Service Agreement
This service agreement (the "Agreement") is made and entered into as of
November 30, 1998, by and between Evolution Online Systems, Inc. ("Evolution"),
a New York corporation, and Bluefly, Inc., a New York corporation ("Client").
WHEREAS Evolution provides services including technology consulting, analysis,
design, production, programming, management, and maintenance of online systems,
including network devices, web sites, and application software, site hosting
and network services, and the integration and resale of third party hardware
and software; and
WHEREAS Client desires to retain Evolution as an independent contractor to
perform certain services on terms set forth more fully below;
NOW THEREFORE in consideration of the mutual promises contained herein, the
parties agree as follows:
1. SERVICE SPECIFICATIONS
a. The services, compensations, and particulars of work to be performed by
Evolution for Client are attached as a Service Specification (the
"Specification") executed on even date herewith. The Specification may also
provide additional or modified terms of agreement which supersede the terms in
this Agreement, within the scope of that Specification.
b. The terms of this Agreement shall also apply to future Service
Specifications ("Future Specifications") which may be agreed upon and executed
in writing, except as specifically provided in any Future Specification
executed by both parties or otherwise agreed in writing executed by both
parties subsequent to the execution of this Agreement. Each such executed
Specification and/or Future Specification shall be considered attached and
incorporated into this Agreement.
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2. OWNERSHIP
a. Except for the Developer Software (herinafter defined), all materials,
products, and modifications developed or prepared by Evolution under this
Agreement, the Specification, and any Future Specifications, including without
limitation forms, images and text viewable on the Internet, any HTML elements
relating thereto, and software, including the deliverables and any upgrades
thereto, are the property of Client and all right, title and interest therein
shall vest in Client and shall be deemed to be a "work made for hire" under
United States copyright law (17 U.S.C. ss. 101 et seq.) and made in the course
of this Agreement. To the extent that title to any such works may not, by
operation of law, vest in Client or such works may not be considered to be work
made for hire, all right, title and interest therein are hereby irrevocably
assigned to Client. All such materials shall belong exclusively to Client with
Client having the right to obtain and to hold in its own name, copyrights,
registrations or such other protection as may be appropriate to the subject
matter, and any extensions and renewals thereof. Evolution agrees to give
Client and any person designated by Client, any reasonable assistance required
to perfect and enforce the rights defined in this Section 2.a. at no additional
cost to Client.
b. As used herein, the term "Developer Software" shall mean all software
existing and owned or licensed by Evolution at the time this Agreement is
executed, except for software developed or obtained specifically in connection
with the Client's Web site, and which is employed by Evolution in connection
with Client's Web site. Evolution shall retain all rights to use the Developer
Software as well as any general-purpose algorithms, know-how, development
techniques, utility routines, computing discoveries and concepts.
Notwithstanding the foregoing, Evolution grants to Client a perpetual,
irrevocable, non-exclusive, royalty-free license (or, in the case of
third-party software, sublicense) for Client or its agents or assigns to use,
modify, copy, transfer and maintain the Developer Software in conjunction with
the operation, maintenance, and updating of the Client Site.
3. CONFIDENTIALITY
a. Each party agrees to treat as confidential any information disclosed by
the other party which is not otherwise public knowledge including, without
limitation, the business affairs, current and planned products or services,
trade secrets, finances, and methods of operation of the parties. While the
existence of this Agreement and general nature of the services to be performed
are not, the details of the services and this Agreement shall also be
considered confidential. The confidentiality requirements of this Agreement
shall not be annulled by the completion of or termination of this Agreement.
b. The parties agree to hold all confidential information in trust and
confidence with no less a degree of care than each uses to protect its own
confidential information of a like nature. Neither party shall disclose any
confidential information to any third party without informing such third party
of the obligation to keep such information confidential.
c. The confidentiality provision of this Agreement will not apply to
disclosures of information that: is or subsequently becomes publicly available
except through a breach of the confidentiality provisions of this Agreement;
was or becomes known to the disclosing party from a source other than the
non-disclosing party; the disclosure of which is required by law; or is
disclosed pursuant to judicial process or by order of any court or governmental
entity.
d. Evolution acknowledges that Client is a publicly traded company and that
the unauthorized disclosure of Client's Confidential Information could have a
material adverse affect. Evolution shall take all appropriate precautions
necessary to prevent its officers, directors, employees and agents from
directly or indirectly trading on or otherwise releasing any of Client's
Confidential Information. The terms of this Section 3 shall survive the
termination of this agreement.
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4. INDEPENDENT CONTRACTOR
a. Evolution shall perform its obligations under this Agreement as an
independent contractor. Nothing in this Agreement shall be construed to create
a joint venture, partnership, agency, or other joint relationship between the
parties. Neither Evolution nor Client shall act or represent itself, directly
or by implication, as an agent of the other, or in any manner assume or create
any obligation on behalf of, or in the name of, the other, nor shall they
attempt to direct or control the day-to-day activities of the other.
b. In consideration of the remuneration that Evolution shall receive
hereunder and for certain other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Evolution agrees that during
the term of this agreement and for a period of nine (9) months thereafter,
Evolution (together with its successor and assigns) shall not, and shall cause
its employees, directors, officers, agents, and affiliates not to directly or
indirectly: engage in, be employed by, hold any interest in, provide advice,
act as a consultant, render any service to, or solicit a business relationship
with, any person, corporation, partnership or other entity (other than Client)
which is engaged in or has plans to engage in a Competitive Business. For
purposes of this agreement, a "Competitive Business" shall mean any person,
corporation, partnership or other entity which sells or has plans to sell name
brand apparel, fashion accessories, or home furnishings via the Internet;
provided, however, that a Competitive Business shall not include a business
which sells the product of only one designer or manufacturer, or a web site,
the principal focus of which is not the sale of name brand apparel. Evolution
agrees that in the event of a breach or threatened breach of this Section 4.b.,
Client shall have no adequate remedy in money damages and, accordingly, shall
be entitled to appropriate injunctive relief against such breach or threatened
breach.
5. CLIENT'S RESPONSIBILITIES
a. Client shall fully cooperate with and assist Evolution in the performance
of its services under this Agreement. Failure of Client, its agents, vendors,
or other parties to supply information, documents, approvals, payments, or
other materials in a timely fashion, and as may be agreed upon, may result in
delays in services provided by Evolution of lesser or greater duration, which
Client agrees shall not be considered a breach of this agreement.
b. Client will make available to Evolution a qualified project manager or
primary contact or, subject to Evolution's reasonable prior approval, Client
will appoint such a person promptly following execution of this Agreement who
will be authorized to make binding decisions for the Client regarding this
Agreement and will promptly: i. advise Evolution of Client's requirements; ii.
review all specifications, technical materials and other documentation or
correspondence submitted by Evolution, request necessary corrections, and
approve such documents; and iii. provide requested Client information and data
and assume responsibility for the accuracy of the same.
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6. PAYMENT TERMS
a. Evolution shall issue detailed invoices on a weekly, bi-weekly, or
monthly basis depending on the type of service and length of project, or as
agreed upon with Client, and on request shall provide relevant supporting
documentation for all charges. Unless otherwise provided in a Service
Specification, routine monthly fees such as network services or pre-arranged
site maintenance shall be billed in advance, while consulting and development
services shall be billed in arrears. In addition to fees and expenses specified
as described above, Evolution shall also invoice Client for reasonable and
necessary business and travel expenses, provided that each such expenses in
excess of fifty dollars must be approved in advance by Client.
b. Client shall make full payment for all invoices within thirty days of
invoice. Accounts which are unpaid and undisputed sixty days after the date of
invoice shall be considered in default and may have their service or use of
materials produced by Evolution interrupted, or Evolution at their exclusive
option may terminate this Agreement. If payment is returned unpaid, Client is
subject to a returned check charge of twenty five dollars.
c. Accounts in default are subject to an interest charge of one-and-one-half
percent per month on the outstanding balance, or the maximum rate allowable by
state and federal law at the time of default. In case of default, Client agrees
to pay Evolution its reasonable expense, including attorney and collection
agency fees, incurred in enforcing its rights under this Agreement.
d. Evolution reserves the right to change its rates by notifying Client no
less than sixty days in advance of the effective date of the change, provided
that at least ninety days have passed from the date of execution. If Evolution
and Client are unable to agree on the new fee arrangement, Client shall have
the right to terminate this agreement with sixty days written notice, for which
period Client shall pay the previous, unchanged rate.
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7. TERMINATION
a. This Agreement shall remain in effect until all obligations under the
various agreed upon Specifications have been properly completed or canceled at
which time either party can terminate the Agreement without notice.
b. If either party breaches any of the provisions of this Agreement and such
failure is not cured within 15 days after written notice thereof by the other
party, or either party becomes insolvent, ceases operations, goes into
liquidation, or files or has filed against it a petition in bankruptcy (which,
in the case of a petition filed against it, is not dismissed within 30 days) or
otherwise seeks protection under any bankruptcy, insolvency or other law
affecting creditors' rights, the other party may, at their option, either
suspend performance of their obligations under this Agreement, or terminate
this Agreement by written notice, which notice will be effective when given.
Evolution shall not be considered in breach for circumstances due to Client's
actions or other causes beyond its control. Cancellation of this agreement
shall not free Client of its obligation to pay any charges incurred prior to
the date of termination, or Evolution of its obligation to deliver all services
paid for prior to the date of termination.
c. Evolution agrees to cooperate with Client and its agents to ensure an
orderly transfer of Client's information and service arrangements in the event
of termination of this agreement other than by Client default. Client shall pay
Evolution for such assistance at Evolution's prevailing rate for such work at
that time.
8. INDEMNIFICATION
Each party hereto shall indemnify, defend, and hold harmless the other
party, its directors, officers, employees and agents with respect to any claim,
demand, cause of action, debt or liability, including reasonable attorneys'
fees, to the extent that it is based upon a claim that: (i) if true, would
constitute a breach of any of the indemnifying party's representations,
warranties, or agreements hereunder; or (ii) arises out of the gross
negligence, willful misconduct, or abandonment of the indemnifying party.
Notwithstanding the foregoing, neither Party shall be obligated to indemnify
the other or its directors, officers, employees or agents with respect to any
claim, demand, cause of action, debt or liability arising out of the gross
negligence or willful misconduct of the other Party. In claiming any
indemnification hereunder, the party claiming indemnification (the "Claimant")
shall provide the other party with written notice of any claim which the
Claimant believes falls within the scope of the foregoing sections. The
Claimant may, at its own expense, assist in the defense if it so chooses,
provided that the other party shall control such defense and all negotiations
relative to the settlement of any such claim and further provided that any
settlement intended to bind the Claimant shall not be final without the
Claimant's written consent.
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9. REPRESENTATIONS AND WARRANTIES
a. Evolution represents, warrants and covenants that: i. Evolution has full
authority to enter into this Agreement; ii. Evolution will comply with all
applicable federal, state and local laws and regulations in the performance of
its obligations hereunder; iii. Evolution has such knowledge and experience in
financial, tax and business matters so as to enable it to evaluate the merits
and risks of the Common Stock (defined in that certain Service Specification of
even date) and to make an informed decision with respect thereto; iv. Evolution
is acquiring the Common Stock for its own account for investment and not with a
view to the distribution thereof or with any present intention of distribution
or selling any of the Common Stock except in compliance with all applicable
securities laws. Evolution understands and agrees that the Common Stock has not
been registered under the Securities Act of 1933, as amended, and the Common
Stock may be sold only if registered pursuant to the provisions thereunder or
if an exemption from registration is available.
b. Except as may be explicitly provided by a Service Specification or
herein, Evolution provides these services to Client as is and without warranty
of any kind, whether express or implied, including those of merchantability and
fitness for a particular purpose.
c. In regards to the services and delivered materials, Evolution warrants
that: i. all of the services, whether rendered by Evolution or a subcontractor
thereof, will be rendered using sound, professional practices and in a
competent and professional manner by knowledgeable, trained and qualified
personnel; ii. all deliverables provided by Evolution hereunder will be
designed and will operate fully and successfully on Client's hardware as then
configured; iii. Evolution is the owner of or otherwise has the right to use
and distribute all materials and methodologies used in connection with
providing the services hereunder; iv. the software and other materials used by
Evolution in fulfilling its obligations hereunder (except materials provided by
Client) and the deliverables provided hereunder do not now and will not
infringe upon any copyright, patent, trade secret, contract right or other
third party right; v. the deliverables shall not contain any Trojan horses,
worms or viruses or other disabling devices; vi. the deliverables will record,
store, process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and with
the same functionality, data integrity and performance as the deliverables
record, store, process, calculate and present calendar dates on or before
December 31, 1999, or calculates any information dependent on or relating to
such dates.
d. In the event of any failure of the services or deliverables to conform to
the provisions of Section 9.c., Evolution shall use its best efforts to correct
the same, and upon correction thereof the same shall be Client's sole remedy
with respect to such failure. In no event shall Evolution be liable for costs
of procurement of substitute services, or for any loss of data, service
interruptions, interruption of business, lost profits, or any other
consequential, incidental, indirect, or special damages, however caused and on
any theory of liability, arising out of or relating to the services, even if
Evolution has been advised of the possibility of such damages.
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10. INTERPRETATION OF AGREEMENT
a. This Agreement constitutes the entire understanding of the parties, and
no representations or conditions are made by either party except as expressly
contained in this Agreement and any current or future executed Service
Specifications.
b. This Agreement may not be cancelled or modified, nor may any of their
provisions be waived, except in writing and signed by both parties. The failure
of either party to exercise in any respect any right provided for herein shall
not be deemed a waiver of any right hereunder.
c. This Agreement shall be binding on the parties and their respective
successors and permitted assigns. Neither party may assign this Agreement or
any rights or obligations thereunder without the prior written consent of the
other, except that the foregoing shall not prevent either party from assigning
this Agreement to any purchaser of or successor to all or a substantial portion
of its business or assets, or to any present or future parent, subsidiary, or
affiliate.
d. If any provision of these terms and conditions is held to be
unenforceable it shall be severed and shall not affect the enforceability of
the remaining provisions.
e. All written notices required or permitted to be given under this
agreement shall be deemed given immediately if in person, or on the next
business day if picked up by or delivered to a commercial next-business-day
delivery service and addressed to the signatories of this agreement, or as the
parties may from time to time designate.
f. This agreement and its validity, construction and effect shall be
governed by the laws of New York State, without reference to the principles of
conflicts of laws thereof. Any dispute arising out of or relating to this
agreement, the specifications, or their subject matter not settled by the
parties may be resolved only by the courts of the State of New York or, if
subject matter jurisdiction exists, by the United States federal courts, with
venue in the County of New York (in the case of state court) or in the Southern
District of New York (in the case of federal court). Each of the parties hereby
consents to the jurisdiction of such courts over it in any action involving any
such dispute. Each of the parties agrees not to commence or maintain a legal
proceeding involving any such dispute in any forum except a court of the State
of New York located in New York County or the United States District Court for
the Southern District of New York (other than to enforce a judgment obtained in
such courts) and agrees not to contest the venue of any action involving any
such dispute in the County of New York or the Southern District of New York, as
the case may be, nor to assert in any such court the doctrine of forum non
conveniens or the like. Service of process in any action involving any such
dispute in any such court may be served, at the option of the serving party, by
certified or registered mail, return receipt requested, or as provided in any
applicable statute or rule or as ordered by the court.
g. The captions of the various sections of this Agreement have been inserted
only for the purpose of convenience and shall not be deemed in any manner to
modify, enlarge, restrict, or explain any of the provisions of this Agreement.
AGREED AND ACCEPTED
The undersigned accept the terms of this Agreement.
EVOLUTION ONLINE SYSTEMS, INC. BLUEFLY, INC.
------------------------------ ------------------------------
Date: /s/ X. Xxxxx Cavalletto Date: /s/ Xxxxxxxx Xxxxxx
------------------------ -------------------------
X. Xxxxx Cavalletto Xxxxxxxx Xxxxxx
President Executive Vice President
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Service Specification
This service specification (the "Specification") is made and entered into as of
November 30, 1998, by and between Evolution Online Systems, Inc. ("Evolution"),
a New York corporation, and Bluefly, Inc., a New York corporation ("Client").
1. SERVICES
a. During the period of August 10, 1998 through October 25, 1998 Evolution
has provided an average full-time equivalent effort of between one and two
qualified persons to develop, improve, and support the Bluefly site, including
delivery of the site features described in Schedule A attached hereto to
Client, the receipt and sufficiency of which Client hereby acknowledges.
b. Starting on October 26, 1998, Evolution began providing and will continue
to provide such ongoing consulting, design, development, network,
documentation, and support services as may be requested by Client and mutually
agreed upon. Evolution and Client will periodically decide on a desirable
target level of activity, to be initially set at average full-time equivalent
effort of two qualified persons.
2. COMPENSATION
a. In consideration of performance and delivery of the services described in
section 1.a. above, Client has made the following payments to Evolution, the
receipt of which Evolution hereby acknowledges: i. $20,000 invoiced on launch
of the site; ii. $20,000 invoiced on October 16, 1998; and iii. $20,000
invoiced on October 26, 1998.
b. As further consideration for the services described in 1.a. above, Client
agrees to issue to Evolution Two Thousand Two Hundred Twenty-two (2,222) shares
of Bluefly, Inc. Common Stock, par value $0.01 ("Common Stock").
c. In consideration of performance and delivery of the services described in
section 1.b. above, Client agrees to pay Evolution $5,000 per full-time
equivalent week of effort, invoiced in arrears. The following invoices are
scheduled for services performed during 1998: i. $20,000 invoiced on November
9, 1998, payment of which has been received; ii. $20,000 invoiced on November
23; and iii. negotiated amounts invoiced on December 7, December 21, and
January 4, 1999.
d. Evolution agrees that it shall accept five percent (5%) of the fees owed
to it pursuant to section 2.c.iii. in the form of Common Stock, in lieu of
cash, based on a per share value of Thirteen Dollars and Five Sixteenths
($13.3125). The Common Stock deliverable hereunder shall be issued in arrears
on January 29, 1999.
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3. REPRESENTATIONS AND WARRANTIES
The parties agree that the representations and warranties contained in the
Service Agreement between the parties of even date, including without
limitation the representations and warranties contained in section 9.a.iii. and
9.a.iv. thereof, are hereby incorporated by reference and made a part hereof.
AGREED AND ACCEPTED
The undersigned accept the terms of this Specification.
EVOLUTION ONLINE SYSTEMS, INC. BLUEFLY, INC.
------------------------------ ------------------------------
Date: /s/ X. Xxxxx Cavalletto Date: /s/ Xxxxxxxx Xxxxxx
------------------------ -------------------------
X. Xxxxx Cavalletto Xxxxxxxx Xxxxxx
President Executive Vice President
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Schedule A
o Referring URL tracked, saved to profile and order
o Make product display queries sort by style descending
o Smallflies Age Groupings on Department pages and Quick Search
o Split Mens and Womens Accesories on Department pages and Quick Search
o Specialized labels for Womens' Quick Search
o Don't show inactive products to users
o No inventory expected for House & Home at launch
o Add search by style number
o Add "You Save" calculations
o My Catalog Sizes (Mens/Womens)
o Add functionality to delete catalog button
o Add category navigation within My Catalog departments
o Fix caching proble in right product frame of My Catalog
o Make sure that my catalog SQL is saved, and present before viewing
o Resolve query-timout problems in My Catalog
o Add support for All Brands and All Categories within My Catalog
o Advanced Search (w/ option to save as personal catalog)
o My Catalog, Advanced Search: Add price criteria
o Add ability to change password and registration information
o Internationalized registration/check-out based on Amazon
o Add longer international phone field to registration and checkout
o Apply stricter U.S. matching to current phone fields
o Replace popups with entry fields for career/magazine/hobby/music
o Add choices to "income" pull-down: $75-100K, $100K+
o Shipping addr defaults to billing in register, check-out
o Allow user to register for e-mail notifications
o E-mail me my password
o Shipping/billing addrs defaults to registration data, if any
o Customer may place items on hold and call to order
o Mask all but trailing 5 digits of charge card # in order forms
o Look into what other e-commerce sites are doing re: charge card encryption.
o Add fulfillment IDs to commit order pages, flyrep list view
o Carry fulfillment id throughout (key on shopper_id, but never display)
o Add "You Save" calculations (on commit order and on commit phone order)
o Order Tracking
o Phone service interface to allow completion of orders
o Log notes to customer account
o Add member and inventory screens to flyrep.
o Manager: Add distinction between financial and production user permissions
o Debug generation of order batch files for fulfillment
o Initial support for processing of incoming data from fulfillment
o Initial support for inventory transaction history features
o Debug current admin interface on Production server
o Xxx-only financials page for products (first_cost, handling, list_price)
o Limit add_inventory ability to Pat's account
o Active/inactive switch for use by Xxx
o Add vendor style number to product admin edit/display/new
o Answer questions for PR staff updating inventory and size data
o Activate all styles where list_price > 0 and retail_price > 0
o Correct numbers on inventory count from latest ODS report
o Update sizes and size mappings.
o Update flybuys data from e-mail
o Update g-xxxxxx brand; complete DKNY->Xxxxx Karan conversion
o cust_serv and comp_info HTML edits & link fixes
o Confirm inventory levels in synch with actual goods on hand
o Wipe out all test transactions, bogus profiles, etc.
