1
Exhibit 10.3
SEARS CANADA INC.
SEARS HEALTH FOOD & FITNESS SHOPS
MANAGEMENT AND OPERATING LICENSE AGREEMENT
This Agreement made as of the 7th day of February, 2001
AMONG:
SEARS CANADA INC., incorporated under the laws of Canada, having its head
office in the City of Toronto, Province of Ontario
(hereinafter called "Sears")
OF THE FIRST PART
AND
3051356 NOVA SCOTIA COMPANY incorporated under the laws of the Province of Nova
Scotia and having its head office in the City of Burnaby, in the Province of
British Columbia
(hereinafter called "Nova")
OF THE SECOND PART
AND
SEARS, XXXXXXX and CO., incorporated under the laws of New York, United
States of America, having its head office in Xxxxxxx Estates in the State
of Illinois
(hereinafter called "Owner")
OF THE THIRD PART
WHEREAS Sears is a major Canadian retailer offering various goods and services
to its Customer(s) through its retail stores, dealer stores, catalogues, select
direct marketing media and the Internet;
AND WHEREAS Sears wishes to offer for sale, to its customers, health food and
fitness products in its retail stores, through free standing dedicated retail
facilities, through selected catalogue and retail direct marketing media and on
its Internet site under the Trade Xxxx XXXXX;
AND WHEREAS Nova represents and warrants to Sears that it is fully qualified,
experienced, licensed, capitalized, staffed and equipped to operate facilities
for the provision and sale of health food and fitness products and services to
Customer(s) in:
(a) Licensed Department(s) in specific Designated Store(s); and,
(b) Licensed Department(s) in Designated Facility(s); and,
2
(c) through catalogue and retail direct marketing programs; and,
(d) through Sears Internet Web Site.
AND WHEREAS Nova represents and warrants that it is fully qualified,
experienced, licensed, capitalized, staffed and equipped to successfully select,
recruit and train certain qualified third parties to provide Retail Services in
Licensed Department(s) in Designated Facility(s) in Designated Markets, to
provide them with and license them to use the Nova systems, management,
purchasing, marketing and consulting services, training and expertise in
marketing, merchandising, advertising, selling skills, management skills,
product knowledge, business administration skills, inventory control systems and
buying power to reduce costs and increase margins, all as contemplated by this
Agreement;
AND WHEREAS Nova is desirous of operating and providing for the sale of health
food and fitness products and services to Customer(s):
(a) in Licensed Department(s) in Designated Store(s); and,
(b) in Licensed Department(s) in Designated Facility(s); and,
(c) through catalogue and retail direct marketing programs; and,
(d) through Sears Internet Web Site.
in association with the Trade Xxxx XXXXX, in physical facilities or direct
marketing vehicles identified by the name "SEARS HEALTH FOOD & FITNESS SHOPS";
AND WHEREAS Nova wishes to have the opportunity to recommend to Sears, for Sears
approval, certain Nova licensed, fully trained and qualified third parties, to
be licensed by Sears to provide Retail Services, in association with the Trade
Xxxx XXXXX, in Licensed Department(s) in Designated Facility(s) in Designated
Market(s) identified by the name "SEARS HEALTH FOOD & FITNESS SHOPS", under the
direction and management of Nova, in accordance with the Nova License Agreement
and the Nova Operations Manual;
AND WHEREAS Owner is related to Sears and by Power of Attorney dated the 4th day
of February, 1994, Owner appointed Sears as its Attorney-in-fact in Canada which
appointment has not been revoked or amended and is in full force and effect as
at the date hereof;
NOW THEREFORE in consideration of the mutual covenants and agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto covenant and agree as follows:
1.0 DEFINITIONS
1.1 The following words and phrases used in this Agreement shall have the
following meanings:
"AGREEMENT" means this Management And Operating License Agreement including all
of the Schedules attached hereto and forming part hereof between Sears and Nova
which authorizes Nova to operate and provide the Retail Services to Customer(s)
and to offer Management Services to Sears including but not limited to, the
responsibility for, and the supervision of, the approved operation and
2
3
provision of the Retail Services by a Licensee(s) pursuant to this Agreement and
the Nova Operations Manual;
"CHANGE OF CONTROL" means any transfer or issue by sale, assignment,
disposition, subscription, transmission on death, mortgage, charge, security
interest, operation of law or otherwise of any shares, voting rights or
interests which would result in any change in the effective control of Nova;
"NOVA'S COMMISSION" has the meaning given to it in Section 9.1;
"NOVA LICENSE AGREEMENT" means the agreement between Nova and its licensees
which details the obligations of the parties with respect to the conduct of an
operation for the procurement, provision, presentation, marketing and sale of
health food and fitness products and services. A copy of the Nova License
Agreement, as periodically updated, shall be provided to Sears for its review
and approval;
"NOVA OPERATIONS MANUAL" means the operating manual containing approved
processes which must be followed and standards which must be adhered to, by Nova
and the Licensee(s), in the conduct of an operation for the procurement,
provision, presentation, marketing and sale of Sears approved health food and
fitness products and services under the Designated Retail Format(s), such Nova
Operations Manual being approved by Sears, a copy of which is held by Sears, and
for which any revisions thereto must also be approved by Sears, and copies of
such approved revisions held by Sears;
"COMMISSION" means a percentage of Net Sales as set out in Section 8.1;
"CONFIDENTIAL INFORMATION" has the meaning given to it in Section 21.1;
"CUSTOMER(S)" means a person or persons who avail themselves of any product or
service in association with the Trade Xxxx;
"DESIGNATED FACILITY(S)" shall mean a free standing, dedicated, Sears approved,
retail facility provided and operated by Nova or a Licensee(s) in a Designated
Market(s), as listed in Schedule "B" attached, which may be amended in writing
by Sears, at Sears sole discretion, from time to time, in which a Licensed
Department(s) is located;
"DESIGNATED MARKET(S)" means the non-exclusive market area designated by Sears,
as listed in Schedule "B" attached, which may be amended in writing by Sears, at
Sears sole discretion, from time to time, wherein Nova or a Licensee(s) is
authorized by Sears to operate and provide the Retail Services under a specified
Designated Retail Format(s), as contemplated under this Agreement;
"DESIGNATED RETAIL FORMAT(S)" means each of the retail formats as listed in
Schedule "A" attached, which may be amended in writing by Sears, at Sears sole
discretion, from time to time, by which Nova and/or a Licensee(s) are authorized
to operate and provide the Retail Services contemplated under this Agreement;
"DESIGNATED STORE(S)" shall mean each of the Sears retail stores listed in
Schedule "B" attached, which may be amended in writing by Sears, at Sears sole
discretion, from time to time, in which a Licensed Department(s) is authorized
to be located;
3
4
"EXPECTED PERFORMANCE LEVEL" means achievement in each fiscal year of at least
eighty (80%) percent of the planned annual Net Sales generated through the sale
of the Health Food And Fitness Products And Services as set forth in the Nova
and the Licensee(s) prepared and agreed, Nova presented, Sears approved, annual
business plan;
"FIRST RENEWAL TERM" has the meaning given to it in Section 7.1;
"GROSS SALES" shall mean the total amount of all sales arising directly or
indirectly from the sale of Health Food And Fitness Products And Services under
the Trade Xxxx;
"HEALTH FOOD AND FITNESS PRODUCTS AND SERVICES" means merchandise, products and
services normally associated with, and offered for sale in, a health food retail
location and other merchandise, products and/or services provided by Nova and/or
the Licensee(s) in a Designated Retail Format(s) which shall be restricted to
the merchandise, products and services approved by Sears that are reasonably
inferred by the name Sears Health Food And Fitness Products And Services but
shall not include the presentation, marketing or sale of merchandise, products
and/or services which, in Sears sole opinion, conflicts with the merchandise,
products and/or services being offered from time to time by Sears or by any
other licensee of Sears, unless otherwise approved by Sears in writing;
"INFRINGEMENT" means any unauthorized use, advertising, imitation or dilution of
the Trade Xxxx or any similar trade xxxx or name;
"INITIAL TERM" has the meaning given to it in Section 7.1;
"LICENSED DEPARTMENT(S)" means the physical area, occupied by Nova or a
Licensee(s) in a Designated Store(s) or a Designated Facility(s), in which Nova
or the Licensee(s) shall operate for the provision of the Retail Services to
Customer(s) under the Trade Xxxx;
"LICENSEE(S)" means a registered incorporated entity, holding a valid and
subsisting Nova License Agreement, which, once recommended by Nova and approved
by Sears in accordance with the terms of this Agreement, is authorized by Sears,
to provide the Retail Services in a Licensed Department(s) pursuant to the terms
of an Operating License Agreement between Sears and the Licensee(s);
"MANAGEMENT QUARTERLY REPORT" has the meaning given to it in Section 13.2;
"MANAGEMENT SERVICES" means the services provided by Nova, to Sears in Nova's
role as the manager of the Retail Services for Sears and the services provided
by Nova to the Licensee(s), pursuant to Clause 12.0, including but not limited
to, the responsibility for, and the supervision of, the proper operation, and
provision of the Retail Services by the Licensee(s) pursuant to an Operating
License Agreement, the Nova Operations Manual, and the Nova License Agreement;
"MARKETING LEVY" means [*****] percent ([***]%) of the Net Sales per month
payable to Nova by the Licensee(s) pursuant to the Nova License Agreement for
the media cost of national advertising programs developed and run by Nova for
the promotion of the Health Food And Fitness Products And Services offered for
sale in the Licensed Department(s);
"NET SALES" means Gross Sales less sales taxes, goods and services taxes,
credits and allowances paid or allowed by Nova and/or the Licensee(s) which are
necessary in connection with the operations contemplated under this Agreement or
any Operating License Agreement;
4
* CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
5
"NORMAL BUSINESS HOURS" has the meanings given to it in Sections 4.12, 4.13,
4.14 and 4.15;
"OPERATING LICENSE AGREEMENT" means the agreement between Sears and each
Licensee(s) substantially in the form attached as Schedule "H" which authorizes
a Licensee(s) to operate a Licensed Department(s) for the provision of the
Retail Services in a specified non-exclusive Designated Market(s), in accordance
with the Nova Operations Manual, this Agreement and the Nova License Agreement;
"POTENTIAL LICENSEE" has the meaning given to it in Section 12.2, Subsection
(a);
"RENEWAL TERM" means the First Renewal Term and/or the Second Renewal Term, as
the context requires;
"RETAIL SERVICES" means all of the activities required by this Agreement to
acquire, establish and operate the physical facilities, the hiring, training and
management of employees and the provision and management of the resources
necessary for the professional procurement, retail presentation, marketing and
sale of Health Food And Fitness Products And Services to Customer(s) in
association with the Trade Xxxx or trade name licensed herein;
"SECOND RENEWAL TERM" has the meaning given to it in Section 7.1;
"TRADE XXXX" means the trade xxxx XXXXX and the additional trade marks as set
forth in the attached Schedule "G", or any other trade xxxx or name of Owner or
Sears which may be authorized for use from time to time, in writing, together
with such type styles, colour schemes and design matter as Sears may designate
in writing from time to time;
"TRAINEE AND TRAINEES" have the meanings given to them in Section 12.3,
Subsection (a);
"WEEKLY SALES REPORT" means the report to be provided weekly by each Licensee(s)
to Nova for Sears pursuant to Section 10.3 of the Operating License Agreement.
2.0 SCHEDULES
The following attached Schedules form an integral part of this Agreement:
Schedule "A" - Retail Format(s)
Schedule "B" - Designated Market(s), Designated Store(s), Designated Retail
Format(s)
Schedule "C" - Initial Term Business Plan
Schedule "D" - Standard of Quality & Performance
Schedule "E" - Employee Statement of Understanding
Schedule "F" - Licensed Businesses on the Internet
Schedule "G" - Trade Marks Authorized For Use
Schedule "H" - Operating License Agreement
5
6
Schedule "I" - Transfer of Telephone and Facsimile Numbers Ownership
3.0 LICENSE - TRADE XXXX
3.1 Nova hereby acknowledges that the Trade Xxxx is valid and enforceable and
the sole and exclusive property of the Owner and that Sears has the right to
license the Trade Xxxx to Nova. Sears is the Attorney-in-fact of the Owner in
Canada representing the Owner's interests in the Trade Xxxx in connection with
the operation and provision of the Management Services and the Retail Services
and as such acts on behalf of the Owner in the supervision and control of the
use of the Trade Xxxx in Canada by Nova.
3.2 Sears, both for itself and as Attorney-in-fact for the Owner, hereby grants
to Nova the right to use the Trade Xxxx in Canada, only in its communication
with Customer(s), in association with the operation and provision of the
Management Services and the Retail Services.
3.3 Nova shall not use the Trade Xxxx outside Canada or in association with the
Management Services, any trade relationships, or any merchandise or services
other than those permitted under the terms of this Agreement.
3.4 Nova shall only use the Trade Xxxx as a trade xxxx and only in the format in
which the Trade Xxxx has been registered or filed for registration and shall not
use the word SEARS or any other Trade Xxxx belonging to the Owner or Sears
except as expressly permitted in this Agreement.
3.5 All uses and presentations of the Trade Xxxx by Nova whether on signs, in
literature or advertising or otherwise, shall be submitted to Sears, or to such
person as Sears may designate, for written approval prior to any use of the
same.
3.6 All uses and presentations of the Trade Xxxx by Nova shall be such as to
clearly distinguish the Trade Xxxx from any other trade xxxx, design or text
appearing with it.
3.7 Nova will display on all signs, literature and advertising on which the
Trade Xxxx appears, and in such other manner as Sears may direct from time to
time, a notice similar to the following notice:
SEARS(R) HEALTH FOOD & FITNESS SHOPS Independently operated by 3051356 Nova
Scotia Company under a Sears Canada Inc. license agreement (R) Registered Trade
Xxxx of Sears, licensed for use in Canada
3.8 Nova shall not use the Trade Xxxx, or any part of it, or any other trade
xxxx of the Owner or Sears as, or as part of, any trade xxxx, corporate name or
trade name, except as expressly permitted in this Agreement.
3.9 Except as expressly permitted in this Agreement, Nova shall not use, in
connection with the operation and provision of the Management Services or the
Retail Services or otherwise, any trade xxxx which is similar to, confusing
with, or which so nearly resembles as to be likely to cause confusion with any
trade xxxx of the Owner or Sears.
3.10 The Trade Xxxx shall only be used in accordance with good trade xxxx
practice and only in such manner as to preserve the independent distinctiveness
of such Trade Xxxx.
6
7
3.11 Nova shall pay to Sears such reasonable charges as may be requested by
Sears from time to time to cover Sears costs in connection with the
registration, maintenance, prosecution and amendment of all trade xxxx entries
required by Sears in connection with this Agreement.
3.12 Nova acknowledges that it does not now have nor will it have, either during
the term of this Agreement or thereafter, any right, title or interest in the
Trade Xxxx or any goodwill associated therewith. Nova hereby assigns to the
Owner or Sears, as the case may be, any rights it may have or claim to have, in
Canada, in the Trade Xxxx XXXXX or any trade xxxx including the word "Sears" or
as set out in Schedule "G" hereto. Nova will never challenge the validity or
ownership of or oppose any application by the Owner or Sears to register the
Trade Xxxx or any other trade xxxx of the Owner or Sears incorporating the word
"Sears".
3.13 All use of the Trade Xxxx, including those set out in Schedule "G" hereto,
pursuant to the terms of this Agreement and all goodwill resulting therefrom
shall enure to the sole and exclusive benefit of the Owner of the Trade Xxxx.
3.14 Nova will use its best efforts to preserve the value, validity and
distinctiveness of the Trade Xxxx and any registrations and applications for
registration thereof and will provide the Owner or Sears with any information
and other assistance as to the use of the Trade Xxxx which the Owner or Sears
may require from time to time in order to assist the Owner or Sears in
registering, protecting, enforcing or maintaining the Trade Xxxx, or any other
name or trade xxxx of the Owner or Sears.
3.15 The license granted to Nova hereunder is personal to it and may not be
assigned or transferred to any other party. Nova has no right to grant to any
other party any permission, license or sublicense to use the Trade Xxxx
independently or on its behalf.
3.16 Upon expiration or upon termination of this Agreement with or without
cause, or upon termination of Nova's rights to use the Trade Xxxx by the Owner
or Sears for any reason whatsoever, Nova shall immediately cease all use of the
Trade Xxxx and shall not use the same thereafter whether as a trade xxxx or in
advertising or otherwise and it will forthwith execute any and all documents
which the Owner or Sears may deem reasonable to confirm the Owner's rights and
to transfer to the Owner, all rights in the Trade Xxxx.
3.17 Nova recognizes that the Trade Xxxx possesses a special, unique and
extraordinary character which makes it impossible to calculate the harm which
the Owner and Sears would sustain in the event of unauthorized use of the Trade
Xxxx by Nova or otherwise. Nova recognizes and agrees that irreparable harm
would be caused to the Owner and Sears by such unauthorized use and agrees that
both interim and permanent injunctive relief would be appropriate and should be
granted in the event of breach of this Agreement by Nova, in addition to any
other legal remedies otherwise available to the Owner or Sears.
3.18 Nova shall promptly notify Sears of any infringement of the Trade Xxxx or
any other trade xxxx of the Owner or Sears which comes to its attention. The
Owner and Sears shall have the sole right, at its own expense, to take such
action as it determines, in its sole discretion, to be appropriate. Nova waives
the provisions of s.50 (3) of the Trade Xxxx Act, R.S.C. 1993, c.15, s.19 and
any similar foreign legislation and successors thereof. Nova undertakes to
cooperate and assist in such protest or legal action by the Owner or Sears at
the Owner's or Sears expense. If required by the Owner or Sears, Nova shall join
in such protest or legal action at the Owner's or Sears expense. Nova shall not
undertake such protest or legal action on its own behalf.
7
8
3.19 It is expressly understood that, upon expiration or termination of Nova's
rights to use the Trade Xxxx for any cause, that nothing in this Agreement shall
be construed as to prevent the Owner or Sears from protecting their respective
rights to the exclusive use of the Trade Xxxx against infringement thereof by
any party or parties, including Nova.
3.20 Sears reserves the right to change the Trade Xxxx and designate such other
or additional trade marks to be licensed and used under this Agreement upon
notice of such change to Nova and this Agreement shall be deemed to refer only
to such designated trade xxxx; provided, however, that Nova shall have a period
of three (3) months within which to change uses and advertising of the Trade
Xxxx to refer only to the trade xxxx so specified.
3.21 Nova acknowledges that all goodwill generated by and subsisting in the
operation and provision of the Management Services or the Retail Services as a
result of the use of the Trade Xxxx enures to the sole benefit of the Owner and
Sears and that Nova has no right to or interest in said goodwill. In this
context, goodwill includes the exclusive right to and interest in information,
including Customer(s) lists, which information shall be immediately transferred
to Sears upon expiry or termination of this Agreement.
3.22 Nova acknowledges that Sears or the Owner may assign, encumber or transfer
their rights under this Agreement in whole or in part.
4.0 LICENSE - SERVICE
4.1 Subject to the terms and conditions of this Agreement, Sears hereby grants
to Nova the privilege of operating and providing the Retail Services under the
Designated Retail Format(s) in association with the Trade Xxxx, in physical
facilities or direct marketing vehicles identified by the name "SEARS HEALTH
FOOD & FITNESS SHOPS" provided that Nova shall not offer the same, similar or
related services under any other trade xxxx in any other business.
4.2 Subject to the terms and conditions of this Agreement, Sears hereby grants
to Nova the privilege of recommending to Sears, for Sears approval, certain of
its fully trained and qualified Nova licensees, to be licensed by Sears to
operate and provide the Retail Services in Licensed Department(s) under the
direction and management of Nova, in accordance with this Agreement, the Nova
License Agreement and the Nova Operations Manual, in association with the Trade
Xxxx, under the name "SEARS HEALTH FOOD AND FITNESS SHOPS" provided that Nova
shall not offer the same, similar or related services under any other trade xxxx
in any other business.
4.3 No part of the privilege granted to Nova under Section 3.2, Section 4.1 and
Section 4.2 shall be assigned or transferred to any other party in any manner
whatsoever by Nova. Nova has no right to authorize any party to provide any
services under this Agreement on its behalf without the prior written consent of
Sears.
4.4 Nova guarantees the full and faithful performance by itself and by its
employees, agents, designees and servants, of all of the terms and conditions
contained in this Agreement, and the full and faithful performance by all
Licensee(s) and their respective employees, agents, designees and servants, of
all of the terms and conditions contained in the Operating License Agreement.
4.5 Nova agrees to protect, defend, hold harmless and indemnify the Owner and
Sears from and against any and all claims, demands, damages, expenses (including
legal fees and disbursement(s), losses, actions, causes of action, judgments,
fines, penalties, fees, suits and proceedings of any kind
8
9
whatsoever, actually or allegedly resulting or arising from, or in connection
with the operation and provision of the Management Services and/or the Retail
Services, by itself or by any Licensee(s), including any actual or alleged
infringement of any patent, trademark, copyright, confidential relationship,
trade secret or other proprietary right of third parties and including any
dispute between or among Nova, a Licensee(s), Nova's or a Licensee's employees,
designees, suppliers and any third parties, Customer(s) or any of them, in
connection with the conduct, operation or provision of the Management Services
and/or the Retail Services.
4.6 The Management Services and the Retail Services provided by Nova shall be of
a high quality and in compliance with all applicable legislative, regulatory and
industry requirements, this Agreement, the Nova License Agreement and the Nova
Operations Manual. Sears shall have the right as Licensor and the
Attorney-in-fact of the Owner to inspect and review all aspects of such
Management Services and Retail Services from time to time to ensure that the
quality of such services meets all requirements and its approval.
4.7 Nova understands and acknowledges that the proper operation and provision of
the Management Services by Nova, and the proper operation and provision of the
Retail Services by Nova and/or the Licensee(s) is of paramount importance to the
Owner, Sears, Nova and the Licensee(s). Therefore, in order to protect and
enhance the reputation and goodwill of the Owner and Sears, in order to develop
and maintain high and uniform standards for all aspects of the operation and
provision of the Management Services and the Retail Services and in order to
increase the sales of the Health Food And Fitness Products And Services, Nova
agrees to supervise the performance of its employees and the Licensee(s) as
required under this Agreement and any Operating License Agreement.
4.8 Nova shall at all times treat all Customer(s) fairly and courteously and
shall maintain a policy of "Satisfaction or Money Refunded". Nova agrees to
resolve all complaints and controversies with Customer(s) of the Retail Services
in a manner fully satisfactory to Sears. In any case in which the resolution of
any complaint or controversy is unsatisfactory to the Customer(s), Sears shall
have the right, after discussing the complaint with Nova or Nova's staff, and at
Nova's expense, to make such adjustment as Sears may deem necessary in the
circumstances and any adjustment made by Sears, even when in excess of the
selling price of the Health Food And Fitness Products and Services, shall be
conclusive and binding upon Nova. Nova agrees that Sears may deduct the amount
of any such adjustment from any settlement remitted to Nova. Nova shall maintain
and make available to Sears all files pertaining to Customer(s) complaints, all
communications and adjustments made.
4.9 Nova shall at all times treat all Licensee(s) fairly and courteously and
shall resolve all complaints and controversies with Licensee(s) in accordance
with the Licensee's Operating License Agreement, Nova's License Agreement and
the Nova Operations Manual. Nova shall maintain and make available to Sears all
files pertaining to Licensee(s) complaints, all communications and adjustments
made.
4.10 Nova agrees that Customer(s) will not be billed and no payment will be
accepted from Customer(s) until Nova has provided the Health Food and Fitness
Products And Services to the Customer(s).
4.11 Nova agrees that Licensee(s) will not be billed and no payment will be
accepted from a Licensee(s) for any Management Services provided by Nova to the
License(s) under the Nova License Agreement until Nova has provided the
Licensee(s) with the agreed Management Services or until
9
10
Nova and the Licensee(s) have executed an agreement whereby Nova has agreed to
provide future Management Services to the Licensee(s) for an agreed
compensation.
4.12 The Licensed Department(s) operated by Nova, located in a Designated
Store(s) shall be open for business and the Retail Services shall be provided to
Customer(s) by fully qualified employees of Nova during all open business hours
of the Designated Store(s) ("Designated Store(s) Normal Business Hours").
4.13 Licensed Department(s) operated by Nova in a Dedicated Facility(s) shall be
open for business and the Retail Services shall be provided to Customer(s)
during all open business hours of the competition in the Designated Market(s)
("Dedicated Facility(s) Normal Business Hours").
4.14 In those markets where the Direct Marketing Retail Format is used,
Customer(s) must be able to place a telephone order for Health Food And Fitness
Products And Services during all hours advertised and in all the languages used
in the printed direct marketing advertising vehicles ("Direct Marketing Normal
Business Hours").
4.15 The Management Services must be provided by Nova to Sears and the
Licensee(s) Monday through Friday, 9:00 am. to 5:00 pm. except during statutory
holidays. ("Management Services Normal Business Hours"). Suitable telephone
numbers must be provided and operated by Nova to address any problems in case of
emergencies.
5.0 ESTABLISHMENT, AND OPERATION OF THE PROVISION OF THE RETAIL SERVICES
5.1. Nova shall, within thirty (30) days of written notice by Sears, to Nova, of
an addition to the On-Premise locations set out in Schedule "B" develop a three
year business plan to determine the financial viability of the operation by Nova
for each individual additional Licensed Department and shall present such
business plans for each individual additional Licensed Department to Sears for
Sears review.
5.2 In the event the review of the business plan indicates such additional
Licensed Department(s) is, in Sears and Nova's mutually agreed opinion, each
acting reasonably, financially viable to operate, Nova shall establish the
operation and provision of the Retail Services in the additional Licensed
Department(s) in the specified Designated Store(s) in association with the Trade
Xxxx, subject to Clauses 3.0 and 4.0, within ninety days of the date of Sears
review of the Nova prepared business plan or on a date specified in writing by
Sears beyond the ninety day period.
5.3 In the event the review of the business plan indicates such additional
Licensed Department(s) cannot, in Sears and Nova's mutually agreed opinion, each
acting reasonably, operate in a financially viable manner, Nova may decline to
establish, operate or provide the Retail Services in the additional specific
Licensed Department(s) in the specified Designated Store(s).
5.4 In the event Nova declines to operate any Licensed Department(s) pursuant to
Section 5.3, Sears shall have the right to offer the opportunity to operate such
Licensed Department(s) to any person or organization it so chooses and Nova
shall have no rights or interests of any kind in such Licensed Department(s).
5.5 Nova may propose in writing to Sears additional Licensed Department(s) under
the Free Standing Retail Format in Designated Facility(s) in Designated
Market(s) to be considered by Sears and/or Sears may propose in writing to Nova
additional Licensed Department(s) under the Free
10
11
Standing Retail Format in Designated Facility(s) in Designated Market(s) and
within thirty (30) days of written notice by Nova to Sears or Sears to Nova
respectively, of a proposed addition to the Free Standing Retail Format
locations set out in Schedule "B", Nova shall develop a three year business plan
to determine the financial viability of the operation by Nova or a Licensee for
each individual additional Licensed Department(s) under the Free Standing Retail
Format in Designated Facility(s) in Designated Market(s) and shall present such
business plans to Sears for Sears review. In the event the review of the
business plan indicates an additional Licensed Department is, in Sears and
Nova's mutually agreed opinion, each acting reasonably;
(a) financially viable to operate, Nova shall;
(i) commit to Sears in writing that it will establish, operate and provide the
Retail Services in the additional Licensed Department(s), under the Free
Standing Retail Format in the specified Designated Facility(s) in the Designated
Market(s) in association with the Trade Xxxx, subject to Clauses 3.0 and 4.0;
or,
(ii) recommend to Sears, a qualified Nova licensee for Sears to consider to
license, to establish, operate and provide the Retail Services, in the
additional specified Licensed Department(s) under the Free Standing Retail
Format in the specified Designated Facility(s) in the Designated Market(s) in
association with the Trade Xxxx, subject to Clauses 3.0 and 4.0; and,
Nova shall establish the operation and provision of the Retail Services, either
by itself or by the fully qualified Licensee, in such additional Licensed
Department(s) within ninety days of the date of Sears review of the Nova
prepared business plan or on a date specified in writing by Sears beyond the
ninety day period.
(b) In the event the review of the business plan indicates an additional
Licensed Department cannot, in Sears and Nova's mutually agreed opinion, each
acting reasonably, operate in a financially viable manner, Nova may;
(i) decline to establish, operate or provide the Retail Services in the
additional specific Licensed Department(s) in the specified Designated
Facility(s) in the Designated Market(s); and/or,
(ii) decline to recommend to Sears a suitable Nova licensee to establish,
operate and provide the Retail Services in the additional specific Licensed
Department(s) in the specified Designated Facility(s) in the Designated
Market(s).
5.6 In the event Nova declines to operate, or to recommend a suitable Nova
licensee to operate, any Licensed Department(s) pursuant to Section 5.5
Subsection (b), Sears shall have the right to offer the opportunity to operate
such Licensed Department(s) to any person or organization it so chooses and Nova
shall have no rights or interests of any kind in such Licensed Department(s).
5.7 During the Initial Term and any Renewal Term of this Agreement, Nova, and
its officers, and employees shall employ their expertise and experience relating
to the retailing of health food and fitness products and services industry
exclusively for the benefit of the operation and provision of the Management
Services and the Retail Services. Neither Nova nor any of its officers, its
officer's spouses or its directors shall, directly or indirectly, have any
interest in or provide services to any person or business whose activities are
the same, similar to or competitive with, the operation and provision of the
Management Services and/or the Retail Services other than those activities that
may be required in the operation of Sears Health Food Shops under a license
agreement with the Owner.
11
12
6.0 FINANCIAL STATEMENT
6.1 Prior to commencing operations under this Agreement and on a monthly basis
thereafter, Nova shall furnish to Sears an acceptable statement of Nova's
financial condition which shall include but not be limited to:
(a) Nova's Monthly Balance Sheet; and,
(b) Nova's Monthly Income Statement; and,
(c) List of Nova's accounts payable summary, by vendor, upon request.
7.0 TERM
7.1 The initial term (the "Initial Term") of this Agreement shall be for three
(3) years commencing on February 7th, 2001 and terminating on February 7th,
2004. Unless earlier terminated in accordance with this Agreement. The Initial
Term shall be automatically renewed thereafter for one (1) further term of one
(1) year (the "First Renewal Term") followed successively by one (1) further
term of one (1) year (the "Second Renewal Term"), on the same terms and
conditions as herein set out.
7.2 Notwithstanding Section 7.1, if both parties wish to vary the terms and
conditions of this Agreement for any Renewal Term, the parties shall conduct
negotiations, in good faith, to mutually agree upon amended terms and conditions
at least ninety (90) days prior to the expiry of the Initial Term or any Renewal
Term, as the case may be, failing which this Agreement shall be renewed on the
same terms and conditions, unless earlier terminated in accordance with this
Agreement.
7.3 Upon the termination of the Second Renewal Term this Agreement may be
renewed by the parties, on an annual basis, on such terms and conditions as may
be mutually agreed at least ninety (90) days prior to the end of the renewal
term. Should the parties fail to reach any such mutual agreement, this Agreement
shall expire on its termination date without any further act of the parties
hereto being necessary to confirm such expiration.
8.0 COMMISSION AND FEES
8.1 In consideration of Nova's provision of the Management Services and the
rights granted to Nova to provide the Retail Services under the terms,
provisions and conditions this Agreement, Nova shall pay to Sears and Sears
shall be entitled to receive from Nova a Commission which shall be the sum of:
(a) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food And Fitness Products And Services through the On Premise Retail Format from
January 30th, 2001 to June 29th, 2002;
(b) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food and Fitness Products and Services through the On Premise Retail Format from
June 30th, 2002 to June 28th, 2003;
(c) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food and Fitness Products and Services through the On Premise Retail Format from
June 29th, 2003; plus,
12
* CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
13
(d) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food And Fitness Products And Services through the Free Standing Retail Format;
plus,
(e) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food And Fitness Products And Services through the Direct Marketing Retail
Format fulfilled from a Nova provided facility; plus,
(f) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food And Fitness Products And Services through the Direct Marketing Retail
Format fulfilled from a Sears provided facility; plus,
(g) [*****] percent ([***] %) of the Net Sales generated by the sale of Health
Food And Fitness Products And Services through the Internet Marketing Retail
Format fulfilled from a Nova provided facility; plus,
(h) [*****] percent ([***]10%) of the Net Sales generated by the sale of Health
Food And Fitness Products And Services through the Internet Marketing Retail
Format fulfilled from a Sears provided facility.
8.2 Nova acknowledges that in arriving at the Commission above, it was taken
into account that all goodwill generated by the operation and provision of the
Management Services and the Retail Services under the Trade Xxxx enures
completely to the benefit of Sears and that neither Nova or the Licensee(s) have
any right, title or interest in said goodwill.
8.3 For all sales generated by the sale of Health Food And Fitness Products And
Services through the Free Standing Retail Format, the Direct Marketing Retail
Format and the Internet Marketing Retail Format, processed through Licensee
provided point of sale equipment Nova agrees to pay and Sears shall have the
right to deduct a credit card plan fee based on a percentage of each Gross Sale
processed through any Sears credit card plan including sales made to Customers
on both the Sears and Eatons credit cards. The fee charged by Sears and paid by
Nova shall be negotiated between Nova and Sears Corporate Credit Department 753.
8.4 For all sales generated by the sale of Health Food And Fitness Products And
Services through the Free Standing Retail Format, the Direct Marketing Retail
Format and the Internet Marketing Retail Format processed through Licensee
provided point of sale equipment Nova agrees to pay all installation and
communication charges and all third party credit card fees as provided for in
Nova's independent agreement with any third party credit service providers.
9.0 NOVA'S COMMISSION
9.1 Sears acknowledges that under the terms, provisions and conditions of the
Nova License Agreement, Nova is entitled to receive from Licensee(s) a
commission which represents a fixed percentage of the Net Sales generated by the
sale of Health Food And Fitness Products And Services by the Licensee(s).
9.2 Nova acknowledges that this commission is fair and equitable and the only
payment due and owing for all ongoing services provided to the Licensee(s) under
the Nova License Agreement with the exception of expenses that Nova may charge
to the Licensee(s) for Nova's initial costs as outlined in Section 12.2,
Subsection (e), or for Licensee(s) employee training or Licensee(s) training
seminars
13
* CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
14
or conferences as outlined in Section 12.3, Subsection (c) and Subsection (d),
of this Agreement and/or payments due and or owing as specified in the Nova
License Agreement.
10.0 SETTLEMENT
10.1 For Licensed Department(s) located in Designated Store(s), Sears shall
provide a daily change fund with all receipts being processed on a daily basis
through the administrative services offered in the Designated Store(s). An
account will be kept by Sears of all such receipts and Sears shall have the
right to retain out of such receipts the Commission herein provided to be paid
by Nova to Sears, together with any and all other moneys that may be due under
this Agreement.
10.2 Pursuant to Section 10.2 of the Operating License Agreement, each
Licensee(s) has authorized and directed Sears to deliver to Nova all moneys due
and owing to the Licensee(s) from the sale of Health Food And Fitness Products
And Services.
10.3 Sears shall calculate a weekly interim remittance and process said
remittance to Nova, within twelve (12) working days, in an amount equal to
eighty five percent (85%) of the weekly Net Sales receipts generated by the sale
of Health Food And Fitness Products And Services by Nova and each Licensee(s)
through the On Premise Retail Format, the Direct Marketing Retail Format and the
Internet Marketing Retail Format and recorded through a Sears point of sale and
credit authorization system.
10.4 For each location operated under the Free Standing Retail Format, the
Direct Marketing Retail Format and the Internet Marketing Retail Format Nova
shall provide to Sears a dated and verifiable weekly sales report, reporting the
Net Sales generated by the sale of Health Food And Fitness Products And Services
processed through each Nova and/or Licensee(s) provided, Sears approved, point
of sale and credit authorization system, for each fiscal week of each monthly
fiscal period, within five (5) days of the end of each fiscal week, in a form
and manner approved by Sears including, but not limited to, Gross Sales,
returns, credits, allowances, Sears, Nova and Licensee(s) employee discounts,
provincial sales taxes, goods and service taxes and any other applicable taxes
and Net Sales by method of payment ("Weekly Sales Report").
10.5 Nova acknowledges that the failure to report all Net Sales generated by the
sale of Health Food And Fitness Products and Services on the Weekly Sales Report
as required under Section 10.3 will be deemed to be a misappropriation of funds
and will be cause for immediate termination by Sears of this Agreement and/or an
Operating License Agreement under the provisions of Section 25.1, Subsection (p)
hereof.
10.6 Sears shall calculate a weekly remittance and process said remittance to
Nova, within ten (10) working days, in an amount equal to the amount of Net
Sales receipts processed on Sears Credit Card system less the Commissions owed
to Sears on the total Net Sales reported by Nova and the Licensee(s) on the
Weekly Sales Report, generated through the On Premise Retail Format, the Direct
Marketing Retail Format and the Internet Retail Marketing Format that are
processed and recorded through a Licensee provided, Sears approved, point of
sale and credit authorization system.
10.7 Sears shall prepare an end of month settlement report showing all Net Sales
reported and generated by the sale of Health Food And Fitness Products And
Services, by Nova and each individual Licensee(s), by Designated Retail Format
and the appropriate Commission percentage rate and dollars pursuant to Section
8.1 of this Agreement and Section 8.1 of the Operating License Agreement.
14
15
10.8 Nova acknowledges and agrees that no funds shall be remitted to Nova, on
Nova's or Licensee(s)' behalf, for the sales generated through a Licensed
Department(s) located in a Designated Facility(s) until such time as the Weekly
Sales Report is completed and received by Sears D/786LDA. In the event no sales
are transacted by Nova or a Licensee(s) during the relevant fiscal week, a nil
Weekly Sales Report shall be submitted. The Weekly Sales Report shall be
prepared in the form and delivered in the manner prescribed by Sears and include
any other information Sears may require for its records and auditing purposes.
10.9 Sears, after first retaining out of the Net Sales receipts generated
through the sale of Health Food And Fitness Products And Services in the
Licensed Department(s) located in Designated Store(s) and the Net Sales receipts
generated through the sale of Health Food And Fitness Products And Services
recorded on Sears Credit Card systems in the On Premise Retail Format, all
moneys due and owing to Sears under the terms of this Agreement, shall remit the
moneys remaining from said Net Sales receipts to Nova, on behalf of the
Licensee(s), pursuant to Section 10.2 of this Agreement, within twelve (12)
working days of the end of each monthly fiscal period.
10.10 Pursuant to Section 29.1 Subsection (b) of this Agreement and Section 29.1
Subsection (b) of the Operating License Agreement no remittance will be
forwarded to Nova, on behalf of Nova or any Licensee(s), until such time as an
appropriate, current Xxxxxxx'x Compensation Certificate of Clearance or its
equivalent is received by Sears.
10.11 Pursuant to the terms and conditions of the Operating License Agreement
and the Nova License Agreement, Sears acknowledges that Nova will deduct Nova's
Commission and the Marketing Levy from the moneys remitted by Sears to Nova, and
Nova shall remit a settlement to each Licensee(s) in accordance with the terms
of the Operating License Agreement and the Nova License Agreement.
11.0 CASH AND CREDIT SALES
11.1 All sales generated from the sale of Health Food And Fitness Products And
Services shall be made only on Sears regularly established credit plans, Sears
approved third party credit plans, debit card, cash, cheque or money order and
shall be recorded through a Sears approved point of sale register and system.
11.2 In the On Premise Retail Format and/or the Direct Marketing Retail format
and/or the Internet Retail Marketing Retail Format operated from a Sears
provided facility, Nova may accept payment from the Customer(s) on Sears
regularly established credit plans or on Sears approved third party credit plans
provided approval of each credit sale is obtained and Nova agrees that:
(a) approval of the appropriate Sears Credit Central is required and shall be
obtained by Nova for each individual credit sale on a Sears regularly
established credit plan; such approval to be granted at the sole discretion of
the appropriate Sears Credit Central; and,
(b) authorization approval from the appropriate third party credit services
provider is required and shall be obtained by Nova for each individual credit
sale on a Sears approved third party credit plan and the authorization number,
Customer(s)'s full account number, expiry date, Customer(s)'s name, address and
phone number shall be shown; and,
15
16
(c) no part of the carrying or interest charge which may be levied by Sears in
connection with any credit sale on a Sears regularly established credit plan, or
by any third party on any Sears approved third party credit plan shall be
payable to or credited in any way to Nova; and,
(d) it shall be responsible for and charged with any losses on any credit sale
for which the proper approval procedures have not been followed; and
(e) it shall comply with all provisions of federal, provincial and territorial
laws governing credit sales and their solicitation, including but not limited to
provisions dealing with disclosures to Customer(s), finance charges and the
like.
11.3 In the On Premise Retail Format and/or the Direct Marketing Retail format
and/or the Internet Retail Marketing Retail Format operated from a Sears
provided facility, Nova may accept payment from the Customer(s) in cash, on
debit card, where this method of payment is accepted in the Designated Store(s)
or Sears facility, or in the form of cheques or money orders made payable only
to Sears Canada Inc., and Nova agrees:
(a) to make certain that all cheques are properly completed with the current
date, the correct amount (in both locations), Customer(s)'s address, telephone
number, Sears account number or driver's license number and Customer(s)'s
signature; and,
(b) that cheques which are deficient in any of the above areas shall be returned
to Nova and Nova shall reimburse Sears for any loss, including any of Sears
Commission lost as a result of Nova's failure to obtain the properly completed
cheques; and,
(c) any and all losses which may be sustained by Sears by reason of nonpayment
of any cheque or money order upon presentment shall be borne by and charged to
Nova and Sears shall have no liability with respect thereto. Sears will make
whatever effort it deems reasonable to collect on such cheque prior to returning
said cheque to Nova; and
(d) to be accountable to Sears, at all times, for the full amount of all cash,
cheque or money order payments made by Customer(s). Any shortage in or
manipulation of such payments will be deemed to be a misappropriation of funds
and will be cause for immediate termination of this Agreement by Sears under the
provisions of Clause 21.3 hereof.
11.4 For sales generated through the Free Standing Retail Format, the Direct
Marketing Retail Format and the Internet Retail Marketing Format operated from a
Nova provided facility, Nova may accept payment from Customer(s) on Sears
regularly established credit plans or on Nova arranged, Sears approved, third
party credit plans provided approval of each credit sale is obtained and Nova
agrees that:
(a) approval of the appropriate Sears Credit Central is required and shall be
obtained by Nova for each individual credit sale on a Sears regularly
established credit plan; such approval to be granted at the sole discretion of
the appropriate Sears Credit Central;
(b) authorization approval from the appropriate third party credit services
provider is required and shall be obtained by Nova for each individual credit
sale on a third party credit plan and the authorization number, Customer(s)'s
full account number, expiry date, Customer(s)'s name, address and phone number
shall be shown;
16
17
(c) no part of the carrying or interest charge which may be levied by Sears in
connection with any credit sale on a Sears regularly established credit plan
shall be payable to or credited in any way to Nova;
(d) it shall be responsible for and charged with any losses on any credit sale
for which the proper approval procedures have not been followed; and
(e) it shall comply with all provisions of federal, provincial and territorial
laws governing credit sales and their solicitation, including but not limited to
provisions dealing with disclosures to Customer(s), finance charges and the
like.
11.5 For sales generated through the Free Standing Retail Format, the Direct
Marketing Retail Format and the Internet Retail Marketing Format operated from a
Nova provided facility, Nova may accept payment from Customer(s) in cash, on
debit card, or in the form of cheques or money orders made payable to Nova, and
Nova agrees:
(a) to make certain that all cheques are properly completed with the current
date, the correct amount (in both locations), Customer(s)'s address, telephone
number and Customer(s)'s signature;
(b) that cheques or money orders made out to Nova shall be the exclusive
responsibility of Nova and Sears shall have no liability with respect thereto.
Sears Commission shall not be reduced as a result of the non payment of such
cheques upon presentation to the financial institution on which it is drawn;
(c) that it shall make whatever effort it deems reasonable to collect on such
cheques.
12.0 NOVA'S MANAGEMENT SERVICES RESPONSIBILITIES TO SEARS UNDER THIS AGREEMENT
12.1 NOVA OPERATIONS MANUAL
(a) Nova to Prepare Nova Operations Manual.
Nova shall prepare the Nova Operations Manual and submit it to Sears for
approval. The Nova Operations Manual shall include, but not be limited to, all
standard forms to be used by Nova and Licensee(s) and the processes to be
followed by Nova and Licensee(s) in the operation and provision of the Retail
Services with respect to:
i) the proper use and protection of the Trade Xxxx;
ii) the quality and standards of performance in the provision of the Retail
Services;
iii) the compliance with all federal, provincial, territorial and municipal laws
and regulations including but not limited to those regarding product and
services offered for sale, and employment;
iv) the form, content and delivery of Weekly Sales Reports and Nova's and
Licensee(s) books, records and financial statement;
v) presentation, advertising and promotion, including but not limited to, sales
and marketing methods and standards;
vi) the terms and conditions applicable to purchases from approved suppliers;
17
18
vii) the payment of any costs incurred on behalf of Nova and the Licensee(s) by
Sears and their own payment of supplier invoices;
viii) the processing of credit sales through Sears credit facilities;
ix) the processing of cash, cheque, money order, debit card or any third party
credit card sales and the financial responsibilities of Nova and the Licensee(s)
in respect to these methods of payment;
x) the Sears Commission, Nova's Commission, the Marketing Levy, and any other
amounts payable by the Licensee(s) to Sears pursuant to the Operating License
Agreement or to Nova pursuant to the Nova License Agreement;
xi) Sears policies and Nova's and Licensee(s) responsibilities to address
Customer complaints;
xii) the form and content of the landlord acknowledgment required by Section
20.11 of the Operating License Agreement;
xiii) Nova's employee and the Licensee(s)' employee discount at Sears and Sears
Associate discount referenced in Sections 18.12 and 18.13 of the Operating
License Agreement;
xiv) the insurance coverage required as referenced in Clause 29.0 of the
Operating License Agreement;
xv) all such other forms, directions, procedures, standards or operating matters
as Sears in its sole discretion may deem appropriate.
(b) Nova to Revise Nova Operations Manual.
Nova shall revise the Nova Operations Manual to incorporate revisions and
updates, as often as required to ensure the Nova Operations Manual is
consistently up to date, or as often as may be required by Sears, and in any
event at least once annually. All such revisions shall be subject to Sears prior
approval.
(c) Nova to Provide a Nova Operations Manual To Licensee(s). Nova shall provide
Sears and each Licensee(s) with one free copy of the Nova Operations Manual and
all revisions thereto in a timely manner.
12.2 RECRUITMENT OF LICENSEE(S)
(a) Recruitment of Qualified Licensee(s).
Based upon Sears requirements, and Nova's own ability to establish, operate and
provide the Retail Services, Nova shall identify and recommend to Sears, for
approval, appropriate, qualified, licensed, staffed, capitalized and equipped
independent third party private ownership incorporated companies, holding a
valid and subsistent Nova License Agreement, who are interested in establishing
and operating a Licensed Department(s) for the provision of the Retail Services
in Designated Facility(s) in Designated Market(s) (a "Potential Licensee(s)").
(b) Application by Potential Licensee(s).
With respect to each Potential Licensee(s), Nova shall provide to Sears, for its
approval, a completed application in the form prescribed by Sears including but
not limited to:
18
19
i) copies of the constating documents including Articles of Incorporation of the
Potential Licensee(s) and any amendments thereto;
ii) financial statements of the Potential Licensee(s) including income statement
and balance sheet for the current and past three years in the case of a
currently operating company;
iii) current statement of financial worth of the principal owner of the
Potential Licensee(s);
iv) security check on the principal owner of the Potential Licensee(s);
v) current certificate of clearance or equivalent document under the applicable
workers' compensation, workplace safety and insurance legislation or equivalent
legislation in the relevant province or territory of the Potential Licensee(s)
in the case of a currently operating company;
vi) statement of gross sales and net sales and purchases by product category for
the current and past three (3) fiscal years of the Potential Licensee(s) in the
case of an operating company; and
vii) Potential License(s) credit rating report;
viii) Fully signed and executed Nova License Agreement between the Potential
Licensee(s) and Nova.
(c) Preparation of Business Plan.
Nova and the Potential Licensee shall together prepare and provide to Sears
together with each Potential Licensee(s) application, a business plan in the
form previously approved by Sears. If said application is approved by Sears,
Nova, with Licensee(s) assistance and approval, shall update the business plan
at least once annually or more often as may be reasonably requested by Sears.
(d) Completion of Impact Study.
When the area of the market in which a Potential Licensee(s) is proposed to
operate and provide the Retail Services is within five (5) kilometers of an
existing Licensed Department(s) either in an existing Sears retail store or in a
Designated Facility(s), Nova shall prepare and submit to Sears an impact study
in the form previously approved by Sears, together with the application by a
Potential Licensee(s).
(e) Costs to Licensee(s) for Nova's services in the Preparation of the
Application, initial training of Trainee(s) and the initial Licensed
Department(s) presentation setup.
i) Nova shall provide to the Potential Licensee(s) a written estimate of the
costs that Nova will charge, upon approval of the application by Sears, to the
Licensee(s) for the assistance provided by Nova in the preparation of the
Licensee(s)'s complete application, for the initial mandatory training required
to be provided by Nova to the Licensee(s) and Trainees and for any expenses
incurred by Nova for assistance provided by Nova in the initial merchandise and
fixture set up of any Licensed Department(s). Such estimates shall be reviewed
by Sears. The written estimate shall be the maximum that may be charged to the
Licensee(s) for all costs incurred by Nova for these services and shall reflect
the actual costs incurred by Nova in the provision of these services. It is
further understood by Sears and acknowledged by Nova that no other fees or
charges will be levied or be expected to be paid by the Licensee(s) to Nova for
any services provided by Nova in the preparation
19
20
and presentation of the application or the initial training and physical set up
of the Licensed Department(s).
ii) Nova acknowledges that in the event of a rejection of a Potential
Licensee(s) application by Sears that no charges will be levied nor will any
payment be expected or solicited from the rejected Potential Licensee(s), nor
from Sears, for the services provided by Nova to the Potential Licensee(s) in
the preparation, submission and presentation of the application.
(f) Sears Sole Discretion re Approval of Applications.
(i) Nova agrees that Sears may, in its sole discretion, either approve or reject
any application by a Potential Licensee(s) for any reason whatsoever. Sears
shall give written notice to Nova as to whether Sears approves or rejects an
application and Sears shall not be deemed to have approved or rejected any
application in the absence of such written notice. Sears shall have no financial
responsibility to Nova for any costs incurred for the preparation or submission
of an application or for any costs incurred by Nova as a result of Sears
rejection of an application.
Prior to submission of an application to Sears, Nova shall ensure that the
Potential Licensee(s) acknowledge in writing that the completion of an
application does not in any way obligate Sears to approve a Potential
Licensee(s) to operate and provide the Retail Services and that Sears shall have
no financial responsibility to the Potential Licensee(s) for any costs incurred
by the Potential Licensee(s) for the preparation or submission of an
application.
(g) Operating License Agreement to be Executed.
Nova shall ensure that no Potential Licensee(s) is permitted to provide the
Retail Services, or to advise third parties that it will be doing so, until
Sears has approved the Potential Licensee(s) to operate and provide the Retail
Services and an Operating License Agreement has been duly executed by Sears and
delivered by all parties thereto.
12.3 TRAINING OF LICENSEE(S)
(a) Training of Licensee(s).
Upon execution and delivery of an Operating License Agreement by all parties
thereto, Nova shall provide to each of the Licensee(s) officers, directors,
shareholders and employees designated by Licensee (collectively, "Trainees" and
individually, a "Trainee"), thorough training in all of the procedures,
standards and systems which the Licensee(s) is required to use and adhere to in
the provision of the Retail Services in a Licensed Department(s), including but
not limited to the Operating License Agreement, the Nova License Agreement, the
Nova Operations Manual, the computerized business systems, use and protection of
the Trade Xxxx, the Retail Services approved suppliers, merchandising,
advertising, selling skills, business administration and loss prevention.
(b) Nova to Ensure Understanding and Acknowledgment by Licensee(s).
Nova shall ensure that, at the completion of training, each Trainee thoroughly
understands and specifically acknowledges to Nova and Sears in writing that they
have received complete training and thoroughly understand each and every aspect
of the Licensee(s) obligations and rights under the Operating License Agreement,
the Nova License Agreement and the Nova Operations Manual,
20
21
including specific acknowledgment that they understand the Licensee(s)
obligations and any limitations on the Licensee(s) rights with respect to:
i) the Trade Xxxx in Clause 3.0 of the Operating License Agreement;
ii) the Commission and Fees in Sections 8.1, Subsections (a) and (b) and Section
8.3 of the Operating License Agreement;
iii) Nova's Commission in Section 9.1 of the Operating License Agreement;
iv) the Marketing Levy in Section 14.6 of the Operating License Agreement;
v) the inurement of all goodwill generated by the provision of the Retail
Services under the Trade Xxxx to Sears in Section 3.13 and Section 16.1 of the
Operating License Agreement;
vi) the noncompetitive covenant of the Licensee(s) in Section 27.8 of the
Operating License Agreement;
vii) confidentiality of business and Customer information in Clause 21.0 of the
Operating License Agreement;
viii) the requirement of the Licensee(s) to offer for sale only approved product
from only approved suppliers in Section 12.2 of the Operating License Agreement
and the required terms and conditions of purchases in the Nova Operations Manual
and the Nova License Agreement;
ix) the requirement of the Licensee(s) to obtain an acknowledgment of employment
from each employee in Section 18.10 of the Operating License Agreement;
x) Sears policy of "Satisfaction or Money Refunded" and resolution of Customer
complaints in Clause 13.3 of the Operating License Agreement;
xi) the automatic termination of the Operating License Agreement upon the
transfer or attempt to transfer the ownership of the Licensee(s) or the attempt
to transfer any responsibilities to any third parties for the provision of the
Retail Services in Section 25.1 Subsections (a), (b) and (c) of the Operating
License Agreement;
xii) Sears right to terminate the Operating License Agreement for failure of
Licensee(s) to meet the Expected Performance Level in Section 25.1 Subsection
(d) of the Operating License Agreement.
(c) Nova to Report to Sears on Licensee(s) Training.
i) Nova shall report to Sears upon completion of training of each new Trainee,
which report shall include a list of all Licensee(s) and respective Trainees and
confirmation of the duration and content of the training of each Trainee
together with copies of the written acknowledgments of each Trainee within one
month of the start of employment of respective Trainee by Licensee(s);
ii) Sears acknowledges that Nova will charge the actual costs incurred by Nova
to provide such training to the applicable Licensee(s), such costs will not
exceed the estimate provided to the Potential Licensee(s) and Sears, in writing,
prior to the training being provided.
(d) Annual Training and Conferences.
21
22
Nova shall provide to the relevant employees of each Licensee(s), at least once
annually, refresher training programs and/or conferences, or as otherwise
required by Sears. Sears acknowledges that Nova may charge a reasonable fee for
such programs and/or conferences to the applicable Licensee(s), which shall not
exceed the actual costs incurred by Nova for the provision of these services.
12.4 SYSTEMS, STANDARDS AND INFORMATION TECHNOLOGY
(a) Nova to Develop, Maintain and Monitor.
Nova, as provided under the Nova License Agreement, shall develop, maintain,
monitor, upgrade and provide to Licensee(s), all the systems, standards,
processes, procedures and reports including but not limited to information
technology, for the capture and reporting of sales, for purchasing systems, for
inventory reporting and control, for business accounting and record keeping and
for the creation and preservation of records and for Customer data, to be used
in the provision of the Retail Services. It is understood by Sears and
acknowledged by Nova that the cost of development, maintenance, monitoring,
upgrading and provision to Licensee(s) of all such services shall be the sole
responsibility of Nova and the Licensee's payment for these services has been
considered in the establishment of Nova's Commission and shall not be a separate
expense charged to the Licensee(s) or Sears.
12.5 CONTINUING SUPPORT AND MONITORING OF LICENSEES
(a) Nova to Support Licensee(s).
Nova shall provide to Licensee(s) continuing support in all aspects of the
establishment, operation and provision of the Retail Services continuously,
throughout the term of this Agreement, including but not limited to responding
to Licensee(s) requests for direction, training, advice and assistance.
(b) Nova to Monitor Licensee(s).
Nova shall closely monitor and supervise the establishment, operation and
provision of the Retail Services by each Licensee(s) continuously throughout the
term of this Agreement, and shall take all appropriate action to ensure
compliance by Licensee(s) with all of the terms, provisions and conditions of
the Operating License Agreement, the Nova Operations Manual and the Nova License
Agreement.
(c) Nova to Ensure and Provide Proof of Compliance by Licensee(s).
Nova shall request from all Licensee(s), collect and provide to Sears any and
all documentation required under the terms and conditions of the Operating
License Agreement, Nova License Agreement and the Nova Operation Manual. If a
Licensee(s) fails to comply with any of the terms, provisions or conditions of
the Operating License Agreement, Nova License Agreement or any of the
requirements outlined in the Nova Operations Manual, Nova shall forthwith:
i) notify Sears in writing, setting out the nature of the noncompliance and the
actions Nova is taking to ensure that the Licensee(s) rectifies same;
ii) unless otherwise directed by Sears, notify the Licensee(s) in writing,
setting out in specific terms the nature of the noncompliance and the actions
which the Licensee(s) is required to take to rectify same;
22
23
iii) take all other appropriate actions to ensure that the Licensee(s) rectifies
the noncompliance including such actions as Sears may direct; and,
iv) inform Sears on a continuing and timely basis of the results of Nova's and
Licensee(s)'s actions.
(d) Termination of an Operating License Agreement.
Should a Licensee(s) fail to rectify any noncompliance with the Operating
License Agreement in a timely and effective manner and to Sears satisfaction,
Nova shall, upon Sears issuance of a termination notice to a Licensee(s) take
all actions necessary, at Nova's sole expense, to ensure compliance with Section
27.0 of the Operating License Agreement by a terminated Licensee(s).
(e) Nova's Acknowledgment.
Nova acknowledges and agrees:
i) that Sears has the right to terminate, in its sole discretion, any
Operating License Agreement in accordance with the terms thereof; and
ii) that Nova shall have no claim whatsoever against Sears or Owner, and Nova
hereby unconditionally and irrevocably waives any claim it may otherwise have,
in respect of any termination of an Operating License Agreement, for any reason.
(f) Audit of Licensee(s) Books and Records by Nova.
Nova shall review and audit the books and records of any Licensee(s) forthwith
upon the request of Sears and shall provide to Sears a complete and confidential
report of such audit in a form acceptable to Sears.
(g) Examination of Licensee(s) Retail Premises, etc. by Nova.
i) Nova shall, at least twice per fiscal year, and upon reasonable notice to
each Licensee(s), examine the vehicles, equipment, fixtures, merchandise,
merchandise presentation and premises occupied for the provision of the Retail
Services of each Licensee(s) during the Designated Store(s) Normal Business
Hours or the Dedicated Facility(s) Normal Business Hours of the Licensee(s), and
inspect all aspects of services provided to Customer(s), to ensure compliance
with the Operating License Agreement, the Nova Operations Manual and the Nova
License Agreement.
ii) Nova shall provide to Sears written reports of all such examinations and
inspections, together with the actions taken by Nova to ensure that the
Licensee(s) correct any deficiencies, and the results of such actions.
12.6 PROCUREMENT AND SUPPLIERS
(a) Nova's Responsibilities for Procurement.
i) Nova shall establish and maintain a Sears approved listing of Health Food And
Fitness Products And Services and an effective procurement process for Health
Food And Fitness Products And Services to be adhered to by the Licensee(s).
23
24
ii) Nova shall identify appropriate suppliers of Health Food And Fitness
Products And Services. Nova shall negotiate the terms and conditions of the
purchase by Licensee(s) of Sears approved and listed Health Food And Fitness
Products And Services with such suppliers, which terms and conditions shall
reflect the combined buying power of the Licensee(s) and appropriate rebates and
discounts.
iii) Nova shall disclose to Sears and all Licensee(s) all buying terms,
discounts, rebates, advertising allowances and any other cost advantages
negotiated with all approved and listed suppliers. The income generated from the
negotiated advertising rebates and/or advertising subsidies shall be considered
moneys to be invested as advertising moneys pursuant to Section 12.8,
Subsections (g) and (h) to promote Health Food And Fitness Products And Services
to Customer(s). Discounts on the cost of goods negotiated by Nova, on behalf of
Nova and the Licensee(s), to promote approved product at reduced selling prices
or to increase profit margins shall be passed on to the Licensee(s), in their
entirety by Nova. Volume rebates negotiated by Nova shall be considered part of
Nova's operating revenues and Nova shall not be required by this Agreement to
distribute any volume rebate discounts to Sears or to the Licensee(s).
(b) Standards of Quality and Performance.
Nova agrees in the selection of suppliers and the listing of Sears approved
products and services which can be purchased and offered for sale by the
Licensee(s) as Health Food And Fitness Products And Services, Nova shall observe
no less than the minimum standards of quality and performance of products and
services as set forth and in compliance with all applicable legislative,
regulatory and industry requirements and Sears standards. Sears or its designate
shall have the right, as licensor and Attorney-in-fact of Owner, to inspect all
aspects of the Health Food And Fitness Products And Services and the provision
the Retail Services by Licensee(s) from time to time to ensure that the quality
and performance of such products and services meets its approval.
(c) Nova's Purchases.
i) Nova hereby agrees that all purchases and contracts made or entered into by
it in connection with the establishment, operation and provision the Retail
Services and the operation and provision of Management Services pursuant to this
Agreement shall be made solely in the name of Nova and under no circumstances
shall any legal document, purchase order, letterhead or other document, expense
or obligation of any kind whatsoever be identified with Sears or the Owner.
ii) Under no circumstances will Nova make any purchases or incur any obligation
or expense of any kind whatsoever in the name of, or on behalf of, Sears or the
Owner.
iii) Prior to making any purchases or entering into any agreements involving the
establishment, operation and provision of the Retail Services and the provision
of Management Services, Nova shall inform the vendor of the product or service
being purchased, by written notice to the vendor, with a copy to Sears, that
Sears is not obligated in any way for, or as a result of, any purchases made or
agreements entered into by Nova.
iv) Prior to listing any approved Health Food And Fitness Products And Services
for the purchase and resale by Licensee(s), Nova shall inform the vendor of the
product or service being listed that Sears is not obligated in any way for, or
as a result of, any listing or purchase made by the Licensee(s).
v) Nova shall promptly pay all obligations incurred in connection with the
establishment, operation and provision of the Retail Services and the operation
and provision of the Management Services,
24
25
including but not limited to those for merchandise, product, labour, material
and services and will hold Sears and the Owner free and harmless from any and
all claims, cost or liabilities incurred in the establishment, conduct,
operation and provision of the Retail Services and the provision of the
Management Services.
vi) In the event Nova fails to comply, in whole or in part, with Section 12.6
Subsection (c) items i), ii), iii) and iv) of this Agreement, Sears may, in
addition to any other remedies afforded it under this Agreement, request and
Nova shall, within thirty (30) days of a written request, furnish Sears with the
names and addresses of all parties from whom it purchases merchandise, products
and/or services for sale or use under this Agreement, as well as the name and
addresses of all other parties with whom it may have any business or contractual
relationships in connection with the conduct, operation and provision of the
Services under this Agreement.
vii) Nova agrees that in the event a supplier of Nova makes representation and
provides verifiable documentation to Sears of an amount owing to said supplier
by Nova incurred in the establishment, operation and provision of the Retail
Services and/or the provision of the Management Services, and Nova has not met
the agreed terms of the payment, Sears may, after discussion with Nova, withhold
the amount of any such invoice from any settlement due and owing to Nova until
such time as Nova provides proof of payment or documentation from the supplier
that the supplier waives any claim it may believe it has against Sears for
payment of unpaid invoices.
viii) In the event such invoices are not paid and either the Owner or Sears is
held legally responsible for any reason, or in the event that the refusal or
inability of Nova to pay such invoices, incurred through the establishment,
operation and provision of the Retail Services and/or the operation and
provision of the Management Services, is in Sears sole opinion, detrimental to
Sears reputation, Sears, after discussion with Nova, may pay such invoices and
deduct such payments from any settlement due and owing Nova together with any
expenses paid by Sears to discharge such invoice and/or lien plus Sears
administrative costs and any legal fees and disbursements.
12.7 CUSTOMER AND/OR LICENSEE COMPLAINT HANDLING
(a) Nova shall investigate all Customer(s) complaints received by it or
forwarded to it by Licensee(s) and/or Sears and shall, acting on Sears and the
Licensee(s) behalf settle the Customer(s) complaint in accordance with Sears
Customer Service Policy of Satisfaction Guaranteed or Money Refunded.
(b) Nova shall maintain a file recording all Customer(s) complaints and shall
produce a monthly report detailing the Customer(s), the complaint and the manner
in which each complaint was addressed and resolved. The individual Customer(s)
files shall be made available to Sears, upon request, and shall include a record
of any adjustments made with the Customer(s).
(c) Nova acknowledges Sears right, at Sears sole discretion, after discussions
with Nova or Nova's employees, to intervene in any situation in which the
resolution of any complaint or controversy is unsatisfactory to a Customer(s),
and Nova shall follow Sears direction and instructions regarding implementation
of a resolution.
(d) Nova acknowledges Sears right, at Sears sole discretion, after discussion
with Nova or Nova's employees, to intervene in any situation in which a
resolution of a complaint made by a Licensee(s) against Nova has not been
addressed by Nova in accordance with the Nova License Agreement, and Nova shall
follow Sears direction and instructions regarding implementation of a resolution
in accordance with the Nova License Agreement.
25
26
12.8 ADVERTISING, MARKETING AND PUBLICITY
(a) Nova shall develop, prepare and present for Sears approval, no later than
the first (1) day of June each year, or as otherwise required by Sears to meet
Sears financial planning requirements for the ensuing year, expansion plans for
the operation and provision of the Retail Services in each Designated Retail
Format, in each Designated Market(s), in each Licensed Department(s) in each
Designated Store(s) and in each Designated Facility(s) in order to grow Sears
share of the retail health food and fitness sales market.
(b) Nova shall, when required by Sears, develop and prepare floor plans and
construction drawings to Sears specifications, for the implementation and/or
refurbishment of Licensed Department(s) locations.
(c) Nova shall develop and present for Sears approval, prior to it being used,
all display materials, product training and consumer literature, signing,
fixturing and furniture that will be authorized for use in the operation and
provision of the Retail Services and the presentation and promotion of Health
Food and Fitness Products And Services in Licensed Department(s) locations.
(d) Nova shall develop and negotiate, with each Licensee(s), an agreed annual
plan for each Licensed Department(s), in each Designated Store(s) or Designated
Facility(s). The plan shall provide an acceptable to Sears, level of Net Sales
growth supported by an outline of the competitive situation, market potential,
planned promotional activity, planned changes to merchandise and/or services
offered through the operation and provision of the Retail Services and any
proposed remerchandising plans.
(e) Nova shall prepare an annual expansion of facilities plan for a proposed
number of new Licensed Department(s) in new or current Designated Store(s) or
Designated Facility(s), proposed planned expansion in each Designated Retail
Format(s) and the resulting Net Sales growth to be achieved.
(f) Nova shall present these individual and combined plans to Sears, for Sears
approval, no later than the first (1st) day of June in the year prior to the
year planned, or as otherwise required to meet Sears financial planning
requirements for the ensuing year. The combined financial Net Sales plan,
supported by the planned facilities growth and market expansion plans, for each
individual Licensed Department(s) and each Designated Retail Format(s) shall be
the yearly Expected Performance Level required of Nova under this Agreement.
(g) Nova shall prepare, for all Licensed Department(s), an annual national
advertising program based on a minimum media advertising expenditure budget of
[*****] percent ([***] %) of the annual Net Sales planned for Licensed
Departments(s). These budgeted dollars shall be the combined minimum amount
spent by Nova and the Licensee(s) on Sears approved advertising media and the
distribution of same for the promotion of the Health Food And Fitness Products
And Services offered for sale through Licensed Department(s) on an annual fiscal
calendar basis. Funding for this national advertising plan shall be composed of
[***] percent ([***] %) of all Net Sales generated by Nova through its operation
and provision of the Retail Services in Licensed Department(s), the Marketing
Levy paid by Licensee(s) to Nova, and funds generated through Nova negotiated,
supplier paid, cooperative advertising moneys. Any Nova negotiated, supplier
paid, cooperative advertising moneys over and above the [*****] percent ([***]
%) of Net Sales needed to support the minimum media advertising expenditure of
[*****] percent ([***] %) shall be used to promote the Health Food And Fitness
Products And Services provided through the Licensed Department(s).
26
* CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
27
(h) Nova shall also prepare an annual national advertising program for the
promotion and sale of the Health Food And Fitness Products And Services through
the Direct Marketing Retail Format based on a minimum media advertising
expenditure budget of [*****] percent ([***] %) of the annual Net Sales planned
for the Direct Marketing Retail Format. These budgeted dollars shall be the
minimum amount spent by Nova in the planned fiscal year, on Sears approved
Direct Marketing Retail Format media promotion of the Health Food and Fitness
Products And Services.
(i) The total yearly national advertising plan and planned expenses shall be
presented to Sears by Nova, no later than the first (1) day of June in the year
prior to the year planned, or as otherwise required to meet Sears financial
planning requirements. Such national advertising plan and planned expenses shall
have the prior approval and support of Licensee(s) before being presented to
Sears.
Nova shall be required to provide a quarterly accounting to Sears and all
Licensee(s) of all the Marketing Levy funds collected in addition to all funds
collected from suppliers for cooperative subsidized advertising and all media
expenses incurred that are charged to these revenues as part of the national
advertising expenditure.
(k) Nova covenants and agrees to pay any and all national advertising expenses
incurred by it in the promotion of Health Food And Fitness Products And Services
from the total of the funds collected through the Marketing Levy plus the funds
collect from suppliers for subsidized advertising, to promote the Health Food
And Fitness Products And Services in accordance with the provisions of this
Agreement.
(l) Nova agrees, in the event the annual total of the Marketing Levy and the
funds collected from the suppliers for subsidized advertising is insufficient to
retire the advertising costs incurred on an annual basis, Nova shall immediately
pay any shortfall to advertising suppliers. Neither Sears nor any Licensee(s)
shall in any way be held accountable for any such shortfall.
(m) For the purposes of defining the minimum media advertising expenditure it is
agreed that the payroll spent by Nova in the preparation, the actual preparation
costs and/or any contractual arrangement cost for the preparation of art work
and type for any media advertising are considered an expense to Nova and are not
considered media advertising expense in the context of the minimum media
advertising expenditure budget in Section 12.8 Subsections (g) and (h). The
expense incurred by Nova to print and distribute in store regular and
promotional signing, flyer advertising, produce and air electronic media
advertising, and the purchase of any media advertising space shall be considered
media advertising and shall be costed as part of the advertising expense
included in the minimum media advertising expense plan.
(n) Nova shall not market, advertise or offer for sale any promotion, plan or
package which requires a Customer(s) to prepay for a product and/or service that
is intended to be delivered to the Customer(s) at a future date.
(o) Nova shall not offer or promote any Customer(s) program which may provide
Customer(s) future benefits based on a current Customer(s) purchase or
commitment without the prior written approval of Sears, such approval may be
unreasonably and arbitrarily withheld.
(p) Nova shall prepare and present to Sears for approval, pursuant to Section
12.8, Subsection (r), and upon written approval by Sears, produce and distribute
all national advertising promotions in accordance with the yearly approved plan.
27
* CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
28
(q) At Licensee(s) request, Nova shall prepare, and upon written approval from
Sears, provide all advertising materials required for Licensee(s)'s individual
local advertising programs. Such advertising material shall be provided to
Licensee(s) by Nova as part of the Management Services provided by Nova to the
Licensee(s) and no payment for such preparation and provision of these
advertising materials shall be required from the Licensee(s); however the
Licensee(s) shall be responsible for all media costs associated with the placing
and running of such advertising programs in their Designated Market(s) and shall
be a marketing expense to the Licensee(s) in addition to the Marketing Levy and
such expense shall not be considered as part of the minimum national advertising
expenditure pursuant to Section 12.8, Subsection (g).
(r) All signs, advertising copy, including, but not limited to, sales brochures,
newspaper advertisements, yellow pages advertisements, radio and television
commercials, and all sales promotional plans and devices, including reward
programs, coupons and contests, which may be utilized by Nova and/or Licensee(s)
in order to advertise and actively promote the Health Food And Fitness Products
And Services, shall first be submitted to Sears National Xxxxxxxxx Xxxxxxxxxx
000X, Xxxxxxx and Sears Licensed Businesses, Department 895A for approval. Nova
agrees that it will not issue any such advertising material or conduct any such
sales promotional plan or device without such prior approval.
(s) Sears shall have the right to refuse its approval of any of the said
advertising or promotional material insofar as it may not properly use the Trade
Xxxx or insofar as it may subject Sears to: liability; loss of goodwill; damage
to Sears reputation, Customer relations or government relations; or because it
does not adhere to the requirements of any federal, provincial, territorial or
municipal legislation, regulation or ordinance governing advertising practices
or because of the failure of such advertising to conform to community or Sears
standards of good taste and honest dealing.
(t) Nova agrees that all Yellow Page advertising, if any, for the promotion of
Health Food And Fitness Products And Services shall be expensed as part of the
national advertising program, committed to and placed by Nova, through Sears
designated agent in the same way Sears places Yellow Page advertising for all
other Sears merchandise and service departments.
(u) Nova hereby agrees to reimburse Sears for all expenses, including but not
limited to advertising, incurred by Sears on behalf of Nova and requested by
Nova, within thirty (30) days after the said expense(s) are incurred by Sears.
Sears shall retain out of the following monthly settlement due and owing Nova
the amount of said expense(s) with interest, if any, due Sears.
(v) Nova will not issue any publicity or press release regarding its contractual
relations with Sears or the Owner hereunder, or regarding Nova's or Sears
activities hereunder, without obtaining from Sears National Manager, Licensed
Businesses, Department 895A, or from such other person said National Manager
shall designate, prior written approval and consent to any such release, which
approval and consent may be withheld.
(w) Nova will not utilize any telemarketing solicitation as part of its
advertising or promotional programs without obtaining specific written approval
for such telemarketing solicitation from Sears National Manager, Licensed
Businesses, Department 895A, or from such other person said National Manager
shall designate. If approved, any such telemarketing solicitation shall be
conducted only in accordance with Sears policies and procedures.
28
29
(x) Nova may establish an Internet Web site for communication with Customer(s).
The Web site must reside on the Sears web server and conform to the Licensed
Businesses on the Internet form attached hereto as Schedule "F" which must be
signed and dated as part of this Agreement. The implementation, content and
maintenance of this Web site shall be through and with the approval of Sears
Department 728, Electronic Commerce.
(y) Nova shall make reference in any print advertising of the Health Food And
Fitness Products And Services that Sears credit services are available, subject
to prior approval of Sears as outlined in Section 12.8 Subsection (r).
13.0 BOOKS, RECORDS AND AUDIT RIGHTS
13.1 Nova shall keep and maintain books and records for the establishment,
operation and provision of the Retail Services and the Management Services in
accordance with generally accepted accounting principles which accurately
reflect the Gross and Net Sales revenue, expenses, accounts payable, accounts
receivable, balance and income statements of Nova. Sears shall have the right,
at any reasonable time, and for a period of two (2) years after the expiration
or any other termination of this Agreement, to review and audit the books and
records of Nova to determine compliance with this Agreement.
13.2 Nova shall maintain separate books and records in accordance with generally
accepted accounting principles as these books relate to the Marketing Levy and
shall complete a quarterly report ("Management Quarterly Report"), not later
than the end of the next fiscal quarter, detailing the income from the Marketing
Levy on a quarterly and accumulated basis together with detailed source
subsidies and the net media purchase and distribution expenses incurred in each
Designated Market(s) in the advertising of the Health Food and Fitness Products
And Services. An accounting of the net income and the net expenditures shall be
provided to Sears and each Licensee(s) quarterly.
13.3 Nova shall, at Nova's expense, provide to Sears or its representative for
inspection or auditing, such forms, stock sheets, reports, records, financial
statements and other information as Sears may reasonably require, within forty
eight (48) hours of a request from Sears and at such reasonable times as Sears
may specify in writing. Nova shall make such financial and other information
available at such locations as Sears may request, and shall afford Sears or its
representative full and free access thereto during Management Services Normal
Business Hours. Sears or its representative shall have the right to communicate
freely with Licensee's employees, and to make extracts from, and copies of all
such information.
13.4 If an inspection or audit determines that income generated as advertising
subsidies from Health Food And Fitness Products And Services suppliers or from
the Marketing Levy has been understated or that media advertising expenses
incurred have been overstated by Nova, Nova shall immediately put in place a
marketing program to promote Health Food And Fitness Products And Services,
approved by the Licensee(s) and Sears.
13.5 If the required Commission payments or reports are delinquent, or if an
inspection or audit should reveal that Gross and/or Net Sales generated from the
sale of Health Food And Fitness Products And Services have been understated in
any Weekly Sales Report of Licensed Department(s) located in Designated
Facility(s) or if Net Sales have not been processed and recorded through the
Sears point of sale system in Licensed Department(s) located in Designated
Store(s), or if Net Sales generated through the Direct Marketing Retail Format,
or if Net Sales generated through the Internet
29
30
Marketing Retail Format have not been reported by Nova from Nova operated Retail
Services then Nova shall immediately pay to Sears the amount overdue,
understated or unreported.
13.6 If an inspection or audit discloses an understatement of Net Sales of two
and one half percent (2.5%) or more, or the Marketing Levy or source advertising
subsidies have been understated by two and one half percent (2.5%) or more, or
the media advertising expenses have been overstated by more than two and one
half (2.5%) then Nova shall in addition to immediate payment of such understated
Commission amounts, reimburse Sears for all expenses connected with the
inspection or audit including but not limited to travel expenses and reasonable
accounting and legal fees. The foregoing remedies shall be in addition to any
other rights Sears may have and shall survive the termination or expiration of
this Agreement.
13.7 Nova shall permit Sears, at any time during Designated Store(s), Dedicated
Facility(s), Direct Marketing and Management Services Normal Business Hours to
examine the records, equipment and the premises of the Nova operated Licensed
Department(s), the Nova offices and any other premises, facilities or equipment
used by Nova for the establishment, operation and provision of the Retail and
Management Services, and to confer with managers and employees of Nova to ensure
compliance with this Agreement.
14.0 GOODWILL
14.1 All goodwill in, or generated by the establishment, operation and provision
of the Management Services and the Retail Services, and the sale of Health Food
And Fitness Products And Services under the Trade Xxxx, shall enure to the sole
and exclusive benefit of Sears and shall reside in the Trade Xxxx. Nova shall
not ever have any right, title or interest in said goodwill. Nova hereby
unconditionally and irrevocably transfers and assigns to Sears any and all
rights it may have or may claim to have, now and in the future, to said
goodwill.
15.0 RELATIONSHIP - INDEPENDENT CONTRACTOR
15.1 It is intended that Nova shall operate in the capacity of an independent
contractor, and that nothing contained in or done pursuant to this Agreement is
to be construed as creating a partnership, agency or joint venture between or
among any of the parties to this Agreement and, except as may be otherwise
expressly provided in this Agreement, no party shall become bound by any
conduct, representation, act or omission of any other party.
15.2 Nova shall not do any act or make any statement that may imply that Sears
in any manner owns or controls Nova or operates or provides the Retail Services
or the Management Services.
16.0 EMPLOYEES AND EMPLOYEE DISCOUNTS
16.1 Nova shall at all times staff the operation for the provision of the Retail
Services and the Management Services with sufficient qualified personnel who
shall demonstrate the morals, safe work habits and attitudes necessary to
produce and maintain good relations with the Licensee(s) and with Customer(s).
16.2 Nova shall not authorize any person other than its own employees to perform
any of Nova's obligations under this Agreement on Nova's behalf without the
prior written consent of Sears.
30
31
16.3 Nova shall diligently supervise its employees in order to protect and
enhance the reputation and goodwill of Sears and Owner and to develop and
maintain high and uniform standards for all aspects of the establishment,
operation and provision of the Management Services and the Retail Services.
16.4 Nova shall have no authority to employ persons on behalf of Sears and no
employees of Nova shall be considered to be employees or agents of Sears, said
employees at all times remaining employees of Nova who shall have the sole and
exclusive control over labour and employee relations policies and policies
relating to wages, hours of work, working conditions, and conditions of its
employees.
16.5 Nova shall have the sole and exclusive right to hire, transfer, suspend,
lay off, recall, promote, assign, discipline, adjust grievances and discharge
said employees, provided, however, that at any time Sears so requests, Nova will
transfer from the premises operated for the provision of the Retail Services and
the Management Services any employee who is objectionable to Sears for reasons
of safety or security of Customer(s), Licensee(s) employees, Sears employees or
merchandise, or impairment of Sears reputation, goodwill or Customer(s) or
Licensee(s) relations. If Sears objects to any such employee, and Nova refuses
to transfer such employee and the conditions which caused Sears to object
continue, Sears shall have the right but not the obligation to terminate this
Agreement by giving thirty (30) days notice in writing to Nova.
16.6 Nova shall have complete responsibility for all salaries and other
compensation of all of its employees and will make all necessary salary
deductions and withholdings from said employees' salaries and other
compensation, and Nova shall have full responsibility for the payment of any and
all contributions, taxes and assessments including any applicable to Workers'
Compensation legislation and agrees to meet all other requirements of the
Employment Insurance and federal, provincial and territorial withholding of
income tax laws on all salary and other compensation of said employees.
16.7 Nova shall comply with all federal, provincial, territorial and local laws
and regulations regarding but not limited to compensation, hours of work, and
other laws and regulations regarding minimum compensation, overtime and equal
opportunities for employment.
16.8 Nova and its employees shall comply with Sears general rules and
regulations which are from time to time in effect in a Designated Store(s)
relating to the conduct of Nova and its employees on the said store premises.
16.9 Nova and its employees while establishing, operating and providing the
Retail Services and the Management Services under this Agreement, shall comply
with any and all federal, provincial, territorial and local laws, regulations
and ordinances and industry standards applicable to such operations and to the
products sold in such operations.
16.10 Nova shall prepare and have all its employees who are engaged in the
establishment, operation and provision of the Retail Services and the Management
Services sign an Understanding of Employment form, a sample of which is attached
as Schedule "E" hereto, such form to be kept on file and available to Sears upon
request, with a copy provided to each employee.
16.11 Nova shall protect, defend, indemnify and hold Sears harmless, from and
against all claims, actions or costs (including legal costs, retroactive wages,
awards, damages and penaltie(s) made against Sears including but not limited to
any claims, actions or costs;
31
32
(a) by any employee of Nova and/or Licensee(s) for salaries and wages, fringe
benefits, compensation, arbitration, severance or relocation costs; and/or,
(b) by any employee of Nova and/or Licensee(s) under the Workers' Compensation
Act (Ontario) or equivalent legislation in any province; and/or,
(c) by any employee of Nova and/or Licensee(s) arising out of any actual or
alleged negligence, act or omission of any party, including Sears, except where
said act or omission by Sears is the sole cause of said claim; and/or,
(d) by any employee of Nova and/or Licensee(s) arising out of employment or
termination of employment for any reason whatsoever.
16.12 Sears agrees to grant a discount of fifteen percent (15%) on all purchases
made from Sears by employees of Nova and/or the Licensee(s) working on a regular
scheduled basis and reporting to work in a Licensed Department(s) located in a
Designated Store(s) who's employment is solely dedicated to the operation and
provision of the Retail Services in such Designated Store(s). Such discount
shall be allowed under the terms and conditions as specified by Sears in the
Sears Personnel Manual, Employee Discounts section (Paragraph 4 - 6 ) and in any
updates or revisions thereto.
16.13 Nova shall grant all Sears employees a discount of fifteen percent (15%),
in addition to all approved applicable discounts offered to Customer(s) who are
not Sears employees, on all Health Food And Fitness Products And Services
purchased by Sears employees.
17.0 LOCATION, UTILITIES, MAINTENANCE OF NOVA'S HEAD OFFICE(S), FACILITIES,
EQUIPMENT, SYSTEMS AND VEHICLES
17.1 Nova shall provide and maintain, at its sole expense, head office
facilities in Canadian location(s) from which to operate and provide the
Management Services and Sears shall not have any responsibility or liability
relating to said location(s) or the operation thereof.
17.2 Unless authorized in writing by Sears or Sears designee, nothing on the
outside of the premises of said location(s), visible to the public, shall make
any reference to the Trade Xxxx or the relationship created under this
Agreement.
17.3 Unless previously waived by Sears, Nova shall, forthwith upon execution of
this Agreement, provide to Sears a written acknowledgment executed by the
landlord of the Management Services premises, in which the landlord acknowledges
to Nova and Sears that the landlord shall not seek recourse against Sears or any
property of Sears which may be located in the Management Services premises in
connection with any matters relevant to the relationship between Nova and the
landlord.
17.4 Nova, at its sole expense, shall provide all vehicles, tools and equipment,
Sears approved computer software and hardware, supplies and other items as may
be necessary and proper for the establishment and ongoing operation and
provision of Management Services.
17.5 All vehicles, tools and equipment used in the establishment and ongoing
operation and provision of Management Services shall be the responsibility of
Nova for all purposes. Nova shall be solely responsible for registration,
licensing and insuring of same and for the payment of any and all taxes and
assessments thereon and same shall be an expense of Nova. Sears shall have no
responsibility for any expense in connection with the purchase, lease,
maintenance, use or misuse of
32
33
same, said expenses being the sole responsibility of Nova. Neither Sears nor
Licensee(s) shall be obligated to purchase or compensate Nova for any vehicle,
equipment, software, supplies, products or merchandise or any other thing upon
expiration or other termination of this Agreement or otherwise.
17.6 Nova shall keep all vehicles and equipment used in the establishment and
ongoing operation and provision of Management Services in a clean and
well-maintained condition at all times and all software and equipment shall be
updated as required and maintained in good working order and repair.
17.7 Nova shall use any and all forms and materials required by Sears in the
establishment and ongoing operation and provision of Management Services. Nova
shall use any equipment, such as, but not limited to, computers and software
designed and/or provided by Sears for the purpose of transmitting funds,
recording transactions, accounting for merchandise and monies, or as otherwise
required by Sears. Nothing in this Section 17.7 shall obligate Sears to provide
any such forms, materials or equipment to Nova.
17.8 All telephone and facsimile numbers used in connection with the
establishment, and ongoing operation and provision of the Management Services
shall be dedicated numbers and shall be billed to Nova but shall be deemed to be
the exclusive property of Sears.
17.9 Upon expiration or termination of this Agreement for any reason, Nova shall
immediately, upon demand by Sears, cease to use such telephone numbers and shall
transfer such telephone numbers to Sears or to such party as Sears may
designate. Nova shall also notify the telephone service provider of any such
transfer and shall use its best efforts to assist Sears in an orderly transfer
of such telephone numbers.
17.10 To facilitate such transfer of telephone numbers, Nova agrees to sign a
valid undated transfer of ownership of such telephone numbers in the form set
out in Schedule "I" attached hereto, which Sears may exercise upon such
termination or expiration, at its sole discretion, without liability to Nova.
18.0 FACILITIES, EQUIPMENT, SYSTEMS, UTILITIES, MAINTENANCE OF LICENSED
DEPARTMENT(S) IN DESIGNATED STORE(S)
18.1 Nova shall, at Nova's sole expense, furnish the Licensed Department(s)
located in Designated Store(s) with, and install, safe modern fixtures,
counters, showcases, shelves, equipment and furniture which are in keeping with
the Designated Store(s) appearance, which have been designed under Nova's
direction, are required under the Nova Operations Manual, and are approved for
use by Sears Department 728SP.
18.2 Nova shall, at Nova's sole expense, furnish all operating supplies,
equipment, tools, vehicles, computer hardware and computer software as required
under the Nova Operations Manual and approved by Sears for the operation and
provision of the Retail Services.
18.3 Nova shall, at Nova's sole expense, maintain all furniture, fixtures,
counters, showcases, shelves, equipment, tools and vehicles used in the
operation and provision of the Retail Services in good working order, good
repair, and update same as necessary and in keeping with Sears presentation
standards and the Nova Operations Manual.
33
34
18.4 Nova shall, at Nova's sole expense, update computer hardware and software
to support the systems and programs as required under the Nova Operation Manual,
developed under the direction of Nova and approved by Sears, to operate and
provide the Retail Services in a professional and competitive manner to
Customer(s).
18.5 All vehicles, tools and equipment used in the establishment and ongoing
operation and provision of the Retail Services in the On Premise Retail Format
shall be the responsibility of Nova for all purposes. Nova shall be solely
responsible for registration, licensing and insuring of same and for the payment
of any and all taxes and assessments thereon. Sears shall have no responsibility
for any expense in connection with the purchase, lease, maintenance, use or
misuse of same, said expenses being the sole responsibility of Nova. Sears shall
not be obligated to purchase or compensate Nova for any vehicle, equipment,
software, supplies, products or merchandise or any other thing upon expiration
or other termination of this Agreement or otherwise.
18.6 Nova shall at Sears request and at Nova's sole expense, upgrade and/or
replace furniture, fixtures and/or equipment from time to time to maintain an
appropriate overall presentation in keeping with the Designated Store(s)
presentation.
18.7 Nova shall, at Nova's sole expense, be responsible for the cost of supply,
construction and installation of all leasehold improvement to the Licensed
Department(s) located in Designated Store(s) including but not limited to:
(a) the cost to raise or lower any existing ceiling to meet the Licensed
Department(s) presentation requirements that differ from the Designated Store(s)
standard;
(b) the cost to extend, shorten, replace or move existing sprinkler systems and
heating/air conditioning ducts required by Nova in order to raise or lower the
existing store selling floor ceilings.
(c) the additional cost of, and installation costs of, non-Sears standard floor
coverings;
(d) the cost of, and installation cost of, any Licensed Department(s) specific
lighting requested by Nova, including but not limited to track lighting, spot
lighting, pot lighting, and flood lighting which is in addition to the store
standard in ceiling lighting;
(e) the cost of, and installation cost of, any additional leasehold improvements
that are requested by Nova that are particular to, and are required for, the
operation and provision of the Retail Services;
(f) the cost of, construction costs of and installation costs of all plumbing,
electrical and computer wiring, electrical connections and fixtures that are
required and requested by Nova and approved by Sears Department 728SP, for the
proper operation and provision of the Retail Services;
(g) the cost of, construction costs of and installation costs of, fixtures,
display walls including but not limited to slat or slot wall, specific trims,
decorative treatments, signing and sign holders, requested by Nova to enhance
the presentation of the Licensed Department(s);
18.8 Nova shall, at Nova's sole expense, provide all construction, electrical,
plumbing and elevation plans and drawings to Sears, in a manner and quantity
specified by Sears, for the construction of any new Licensed Department(s) and
any Licensed Department(s) being relocated or refurbished in Designated Store(s)
at the request of either Nova or Sears.
34
35
18.9 Nova shall, at Nova's sole expense, furnish and install furniture, fixtures
and equipment not specifically included in Section 18.1 hereof, so as to furnish
and equip the Licensed Department(s) located in Designated Store(s) with safe,
modern, sanitary and proper furniture, fixtures and equipment suitable for the
operation and provision of the Retail Services and the professional presentation
and sale of the Health Food And Fitness Products And Services provided that all
such leasehold improvements, furniture, fixtures and equipment shall be subject
to the written approval of Sears.
18.10 Sears shall, at Sears expense, except as set out hereunder, construct and
install the following with respect to the Licensed Department(s) located within
Designated Store(s) as required for the operation and provision of the Retail
Services:
(a) erect, finish and paint all perimeter and interior walls and doors as
requested on Licensee supplied plans. In the event that Licensee elects to
provide, at its expense, paper or vinyl wall coverings approved by Sears
Department 728SP, then Sears will, at Sears expense, apply said wall coverings
in lieu of the finish coat of paint;
(b) heating/air conditioning ducts and water sprinklers as required;
(c) a suspended ceiling at the height of, and in keeping with, the ceiling
generally installed throughout the store;
(d) Sears standard floor coverings appropriate to, and in keeping with, the
general standards of decor for the store;
(e) the boxing, finishing and painting of columns within the Licensed
Department(s) within Designated Store(s);
(f) Sears standard departmental identification lettering. In the event Nova
requires and provides at its own expense, other or additional department
identification and/or signing, which meets Sears Department 728SP approval, then
Sears will install same at Nova's expense;
(g) Sears standard in ceiling lighting as per the general standard of in ceiling
lighting for the Designated Store(s);
(h) Sears standard electrical wiring to and within the Licensed Department(s) in
a Designated Store(s), including only store standard appropriate switches,
receptacles and covers;
(i) required water lines and drain lines for sinks up to the exterior wall of
the Licensed Department(s) in a Designated Store(s).
18.11 Sears shall provide to Nova, for Licensed Department(s) located in
Designated Store(s), all sales checks, cash register tapes and customer
merchandise bags which shall be in Sears regular form as used in the Designated
Store(s) provided Nova is using a Sears supplied point of sale register system.
18.12 Sears shall provide, for the Licensed Department(s) located in Designated
Store(s), overnight storage of a locked fund bag. Anything to the contrary
notwithstanding, Sears shall not be responsible for the contents of the said bag
in any manner whatsoever.
35
36
18.13 Until such time as Sears shall provide a point of sale interface to Sears
sales and credit approval system for Sears approved, Nova provided, point of
sale equipment, Sears agrees to provide a cash register, as selected by Sears,
for the Licensed Department(s) located within Designated Store(s), which shall
remain the property of Sears.
18.14 At such time as Sears shall provide a third party point of sale interface
to Sears sales and credit approval systems, Nova shall at Sears request, and at
Nova's own expense, provide compatible, Sears approved, point of sale hardware
and software systems which shall be owned, operated, updated and maintained by
Nova.
18.15 Sears shall provide to Nova heat, light, electrical current, air
conditioning, floor cleaning, general maintenance and resource protection in the
Licensed Department(s) in Designated Store(s) as provided to all other selling
departments in the store.
18.16 Sears shall provide telephone service to the Licensed Department(s) in
Designated Store(s) provided Nova reimburse Sears for the cost of such telephone
service, including a prorated share of the central switchboard expenses.
18.17 Sears shall not be liable to Nova nor shall Nova be able to claim
compensation of any kind for Sears inability from time to time to provide Nova
with the services specified in this Clause 18.0.
19.0 LOCATION, FACILITIES, EQUIPMENT, SYSTEMS, UTILITIES, MAINTENANCE OF
LICENSED DEPARTMENT(S) LOCATED IN DESIGNATED FACILITY(S)
19.1 Nova shall, at Nova's sole expense, provide a suitable, Sears approved,
retail location for any Licensed Department(s) it wishes to operate for the
provision of the Retail Services in a Designated Facility(s) under the Free
Standing Retail Format.
19.2 Nova shall, at Nova's sole expense, furnish the Licensed Department(s)
located in Designated Facility(s) with and install, safe modern fixtures
counters, showcases, shelves, equipment and furniture, which have been designed
under Nova's direction, are required under the Nova Operations Manual and are
approved by Sears Department 728SP.
19.3 Nova shall, at Nova's sole expense, furnish the Licensed Department(s)
located in a Designated Facility(s) with all operating supplies, equipment,
tools, vehicles, computer hardware and computer software, as required under the
Nova Operation Manual and approved by Sears for the operation and provision of
the Retail Services.
19.4 Nova shall, at Nova's sole expense, maintain all facilities, furniture,
fixtures, counters, showcases, shelves, equipment, tools and vehicles used in
the operation and provision of the Retail Services in Licensed Department(s)
located in Designated Facility(s), in good working order, good repair and in
keeping with Sears presentation standards and the Nova Operations Manual.
19.5 Nova shall, at Nova's sole expense, update computer hardware and software
to support the systems and programs as required under the Nova Operation Manual,
developed under the direction of Nova and approved by Sears, to operate and
provide the Retail Services in a professional and competitive manner to
Customer(s).
19.6 All vehicles, tools and equipment used in the establishment and ongoing
operation and provision of the Retail Services in the Free Standing Retail
Format shall be the responsibility of Nova
36
37
for all purposes. Nova shall be solely responsible for registration, licensing
and insuring of same and for the payment of any and all taxes and assessments
thereon. Sears shall have no responsibility for any expense in connection with
the purchase, lease, maintenance, use or misuse of same, said expenses being the
sole responsibility of Nova. Sears shall not be obligated to purchase or
compensate Nova for any vehicle, equipment, software, supplies, products or
merchandise or any other thing upon expiration or other termination of this
Agreement or otherwise.
19.7 Nova shall, at Sears request and at Nova's sole expense, upgrade and/or
replace furniture, fixtures and equipment used in the Licensed Department(s) in
Designated Facility(s), from time to time, to maintain an appropriate overall
presentation in keeping with Sears presentation standards and the Nova
Operations Manual.
19.8 Nova shall, at Nova's sole expense, provide all leasehold improvements
necessary for the Licensed Department(s) located in Designated Facility(s) for
the operation and professional provision of the Retail Services in keeping with
Sears presentation standards and the Nova Operations Manual.
19.9 Nova shall, at Nova's sole expense, provide all services including but not
limited to electrical, water, sewer, telephone, insurance fees and maintenance
costs, rents, taxes, operating fees, and any and all occupancy, installation and
operational charges encountered in the operation and provision of the Retail
Services through the Licensed Department(s) located in Designated Facility(s).
19.10 Sears shall not have any responsibility or liability relating to the said
Licensed Department(s) located in Designated Facility(s) used in the operation
and provision of the Retail Services or the operation thereof.
19.11 Unless previously waived in writing by Sears, Nova shall, forthwith upon
execution of this Agreement, provide to Sears a written acknowledgment, executed
by the landlord of the Designated Facility(s) from which the Licensed
Department(s) is operated, in the form and context set forth in the Nova
Operations Manual, in which the landlord acknowledges to Nova and to Sears that
the landlord shall not seek recourse against Sears or any of Sears property
which may or may not be located in the Designated Facility(s) in connection with
any matters relevant to the relationship between Nova and landlord.
19.12 Nova shall, at Nova's sole expense, provide Sears approved point of sale
equipment, hardware and software, and shall maintain a Sears compatible and
approved credit authorization system through a recognized, Sears approved,
financial institution that will capture and provide Sears card credit sales as
well as third party sales and credit approval transactions occurring from the
operation and provision of the Retail Services through the Licensed
Department(s) located in Designated Facility(s).
19.13 Nova shall use any and all forms and materials required by Sears in the
operation and provision of the Retail Services through the Licensed
Department(s) located in Designated Facility(s).
19.14 Nova shall only use equipment, such as but not limited to, computers and
software designed and/or provided by Sears, and/or Nova and approved by Sears,
for the purpose of transmitting funds, recording transactions, accounting for
inventories and moneys, or as otherwise required by Sears. Nothing in Sections
19.13 and 19.14 shall obligate Sears to provide any such forms, materials or
equipment to Nova.
19.15 All telephone and facsimile numbers used in connection with the operation
and provision of the Retail Services through Licensed Department(s) located in
Designated Facility(s) shall be
37
38
dedicated numbers used exclusively for the operation and provision of the Retail
Services and shall be billed directly to Nova but shall be the exclusive
property of Sears.
19.16 Should any moneys be due and owing by Nova to a telephone or facsimile
service provider upon the expiration or termination of this Agreement, for any
reason, Sears shall have the right to withhold from the final settlement such
moneys as may be necessary to retire such obligation to the telephone or
facsimile service provider.
20.0 LOCATION, EQUIPMENT, SYSTEMS, UTILITIES, MAINTENANCE IN FREE STANDING, NOVA
PROVIDED, DIRECT MARKETING AND/OR INTERNET MARKETING RETAIL FORMAT FACILITIES
20.1 Nova shall, at Nova's sole expense, provide a suitable, Sears approved,
location for any facility it wishes to operate for the provision of the Retail
Services through the Direct Marketing Retail Format and/or the Internet
Marketing Retail Format.
20.2 Nova shall, at Nova's sole expense, furnish all, Sears approved, operating
supplies and systems that it deems necessary to operate and provide the Retail
Services through the Direct Marketing Retail Format and/or the Internet
Marketing Retail Format.
20.3 Nova shall, at Nova's sole expense, furnish, install in the approved
facilities, safe fixtures, equipment and furniture, in keeping with all
governmental regulations, including but not limited to those regulations and
requirements concerning the working environment and safety standards for office
and warehouse facilities, fixtures, equipment and furniture, for the operation
and provision of the Retail Services through the Direct Marketing Retail Format
and/or the Internet Marketing Retail Format.
20.4 Nova shall, at Nova's sole expense, maintain all facilities, furniture,
fixtures and equipment, used in the operation and provision of the Retail
Services through the Direct Marketing Retail Format and/or the Internet
Marketing Retail Format, in good working order, good repair and in keeping with
all governmental regulations and requirements, including but not limited to
those regulations concerning the working environment and safety standards for
office and warehouse facilities, fixtures, equipment and furniture.
20.5 Nova shall at Sears reasonable request and at Nova's sole expense, to
upgrade and/or replace systems, furniture, fixtures and equipment in facilities
provided by Nova for use in the operation and provision of the Retail Services
through the Direct Marketing Retail Format and/or the Internet Marketing Retail
Format, from time to time, to maintain an appropriate overall level of service
to the Customer(s) in keeping with Sears Customer(s) service standards.
20.6 Nova shall, at Nova's sole expense, provide all leasehold improvements
necessary in such facilities for the professional, operation and provision of
the Retail Services through the Direct Marketing Retail Format and/or the
Internet Marketing Retail Format, to maintain an appropriate overall level of
service to the Customer(s) in keeping with Sears Customer(s) service standards.
20.7 Nova shall, at Nova's sole expense, provide all services including but not
limited to electrical, water, sewer, telephone, insurance fees, rents, taxes,
operating fees, and any and all occupancy, installation and operational charges
encountered in the operation of the facilities provided by Nova for the
provision of the Retail Services through the Direct Marketing Retail Format
and/or the Internet Marketing Retail Format.
38
39
20.8 Sears shall not have any responsibility or liability relating to the said
facility(s) provided by Nova, for the provision of the Retail Services or the
presentation and sale of Health Food And Fitness Products And Services through
the Direct Marketing Retail Format and/or the Internet Marketing Retail Format
or the operation thereof.
20.9 Unless previously waived in writing by Sears, Nova shall, forthwith upon
execution of this Agreement, provide to Sears a written acknowledgment, executed
by the landlord of the facility(s) from which the Retail Services are provided,
through the Direct Marketing Retail Format and/or the Internet Marketing Retail
Format, in the form and context set forth in the Nova Operations Manual, wherein
the landlord acknowledges to Nova and to Sears that the landlord shall not seek
recourse against Sears or any of Sears property which may or may not be located
in the facility(s) in connection with any matters relevant to the relationship
between Nova and landlord.
20.10 Nova shall, at Nova's sole expense, provide Sears approved, point of sale
equipment, hardware and software, and shall maintain a Sears compatible and
approved credit authorization system through a recognized, Sears approved,
financial institution that will capture and provide Sears card credit sales as
well as third party sales and credit approval transactions occurring from the
operation and provision the Retail Services through the Direct Marketing Retail
Format and/or the Internet Marketing Retail Format.
20.11 Nova shall use any and all forms and materials required by Sears in the
operation and provision of the Retail Services through the Direct Marketing
Retail Format and/or the Internet Marketing Retail Format. Nova shall use any
equipment, such as but not limited to, computers and software designed and/or
provided by Sears, and/or Nova and approved by Sears, for the purpose of
transmitting funds, recording transactions, accounting for merchandise and
moneys, or as otherwise required by Sears. Nothing in this Section 20.11 shall
obligate Sears to provide any such forms, materials or equipment to Nova.
20.12 Nova shall be responsible for the entire cost of the installation of Sears
approved telephone, facsimile and Internet systems and equipment and the full
cost of ongoing operations of such equipment and/or systems necessary for the
efficient operation and provision of the Retail Services through the Direct
Marketing Retail Format and/or the Internet Marketing Retail Format.
20.13 All telephone and facsimile numbers used in connection with the operation
and provision of the Retail Services through the Direct Marketing Retail Format
and/or the Internet Marketing Retail Format shall be dedicated numbers used
exclusively for the operation and provision of the Retail Services and shall be
billed directly to Nova but shall be the exclusive property of Sears.
20.14 Should any moneys be due and owing by Nova to a telephone, facsimile or
Internet service provider upon the expiration or termination of this Agreement
for any reason, Sears shall have the right to withhold from the final settlement
such moneys as may be necessary to retire such obligation to the telephone,
facsimile and/or Internet service provider.
20.15 Nova shall, at its sole expense, provide all vehicles, tools and
equipment, Sears approved computer software and hardware, supplies and other
items as may be necessary and proper for the establishment and ongoing operation
and provision of the Retail Services through the Direct Marketing Retail Format
and/or the Internet Marketing Retail Format.
20.16 All vehicles, tools and equipment used in the establishment and ongoing
operation and provision of the Retail Services through the Internet Marketing
Retail Format and the Direct
39
40
Marketing Retail Format shall be the responsibility of Nova for all purposes.
Nova shall be solely responsible for registration, licensing and insuring of
same and for the payment of any and all taxes and assessments thereon. Sears
shall have no responsibility for any expense in connection with the purchase,
lease, maintenance, use or misuse of same, said expenses being the sole
responsibility of Nova. Sears shall not be obligated to purchase or compensate
Nova for any vehicle, equipment, software, supplies, products or merchandise or
any other thing upon expiration or other termination of this Agreement or
otherwise.
20.17 Nova shall keep all facilities, vehicles, and equipment used in the
operation and provision of the Retail Services through the Internet Marketing
Retail Format and the Direct Marketing Retail Format in a clean and
well-maintained condition at all times and all software and equipment shall be
updated as required and maintained in good working order and repair.
21.0 CONFIDENTIAL INFORMATION
21.1 All information relating to the establishment, operation and provision of
the Retail Services, the operations, policies or processes of Sears including
but not limited to all Customer(s) Lists, all Customer(s) information, including
Sears operating methods and any Sears computer provided software (collectively,
"Confidential Information") is deemed to be the exclusive property of Sears.
Nova shall have no right, title or interest in the Confidential Information.
21.2 All Confidential Information shall be treated by Nova and it employees as
confidential. Nova shall not, and shall not allow its employees to reproduce,
release, disclose or in any other way make available or furnish, either directly
or indirectly, any Confidential Information to any other person without the
prior written consent of Sears. Nova shall ensure that all employee contracts
contain an express written provision to this effect.
21.3 In particular, but not to exclusion of all other Confidential Information;
(a) all Customer(s) lists and all Customer(s) information developed by Nova, or
its employees, agents or the Licensee(s), from the operation of or from records
generated as a result of the conduct or provision of Management Services or
through the operation and provision of the Retail Services by Nova or the
Licensee(s) or through information made available through the provision of
services to the Licensee(s), either during the Initial Term of this Agreement or
any renewal hereof, or after termination of this Agreement, are deemed to be
confidential and the exclusive property of Sears (unless prohibited by law).
(b) Nova shall not reproduce, release, disclose or in any way make available or
furnish, either directly or indirectly, to any person, firm, corporation,
association or organization at any time, any information concerning the
Customer(s) of the Retail Services.
(c) Nova shall protect all such Customer(s) information from destruction, loss,
theft, misuse or disclosure during the Initial Term and any Renewal term of this
Agreement and until such Customer(s) lists and other information concerning
Customer(s) are turned over to Sears.
(d) Nova agrees not to use, or permit to be used, such lists and information
concerning Customer(s) or potential Customer(s) of the Retail Services in any
manner except in the provision of the Retail Services.
40
41
(e) Upon termination of this Agreement for any reason, Nova shall immediately
deliver to Sears all existing copies of Customer(s) and potential Customer(s)
lists and copies of all other information concerning Customer(s), whether
written or computerized or otherwise as permitted by law. Nova and its officers,
directors, employees, agents, designees, successors and assigns, shall not use
any information concerning Customer(s) or to solicit any Customer(s) in any
manner whatsoever.
22.0 LAWS, PERMITS, LICENSES AND ORDINANCES
22.1 Nova shall, at its sole expense, obtain all permits and licenses which may
be required under any applicable federal, provincial, territorial or local law,
ordinance, rule or regulation by virtue of any act performed in connection with
the establishment, conduct, operation and provision of the Management Services
and the Retail Services in any of the Retail Format(s).
22.2 Nova shall, in the establishment, conduct, operation and provision of the
Management Services and/or the Retail Services and in the performance of this
Agreement, comply fully with any and all applicable federal, provincial,
territorial and local laws, ordinances, rules and regulations including industry
rules, standards and guidelines including but not limited to those relevant to
environmental matters and employment matters (including but not limited to
compensation, hours of work, overtime and equal opportunities for employment).
Nova shall comply with all federal and applicable provincial or territorial
Human Rights, Employment Standards, Workers' Compensation, Workplace Safety and
Insurance and labour relations legislation and all other equivalent or similar
legislation.
22.3 Nova shall provide to Sears upon request, proof of registration as required
by any applicable local, provincial or territorial requirements.
22.4 Nova agrees to prominently display its business license and, upon the
request of Sears, to prominently display and do all such things as Sears may
feel is reasonably necessary to inform Customer(s) that the Retail Services are
operated and provided by Nova and not by Sears or the Owner.
23.0 FEES, TAXES
23.1 Nova shall, at its own expense, pay and discharge all license fees,
business, realty, use, sales, goods and services, gross receipts, income,
property or other similar or different taxes or assessments which may be
charged, levied or payable in connection with the establishment, operation and
provision of the Management and Retail Services by reason of any act performed
in connection with any of the operations contemplated under this Agreement,
excluding however, all taxes and assessments applicable to Sears income from
Commission payable to Sears hereunder or applicable to Sears property.
24.0 TERMINATION WITH CAUSE ON THIRTY (30) DAYS NOTICE
24.1 This Agreement may be terminated by Sears or the Owner without cost,
penalty or damages at any time for cause, upon giving at least thirty (30) days
prior written notice to Nova. Sufficient cause for termination by Sears or the
Owner shall include, but not be limited to:
(a) failure of Nova to comply with any of the terms, provisions or conditions of
this Agreement if the failure is not rectified within such thirty (30) day
period, following which Sears may, in its sole discretion, terminate this
Agreement, upon written notice effective immediately;
41
42
(b) if Nova fails to remove an employee to which Sears objects pursuant to
Section 16.5, before the expiry of such thirty (30) day period.
24.2 Failure by Sears or the Owner to give notice or otherwise object to any
attempt to correct any default, failure or breach under this Agreement by Nova
or any waiver of the same by Sears or the Owner, shall not affect or impair
Sears or the Owner's respective rights in respect of any subsequent default,
failure or breach of the same or a different kind, nor shall any delay or
omission by Sears or the Owner in exercising or failing to exercise any right
arising from any default, failure or breach hereunder, affect or impair Sears or
the Owner's rights in respect of the same or any other default, failure or
breach.
25.0 TERMINATION WITH CAUSE IMMEDIATELY
25.1 Notwithstanding Section 24.1, this Agreement may, at the sole option of
Sears, be terminated by Sears upon written notice to Nova effective immediately
(unless prohibited by law), without cost, penalty or damages if the cause for
termination is:
(a) any transfer of or any attempt to transfer this Agreement by Nova, either
expressly or by operation of law; or,
(b) any authorization by Nova of persons other than Nova's employees to perform
any of Nova's obligations under this Agreement on Nova's behalf without the
prior written approval of Sears; or,
(c) any Change Of Control of Nova unless Nova shall have notified Sears in
advance of such Change Of Control and obtained Sears written approval and
consent to the operation and provision of Management Services and/or the
operation and provision of the Retail Services by such new ownership or
management; or,
(d) Nova's failure to meet the Expected Performance Level in any fiscal year;
or,
(e) Nova's failure to comply with its obligations with respect to the Trade Xxxx
set forth in Clause 3.0 and to train, monitor, ensure compliance with, and
inform Licensee on the use of the Trade Xxxx by Licensee(s) set out in Section
12.3, Subsection (b) and Subsection (c), Section 12.5 Subsection (b) and
Subsection c); or,
(f) if Nova becomes insolvent or bankrupt; or,
(g) if Nova makes a proposal or files a notice of intention to make a proposal
under the Bankruptcy and Insolvency Act (Canada); or,
(h) if Nova makes an application or files a notice of intention to make an
application under the Companies' Creditors Arrangement Act (Canada); or,
(i) if a secured creditor of Nova gives notice of its intention to enforce its
security on all or substantially all of the property of Nova; or,
(j) if any property of Nova passes into the hands of any receiver, assignee,
officer of the law or creditor, pursuant to the Bankruptcy and Insolvency Act
(Canada); or,
(k) if Nova vacates, abandons, or ceases to operate under this Agreement; or,
42
43
(l) if, in the sole discretion of Sears, the operations, conduct or business
practices of Nova, its employees or agents are detrimental to Sears reputation,
goodwill, relationship with Licensee(s) or Customer(s) and/or suppliers or
otherwise adversely affects Sears operations, merchandise and/or property; or,
(m) the disclosure to any third party by Nova or any of its directors, officers,
shareholders or employees of any Confidential Information; or,
(n) Nova fails to provide evidence of insurance as required by Section 29.1 or,
in Sears sole discretion, the insurance policies obtained by Nova do not afford
adequate protection for Sears and/or Owner, and Nova fails to provide to Sears
evidence of insurance of such additional insurance as Sears may require, within
fifteen (15) days of notice of same being given by Sears to Nova; or,
(o) any assignment, encumbrance or transfer or any attempt to assign, encumber
or transfer any of Nova's rights or obligations under the Agreement; or,
(p) any misappropriation of funds, merchandise or property of Sears or misuse or
misappropriation of the Marketing Levy or funds generated by Nova from sources
as advertising funds to support the marketing of Health Food And Fitness
Products And Services; or,
(q) the failure of Nova to provide timely, accurate Weekly Sales Reports.
25.2 Termination for cause by Sears shall not effect any other rights or
remedies which Sears may have by reason hereof. Nova agrees to pay and discharge
all costs and expenses including, without limitation, all legal fees and
disbursements which may be incurred by Sears or the Owner in enforcing the terms
herein.
25.3 Nova acknowledges that the termination for cause of this Agreement by Sears
will not in any manner effect or terminate any Operating License Agreement with
any Licensee(s) and that Nova's License Agreement with its licensee(s) will
automatically terminate and Nova will not penalize or preclude in any manner any
Licensee(s) from continuing to provide the Retail Services under a valid and
subsisting Operating License Agreement.
25.4 In the event Sears give notice of its intention to terminate this Agreement
pursuant to Clause 24.0 or 25.0 and Sears does not intend to also give notice of
termination of the Operating License Agreements with Licensee(s), Nova agrees to
relinquish at no cost to Sears, upon Sears request, all proprietary rights to
the Nova Operations Manual, Nova's systems, processes, software, forms, and any
other Nova proprietary information used in or generated by the operation and
provision of the Management Services or the operation and provision of the
Retail Services without payment for or liability for any damages by Sears to
Nova.
26.0 TERMINATION WITHOUT CAUSE
26.1 Nova, Sears or the Owner shall each have the right, at any time during the
Initial Term or any renewal hereof, to terminate this Agreement without cause,
by giving to the other parties at least ninety (90) days' prior written notice
of such termination.
26.2 Nova acknowledges that the termination of this Agreement, without cause, by
Sears or the Owner does not in any manner effect or terminate any Operating
License Agreement between Sears and its Licensee(s).
43
44
26.3 Nova acknowledges that the termination of this Agreement, without cause, by
Sears or the Owner, without the termination by Sears or the Owner of the
Operating License Agreements with Sears Licensee(s), will automatically
terminate Nova's License Agreement with Licensee(s) and Nova will not penalize
or preclude in any manner whatsoever any Licensee(s) from continuing to provide
the Retail Services under a valid and subsisting Operating License Agreement.
26.4 In the event Sears gives notice of termination of this Agreement pursuant
to Section 26.1 and Sears does not give notice of termination of the Operating
License Agreements to Licensee(s), Nova agrees that Sears has the right to and
Sears shall purchase from Nova all proprietary rights to the Nova Operations
Manual, Nova's systems, processes, software, forms, and any and all Nova's
proprietary information required to continue the provision of the Management
Services. As total and final payment for all such proprietary rights Sears shall
pay to Nova five percent (5%) of the Net Sales reported for the three (3) month
period immediately preceding the effective date of termination. Such payment
shall be made in three (3) equal monthly installments on the last day of each
month for the three (3) month period immediately following the effective date of
the termination.
26.5 Nova acknowledges that the termination of this Agreement, without cause, by
Nova, does not in any manner effect or terminate any Operating License Agreement
between Sears and Licensee(s) and that such termination by Nova of this
Agreement without cause will automatically terminate Nova's License Agreement
with Licensee(s) and Nova will not penalize or preclude in any manner whatsoever
any Licensee(s) from continuing to operate and provide the Retail Services under
a valid and subsisting Operating License Agreement.
26.6 In the event Nova gives notice of termination of this Agreement pursuant to
Section 26.1 and Sears does not terminate its Operating License Agreements with
its Licensees Nova agrees that Sears has the right, but is not obligated, to
purchase from Nova all Nova's proprietary rights to the Nova Operations Manual,
Nova's systems, processes, software, forms, and any and all Nova's proprietary
information required to continue the provision of the Management Services and
the operation and provision of the Retail Services. In the event Sears chooses
to exercise its right to purchase such proprietary rights Sears shall pay to
Nova, as total and final payment for such proprietary rights, an amount equal to
Nova's Commission paid to Nova for the three (3) month period immediately
preceding the effective date of termination. Such payment shall be made in three
(3) equal monthly installments on the last day of each month for the three (3)
month period immediately following the effective date of the termination.
26.7 In the event Sears gives notice of termination of this Agreement pursuant
to Section 26.1 and at the same time also give notice of termination of all
Operating License Agreements with Licensee(s) these notices of termination shall
not in any manner effect or terminate Nova's License Agreement with Licensee's.
26.8 In the event Sears gives notice of termination of this Agreement pursuant
to Section 26.1 to Nova and also gives notice to termination of the Operating
License Agreements to Licensee(s) such termination shall be without penalty to,
and without liability by, any party for any damages as a result of such
termination and Sears shall not be obligated to purchase any of Nova's
proprietary rights.
26.9 Nova agrees that Sears may, solely at Sears discretion and without penalty
and liability, amend this Agreement, due to the closing of a Designated Store(s)
during the Initial Term or any Renewal Term of this Agreement. Nova shall not be
entitled to any notice of said Designated Store(s) closing prior to a public
announcement of said closing. Nova shall not be entitled to recover damages,
44
45
if any, incurred as a result of said closing from Sears or the Owner. The
parties recognize that, because of the many factors involved, a requirement that
Sears give notice to Nova of a Designated Store(s) closing before a public
announcement is not possible.
26.10 Notwithstanding anything to the contrary herein contained, Nova hereby
acknowledges that Sears marketing, merchandising, retailing and development
plans are under constant review and that plans for such marketing,
merchandising, retailing and development may change from time to time and such
changes may necessitate the change of location, dimensions or amount of space of
any or all the Licensed Department(s) locations in the Designated Store(s), or
the termination of any or all of the Licensed Departments(s) locations in the
Designated Store(s), or the redefinition of Designated Market(s) or the
redefinition of, or termination of, one or all of the Designated Retail
Format(s).
26.11 Nova understands and acknowledges that in the event Sears determines that
a change of location, dimensions or amount of space occupied by any or all of
the Nova operated Licensed Department(s) locations is necessary, Sears will, at
its expense, move the existing fixtures, furniture and equipment to such changed
location or space. If such changed location or space is not satisfactory to
Nova, Nova may without cost, penalty or damage to Sears terminate the operation
for the provision of the Retail Services at such changed location.
26.12 Nova understands and acknowledges that in the event Sears determines that
a change of location, dimensions or amount of space occupied by any or all of
the Licensee(s) operated Licensed Department(s) locations is necessary, Sears
will, at its expense, move the existing fixtures, furniture and equipment to
such changed location or space. If such changed location or space is not
satisfactory to the operating Licensee(s), Licensee(s) may without cost, penalty
or damage to Sears or Nova terminate its Operating License Agreement at such
changed location, and its Nova License Agreement and the provisions of Clause
26.13 below will apply.
26.13 In the event Nova provides evidence to Sears, based on actual profit and
loss statements that a specific Licensed Department(s) in a specific Designated
Store(s) is not profitable for Nova or a Licensee(s) to operate, Sears will
accept a ninety (90) day termination notice from Nova and will allow Nova and/or
a Licensee to vacate the premises without prejudice to this Agreement. The
closed Licensed Departments(s) in the Designated Store(s) will be removed from
Schedule "B" and Nova acknowledges and agrees that Sears may offer health food
and fitness products in that location under any format it may employ.
26.14 Nova acknowledges and agrees that if Sears terminates or amends this
Agreement in accordance with the provisions of Sections 24.1, 25.1, 25.2, 25.3
25.4, 26.1, 26.2, 26.3, 26.4, 26.5, 26.7, 26.8, 26.9, 26.10, 26.11, 26.12 and
30.2 or if Nova terminates the Agreement in accordance with the provisions of
Section 26.6, or a Licensee(s) terminates its Operating License Agreement under
Section 26.1 of the Operating License Agreement;
a) such termination by Sears or Licensee(s) is entirely contemplated by Nova and
is within the spirit of the negotiations for rights granted under this Agreement
prior to, and at the time of, the execution of this Agreement;
b) the provisions of Sections 24.2, 25.2, 25.3, 25.4, 26.2, 26.3, 26.4 26.5,
26.6, 26.7, 26.8, 26.9, 26.10, 26.11, 26.12 and 30.2 the payments or lack of
payments, penalties or damages provided for under Sections 24.2, 25.2, 25.3,
25.4, 26.2, 26.3, 26.4, 26.5, 26.6, 26.7, 26.8, 26.9, 26.10, 26.11, 26.12 and
30.2 are adequate, equitable and non-oppressive to Nova;
45
46
c) Nova hereby expressly and irrevocably waives any rights it may have with
respect to the doctrine of good faith and fair dealing, if any, or the doctrine
of recoupment, if any, and
d) Nova has been given opportunity to seek independent legal advice.
26.15 In the event a Licensee(s) gives notice of termination to Sears per
Section 26.1 or 30.2 of the Operating License Agreement, the affected Licensed
Department(s) may, at the sole discretion of Sears, be removed from Schedule "B"
of this Agreement. Sears may consider at its sole discretion and at the request
of Nova to allow Nova to either operate such Licensed Department(s) itself
pursuant to Section 4.1, or to recommend another Nova licensee to operate such
Licensed Department(s) pursuant to Section 4.2 of this Agreement.
27.0 CONSEQUENCES UPON TERMINATION
27.1 After the termination of this Agreement in accordance with any of the terms
herein, it is agreed that Nova shall not have any right or interest in future
contracts entered into by Sears or the Owner relating to the operation of the
same or any business similar to that contemplated by this Agreement and it is
further agreed that Sears and the Owner may, without incurring any liability to
Nova:
(a) enter into an agreement for the operation and provision of the same or
similar Management Services and/or Retail Services with any person or
organization Sears chooses; or,
(b) directly operate and provide the same or similar Management Services and/or
Retail Services itself; or,
(c) completely terminate the operation and provision of such Management Services
and/or Retail Services.
27.2 Immediately upon expiration or other termination of this Agreement, Nova
shall:
(a) cease all use of the Trade Xxxx and otherwise comply with the requirements
of Section 3.16, and remove from the Management Services premises and vehicles
and return to Sears, all signs, work orders, invoices and related documentation
bearing the Trade Xxxx or any other Sears identification, failing which Sears
shall have the right to enter the Management Services premises to do so at
Nova's sole cost; and,
(b) return to Sears or as Sears may direct all Sears property, if any, including
but not limited to all Confidential Information, employee identification cards,
Sears merchandise, forms, signs, operating guides, sales and distribution
reports; provide Sears the right to enter the Management Services premises to
remove such property immediately upon expiration or other termination of this
Agreement; and,
(c) cease to use all telephone and facsimile numbers used in the operation and
provision of Management Services and the operation and provision of the Retail
Services, transfer such numbers to Sears or as Sears may direct and notify the
provider of the telephone and facsimile services of the transfer. Nova hereby
appoints Sears as its true and lawful attorney in fact, for it and in its name,
place and stead to execute and deliver any and all documents and instruments as
may be required to transfer such telephone and facsimile numbers to Sears or as
Sears may direct.
46
47
(d) To facilitate such transfer of telephone and facsimile numbers, Nova agrees
to sign a valid, undated transfer of ownership of such numbers in the form set
out in Schedule "I" attached hereto, which Sears may exercise upon such
termination or expiration, at its sole discretion, without liability to Nova.
(e) Should any monies be due and owing to a telephone or facsimile service
provider upon the expiration or termination of this Agreement for any reason,
Sears shall have the right to withhold from the final settlement, such moneys as
may be necessary to retire such obligation to the telephone and facsimile
service provider.
27.3 Upon termination of this Agreement, except when terminated by Sears
pursuant to Sections 26.7 and 26.8, Nova acknowledges and agrees that the Nova
License Agreement with Licensee(s) will immediately terminate and that all
moneys due and owing the Licensee(s) by Nova shall be immediately paid to
Licensee(s).
27.4 Upon termination of this Agreement, except when terminated by Sears
pursuant to Sections 26.7 and 26.8, Nova acknowledges and agrees that all
advertising and marketing costs committed to by Nova for past or future
promotion of the Health Food And Fitness Products And Services shall be paid by
Nova and any surplus Marketing Levy moneys and/or any surplus source advertising
subsidy moneys either held or owed to Nova by Health Food And Fitness Products
And Services suppliers shall immediately become the property of Licensee(s) to
be used for the express purpose of marketing the Health Food And Fitness
Products And Services in each Designated Market for each Licensed Department(s)
in a ratio comparable to the Net Sales generated by each Licensed Department
during the previous year.
27.5 Each of Sears, Nova and the Licensee(s) shall be responsible for their own
costs of disengagement. Nova acknowledges that neither Sears nor the Owner nor
the Licensee(s) shall have any liability to Nova for any of Nova's disengagement
or termination costs. Without limiting the generality of the foregoing, Nova
shall assume, to the complete exoneration of Sears and Owner, all costs and
expenses relating to Nova's legal, administration, overhead, employees' wages
and all other costs relating to severance, pensions, unemployment insurance and
employee contracts and Nova shall indemnify and hold Sears and Owner harmless
from any and all claims, actions, costs and expenses arising therefrom.
27.6 The expiration or other termination of this Agreement shall not relieve any
party from its obligations which survive the termination of this Agreement,
including but not limited to the obligation to pay any amount due hereunder and
the obligations and provisions of Sections 3.1, 12.8 Subsection (t), Sections
29.4 and 29.5 and Clauses 8.0, 13.0, 21.0, 22.0, 23.0, 28.0 and this Clause
27.0.
27.7 From and after expiration of this Agreement or its termination pursuant to
any provision of this Agreement, Nova and its officers, directors, employees and
agents shall not;
(a) solicit any Licensee(s) or any officer, director or shareholder of any
Licensee(s); or
(b) solicit any Customers.
27.8 Notwithstanding Sections 25.3, 26.2, 26.3, 26.4, 26.5, 26.6, 26.7, 26.8,
26.9, 26.10, 26.11, 26.12, 26.13 and 27.7 if Sears terminates this Agreement
pursuant to Sections 24.1, 25.1, 26.1 or 30.2 and Sears gives Notice of
Termination of all Operating License Agreements to Licensee(s) then
47
48
Sections 25.3, 25.4, 26.3, 26.4, 26.5, 26.6 and 27.7 Subsection (a) shall not
apply and Sears will neither prevent nor interfere with Nova should Nova solicit
Licensee(s) or officers, directors or shareholders of any Licensee(s) after
termination of this Agreement.
27.9 During the Initial Term and any Renewal Term and for a period of one (1)
year following the expiration of this Agreement or its termination by Nova
pursuant to any provision of this Agreement (other than Section 26.7 and Section
26.8 where Sears has given Notice of Termination of all the Operating License
Agreements to Licensee(s)), Nova and its officers, whether as principal, agent,
employee, consultant, director, officer, shareholder, beneficiary of a trust or
otherwise, shall not have any interest in, be employed by or provide any
services to any retail health food and fitness business in the market without
the prior written consent of Sears, such consent may be arbitrarily withheld. If
Nova breaches this Section 27.9 Sears shall be entitled to a decree or order
restraining Nova, and Nova shall not plead in defense thereto that there would
be an adequate remedy at law, it being recognized that the injury and damage
resulting from such breach would be impossible to measure monetarily.
27.10 If Nova or any of its officers fail to comply with Section 27.7 or Section
27.9, in addition to any other rights or remedies of Sears under this Agreement
at law or in equity, Nova shall repay to Sears the full amounts, if any, paid by
Sears to Nova pursuant to Section 26.4 and Section 26.6 and Nova shall forfeit
any other amounts which would otherwise have been payable to Nova pursuant to
Section 26.4 and Section 26.6.
28.0 INDEMNITY
28.1 Nova shall protect, defend, hold harmless and indemnify Sears and the
Owner, and their respective directors, officers, employees, agents and assigns
from and against:
(a) any and all penalties, judgments or fines of any nature or kind which may be
sought to be enforced by reason of the alleged or actual violation by Nova, its
employees, subcontractors or agents, Licensee(s), Licensee(s)'s employees,
subcontractors or agents, of any federal, provincial, territorial or municipal
law or regulation;
(b) any and all expenses, including but not limited to, reasonable legal fees
and disbursements, suits, claims, demands, actions, causes of action,
liabilities, damages and losses of any kind whatsoever (including, without
limitation, death of or injury to persons and damage to property), actually or
allegedly resulting from or connected with the conduct and operation of the
Management Services by Nova, and/or the conduct and operation of the provision
of the Retail Services by Nova and/or Licensee(s) including without limitation,
goods sold, work done, services rendered or products utilized therein, lack of
repair in or about said Management Services facilities operated by Nova and/or
in the operation of the provision of the Retail Services by Nova and/or
Licensee(s), the operation of or defects in any machinery, motor vehicles, or
equipment used in connection with the provision of Management Services by Nova
and/or in the provision of the Retail Services by Nova and/or License(s), or
from the omission to act or commission of any act, lawful or unlawful, by Nova
or its agents, employees or designees, and/or Licensee(s)'s agents, employees or
designees, whether or not such act is within the scope of the employment of such
agents, employees, or designees;
and notwithstanding anything to the contrary contained in this Agreement, such
indemnification in respect of any breach, violation or nonperformance, damage to
third party's property, injury or death occurring during the term will survive
the termination of Agreement and any renewals thereof.
48
49
28.2 Nova shall release and hold harmless Sears and the Owner, their respective
employees, officers and directors and all other companies owned, operated,
controlled by or affiliated with Sears or the Owner from all and any damages or
losses caused by Sears or the Owner.
29.0 INSURANCE
29.1 Nova shall, at its sole expense, obtain and maintain during the term of
this Agreement, the following policies of insurance from a company or companies
satisfactory to Sears and adequate to fully protect Sears, the Owner and Nova
from and against all expenses, claims, actions, liabilities and losses arising
out of the subjects covered by said policies of insurance:
(a) Workers' Compensation Insurance coverage with the applicable provincial or
territorial Workers' Compensation Board and/or Employer's Liability Insurance
covering all persons employed or working in the Management and Retail Services;
(b) Nova shall, every forty-five (45) day period, or other such period relevant
to the applicable workers' compensation or workplace safety and insurance
legislation or equivalent legislation in any province or territory in which the
Management Services operations facility is located or operated and where the
Retail Services are provided, provide to Sears a copy of Nova's and each
Licensee(s)'s current workplace safety certificate of clearance or equivalent
document.
(c) Comprehensive General Liability Insurance, including but not limited to
Products and Completed Operations coverage with a 24 month indemnity period and
containing a Contractual Liability Endorsement specifically covering Nova's
indemnification of Sears and the Owner under this Agreement. The policy must
contain a Cross Liability clause and must not have any exclusions for work done
by subcontractors and/or sub-trades. The policy must also provide coverage for
Non-Owned Automobile Liability as well as Tenant's Legal Liability. The limits
of liability must not be less than five million ($5,000,000.00) dollars for
bodily injury, death and property damage;
(d) Motor Vehicle Liability Insurance covering all vehicles used by Nova in
connection with the Management Services and the Retail Services hereunder with
limits of not less than two million ($2,000,000.00) dollars, combined single
limit for bodily injury, death and property damage per accident;
(e) All Risk Property Insurance, including Theft upon Nova's property, equipment
and merchandise utilized in the operation and provision of the Management
Services and the operation and provision of the Retail Services. The policy
shall also cover any and all Sears and/or Customer's merchandise in the care,
custody and/or control of Nova in an amount not less than the Full Replacement
Cost thereof;
(f) Nova shall also provide evidence of Employee Dishonesty coverage to include
Nova and the employees of Nova in an amount not less than ten thousand
($10,000.00) dollars;
29.2 All policies of insurance mentioned above will name Sears Canada Inc. and
Sears, Xxxxxxx and Co. as Named Additional Insured and such policies shall not
be subject to material change or cancellation except upon at least thirty (30)
days prior written notice addressed to Sears Canada Inc., 000 Xxxxxx Xxxxxx,
Xxxxxxxxxx 000X, Xxxxxxxx Xxxxxxxxxxx, Xxxxxxx, Xxxxxxx, X0X 0X0. Said policies
shall be prepared in such a form that neither Sears nor the Owner shall be
liable for any premiums therefor.
49
50
29.3 Every policy of insurance maintained or required to be maintained by Nova
under this Agreement will contain a waiver of subrogation clause.
29.4 Nova shall furnish Sears with Original copies of all such policies or
Certificates Of Insurance, certified by either Nova's insurance company or
broker, as evidence of such insurance prior to the commencement of the operation
for the provision of Management Services and the operation and provision of the
Retail Services under this Agreement. If, in Sears sole opinion, such policies
do not afford adequate protection for Sears and the Owner, Sears will so advise
Nova and if Nova does not furnish evidence of such additional coverage within
fifteen (15) days, Sears shall have the right, at its option, to obtain such
additional insurance at the expense of Nova and deduct same from any payment to
Nova on the settlement date as set out herein or to terminate the Agreement
forthwith.
29.5 Nova will furnish Sears with Original copies of insurance policies or
Certificates Of Insurance upon the anniversary date(s) of all applicable
policies described herein including, but not limited to, confirmation of
Workers' Compensation Insurance coverage. In the event Nova fails to provide
evidence of insurance coverage on an annual basis, Sears shall have the right to
obtain such additional insurance or to terminate the Agreement as set out in
Section 29.4.
29.6 Any approval by Sears of Nova's insurance policies or additional insurance
obtained by Sears on Nova's behalf shall not relieve Nova of any responsibility
hereunder.
30.0 LOSS, DAMAGE, DESTRUCTION, ETC.
30.1 Sears and the Owner shall not be responsible for or liable to Nova for any
loss suffered by Nova or for any damage or injury to Nova or to Nova's property,
or any Licensee(s) or to Licensee(s)'s property, or to the property of Nova's or
Licensee(s)'s employees, agents or designees, by any cause whatsoever.
30.2 Should a Licensed Department(s) located in any Designated Store(s) or
Designated Facility(s) be damaged by fire or any unavoidable casualty so as to
render such location unfit for the carrying on of business and the same is not
repaired and rendered fit within sixty (60) days thereafter, Sears or Nova shall
have the right to terminate this Agreement as it relates to the damaged location
in such Designated Store(s) or Designated Facility(s), by giving notice in
writing of such termination, and Nova shall not be required to make any payment
to Sears, nor shall Sears be required to make any payment to Nova for amounts
owing from such damaged location during the period Nova has been prevented from
carrying on the provision of the Retail Services in such damaged location by
reason of such fire or other casualty.
31.0 CUMULATIVE REMEDIES
31.1 It is agreed that the remedies provided herein for any default, failure or
breach of this Agreement by Nova are cumulative and shall not affect in any
manner any other remedies that Sears or the Owner may have by reason of such
default, failure or breach by Nova.
32.0 ASSIGNS
32.1 The provisions of this Agreement shall be binding upon Nova and upon its
permitted successors and assigns, and shall be binding upon and enure to the
benefit of Sears and the Owner and their respective successors and assigns.
However, the parties agree that nothing herein contained shall authorize any
assignment or sublicense under this Agreement or delegation of any duties in the
50
51
operation and provision of the Management Services or the Retail Services
hereunder by Nova without Sears prior written consent.
33.0 PREVIOUS AGREEMENTS
33.1 All prior arrangements or agreements concerning the provision of health
food and fitness products and services and/or the operation of Sears health food
and fitness shops by Nova or its franchisees in the Designated Store(s) or
Designated Facility(s) or through Sears catalogue facilities are hereby canceled
and the terms and provisions hereof are in each case substituted therefore,
effective in each case with the close of business on the 30th day of June, 1999,
provided that any payments required under said prior arrangements or agreements
and any liabilities thereunder shall survive the cancellation of said prior
arrangements or agreements.
34.0 NOTICE
34.1 All notices herein provided for or which may be given in connection with
this Agreement shall be in writing and given by certified or registered mail
with postage prepaid and return receipt requested or by private courier or by
facsimile transmission with original copy forwarded by ordinary mail. If any
such notice be given by Nova to Sears or the Owner, it shall be addressed to:
SEARS CANADA INC.
Attention: National Manager
Licensed Xxxxxxxxxxx, Xxxxxxxxxx 000X
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile No: (000) 000-0000
with a copy to:
SEARS CANADA INC.
Attention: The Secretary
Department 766
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile No: (000) 000-0000
and a copy to:
SEARS, XXXXXXX AND CO.
Department 766 -1B6 - 311 B
Sears Merchandise Group
0000 Xxxxxxx Xxxx
Xxxxxxx Xxxxxxx,
Xxxxxxxx, XXX
00000
Facsimile No: (000) 000-0000
51
52
and if given by Sears to Nova, such notice shall be addressed to:
3051356 NOVA SCOTIA COMPANY
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Facsimile No: (000) 000-0000
Any notice, if delivered personally or sent by facsimile transmission, shall be
deemed to have been given on the date of delivery or transmission, and if
mailed, shall be deemed to have been given on the fifth (5th) day following the
date of mailing. When notice is delivered by facsimile transmission, the
original notice must be delivered promptly thereafter.
35.0 PRICES
35.1 Nothing contained in this Agreement shall be construed as giving Sears or
the Owner any right or power to affect or control the price of merchandise or
services which shall be offered hereunder in the operation and provision of the
Retail Services, said right and power being retained by Nova.
36.0 REPRESENTATIONS
36.1 It is understood that no promises or representations whatsoever have been
made as to the potential amount of sales, profit or Nova's Commission, Nova can
expect at any time during the term of this Agreement or the Nova License
Agreement. Nova represents and warrants that it is solely responsible for any
expenses incurred related to this Agreement and agrees that Sears and the Owner
shall not be obligated for any expenses incurred by Nova in connection with any
increase in the number of its employees or expenditures made by Nova for
additional facilities or equipment.
37.0 OTHER AGREEMENTS
37.1 If any claim is made by a third party that this Agreement in any way
contravenes any previous agreement entered into by Sears or such third party as
to the operation of any Designated Store(s), the shopping centre or facility of
which such Designated Store(s) forms a part, Sears shall conduct a thorough
investigation of such claim and shall give Nova notice of such claim and
disclose to Nova the results of such investigation. It is understood and agreed
that if Sears determines that this Agreement does in fact contravene any such
previous agreement then this Agreement shall be automatically terminated as it
relates to such Designated Store(s); this Agreement shall otherwise continue and
remain in full force and effect.
38.0 ILLEGAL PROVISION
38.1 If any provision in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
39.0 GOVERNING LAWS
52
53
39.1 This Agreement shall be interpreted and governed by the laws of the
Province of Ontario and the laws of Canada applicable therein.
40.0 ENTIRE AGREEMENT
40.1 This Agreement sets forth the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof. This Agreement
shall not be amended except by a written instrument signed by Nova, Sears and
Owner, subject only to the attached Schedule "A", Schedule "B", Schedule "C",
Schedule "D" and Schedule "E", Schedule "F", Schedule "G", Schedule "H" and
Schedule "I" which Schedules may be amended from time to time at the sole
discretion of Sears, by written notice from Sears to Nova.
41.0 PARAGRAPH TITLES
41.1 The paragraph titles in this Agreement have been placed thereon for the
mere convenience of the parties, and shall not be considered in any construction
or interpretation of this Agreement.
42.0 APPROVALS AND CONSENTS
42.1 Any approvals or consents required to be obtained from Sears pursuant to
this Agreement shall be in writing and at Sears sole discretion and may be
withheld unreasonably or arbitrarily by Sears.
43.0 LANGUAGE
It is the express wish of the parties that this Agreement and any related
documents be drawn up and executed in English. Il est la volonte expresse des
parties que cette convention et tous les documents s'y rattachant soient rediges
en anglaise.
44.0 SEVERABILITY
44.1 If any term, provision or condition of this Agreement shall be held to be
invalid, illegal or unenforceable by a court of competent jurisdiction, the
remaining terms, provisions and conditions shall be and remain in full force and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. Nova, Sears and the Owner agree that
all of the terms, provisions and conditions of this Agreement are reasonable and
are not unduly harsh in the circumstances.
53
54
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorized signatories.
EXECUTED at Xxxxxxx, Xxxxxxx, this ____ day of ___________________, 2001.
SEARS CANADA INC.
by: _________________________________________
Executive Vice President
c/s
by: _________________________________________
Secretary
SEARS, XXXXXXX AND CO.
by: _________________________________________
Its Attorney-in-fact
SEARS CANADA INC.
EXECUTED at ________________________, ______________________________, this _____
day of ___________________, 2001.
3051356 NOVA SCOTIA COMPANY
___________________________ by:___________________________
(Witness Signature) Licensee Signature
Print Name: Print Name:
Print Title:
c/s
(affix corporate seal)
[Execution by a corporation requires corporate seal. Execution by an individual
or an unincorporated business requires a witness]
54
55
SCHEDULE "A"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
RETAIL FORMAT(S)
On Premise Retail Format - shall mean the operation of a Licensed Department(s)
in a Sears retail store and/or Sears provided Designated Facility(s).
Free Standing Retail Format - shall mean the operation of a Licensed
Department(s) in a Designated Facility(s) owned or leased and provided by Nova
or a Licensee(s) in any location outside a Sears retail store.
Internet Marketing Retail Format - shall mean the marketing, operation and
provision of the Retail Services through the Sears Canada Inc. Internet web site
and fulfillment of the Customer(s) orders via direct parcel service to the
Customer(s) residence from a centrally located facility or facilities operated
by Nova.
Direct Marketing Retail Format - shall mean the marketing, operation and
provision of the Retail Services through direct mail offers to Customer(s) with
order taking through a 1-800 dedicated telephone service and fulfillment of
Customer(s) orders via direct parcel service to Customer(s) residence from a
centrally located facility or facilities operated by Nova.
56
SCHEDULE "B"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
"ON PREMISE" RETAIL FORMAT
STORE NAME STORE NUMBER STORE NAME STORE NUMBER
Abbotsford 1835 Belleville 1027
Xxxxxx Xxxx 1423 Brentwood 1836
Bramalea 1049 Burnaby 1819
Carlingwood 0000 Xxxxxxxxxx 1822
Chinook 1413 Coquitlam 1812
Xxxxxx Xxxx 0000 Xxxxxxx 0000
Xxxxxxxx 0000 Xxxxxxxx 1432
Kingsway 0000 Xxxxxxxx 0000
Xxxxxxxxx 0000 Xxxxxxxxx 1093
Xxxxxx 0000 Xxxxxxxxxxx 1426
Medicine Hat 1428 Mississauga 1081
Moose Jaw 1431 Nanaimo 0000
Xxxxx Xxxx 0000 Xxxxxx 1016
Xxxxxxxxx 1034 Polo Park 1412
Prince Xxxxxx 0000 Xxxxxx Xxxxxx 0000
Xxxxxxxxx 0000 Xxx Xxxx 1427
Xxxxxx 1417 Xxxxxxxx 0000
Xxxxxxxxx 1414 Sault Ste. Xxxxx 1082
Scarborough 1326 Sherway Gardens 0000
Xxxxx Xxxxxx 0000 Xxxxx Xxxx 1429
St. Catharines 0000 Xx. Xxxxxxx 0000
Xxxxxx 1817 Xxxxxxx Xxx 0000
Xxxxxxxx 0000 Windsor 1017
"FREE STANDING RETAIL FORMAT"
DESIGNATED POSTAL DESIGNATED POSTAL
MARKET(S) CODES MARKET(S) CODES
Nil
"DIRECT MARKETING RETAIL FORMAT"
Designated Market(s) is Canada
"INTERNET MARKETING RETAIL FORMAT"
Designated Market(s) is Canada
57
SCHEDULE "C"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
Initial And Renewal Terms Business Plan - Five Year
To be completed by Nova and submitted with executed copies.
58
SCHEDULE "D"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
HEALTH FOOD AND FITNESS PRODUCTS RETAIL SERVICES STANDARDS OF QUALITY AND
PERFORMANCE
1. All products and services listed for purchase by Nova and/or the Licensee(s)
from Nova approved suppliers or offered for sale to Customer(s) by Nova, the
Licensee(s) and/or their respective employees, under the Trade Xxxx shall meet
or exceed all minimum industry standards of quality and performance and shall be
in compliance with all legislation, regulatory and industry requirements and
guidelines.
2. All products and services offered for sale by Nova and/or any Licensee(s)
under the Trade Xxxx shall be approved by Nova.
3. Nova, the Licensee(s) and their respective employees shall professionally
meet all customer service standards as defined by Sears and shall adhere to
Sears satisfaction guaranteed or money refunded policy in all Customer(s)
transactions.
4. Nova shall ensure that all advertising for the Retail Services under the
Trade Xxxx shall be approved by Sears prior to the use of such advertising in
the marketplace and Nova shall assume all responsibility to ensure and hereby
warrants that such advertising complies with all government regulations and
meets all industry standards prior to being submitted for approval.
5. All On Premise and Free Standing Retail Format locations operated by Nova or
the Licensee(s) shall be operated in a professional manner within the standards,
policies and guidelines of the Designated Store(s) and in accordance with the
Nova Operations Manual.
6. All Nova employees and the Licensee(s) and their employees shall participate
in both Nova and Sears education and training programs, as required or directed,
to meet the ongoing needs of the Customer(s) and the operation.
7. Nova shall insure that it remains current in all phases of the health food
industry and will offer Customer(s) the most up to date Retail Services
available in the industry.
59
SCHEDULE "E"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
THIS IS A REFERENCE SAMPLE
THIS STATEMENT MUST BE ON NOVA'S LETTERHEAD
Statement Of Understanding and Acknowledgment of Employer
I, ____(employee signature) ____, understand that 3051356 Nova Scotia Company is
a Licensee of Sears Canada Inc. authorized to operate the Sears Health Food and
Fitness Shop under a License agreement with Sears Canada Inc.
I understand that I am an employee of 3051356 Nova Scotia Company and not an
employee of Sears Canada Inc.
I further understand that I am not and shall not be deemed to be an employee of
Sears Canada Inc. for any purpose whatsoever, including but not limited to, any
future claims pursuant to Workers' Compensation, Employment Standards or Human
Rights Legislation or any other possible claims, actions or demands.
I further understand that I am not eligible for and will not be considered for
employment at Sears Canada Inc. while I am an employee of 3051356 Nova Scotia
Company.
I have read the above, I fully understand it and I sign this statement
voluntarily.
_______________________ ________________________ _____________
(signature of employee) (print name of employee) (date)
I, ______(print authorized Nova signatory name)______ of 3051356 Nova Scotia
Company am authorized to sign this statement on behalf of 3051356 Nova Scotia
Company which operates Sears Health Food & Fitness Shops as a Licensee of Sears
Canada Inc. and confirm that the above named is an employee of 3051356 Nova
Scotia Company.
____________________________________________ _____________
(signature of authorized Licensee signatory) (date)
60
SCHEDULE "F"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
LICENSED BUSINESSES ON THE INTERNET
Sears Canada has developed a web site on the Internet for communication with its
customers. Licensed businesses are encouraged to participate on the Sears Canada
web site, subject to the following procedures:
1. Location
All licensed business Internet web pages must reside in a licensed department
sub site on the Sears Canada web server (xxx.xxxxx.xx). This provides a common
location and allows us to manage the image we present to our customers.
2. Web site Naming:
Licensed business sub sites will be named xxx.xxxxx.xx/xxxxxxxx/ where
"business" is the common name of the business of that department, such as
optical or health foods. This helps to build traffic for all businesses by
providing a common, easy-to-remember root name.
For example, Sears Canada will create sub sites named as follows:
Sears Optical xxx.xxxxx.xx/xxxxxxx/
Sears Health Foods xxx.xxxxx.xx/xxxxxxxxxxx/
Sears Carpet Cleaning xxx.xxxxx.xx/xxxxxxxxxxxxxx
3. Creating Content
Developing the content for a licensed business sub site is the responsibility of
the Licensee. Sears Department 728, Electronic Commerce, maintains web site
content guidelines and will provide a current copy on request. These guidelines
ensure that all sub sites have a complementary appearance and perform
satisfactorily for the majority of users. Licensees must adhere to these
guidelines.
Content development may be done internally by the licensee or contracted out.
However, the appropriate Sears administrative department, as well as Department
728 Editorial and Department 728 Electronic Commerce must review and give
written approval of the initial content of the sub site, and must provide prior
approval for all subsequent content changes.
Sears will provide each licensee with direct access and update capabilities to
the respective sub site directory so that they may maintain the appropriate
pages.
Special web site programming or data base access can be arranged, but will
require prior approval from Sears Department 728, Electronic Commerce.
Should a licensee wish to create a simple home page, it should contact Sears
Department 728 Electronic Commerce which will assist in its creation.
61
4. Advertising:
Licensed businesses must not use the sub site name (URL) in any advertising
media or in registries such as Yellow Pages until it has been approved in
writing by the appropriate Sears administrative department. Once it has been
approved, the URL should be included in the licensed businesses advertising in
other media. Web site traffic will build only by making xxx.xxxxx.xx broadly
known.
Internet banner advertising may be purchased on other sites, providing it is
consistent with the Sears Canada image and has received prior written approval
from Sears Department 728 Editorial. No advertisements of third party
merchandise or services or references to other companies or organizations may be
placed on the sub site without prior written approval from the respective Sears
administrative department, Department 728 Editorial and Department 728
Electronic Commerce.
No unsolicited Internet e-mail marketing (also known as spamming) is permitted
by any Sears Licensed business.
5. Electronic Mail Facilities for Communication to Customers:
Sears Canada has a corporate arrangement with the IBM Global Network Canada
(IGN), to provide Internet access, including web browsing and Internet e-mail.
This arrangement has also been extended to licensed businesses at the corporate
rate (currently this is $29.99 per month plus GST) and will be billed via the
Sears Accounting department.
As each licensee builds a sub site, one e-mail address will be required on the
IGN system to communicate with customers. While alternative facilities may be
used for web browsing, all e-mail being sent to Sears customers by the licensee
must have the names Sears in its address (e.g., xxxxxxx@xxxx.xxxxx.xx). The IGN
service provides this capability.
Your Sears Canada/IGN e-mail userid is intended solely to communicate with
customers, and must not be used to communicate with suppliers or in any manner
that may imply that the business operator is Sears Canada Inc. E-mail userids
for use to suppliers must use the business name of the licensee and not refer in
any manner to Sears Canada Inc.
Sub-licensees or individual operators must obtain their own business Internet
services themselves through any Internet Service Provider, and are not permitted
to send e-mail directly to Sears Canada customers. The primary licensee is
expected to perform this function on behalf of its sub-licensees, if it is
required.
Sears maintains e-mail guidelines to assist in communicating with customers on
the Internet, and will provide a current copy on request.
6. Professional Image and Conduct:
The Internet is receiving great scrutiny in the press. Each licensee must
exercise caution that its employees understand the implications of their
actions. Specifically, we require that:
The licensed business sub site will contain only Sears-approved pages and that
no other pages of any kind (such as personal home pages, hobbies or other
businesse(s) will be placed on the site.
62
Information which is received from customers through the Internet will be held
in the strictest confidence, and used only for the purpose for which it was
provided, and shall be deemed to be Confidential Information as defined in the
License Agreement.
Employees will not use the Sears Internet access facilities for any non-business
purpose (e.g., making personal comments in discussion groups or chat rooms,
participating in Internet games, downloading non-business materials, etc.)
Licensees will be held strictly liable for all web site use by itself, its
employees and sub-licensees.
I have reviewed these guidelines, and agree to abide by them. I understand that
any breach of these procedures and guidelines by myself, my employees or
sub-licensees will result in immediate removal of the licensed business sub site
and may result in termination of my License Agreement with Sears Canada Inc.
_______________________ _______________________
Licensee Corporate Name Date
per:___________________ per:___________________
Signature Signature
_______________________ _______________________
Name (printed) Name (printed)
_______________________ _______________________
Title Title
63
SCHEDULE "G"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
ADDITIONAL TRADE MARKS AUTHORIZED FOR USE
- SEARS CLUB MEMBERSHIP IS VERY REWARDING(R)
- CLUB SEARS C'EST TOUT A VOTRE AVANTAGE (MD)
- SEARS (R) HEALTH FOOD & FITNESS SHOPS
- CENTRE de SANTE et VITALITE SEARS (MD)
- Sears Health Food & Fitness Vitamin Club
- Sears Health Food - Live Better
64
APPENDIX "H"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3051356 NOVA SCOTIA COMPANY.
OPERATING LICENSE AGREEMENT
See Attached
65
APPENDIX "I"
Attached to and forming part of the Agreement dated February 7th, 2001 between
SEARS CANADA INC., SEARS, XXXXXXX AND CO., and 3061356 NOVA SCOTIA COMPANY.
TRANSFER OF TELEPHONE AND FACSIMILE NUMBERS OWNERSHIP
See Attached
