions, claims, proceedings or lawsuits
arising from or related in any way to: (a) any claim that TSA.com's use of the
Marks as permitted hereunder and under the License Agreement, including use of
Retailer's URL and of the name and Mark "TheSportsAuthority.com" infringes the
trademark, service mark, trade dress or trade name rights of any third party in
the U.S., its territories and possessions, Puerto Rico, or Canada, provided,
however, that Retailer shall not bear any duty, obligation or liability pursuant
to this Article 15.1 to the extent that, and with respect to which, any use by
TSA.com of any of the Marks is in a manner not authorized by this Agreement or
the License Agreement; or (b) from Retailer's gross negligence or willful or
intentional misconduct.
15.2 TSA.com. Subject to Article 15.1 above, TSA.com, at its own cost and
-------
expense, shall defend, indemnify and hold harmless Retailer and any of its
officers, directors, employees or agents from and against all damages, expenses,
liabilities and other costs (including reasonable attorneys' fees and court
costs) arising: (a) from a claim made by any party (other than Retailer) that is
related in any way to the TSA Site, the E-Commerce Business, On-Line Merchandise
sold or services furnished through the TSA Site, or TSA.com's services to
Retailer provided pursuant to this Agreement; or (b) from TSA.com's gross
negligence or willful or intentional misconduct.
15.3 Any Party seeking indemnification shall notify the other Party as soon as
possible after such Party seeking indemnification becomes aware of the claim.
Except with respect to infringement claims asserted under 15.1(a) which Retailer
shall have the sole right to defend, the indemnifying Party shall have the right
to defend any claim pursuant to this Article XV. The indemnified Party shall
cooperate with such defense and, at its option, may also defend such claim to
the extent that its interests in any way vary from that of the indemnifying
Party.
ARTICLE XVI
INSURANCE
16.1 TSA.com shall, during the Term of this Agreement, maintain the following
insurance coverages as indicated or as required by law, whichever shall be
greater, with insurers in good standing and authorized to do business under the
laws of the State(s) where performance shall occur:
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(a) Comprehensive General Liability, naming Retailer as an additional
insured, including without limitation Contractual Liability and Products
Liability, with broad form property damage and bodily injury (including
Personal Injury) coverage. The minimum limits for each shall be [*] per
occurrence and [*] annual aggregate; and
(b) Workers' Compensation and Employers' Liability with minimum limits of
[*] per accident, [*] disease (each employee) and [*] disease (policy
limit).
Upon Retailer's request, TSA.com shall tender to Retailer certificates of
insurance evidencing the coverages required to be maintained by TSA.com
hereunder. The certificates must provide that no change or cancellation of
insurance shall be made without thirty (30) days prior written notice to
Retailer.
ARTICLE XVII
TERM AND TERMINATION
17.1 Term. This Agreement shall commence on the Effective Date and
----
automatically terminate upon termination of the E-Commerce Venture Agreement, or
terminate pursuant to Article 17.2 below.
17.2. Termination. This Agreement may be terminated prior to termination of
-----------
the E-Commerce Venture Agreement, as follows:
(a) By either Party if the other Party shall materially breach in the
performance of any of the covenants, terms and conditions of this Agreement and
shall fail to cure such breach within 60 days after receipt of notice in writing
from the terminating Party of such breach, giving reasonable particulars of such
breach and of the intention of the Party serving the notice to terminate this
Agreement unless such breach is cured; provided, however, that if such breach
cannot reasonably be cured within 60 days, no termination shall occur so long as
the Party against which breach has been declared continues to use its best
efforts to cure such breach.
(b) By either Party if the other Party shall be judicially declared
bankrupt or insolvent, make an assignment for the benefit of, or enter into a
compromise with, its creditors; initiate bankruptcy or insolvency proceedings of
any kind or proceedings for the appointment of a receiver, manager, judicial
manager or similar official with respect to it or any of its assets or become a
party to dissolution proceedings; provided, however, that no termination shall
occur if any such action is stayed, dismissed or reversed within 60 days of the
initiation of such action and the other Party provides satisfactory evidence of
the same within such period.
ARTICLE XVIII
NO IMPLIED WARRANTIES; LIMITATIONS UPON LIABILITY
18.1 Neither Party shall be liable to the other party for incidental,
consequential, punitive or exemplary damages arising in connection with this
agreement or the performance, omission of performance or termination hereof,
even if the said Party has been advised of the possibility of
26
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such damages and without regard to the nature of the claim or the underlying
theory or cause of action (whether in contract, tort or otherwise). Neither
Party makes any representation or warranty to the other except as specifically
set forth herein.
ARTICLE XIX
PROPERTY RIGHTS AND OWNERSHIP
19.1 General. The TSA Site shall consist of, and shall operate in conjunction
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with, multiple elements, all of which are subject to certain Intellectual
Property Rights. The Parties' respective rights with respect to such elements
shall be as set forth below. For purposes of this Agreement, the term
"ownership" shall refer to ownership of all right, title and interest in and to
the respective elements, including, but not limited to, all patent, copyright,
trade secret, trademark and any other similar Intellectual Property Rights
therein, as applicable.
19.2 Retailer's URL. Retailer's URL shall be owned solely by Retailer (or its
--------------
licensor) and all use by TSA.com shall be governed by the License Agreement.
19.3 The TSA Site. The TSA Site shall be owned solely by TSA.com. Except with
------------
respect to each whole page of the TSA Site (which TSA.com shall own), TSA.com
disclaims all right, title and interest, and Retailer shall own all right, title
and interest, in and to all TSA Content and all works derivative of the TSA
Content which are incorporated into the TSA Site, whether such works are
copyright or trademark subject matter or otherwise, and even if such works are
not created by Retailer.
19.4 Software. Software developed by GSI for the TSA Site shall be owned solely
--------
by GSI, subject to any authorizations to use and approvals obtained and granted
to TSA.com and Retailer.
19.5 TSA.com Products. As between Retailer and TSA.com, TSA.com owns the
----------------
TSA.com Products.
19.6 TSA Content. As between TSA.com and Retailer, Retailer owns the TSA
-----------
Content. Except for a limited non-exclusive license to use the TSA Content
(subject to the terms of the License Agreement) solely to perform its
obligations hereunder, this Agreement confers no ownership or other beneficial
interest in TSA Content to TSA.com.
ARTICLE XX
MISCELLANEOUS
20.1 Discontinuance Or Regulation Of The Internet. Retailer acknowledges and
--------------------------------------------
agrees that the Internet (including without limitation the Web) is a network of
private and public networks, that TSA.com has no control over the Internet, and
that TSA.com is not liable for the discontinuance of operation of any portion of
the Internet or possible regulation of the Internet which might restrict or
prohibit the operation of the TSA Site.
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20.2 Force Majeure. In the event that either party is unable to perform any of
-------------
its obligations under this Agreement or to enjoy any of its benefits because of
any event beyond the control of the affected party including, but not limited
to, natural disaster, acts of God, actions or decrees of governmental bodies or
failure of communications lines or networks (a "Force Majeure Event"), the party
who has been so affected shall promptly give written notice to the other party
and shall use its best efforts to resume performance. Upon receipt of such
notice, all obligations under this Agreement shall be immediately suspended for
the duration of such Force Majeure Event.
20.3 Waiver. No delay or failure on the part of any party hereto in exercising
------
any right, power or privilege under this Agreement shall impair any such right,
power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be
valid against any party hereto unless made in writing and signed by the party
against whom enforcement of such waiver is sought and then only to the extent
expressly specified.
20.4 Press Releases. All voluntary public announcements concerning the
--------------
transactions contemplated by this Agreement shall be mutually acceptable to both
TSA.com and Retailer. Unless required by law, neither TSA.com on the one hand,
and/or Retailer on the other hand, shall make any public announcement or issue
any press release concerning the transactions contemplated by this Agreement
without the prior written consent of TSA.com or Retailer, respectively. With
respect to any announcement that any of the Parties is required by law to issue,
such Party shall, to the extent possible under the circumstances, review the
necessity for and the contents of the announcement with the other Party before
issuing the announcement; provided, however, if either Party cannot obtain the
consent of the other Party in a timely manner, the Party required to comply with
law may issue the press release or public announcement without obtaining the
consent of the other Party.
20.5 Choice of Delaware Law. This Agreement shall be deemed to have been
----------------------
executed and delivered in the State of Delaware, and shall be construed,
interpreted and enforced under and in accordance with the internal laws of the
State of Delaware.
20.6 Binding Effect; Assignment; TSA.com's Use of Outsourcing Partners. (a)
-----------------------------------------------------------------
This Agreement shall be binding upon the Parties hereto, their successors and
permitted assigns and approved Outsourcing Partners. Neither Party may assign
its rights and/or duties under this Agreement without the prior written consent
of the other Party, except as provided below.
(b) Upon written notice to TSA.com, Retailer shall have the right to
assign this Agreement to any person or entity which acquires or succeeds to all
or substantially all of Retailer's business or assets
(c) Retailer acknowledges that TSA.com shall contract with GSI, Organic
Online, Inc. and Client Logic Corporation as major Outsourcing Partners to
perform certain services hereunder. TSA.com represents and warrants to Retailer
that TSA.com shall fully comply with the terms of Article 20.6(e) below with
respect to GSI, Organic Online, Inc. and Client Logic Corporation.
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(d) TSA.com may employ Outsourcing Partners to perform certain other
services hereunder, provided, however, that for any Outsourcing Partner proposed
by TSA.com to perform web site development or fulfillment services, and for any
Outsourcing Partner proposed by TSA.com under an agreement which will pay such
Outsourcing Partner over $500,000 in any year,TSA.com shall notify Retailer and
obtain its prior written consent with respect to the material terms of
engagement of any such Outsourcing Partner, which consent shall not be
unreasonably withheld.
(e) All Outsourcing Partners must be fully informed by TSA.com and bound
in writing and agree (i) to all of the applicable restrictions upon TSA.com
hereunder, and (i) to perform all of the applicable obligations of TSA.com with
respect to Retailer hereunder, including, without limitation, the obligations
set forth in Articles VIII, X, XI, XII, XV, XVI and XX. Retailer shall be deemed
a third party beneficiary of all such agreements between TSA.com and its
Outsourcing Partners, and shall be entitled to enforce such agreements as
against any Outsourcing Partner in its own name and on its own behalf.
Notwithstanding the foregoing, as between Retailer and TSA.com, TSA.com shall be
responsible for all acts or omissions of any Outsourcing Partner.
20.7 Counterparts. This Agreement may be signed in several counterparts, each
------------
of which shall be deemed an original, and all of which when taken together,
shall be deemed a complete instrument.
20.8 Entire Agreement. This Agreement, as well as the License Agreement and
----------------
the E-Commerce Services Agreement, represent the entire agreement of the Parties
with respect to the subject matter hereof and may not be modified, except in
writing, and executed by all of the Parties hereto. This Agreement supersedes
all prior writings of the Parties with respect to this subject matter.
20.9 No Partnership. The relationship of the Parties herein shall be that of
--------------
independent contractors and nothing herein shall be construed to create a joint
venture or partnership.
20.10 Headings. Section headings contained in this Agreement are inserted for
--------
convenience or reference only and shall not be deemed to be a part of this
Agreement for any other purpose.
20.11 Notices. Any notices or writings to be sent hereunder shall be in
-------
writing and shall be by personal delivery or facsimile transmission and shall be
deemed given upon the earlier of actual receipt or receipt by sender of
confirmation of facsimile transmission. Notices shall be sent to the following
addresses (or such other address as either party may specify in writing):
if to TSA.com: TheSportsAuthority.com, Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
Attention: President
Fax No.: (610) 768-0981
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copy to: David S. Mandel, Esq.
Astor Weiss Kaplan & Rosenblum, LLP
The Bellevue
Broad & Walnut Streets
6th Floor
Philadelphia, Pennsylvania 19102
Fax No.: (215) 790-0509
if to Retailer: The Sports Authority, Inc.
3383 North State Road No. 7
Fort Lauderdale, Florida 33319
Attention: Alex Stanton, Senior Vice
President, Business Development
Fax No.: (954) 677-6094
copy to: The Sports Authority, Inc.
3383 North State Road 7
Fort Lauderdale, Florida 33319
Attention: General Counsel
Fax No.: (954) 730-4288
and to: The Sports Authority Michigan, Inc.
306 South Washington, Suite 224
Royal Oak, Michigan 48067
Attention: General Counsel
Fax No: (248) 414-9993
30
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IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement with intent to be legally bound
hereby, the date and year first above written.
THESPORTSAUTHORITY.COM, INC. THE SPORTS AUTHORITY, INC.
By: /s/ Michael Rubin By: /s/ Martin E. Hanaka
---------------------------- -----------------------------
Title: ________________________ Title: _________________________
31
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ATTACHMENT A
Domain Name: TheSportsAuthority.com
Format of Retailer Content: See Attachment B
Project Liaisons: For TSA.com - Michael Golden For Retailer - Alex Stanton
Feature Set: TSA.com, at its own expense, shall create, maintain and operate the
TSA Site for Retailer on the Web in accordance with state of the art computer
software development industry professional standards and with at least the
following functionality:
1. Standard Search
2. Browse Category/Sub-Category/Family/Sub-Family
3. Product Presentation
4. Related Products
5. Product Comparison
6. Shopping Cart
7. Online Checkout with Secure Ordering
8. Email Notification of Orders
9. Order Tracking
10. User Login/Registration
11. User Profile Management
12. Product Bundles/Promotions
13. 24/7 Real Time Customer Service
14. Reporting Tools for Site Performance, Sales and Traffic
15. Affiliate Program Management
16. Store Locator with Mapping
17. Gift Giving Functionality
18. Real-Time Order Processing (including tax and shipping costs configurators)
19. Corporate Information (including financial information and company profile)
20. Employment and Press Areas with remote publishing tools for administration
by Retailer
(Collectively, items 1-20 above describe the "Core Functionality" of the TSA
Site)
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Milestone Delivery Schedule:
- ---------------------------
Task Estimated Completion Date
Establish Fulfillment Capabilities April 30, 1999
Discovery And Planning June 1, 1999
Commence Engine Engineering July 31, 1999
Alpha Testing August 15, 1999
Retailer Web Site Development August 30, 1999
Quality Control Review And Revisions September 16, 1999
Beta (Soft Launch) September 21, 1999
Web Site Launch To General Public October 1 - December 1,1999
Media And Promotions October 1 - December 1,1999
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ATTACHMENT B
ASSET SUBMISSION GUIDELINES
This section details how to submit assets.
Source Assets and Final Assets
- ------------------------------
We require source files for all assets. This means if an image is originally
constructed as a layered RGB Photoshop file at 100x500 pixels, we need that
file, even if the final file is a flattened 4-bit GIF at 20x100.
We allow the submission of final assets in some cases, but only by prior
arrangement and only in addition to an up-to-date source file. All submitted
assets are subject to review and verification by production staff.
Media and Format
- ----------------
We routinely receive assets in the following media and formats:
Digital Media:
Media:
SyQuest 44mb, 88mb, 200mb, CD-ROM (including PhotoCD), Zip, Jaz, 3.5"
floppy.
Format:
Win16, Win-32, or Macintosh
File Formats:
Text: Raw, MS Word 95, RTF, HTML
Bitmap Graphics:
Photoshop, TIFF, PCD (PhotoCD), EPS, PICT (JPEG and GIF for final files only
and only along with source files)
PostScript Graphics:
EPS, Illustrator (7.0 preferred)
Video:
QuickTime
Audio:
WAV, AIFF, MIDI
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Non-Digital Media:
Contact us to discuss needs and capabilities before submitting any non-digital
assets.
Asset Submission
- ----------------
We prefer to receive assets via FTP (file transfer protocol) although we gladly
accept assets via standard package delivery services (i.e., FedEx, USPS, UPS,
etc.).
Submission via FTP
FTP Area: ftp.globalsportsinteractive.com
Assets should be left in "Incoming" which is a level below the initial
directory. Once assets have been transferred, e-mail confirmation is
required.
Submission via Package Delivery
If you wish to submit assets via standard package delivery services, please
address the package to this address:
Address TBD
If you are submitting hard assets like brochures, photographs, etc. please be
sure to ship them in a reinforced container to prevent damage to the assets
while in transit.
If you are submitting digital media like SyQuests, Zip disks, Jaz disks, etc.,
be sure to ship them in a well-padded, reinforced container.
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ATTACHMENT C
TSA Site Performance Standards and Specifications
A. Scheduled Maintenance Downtime
In order to keep the TSA site running at optimal efficiency, scheduled downtime
will be used for periodic system maintenance and upgrades. TSA.com has a
scheduled maintenance window of 4AM to 6AM EST on Sunday mornings for the TSA
Site. Tracking tickets will be issued to track any maintenance performed during
this time. Tickets are also issued for unscheduled maintenance and downtime.
B. Escalation Procedures
If a technical problem occurs with the TSA Site, contact people in the following
order:
Frontier Global Center Network Operations Center
1 800 662 3551
TSA.com Web Operations
Joe Romello (610)768 0900
Michael Balik (610) 768 0900
Organic Web Operations
Daniel Lees (212) 277 4678 pager [email protected]
----------------------
Dion Lee Chin (212) 277 4742 pager [email protected]
-------------------------
Organic Project Engineer
Clay Amerault (212) 277 4732 pager [email protected]
-------------------------
C. Server Monitoring
1. Web Servers
Web servers will be monitored by continuous pinging to make sure the
machine is alive. The http server will be continuously monitored to ensure
it is serving web pages. The home page will be monitored to ensure the
correct home page is being displayed with no errors. Disk space on the web
servers will be monitored and someone notified if capacity exceeds a preset
level.
2. Application Servers
Application servers will be monitored by continuous pinging to make sure
the machine is alive. Disk space on the application servers will be
monitored and web operations notified if capacity exceeds a preset level.
3. Database Servers
Database servers will be monitored by continuous pinging to make sure the
machine is alive. Disk space on the database servers will be monitored and
someone notified if capacity exceeds a preset level. Database table space
and database extents allocated will be monitored and web operations
notified if capacity exceeds a preset level.
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D. Replacement Parts
Under the Sun Silver maintenance agreement, replacement parts shall be available
within four (4) hours of reported failure.
E. Backups
Full backups of all machines will be performed every Monday morning beginning at
2AM EST. Incremental backups will be performed every morning except Monday
beginning at 4AM EST.
F. Hosting Environment
Other than scheduled downtime as described above, TSA.com guarantees 99% uptime,
with preset escalation points for outages starting from system degradation and
system interruption and moving to Priority I, II or III. The mean response time
for server response to access the TSA Site shall not exceed more than __ seconds
during any one (1) hour period. Pages will return in 8 seconds or less over a T1
connection on a 28.8Kps modem. The bandwidth representing the TSA Site's
connection to the Internet shall be no less than a ____ connection, and shall be
operating at capacity no more than __ minutes in any 24 hour period.
G. Security
Since the TSA Site is an electronic commerce web site, security is a primary
concern. TSA.com shall operate and maintain the TSA Site's servers at a locked
and secured location and shall prevent unauthorized access to the same, and any
databases or other sensitive material generated from or used in conjunction with
the TSA Site. TSA.com shall promptly notify Retailer of any known security
breaches or holes. A Solaris platform will be used to keep the web site system
as secure as possible. Solaris allows easy removal of nonessential services.
Solaris allows administrative access to the servers to be restricted by a secure
shell or direct terminal connection. Solaris allows auditing of access to the
system. Solaris allows software that performs a single use password system.
Credit card and other sensitive data will be encrypted before being transmitted.
In addition to securing the individual servers used in the system, a firewall
will be used.
H. Design Requirements
Standard Viewable Area: 615x500
Monitor Resolution: 800x600 and greater
Maximum Page Size: 50k, no page exceeding 80k
Connection Speed: 28.8 Kbps and greater
Graphic Formats: GIF89a, JPEG, plus a TBD enhanced image format
Interactive Elements: HTML, JavaScript, CSS, Dynamo, dHTML
I. Supported Browser Environments
This list below shows which browser/platform/OS combinations, based on research
conducted by GSI, will provide full functionality for the GSI Common Engine and
the TSA Site. The list below should cover approximately 95% of all browsers.
Users without Netscape 4 (or higher) or Internet Explorer 4 (or higher) will be
directed to a page informing them how to download the necessary browser.
Additionally, since JavaScript is required to view the site, users who have
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disabled JavaScript will be directed to a page telling them how to enable it.
This list also serves as the list of browsers with which the site will be tested
during the quality assurance phase of the project-preceding launch.
Browser Version Platform OS Version
Netscape Navigator 4.0.x Windows 95,98,NT 4.0
MS Internet Explorer 4.x Windows 95,98,NT 4.0
Netscape Navigator 4.0.x Macintosh MacOS 7.x.x and up
MS Internet Explorer 4.x Macintosh MacOS 7.x.x and up
J. Fulfillment, Customer Service
1. Telephone Service
On a monthly basis, TSA.com shall provide the following service levels:
. Abandoned calls not to exceed 2% of total calls.
. Average speed of answer shall not exceed 20 seconds.
. Calls delayed shall not exceed 20%.
2. Shipment Service Time
TSA.com shall use its best efforts to make all shipments of merchandise to
Customers according to the following schedule:
. 100% by the end of the Business Day following date of receipt (orders
received after 3PM count as next day).
. Balance by the end of the second Business Day following the date of
receipt.
. Preferential orders and Federal Express (or other express courier
service) orders will be shipped on the day received.
3. Customer Returns, Requests for Information
TSA.com shall process all Customer returns within three (3) Business Days
of receipt. TSA.com shall respond to requests for information Customers for
UPS call tags (or the like) and Customer returns within three (3) Business
Days of receipt. Similarly, TSA.com shall respond to requests from
Customers regarding shipment confirmation or other matters within three (3)
Business Days of receipt, except that serious problems shall be responded
to within 24 hours.
K. Reporting
TSA.com shall provide monthly reports (or more frequent) to Retailer by the 15th
of each month, which:
. Track and monitor maintenance and downtime of the TSA Site;
. Track and monitor the metrics set forth above in items C, E, F and J;
. Track and monitor such information as original order number, order
date, reason for Customer contact, and resolution; and
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. For e-mail, elapsed time from Customer send time/date to TSA.com
response time/date.
