Exhibit 3.16
E-Commerce and Promotion Services Agreement
THIS AGREEMENT is made as of the 28th day of July, 1998 (the "Effective Date")
by and between XXX.XXX INTERNATIONAL INC. ("XXX.XXX"), a corporation having a
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxx, X0X 0X0 and XXXXXX MEDIA INC. ("Rogers"), a corporation having a place
of business at 000 Xxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0.
BACKGROUND:
1. XXX.XXX has developed, and has all necessary rights in, certain electronic
auction software, technology and services (collectively, the "XXX.XXX
Technology", as that term is more fully defined below).
2. XXX.XXX uses the XXX.XXX Technology to operate an on-line auction service
over the Internet provided at XXX.XXX's Web site found at the URL "xxx.xxx.xxx"
(the "E-Commerce Service", as that term is more fully defined below).
3. As more particularly described in this Agreement, XXX.XXX and Rogers wish
to enter into an exclusive relationship whereby, in part, XXX.XXX shall operate
the Canadian E-Commerce Service (defined below) in the Territory in accordance
with the provisions of this Agreement, and Rogers shall have exclusive
responsibility for the promotion of the Canadian E-Commerce Service.
4. XXX.XXX possesses all necessary intellectual property rights and other
rights to enter into the relationship with Rogers described herein.
NOW THEREFORE, in consideration of the premises, the mutual covenants contained
in this Agreement, and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:
ARTICLE ONE
INTERPRETATION
1.1 Definitions. In this Agreement, unless the context otherwise requires,
------------
each capitalized term shall have the meaning indicated below.
(1) "Above the Fold" means, in respect of a hyperlink, the ability of a user
using a screen resolution of 640 by 480 pixels to view a hyperlink without
having to scroll down the applicable Web page;
(2) "Affiliate" means any person, corporation, or entity that controls, is
controlled by or is under common control with a party, as the context
indicates;
(3) "Agreement" means this E-Commerce and Promotion Services Agreement and all
schedules annexed to this Agreement as the same may be amended from time to
time in accordance with the provisions hereof;
(4) "XXX.XXX Marks" means the trade-marks, trade names, service marks, design
marks, logos and other distinctive brand elements set out in Schedule "M"
to this Agreement (as amended from time to time) owned by XXX.XXX or its
Affiliates and used in association with the E-Commerce Service or the
XXX.XXX Site (whether registered or not);
(5) "XXX.XXX Site" means the Web site at which XXX.XXX operates the E-Commerce
Service, currently found at the URL "xxx.xxx.xxx";
(6) "XXX.XXX Technology" means: (i) all software (including cybermall
software), hardware, firmware, trade secrets, and know-how used and/or
developed by XXX.XXX or its Affiliates prior to and during the Term of this
Agreement (and including all Intellectual Property Rights therein); and
(ii) all Third Party Technology. XXX.XXX Technology includes, without
limitation, all technology used to create, modify, operate, distribute,
update, maintain and permit Internet access to the XXX.XXX Site, the E-
Commerce Service and any other on-line auction services developed or
offered by XXX.XXX, and all updates, modifications, revisions, additions,
customizations and enhancements to the XXX.XXX Technology. The XXX.XXX
Technology is more particularly described in Schedule "A", as may be
amended and updated from time to time;
(7) "Canadian XXX.XXX Site" means the pages of the XXX.XXX Site through which
XXX.XXX operates the Canadian E-Commerce Service;
(8) "Canadian E-Commerce Service" means an auction E-Commerce Service operated
by XXX.XXX which sells products and services to retail customers who
provide a billing address in the Territory (including, without limitation,
"small office home office" customers ("SOHO"));
(9) "Confidential Information" means all information relating to either party
or to such party's business, products, sales, customers, trade secrets,
technology or financial position to which access is obtained or granted
hereunder, which is treated by the disclosing party as being confidential
provided, however, that Confidential Information of the disclosing party
shall not include any data or information which the receiving party can
demonstrate:
(i) is or becomes publicly available through no fault of the receiving
party;
(ii) is already in the rightful possession of the receiving party prior
to its receipt from the other party;
(iii) is independently developed by the receiving party;
(iv) is rightfully obtained by the receiving party from a third party not
subject to an obligation of confidentiality;
2
(v) is disclosed with the written consent of the disclosing party whose
information it is; or
(vi) is disclosed pursuant to court order or other legal compulsion,
provided the receiving party gives the disclosing party prompt
notice of any such requirement to afford the disclosing party an
opportunity to obtain a protective order;
(10) "Contra" means the provision of advertising and sponsorship space on the
Canadian XXX.XXX Site to desired advertisers in return for the provision by such
advertisers of useful content, promotion and advertising services, products, and
other services for the Canadian E-Commerce Service;
(11) "Customer Profile" means all information and data relating to a customer of
the Canadian E-Commerce Service, including, without limitation: (i) name,
address, e-mail address, telephone number, and any other personal or demographic
information relating to such customer; (ii) all information and data relating to
the purchase of goods and services by such customer; and (iii) any other
information relating to such customer's behavior collected while such customer
accesses the Canadian E-Commerce Service;
(12) "Customer Service Standards" means the customer service performance
standards to which XXX.XXX shall adhere in operating the Canadian E-Commerce
Service hereunder, as set out in detail in Schedule "C" to this Agreement;
(13) "E-Commerce Service" means the on-line auction services and any storefront
on-line commerce services provided by or on behalf of XXX.XXX or its Affiliates
on the Internet using the XXX.XXX Technology, at the XXX.XXX Site, or any other
comparable on-line auction service which XXX.XXX or its Affiliates may directly
or indirectly provide now or at some future time during the Term, using the
XXX.XXX Technology or otherwise, which is similar in functionality and quality
to the current services. Without limiting the generality of the foregoing,
the E-Commerce Service includes, without limitation, the Canadian E-Commerce
Service and the U.S. E-Commerce Service;
(14) "Evaluation Period" means: (i) the period commencing on the Effective Date
hereof and ending three years after the Effective Date; and (ii) each subsequent
contiguous three year period following the previous Evaluation Period;
(15) "Intellectual Property Rights" means (A) any and all proprietary rights
provided under (i) patent law, (ii) copyright law, (iii) trade-xxxx law, (iv)
design patent or industrial design law, (v) semi-conductor chip or mask work
law, or (vi) any other statutory provision or common law principle applicable to
this Agreement or the XXX.XXX Technology, including trade secret law, which may
provide a right in either (a) ideas, formulae, algorithms, concepts, inventions
or know-how generally, or (b) the expression or use of such ideas, formulae,
algorithms, concepts, inventions or know-how; and (B) any and all applications,
registrations, licenses, sub-licenses, franchises, agreements or any other
evidence of a right in any of the foregoing;
3
(16) "Net E-Commerce Revenue" means the sum of:
(i) revenue earned by XXX.XXX in connection with the operation of the
Canadian E-Commerce Service (including all shipping costs paid by
such retail customer to XXX.XXX), net of sales, use, goods and
services, and other similar taxes imposed by any federal, provincial,
municipal or other governmental authority; and
(ii) revenue earned by XXX.XXX in connection with the purchase of products
and services offered for sale by XXX.XXX to retail customers in the
Territory as part of XXX.XXX's database marketing operations, and not
through the Canadian E-Commerce Service (including all shipping costs
paid by such retail customer to XXX.XXX), net of sales, use, goods
and services, and other similar taxes imposed by any federal,
provincial, municipal or other governmental authority,
less cost of goods or services sold (as invoiced by the supplier of such
products or services, but net of all taxes invoiced by such supplier), credit
card transaction fees paid to or deducted by third parties, duties, the cost of
shipping, and credits for returned goods, services or bad debts (including
shipping and restocking costs, if applicable), calculated in accordance with
generally accepted accounting principles applied in Canada on a consistent
basis;
(17) "Net Promotional Revenue" means revenue earned by Rogers from sales of
advertising and sponsorship for the Canadian XXX.XXX Site, net of all taxes
collected by Rogers on such revenue (including, without limitation, goods and
services tax), agency commissions and bad debts. Net Promotional Revenue shall
be calculated in accordance with generally accepted accounting principles
applied in Canada on a consistent basis, provided that Net Promotional Revenue
shall not include any value attributed by the parties to Contra;
(18) "New Canadian Auction" means: (i) any business-to-business or other form of
on-line auction in which both a buyer and a seller are located in the Territory;
or (ii) any other business-to-business or other form of on-line auction in
respect of which Rogers presents to XXX.XXX an analysis demonstrating that the
business case in support of the operation of such on-line auction in the
Territory is no less favourable than the business case supporting other on-line
auction opportunities in which XXX.XXX has engaged in the Territory during the
Term;
(19) "Reasonable Best Efforts" means that a party shall comply with the
obligation to which the covenant to use Reasonable Best Efforts applies in all
cases where such party has the ultimate discretion, control and ability to do
so, and that such party shall use commercially reasonable efforts to comply with
such obligation in cases where such party does not have such ultimate
discretion, control and ability;
(20) "Rogers E-Commerce Portal" means an e-commerce Web site marketed by Rogers
which aggregates an array of e-commerce content and services on-line;
(21) "Rogers New Media" means the division of Rogers which develops and operates
businesses on the Internet and which derives revenues from the sale of Internet
advertising, Internet sponsorships, Internet subscriptions and from the
completion of transactions on-line;
4
(22) "Xxxxxx'x Requirements" means the statement of the technical, operational,
performance, process and functional specifications and capabilities of the
XXX.XXX Technology, the Canadian XXX.XXX Site and the Canadian E-Commerce
Service, as described in Schedule "B";
(23) "Source Code Materials" means:
(i) a complete copy of the source code version of all software required to
allow Rogers to independently operate, maintain and support the Canadian
E-Commerce Service and the Canadian XXX.XXX Site in accordance with
Xxxxxx'x Requirements, appropriately labeled to denote the version or
release thereof, and the currency date thereof, in each of:
(a) machine-readable form on machine-readable storage medium suitable for
long term storage and compatible with the software as then being used
by Rogers and which, when compiled, will produce the object code
version of the software; and
(b) human-readable form with annotations in English on bond paper suitable
for long term archival storage; and
(ii) a complete copy, in English, on bond paper, suitable for long term
archival storage, and appropriately labeled to describe the contents
thereof, of all applicable documentation and other explanatory materials
including programmer's notes, technical or otherwise, for the software as
may be required by Rogers, using a competent computer programmer
possessing ordinary skills and experience, to further develop, maintain
and operate such software without further recourse to XXX.XXX including,
but not necessarily limited to, general flow-charts, input and output
layouts, field descriptions, volumes and sort sequence, data dictionary,
file layouts, processing requirements and calculation formula and the
details of all algorithms;
(24) "Term" shall have the meaning ascribed thereto in Section 7.1;
(25) "Territory" means Canada as presently constituted;
(26) "Third Party Technology" means all software (including cybermall software),
hardware, firmware, trade secrets, and know-how licensed by XXX.XXX from
third parties prior to and during the Term of this Agreement (and including
all Intellectual Property Rights therein) including, without limitation,
all third party technology used to create, modify, operate, distribute,
update, maintain and permit Internet access to the XXX.XXX Site, the E-
Commerce Service and any other on-line auction services developed or
offered by XXX.XXX, and all updates, enhancements, modifications,
revisions, additions, customizations and enhancements to the XXX.XXX
Technology. The Third Party Technology is more particularly described in
Schedule "A";
(27) "Torstar" means Toronto Star Newspapers Limited;
5
(28) "Transition Plan" means the process, procedures, time periods, and
obligations of the parties upon termination or expiration of this Agreement, as
set out in detail in Schedule "L" hereto; and
(29) "U.S. E-Commerce Service" means an auction E-Commerce Service operated by
XXX.XXX which sells products and services only to retail customers who provide a
billing address in the United States (including, without limitation, SOHO
customers).
1.2 Schedules. The following are the schedules attached to and forming part
---------
of this Agreement:
Schedule "A" - XXX.XXX Technology (including Third Party Technology)
Schedule "B" - Xxxxxx'x Requirements
Schedule "C" - Customer Service Standards
Schedule "D" - Response Times
Schedule "E" - Source Code Trust Agreement
Schedule "F" - Site Activity Reporting Requirements
Schedule "G" - Prohibited Products and Services
Schedule "H" - Prohibited Rogers Assignees
Schedule "I" - Net E-Commerce Revenue Reports
Schedule "J" - Net Promotional Revenue Reports
Schedule "K" - Rogers Performance Metrics
Schedule "L" - Transition Plan
Schedule "M" - XXX.XXX Marks
Schedule "N" - Torstar Letter
Schedule "O" - AOL Letter
ARTICLE TWO
OPERATION OF CANADIAN E-COMMERCE SERVICE
2.1 Operation of Canadian E-Commerce Service. XXX.XXX shall operate the
-----------------------------------------
Canadian E-Commerce Service in accordance with the provisions of this Agreement.
Except for those obligations which Rogers shall perform set out in Article 3
hereof, XXX.XXX shall be responsible for all aspects of operating the Canadian
E-Commerce Service. Without limiting the generality of the foregoing, XXX.XXX
shall, at its expense:
(i) have sole responsibility for supplying the inventory of products and
services which will be offered as part of the Canadian E-Commerce Service.
At Xxxxxx'x request, XXX.XXX agrees to use commercially reasonable efforts
to offer products and services supplied by Rogers as part of the Canadian
E-Commerce Service. Rogers acknowledges and agrees that XXX.XXX shall
maintain ultimate discretion with respect to the choice of products and
services which will be included as part of the Canadian E-Commerce Service;
provided, however, that XXX.XXX shall not offer any of the prohibited
products or services identified in Schedule "G" hereto without the prior
written consent of Rogers;
6
(ii) comply with Xxxxxx'x Requirements attached as Schedule "B" hereto;
(iii) comply with the Customer Service Standards attached as Schedule "C"
hereto;
(iv) support and maintain the Canadian E-Commerce Service, the XXX.XXX
Technology and the XXX.XXX Site in accordance with Schedule "D" hereto;
(v) use commercially reasonable efforts to upgrade, enhance, and improve the
Canadian E-Commerce Service, the XXX.XXX Technology and the XXX.XXX
Site;
(vi) be responsible for the fulfillment of all purchases of products and
services sold through the Canadian E-Commerce Service;
(vii) be responsible for the processing of all credit card purchases of
products and services through the Canadian E-Commerce Service;
(viii) comply with the site activity reporting requirements set out in
Schedule "F" hereto;
(ix) during each of the first three years of the Term, pay a minimum cash
amount of [Confidential Information filed separately with the SEC]
annually to Rogers to purchase the equivalent rate card value of
advertising for the Canadian E-Commerce Service on a selection of media
properties owned by Rogers and its Affiliates. Rogers will provide a
report to XXX.XXX within thirty (30) days of the end of each calendar
quarter during which XXX.XXX is obligated to make payment pursuant to
this subsection 2.1(ix) summarizing the advertising purchased by Rogers
pursuant to this subsection 2.1(ix). Unless otherwise mutually agreed by
the parties in writing, XXX.XXX shall pay this amount in four (4) equal
installments on the last day of each calendar quarter during the Term.
The parties agree that Rogers shall not include the cash amount paid by
XXX.XXX to Rogers pursuant to this subsection 2.1(ix) in the calculation
of whether Rogers has fulfilled the performance metric set out in
paragraph K.1(3)(i) of Schedule "K" hereto;
(x) provide a complete list of all Customer Profiles to Rogers within thirty
(30) days of the Effective Date, and thereafter provide Rogers with an
updated list of all Customer Profiles on a calendar monthly basis; and
(xi) work exclusively with Rogers to negotiate exclusive national
arrangements with suppliers to supply products and services for the
Canadian E-Commerce Service.
2.2 Equal Treatment. XXX.XXX represents, warrants and covenants that at
----------------
all times during the Term, it will perform its obligations set out in Section
2.1 and otherwise ensure that the Canadian E-Commerce Service is competitive to
the U.S. E-Commerce Service. Without limiting the generality of the foregoing,
XXX.XXX shall ensure that, unless Rogers otherwise agrees:
7
(i) the XXX.XXX Technology used in the operation of the Canadian E-Commerce
Service shall at all times be identical to the XXX.XXX Technology used
in the U.S. E-Commerce Service;
(ii) all updates, enhancements, modifications, improvements, and new features
owned by XXX.XXX or any Affiliate of XXX.XXX and incorporated into the
U.S. E-Commerce Service during the Term (including, without limitation,
new GUIs, branding and other creative material incorporated into the
U.S. E-Commerce Service) are incorporated into the Canadian E-Commerce
Service. For updates, enhancements, modifications, improvements, and new
features incorporated into the U.S. E-Commerce Service during the Term
but not owned by XXX.XXX or any Affiliate of XXX.XXX ("Third Party
Enhancements"), XXX.XXX shall use Reasonable Best Efforts to obtain all
rights necessary to incorporate such Third Party Enhancements into the
Canadian E-Commerce Service. XXX.XXX shall comply with the obligations
set out in this subsection 2.2(ii) as soon as commercially practicable,
provided that the time for performance of XXX.XXX's obligations set out
in this subsection 2.2(ii) shall not exceed ninety (90) days without the
prior written consent of Rogers, which consent will not be unreasonably
withheld;
(iii) the Customer Service Standards to which XXX.XXX adheres in its operation
of the Canadian E-Commerce Service are equal to the Customer Service
Standards to which XXX.XXX adheres in its operation of the U.S. E-
Commerce Service;
(iv) XXX.XXX supports and maintains the Canadian E-Commerce Service at a
level and with a priority that is equal to the level at which it
maintains the U.S. E-Commerce Service;
(v) the products and services offered as part of the Canadian E-Commerce
Service are comparable to the products and services offered as part of
the U.S. E-Commerce Service with respect to quality and proportionate
quantity (based on the relative volume of traffic on the Canadian E-
Commerce Service and the U.S. E-Commerce Service). In addition, unless
otherwise mutually agreed in accordance with the process set out in
Article 10 of this Agreement, XXX.XXX shall offer a minimum of five (5)
categories of products and services as part of the Canadian E-Commerce
Service, and shall ensure that the selection of products and services
offered as part of the Canadian E-Commerce Service is competitive to the
selection of products and services available through any comparable
Canadian on-line auction; and
(vi) the database of Customer Profiles is equal in quality, accuracy,
completeness and integrity to the database of customer profiles for the
U.S. E-Commerce Service.
2.3 Exclusivity to Rogers.
----------------------
(i) During the Term hereof, neither XXX.XXX nor any Affiliate of XXX.XXX
may, directly or indirectly, use, operate, distribute, sell, licence,
market, promote, offer, or grant to any third party any right to use,
operate, distribute, sell, licence, market, promote, or offer:
8
(a) all or any part of the XXX.XXX Technology, the XXX.XXX Site or the E-
Commerce Service in the Territory;
(b) any XXX.XXX Xxxx or any trade-xxxx confusingly similar to any XXX.XXX Xxxx
in the Territory, provided that XXX.XXX may use the XXX.XXX Marks to the
extent permitted by and in accordance with the specifications set out in
the marketing strategy and trade-xxxx guidelines for such use mutually
agreed to by the parties; or
(c) any business-to-retail consumer on-line auction service in which either or
both of the participating businesses and the participating consumers are
located in the Territory,
except as expressly contemplated in this Agreement, without the prior written
consent of Rogers, which consent will not be unreasonably withheld. For
greater certainty, the parties acknowledge that nothing in this subsection
2.3(i) shall preclude XXX.XXX from using or operating the XXX.XXX
Technology, the XXX.XXX Site or the E-Commerce Service in the Territory in
connection with XXX.XXX's operations outside of the Territory.
(ii) Exceptions. Notwithstanding the foregoing, Rogers acknowledges that
Xxxxxx'x rights of exclusivity in this Section 2.3 shall be subject to the
existing contractual arrangement between XXX.XXX and Torstar, as amended by
Schedule "N" hereto. XXX.XXX represents, warrants and covenants that:
(a) the performance by XXX.XXX and Rogers of their respective rights and
obligations as set out in this Agreement shall not contravene, breach
or infringe any rights granted by XXX.XXX to Torstar;
(b) XXX.XXX has not granted any right to Torstar to use any XXX.XXX Marks;
(c) the rights granted to Torstar are restricted to the right to sell
products and services offered by charitable organizations, community
organizations and retail stores with operations in Ontario to retail
customers with a billing address inside of Ontario;
(d) XXX.XXX shall not, directly or indirectly, extend, enhance, expand or
enlarge the scope of the rights granted to Torstar without Xxxxxx'x
prior written consent; and
(e) the services provided by XXX.XXX to Torstar during the Term hereof
shall be restricted to the licence, operation, support and maintenance
of the XXX.XXX Technology. Without limiting the generality of the
foregoing, XXX.XXX covenants that, during the Term, it shall not
assist Torstar with the marketing of Torstar's on-line auction nor
with the sourcing of products and services for sale through Torstar's
on-line auction.
9
(iii) America Online, Inc. Rogers acknowledges that XXX.XXX has entered into
an agreement with America Online, Inc. ("AOL") dated November 1, 1997 (the
"AOL Agreement"). XXX.XXX represents, warrants and covenants that:
(a) the terms and conditions set out in the AOL Agreement do not apply to
the Canadian E-Commerce Service or the Canadian XXX.XXX Site;
(b) the rights granted to AOL in the AOL Agreement do not include any
rights in the Territory, except to the extent that AOL may, in the
exercise of its rights set out in the AOL Agreement, engage in
activity in the Territory in connection with AOL's operations outside
of the Territory;
(c) XXX.XXX has not granted to AOL any right to sell advertisements or
sponsorship for the Canadian XXX.XXX Site;
(d) XXX.XXX has not granted to AOL any right to use the XXX.XXX
Technology to establish, operate or maintain an on-line auction
service for purchasers with a billing address in Canada;
(e) the letter attached as Schedule "O" hereto has been executed by an
executive of AOL with authority to bind AOL; and
(f) XXX.XXX shall not renew, amend or enter into any new agreement with
AOL which relates to the use, operation, distribution, sale, licence,
marketing, promotion, or other offer of the XXX.XXX Technology,
the E-Commerce Service, the XXX.XXX Marks or the XXX.XXX Site in the
Territory without Xxxxxx'x prior written consent.
(iv) Non-Profit Support. Notwithstanding the foregoing, Rogers acknowledges that
XXX.XXX currently provides assistance to the following organizations in the
hosting, production and promotion of their Web sites: Recording Artists
Against Drinking and Driving, Students Against Drinking and Driving,
Ontario Community Council on Impaired Driving, Association of Campus
Hospitality Managers, and BACCHUS and their affiliates (collectively, the
"Charities"). Rogers agrees that such assistance shall not constitute a
breach of XXX.XXX's obligations of exclusivity to Rogers hereunder.
XXX.XXX agrees that it shall consult with Rogers prior to expanding the
scope of the services it provides for the Charities and prior to providing
similar services for any other registered charities.
2.4 Right to Participate in Additional On-Line Auction Initiatives. During the
---------------------------------------------------------------
Term, XXX.XXX shall make available to Rogers, and Rogers shall have the first
right to participate in, any New Canadian Auction on an exclusive basis as
follows:
(i) XXX.XXX shall provide written notice to Rogers specifying the major terms
and conditions which XXX.XXX proposes shall apply to Xxxxxx'x right to
participate with
10
XXX.XXX in the operation of such New Canadian Auction. The terms
proposed by XXX.XXX shall be reasonable, consistent with this Agreement
and consistent with industry standards;
(ii) Rogers shall provide written notice to XXX.XXX of whether or not it
wishes to exercise its right to participate with XXX.XXX in the
operation of such New Canadian Auction within fourteen (14) days of the
date Rogers receives the notice referred to in subsection 2.4(i). If
Rogers does not respond to XXX.XXX within such fourteen (14) day period,
Rogers shall be deemed to have rejected its option to participate in
such New Canadian Auction pursuant to subsection 2.4(v) and XXX.XXX
shall be governed by the provisions of subsection 2.4(vi);
(iii) if Rogers provides written notice to XXX.XXX that it wishes to exercise
its right to participate with XXX.XXX in the operation of such New
Canadian Auction in accordance with subsection 2.4(ii), then, for a
period of up to sixty (60) days following the date upon which Rogers
receives the notice referred to in subsection 2.4(i), Rogers and XXX.XXX
shall negotiate exclusively respecting the terms upon which Rogers shall
be entitled to participate with XXX.XXX in the operation of such New
Canadian Auction. The parties may extend this sixty (60) day exclusive
negotiating period upon mutual agreement;
(iv) if Rogers and XXX.XXX agree in writing upon terms and conditions
pursuant to which Rogers shall participate with XXX.XXX in the operation
of such New Canadian Auction, then XXX.XXX shall grant to Rogers such
exclusive rights;
(v) if Rogers and XXX.XXX fail to agree in writing upon terms and conditions
pursuant to which Rogers shall participate with XXX.XXX in the operation
of such New Canadian Auction, or if Rogers notifies XXX.XXX in writing
that it does not wish to exercise its right to participate with XXX.XXX
in the operation of such New Canadian Auction, then Rogers shall be
deemed to have rejected its option; and
(vi) if Rogers is deemed to have rejected its option to participate with
XXX.XXX in the operation of such New Canadian Auction in accordance with
subsection 2.4(v), XXX.XXX may either: (1) operate such New Canadian
Auction on its own; or (2) grant the right to participate in the
operation of such New Canadian Auction to a third party on terms and
conditions no more favourable than those offered to Rogers, provided
that XXX.XXX may not grant such rights to a third party later than one
hundred and eighty (180) days after the date that Rogers is deemed to
have rejected its option to participate with XXX.XXX in the operation of
such New Canadian Auction without Xxxxxx'x prior written consent. If
XXX.XXX wishes to grant to a third party the right to participate with
XXX.XXX on an exclusive basis in the operation of such New Canadian
Auction on terms and conditions which are more favourable than those
offered to Rogers, XXX.XXX must first offer such more favourable terms
to Rogers on an exclusive basis, and the parties shall again attempt to
negotiate the right to participate with XXX.XXX on an exclusive basis in
the operation of such New Canadian Auction in accordance with the
procedure provided in this Section 2.4.
11
ARTICLE THREE
PROMOTION OF CANADIAN E-COMMERCE SERVICE
3.1 Promotion and Advertising of the Canadian E-Commerce Service. XXX.XXX
-------------------------------------------------------------
grants to Rogers the exclusive, worldwide right to advertise and promote the
Canadian E-Commerce Service. Rogers will have responsibility for the purchase of
all advertising and promotional activity in connection with the Canadian E-
Commerce Service in both electronic and traditional media. Rogers shall, at its
expense, use Reasonable Best Efforts to prominently display the XXX.XXX Marks
and to prominently advertise the Canadian E-Commerce Service on Xxxxxx'x
national media properties (including, but not limited to, Yahoo! Canada). Such
Reasonable Best Efforts shall include efforts to:
(i) facilitate the integration of the Canadian E-Commerce Service with
Xxxxxx'x media properties and other communications products and
services;
(ii) display a user interface to the Canadian E-Commerce Service Above the
Fold on the home page of the Rogers E-Commerce Portal, and frequently
and prominently display the XXX.XXX Marks Above the Fold on other Rogers
on-line properties;
(iii) point such key words as "auction" and "online auction" only to the
Canadian E-Commerce Service; and
(iv) thread advertisements for the Canadian E-Commerce Service throughout the
Rogers E-Commerce Portal and on other Web sites operated by Rogers.
The equivalent rate card value of the performance by Rogers of the covenants set
out in this Section 3.1 shall be included in the calculation of Xxxxxx'x actual
performance for the purpose of evaluating whether Rogers has achieved the
performance metrics set out in Schedule "K".
3.2 Sale of Advertising for the Canadian E-Commerce Service.
--------------------------------------------------------
(i) Right to Sell Advertising. XXX.XXX grants to Rogers the exclusive right to
sell all advertising and sponsorship for the Canadian E-Commerce Service.
Rogers shall be responsible for generating advertising and sponsorship
revenues from the Canadian XXX.XXX Site, including the sale of banner
advertisements on the Canadian XXX.XXX Site and the sale of sponsorships to
specific auctions within the Canadian E-Commerce Service. Notwithstanding
the foregoing, Rogers agrees that, if XXX.XXX requests that Rogers sell
advertising to advertisers or advertising sales agents in order to assist
XXX.XXX with the merchandising of the Canadian E-Commerce Service, Rogers
will reasonably consider and pursue such advertising opportunities. Any
revenue earned by Rogers from advertising sales made by Rogers as a result
of such requests by XXX.XXX shall be included in the calculation of Net
Promotional Revenue.
12
(ii) Contra and Free Advertising. Rogers shall be entitled to place Contra and
free advertising on the Canadian XXX.XXX Site in its sole discretion,
provided that the total amount of free advertising and Contra allocated in
each year during the Term may not exceed:
(a) [Confidential Information filed separately with the SEC] of the total
advertising inventory available on the Canadian XXX.XXX Site during each
year of the first Evaluation Period; and
(b) [Confidential Information filed separately with the SEC] of the total
advertising inventory available on the Canadian XXX.XXX Site during each
subsequent year,
without the prior consent of XXX.XXX. For the purposes of this subsection,
the first "year" shall commence on the Effective Date and each subsequent
year shall commence on each anniversary of the Effective Date.
3.3 Rogers E-Commerce Portal. Rogers shall have the right, in its
-------------------------
sole discretion, to create, operate, distribute, and promote user interfaces to
the Canadian E-Commerce Service from the Rogers E-Commerce Portal.
3.4 Licence of XXX.XXX Marks. XXX.XXX grants to Rogers an exclusive, worldwide
-------------------------
right to use, copy, display, and distribute the XXX.XXX Marks in connection with
the advertising, marketing and promotion of the Canadian E-Commerce Service and
in connection with the operation of the Rogers E-Commerce Portal in accordance
with the terms of this Agreement. Such use shall include the right to use the
XXX.XXX Marks as part of a co-brand with a trade-xxxx, trade name, design xxxx,
logo or tag line owned or licenced by Rogers (a "Rogers Co-brand"). XXX.XXX
shall have opportunity to contribute to the selection of any such Rogers Co-
brand; provided, however, that Rogers shall maintain ultimate discretion with
respect to the choice of any Rogers Co-brand.
3.5 Exclusivity to XXX.XXX.
-----------------------
(i) During the Term of this Agreement, Rogers agrees that:
(a) except as otherwise permitted in accordance with subsections 3.5(ii)
and 3.5(iii) below, the Canadian E-Commerce Service shall be the only
on-line auction service displayed on the home page of the Rogers E-
Commerce Portal; and
(b) Rogers New Media shall use Reasonable Best Efforts not to actively
solicit advertising from or actively promote an on-line auction
technology or Web site competitive to the Canadian E-Commerce Service
or the XXX.XXX Technology (a "XXX.XXX Competitor"). Without limiting
the generality of the foregoing, in the event that any Rogers media
property independently receives advertising from a XXX.XXX Competitor,
at XXX.XXX's request, Rogers will place advertising for the
Canadian E-Commerce Service in Xxxxxx'x media properties to provide
13
advertising exposure comparable to that provided to such XXX.XXX
Competitor. The cost of such advertising shall be included in the
calculation of the amount spent by Rogers in order to meet the
performance metric set out in paragraph K.1(3)(i) of Schedule "K". The
amount deemed to be spent by Rogers pursuant to this paragraph
3.5(i)(b) shall be equal to [Confidential Information filed separately
with the SEC] of Xxxxxx'x standard rate card price.
(ii) Exceptions. Notwithstanding the foregoing, XXX.XXX acknowledges that
Rogers shall have the unrestricted right to advertise, market, promote,
and operate an on-line auction which is limited to the sale of products
and services offered by charitable organizations, community organizations
and retail stores with operations in Ontario to customers with a billing
address inside of Ontario (a "Local Auction") using technology other than
the XXX.XXX Technology. At Xxxxxx'x request, XXX.XXX will provide services
to assist Rogers to build, implement and operate such Local Auction on
terms and conditions to be mutually agreed.
(iii) Nothing in this Agreement shall restrict, inhibit or otherwise interfere
with:
(a) the ability of Rogers (including, without limitation, Rogers New
Media) or any Affiliate of Rogers to sell advertising to any third
party including, without limitation, a XXX.XXX Competitor;
(b) the ability of Rogers (including, without limitation, Rogers New
Media) to advertise, distribute, offer, market or promote the on-line
activities of any Affiliate of Rogers (including, without limitation,
The Shopping Channel), on the home page of the Rogers E-Commerce
Portal or otherwise; or
(c) the ability of any Affiliate of Rogers (including, without
limitation, The Shopping Channel), to engage in on-line activities
which may be competitive to those of XXX.XXX, use technology which
may be competitive to the XXX.XXX Technology, or enter into any
commercial arrangement with any XXX.XXX Competitor.
ARTICLE FOUR
ADDITIONAL SERVICES
4.1 Future Rogers Initiatives. During the Term of this Agreement, Rogers
--------------------------
agrees to use commercially reasonable efforts to facilitate the use of the
XXX.XXX Technology by Rogers and its Affiliates in connection with any future
Rogers on-line auction initiatives. XXX.XXX will licence the XXX.XXX Technology
and provide related services to Rogers and its Affiliates [Confidential
Information filed separately with the SEC].
4.2 Rogers-Specific Enhancements. If Rogers requests the inclusion of specific
-----------------------------
functionality or customization changes to the XXX.XXX Technology (a "Rogers-
Specific Enhancement"), XXX.XXX will use commercially reasonable efforts to
assist Rogers in the
14
development of such Rogers-Specific Enhancements. Ownership of Rogers-Specific
Enhancements shall be determined in accordance with Section 6.3 hereof.
ARTICLE FIVE
PAYMENT TERMS
5.1 Allocation of Revenue.
----------------------
(i) XXX.XXX shall pay Rogers fifty percent (50%) of the Net E-Commerce
Revenue. XXX.XXX shall invoice and collect all Net E-Commerce Revenue. Net
E-Commerce Revenue shall be aggregated on a calendar quarterly basis, and
XXX.XXX shall pay Rogers fifty percent (50%) of the Net E-Commerce Revenue
within thirty (30) days of the end of each calendar quarter. For greater
certainty, XXX.XXX agrees that it shall not deduct any portion of the Net
E-Commerce Revenue payable by XXX.XXX to a third party (including, without
limitation, any portion payable to Torstar or to AOL) from the calculation
of the total Net E-Commerce Revenue of which XXX.XXX shall pay Rogers
fifty percent (50%). XXX.XXX shall complete a Net E-Commerce Revenue
Report in the form attached hereto as Schedule "I" for each applicable
payment period and shall remit each such report along with each payment
due hereunder.
(ii) Rogers shall pay XXX.XXX fifty percent (50%) of the Net Promotional
Revenue. Rogers shall invoice and collect all Net Promotional Revenue. Net
Promotional Revenue shall be aggregated on a calendar quarterly basis, and
Rogers shall pay XXX.XXX fifty percent (50%) of the Net Promotional
Revenue within thirty (30) days of the end of each calendar quarter.
Rogers shall complete a Net Promotional Revenue Report in the form
attached hereto as Schedule "J" for each applicable payment period and
shall remit each such report along with each payment due hereunder.
5.2 Audit. Rogers shall keep accurate books and records of all revenues
------
received by Rogers and all information regarding deductions made to calculate
Net Promotional Revenues. XXX.XXX shall keep accurate books and records of all
revenues received by XXX.XXX and all information regarding deductions made to
calculate Net E-Commerce Revenues. Each party has the right, acting reasonably,
to audit the books and records of the other party during normal business hours
in respect of financial obligations under this Agreement. If such audit
discloses underpayment by the other party, the other party shall pay such
underpayment forthwith, together with interest from the date the payment was due
until such amount is paid. If an audit discloses an underpayment of 5% or more,
the party in default shall reimburse the other party on demand for the
reasonable out of pocket costs incurred in conducting such audit.
5.3 Most Favoured Terms. XXX.XXX represents, warrants, and covenants that:
--------------------
15
(i) the prices, terms and conditions contained in this Agreement are at least
as favourable as the prices, terms and conditions made available by
XXX.XXX to any other party who has entered into a commercial transaction
with XXX.XXX relating to the operation of a business-to-retail customer E-
Commerce Service in the Territory; and
(ii) between the Effective Date and August 31, 1998, XXX.XXX shall not grant to
any third party prices, terms or conditions more favourable than those
contained in the Share Subscription Agreement between XXX.XXX and Rogers
dated July 28, 1998 (the "Share Subscription Agreement").
Without limiting the generality of the foregoing, in the event that XXX.XXX
enters into a similar commercial transaction with a third party relating to the
operation of a business-to-retail customer E-Commerce Service in the Territory
on prices, terms or conditions that are more favourable than the prices, terms
and conditions made available to Rogers hereunder, or grants to any third party
prices, terms or conditions more favourable than those contained in the Share
Subscription Agreement between the Effective Date and August 31, 1998, then
XXX.XXX agrees to make such more favourable prices, terms or conditions
available to Rogers. Rogers may, in its sole discretion, retain an independent
third party auditor to audit the books and records of XXX.XXX in order to verify
XXX.XXX's compliance with this representation, warranty and covenant.
ARTICLE SIX
OWNERSHIP RIGHTS
6.1 Rogers Intellectual Property and Customer Profiles.
---------------------------------------------------
(i) Rogers Intellectual Property. Notwithstanding Section 6.2 hereof, Rogers
and XXX.XXX each agree that all right, title and interest in all content,
technology, software, and other intellectual property owned or created
entirely by Rogers, its licensors or its assignees, including, without
limitation, all Intellectual Property Rights therein, and all
modifications, revisions, additions, customizations and enhancements made
by Rogers hereunder related thereto, shall be owned by Rogers (and its
licensors, as the case may be).
(ii) Customer Profiles. XXX.XXX acknowledges that ownership of the Customer
Profiles shall at all times remain with Rogers, and XXX.XXX assigns all
right, title and interest in and to such Customer Profiles to Rogers.
Except as otherwise expressly permitted hereunder, XXX.XXX shall not use
any Customer Profiles other than in the performance of its obligations
under this Agreement. Notwithstanding the foregoing, Rogers acknowledges
and agrees that XXX.XXX shall have the unrestricted right to retain and
use information: (a) received by XXX.XXX from customers of the Canadian E-
Commerce Service prior to the Effective Date; or (b) provided to XXX.XXX
during the Term by customers of the Canadian E-Commerce Service as a
result of a special voluntary registration process with XXX.XXX, and not
as a result of the purchase by such customer of products or services from
the Canadian E-Commerce Service.
16
6.2 XXX.XXX Intellectual Property, XXX.XXX Marks and XXX.XXX URL.
-------------------------------------------------------------
(i) XXX.XXX Intellectual Property. Subject to Sections 6.1 and 6.3 hereof,
Rogers acknowledges that ownership of the XXX.XXX Technology, the XXX.XXX
Site and any customization or enhancements as used in the Canadian E-
Commerce Service shall remain with XXX.XXX.
(ii) XXX.XXX Marks and XXX.XXX URL. Rogers acknowledges that ownership of
the XXX.XXX Marks and the XXX.XXX URL shall remain with XXX.XXX.
6.3 Rogers-Specific Enhancements. If Rogers requests that XXX.XXX develop a
-----------------------------
Rogers-Specific Enhancement, the parties will mutually agree in writing to terms
and conditions respecting the development of such Rogers-Specific Enhancement,
including, without limitation, terms and conditions relating to each parties'
respective ownership and exploitation rights in such Rogers-Specific
Enhancement. The parties acknowledge and agree that their respective ownership
and exploitation rights in each Rogers-Specific Enhancement shall be determined
in accordance with the following principles:
(i) if a Rogers-Specific Enhancement can be used as a severable, standalone
component, then Rogers shall own all right, title and interest in and to
such Rogers-Specific Enhancement, and XXX.XXX shall be granted perpetual,
royalty-free license rights to use and reproduce such Rogers-Specific
Enhancement internally, provided that XXX.XXX may not transfer or license
such Rogers-Specific Enhancement to any third party (other than its
Affiliates) without the prior written consent of Rogers;
(ii) if a Rogers-Specific Enhancement is integrated into the XXX.XXX
Technology, the XXX.XXX Site or the Canadian E-Commerce Service in such a
way that it cannot reasonably be used as a severable, standalone
component, then XXX.XXX shall own all right, title and interest in and to
such Rogers-Specific Enhancement, and Rogers shall be granted perpetual,
royalty-free license rights to use and reproduce such Rogers-Specific
Enhancement internally, provided that Rogers may not transfer or license
such Rogers-Specific Enhancement to any third party (other than its
Affiliates) without the prior written consent of XXX.XXX; and
(iii) notwithstanding anything else in this Agreement, XXX.XXX shall not use
any Rogers-Specific Enhancement to provide services or technology to any
competitor to Rogers, nor sub-licence any Rogers-Specific Enhancement to
any competitor to Rogers, without the prior written consent of Rogers.
ARTICLE SEVEN
TERM, TERMINATION AND TRANSITION
17
7.1 Term. This Agreement shall commence on the Effective Date and shall
-----
continue unless and until terminated in accordance with the provisions hereof.
7.2 Reporting. Within thirty (30) days of: (i) the one-year anniversary of the
----------
Effective Date; and (ii) each one-year anniversary thereafter, Rogers shall
provide a report to XXX.XXX summarizing Xxxxxx'x performance statistics based on
the categories of performance metrics set out in Schedule "K" hereto.
7.3 Termination by XXX.XXX. If, during any Evaluation Period, Rogers fails to
-----------------------
meet the performance requirements set out in Schedule "K", XXX.XXX may, at its
option, elect to terminate this Agreement upon thirty (30) days written notice
to Rogers, provided that, to be effective, XXX.XXX must exercise the option to
terminate set out in this Section 7.3 within sixty (60) days of receipt by
XXX.XXX of the report provided by Rogers pursuant to Section 7.2 hereof.
7.4 Termination by Rogers. Rogers may terminate this Agreement at any time
----------------------
upon ninety (90) days advance written notice to XXX.XXX. In the event that
Rogers terminates this Agreement other than as a result of a breach by XXX.XXX
of this Agreement, the following terms shall apply in addition to those set out
in Schedule "L":
(i) XXX.XXX shall have a perpetual, non-exclusive license to use all Customer
Profiles; and
(ii) at XXX.XXX's request, Rogers shall maintain the user interface for the
Canadian E-Commerce Service on the Rogers E-Commerce Portal for a period
of up to ninety (90) days from the effective date of such termination.
7.5 Transition. Upon the termination of this Agreement, the parties shall
-----------
comply with the applicable portion of the Transition Plan, and each party will
bear its respective costs incurred in respect of such transition.
7.6 Survival. Except as otherwise provided herein, the terms of Article 1,
---------
Section 5.2, Section 5.3, Article 6, Article 7, Article 9, and Article 11 shall
survive any termination or expiry of this Agreement and shall continue in force
thereafter for the period contemplated by the Agreement. Other provisions of
this Agreement which, by the nature of the rights or obligations set out
therein, might reasonably be expected to be intended to so survive, shall
survive termination or expiry of this Agreement until they are satisfied or by
their nature expire.
ARTICLE EIGHT
APPOINTMENT TO BOARD OF DIRECTORS
XXX.XXX hereby covenants with Rogers to use its Reasonable Best Efforts to
forthwith cause one nominee of Rogers to be appointed to the board of directors
of XXX.XXX to hold office as a director until the next annual meeting of the
shareholders of XXX.XXX and to recommend that a
18
nominee of Rogers be elected as a director at each annual meeting of the
shareholders of XXX.XXX during the Term of this Agreement.
ARTICLE NINE
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
9.1 Warranty and Indemnity re: Authority, Title and Proprietary Rights.
--------------------------------------------------------------------
(i) XXX.XXX represents, warrants and covenants that it has all Intellectual
Property Rights and other rights necessary to perform its obligations
hereunder including, without limitation, the right to operate the XXX.XXX
Technology, the XXX.XXX Site and the Canadian E-Commerce Service, and that
the execution and performance of the terms of this Agreement by XXX.XXX and
Rogers shall not in any manner interfere with, infringe, breach,
contravene, harm, or damage any rights or interests of any other person,
including without limitation any Intellectual Property Rights, moral rights
(or the equivalent or comparable rights in any other jurisdiction),
personality rights, confidentiality rights, equitable rights or statutory
rights whatsoever.
(ii) XXX.XXX agrees to defend, indemnify and hold harmless Rogers, its
Affiliates, and their respective officers, directors, employees and agents
from all losses, claims, damages or liabilities, including court costs and
legal fees, incurred in connection with or arising out of any claim
asserted against Rogers based upon a contention that the E-Commerce
Service, the XXX.XXX Technology, the XXX.XXX Site, the XXX.XXX Marks, the
Customer Profiles, or any portion thereof infringe the Intellectual
Property Rights of any third party provided that:
(a) Rogers or its Affiliates promptly notify XXX.XXX in writing of the
claim and of all material developments in connection with such claim
and provides all assistance otherwise reasonably requested by XXX.XXX;
(b) XXX.XXX has the right to control, at its own expense, the defence and
all related settlement negotiations (Rogers has the right to
participate at its own expense);
(c) Rogers or its Affiliates do not pay or settle any such claim without
the express written consent of XXX.XXX; and
(d) the claim in respect of which indemnity is sought does not arise out
of or in connection with any unauthorized use of the XXX.XXX
Technology by Rogers.
In addition, if the E-Commerce Service, the XXX.XXX Technology, the XXX.XXX
Site, the XXX.XXX Marks, the Customer Profiles, or any portion thereof is
held to constitute an infringement of another person's rights, and use
thereof is enjoined, or XXX.XXX
19
enters into a settlement of the claim which includes an agreement to refrain
from the use thereof, XXX.XXX shall, at its election and expense, either:
(1) procure the right to use the infringing element thereof;
(2) procure the right to an element which performs the same function
without any material loss of functionality; or
(3) replace or modify the element thereof so that the infringing portion
is no longer infringing and still performs the same function without
any material loss of functionality;
and shall make every reasonable effort to correct the situation with
minimal effect upon the operations of Rogers and its Affiliates.
9.2 General Limitation on Liability. UNDER NO CIRCUMSTANCES WILL EITHER
--------------------------------
PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES) ARISING FROM BREACH OF THE AGREEMENT, THE USE OR
INABILITY TO USE THE XXX.XXX TECHNOLOGY, THE XXX.XXX SITE, THE XXX.XXX MARKS,
THE CUSTOMER PROFILES, OR THE CANADIAN E-COMMERCE SERVICE, OR ARISING FROM ANY
OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE
OR ANTICIPATED PROFITS OR LOST BUSINESS (COLLECTIVELY, "DISCLAIMED DAMAGES");
PROVIDED THAT XXX.XXX WILL REMAIN LIABLE TO ROGERS TO THE EXTENT ANY DISCLAIMED
DAMAGES ARE CLAIMED BY A THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION PURSUANT
TO SUBSECTION 9.1(ii) ABOVE. EXCEPT AS PROVIDED IN SUBSECTION 9.1(ii), NEITHER
PARTY WILL BE LIABLE TO THE OTHER PARTY FOR MORE THAN [Confidential Information
filed separately with the SEC] PROVIDED THAT EACH PARTY WILL REMAIN LIABLE FOR
THE AGGREGATE AMOUNT OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY.
9.3 Requirements of the Canadian E-Commerce Service. XXX.XXX represents,
------------------------------------------------
warrants and covenants that the Canadian E-Commerce Service, the XXX.XXX
Technology and the XXX.XXX Site shall perform in conformance with Xxxxxx'x
Requirements therefor, provided that XXX.XXX shall have no liability for
performance failures due to events or causes beyond its reasonable control or
due to changes made by Rogers without the prior written approval of XXX.XXX.
9.4 Disabling Device. XXX.XXX represents, warrants and covenants that the
-----------------
XXX.XXX Site, any software, XXX.XXX Technology, Customer Profiles and other
deliverables provided hereunder shall not contain any virus, clock, timer,
counter, bomb, trojan horse, worm, or other limiting or disabling code, design
or routine that would cause the XXX.XXX Site, any software, XXX.XXX Technology,
Customer Profiles or other deliverables to be made inoperable or otherwise
rendered incapable of performing in accordance with Xxxxxx'x Requirements or
20
otherwise limit or restrict Xxxxxx'x or its Affiliates' ability to use same
after the lapse or occurrence of any triggering prompt.
9.5 Media. XXX.XXX represents and warrants that the media on which any
------
XXX.XXX Technology, Customer Profiles or other software is provided shall be
compatible to the greatest extent possible with the majority of industry
standard browsers and that the media, as supplied by XXX.XXX, shall be free from
defects and computer viruses.
9.6 Representations and Warranties re: Services. XXX.XXX agrees that it shall
--------------------------------------------
perform all of its obligations hereunder in a timely fashion and in a
professional manner by personnel appropriately trained in the performance of
such obligations. Response times shall be as outlined in Schedule "D". If
XXX.XXX does not meet the response time requirements for a severity (1) or
severity (2) event and such failure is not due to an event beyond the reasonable
control of XXX.XXX, Rogers shall have the right to insist that its own engineers
and designers assist XXX.XXX's personnel at XXX.XXX's premises to rectify the
problem and XXX.XXX shall co-operate fully in this process.
9.7 Provision of Source Code Materials. Rogers may subscribe, at its own
-----------------------------------
expense, to the existing Source Code Escrow Agreement attached as Schedule "E"
and deposited with Data Securities International, Inc. (the "Escrow Agreement").
XXX.XXX shall deposit updated Source Code Materials as required by Section 1.7
of the Escrow Agreement. In addition to the requirements set out in Section 1.7
of the Escrow Agreement, XXX.XXX shall deposit updated, current Source Code
Materials with Data Securities International, Inc. on a calendar quarterly
basis. The parties agree that in addition to the "Release Conditions" specified
in Section 4.1 of the Escrow Agreement, a further Release Condition shall exist
if XXX.XXX is in continuing material breach of this Agreement. Upon the release
of the Source Code Materials to Rogers in accordance with the Escrow Agreement,
Rogers shall have a perpetual, worldwide, royalty-fee licence to use, copy, and
modify the Source Code Materials and to permit third parties to use, copy and
modify the Source Code Materials for purposes solely related to the use,
operation and distribution of the Canadian E-Commerce Service and the Canadian
XXX.XXX Site by Rogers in the Territory and in accordance with the provisions of
this Agreement.
9.8 Confidentiality. Each party (hereinafter in this Section, the "Receiving
----------------
Party") covenants with the other party (hereinafter in this Section, the
"Disclosing Party") that it shall keep confidential the Confidential Information
of the Disclosing Party to which the Receiving Party obtains access as a
consequence of entering into this Agreement and that it will take all reasonable
precautions to protect such Confidential Information from any use, disclosure or
copying except as expressly authorized by this Agreement. The Receiving Party
shall implement such procedures as the Disclosing Party may reasonably require
from time to time to improve the security of the Confidential Information of the
Disclosing Party in its possession. This Section shall survive the termination
of the Agreement. Upon termination of this Agreement, the Receiving Party shall,
at the choice of the Disclosing Party, either return to the Disclosing Party or
destroy all copies or partial copies of Confidential Information of the
Disclosing Party in any
21
form which is in the possession of the Receiving Party or under its control, and
certify that all such Confidential Information has been returned or otherwise
destroyed.
9.9 Year 2000 Compliance. XXX.XXX represents, warrants and covenants that
---------------------
all XXX.XXX Technology other than the Third Party Technology, the Canadian E-
Commerce Service, the XXX.XXX Site, and all other software, hardware, firmware,
and other technology used by XXX.XXX in performing its obligations hereunder
shall be able to accurately process date data including, but not limited to,
calculating, comparing, and sequencing from, into, and between the twentieth and
twenty-first centuries, including leap year calculations, and are fully capable
of operating as required to accommodate the year 2000 and beyond (the "Year 2000
Warranty"). With respect to the Third Party Technology, XXX.XXX represents,
warrants and covenants that it shall make appropriate inquiries to satisfy
itself that such Third Party Technology shall comply with the Year 2000
Warranty. XXX.XXX shall use Reasonable Best Efforts to repair or replace any
Third Party Technology which does not comply with the Year 0000 Xxxxxxxx to the
extent necessary to ensure that the Canadian E-Commerce Service and the XXX.XXX
Site comply with the Year 0000 Xxxxxxxx.
9.10 Compliance With Laws. Each party represents, warrants and covenants that
---------------------
its performance of this Agreement shall comply with (and shall neither
contravene, breach nor infringe) any laws or regulations of Canada or any laws
or regulations of any province or territory of Canada (including, without
limitation, all laws respecting the protection of personal information).
9.11 Limitation on Warranties. Except for those warranties otherwise provided
-------------------------
herein, neither party makes any warranties or representations, and there are no
conditions, express or implied, in fact or in law, including without limitation,
the implied warranties or conditions of merchantable quality and fitness for a
particular purpose and those arising by statute or otherwise in law or from a
course of dealing or usage of trade.
ARTICLE TEN
CONTRACT MANAGEMENT AND DISPUTE RESOLUTION
10.1 Contract Governance. The parties agree to utilize the process set out in
--------------------
this Article 10 to consult and render decisions relating to this Agreement,
including, but not limited to, the following matters:
(i) the number, frequency and cost of loss leader promotions;
(ii) the use by XXX.XXX of the XXX.XXX Marks in the Territory;
(iii) the co-ordination of XXX.XXX's investor relations and public relations
strategies;
22
(iv) the compliance by XXX.XXX with the covenant set out in subsection 2.2(v)
of this Agreement;
(v) the sale by Rogers of advertising to advertisers and advertising agents
identified by XXX.XXX in order to assist XXX.XXX with its merchandising
of the Canadian E-Commerce Service;
(vi) the overall operating plans, business plans, budgets and revenue
strategies for the Canadian E-Commerce Service, including the relative
emphasis to be placed on Net Promotional Revenue earnings and Net E-
Commerce Revenue earnings;
(vii) the terms and conditions relating to the introduction and operation of
New Canadian Auctions;
(viii) the development and ownership of Rogers-Specific Enhancements; and
(ix) the effectiveness of Xxxxxx'x advertising sales, marketing and
promotional activities.
Unless otherwise mutually agreed, the parties shall meet to discuss the above
issues no less frequently than once every calendar quarter. Unless otherwise
agreed, all decisions relating to the above matters shall require the mutual
written agreement of the parties.
10.2 Contacts and Contact Meetings. The parties agree that each shall
------------------------------
designate no more than two (2) principal contacts for day-to-day liaison and
management of the relationship during the Term ("Contacts"). Unless otherwise
mutually agreed, the Contacts shall meet on a regular basis in person or by
telephone, but in any event no less than once per month, in order to review the
parties' respective performance under this Agreement, discuss relevant issues,
and resolve or, upon mutual agreement, escalate issues as necessary. The
Contacts shall not have any authority or right to either amend or revise this
Agreement, nor to waive any obligations, duties or responsibilities of either
party under this Agreement. Each party shall pay its own costs associated with
its respective Contacts.
10.3 Joint Management Committee. XXX.XXX and Rogers shall form a management
---------------------------
committee (the "Committee") composed of two or more senior representatives of
XXX.XXX and two or more senior representatives of Rogers who shall, from time to
time, meet to review and discuss matters related to this Agreement. The number
of representatives of Rogers and XXX.XXX on the Committee shall at all times be
equal. The Committee in its discretion may invite the participation of the
Contacts or others in its deliberations. The Committee shall have the right to
implement the Agreement and make decisions of an interpretive nature (including
without limitation decisions regarding issues to be put before the Committee as
set forth herein), but the Committee shall not have the authority or right to
either amend or revise this Agreement, or to waive any obligations, duties or
responsibilities of either party under this Agreement. Each party shall pay its
own costs associated with its respective Committee representatives.
23
10.4 Dispute Resolution and Applicable Law. XXX.XXX and Rogers expressly agree
--------------------------------------
to the following exclusive internal dispute escalation provisions governing all
performance and disputes under this Agreement:
(i) In the event that XXX.XXX and Rogers cannot resolve a dispute under the
Agreement in the normal course of performance (including through recourse
to the Contacts), then each party's designated Committee members shall
confer immediately and use reasonable efforts to resolve the dispute
within fifteen (15) days of their initial conference. No dispute shall be
considered resolved until both parties have agreed to the resolution in
writing. The designated Committee members shall mutually agree on the
methods by which they attempt to resolve any dispute such as, for example,
telephone and/or video conferences, e-mail and fax communications, and/or
face to face meetings. The costs under this subsection 10.4(i) shall be
shared equally by the parties.
(ii) In the event that each party's designated Committee members cannot resolve
a dispute under the Agreement as specified in subsection 10.4(i) above,
then each party's respective Presidents (or an equivalent or higher
position) having responsibility for this Agreement shall confer
immediately and use reasonable efforts to resolve the dispute within
fifteen (15) days of their initial conference. No dispute shall be
considered resolved until both parties have agreed to the resolution in
writing. The respective Presidents (or equivalents) shall mutually agree
on the methods by which they attempt to resolve any dispute such as, for
example, telephone and/or video conferences, e-mail and fax
communications, and/or face to face meetings. The costs under this
subsection 10.4(ii) shall be shared equally by the parties.
(iii) In the event that each party's respective Presidents (or equivalents)
cannot resolve a dispute under the Agreement as specified in subsection
10.4(ii) above, then the parties shall each be free to submit the dispute
to arbitration in accordance with Section 10.5 hereof.
10.5 Arbitration. Other than with respect to one party's violation or alleged
------------
violation of the other party's (or its licensors') Intellectual Property Rights
or a breach of the confidentiality provisions of this Agreement, any dispute,
disagreement, controversy or claim arising out of or relating to this Agreement
that cannot be resolved by the parties pursuant to the provisions of Section
10.4 including, without limitation, any dispute relating to its application,
interpretation, performance, breach, termination, enforcement or damages, or
remedies arising out of the breach of or non-compliance therewith, shall be
finally determined by arbitration before a single arbitrator to be commenced and
conducted in the English language in Toronto in accordance with the Arbitration
Act (Ontario). All arbitration proceedings shall be conducted in private and all
documentation and information pertaining to any arbitration shall be
Confidential Information. The parties hereto agree that:
(i) subject to mutual agreement between the parties to the contrary, the
arbitrator shall be a person who is legally trained and trained as a
professional arbitrator and who has a minimum of five (5) years experience
in the Internet and electronic commerce;
24
(ii) the parties shall agree on the identity of the arbitrator within ten (10)
days of notice of reference to arbitration and in default thereof, either
party may apply to a Judge of the Supreme Court of Ontario, General
Division, to appoint an arbitrator with the foregoing qualifications;
(iii) the parties shall be required to make written submissions to the
arbitrator within seven (7) days of appointment and shall not be entitled
to make verbal representations or further submissions unless so requested
by the arbitrator. Any party who does not comply with the foregoing time
period shall not be entitled to make any submissions without the written
approval of the other party;
(iv) the arbitrator shall be required to render his decision in writing within
ten (10) days of the period mentioned in subsection 10.5(iii);
(v) neither of the parties shall apply to the Courts of Ontario or any other
jurisdiction to attempt to enjoin, delay, impede or otherwise interfere
with or limit the scope of the arbitration or the powers of the
arbitrator provided for in the Arbitration Act (Ontario);
(vi) the award of the arbitrator shall be a final and conclusive award and
judgment with respect to all matters properly before the arbitral
tribunal in accordance with the Arbitration Act (Ontario) and neither
party shall appeal such award in any manner whatever to any court,
tribunal or other authority; and
(vii) the award of the arbitral tribunal may be entered and enforced by any
court in any jurisdiction having jurisdiction over the parties hereto or
the subject matter of the award or the properties or assets of either of
the parties hereto.
Notwithstanding the submission of any dispute to arbitration under this
Agreement, the parties shall continue to cooperate and act in good faith to
perform their respective obligations under this Agreement during any such
arbitration.
ARTICLE ELEVEN
GENERAL
11.1 Notice. Any notice or other communication (a "Notice") required or
-------
permitted to be given or made hereunder shall be in writing and shall be well
and sufficiently given or made if:
(i) delivered in person during normal business hours on a business day and left
with a receptionist or other responsible employee of the relevant party at
the applicable address set forth below;
(ii) sent by prepaid first class mail; or
25
(iii) sent by any electronic means of sending messages, including facsimile
transmission, which produces a paper record (an "Electronic
Transmission"), charges prepaid and confirmed by prepaid first class
mail;
in the case of a Notice to Rogers addressed to it at:
Xxxxxx Media Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxxxxxx
President, New Media
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx Communications Inc.
000 Xxxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
Attention: Xxxxx X. Xxxxxx
Vice President, General Counsel
Fax No.: (416) 000- 0000
and in the case of a Notice to XXX.XXX addressed to it at:
XXX.XXX International Inc.
0000 Xxxxxxx Xxxx.,
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
with a copy to:
26
Gowling, Strathy & Xxxxxxxxx
Barristers & Solicitors
Xxxxxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 11.1 shall be deemed to
have been given or made and to have been received:
(a) on the day it was delivered, if delivered as aforesaid;
(b) on the fifth business day (excluding each day during which there exists any
general interruption of postal services due to strike, lockout or other
cause) after it was mailed, if mailed as aforesaid; and
(c) on the day of sending if sent by Electronic Transmission during normal
business hours of the addressee on a business day and, if not, then on the
first business day after the sending thereof.
Either party may from time to time change its address for notice by giving
Notice to the other party in accordance with the provisions of this Section
11.1.
11.2 Assignment. Except as otherwise permitted by this Section 11.2, neither
-----------
party may assign its rights and obligations under this Agreement, in whole or
in part, without the prior consent in writing of the other party, and any
purported assignment made without that consent is void and of no effect (save
and except for an assignment as an incident of security taken in a normal course
financing transaction). Notwithstanding the foregoing, Rogers may assign its
rights and obligations under this Agreement, in whole or in part, to: (i) any
Affiliate; or (ii) a joint venture in which Rogers has an interest with any
party or parties other than those listed in Schedule "H" hereto, without the
prior written consent of XXX.XXX, provided that such assignee shall agree to be
bound by the terms and conditions of this Agreement to the extent that such
terms and conditions are assigned to such assignee.
11.3 Binding on Successors. This Agreement shall enure to the benefit of and be
----------------------
binding upon the parties and their respective successors and permitted assigns.
11.4 Further Assurances. Each party agrees that upon the written request of the
-------------------
other party, it will do all such acts and execute all such further documents,
conveyances, deeds, assignments, transfers and the like, and will cause the
doing of all such acts and will cause the execution of all such further
documents as are within its power to cause the doing or execution of, as any
other
27
party hereto may from time to time reasonably request be done and/or executed as
may be necessary or desirable to give effect to this Agreement.
11.5 Independent Contractors. It is understood and agreed that in giving effect
------------------------
to this Agreement, no party shall be or be deemed a partner, agent or employee
of another party for any purpose and that their relationship to each other shall
be that of independent contractors. Nothing in this Agreement shall constitute
a partnership or a joint venture between the parties. No party shall have the
right to enter into contracts or pledge the credit of or incur expenses of
liabilities on behalf of the other party.
11.6 Waiver. A waiver by a party hereto of any of its rights hereunder or of
-------
the performance by the other party of any of its obligations hereunder shall be
without prejudice to all of the other rights hereunder of the party so waiving
and shall not constitute a waiver of any such other rights or, in any other
instance, of the rights so waived, or a waiver of the performance by the other
party of any of its other obligations hereunder or of the performance, in any
other instance, of the obligations so waived. No waiver shall be effective or
binding upon a party unless the same shall be expressed in writing and executed
by the party to be bound.
11.7 Entire Agreement. This Agreement, and any agreements and other documents
-----------------
to be delivered pursuant to it, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, oral or written
between the parties. The execution of this Agreement has not been induced by,
nor do either of the parties rely upon or regard as material, any
representations, warranties, conditions, other agreements or acknowledgments not
expressly made in this Agreement or in the agreements and other documents to be
delivered pursuant hereto.
11.8 Currency. Unless otherwise indicated, all dollar amounts referred to in
---------
this Agreement are in Canadian funds.
11.9 Invalidity. If in any jurisdiction a provision contained in this Agreement
-----------
is found by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions contained herein, or of such provision in any other
jurisdiction shall not be affected or impaired thereby.
11.10 No Announcement. Except as required by applicable law, neither party
----------------
shall, in any manner, disclose, advertise or publish the terms of, or any
information concerning, this Agreement without the prior written consent of the
other party.
11.11 Regulatory Requirements. Notwithstanding any provisions herein to the
------------------------
contrary, the obligations, duties and covenants of Rogers shall be subject to
all present and future laws and regulations in Canada concerning
telecommunications content and access, the rulings or decisions of the Canadian
Radio-television and Telecommunications Commission ("CRTC"), and all policies or
rules that are either promulgated or formally adopted by the CRTC. Any act or
omission of Rogers that is inconsistent with the provisions of this Agreement in
order to make such act or omission consistent with any such laws, regulations,
rulings, decisions, policies or
28
rules shall not constitute Rogers in breach, infringement or contravention of
this Agreement, provided that Rogers promptly gives XXX.XXX notice of the need
to conform such act or omission to law. If any such laws, regulations, rulings,
decisions, policies or rules require that the parties make a material change to
the terms and conditions of this Agreement, the parties will use commercially
reasonable efforts to negotiate a mutually acceptable amendment to this
Agreement. If the parties are unable to negotiate a mutually acceptable
amendment, then this Agreement shall terminate and neither party shall have any
liability to the other, other than liability for payment obligations which have
accrued prior to the effective date of such termination.
11.12 Compliance With Law. Each party shall, in the performance of this
--------------------
Agreement, fully comply with, and abide by, all laws, regulations, regulatory
rulings or directives, court orders, and decisions of administrative tribunals
of competent jurisdiction, that may, in any manner or extent, concern, govern,
or affect either party's respective performance of, and obligations under, this
Agreement.
11.13 Interpretation. This Agreement has been negotiated by the parties hereto
---------------
and their respective counsel and shall be fairly interpreted in accordance with
its terms and without any rules of construction relating to which party drafted
the Agreement being applied in favor or against either party.
11.14 Effective Date. This Agreement shall not become a valid and binding
---------------
contract unless and until each party has duly executed and delivered two copies
of this Agreement. For greater certainty, there shall be no agreement, whether
oral, written, express, implied or otherwise notwithstanding any performance
between the parties concerning the subject matter of this document, including,
without limitation, by course of conduct, doctrine of part performance, or
otherwise.
11.15 Amendment. No amendment of any provision of this Agreement shall be
----------
effective unless such amendment is embodied in a written agreement which is: (i)
expressly stated to be intended to amend this Agreement; and (ii) executed by
two authorized signing officers of Rogers and an authorized officer of XXX.XXX.
For greater certainty, the parties acknowledge and agree that no
representations, warranties, conditions, covenants or other statements or
commitments, whether made orally, in writing, by course of conduct or otherwise,
and whether made prior to the Effective Date of this Agreement or thereafter,
shall be binding on either of the parties.
11.16 Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated, in all respects, as an Ontario
contract. The parties hereby: (i) irrevocably submit to the exclusive
jurisdiction of the courts of Ontario in respect of the subject matter hereof;
(ii) consent to service of process being effected upon the other party by
registered mail sent to the address set forth in Section 11.1 hereof; (iii)
agree not to seek, request, claim or pursue trial by jury; and (iv) agree not to
seek, request, claim or pursue any right, claim, or entitlement to any punitive
or exemplary damages whatsoever.
29
IN WITNESS WHEREOF this Agreement is executed by the parties as of the Effective
Date.
XXX.XXX INTERNATIONAL INC.
By:_____________________________ By:______________________________
(Duly Authorized Officer) (Duly Authorized Officer)
XXXXXX MEDIA INC.
By:_____________________________ By:______________________________
(Duly Authorized Officer) (Duly Authorized Officer)
30
SCHEDULE "A"
XXX.XXX Technology (including Third Party Technology)
ILI Xxx.xxx Modules
--------------------------------------------------------------------------------------------------------
Databases: [Confidential Information filed
separately with the SEC]
Business Services: [Confidential Information filed
separately with the SEC]
Data Services: [Confidential Information filed
separately with the SEC]
Dynamic Export: [Confidential Information filed
separately with the SEC]
Order Processing
Administrator: [Confidential Information filed
Credit Card: separately with the SEC]
Order Business Services:
Utilities:
Category Builder: [Confidential Information filed
AdrotatorGenerator separately with the SEC]
AssetMgmt:
DB Services:
Notification:
Supporting S/W: [Confidential Information filed
separately with the SEC]
Web: [Confidential Information filed
separately with the SEC]
ILI Xxx.xxx Modules (Dutch)
--------------------------
Business Services: [Confidential Information filed
separately with the SEC]
Data Services: [Confidential Information filed
separately with the SEC]
Dutch Server: [Confidential Information filed
separately with the SEC]
Dutch Client: [Confidential Information filed
separately with the SEC]
Internet Web: [Confidential Information filed
separately with the SEC]
Admin Web: [Confidential Information filed
separately with the SEC]
Top Bid Auction
---------------
[Confidential Information filed separately with the SEC]
Dutch Auction
-------------
[Confidential Information filed separately with the SEC]
Xxx.Xxx Commerce Site
List Of Third Party Tools Incorporated Into
Application
[Confidential Information filed separately with the SEC]
SCHEDULE "B"
Xxxxxx'x Requirements
B.1 Preparation and Delivery of Xxxxxx'x Requirements. Rogers and XXX.XXX
covenant and agree to negotiate in good faith to execute an amendment to this
Agreement (the "Amendment") with thirty (30) days of the Effective Date in order
to complete this Schedule "B" in a manner acceptable to both parties. The
Amendment shall contain detailed performance requirements and specifications for
the Canadian XXX.XXX Site, the Canadian E-Commerce Service and the XXX.XXX
Technology. Without limiting the generality of the foregoing, the Amendment
shall include:
(a) performance metrics relating to the quality of the user experience on the
Canadian XXX.XXX Site;
(b) a description of the required functional capabilities and performance
specifications for the Canadian E-Commerce Service and the XXX.XXX
Technology;
(c) minimum availability and up-time requirements for the Canadian XXX.XXX Site
and the Canadian E-Commerce Service;
(d) technical and operational requirements relating to the serving of
advertisements for the Canadian XXX.XXX Site; and
(e) other technical, operational and functional specifications mutually agreed
by the parties.
B.2 Escalation. In the event that the Amendment has not been executed within
thirty (30) days of the Effective Date, the Committee shall review disputes and
use its good faith efforts to complete the Amendment within an additional thirty
(30) day period. If the Amendment has not been completed within such additional
thirty (30) day period, outstanding disputes or issues relating to the Amendment
shall be submitted to dispute resolution in accordance with Section 10.4 of this
Agreement.
SCHEDULE "C"
Customer Service Standards
XXX.XXX shall, at a minimum, comply with the following customer service
standards in its operation of the Canadian E-Commerce Service:
C.1 Logistics
XXX.XXX shall:
1. appoint the equivalent of one full-time employee to provide online customer
service;
2. receive and respond to email and customer inquiries within one (1) business
day of receipt;
3. install a toll free phone line and communicate the toll free phone number
in the online "Customer Service" area of the Canadian XXX.XXX Site;
4. ensure the ability to handle customer service volumes in excess of 25% to
50% of average daily order volumes;
5. monitor the Canadian E-Commerce Service to minimize and/or eliminate out of
stock merchandise;
6. post all customer service policies in an online "Customer Service" area of
the Canadian XXX.XXX Site which includes the following information and
policies: shipping information, return policies, product warranties and
contact information; and
7. post security and privacy policies in an online "Customer Service" area of
the Canadian XXX.XXX Site.
C.2 Process and Fulfillment
In fulfilling purchases by customers of the Canadian E-Commerce Service, XXX.XXX
shall:
1. process electronic orders within one (1) business day of receipt;
2. provide customers with an order confirmation which includes order status (in
stock, temporary back order or out of stock), expected delivery time and
total cost (including all shipping and taxes) within one (1) business day of
receipt;
3. ship products at the price displayed and without substitutions, unless such
substitutions are authorized by the customer;
4. deliver all merchandise in professional packaging;
5. ensure all packages arrive undamaged, well packed and neat (barring shipping
disasters);
6. permit the return of defective or damaged goods to the manufacturers under
warranty; and
7. permit the return of other goods within 30 days of delivery, less a 15%
restocking fee with chronic abuse exclusions.
SCHEDULE "D"
Response Times
D.1 XXX.XXX shall respond to any report that the XXX.XXX Technology, the
Canadian E-Commerce Service or the Canadian XXX.XXX Site is failing to meet
Xxxxxx'x Requirements, and shall correct such failure, within the time frames
set out in Section D.2 of this Schedule "D". The severity of any particular
failure shall be reasonably determined by Rogers, and communicated to XXX.XXX,
based on the following definitions:
Severity 1: total inability to use any material part of the XXX.XXX Technology,
the Canadian E-Commerce Service or the Canadian XXX.XXX Site,
resulting in a critical impact on user objectives.
Severity 2: ability to use the XXX.XXX Technology, the Canadian E-Commerce
Service or the Canadian XXX.XXX Site, but user operation is
severely restricted.
Severity 3: ability to use the XXX.XXX Technology, the Canadian E-Commerce
Service or the Canadian XXX.XXX Site; failures relate to functions
which are not critical to overall user operations.
Severity 4: failure has been bypassed or temporarily corrected and is not
affecting customer operations.
D.2 XXX.XXX shall correct failures of the XXX.XXX Technology, the Canadian E-
Commerce Service and the Canadian XXX.XXX Site in order to comply with Xxxxxx'x
Requirements within the following time frames:
Severity 1: within 12 hours of notification by Rogers.
Severity 2: within 48 hours of notification by Rogers.
Severity 3: within 15 days of notification by Rogers.
Severity 4: within 120 days of notification by Rogers.
SCHEDULE "E"
Source Code Trust Agreement
MASTER PREFERRED ESCROW AGREEMENT
Master Number __________
This Agreement is effective February 12, 1997 among Data Securities
International, Inc.("DSV), Internet Liquidators International Inc.
("Depositor"), and any additional party signing the Acceptance Form attached to
this Agreement ("Preferred Beneficiary") who collectively may be referred to in
this Agreement as "the parties."
A. Depositor and Preferred Beneficiary have entered or will enter into a
license agreement in the form attached to such Preferred Beneficiary's
Acceptance Form regarding certain proprietary technology of Depositor
(referred to in this Agreement as "the license agreement").
B. Depositor desires to avoid disclosure of its proprietary technology except
under certain limited circumstances.
C. The availability of the proprietary technology of Depositor is critical to
Preferred Beneficiary in the conduct of its business and, therefore,
Preferred Beneficiary needs access to the proprietary technology under
certain limited circumstances.
D. Depositor and Preferred Beneficiary desire to establish an escrow with DSI
to provide for the retention, administration and controlled access of
certain proprietary technology materials of Depositor.
ARTICLE 1 -DEPOSITS
1.1 Obligation to Make Deposit. Upon the signing of this Agreement by the
parties, including the signing of the Acceptance Form, Depositor shall deliver
to DSI the proprietary information and other materials identified on an Exhibit
A. DSI shall have no obligation with respect to the preparation, signing or
delivery of Exhibit A.
1.2 Identification of Tangible Media. Prior to the delivery of the deposit
--------------------------------
materials to DSI, Depositor shall conspicuously label for identification each
document, magnetic tape, disk, or other tangible media upon which the deposit
materials are written or stored. Additionally, Depositor shall complete Exhibit
B to this Agreement by listing each such tangible media by the item label
description, the type of media and the quantity. The Exhibit B must be signed by
Depositor and delivered to DSI with the deposit materials. Unless and until
Depositor makes the initial deposit with DSI, DSI shall have no obligation with
respect to this Agreement, except the obligation to notify the parties regarding
the status of the deposit account as required in Section 2.2 below.
1.3 Deposit Inspection. When DSI receives the deposit materials and the
Exhibit B, DSI will give a receipt for the deposit materials to the Depositor in
the form provided by the Depositor and conduct a deposit inspection by visually
matching the labeling of the tangible media containing the deposit materials to
the item descriptions and quantity listed on the Exhibit B. In
addition to the deposit inspection, Preferred Beneficiary may elect to cause a
verification of the deposit materials in accordance with Section 1.6 below.
1.4 Acceptance of Deposit. At completion of the deposit inspection, if DSI
determines that the labeling of the tangible media matches the item descriptions
and quantity on Exhibit B, DSI will date and sign the Exhibit B and deliver a
copy thereof to Depositor and Preferred Beneficiary. If DSI determines that the
labeling does not match the item descriptions or quantity on the Exhibit B, DSI
will (a) note the discrepancies in writing on the Exhibit B; (b) date and sign
the Exhibit B with the exceptions noted, and (c) provide a copy of the Exhibit B
to Depositor and Preferred Beneficiary. DSI's acceptance of the deposit occurs
upon the signing of the Exhibit B by DSI. Delivery of the signed Exhibit B to
Preferred Beneficiary is Preferred Beneficiary's notice that the deposit
materials have been received and accepted by DSI.
1.5 Depositor's Representations. Depositor represents as follows:
(a) Depositor lawfully possesses all of the deposit materials deposited with
DSI;
(b) With respect to all of the deposit materials Depositor has the right and
authority to grant to DSI and Preferred Beneficiary the rights as provided
in this Agreement;
(c) The deposit materials are not subject to any lien or other encumbrance
other than encumbrances arising in the ordinary cause of Depositor's
business;
(d) The deposit materials consist of the proprietary information and other
materials identified in Exhibit A; and
(e) The deposit materials are readable and useable in their current form or, if
the deposit materials are encrypted, the decryption tools and decryption
keys have also been deposited.
1.6 Verification. Preferred Beneficiary shall have the right, at Preferred
Beneficiary's expense. to cause a verification of any deposit materials. A
verification determines, in different levels of detail, the accuracy,
completeness. sufficiency and quality of the deposit materials. If a
verification is elected after the deposit materials have been delivered to DSI,
then only DSI, or at DSI's election an independent person or company selected
and supervised by DSI, may perform the verification.
1.7 Deposit Updates. Unless otherwise provided by the license agreement,
Depositor shall update the deposit materials within 60 days of each release of a
new version of the product which is subject to the license agreement. Such
updates will be added to the existing deposit. All deposit updates shall be
listed on a new Exhibit B and the new Exhibit B shall be signed by Depositor.
Each Exhibit B will be held and maintained separately within the escrow account.
An independent record will be created which will document the activity for each
Exhibit B. The processing of all deposit updates shall be in accordance with
Sections 1.2 through 1.6 above. All references in this Agreement to the deposit
materials shall include the initial deposit materials and any updates.
1.8 Removal of Deposit Materials. The deposit materials may be removed and/or
exchanged only on written instructions signed by Depositor and Preferred
Beneficiary, or as otherwise provided in this Agreement.
ARTICLE 2 --CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality. DSI shall maintain the deposit materials in a secure,
environmentally safe, locked facility in the greater Toronto area which is
accessible only to authorized representatives of DSI. DSI shall have the
obligation to reasonably protect the confidentiality of the deposit materials.
Except as provided in this Agreement, DSI shall not disclose, transfer, make
available, or use the deposit materials. DSI shall not disclose the content of
this Agreement to any third party. If DSI receives a subpoena or other order of
a court or other judicial tribunal pertaining to the disclosure or release of
the deposit materials, DSI will immediately notify the parties to this
Agreement. It shall be the responsibility of Depositor and/or Preferred
Beneficiary to challenge any such order; provided, however, that DSI does not
waive its rights to present its position with respect to any such order. DSI
will not be required to disobey any court or other judicial tribunal order. (See
Section 7.5 below for notices of requested orders.)
2.2 Status Reports. DSI will issue to Depositor and Preferred Beneficiary a
report profiling the account history at least semi-annually. DSI may provide
copies of the account history pertaining to this Agreement upon the request of
any party to this Agreement.
2.3 Audit Rights. During the term of this Agreement, Depositor and Preferred
Beneficiary shall each have the right to inspect the written records of DSI
pertaining to this Agreement. Any inspection shall be held during normal
business hours and following reasonable prior notice.
ARTICLE 3 - GRANT OF RIGHTS TO DSI
3.1 Title to Physical Copies of Deposited Materials.
(a) Depositor transfers to DSI in trust all legal title in and to the physical
copies of the deposit materials provided to DSI from time to time in
accordance with the terms of this Agreement. It is acknowledged by the
parties hereto that such transfer by Depositor to DSI under this Section is
not intended to, nor does it, transfer any intellectual property or other
intangible rights in the deposit materials. DSI agrees to hold the deposit
materials in trust for Depositor and Preferred Beneficiary as provided in
this Agreement.
(b) The expression "in trust" is intended to refer strictly to the issue of
ownership of the deposit materials and not to the level of care which must
be taken by DSI in performing its duties under this Agreement. The duties
of DSI are strictly contractual in nature and are as set out in this
Agreement. It is not intended that DSI is to have the fiduciary duty of a
trustee.
3.2 Right to Make Copies. DSI shall have the right to make copies of the
deposit materials as reasonably necessary to perform this Agreement. DSI shall
copy all copyright, nondisclosure. and other proprietary notices and titles
contained on the deposit materials onto any copies made by DSI. With all deposit
materials submitted to DSI, Depositor shall provide any and all instructions as
may be necessary to duplicate the deposit materials including but not limited to
the hardware and/or software needed.
3.3 Right to Transfer Upon Release. Depositor hereby grants to DSI the right
to transfer deposit materials to Preferred Beneficiary upon any release of the
deposit materials for use by Preferred Beneficiary in accordance with Section
4.5. Except upon such a release or as otherwise provided in this Agreement, DSI
shall not transfer the deposit materials.
ARTICLE 4 - RELEASE OF DEPOSIT
4.1 Release Conditions. As used in this Agreement, "Release Conditions" shall
mean the following:
(a) voluntary bankruptcy of Depositor;
(b) involuntary bankruptcy provided that the Depositor is not in good faith
diligently taking steps to contest or set aside such process,
(c) if Depositor becomes insolvent and ceases to continue to carry on its
business;
(d) if Depositor ceases the operation of its business and the business is not
continued by a successor acceptable to the Preferred Beneficiary, acting
reasonably; and
(e) any additional release conditions identified on the attached Acceptance
Form.
4.2 Filing For Release. If Preferred Beneficiary believes in good faith that a
Release Condition has occurred, Preferred Beneficiary may provide to DSI written
notice of the occurrence of the Release Condition and a request for the release
of the deposit materials. Upon receipt of such notice, DSI shall deliver a copy
of the notice to Depositor.
4.3 Contrary Instructions. From the date DSI delivers the notice requesting
release of the deposit materials, if the Release Condition is one defined in 4.
1 (b), 4. 1 (d) or 4. 1 (e) Depositor shall have ten business days to deliver to
DSI Contrary Instructions. If the Release Condition is one defined in 4. 1 (a)
or (c), DSI shall release the deposit materials pursuant to Section 4.4 within
48 hours of giving notice to the Depositor under Section 4.2. "Contrary
Instructions" shall mean the written representation by Depositor that a Release
Condition has not occurred or has been cured. Upon receipt of Contrary
Instructions, DSI shall deliver a copy to Preferred Beneficiary. Additionally,
DSI shall notify both Depositor and Preferred Beneficiary that there is a
dispute to be resolved pursuant to the Dispute Resolution section of this
Agreement (Section 7.3). Subject to Section 5.2, DSI will continue to store the
deposit materials without release
pending (a) joint instructions from Depositor and Preferred Beneficiary, (b)
resolution pursuant to the Dispute Resolution provisions, or (c) order of a
court.
4.4 Release of Deposit. If DSI does not receive Contrary Instructions from the
Depositor, DSI is authorized to release the deposit materials to the Preferred
Beneficiary or, if more than one beneficiary is registered to the deposit
materials, to release a copy of the deposit materials to the Preferred
Beneficiary who gave notice under Section 4.2. However, DSI or DSI's authorized
representative is entitled to receive any fees due DSI or DSI's authorized
representative before making the release. This Agreement will terminate with
respect to the Preferred Beneficiary giving notice under Section 4.2 upon the
release of the deposit materials held by DSI.
4.5 Right to Use Following Release. Unless otherwise provided in the license
agreement, upon release of the deposit materials in accordance with this Article
4, Preferred Beneficiary shall have the right to use the deposit materials for
the sole purpose of continuing the benefits afforded to Preferred Beneficiary by
the license agreement. Preferred Beneficiary shall be obligated to maintain the
confidentiality of the released deposit materials.
ARTICLE 5 - TERM AND TERMINATION
5.1 Term of Agreement. The initial term of this Agreement is for a period of
one year. Thereafter, this Agreement shall automatically renew from year-to-year
unless (a) Depositor and Preferred Beneficiary jointly instruct DSI in writing
that the Agreement is terminated, or (b) the Agreement is terminated by DSI for
nonpayment in accordance with Section 5.2. If the Acceptance Form has been
signed at a date later than this Agreement, the initial term of the Acceptance
Form will be for one year with subsequent terms to be adjusted to match the
anniversary date of this Agreement. If the deposit materials are subject to
another escrow agreement with DSI, DSI reserves the right, after the initial one
year term, to adjust the anniversary date of this Agreement to match the then
prevailing anniversary date of such other escrow arrangements.
5.2 Termination for Nonpayment. In the event of the nonpayment of fees owed to
DSI or DSI's authorized representative, DSI shall provide written notice of
delinquency to the parties to this Agreement affected by such delinquency. Any
such party shall have the right to make the payment to DSI or DSI's authorized
representative to cure the default. If the past due payment is not received in
full by DSI or DSI's authorized representative within one month of the date of
such notice, then at anytime thereafter DSI shall have the right to terminate
this Agreement to the extent it relates to the delinquent party by sending
written notice of termination to such affected parties. DSI shall have no
obligation to take any action under this Agreement so long as any payment due to
DSI or DSI's authorized representative remains unpaid.
5.3 Disposition of Deposit Materials Upon Termination. Upon termination of
this Agreement by joint instruction of Depositor and each Preferred Beneficiary,
DSI shall return the deposit materials to the Depositor. Upon termination for
nonpayment, DSI shall return the deposit materials to the Depositor. DSI shall
have no obligation to return or destroy the deposit materials if the deposit
materials are subject to another escrow agreement with DSI.
5.4 Survival of Terms Following Termination. Upon termination of this
Agreement, the following provisions of this Agreement shall survive:
(a) Depositor's Representations (Section 1.5);
(b) The obligations of confidentiality with respect to the deposit materials;
(c) The rights granted in the sections entitled Right to Transfer Upon Release
(Section 3.3) and Right to Use Following Release (Section 4.5), if a
release of the deposit materials has occurred prior to termination;
(d) The obligation to pay DSI or DSI's authorized representative any fees and
expenses due;
(e) The provisions of Article 7; and
(f) Any provisions in this Agreement which specifically state they survive the
termination or expiration of this Agreement.
5.5 Alternative to DSI. If this Agreement terminates, Depositor and Preferred
Beneficiary agree, at Preferred Beneficiary's request, to appoint a new agent by
mutual agreement. If Depositor and Preferred Beneficiary cannot agree, Preferred
Beneficiary shall appoint a trust company or other company specializing in the
escrow business as the agent provided that such company has appropriate storage
facilities located in or around Toronto and agrees to store the deposited
materials there in accordance with the terms of this Agreement. The new agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named hereunder, without any further assurance,
conveyance, act or deed.
ARTICLE 6 - DSI'S FEES
6.1 Fee Schedule. DSI or DSI's authorized representative is entitled to be
paid its standard fees and expenses applicable to the services provided. DSI or
DSI's authorized representative shall notify the party responsible for payment
of DSI's fees at least 90 days prior to any increase in fees. For any service
not listed on DSI's standard fee schedule, DSI or DSI's authorized
representative will provide a quote prior to rendering the service.
6.2 Payment Terms. DSI shall not be required to perform any service unless the
payment for such service and any outstanding balances owed to DSI or DSI's
authorized representative are paid in full. All other fees are due upon receipt
of invoice. If invoiced fees are not paid, DSI may terminate this Agreement in
accordance with Section 5.2. Late fees on past due amounts shall accrue at the
rate of one and one-half percent per month (18% per annum) from the date of the
invoice.
ARTICLE 7 - LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions. DSI may act in reliance upon any
instruction, instrument, or signature reasonably believed by DSI to be genuine.
DSI may assume that any employee of a party to this Agreement who gives any
written notice. request, or instruction has the authority to do so. DSI shall
not be responsible for failure to act as a result of causes beyond the
reasonable control of DSI, subject to Section 2. 1.
7.2 Indemnification. DSI shall be responsible to perform its obligations under
this Agreement and to act in a reasonable and prudent manner with regard to this
escrow arrangement. Provided DSI has acted in the manner stated in the preceding
sentence, Depositor and Preferred Beneficiary each agree to indemnify, defend
and hold harmless DSI from any and all claims, actions, damages, arbitration
fees and expenses, costs, attorney's fees and other liabilities incurred by DSI
relating in any way to this escrow arrangement.
7.3 Dispute Resolution. Any dispute, difference or question arising among any
of the parties concerning the construction, meaning, effect or implementation of
this Agreement or any part hereof will be settled by a single arbitrator
mutually agreed upon by the parties, or failing agreement, an arbitrator
appointed pursuant to the Arbitration Act (Ontario) or similar legislation. The
decision of such arbitrator appointed pursuant to this Agreement or such Act
will be final and binding on the parties and no appeal will lie therefrom.
7.4 Controlling Law. This Agreement is to be governed and construed in
accordance with the laws of the Province of Ontario except any laws which would
refer any matter to the laws of another jurisdiction. All parties irrevocably
attorn to the exclusive jurisdiction of the Courts of Ontario in respect of the
subject matter hereof.
7.5 Notice of Requested Order. If any party intends to obtain an order from
the arbitrator or any court of competent jurisdiction which may direct DSI to
take, or refrain from taking any action, that party shall:
(a) Give DSI at least two business days' prior notice of the hearing;
(b) Include in any such order that, as a precondition to DSI's obligation, DSI
or DSI's authorized representative be paid in full for any past due fees
and be paid for the reasonable value of the services to be rendered
pursuant to such order: and
(c) Ensure that DSI not be required to deliver the original (as opposed to a
copy) of the deposit materials if DSI may need to retain the original in
its possession to fulfill any of its other escrow duties.
ARTICLE 8 - GENERAL PROVISIONS
8.1 Entire Agreement. This Agreement, which includes the Acceptance Form and
the Exhibits described herein, embodies the entire understanding between all of
the parties with respect to its
subject matter and supersedes all previous communications. representations or
understandings, either oral or written. No amendment or modification of this
Agreement shall be valid or binding unless signed by all the parties hereto,
except that Exhibit A need not be signed by DSI, Exhibit B need not be signed by
Preferred Beneficiary and the Acceptance Form need only be signed by the parties
identified therein.
8.2 Notices. All notices, invoices, payments, deposits and other documents and
communications shall be given to the parties at the addresses specified in the
attached Exhibit C and Acceptance Form. It shall be the responsibility of the
parties to notify each other as provided in this Section in the event of a
change of address. The parties shall have the right to rely on the last known
address of the other parties. Unless otherwise provided in this Agreement, all
documents and communications may be delivered by First Class mail.
8.3 Severability. In the event any provision of this Agreement is found to be
invalid, voidable or unenforceable, the parties agree that unless it materially
affects the entire intent and purpose of this Agreement, such invalidity,
voidability or unenforceability shall affect neither the validity of this
Agreement nor the remaining provisions herein, and the provision in question
shall be deemed to be replaced with a valid and enforceable provision most
closely reflecting the intent and purpose of the original provision.
8.4 Successors. This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties. However, DSI shall have no
obligation in performing this Agreement to recognize any successor or assign of
Depositor or Preferred Beneficiary unless DSI receives clear, authoritative and
conclusive written evidence of the change of parties.
Data Securities International, Inc. Internet Liquidators International Inc.
By:__________________________________ By:________________________________
Name:________________________________ Name:______________________________
Title:_______________________________ Title______________________________
Date:________________________________ Date:______________________________
By:__________________________________ By:________________________________
Name:________________________________ Name:______________________________
Title:_______________________________ Title______________________________
Date:________________________________ Date:______________________________
ACCEPTANCE FORM
Account Number _____________________
Xxxxxx Media Inc., hereby (i) acknowledges that it is a Preferred Beneficiary
referred to in the Master Preferred Escrow Agreement effective February 12, 1997
with Data Securities International, Inc. as the escrow agent and Xxx.Xxx
International Inc. (formerly Internet Liquidators International, Inc.) as the
Depositor, (ii) agrees to be bound by all provisions of such Agreement, and
(iii) agrees that in addition to the Release Conditions set forth in section 4.1
of this Agreement, a further Release Condition shall exist if the Depositor is
in continuing material breach of the E-Commerce and Promotion Services Agreement
attached hereto as Schedule "A".
Xxxxxx Media Inc.
By:___________________________________
Name:_________________________________
Title:________________________________
Date:_________________________________
Notices and communications should Invoices should be addressed to:
be addressed to:
Company Name: Xxxxxx Media Inc. Xxxxxx Media Inc.
Address: 000 Xxxxx Xxxxxx Xxxx 156 Front Street West
Suite 400 Suite 400
Toronto, Ontario Toronto, Xxxxxxx
X0X0X0 X0X0X0
Designated
Contact: Xxxx Xxxxxxxx Xxxx Xxxxxxxx
Telephone: (000) 000-0000 (000) 000-0000
Facsimile: (000) 000-0000 (000) 000-0000
SCHEDULE "A"
LICENSE AGREEMENT
EXHIBIT A
MATERIALS TO BE DEPOSITED
Account Number __________________
Deposit represents to Preferred Beneficiary that deposit materials delivered to
DSI shall consist of the following:
[Confidential Information filed separately with the SEC]
XXX.XXX International Inc. Xxxxxx Media Inc.
---------------------------------------------- -------------------------------------------------
Depositor Preferred Beneficiary
By: Xxxxx Xxxxxx
-------------------------------------- --------------------------------------------------
Name:
-------------------------------------- -------------------------------------------------
Title: Chief Financial Officer Vice President Finance, CEO
-------------------------------------- -------------------------------------------------
Date: July , 1998 July 29, 1998
I certify for Depositor that the above DSI has inspected and accepted the above
desceribed deposit materials have been materials (any exceptions are noted above):
transmitted to DSI:
Signature: Signature:
--------------------------------------
Print Name: Print Name:
-------------------------------------- --------------------------------------
Date: Date:
Exhibit B#
Send materials to: DSI, 0000 Xxxxxxxxxx Xxxxx, #000, Xxx Xxxxx, XX 00000
EXHIBIT "B"
DESCRIPTION OF DEPOSIT MATERIALS
Depositor Company Name: Xxx.xxx International Inc.
-------------------------------------------------------
Account Number:
PRODUCT DESCRIPTION:
[Confidential Information
Product Name: filed separately with the Version: [Confidenti
SEC] al Information
filed
separately
with the
SEC]
[Confidential Information filed separately with the
Operating System: SEC]
-------------------------------------------------------
[Confidential Information filed separately with the
Hardware Platform: SEC]
-------------------------------------------------------
DEPOSIT COPYING INFORMATION:
[Confidential Information filed separately with the
Hardware required: SEC]
[Confidential Information filed separately with the
Software required: SEC]
DEPOSIT MATERIAL DESCRIPTION:
Qty Media Type & Size Label Description of Each Separate Item
---------------------------------------------------------------------------------------------------
(Excluding documentation
1X Disk 3.5" or ________ No Documentation
DAT tape 4mm
CD-ROM
Data Cartridge Tape DAT 24I
TK 70 or _______ tape
Magnetic tape _______
Documentation
Other: ____________
Listing of Xxx.Xxx Source Components
ILI Xxx.xxx Modules
------------------------------------------------
Database: [Confidential Information filed
separately with the SEC]
Business Services: [Confidential Information filed
separately with the SEC]
Data Service: [Confidential Information filed
separately with the SEC]
Dynmic Export: [Confidential Information filed
separately with the SEC]
Order Processing [Confidential Information filed
Administrator:
Credit Card: separately with the SEC]
Order Business Services:
Utilities [Confidential Information filed
Category Builder: separately with the SEC]
AdRotatorGenerator:
AssetMgmt
DB Services:
Notification:
Supporting S/W: [Confidential Information filed
separately with the SEC]
Web: [Confidential Information filed separately
with the SEC]
XXXXxx.xxx Modules (Dutch)
---------------------------
Business Services: [Confidential Information filed separately
with the SEC]
Data Services: [Confidential Information filed separately
with the SEC]
Dutch Server: [Confidential Information filed separately
with the SEC]
Dutch Client: [Confidential Information filed separately
with the SEC]
Internet Web: [Confidential Information filed separately
with the SEC]
Admin Web: [Confidential Information filed separately
with the SEC]
SCHEDULE "F"
Site Activity Reporting Requirements
Pursuant to subsection 2.1(viii) of this Agreement, XXX.XXX shall deliver the
following site activity information to Rogers with the frequency indicated
below:
F.1 Daily Reports
1. number of page views.
F.2 Monthly Reports
1. number of unique visitors;
2. top 15 domain names from which traffic to the Canadian XXX.XXX Site
originated;
3. number of unique visits by province;
4. number of unique visits by product category offered;
5. average visit duration;
6. number of transactions;
7. average transaction value;
8. number of transactions by category;
9. number of transactions by product; and
10. percentage of server uptime/availability.
F.3 Additional Reports
In addition, XXX.XXX shall deliver the following site activity information as
indicated below:
1. purchase history of repeat visitors on a semi annual basis;
2. advertising statistical reports at the request of Rogers; and
3. other statistics as mutually agreed by the parties.
-2-
SCHEDULE "G"
Prohibited Products and Services
Pursuant to subsection 2.1(i) of this Agreement, XXX.XXX shall not offer any of
the categories of products or services set out below without the prior written
consent of Rogers:
1. cellular, paging or PCS hardware, services or packages;
2. cable hardware, services or packages;
3. broadband hardware, services or packages;
4. set-top box, WebTV and wireless cable hardware, services or packages;
5. satellite hardware, services or packages;
6. pornographic or obscene materials or services; and
7. firearms.
-3-
SCHEDULE "H"
Prohibited Rogers Assignees
Pursuant to subsection 11.2(ii) of this Agreement, Rogers may not, without the
prior written consent of XXX.XXX, assign its rights and obligations under this
Agreement, in whole or in part, to a joint venture in which Rogers has an
interest with a party which operates an on-line auction site which is
competitive to XXX.XXX, including the on-line auction sites currently operating
at the following URLs:
[Confidential Information filed separately with the SEC]
-4-
SCHEDULE "I"
Net E-Commerce Revenue Reports
SUMMARY Month 1 Month 2 Month 3 Quarter
Total
-------------------------------------------
(a) Sales Revenues XXX XXX XXX XXX
(b) Sales Returns and Allowances (XXX) (XXX) (XXX) (XXX)
(c) Cost of Goods Sold (XXX) (XXX) (XXX) (XXX)
Shipping and Handling Costs (XXX) (XXX) (XXX) (XXX)
Credit Card Fees (XXX) (XXX) (XXX) (XXX)
-------------------------------------------
Gross Margin XXX XXX XXX XXX
Less Revenue Share (XXX) (XXX) (XXX) (XXX)
-------------------------------------------
Net Margin XXX XXX XXX XXX
-------------------------------------------
TOP BID AUCTION DETAIL
Product Sales Top Bid Auction XXX XXX XXX XXX (a)
Shipping & Handling Sales Top Bid Auction XXX XXX XXX XXX (a)
Sales Return & Allowances Top Bid Auction (XXX) (XXX) (XXX) (XXX) (b)
Cost of Goods Sold Top Bid Auction (XXX) (XXX) (XXX) (XXX) (c)
-------------------------------------------
Gross Margin XXX XXX XXX XXX
-------------------------------------------
DUTCH AUCTION DETAIL
Product Sales Dutch Auction XXX XXX XXX XXX (a)
Shipping & Handling Sales Dutch Auction XXX XXX XXX XXX (a)
Sales Returns & Allowances Dutch Auction (XXX) (XXX) (XXX) (XXX) (b)
-------------------------------------------
Cost of Goods Sold Dutch Auction (XXX) (XXX) (XXX) (XXX) (c)
-------------------------------------------
DIRECT SALES DETAIL
Product Sales Direct XXX XXX XXX XXX (a)
Shipping & Handling Sales Direct XXX XXX XXX XXX (a)
Sales Returns & Allowances Direct (XXX) (XXX) (XXX) (XXX) (b)
Cost of Goods Sold Direct (XXX) (XXX) (XXX) (XXX) (c)
-------------------------------------------
Gross Margin XXX XXX XXX XXX
-5-
SCHEDULE "J"
Net Promotional Revenue Reports
Pursuant to subsection 5.1(ii) of this Agreement, Rogers shall provide a report
of Net Promotional Revenue to XXX.XXX in a format similar to the following:
For the calendar quarter beginning ____________, 19___ and ending ____________,
19___.
Advertiser Status Amount Paid
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Advertising
Revenue $xx,xxx.xx
$ xxx.xx
--------------------------------------------------------------------------------
Total Net Promotional Revenue earned by Rogers $xx,xxx.xx
Share of Net Promotional Revenue due to XXX.XXX $ xxxx.xx
-6-
SCHEDULE "K"
Rogers Performance Metrics
K.1 Performance Metrics. Rogers shall achieve three of the following metrics:
1. during the last [Confidential Information filed separately with the SEC] of
the Evaluation Period, the aggregate site traffic on the Canadian XXX.XXX
Site shall be at least [Confidential Information filed separately with the
SEC] of the aggregate site traffic on the U.S. E-Commerce Service site
during such three (3) month period.
2. Aggregate Net Promotional Revenue during the Evaluation Period shall be
greater than or equal to [Confidential Information filed separately with the
SEC]. If the aggregate Net Promotional Revenue during the Evaluation Period
is less than [Confidential Information filed separately with the SEC],
Rogers may, at its sole option, fulfill this metric by paying to XXX.XXX
[Confidential Information filed separately with the SEC] of the difference
between the [Confidential Information filed separately with the SEC] metric
and the actual aggregate Net Promotional Revenue earned by Rogers during
such Evaluation Period.
3. Rogers shall spend a minimum of [Confidential Information filed separately
with the SEC] annually during the Evaluation Period in respect of
advertising, and promotion of the Canadian E-Commerce Service, allocated as
follows:
(i) the equivalent rate card value of [Confidential Information filed
separately with the SEC]in media properties operated by Rogers and its
Affiliates; and
(ii) [Confidential Information filed separately with the SEC] in non-Rogers
media properties. This amount shall include, without limitation: (a)
amounts paid by Rogers to advertising agencies; (b) amounts paid by Rogers
to employees and consultants who provide services relating, to the
advertising and promotion of the Canadian E-Commerce Service in non-Rogers
media properties; and (c) [Confidential Information filed separately with
the SEC] of the value of Contra transactions involving any non-Rogers media
property, as such value is attributed to such Contra transactions by mutual
agreement of the parties
4. Rogers shall retain, at a minimum, the equivalent of [Confidential
Information filed separately with the SEC] full-time staff to provide
services related to the Canadian E-Commerce Service.
K.2 Amendments to Performance Metrics. At either party's request, the parties
will negotiate reasonable amendments to the performance metrics set out above
for a subsequent Evaluation Period. If the parties are unable to reach such an
agreement on such amended performance metrics, the parties agree that they will
submit
-7-
the determination of such amended performance metrics to dispute
resolution in accordance with Section 10.5 of this Agreement. In choosing new
performance metrics, the arbitrator shall take into account the following:
(a) the arbitrator may choose new numbers for the categories of
metrics set out in Section K. I above, but the arbitrator may not establish
new categories of performance metrics;
(b) actual performance in each of the above categories for the U.S.
E-Commerce Service;
(c) computer penetration in Canada compared to computer penetration
in the United States;
(d) Internet use in Canada compared to Internet use in the United
States;
(e) use of the Internet to purchase products and services in Canada
compared to such use in the United States, measured both by number of
transactions and dollar value;
(f) performance of the Canadian E-Commerce Service during the
previous Evaluation Period; and
(g) the existence of XXX.XXX Competitors in Canada.
K.3 Default Metrics. If the parties are unable to agree upon new performance
metrics, and if an arbitrator falls to render a decision pursuant to Section K.2
hereof which is mutually acceptable to the parties, the performance metrics
applicable for each year during the following Evaluation Period shall be equal
to the actual performance achieved by Rogers in the immediately preceding year
in each of the categories set out in Section K. I above.
-8-
SCHEDULE "L"
Transition Plan
Pursuant to Section 7.5 of this Agreement, the parties agree that upon
termination of this Agreement, there will be a transition period of such
duration as will be mutually agreed upon, during which the parties will co-
operate and work together in good faith to effect a smooth and orderly
transition from the facilities, networks, technology, Web sites and services
provided by each of the parties hereunder to the separate facilities, networks,
technology, Web sites and services required by each of the parties after the end
of the transition period. Without limiting the generality of the foregoing, the
parties agree to co-operate and work together in good faith to address
transition issues relating to the following:
1. linking of the Canadian XXX.XXX Site and the Rogers E-Commerce Portal;
2. delivery up of a complete, updated list of Customer Profiles to Rogers;
3. continued service to and support of customers of the Canadian E-Commerce
Service;
4. continued fulfillment of all obligations to advertisers on the Canadian
XXX.XXX Site;
5. branding strategy; and
6. any technical or operational requirements.
-9-
SCHEDULE "M"
XXX.XXX Marks
The XXX.XXX Marks licensed to Rogers pursuant to Section 3.4 of this Agreement
include:
1. XXX.XXX;
2. XXX.XXX + Design;
3. any derivations or modified versions incorporating the word XXX.XXX; and
4. any other marks mutually agreed between the parties.
-10-
SCHEDULE "N"
Torstar Amending Letter
VIA FACSIMILE
July 22, 1998
Mr. Xxxxx Xxxxx
Vice President Strategic Planning and New Media
Toronto Star Newspapers Limited
Xxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Rocco;
Re: E-Commerce Services Agreement between Internet Liquidators Internatiors4
Inc. ("IL") and Toronto Star Newspapers Limited ("Torstar") dated February
12, 1997 (the "Torstar Agreement")
-------------------------
Following the introduction of Xxxxxx Media Inc. ("Rogers") to IL for the
purpose of creating a Canadian national partnership for e-commerce, the
following areas require clearer definition so that the rights granted to Torstar
under the Torstar Agreement do not conflict with the rights to be granted to
Rogers in an agreement to form a national partnership with IL (the "Rogers
Agreement"). Unless otherwise defined in this letter, capitalize terms will have
the meaning set out in the Torstar Agreement, as clarified and amended by this
letter.
1. The Torstar Agreement grants to Torstar the exclusive right to use the
E-Commerce Service "in a Local Auction and Mall format to sell products from
charitable and community organizations and local retailers to purchasers in
the Territory", Torstar agrees that the exclusive rights granted in the
Torstar Agreement are to use the IL Technology (not the E-Commerce Service)
in a Local Auction and Mall format. In addition, Torstar agrees that the
charitable and community organizations and local retailers; from whom Torstar
has the right to sell products in a Local Auction and Mall format are
restricted to charitable organization, community organizations and local
retailers located in Ontario.
The Torstar Agreement also extends rights to sell products from Ontario based
retailers to purchasers Outside of the Territory only until such time as IL
-------
may grant exclusive rights for such non-Ontario territory to another party.
Torstar acknowledges that following the execution of the Rogers Agreement,
Torstar will have no further right to sell products to purchaser located
outside of Ontario, provided that Torstar may accept sales from purchasers
located outside of Ontario, which are incidental to the Ontario focus of its
event (i.e. representing less than five percent of the total Net Revenue
received by Torstar from the Torstar Online Auction in any calendar quarter).
2. Torstar agrees that the Torstar Agreement grants the right to Torstar to use
the IL Technology to sell products in a Local Auction and Mall format only at
a new URL chosen by Torstar, and that this does not extend to any other URL
owned or used by IL now or in the future including, for greater certainty,
the URL xxx.xxx.xxx.
3. The branding of such an auction is at Torstar's discretion, with IL granting
the use of its "Online Auction" trademark to facilitate a "Torstar Online
Auction" branding if so desired by Torstar. Torstar may, in its discretion,
use the IL trademark "Online Auction" as a sub-brand. Torstar agrees that it
does not have any right to any IL trademark other than the trademark "Online
Auction". For greater certainty, Torstar agrees that it does not have the
right to use the trademark XXX.XXX or any trademark related to the trademark
XXX.XXX.
4. Torstar agrees that Torstar's rights to require XXX.XXX to make functionality
and customization changes to the IL Technology or the E-Commerce Service to
implement a "Torstar look" is restricted to the right to require charges to
the look and feel of the Torstar Online Auction operating at the URL chosen
by Torstar and to the branding of the user interface on the Torstar Online
Auction, and not to changes to the IL Technology or the E-Commerce Service.
5. The Torstar Agreement granted to Torstar the right to participate in a co-
branded Torstar Sponsored Auction on IL's "Canadian national auction" for a
minimum of one hour per day. In addition, The Torstar Agreement provided that
while each Torstar Sponsored Auctions are operating, IL may not conduct or
allow any third party to conduct other online auctions through the E-Commerce
Service. Torstar and IL contemplated that the Canadian national auction and
any Torstar Sponsored Auctions would be operated at the URL
xxx.xxxxxxxxxxxxxxxxxxx.xxx.
---------------------------
The URL xxx.xxxxxxxxxxxxxxxxxxx.xxx no longer has any consumer based
---------------------------
traffic and IL will no longer have an "IL Canadian national auction"
through which Torstar would operate Torstar Sponsored Acutions within the
meaning of the Torstar Agreement. As such, Torstar agrees that it no longer
has any right to participate in a Torstar Sponsored Auction on any IL
Canadian national auction, including, for greater certainty, the Canadian
national auction on the URL xxx.xxx.xxx without the prior written consent
-----------
of Rogers. If Rogers, in its sole discretion consents to such daily one
hour Torstar Sponsored Auction, the daily one hour Torstar Sponsored
Auction need not be the only auction operated at such time, but shall have
at least equal prominence with any other auction functioning at that time.
Should Rogers refuse to grant such consent, Torstar shall be at liberty to
operate another Torstar Sponsored Auction on a competing auction platform.
6. The Torstar Agreement granted to Torstar the right to call up to
[Confidential Material filed separately with the SEC] of the advertising on
IL's "Canadian national auction". Torstar agrees that since IL will no
longer have a "Canadian national auction" at the URL
xxx.xxxxxxxxxxxxxxxxxxx.xxx within the meaning of the Torstar Agreement,
Torstar will have no right to sell any advertisments for any Web site owned
or operated by IL or its affiliates, including any linked pages and
including for greater certainty the URL xxx.xxx.xxx, IL will pay Torstar
[Confidential Material filed separately with the SEC] of the revenue
received by IL form the sale of banner advertisement on its Canadian
business to consumer on-line auction in accordance with the terms of the
Rogers Agreement.
7. IL will pay a Net Revenue split to Torstar of [Confidential Material filed
separately with the SEC] (which equates to [Confidential Material filed
separately with the SEC] of the total) of the Net Revenue received by IL
from sales to consumers who provide a billing address in Ontario through
the URL xxx.xxx.xxx as this component of the Torstar Agreement had the
intent of comprising Torstar for assistance in building a national presence
for IL.
8. Torstar agrees that IL and Rogers are not restricted from sourcing goods
and services from retailers who have a presence which is not restricted to
Ontario, as long as such products and services are offered on a national
presence for IL.
9. It is understood that nothing in the Rogers Agreement will prevent Torstar
from operating the Torstar Online Auction in the territory or prevent
Torstar from selling advertising on the Torstar Online Auction in the
Territory. The mutually agreed terms required for any rights by Torstar to
a non-exclusive license of the IL Technology for non-auction related uses
such as the operation of games and contests will require the additional
prior written agreement of Rogers.
Kindly acknowledge your agreement to the amendments to the Torstar Agreement
contained herein by signing a copy of this letter and returning it to the
undersigned to be used as a schedule in the Rogers Agreement. Please accept our
sincere gratitude for being a catalyst in forming our national partnership with
Rogers. We look forward to facilitating a successful launch of the Torstar
Online Auction whenever you deem the timing to be opportune.
Yours very truly,
BID-COM International Inc.
Per:
___________________________
Xxxxx Xxxxxx
Chief Financial Officer
Acknowledged and agreed to this ____ day of July, 1998.
TORONTO STAR NEWSPAPER LIMITED
By:_________________________________
Xxxxx Xxxxx
(duly authorized signatory)
-11-
SCHEDULE "O"
AOL Amending Letter
VIA FACSIMILE
July 29, 1998
Xxxx XxXxxxx
America Online, Inc
00000 XXX Xxx
Xxxxxx, Xxxxxxxx
00000-0000
Dear Xxxx:
Re: Interactive Marketing Agreement between America Online, Inc. ("AOL") and
Internet Liquidators International, Inc. ("IL") dated November 1, 1997 (the
"AOL Agreement")
The purpose of this letter is to confirm our understanding that:
1. the right of AOL provided in Section 2.13 of the AOL Agreement to "license
or sell promotions advertisements, links, promoters or similar services or
rights ("Advertisements") through the Affiliated IL Site" does not include
the right of AOL to Sell Advertisements, through those pages of the
Affiliated IL Site through which IL conducts on-line auctions for purchasers
with a billing address in Canada; and
2. the rights of AOL to establish, operate and maintain an auction service on
one or more AOL servers in accordance with Article Three of the agreement
between IL and AOL dated February 21, 1997, which is incorporated into the
ht AOL Agreement pursuant to Section 1.5 does not include any right to
establish, operate and maintain an on-line auction service using the IL
Technology for purchasers with a billing address Canada.
Kindly acknowledge your agreement to the above by signing a copy of this letter
and return it to the undersigned.
Yours very truly,
XXX.XXX International Inc.
Per:
________________________________
Xxxxx Xxxxxxxx
Director and Assistant Secretary
Acknowledged and agreed to this 29th day of July, 1998
AMERICA ONLINE, INC.
By:_____________________________
(duly authorized signatory)
