PANDESIC LLC
HOSTED PANDESIC-TM- E-BUSINESS SOLUTION
AGREEMENT
PANDESIC-TM- E-BUSINESS SOLUTION
CONTRACT #_______
Date: March 25, 1998
With: DVD EXPRESS, Inc., 0000 Xxxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, XX,
00000 ("Merchant")
This agreement (the "Agreement") sets out the terms and conditions under
which Pandesic LLC, a Delaware limited liability company, with its offices at
Sunnyvale, California ("Pandesic") will make available the Pandesic-TM-
E-Business Solutions service to Merchant who wishes to implement an
electronic commerce capability with integrated internal business
functionality. Pandesic and Merchant agree as follows:
1. PANDESIC E-BUSINESS SOLUTIONS SERVICE AND LICENSE
Pandesic will provide services which include the implementation, hosting and
administration of Merchant's Pandesic-TM- E-Business Solution on
computer servers operated by Pandesic (the "Hosted Services") and
configured with and containing the software and related documentation
(which together with any upgrades, modifications, or enhancements which
Pandesic may provide to Merchant hereunder shall be referred to as the
"Licensed Software"), all as more specifically described in this
Agreement and in Schedule A hereto (collectively, the "Pandesic
E-Business Solutions Service").
2. DEFINITIONS
In this Agreement,
a) "Documentation" means the standard documentation provided to
Merchant by Pandesic describing the Pandesic E-Business Solutions
Service and the Licensed Software and their operation, whether
transmitted on paper, on magnetic media or by electronic means.
b) "Affiliates" means those entities whose goods and services are sold
by Merchant, on a consignment basis, through Merchant's web site
utilizing Merchant's Pandesic E-Business Solutions Service.
3. PANDESIC-TM- E-BUSINESS SOLUTIONS SERVICE
Pandesic or its representatives will:
i) install the Licensed Software on servers operated by Pandesic,
at Pandesic's facilities or on other servers, as mutually
agreed upon (the "Pandesic Server");
ii) implement, host and administer Merchant's Internet commerce
activities utilising the Pandesic-TM- E-Business Solution; and
iii) provide a total of up to 5 hours of training to Merchant's
employees at Merchant's facilities in the U.S.A..
4. SOFTWARE LICENSE
a) Pandesic hereby grants to Merchant, during the Pandesic E-Business
Solutions Service Term, a non-exclusive, and non-assignable (except
as permitted in Section 18) license to use the Licensed Software
for the purposes of conducting business over the Internet, subject
to the limitations set out in Schedule A hereto.
b) Merchant acknowledges that certain third party software programs
are bundled in the Licensed Software (the "Supplier Software") and
may be subject to electronic clickwrap licenses from such suppliers
(a "Supplier Agreement"). Merchant agrees that it will not access
or use the Supplier Software unless it has accepted the Supplier
Agreement in accordance with the procedure required by such
supplier(s), and it further agrees that in case of any conflict
between this Agreement and a Supplier Agreement, the terms of the
Supplier Agreement shall govern with respect to the Supplier Software
licensed pursuant hereto.
5. MAINTENANCE AND SUPPORT SERVICES
a) Pandesic will provide to Merchant the maintenance and support services
set out in Schedule B in respect of the Licensed Software (the
"Maintenance and Support Services"). Merchant agrees to provide access
for, accept, and do nothing to prevent electronic communications from
and to Pandesic and its third party service providers. It is
acknowledged and agreed that network and server security is the joint
responsibility of Merchant and
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Pandesic and Pandesic cannot be responsible for third party spamming of
Merchant's system.
6. ADDITIONAL TERMS
a) Pandesic will provide the enhanced functionality to the Pandesic
E-Business Solutions Service, either specifically for Merchant or
generally as part of the standard product, according to the timetable
and functionality list set out in Schedule D, attached.
b) Notwithstanding any other provision of this Agreement, Merchant shall
have the option of terminating this Agreement for any reason within 90
days of the date the Licensed Software is made ready for use by the
Merchant. Sections 13, 14 and 15 shall continue to apply in such event.
c) In consideration of Merchant assisting Pandesic in the validation of the
Pandesic E-Business model, Pandesic shall pay to Merchant a market
development fee, being [***] of the Merchant's service fees calculated in
accordance with Schedule C. In return, Merchant shall; (i) participate
in at least 2 marketing activities in each month, as requested by
Pandesic, such as reference calls and site visits by potential Pandesic
merchants, customer meetings, participation in public seminars and
participation in trade shows; (ii) Merchant shall prominently display the
Pandesic logo on the home page of its storefront web site, subject to the
trademark provisions of Section 20. The size and placement of the logo
shall be determined by Pandesic and Merchant, acting reasonably, with the
intent that it be a prominent feature of the web site look and feel;
(iii) Merchant shall employ a full-time director of technology whose
function will be to act as liaison to Pandesic in developing new
functionality and applications for the Licensed Software.
d) The Merchant acknowledges that its rights to use the Pandesic
trademarked logo (the "Logo") hereunder will terminate upon the earlier
of (a) termination of this Agreement and (b) at Pandesic's request for
any reason. The Merchant will only use the Logo as permitted hereunder.
The Merchant acknowledges that the Merchant has no rights or interest in
the Logo and all use of the Logo shall inure to the benefit of Pandesic.
The nature and quality of all services rendered by the Merchant in
connection with the Logo, and related advertising, promotional and other
related uses of the Logo by the Merchant shall conform to standards set
by and shall be under the control of Pandesic.
e) Pandesic shall have Merchant's web site live and operational within by
April 27, 1998 failing which Merchant may terminate in accordance with
Sub-section 6(b), above. This obligation is contingent upon Merchant
co-operating fully with Pandesic in such web site creation and
deployment. The new Merchant web site shall have the a similar format,
look and feel to their current web site.
f) Pandesic agrees not to provide, in the future, the Pandesic E-Business
Solutions Service to a direct competitor of Merchant (a virtual store
selling digital video disks where the sales of such digital video discs
are greater than, at the time of contracting, [***] of such competitor's
total online revenues) for the initial term of this Agreement. This
provision has no effect with respect to current Pandesic merchants.
g) Pandesic agrees that, for the initial term of this Agreement, the rates
for the monthly service fees charged to Merchant and described in Schedule
C shall be the maximum charged to other Pandesic Merchants. If any lower
transaction percentage rates are offered to any other Pandesic merchant
by Pandesic both above and below the [***] sales per month level (the
calculation to determine whether the rates are lower shall include the
calculation of the development fee described in sub-section 6(c) above),
Pandesic shall make such lower rates applicable to Merchant and will
advise Merchant immediately.
7. TITLE TO THE LICENSED SOFTWARE
Merchant acknowledges that its rights pursuant to this Agreement do not
extend beyond the rights to the licenses granted pursuant to Section 4
and that it does not otherwise acquire any rights of ownership or
possession or any interest in intellectual property in the Licensed
Software. Merchant agrees that it will not, at any time during or after
the termination of this Agreement, contest or challenge Pandesic's and
its suppliers ownership of or rights in or related to the intellectual
property in the Licensed Software. Title to any medium containing the
Licensed Software delivered to Merchant shall remain with Pandesic.
***CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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8. RESTRICTIONS
Merchant, its employees, agents, consultants and Affiliates will not:
a) copy, modify, alter, disassemble, decompile, translate or convert into
human readable form, or reverse engineer, all or any part of the
Licensed Software and shall not use the Licensed Software to develop
any derivative works or any functionally compatible or
competitive software, except to the extent permitted under
applicable law. However, Merchant may create interfaces to
the Licensed Software or modify the provided interfaces to
permit interfacing with Merchant's legacy database systems. Merchant
shall not separate the Licensed Software into its component parts nor
incorporate any component files into any product, nor shall it remove
any proprietary, trademark or copyright markings or confidentiality
legends within the Licensed Software (and Pandesic agrees that it
shall not make such markings or legends visible to customers of
Merchant);
b) offer, for a fee or free of charge, services consisting of the
processing of data through the use of the Pandesic Server or the
Licensed Software for or for the benefit of any person other than
Merchant or its Affiliates;
c) use the Pandesic Server or the Licensed Software for commercial time
sharing, rental or service bureau use;
d) SELL, LEASE, RENT, LICENSE, SUB-LICENSE, TRANSFER, MARKET, DISTRIBUTE,
REDISTRIBUTE, OR OTHERWISE PART WITH THE LICENSED SOFTWARE OR ANY
COPIES OF THE LICENSED SOFTWARE, IN ANY MANNER OR IN ANY FORM NOT
EXPRESSLY PERMITTED BY THIS AGREEMENT; or
e) use the Licensed Software in any manner which violates any law or
regulation; is for a fraudulent purpose; contravenes public policy;
may cause Pandesic or its licensors to be subject to investigation,
prosecution or legal action or in contravention with the written
instructions provided by Pandesic.
9. CHARGES
a) In respect of Pandesic's provision of the Pandesic E-Business
Solutions Service Merchant will pay to Pandesic the service fees in
the amount and within the time set out Schedule C. The fees referred
to in this Section 9 do not include any taxes. If Pandesic is
required to pay any sales, use, property, value added, goods and
services or other federal or state or local taxes (excepting any taxes
on Pandesic's income) based on or as a result of the Pandesic
E-Business Solutions Service, lease or the license granted pursuant to
this Agreement, or Merchant's use of the Pandesic Server or the
Licensed Software, such taxes shall be charged to and collected from
Merchant in addition to the service fees set out in Part 1 of Schedule
C.
b) Merchant shall maintain complete and accurate records of its accounts
including, without limitation, invoices, correspondence and all
banking, financial or other records related to its use of the Pandesic
E-Business Solutions Service during the existence of this Agreement
and for at least three years after termination or expiration.
10. AUDIT
Pandesic shall have the right, on a once per year basis, to audit and inspect
Merchant's use of the Pandesic E-Business Solutions Service and the sales
records associated therewith in order to verify compliance with the terms
of this Agreement.
11. TERM
a) The term of this Agreement will commence on the date hereof.
b) Subject to Section 12, the term of Pandesic's obligation to provide
the Pandesic-TM- E-Business Solutions Service and Merchant's
obligations to pay for such will end 24 months from the date on which
the Licensed Software is made ready for use by the Merchant (the
"Initial Term"), following which it will be automatically renewed for
further successive one year terms (each, a "Renewal Term") unless
Pandesic or Merchant gives the other party at lease 90 days notice of
non-renewal prior to the end of the Initial Term or any Renewal Term
(the Initial Term and any
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Renewal Terms collectively, the "Pandesic-TM- E-Business Solutions
Service Term").
12. TERMINATION
a) Pandesic may immediately terminate this Agreement and its obligations
under all Schedules attached hereto by notice in writing to Merchant
if any of the following occur:
i. Merchant's use of the Licensed Software exceeds the scope of the
license conferred by Section 4;
ii. Merchant materially breaches any term of this Agreement and such
breach is not cured within 10 days of notice to Merchant of such
breach; or
iii. MERCHANT MAKES ANY ATTEMPT TO ASSIGN, SUB-LICENCE, OR OTHERWISE
TRANSFER ANY OF ITS RIGHTS UNDER THIS AGREEMENT OTHER THAN AS
PERMITTED BY SECTION 18.
b) The provisions of Sections 12, 13, 14 and 15 will continue to apply
between Pandesic and Merchant following the termination of this
Agreement.
c) Upon the termination of this Agreement pursuant to Section 12(a):
i) Merchant's rights under Section 4 shall immediately cease;
ii) Merchant shall return to Pandesic, or destroy (such destruction
to be certified in writing by an officer of Merchant), at the
Merchant's expense, all copies of the Licensed Software and
Documentation within 30 days of termination;
iii) Pandesic shall be under no further obligation to provide the
Maintenance and Support Services.
d) Termination of this Agreement shall not limit either party from
pursuing any other remedies available to it, including injunctive
relief, not shall such termination relieve Merchant, in the event that
it terminates this Agreement or its breach causes such termination,
from its obligation to pay fees accrued prior to the termination and
the present value of the minimum monthly fees from the date of
termination through the end of the E-Business Solutions Service Term,
discounted at a rate of six (6%) per annum.
e) In the event of any termination hereunder, Merchant shall not be
entitled to any refund of any payments made by Merchant.
13. CONFIDENTIALITY
a) Merchant and Pandesic each acknowledge that, during the term of this
Agreement, it will receive information from the other party that the
disclosing party regards as confidential (collectively, the
"Confidential Information"). Pandesic and Merchant each agree to take
measures to protect the confidentiality of the other party's
Confidential Information that, in the aggregate, are no less
protective than those measures it uses to protect the confidentiality
of its own Confidential Information, but at a minimum, Merchant
and Pandesic shall take reasonable steps to (i) use Confidential
Information of the other party only for the purposes of this
Agreement; (ii) avoid disclosure of such Confidential Information
to any third party, without the disclosing party's prior written
consent, other than to each other's employees and contractors on
a need-to-know basis; (iii) advise its employees and contractors
of the confidential nature of the Confidential Information and
of the prohibitions contained herein; (iv) not duplicate such
Confidential Information, except as reasonably necessary to
perform their duties hereunder, and (vi) not remove or destroy
any proprietary or copyright notice appearing therein.
b) This Section 13 will not apply to Confidential Information that:
i) is rightfully known to the recipient prior to receipt from the
disclosing party;
ii) is required to be disclosed under the laws of that party's
jurisdiction (provided that the parties shall meet and discuss in
good faith reasonable and lawful methods for limiting such
disclosure);
iii) is disclosed to an assignee of Pandesic; or
iv) is or later enters the public domain.
c) Pandesic and Merchant each acknowledge that its failure to comply with
the provisions of this Section 13 will cause irreparable harm to the
other party which cannot be adequately compensated for in damages, and
accordingly acknowledges that the other party will be
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entitled, in addition to any other remedies available to it, to
interlocutory and permanent injunctive relief to restrain any
anticipated, present or continuing breach of this Section.
14. NO WARRANTIES.
PANDESIC WARRANTS THAT THE LICENSED SOFTWARE WILL SUBSTANTIALLY CONFORM TO
THE FUNCTIONAL SPECIFICATIONS CONTAINED IN THE DOCUMENTATION. PANDESIC
DOES NOT WARRANT THAT THE LICENSED SOFTWARE WILL OPERATE UNINTERRUPTED OR
THAT IT WILL BE FREE FROM MINOR DEFECTS OR ERRORS WHICH DO NOT MATERIALLY
AFFECT SUCH PERFORMANCE OR THAT THE APPLICATIONS CONTAINED IN THE
LICENSED SOFTWARE ARE DESIGNED TO MEET ALL OF MERCHANT'S OR ITS
AUTHORIZED AFFILIATES' BUSINESS REQUIREMENTS.
ONE OF PANDESIC'S LICENSORS IS TAXWARE INTERNATIONAL, INC. ("TAXWARE"). WITH
RESPECT TO SUCH TAXWARE SOFTWARE AND DATA, PANDESIC DOES NOT WARRANT THE
ACCURACY OF THE DATA AND OTHER CALCULATIONS MADE BY THE TAXWARE SOFTWARE.
MERCHANT BEARS FULL RESPONSIBILITY FOR THE DETERMINATION OF THE ACCURACY
AND APPLICABILITY OF THE OUTPUT FROM THE TAXWARE SOFTWARE AND
ACKNOWLEDGE AND UNDERSTAND THAT TAX CALCULATIONS OFTEN INVOLVE
INTERPRETATIONS AND THAT THE DATA OF MANY JURISDICTIONS CAN CHANGE
RAPIDLY. MERCHANT UNDERSTANDS THAT TAXWARE IS NOT PROVIDING SPECIFIC TAX
ADVICE AND MERCHANT SHOULD OBTAIN THE ADVICE OF QUALIFIED PROFESSIONALS
IN THIS AREA.
15. LIMITATION OF LIABILITY.
A) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR ANY
STATUTE OR RULE OF LAW, SUBJECT TO SECTION 13(C), PANDESIC'S
CUMULATIVE LIABILITY FOR ALL CLAIMS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT AND ANY SCHEDULES ATTACHED HERETO, WHETHER DIRECTLY
OR INDIRECTLY, INCLUDING, WITHOUT LIMITATION, FROM OR IN CONNECTION
WITH THE PANDESIC E-BUSINESS SOLUTIONS SERVICE, THE PANDESIC SERVER,
THE HOSTING SERVICES, THE LICENSED SOFTWARE, OR THE PROVISION OF THE
MAINTENANCE AND SUPPORT SERVICES SHALL NOT EXCEED THE LESSER OF THE
CHARGES PAYABLE BY MERCHANT PURSUANT TO THIS AGREEMENT IN THE YEAR IN
WHICH THE CAUSE OF ACTION AROSE OR $500,000.
B) NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT,
CONSEQUENTIAL OR SPECIAL DAMAGES CLAIMED BY ONE OF THE PARTIES OR
ANY THIRD PARTY, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF
PROFITS OR REVENUE, DATA LOSS OR FAILURE TO RELEASE EXPECTED SAVINGS,
HOWEVER DERIVED.
C) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR ANY
STATUTE OR RULE OF LAW EXCEPT FOR ITS OBLIGATIONS UNDER SECTIONS 9
AND 13, MERCHANT'S CUMULATIVE LIABILITY FOR ALL CLAIMS ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT AND ANY SCHEDULES ATTACHED
HERETO, WHETHER DIRECTLY OR INDIRECTLY, INCLUDING, WITHOUT LIMITATION,
FROM OR IN CONNECTION WITH THE PANDESIC E-BUSINESS SOLUTIONS SERVICE,
THE PANDESIC SERVER, THE HOSTING SERVICES, THE LICENSED SOFTWARE, OR
THE PROVISION OF THE MAINTENANCE AND SUPPORT SERVICES SHALL NOT
EXCEED THE LESSER OF THE CHARGES PAYABLE BY MERCHANT PURSUANT TO THIS
AGREEMENT IN THE YEAR IN WHICH THE CAUSE OF ACTION AROSE OR $500,000.
D) THIS SECTION 15 APPLIES REGARDLESS OF THE GROUNDS ON WHICH MERCHANT
BASES ITS CLAIM, INCLUDING BUT NOT LIMITED TO CONTRACT OR TORT, EVEN
IF THE DAMAGES ARE CAUSED BY BREACH OF CONTRACT (INCLUDING, WITHOUT
LIMITATION, FUNDAMENTAL BREACH), OR BY THE NEGLIGENCE, GROSS
NEGLIGENCE, NEGLIGENT MISREPRESENTATION OR OTHER FAULT OF
PANDESIC,AND EVEN IF
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PANDESIC HAS BEEN ADVISED OF THE POSSIBILITY OF THESE DAMAGES.
16. AUTHORIZATION
The relationship between Pandesic and Merchant is intended to be that of
independent contractors. Merchant acknowledges that Pandesic is
providing a service and granting a license only, and that by
providing the Pandesic E-Business Solutions Service Pandesic is not
acting as the employee, agent or representative in any other capacity
of Merchant.
17. PROPRIETY RIGHT INFRINGEMENT
a) Subject to Section 15, Pandesic will indemnify Merchant and save
Merchant harmless for and against any and all costs, losses, damages,
legal costs and expenses, liability, claims and demands incurred by
or made against Merchant alleging that the use of the Licensed
Software by Merchant in accordance with the terms of this Agreement
infringes or otherwise breaches the copyright, trade secret, or other
intellectual property, other than patent rights, of any third party,
provided that Merchant gives Pandesic prompt notice of, and
reasonable assistance in defending, any claim to which this Section
17 applies, and provided further that Pandesic will have sole
authority to defend and contest or settle any claim to which this
Section 17 applies.
b) Pandesic will have no liability under this Section 17 for, and
Merchant will indemnify and save Pandesic harmless from and against
any and all costs, losses, damages, legal costs and expenses,
liability, claims and demands incurred by or made against Pandesic in
connection with any claim described in this Section 17 and any claim
for breach of patent rights which is based upon Merchant's use of the
Licensed Software in connection with any other hardware, software or
services not provided by Pandesic, or in any manner which is not
authorized by this Agreement.
c) If any of the Licensed Software becomes, or in Pandesic's judgment is
likely to become, the subject of a claim that infringes a proprietary
right or if Pandesic settles a claim of infringement, Pandesic may, at
its sole option, discretion and expense:
i) obtain for Merchant the right to continue using the Licensed
Software;
ii) replace or modify the Licensed Software to make in non-infringing
so long as the replacement or modification is substantially
similar to the Licensed Software; or
iii) terminate this Agreement and refund to Merchant the Service fees
paid pursuant to Section 9(a) during the month in which the
termination occurs.
d) The maximum aggregate liability of Pandesic under this Section 17
shall equal the lesser of the aggregate payments made by Merchant to
Pandesic under this Agreement in the twelve months immediately prior
to the time the claim of infringement arises or $500,000, and if
there should be more than one claim of infringement, the amount
payable under such indemnity in respect of each claim shall be
divided pro rata.
e) This Section 17 states the entire liability of Pandesic and the
exclusive remedy of Merchant with respect to any claim of
infringement, including patent, copyright or trade secret infringement.
18. ASSIGNMENT
A) MERCHANT MAY NOT, WITHOUT PANDESIC'S PRIOR WRITTEN CONSENT, ASSIGN,
SUBLICENSE, PLEDGE, GRANT A SECURITY INTEREST IN OR OTHERWISE TRANSFER
THIS AGREEMENT OR ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS
AGREEMENT, TO ANY PERSON.
B) ANY ATTEMPT OR ANY PURPORTED ACT OR ATTEMPTED ACT TO DO ANY OF THE
THINGS PROHIBITED BY THIS SECTION 18 SHALL BE NULL AND VOID.
19. ARBITRATION
Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order or other provisional
remedy to preserve the status quo or prevent irreparable harm pending
the selection and confirmation of a panel of arbitrators, and for the
right of Pandesic to bring suit on an open account for any payments
due Pandesic hereunder, any controversy or claim arising out of
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or relating to this Agreement shall be settled by arbitration in San
Francisco, California, in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgement upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
Arbitration shall be conducted by a single arbitrator who shall have a
background or training in computer law, computer science, or marketing of
computer products. The arbitrator shall have the authority to grant
injunctive relief in a form substantially similar to that which would
otherwise be granted by a court of law.
20. General
a) The inclusion of headings in this Agreement is for convenience of
reference only and shall not affect its construction or
interpretation.
b) This Agreement and the Schedules attached hereto constitute the
entire agreement between the parties pertaining to the subject
matter hereof. There are no warranties, conditions, or
representations (including any that may be implied by statute) and
there are no agreements in connection with such subject matter
except as specifically set forth or referred to in this Agreement.
No reliance is placed on any warranty, representation, opinion,
advice or assertion of fact made by any party hereto or its
directors, officers, employees or agents, to any other party hereto
or its directors, officers, employees or agents, except to the
extent that the same has been reduced to writing and included as a
term of this Agreement. Accordingly, there shall be no liability,
either in tort or in contract, assessed in relation to any such
warranty, representation, opinion, advice or assertion of fact,
except to the extent aforesaid.
c) Except as expressly provided in this Agreement, no amendment or
waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No agent or
representative of Pandesic, except an Officer, has authority to
alter, modify or waive any provision of this Agreement. No waiver
of any provision of this Agreement shall constitute a waiver of any
other provision nor shall any waiver of any provision of this
Agreement constitute a continuing waiver unless otherwise expressly
provided.
d) This Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties
hereto.
e) If any provisions of this Agreement shall for any reason be held
illegal or unenforceable, such provision shall be deemed separable
from the remaining provisions of this Agreement and shall in no way
affect or impair the validity of the enforceability of the
remaining provisions of this Agreement.
f) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
CONFLICT OF LAWS PRINCIPLES. THE PARTIES AGREE THAT THIS AGREEMENT
IS NOT SUBJECT TO AND SHALL NOT BE INTERPRETED BY THE UNITED
NATIONS CONVENTION ON CONTRACTS FOR THE SALE OF GOODS.
g) Any notice or other communication required or permitted to be given
pursuant to or in connection with this Agreement shall be in
writing and shall be given by hand or overnight delivery to the
address noted above for each of the respective parties.
h) Time is of the essence of this Agreement.
i) Neither party shall be liable under this Agreement by reason of any
failure or delay in the performance of its obligations hereunder
(except for the payment of money) on account of any cause which is
beyond the reasonable control of such party.
j) Merchant shall not disclose the terms of this Agreement to any
third parties.
k) It is acknowledged and agreed that Pandesic may use sub-contractors
to perform any or all of the services to be performed hereunder.
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IN WITNESS WHEREOF Pandesic and Merchant have
executed this Agreement on the date first written.
PANDESIC LLC
Per: /s/ Xxxxxx Xxxxxx
-----------------------------
DVD EXPRESS, INC.
Per: /s/ Xxxxxxx Xxxxxxx 3/26/98
-----------------------------
SCHEDULE A
PANDESIC E-BUSINESS SOLUTIONS-TM- CONTRACT # __________
SOFTWARE LIST
DESCRIPTION OF SERVICE EQUIPMENT:
Description of Licensed Software:
Pandesic-TM- E-business solution software product version 2.0
RESTRICTIONS AND LIMITATIONS OF THE PANDESIC E-BUSINESS SOLUTION SERVICE AND
LICENSE:
i) Merchant shall have a maximum of 10,000 base products offered on its Web
site.
ii) Merchant is permitted a maximum of 9 warehouses.
iii) Merchant operates on a supplier, reseller or physical consignment
business model.
iv) Merchant is permitted to place its web site on the hosted server to a
maximum configuration of 50MB of disk space and 1 GB bandwith
utilisation per month, provided that Merchant uses static web pages for
its web site.
DOCUMENTATION:
Attached hereto in the form of Appendices to this Schedule A.
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SCHEDULE A, APPENDIX 1
PANDESIC HOSTING DEFINITION
The Pandesic Hosted E-Business Solution allows a Merchant to receive the
benefits of the Pandesic Solution without the costs of running and
supporting a system at their own site.
OBJECTIVE
This document outlines Pandesic's responsibilities and obligations to the
Merchant.
1. SOLUTION COMPONENTS (SEE PANDESIC PRODUCT DEFINITION OVERVIEW)
1.1. HOSTING SERVER AND NETWORK BANDWIDTH -- Pandesic will allocate the
appropriate (to be mutually agreed between the parties acting
reasonably) server capacity and network bandwidth to the Merchant for
their Pandesic Solution, subject only to minimum monthly fees.
1.1.1. CORPORATE WEBSITES -- Hosting includes 25-200 MB of disk
space and 0.5-2 GB of network bandwidth per month for
hosting corporate static web pages, beyond which additional
usage-based fees will be applicable. Pandesic cannot host
dynamic web pages (pages linked to non-Pandesic applications
or databases).
1.2. ADDITIONAL HARDWARE -- Pandesic will provide two Wedge barcode
scanners and one printer (including a network card and barcode
printing cartridge) for the Merchant's first warehouse, and will
install them in the Merchant's warehouse. After the first
warehouse, Pandesic will install further warehouses on a time and
materials basis (required hardware is purchased by the Merchant).
1.2.1. PROVIDED BY MERCHANT -- The Merchant will need to provide a
PC and appropriate software (for specifications see PANDESIC
PRODUCT DEFINITION OVERVIEW), and security hardware if desired
or necessary. If the Merchant is not located in the warehouse,
they will also need one or more additional Web-enabled PCs to
maintain their Pandesic Solution.
1.3. SOFTWARE -- The Hosted Solution encompasses all the software
functionality described in the PANDESIC PRODUCT DEFINITION
OVERVIEW. Pandesic will provide the Merchant with SAP Client
software.
1.3.1. PROVIDED BY MERCHANT -- The Merchant needs a system capable
of Web browsing with Microsoft Internet Explorer 3.0 (or
higher) or Netscape Navigator 3.0 (or higher). Pandesic does
not provide the Merchant with web editing software such as
Microsoft FrontPage or Visual Interdev.
2. DEPLOYMENT (SEE DEPLOYMENT STATEMENT OF WORK)
2.1. PREPARATION -- During the preparation phase, the Merchant completes
the pre-work (including designing the store front and preparing
catalog content) and education is provided to the Merchant on the
Pandesic Solution.
2.2. INSTALLATION -- The hardware and software, as described above, is
delivered, setup, configured and tested.
2.3. INITIALIZATION -- The Merchant receives 5 hours of training and the
Pandesic Solution is personalized with basic store setup. The
Merchant tests the system.
2.4. ROLLOUT -- The Merchant completes the store setup, including
loading all of their catalog products, and links the store to their
corporate web site.
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2.5. CUSTOMIZATION - The Merchant is responsible for additional
customization or legacy integration. Pandesic will only allow and
support hosted systems utilizing SAP's ALE (Application Link
Enabling) technology or flat-file transfers. Customization and
legacy integration may require additional fees due to service,
hardware or bandwidth requirements.
3. EVERGREEN SERVICES AND UPGRADES
3.1. SYSTEM MAINTENANCE AND ADMINISTRATORS - System monitoring and
maintenance will be provided by Pandesic and/or an authorized
Hosting Partner. These services will encompass the hardware,
Windows NT, Microsoft SQL Sever, Microsoft IIS, Pandesic Application
Software, SAP R/3, Cybercash, Taxware, Citibank, and any other
hosted components of the Pandesic Solution.
3.2. BACKUP SERVICES - The Merchant's system will be backed up daily
and weekly, or as per a mutually agreed upon schedule.
3.3. DOWNTIME RESPONSE - 24x7x365 mission-critical downtime response.
3.4. CUSTOMER AND TECHNICAL SUPPORT - Customer and technical support
will be available Monday through Friday, 5am PST to 8pm PST.
3.5. EVERGREEN HARDWARE, NETWORK SCALABILITY - Pandesic will guarantee
Evergreen server capacity and network bandwidth as is appropriate
to meet mutually agreed upon performance benchmarks.
3.5.1. ADDITIONAL SERVER, NETWORK REQUIREMENTS - If the Merchant
requires additional non-Pandesic Solution server or bandwidth
capacity, including legacy integration traffic, Pandesic may
elect to charge additional usage-based fees which shall be
based upon actual out-of-pocket costs.
3.6. EVERGREEN UPGRADES - Pandesic or an authorized partner will perform
upgrades and patches at Pandesic's discretion, barring
backwards-compatibility or legacy integration issues. If such
issues exist, Pandesic will work with the Merchant to determine a
mutually acceptable timeframe and process for upgrading.
4. HOSTING FACILITIES
4.1. CURRENT FACILITIES - Pandesic currently hosts systems at its
Folsom, CA site. It provides T1 Internet access, firewall security,
physical security, and immediate proximity to Pandesic technicians.
T1 redundancy and UPS capabilities are currently being evaluated
for installation.
4.2. PANDESIC HOSTING PARTNER - Pandesic is currently evaluating
best-of-class Network Service Providers as candidates for a
Pandesic Hosting Partner. If selected, the Pandesic Hosting Partner
will provide the hosting facilities and services in cooperation
with Pandesic. Pandesic customers installed at Pandesic's Folsom,
CA site will be moved to the Hosting Partner's site within a
mutually agreed upon timeframe.
-12-
SCHEDULE A, APPENDIX 2
PANDESIC PRODUCT DEFINITION OVERVIEW
-------------------------------------------------------------------------------
HARDWARE - PROVIDED BY PANDESIC
-------------------------------------------------------------------------------
SERVER CAPACITY Shared capacity; Compaq or
Hewlett-Packard; 4 x 200 MHz Intel
Pentium-Registered Trademark- Pro
processors; 1 GB RAM; 30 GB Hard Disk;
Ethernet Card
BANDWIDTH Shared T1 access
WAREHOUSE PRINTER Hewlett-Packard 5Si; Barcode printing
cartridge; Ethernet Card
BARCODE SCANNER Symbol LS4004 Wedge scanner
-------------------------------------------------------------------------------
HARDWARE - PROVIDED BY MERCHANT
-------------------------------------------------------------------------------
WAREHOUSE PC Intel 166 MHz Pentium-Registered
Trademark- Processor or equivalent; 32
Mb RAM; 0 Xx Xxxx Xxxxx; CD-ROM;
Ethernet Card; Windows NT Server v4.0
TERMINALS ON LAN FOR OS is Unix, Windows 95, or Windows NT
- CUSTOMER SUPPORT FUNCTION Hardware is unspecified
- ACCOUNTING AND FINANCE
- MERCHANDISING (PRODUCT
MANAGEMENT)
- WEB DEVELOPMENT (IF NOT
OUTSOURCED)
SECURITY HARDWARE Optional, depends on security required
SCANNER OR DIGITAL CAMERA Unspecified - for catalog setup/maintenance
-------------------------------------------------------------------------------
SOFTWARE - PROVIDED BY PANDESIC
-------------------------------------------------------------------------------
PANDESIC APPLICATION SOFTWARE
DATABASE SERVER Microsoft SQL Server 6.5
OS & WEB SERVER LICENSE Microsoft Windows NT Server 4.0
NT Resource Kit
Microsoft Internet Information Server
(IIS) 4.0
BROWSER Microsoft LE 4.0
ELECTRONIC MAIL MetaInfo Send Mail
TRANSACTION PAYMENTS SYSTEM Cybercash
TAX SOFTWARE AVP Taxware
SAP INTERFACE SAP GUI client
REMOTE TERMINAL ACCESS SOFTWARE PCAnywhere
-13-
-------------------------------------------------------------------------------
SOFTWARE - PROVIDED BY MERCHANT
-------------------------------------------------------------------------------
OS ON OFFICE TERMINALS Unix, Windows 95, Windows NT
BROWSER ON OFFICE TERMINALS Netscape 3.0 or MS LE 3.0, or higher
versions
WEB EDITING PROGRAM Examples: MS FrontPage 97, MS Visual Interdev
IMAGE EDITOR Unspecified - for catalog setup/maintenance
-14-
SCHEDULE A, APPENDIX 3
STATEMENT OF WORK
HOSTED
The purpose of this document is to identify the activities and deliverables
that are included in the deployment portion of the Pandesic-TM- e-business
solution; to identify who completes these activities and what optional
services are available from the Certified Installer.
DEPLOYMENT OBJECTIVE
The objective of the Pandesic Deployment is for the Certified Installer, the
Merchant and Pandesic to work together on establishing and launching the
Internet shopping environment for the Merchant using the Pandesic-TM-
e-business solution.
ROLES AND RESPONSIBILITIES
The following resources are involved during a Deployment of the Pandesic
Solution:
1. Pandesic Deployment Manager
2. Certified Installers
3. Merchant Resources
The roles and responsibilities for these people include the following:
1. THE PANDESIC DEPLOYMENT MANAGER - The Pandesic Deployment Manager
has overall responsibility for the delivery and deployment of the
Pandesic-TM- e-business solution. They assist the merchant with
understanding the deployment methodology, preparing the prework
needed for the installation and coordinate activities with the
Certified Installer.
2. CERTIFIED INSTALLER - The Certified Installer will be responsible
for the initial personalization of software and the installation of
the printer at the distribution site.
3. MERCHANT - Multiple roles within the merchant's organization need
to be represented during the Deployment of the Pandesic-TM-
e-business solution. The following list is designed to provide you
with some guidelines as to the type of roles that will need to be
performed. This could represent different individuals or the same
person could facilitate multiple roles. When identifying Merchant
resources for the Deployment project, representatives from the
following areas should be included:
DISTRIBUTION CENTER - A representative from the warehouse that
will be used to stock merchandise for shipment to the
customer. This person will be responsible for executing
transactions to receive inventory into the warehouse, process
deliveries and return orders, and move inventory within the
the warehouse.
MARKETING/PLANNING - A representative who will be responsible
for executing transactions to maintain product and catalog
information, and maintain business information such as
supplier and freight costs and minimum inventory levels.
CUSTOMER SERVICE - A representative from the customer service
organization who will assist customers when required. This
person will be responsible for executing transactions to
cancel orders, issue customer credits, and sent replacement
orders when required.
-15-
FINANCE - A representative from finance/accounting
organization who will process vendor payments, maintain month
end/ year-end period close and maintain vendor information.
Additionally, a project leader or primary contact should be identified
for the project. This project leader can also represent one of the
functional roles listed above.
SCOPE AND APPROACH
The deployment of the Pandesic Solution is accomplished utilizing the
Pandesic Deployment Methodology. This methodology is comprised of four
phases, which are highlighted below:
1. PREPARATION
During the Preparation phase, the merchant completes the pre-work
and education is provided to the Merchant on the Pandesic System.
2. INSTALLATION
The hardware and software is delivered, setup, configured and tested.
3. INITIALIZATION
The merchant receives additional training and the Pandesic Solution
is personalized with basic store setup. Merchant tests the system.
4. ROLLOUT
Merchant completes store setup, develops the creative store front if
desired, and integrates the store into the existing web site if
applicable.
PREPARATION
The preparation phase of the project sets the foundation for the installation
and initialization of the system. It is during this phase that the Merchant
must complete the activities outlined in the Merchant Pre-work Document.
These activities include, but are not limited to:
- Identify Credit Cards Vendors
- Sign up with CyberCash
- Establish business relationship with transportation carriers
- Identify consignment model
- Register a domain name
- Obtain a VeriSign Secure Server ID
- Establish online business rules
- Establish banking relationships
- Provide catalog, product and inventory information
- Develop strategies for marketing products online
- Establish physical space for the installation
- Obtain digital pictures of merchandise
- Complete Merchant Questionnaire
It is during the Preparation Phase that the Deployment coordinates the
scheduling of the installation with the Certified Installers based upon
completion of the Merchant pre-work. Additionally, the Deployment Manager
provides the Merchant with a high level overview of both the deployment
process and the Pandesic-TM- e-business solution.
- 16 -
INSTALLATION
The installation of the Pandesic-TM- e-business solution is the first of a
two phase process. In this phase the Pandesic-TM- e-business solution is
configured, and tested at the hosting site. The installation of the
Pandesic-TM- e-business solution can only begin upon completion of the
Merchant Pre-work. It is during this phase that Pandesic will be responsible
for:
- Execution of the Pandesic provided Technical Script. Activities within
the script may include but are not limited to:
- Prepare the IP Configuration
- Prepare network properties
- Establish system settings
- Configure Internet information server
- Configure SQL Server
- Configure SAP System
- Run Patch Transports
- Update hostnames in RFC's
- NT configuration tasks
- Test SAP connection server
- Verify DCOM setting s
- Configure Cybercash
- Configure Citibank World Link
- Configure Verisign
- System Testing
Additionally, Pandesic will be responsible for the installation of a
single printer at a warehouse location.
The Functional Certified Installer will be responsible for using the
responses provided in the Xxxx-Work Questionnaire to execute the Functional
Script. Activities within the script may include but are not limited to:
- System preparation
- Create company basic information
- Define shipping conditions
- Update tax jurisdictions
- Create credit card conditions
- Establish financial information
- Establish automated background processes
- Create base materials, attributes and catalogs
- System testing
INITIALIZATION
During the Initialization Phase of the project is when the Merchant receives
training, the Pandesic-TM- e-business solution is personalized with basic
store set up, and the Merchant tests the initial system.
During this phase the Certified Installer will load the basic material,
catalog and inventory information for the base system.
The initial load of the Merchants information includes the following:
- Baseline configuration of 3 distribution centers
- Install 1 printer at a single distribution center
- Base line population of 50 products
- 17 -
- Create basic product catalog - establish a basic
catalog hierarchy and build at least 10 basic
branches of that hierarchy
- Update inventory levels - populate the inventory levels
of the catalog products for at least 50 of the product
line items.
- Establish user id's and security to support the baseline
configuration
- Perform system backup.
Additionally, during this phase, the Certified Installer will deliver five
hours of functional training for the Merchant on overall operation and
maintenance of the Pandesic System. The final component of the Initialization
Phase of deployment is for the Merchant to test the baseline of products which
have been loaded during the Initialization phase. Upon completion of a
successful system test, the Merchant, Certified Installer, and Deployment
Manager will sign-off on the completion of the Installation and Initialization
of the Pandesic-TM- e-business solution.
ROLLOUT
It is during the Rollout Phase that the Merchant completes store set up,
develops the creative storefront and integrates the store into the existing
web site. Activities that the Merchant should perform include:
- Create full product material load
- Create all catalog levels
- Create all distribution centers
- Update inventory levels for full product line
- Establish security for all users
- Integrate Pandesic store with existing web site
- Full system testing
Upon completion of the above activities, the Pandesic-TM- e-business solution
is ready to go live.
ASSUMPTIONS
The following outlines the assumptions Pandesic has made related to the
deployment of the Pandesic-TM- e-business solution.
- The entire Merchant Pre-work document is completed before
beginning the installation phase of the project.
- Additional work related to the deployment not listed above is
not included in the pricing of the Pandesic-TM- e-business
solution, but may be contracted for an additional fee.
FEES
As part of the Pandesic-TM- e-business solution, Pandesic will provide a
Deployment Manager at no additional charge. Fees that are the responsibility
of the merchant include:
- Registration of the domain name through Internic
- Obtaining VeriSign Secure Digital ID
- Bank Fees and other fees associated with establishing
secure financial transaction processing
Any additional services, other than those described above, provided by the
Certified Installer are arranged directly between the Merchant and the
Certified Installer.
-18-
--------------------------------------------------------------------------------
MERCHANT ROLES NOT INCLUDED AS PART OF THE PANDESIC E-BUSINESS SOLUTION
PREWORK
MERCHANT WEBSITE DESIGN & CONTENT
PREPARATION
Pandesic Project Coordination
Merchant Education
Merchant Complete Merchant Questionnaire
INSTALLATION
Pandesic Installation Support
Certified Installer Functional & Technical Installation
Merchant Training
INITIALIZATION
Pandesic Installation Support
Certified Installer System Initialization & Test
System Restoration
Merchant certification
ROLLOUT
Pandesic Quality Control
MERCHANT SYSTEM CUSTOMIZATION
--------------------------------------------------------------------------------
EVERGREEN - PROVIDED BY PANDESIC
--------------------------------------------------------------------------------
24x7 MISSION CRITICAL COVERAGE Database down, hardware problems, etc.
BACKUP SERVICES Daily and weekly backups
CUSTOMER, TECHNICAL SUPPORT 5am PST - 8pm PST, Mon-Fri
SOFTWARE UPGRADES Minimize downtime on major upgrades
HARDWARE, NETWORK UPGRADES Pandesic will determine performance
benchmarks and upgrade as needed
SCHEDULE B
PANDESIC E-BUSINESS SOLUTIONS-TM- CONTRACT # ______
MAINTENANCE AND SUPPORT SERVICES
1. MAINTENANCE AND SUPPORT SERVICES
a) During such periods as Pandesic makes available such services
generally to its Merchants for the Pandesic E-Business Solutions
Services, Pandesic will provide the following maintenance and support
services (the "Maintenance and Support Services") to Merchant in
respect of the Licensed Software:
i) telephone support, consisting of the following:
a) explaining specific functions and features of the Service
Equipment and the Licensed Software;
b) guiding Merchant's employees in the performance of specific
operations using the Service Equipment and the Licensed
Software; and,
c) first level response to defect reports; and,
ii) correction of errors in the Licensed Software, which Pandesic is
able to reproduce and which cause a material loss of function in
the Licensed Software;
subject, in each case, to Pandesic's ability to procure from third party
licensors, where necessary, assistance or software required to provide
the Maintenance and Support Services. In order to receive Maintenance
and Support Services hereunder, Merchant must provide the required
remote support and update connections to the Service Equipment as and
when required by Pandesic.
b) Pandesic will provide the Maintenance and Support Services on a 7 day
by 24 hour basis.
c) Any request for Maintenance and Support Services must be made by
Merchant to Pandesic by telephone and must describe, with reasonable
specificity, the Maintenance and Support Services required.
2. EXCLUDED SERVICES
a) Maintenance and Support Services will not include the following
("Excluded Services"):
i) user education and training except as otherwise expressly stated
in this Agreement;
ii) third party software implementation or installation;
iii) on-site support;
iv) modification of the Licensed Software;
v) correction of errors attributable, in Pandesic's reasonable
opinion, to operator error;
vi) correction of errors attributable, in Pandesic's reasonable
opinion, to the Merchant's use of software other than the
Licensed Software in conjunction with the Licensed Software; and
vii) Merchant's individual network security unless it is part of
Pandesic's general network security for its hosted E-Business
Solutions Service server operations.
b) Pandesic may, at its sole option, provide Excluded Services to the
Merchant from time to time at such rates and charges as may be
mutually agreed between Pandesic and the Merchant.
-20-
3. LICENSED SOFTWARE UPGRADES
Pandesic may from time to time make available modified and/or enhanced
versions of the Licensed Software ("Upgrades"). Pandesic will make each
such Upgrade available to Merchant on the same terms as Pandesic makes
such Upgrade generally available to other licensees of the Licensed
Software. Maintenance and Support shall only be provided in respect of
the most current version of the Licensed Software and the previous
version (i.e. version 1.x and version 1.[x minus 1]).
-21-
SCHEDULE C
PANDESIC E-BUSINESS SOLUTIONS-TM- CONTRACT # ________
CHARGES TO MERCHANT
(A) Merchant shall pay to Pandesic the sum of [***] upon the acceptance by
Pandesic of this agreement.
(B) Upon the completion of installation, Merchant shall remit to Pandesic
within 30 days following the expiration of each calendar month (in the
event the installation is completed mid-month, the Fees shall be
prorated for that month) the aggregate incremental transaction
percentage amounts of Merchant's gross revenues (for clarification
purposes, gross revenues shall not include sales tax charged to
customers of Merchant or bank transaction fees associated with customer
revenues) generated by the sale or other distribution of products or
services provided by Merchant through use of the Pandesic-TM- E-Business
Solutions Service during such month, less the amount of post-invoice
credits granted by Merchant to its customers during such month in
accordance with Merchant's standard credit and returns policy end (the
"Fees"). If such fees do not equal or exceed the Monthly Base Fee
applicable to Licensee Monthly Sales up to [***] in any month, Merchant
shall remit the difference to Pandesic within 30 days of the end of such
month.
The fees are predicated on the Merchant offering less than [***] Base
Products utilizing the Pandesic-TM- E-Business Solutions Service (a Base
Product being a distinct product which can have color and size
variations), AND Merchant having less than ten warehouses, AND Merchant
operates on a supplier, reseller or physical consignment business model.
Such payments shall be paid sooner than on a monthly basis as and when
software functionality in the Licensed Software provides the ability to
do so. Merchant agrees to utilize such software functionality when
available. Merchant shall provide to Pandesic, together with such Fees,
a detailed report (the "Report"), which shall include (a) the number of
sales or other distribution of products or services provided by Merchant
through use of the Pandesic-TM- E-Business Solutions Service, (b) the
amount of revenue generated by such sale or distribution and (c) the
number, amount, and nature of post-invoice credits granted.
***CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
-22-
Licensee Monthly Sales Monthly Transaction Fee
---------------------- ------------------------------------------------------------
From To Monthly Base Fee Incremental Transaction %
-------- -------- ---------------- -------------------------------------
[***] [***] [***] Plus [*] of the amount over $50,000
[***] [***] [***] Plus [*] of the amount over $100,000
[***] [***] [***] Plus [*] of the amount over $250,000
[***] [***] [***] Plus [*] of the amount over $500,000
[***] [***] [***] Plus [*] of the amount over $1,000,000
[***] [***] [***] Plus [*] of the amount over $2,500,000
[***] [***] to be renegotiated at such time
For example, a Merchant that transacts [***] of revenue is responsible
for a monthly transaction fee of [***].
From the table above:
[***] [***] [***] +/- [***] of the amount over $500,000
Base fee [***]
[***] of [***] (amount over [***]) [***]
Total [***]
***CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
-23-
SCHEDULE D
PANDESIC E-BUSINESS SOLUTIONS-TM- CONTRACT # ______
LIST AND TIMETABLE OF FUNCTIONALITY ENHANCEMENTS
------------------------------------------------
PHASE 1: ON INSTALLATION
REQUIREMENT: CUSTOMER BASED ORDER MANAGEMENT:
- Customer needs web based facility to make changes to their
outstanding orders. Changes will include adding line items,
deleting line items, change delivery dates
SOLUTION: Initial solution will provide customer with order change
capability but the back-end processing of those changes will result in
the cancellation and re-entry of the order. This will be invisible to
the customer except that he/she will receive a new order number when
changing orders. Longer term solution will be for customer changes to
be applied to the original order rather than deletion and creation of
a new order
CUSTOM DEVELOPMENT REQUIRED: Front-end changes to allow customer to make
changes to the order, then taking those changes and passing them back
to the R/3 engine so the original order can be deleted then a new
order created. Longer term solution will require re-configuration of
the R/3 engine to allow for change orders and a front-end facility to
allow customers to make those changes.
REQUIREMENT: PRE-ORDERS AND BACK-ORDERS:
- System needs to allow the customer to distinguish between
pre-(advanced releases of videos) and back-orders (titles not in
stock)
- System needs to allow customer to order a DVD prior to official
release of the title
- Provide ability for customer select delivery/shipment options
such as "ship complete" or ship when three titles at a minimum
are available, etc.
SOLUTION: Creation of separate catalog categories, and the assignment of
specific videos to those categories will allow customers to
distinguish between pre-releases and other titles when browsing the
catalog. Pre-releases titles will be set with an inventory qty of 0,
allowing the customer to place the order. The Licensed Software will
treat these pre-release orders like back-orders. Distinction between
pre-release orders and standard back orders can be explained through
language on the site explaining the difference between pre-releases
and back-orders for titles already released. Customer would then have
the option to select either "ship order complete" or "ship when
available" for their order.
CUSTOM DEVELOPMENT REQUIRED: Enable the Licensed Software to allow the
consumer to select "ship order complete", indicating that the order is
not to be shipped until all line items are ready for delivery. The
Licensed Software's default setting is to ship each line item as it's
available. This will give the customer the choice to "ship when
available" or "ship order complete."
REQUIREMENT: COMBINE PICK AND PACK SLIP AND REDUCE THAT PROCESS TO ONE FORM:
-24-
SOLUTION: Merchant will attempt to use the Licensed Software standard
configuration of separate pick and pack slips, but reserves the right to
request re-configuration to a single form if this is not workable in the
long run.
REQUIREMENT: DYNAMIC CREATION OF "WHAT'S NEW", "COMING ATTRACTIONS", AND
SEARCH-ALPHA LIST.
SOLUTION: The Licensed Software will allow for "What's New" and "Coming
Attraction" categories in the catalog. To achieve this, Merchant only has
to assign individual titles to those categories. The Licensed Software
will also provide a "Search-Alpha" list for users to see all store titles
(except adult videos) in a single drop-down box.
CUSTOM DEVELOPMENT REQUIRED: Creation of a "Search-Alpha" capability.
REQUIREMENT: DYNAMIC CATEGORIES
- Conceal adult titles on storefront via secure access of some type
- Block customers referred from certain sites (Gateway) from seeing
adult and Playboy titles in any and all places these titles may
appear including withing the "new arrivals" section.
- Adult and Playboy title option display in user profile
SOLUTION: The Licensed Software will provide a capability to block
customers referred from certain sites from seeing adult titles. Concealed
adult titles on store front via secure access and "Adult title option
display in user profile" will be delivered in a later phase.
CUSTOM DEVELOPMENT REQUIRED: Track customers coming from certain sites and
prevent the "Adult-title" catalog category from being displayed to
customer.
REQUIREMENT: SEND EMAIL NOTIFICATION TO A CUSTOMER IF A PRE-ORDERED PRODUCT
SHIPPING DATE IS CHANGED. PROVIDE A MANUAL OR SCHEDULED PROCESS TO RUN EVERY N
DAY(S) TO EMAIL CUSTOMERS ABOUT STATUS CHANGES TO ORDERS.
SOLUTION: The Licensed Software already supports this requirement.
REQUIREMENT: PROVIDE THE ABILITY TO ALLOW THE CUSTOMER TO ENTER SPECIFIC
SHIPPING INSTRUCTIONS ON AN ORDER SUCH AS "DO NOT INCLUDE INVOICE IN BOX".
SOLUTION: The Licensed Software is to provide capability to allow customer
to specify special shipping conditions. These requests will be in the form
of text based note entered by the customer at order placement time and will
print on the pick list.
CUSTOM DEVELOPMENT REQUIRED: Enable "special notes" field on order form.
These notes will print on pick list as special handling instructions for
warehouse.
-25-
REQUIREMENT: TRACK FOR REPORTING PURPOSES, ORDERS REFERRED FROM CERTAIN
URLs. (THIS IS TO ACCOMMODATE COMMISSION TACKING.)
SOLUTION: The Licensed Software will provide the capability to
track orders referred from certain URL's through reporting.
CUSTOM DEVELOPMENT REQUIRED: Ability to track referred customers
from certain sites. This requires we associate a specific order from
a referred site. Creation of a report to identify orders actually
placed from referred site visits.
PHASE 2: TARGETED FOR MID/LATE JUNE IMPLEMENTATION
REQUIREMENT: PROVIDE THE ABILITY TO DEFINE SELECTED ORDERS FOR HUMAN REVIEW
PRIOR TO PROCESSING (I.E., HOLD ALL FOREIGN ORDERS, HOLD ORDERS THAT HAVE
DIFFERENT SHIP-TO ADDRESSES FROM XXXX-TO ADDRESSES, HOLD MULTIPLE ORDERS FOR
THE SAME CREDIT CARD.)
SOLUTION: Pandesic and Merchant to work to refine requirements and
provide solution for June delivery.
CUSTOM DEVELOPMENT REQUIRED: Enable block order capability based on
Merchant conditions. Also provide Review Queue to allow Merchant to
view blocked orders and disposition as appropriate.
REQUIREMENT: STORE CUSTOMERS USER ACCOUNT PROFILE WITH CREDIT CARD
INFORMATION -- NEEDS TO STORE MULTIPLE CREDIT CARD NUMBERS.
SOLUTION: PANDESIC TO ADD TO VER. 2.1 ROADMAP. The Licensed Software
to provide functionality so consumer does not have to re-enter credit
card information if they've shopped at the store before. For June
delivery. The Licensed Software can either store the credit card numbers
with the customer account information on the same Pandesic server or
Pandesic can utilize the Cybercash database to retrieve previously used
credit cards. Pandesic will also work with Merchant to define longer term
solution requirements for inclusion into 2.1 release.
CUSTOM DEVELOPMENT REQUIRED: Custom work will depend on Merchant
solution preference:
a) Store credit card numbers on Pandesic server. The Licensed Software
will store multiple credit card numbers with the customers profile
information on the Pandesic server. Allow customer to either use
existing credit card info or enter a different number as an override.
b) Utilize Cybercash database to retrieve previously used credit cards:
Credit card numbers will not be stored on Pandesic server but rather
retrieved from remote Cybercash database using previous order
information.
REQUIREMENT: SUPPORT ORDERS TAKEN BY PHONE (1-800) AS WELL AS WWW.
-26-
SOLUTION: Pandesic is already working on 1-800 call center
templates which will allow Merchant 1-800 operators to utilize a more
efficient interface for placing phone orders. These new templates
will be ready for the June phase.
CUSTOM DEVELOPMENT REQUIRED: Provided Merchant is content with the
templates already being developed, there is no custom development
required. However, if the templates do not meet Merchant's needs,
custom work will be required.
PHASE 3: TARGETED FOR PANDESIC 2.1 RELEASE (SCHEDULED FOR AUGUST)
REQUIREMENT: "ONE CLICK" ORDER CAPABILITY
SOLUTION: ADD TO PANDESIC'S 2.1 ROADMAP. Pandesic and Merchant to work
to refine requirements and provide solution for Pandesic release 2.1
delivery. REQUIREMENT: GIFT CERTIFICATES
SOLUTION: Already on Pandesic 2.1 roadmap.
REQUIREMENT: PROVIDE THE ABILITY TO STAGE PICKING (I.E., STAGE ALL FOREIGN
SHIPMENTS TO PRINT JUST THOSE PICK, PACK AND SHIPPING PAPERS).
SOLUTION: ADD TO PANDESIC'S 2.1 ROADMAP. Pandesic is already planning
on staged shipments for ver. 2.1 but not currently planning on
staging by ship-to destination (country). Need to work with Merchant
to understand requirements and incorporate into 2.1 solution.
REQUIREMENT: PROVIDE THE ABILITY TO ALLOW THE CUSTOMER TO SPECIFY A FIXED
NUMBER OF TITLES TO BE SHIPPED IN EACH SHIPMENT. THIS PROVIDES THE CUSTOMER
THE ABILITY TO MINIMIZE SHIPPING COSTS. EXAMPLE: "SHIP WHEN A MINIMUM OF
THREE TITLES ARE AVAILABLE."
SOLUTION: ADD TO PANDESIC'S 2.1 ROADMAP. Need to work with Merchant to
understand requirements and incorporate into 2.1 solution.
CUSTOM DEVELOPMENT REQUIRED: Modification to R-3 engine to allow for
variable customer shipment criteria.
PHASE 4: FUTURE PANDESIC RELEASES BEYOND VER 2.1 (TARGET DECEMBER)
REQUIREMENT: IF A CUSTOMER REQUESTS TWO BACKORDERED TITLES TO BE SHIPPED AS
AVAILABLE, AND THE ARRIVE ON THE SAME DAY BUT ONE IN THE MORNING AND ONE IN
THE AFTERNOON, HOW MIGHT WE DEAL WITH THE SUPERFLUOUS SHIPPING CHARGES THAT
WOULD REQUIRE THE CUSTOMER TO PAY?
-27-
SOLUTION: Not a planned feature. Pandesic and Merchant to discuss for
consideration into future releases. The system will not generate
multiple shipping charges to the customer, however Merchant may incur
added shipping charges for the subsequent shipments.
CUSTOM DEVELOPMENT: Pandesic to deliver a consolidated batch picking
process that will provide ability to consolidate multiple deliveries
per order based on a Merchant schedule.
REQUIREMENT: CUSTOMER MAINTAINED ORDERS, "MULTIPLE" ORDER MANAGEMENT:
Provide the ability for customers to maintain multiple order baskets
(example, CDNOW's Lunchbox.)
SOLUTION: Pandesic and Merchant to discuss the planned 'personal wish
list' to see if this meets the Lunchbox requirements. This feature
provides the customer the ability to maintain a selection of items
and to decide at a later date to create an order from this selection.
The 'wish list' is a planed feature for the 2.1 release in August.
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AGREEMENT
This Agreement (the "Agreement") is entered into by and between Pandesic
LLC, a Delaware limited liability company, with its offices in Sunnyvale,
California ("Pandesic") and DVD Express, Inc., a California corporation with
its offices in Hollywood, California ("DVD Express") as of this 9th day of
April, 1999.
WHEREAS, Pandesic and DVD Express entered into that certain E-Business
Solution Agreement dated March 25, 1998 (the "E-Business Agreement"); and
WHEREAS, the E-Business Agreement was entered into by both Pandesic and
DVD Express during the early stages of their respective business development;
and
WHEREAS, Section 13 of the E-Business Agreement entitled
"Confidentiality" does not specifically obligate either Pandesic or DVD
Express to keep the terms of such E-Business Agreement confidential; and
WHEREAS, it was always the understanding and intent of both Pandesic and
DVD Express that the terms of the E-Business Agreement be subject to the
confidentiality provisions set forth in Section 13 of such E-Business
Agreement; and
WHEREAS, DVD Express is filing a Registration Statement on Form S-1 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") in connection with an initial public offering of its common
stock; and
WHEREAS, in accordance with the rules promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), DVD Express is required to
file the E-Business Agreement with the Commission as an exhibit to the
Registration Statement; and
WHEREAS, Pandesic and DVD Express acknowledge and are concerned about
the filing of the E-Business Agreement in that it may result in disclosure to
the public of highly sensitive economic, commercial, proprietary and other
such information set forth in the E-Business Agreement which could cause
competitive and economic harm to both Pandesic and DVD Express; and
WHEREAS, DVD Express has agreed to file with the Commission an
application for an order granting confidential treatment of certain highly
sensitive portions of the E-Business Agreement (the "Confidential Treatment
Application"), in connection with, but not part of, DVD Express' Registration
Statement; and
WHEREAS, Pandesic permits DVD Express to file the Confidential Treatment
Application with the Commission; and
WHEREAS, Pandesic and DVD Express wish to include the terms and
provisions of the E-Business Agreement within the definition of "Confidential
Information" contained in Section 13 of such E-Business Agreement; and
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WHEREAS, Pandesic and DVD Express mutually agree to use their best
efforts to keep confidential the terms of the E-Business Agreement.
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the mutual covenants set forth above, Pandesic and DVD
Express hereby agree as follows:
Section 13 of the E-Business Agreement is hereby amended to read as
follows:
13. Confidentiality.
a) Merchant and Pandesic each acknowledge that, during the term of
this Agreement, it will receive information from the other party
that the disclosing party regards as confidential, including the
terms and provisions of this Agreement (collectively, the
"Confidential Information"). Pandesic and Merchant each agree
to take measures to protect the confidentiality of the other
party's Confidential Information that, in the aggregate, are no
less protective than those measures it uses to protect the
confidentiality of its own Confidential Information, but at a
minimum, Merchant and Pandesic shall take reasonable steps to
(i) use Confidential Information of the other party only for the
purposes of this Agreement; (ii) avoid disclosure of such
Confidential Information to any third party, without the
disclosing party's prior written consent, other than to each
other's employees and contractors on a need-to-know basis; (iii)
advise its employees and contractors of the confidential nature
of the Confidential Information and of the prohibitions
contained herein; (iv) not duplicate such Confidential
Information, except as reasonably necessary to perform their
duties hereunder, and (v) not remove or destroy any proprietary
or copyright notice appearing therein.
b) This Section 13 will not apply to Confidential Information that:
i) is rightfully known to the recipient prior to receipt from
the disclosing party;
ii) is required to be disclosed under the laws of that party's
jurisdiction and/or the federal securities laws (provided
that the parties shall meet and discuss in good faith
reasonable and lawful methods for limiting such disclosure);
iii) is disclosed to an assignee of Pandesic; or
iv) is or later enters the public domain.
c) Pandesic and Merchant each acknowledge that its failure to
comply with the provisions of this Section 13 will cause
irreparable harm to the other party which cannot be adequately
compensated for in damages, and accordingly acknowledges that
the other party will be entitled, in addition to any other
remedies available to it, to interlocutory and permanent
-30-
injunctive relief to restrain any anticipated, present or
continuing breach of this Section.
IN WITNESS WHEREOF, Pandesic and DVD Express have executed this
Agreement as of the date above first written.
Pandesic LLC
/s/ Xxxxxx Xxxxxx
---------------------------
By: Xxxxxx Xxxxxx
Its:
DVD Express, Inc.
/s/ Xxxxxxx Xxxxxxx
---------------------------
By: Xxxxxxx Xxxxxxx
Its: President
