Exhibit 18
SERVICES AGREEMENT
THIS SERVICES AGREEMENT made this 11th day of April, 2003.
B E T W E E N:
WAL-MART CANADA CORP., a corporation incorporated
pursuant to the laws of the Province of Nova Scotia,
(hereinafter called "WAL-MART")
OF THE FIRST PART;
- and -
PHOTOCHANNEL NETWORKS LIMITED PARTNERSHIP, a limited
partnership under the laws of the Province of British
Columbia,
(hereinafter called "PHOTOCHANNEL")
OF THE SECOND PART;
WHEREAS PhotoChannel Networks Inc. ("PNI") is the developer and owner of a
proprietary Internet based digital imaging network solution for the storage,
distribution and printing of photographs (the "SYSTEM");
AND WHEREAS PhotoChannel has obtained an exclusive license from PNI to
use, reproduce and modify the System within the Canadian marketplace and to use
or provide branded versions of the System which, in addition to providing
customisations and a distinctive graphical user interface, may also incorporate
modifications and/or enhancements of the System, under a license agreement,
dated for reference February 14, 2002;
AND WHEREAS PhotoChannel provides installation, hosting and management
services for Systems and branded versions thereof through an operating agreement
with PNI, dated for reference February 14, 2002;
AND WHEREAS Wal-Mart requires the development, installation, hosting and
management of a branded version of the System for its Online Print Business (as
such term is hereinafter defined) and PhotoChannel wishes to develop, install,
host and manage this system;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement and in any amendments hereto (unless
otherwise amended therein) and in all Schedules hereto, the following
terms shall have the following meanings:
(a) "620077" means 620077 B.C. LTD., a company incorporated under the
laws of the Province of British Columbia, having offices at 5th
Floor - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇, which is the sole general partner of PhotoChannel as the result
of the amended and restated limited partnership agreement, dated for
reference June 4, 2002;
(b) "ACCESS RESTRICTIONS" means those sections and/or features of the
Branded System which may only be accessed and/or utilised by
Members, Guests, Printers, Producers and/or Wal-Mart, as same is set
forth in Schedule 1.1(b);
(c) "AFFILIATE" means, in relation to a party, subject to the
limitations set forth below, any Person which, directly or
indirectly, controls, is controlled by or is under common control
with such party.
(d) "AGREEMENT" means this services agreement and all instruments
supplemental hereto or in amendment or confirmation hereof;
(e) "APPLICABLE LAW" means any Canadian (whether federal, territorial,
provincial, municipal or local) statute, ____ law, ordinance, ____
rule administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree or other requirement, all as
in effect as of the date hereof or which come into effect
thereafter, of any governmental authority, agency, official, board,
tribunal, ministry, commission or department;
(f) "ARCHIVAL PERIOD" has the meaning set forth in Sub-Paragraph
7.7(a)(iii);
(g) "BRANDED ENVIRONMENT" means the structure, organisation,
presentation, layout, look and feel and aesthetical elements of the
Wal-Mart Site, including without limitation all menus, toolbars,
screen layout, popup pages, forms, frames, buttons, checkboxes, and
other forms or methods of presentation and organisation contained on
the Wal-Mart Site;
(h) "BRANDED SYSTEM" means the Wal-Mart Site used in conjunction with
the System, including without limitation, use of any features or
functionality offered by the System via the Wal-Mart Site;
(i) "BROADBAND CONNECTIVITY" means a high speed connection to the
Internet, through one or a combination of T-3, T-2, T-1C, T1, XDSL
or ADSL lines or through other comparable high speed connections, as
determined in Wal-Mart's sole discretion;
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(j) "BUSINESS DAY" means any day of the week except a Saturday, Sunday
or a statutory holiday in the Province of Ontario;
(k) "CODE" means any computer programming/formatting code (including
without any limitation to the foregoing, HTML, Java, XML, CSS, JSP
and java script), any files necessary to make image maps function
and any server code necessary to make forms, frames, buttons,
check-boxes and the like function;
(l) "COMMISSION" has the meaning set forth in Section 7.10;
(m) "COMPETING SYSTEM" means any web site or other online site, system
or resource other than the Wal-Mart Site which is utilised to carry
on the Online Print Business;
(n) "COMPUTER FACILITIES" means the computer hardware including related
system software and peripheral devices and any addition to, and
replacements and upgrades thereto, operated by or on behalf of
PhotoChannel, located at ▇▇▇▇ - ▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ or such other location as the parties may mutually agree;
(o) "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 8.5;
(p) "CUSTOMISATION FEE" has the meaning set forth in Section 7.2;
(q) "DERIVATIVE WORK" means work that is based upon one or more
pre-existing works, such as a revision, modification, translation,
abridgement, condensation, expansion or any other form in which such
pre-existing works may be recast, transformed or adapted, and that,
if prepared without authorization of the owner of the copyright in
such pre-existing work, would constitute a copyright infringement.
For the purposes hereof, a Derivative Work shall also include any
compilation that incorporates such a pre-existing work;
(r) "DEVELOPMENT FEE" has the meaning set forth in Section 7.3;
(s) "DOCUMENTATION" shall mean all system manuals and user instructions,
including without limitation all online help files, frequently asked
questions and tutorials (whether in hard copy or electronic format
and regardless of media) explaining the use, operation, support and
technical aspects of the Branded System, the Wal-Mart Site,
PCUploader, the PhotoChannel Lab System Software, or any portion or
component thereof, including any updates, revisions, or enhancements
thereof;
(t) "EDITING FEATURES" means such creation and editing processes applied
to or incorporating Photos or Modified Photos which may be available
through the Branded System, including without limitation cropping to
specific aspect ratios, removal of "red eye", the addition of
digital clipart, the addition of digital borders and frames, the
incorporation of certain special effects, the creation of digital
greeting cards, and the removal of any of the foregoing editing
features;
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(u) "ENHANCEMENT REBATE" has the meaning set forth in Section 7.9;
(v) "ENHANCEMENTS" means changes or additions to the Software which are
requested and completed after the System Launch Date;
(w) "ESCROW MATERIALS" means the source code (including, without
limitation, the Code), magnetically or optically stored, for the
Software; (ii) supporting documentation and related materials
(including, without limitation, the Documentation); (iii) a listing
of any and all compilers and if not commercially available, a copy
of such compilers, in object code format, any other software
utilities required to create a fully operational version of the
Branded System and PCUploader; and (iv) any and all technical
manuals, story boards, process flow charts, data element definitions
and data flow diagrams, database schema and programmers' notes which
relate to the foregoing;
(x) "FINAL RELEASE" means, for the purposes of the launch of the Branded
System, the final version of each of the Wal-Mart Site, PCUploader,
the System and the PhotoChannel Lab System Software which
incorporates, without limitation, all items in the Project Plan
which are to be completed on or prior to the System Launch Date;
(y) "FULL BACKUP" has the meaning set forth in Section 4.7(a);
(z) "FUNCTIONAL REQUIREMENTS AND SPECIFICATIONS" means the respective
functional requirements and specifications for the Software, as same
is set out in Schedule 1.1(z) and as same may be amended from time
to time as provided herein;
(aa) "GIFT ORDER FORM" means an online form accessible through the
Branded System which contains the fields set forth in Schedule
1.1(aa) and which provides for the purchase by a Member or Guest of
Online Photo Merchandise which incorporates Selected Pictures;
(bb) "GIFT TRANSACTION" means the sequential occurrence of each of the
following:
(i) the submission of a valid Gift Order Form by a Member or a
Guest;
(ii) the successful processing of said Gift Order Form by the
Branded System;
(iii) the successful distribution of the Gift Order Form and the
Selected Pictures to the Producer;
(iv) the successful notification by the Producer to the Branded
System of the completion of the respective order;
(v) the successful notification of the respective Member or Guest
by the Branded System of completion of the respective order;
and
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(vi) the successful collection by Wal-Mart of the applicable Gift
Transaction Fees from the Member or Guest who submitted the
Gift Order Form, as same is specified in the Gift Order Form;
(cc) "GUEST" means any Person, whether a Member or not, who has been
authorised by a Member to access one or more of such Member's Online
Albums;
(dd) "GIFT TRANSACTION FEES" means those fees, including without
limitation any processing, production, assembly and delivery fees,
which are payable by a Member or a Guest for a Gift Transaction, as
same may be modified by Wal-Mart from time to time in its sole
discretion;
(ee) "INITIAL COMPUTER FACILITIES" means the computer hardware including
related system software and peripheral devices and any addition to,
and replacements and upgrades thereto, operated by or on behalf of
PhotoChannel, located at ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇▇ or such other location as the parties may mutually agree;
(ff) "INITIAL TERM" has the meaning set forth in Section 13.1;
(gg) "INSTALLATION FEE" has the meaning set forth in Section 7.4;
(hh) "INTELLECTUAL PROPERTY RIGHTS" shall mean all rights derived or
arising from copyrights (including, without limitation, the
exclusive right to use, make recordings of, reproduce, modify,
adapt, edit, enhance, maintain, support, market, sell, rent, sell
for rental, sublicense, distribute copies of, publicly and privately
display and publicly and privately perform, exploit, exhibit, the
copyrighted work and to prepare Derivative Works), copyright
registrations and/or applications, trade-marks, trade-▇▇▇▇
registrations and/or applications, patents (including without
limitation the exclusive right to make, use and sell), patent
applications, industrial designs, industrial design applications,
integrated circuit products, registered topographies, moral rights
and other intellectual property rights, as may exist now and/or
hereafter come into existence, and all renewals and extensions
thereof (as the case may be), regardless of whether any of such
rights arise under the laws of the Canada or of any Province, or the
laws of any other country or jurisdiction;
(ii) "KODAK" means Kodak Canada Inc. and includes any of its affiliates
(including without limitation Qualex Canada Photofinishing Inc.);
(jj) "MAINTENANCE UPDATE" has the meaning set forth in Section 4.13;
(kk) "MANAGEMENT FEE" has the meaning set forth in Section 7.5;
(ll) "MEMBER" means any Person who registers online via the Branded
System and creates an account comprised of, at a minimum, the Member
Information;
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(mm) "MEMBER CONTENT" means the Member Information and the Online
Album(s) (including without limitation all Photos and Modified
Photos comprising same) of a Member;
(nn) "MEMBER INFORMATION" means the information collected from a Member
when said Member applies for an account on the Branded System (as
same may be subsequently modified from time to time) and all
information relating to said Member's account;
(oo) "MODIFIED PHOTO" means a Photo which has been modified using any of
the Editing Features;
(pp) "NET GIFT TRANSACTION FEES" means that portion of the Gift
Transaction Fees which relate strictly to the sale of Online Photo
Merchandise. For greater certainty, Net Gift Transaction Fees shall
not include any administrative fees, delivery fees, shipping and
handling fees, surcharges, penalties, tariffs, customs duties,
brokerage fees, insurance premiums, taxes (including without
limitation any goods and services taxes, harmonized taxes, retail
sales taxes, value added taxes and any other sales taxes), or duties
charged, assessed or levied in connection with Gift Transactions.
(qq) "NET PRINT TRANSACTION FEES" means that portion of the Print
Transaction Fees which relate strictly to the sale of photo
development services. For greater certainty, Net Print Transaction
Fees shall not include administrative fees, delivery fees, shipping
and handling fees, surcharges, penalties, tariffs, customs duties,
brokerage fees, insurance premiums, taxes (including without
limitation any goods and services taxes, harmonized taxes, retail
sales taxes, value added taxes and any other sales taxes), or duties
charged, assessed or levied in connection from Print Transactions.
(rr) "ONLINE ALBUM" means a collection of Photos and Modified Photos
associated to a Member and stored on the Computer Facilities (or the
Initial Computer Facilities as the case may be) and/or the Recovery
Facility accessible through the Branded System;
(ss) "ONLINE PHOTO MERCHANDISE" means merchandise, other than Prints,
which incorporates a representation of a Photo or Modified Photo and
which is produced in the context of a Gift Transaction, including
without limitation, clothing, mugs, pads, calendars, ornaments,
playing cards and other items;
(tt) "ONLINE PRINT BUSINESS" means any of the following activities:
(i) the rendering of photo development services for digital images
stored on computer resources accessible through a public
network, a private network or a combination of public and/or
private networks;
(ii) the production and online retail of prints and merchandise
which incorporates such digital images; and/or
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(iii) the rendering of photo editing services for digital images
stored on computer resources accessible through a public
network, a private network or a combination of public and/or
private networks;
(iv) the rendering of services akin to those offered by or through
the System; and/or
(v) the rendering of products and/or services ancillary to any of
the foregoing;
(uu) "ORDER PROCESSING SYSTEMS" means the computer hardware, including
related system software and peripheral devices and any addition to
and replacements and upgrades thereto, contained in a single
physical premise and operated by or on behalf of:
(i) a Printer for the purpose of receiving and processing Print
Order Forms; and/or
(ii) a Producer for the purpose of receiving and processing Gift
Order Forms;
(vv) "PCUPLOADER" means the software application which allows a Member:
(i) to view digital photos on said Member's personal computer; and
(ii) to upload digital photos to said Member's Online Album,
and which has been branded for Wal-Mart using some or all of the
Wal-Mart Materials.
(ww) "PERFORMANCE AUDIT" has the meaning set forth in Paragraph 12.1(a);
(xx) "PERSON" shall be broadly interpreted and shall include any
individual, partnership, limited partnership, corporation, joint
venture, association, joint stock company, trust, unincorporated
organisation, or a government or an agency thereof;
(yy) "PHOTO" means a digital image uploaded by a Member to said Member's
Online Album;
(zz) "PHOTOCHANNEL LAB SYSTEM SOFTWARE" means the web-based software
system which permits management and/or processing of Print
Transactions and or Gift Transactions through the Branded System;
(aaa) "PNI" has the meaning set forth in the first recital hereof;
(bbb) "PNI AGREEMENT" has the meaning set forth in Section 10.19;
(ccc) "PRE-INSTALLATION TEST" has the meaning set forth in Section 2.4;
(ddd) "POST-INSTALLATION TEST" has the meaning set forth in Section 3.1;
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(eee) "POST-MIGRATION TEST" has the meaning set forth in Section 3.3;
(fff) "PRELIMINARY SYSTEM" has the meaning set forth in Section 2.6;
(ggg) "PRINT ORDER FORM" means an online form accessible through the
Branded System which contains the fields set forth in Schedule
1.1(ggg) and which provides for the purchase of prints of the
Selected Pictures;
(hhh) "PRINT TRANSACTION" means the sequential occurrence of each of the
following:
(i) the submission of a valid Print Order Form by a Member or a
Guest;
(ii) the successful processing of said Print Order Form by the
Branded System;
(iii) the successful distribution of the Print Order Form and the
Selected Pictures to the Printer;
(iv) the successful notification by the Printer to the Branded
System of the completion of the respective order;
(v) the successful notification of the respective Member or Guest
by the Branded System of completion of the respective order;
(vi) the successful collection by Wal-Mart of the applicable Print
Transaction Fees from the Member or Guest who submitted the
Print Order Form, as same is specified in the Print Order
Form;
(iii) "PRINT TRANSACTION FEES" means those fees, including without
limitation any processing, printing and delivery fees, which
are payable by a Member or a Guest for a Print Transaction, as
same may be modified by Wal-Mart from time to time in its sole
discretion;
(jjj) "PRINTERS" means those photo development labs listed in Schedule
1.1(jjj), as same may from time to time be amended by Wal-Mart in
its sole discretion, and also includes the Wal-Mart Printers. The
term "PRINTER" shall mean any one of them;
(kkk) "PRINTS" means prints produced by the Printer from the Selected
Pictures in such format and in such quantities as specified in the
relevant Print Order Form;
(lll) "PRODUCERS" means the Photo Gift Company Ltd. and such other
producers of customized photo merchandise as Wal-Mart may from time
to time designate in its sole discretion. The term "PRODUCER" shall
mean any one of them;
(mmm) "PROJECT COORDINATOR" has the meaning set forth in Paragraph
14.1(a);
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(nnn) "PROJECT PLAN" means the project plan set forth in Schedule
1.1(nnn), as same may be amended from time to time by Wal-Mart;
(ooo) "REBATE" has the meaning set forth in Section 7.8;
(ppp) "RECOVERY FACILITY" has the meaning set forth in Section 4.5;
(qqq) "RENEWAL TERM" has the meaning set forth in Section 13.1;
(rrr) "SECURITY MEASURES" means those minimum security measures for the
Initial Computer Facilities, the Computer Facilities and the
Recovery Facility which are set forth in Schedule 1.1(rrr), as same
may be upgraded or increased from time to time as provided herein;
(sss) "SELECTED PICTURES" means one or more Photos or Modified Photos
contained in an Online Album which are selected by a Member or a
Guest in the context of a Gift Transaction or a Print Transaction;
(ttt) "SERVICE FEE" has the meaning set forth in Section 7.6;
(uuu) "SERVICE LEVELS" means those minimum service levels set forth in
Schedule 1.1(uuu);
(vvv) "SOFTWARE" means the Wal-Mart Site, the System, the PhotoChannel Lab
System Software, PCUploader and any other software which is
developed or otherwise provided under the terms hereof;
(WWW) "SOURCE CODE ESCROW AGREEMENT" has the meaning set forth in Section
11.1;
(xxx) "STATEMENT OF WORK" has the meaning set forth in Section 5.2;
(yyy) "STORAGE FEE" has the meaning set forth in Paragraph 7.7(a);
(zzz) "SUBCONTRACTORS" has the meaning set forth in Section 14.10;
(aaaa)______ "SUPPORT SERVICES" has the meaning set forth in Section
4.10;
(bbbb)______ "SYSTEM" has the meaning set forth in the first recital
hereof;
(cccc)______ "SYSTEM CONTENT" means all data generated through the
customisation, installation, operation, administration, maintenance
and use of the Wal-Mart Site and/or the Branded System and all data
at any time stored on and all data received or processed by the
Computer Facilities through use of the Wal-Mart Site and/or the
Branded System (including without any limitation all Member Content,
System Logs and Transaction Records) (including all such data which
has been backed up);
(dddd)______ "SYSTEM LAUNCH DATE" means April 11, 2003 or such later date
as Wal-Mart may designate in its sole discretion;
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(eeee) ______ "SYSTEM LOGS" has the meaning set forth in Section 4.9;
(ffff) ______ "TERM" has the meaning set forth in Section 13.1;
(gggg)______ "TERMS AND CONDITIONS OF USE" means those terms and
conditions governing the access of the Branded System by non-Members
and access and use of the Branded System by Members and/or Guests,
as same may be modified from time to time by Wal-Mart in its sole
discretion;
(hhhh)______ "THIRD PARTY SOFTWARE" means any software application (in
object code and/or source code format, including any and all updates
and upgrades thereto) in which a Person other than PhotoChannel or
PNI holds proprietary rights, a list of which is set out in Schedule
10.6;
(iiii)______ "TRANSACTION FEES" the Gift Transaction Fees and/or the
Print Transaction Fees;
(jjjj)______ "TRANSACTION RECORDS" means those records generated by the
Branded System during a Gift Transaction or Print Transaction and
the completion of a Print Transaction or Gift Transaction, as
Wal-Mart may specify in its sole discretion, including without
limitation the form of report set forth in Schedule 1.1(jjjj);
(kkkk) ______ "UPDATE" has the meaning set forth in Paragraph 5.1(a);
(llll) ______ "VENDOR AGREEMENT" has the meaning set forth in Section 1.7;
(mmmm)______ "WAL-MART PHOTOCENTER" means any web site owned or operated
by an Affiliate of Wal-Mart, including ____ without ____ limitation
____ the ____ web ____ site ____ having "▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"
as domain name.
(nnnn)______ "WAL-MART MARKS" means those trade-marks owned by or
licensed to Wal-Mart which Wal-Mart in its sole discretion decides
to incorporate to the Wal-Mart Site;
(oooo)______ "WAL-MART MATERIALS" means those materials provided by
Wal-Mart to PhotoChannel or created by PhotoChannel (or its
subcontractors) for the purposes of creating the Wal-Mart Site
and/or the Branded Environment, including without limitation, all
pictures, images, drawings, text, formatted text (including without
limitation HTTP pages) audio-visual materials, sounds, music,
animation, symbols, representations, logos and other materials. For
greater certainty, the Wal-Mart Materials include the Wal-Mart
Marks;
(pppp)______ "WAL-MART PRINTER" means those photo development
laboratories operated by Wal-Mart which are listed in Schedule
1.1(pppp), as such Schedule may be amended from time to time by
Wal-Mart in its sole discretion;
(qqqq)______ "WAL-MART SITE" means the web site which incorporates the
Wal-Mart Materials, the Branded Environment, and such other
materials and/or items as may be set forth herein or provided
hereunder, including without limitation any modifications, updates
or enhancements thereto;
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(rrrr)______ "WAL-MART STANDARDS" means Wal-Mart's general standards and
standard procedures which apply to its employees, vendors and/or
suppliers, as same are set forth in Schedule 1.1(rrrr) and as same
may from time to time be modified by Wal-Mart in its sole
discretion; and
(ssss) ______ "YEAR" has the meaning set forth in Section 7.8;
1.2 SCHEDULES. The following are the Schedules attached to and forming part of
this Agreement:
Schedule 1.1(b) - Access Restrictions
Schedule 1.1(z) - Functional Requirements and Specifications
Schedule 1.1(aa) - Gift Order Form
Schedule 1.1(ggg) - Print Order Form
Schedule 1.1(jjj) - Printers
Schedule 1.1(nnn) - Project Plan
Schedule 1.1(rrr) - Security Measures
Schedule 1.1(uuu) - Service Levels
Schedule 1.1(jjjj) - Form for Transaction Records
Schedule 1.1(pppp) - Wal-Mart Printers
Schedule 1.1(rrrr) - Wal-Mart Standards
Schedule 5.2 - Statement of Work and Project Schedule
Schedule 10.5(a) - Hardware Environment (Branded System)
Schedule 10.5(b) - Hardware Environment (PhotoChannel Lab System)
Schedule 10.5(c) - Minimum System Requirements (PCUploader)
Schedule 10.6 - Third Party Software
Schedule 10.19 - Form of PNI Agreement
Schedule 11.1 - Source Code Escrow Agreement
1.3 DIVISION, HEADINGS, INDEX. The division of this Agreement into Articles,
Sections, and paragraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation
hereof. The words "THE AGREEMENT", "THIS AGREEMENT", "HEREBY", "HEREIN",
"HEREOF", "HERETO", "HEREUNDER" and similar expressions used in any
paragraph of this Agreement relate or refer to the whole of this Agreement
and not to that paragraph only, unless otherwise expressly provided. The
words "ARTICLE", "SECTION", "SUBSECTION", "PARAGRAPH", "SUB-PARAGRAPH" and
similar words refer to the specified article, section, subsection,
paragraph or other part of this Agreement.
1.4 GENDER AND NUMBER. Unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
1.5 PROPER LAW OF AGREEMENT. This Agreement shall be governed 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.
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1.6 INVALIDITY OF PROVISIONS. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision hereof and any such invalid or
unenforceable provision shall be deemed to be severable.
1.7 ENTIRE AGREEMENT. This Agreement, including the Schedules hereto, together
with the agreements and other documents to be delivered pursuant hereto
and the vendor agreement entered into by Wal-Mart and PhotoChannel on or
about December 12, 2002, as same may be amended or replaced from time to
time (the "VENDOR AGREEMENT"), constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether
written or oral, of the parties hereto and there are no warranties,
representations or other agreements between the parties in connection with
the subject matter hereof except as specifically set forth or referred to
herein. If there is a conflict between any provision of this Agreement and
any provision of the Vendor Agreement, the provision of this Agreement
shall govern. No amendment, waiver or termination of this Agreement shall
be binding unless executed in writing by the party to be bound thereby.
1.8 ENUREMENT. This Agreement shall be binding upon and shall enure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
1.9 CURRENCY. Unless otherwise indicated, all dollar amounts referred to in
this Agreement are in Canadian funds and all payments required hereunder
shall be paid in Canadian funds.
ARTICLE 2
SYSTEM CUSTOMISATION
2.1 PROJECT PLAN. PhotoChannel shall develop the Wal-Mart Site in accordance
with the specifications set forth in the Project Plan and such other
specifications Wal-Mart may from time to time specify prior to the System
Launch Date. PhotoChannel shall undertake its obligations under this
Agreement as expeditiously as possible and with the intent of conforming
to the timeline specified in the Project Plan.
2.2 FORMAT. All materials created and/or provided under this Agreement shall
be supplied in such format (electronic or otherwise) as Wal-Mart may from
time to time specify in its sole discretion.
2.3 REQUIRED INFORMATION AND MATERIALS. Wal-Mart shall provide PhotoChannel
the Wal-Mart Materials it wishes PhotoChannel to incorporate into the
Wal-Mart Site. Wal-Mart shall also provide PhotoChannel with any
assistance and information PhotoChannel may reasonably require to complete
the work set forth in the Project Plan, to complete the Final Release and
to complete any further customisations of the Wal-Mart Site or changes to
the Branded Environment.
2.4 FINAL RELEASE.
(A) TESTING. Upon PhotoChannel being reasonably satisfied that it has
completed all work set out in the Project Plan relating to the
development of the Final Release, it shall thoroughly test such
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Final Release to ensure it fully complies with the applicable
Functional Requirements and Specifications (the "PRE-INSTALLATION
TEST"). The methodology, test data and criteria utilized in the
Pre-Installation Test shall be subject to Wal-Mart's prior written
approval, such approval not to be unreasonably withheld. Wal-Mart
shall have the option, but not the obligation to participate in
and/or be present during the conducting of the Pre-Installation
Test. Should the testing reveal any deficiency, PhotoChannel shall
use its best efforts to forthwith remedy such deficiency and, upon
having done so, PhotoChannel shall repeat its obligations under this
Paragraph 2.4(a) until the Pre-Installation Test has been
successfully completed.
(B) DELIVERY. Upon successful completion of the Pre-Installation Test,
PhotoChannel shall deliver to Wal-Mart all Documentation that
relates to the Final Release and all Code which relates to the
Wal-Mart Site as same is encompassed in the Final Release.
2.5 SUBSEQUENT CHANGES. Wal-Mart may require PhotoChannel to make changes to
the Wal-Mart Site (including without limitation changes to the Branded
Environment and/or Wal-Mart Materials). Such changes shall be at no extra
cost to Wal-Mart; provided, however, that should Wal-Mart require
fundamental changes be made to the Wal-Mart Site more than twice in any
given 12 month period, any such additional fundamental changes within said
12 month period shall be made on a time and material basis at the lowest
rate PhotoChannel then charges to any of its customers; provided that such
rate shall be no higher than $150 per hour and that PhotoChannel shall
obtain Wal-Mart's consent prior to engaging any expenses. Upon making any
such subsequent changes PhotoChannel shall modify the relevant
Documentation to reflect such changes. For greater certainty, PhotoChannel
shall not permitted to make any changes to the Wal-Mart Site, including
without any limitation, any changes in the manner of presentation,
appearance and/or display of the Wal-Mart Materials, without Wal-Mart's
prior written approval, which approval may be arbitrarily withheld.
2.6 ACCESSIBILITY OF BRANDED SYSTEM DURING CONSTRUCTION. During the term of
this Agreement, Wal-Mart shall have full access to the latest version of
the Branded System which is then under construction (the "PRELIMINARY
SYSTEM"). The Preliminary System shall be made accessible to Wal-Mart
through the world wide web and shall incorporate the Security Measures.
PhotoChannel shall assume all costs and expenses relating to the
installation, maintenance and operation of the Preliminary System.
PhotoChannel shall take all reasonable measures to ensure that access to
the Preliminary System (or any part thereof) is restricted to
pre-authorised Wal-Mart representatives. Without any limitation to the
foregoing, PhotoChannel will periodically monitor access to the
Preliminary System during its development and will notify Wal-Mart if
there appears to be any unauthorized access thereto.
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ARTICLE 3
INSTALLATION
3.1 INSTALLATION OF BRANDED SYSTEM. Upon successful completion or deemed
successful completion of the Pre-Installation Test, PhotoChannel shall
forthwith install the Branded System on the Initial Computer Facilities
and, upon completion of said installation, shall conduct such testing to
confirm that the Branded System is fully operational and operates at or
beyond the Service Levels on said Initial Computer Facilities (the
"POST-INSTALLATION TEST"). The methodology, test data and criteria
utilized in the Post-Installation Test shall be subject to Wal-Mart's
prior written approval, such approval not to be unreasonably withheld.
Wal-Mart shall have the option, but not the obligation to participate in
and/or be present during the conducting of the Post-Installation Test.
Should the testing reveal any deficiency, PhotoChannel shall use its best
efforts to forthwith remedy such deficiency and, upon having done so,
PhotoChannel shall repeat its obligations under this Section 3.1 until the
Post-Installation Test has been successfully completed. Notwithstanding
the foregoing, PhotoChannel must successfully complete the
Post-Installation Test before the System Launch Date.
3.2 INTEGRATION OF ORDER PROCESSING SYSTEMS. PhotoChannel shall configure the
Branded System and, to the extent necessary, the Initial Computer
Facilities, Computer Facilities and the Recovery Facility, and each of the
Order Processing Systems so as to permit delivery by the Branded System
and receipt and processing by each of the Printers of Print Order Forms
and by each of the Producers of Gift Order Forms. For greater certainty,
Wal-Mart may designate more than one Order Processing System for a
particular Printer or Producer and to the extent it may elect to do so,
PhotoChannel shall configure each such Order Processing System as provided
herein. Without any limitation to the foregoing:
(a) PhotoChannel, or an authorized representative of PhotoChannel, shall
install the PhotoChannel Lab System Software on each of the Order
Processing Systems, shall configure each of the Order Processing
Systems (including without limitation configuring any connection to
any equipment used to produce Prints and/or Online Photo
Merchandise), shall ensure that the Order Processing Systems are
secure (incorporating such firewall and virus protection
contemplated in the Security Measures and updating and/or upgrading
same as provided herein) and that access to the Order Processing
Systems is restricted to authorised communications from the Branded
System and shall provide such other network configuration services
as may be required;
(b) where requested, PhotoChannel shall assist Printers and Producers in
their procurement of services for the deployment and installation of
Broadband Connectivity for their respective Order Processing
Systems; and
(c) with respect to Wal-Mart Printers, PhotoChannel shall ensure that
the Order Processing Systems are not connected or otherwise have
access to any other computer networks owned or operated by Wal-Mart.
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3.3 MIGRATION. On or before the July 31, 2003, PhotoChannel shall transfer the
Branded System (including all System Content) from the Initial Computer
Facilities to the Computer Facilities. Upon completion of said transfer,
PhotoChannel shall conduct such testing to confirm that the Branded System
is fully operational and operates at or beyond the Service Levels on said
Computer Facilities (the "POST-MIGRATION TEST"). The methodology, test
data and criteria utilized in the Post-Migration Test shall be subject to
Wal-Mart's prior written approval, such approval not to be unreasonably
withheld. Wal-Mart shall have the option, but not the obligation to
participate in and/or be present during the conducting of the
Post-Migration Test. Should the testing reveal any deficiency,
PhotoChannel shall use its best efforts to forthwith remedy such
deficiency and, upon having done so, PhotoChannel shall repeat its
obligations hereunder until the Post-Migration Test has been successfully
completed.
ARTICLE 4
OPERATION, USE, MAINTENANCE AND SUPPORT OF BRANDED SYSTEM
4.1 OPERATION OF THE BRANDED SYSTEM. PhotoChannel shall be solely responsible
for the hosting and operation of the Branded System and all administration
and maintenance thereof. PhotoChannel shall ensure that the operation and
hosting of the Branded System at all times fully complies with all Service
Levels, the Terms and Conditions of Use (to the extent the foregoing may
directly or indirectly create any obligations and/or potential liability
for Wal-Mart) and all Applicable Laws and that the Security Measures have
been fully implemented, remain in place and remain effective.
4.2 UPDATING OF SITE CONTENT. PhotoChannel shall modify and/or update the
Wal-Mart Materials contained on and/or displayed by the Branded System as
Wal-Mart may in its sole discretion direct, including without limitation,
any content relating to any of the following sections of the Wal-Mart
Site: (i) Pricing; (ii) Product Offering; (iii) Shipping Methods; (iv)
What's New; (v) About Us; and (vi) Resolution. The foregoing shall be at
PhotoChannel's sole cost and expense.
4.3 USE OF THE BRANDED SYSTEM. Upon successful completion of the
Post-Installation Test, Wal-Mart will be permitted, in accordance with the
terms of this Agreement, to use the Branded System to carry on its Online
Print Business. PhotoChannel hereby agrees to provide Wal-Mart and such
Printers and Producers authorized by Wal-Mart from time to time, with
remote access to the Branded System and the Initial Computer Facilities or
Computer Facilities and to provide Wal-Mart, Printers and Producers with
the use of the Branded System on a remote access basis. Access to and use
of the Branded System and the Initial Computer Facilities or Computer
Facilities shall be through the world wide web unless the parties mutually
agree otherwise. Subject to the Access Restrictions and the Terms and
Conditions of Use, PhotoChannel hereby agrees to make the Branded System
generally available to the public via the world wide web.
4.4 REMOTE ACCESS DEVICES. Wal-Mart shall be responsible at its expense for
all communication equipment and all services necessary to enable Wal-Mart
to obtain Internet access and interface with the Initial Computer
Facilities or Computer Facilities. PhotoChannel shall be responsible at
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its expense for the installation, maintenance and operation of the Initial
Computer Facilities and the Computer Facilities, as well as any upgrades
that may be required to meet the Service Levels.
4.5 RECOVERY FACILITY. Upon successful completion of the Post-Migration Test,
PhotoChannel shall, at its sole expense, convert the Initial Computer
Facilities into a second site disaster recovery facility (the "RECOVERY
FACILITY") comprised of resources which are the same or substantially the
same as those which comprise the Initial Computer Facility (including
without limitation, those specifications set forth in Schedule 10.5(a)),
such site to be available to PhotoChannel to undertake its obligations
hereunder in the event the Computer Facilities become inoperable or become
incapable of meeting the Service Levels. In such circumstances,
PhotoChannel shall use its best efforts to resume delivery of the services
contemplated hereunder via said Recovery Facility as soon as possible.
PhotoChannel shall ensure that its operation and hosting of the Branded
System on the Recovery Site at all times fully complies with all Service
Levels and the Security Measures. Nothing in this Section 4.5 shall in any
way limit or exclude any liability which PhotoChannel may incur under the
terms of this Agreement.
4.6 INTEGRATION. Wal-Mart may, in its sole discretion and at any time during
the Term of this Agreement, elect to integrate and link the Branded System
to the Wal-Mart Photocenter. PhotoChannel agrees to provide all necessary
support to any Affiliate of Wal-Mart to enable such integration in a
timely manner.
4.7 BACKUPS. After successful completion of the Post-Installation Test,
PhotoChannel shall:
(a) conduct a full backup of the Branded System and related data and
content (including, without limitation, all System Content) once
every seven (7) consecutive days (a "FULL BACKUP");
(b) conduct an incremental backup from the last Full Backup of the
Branded System and related data and content (including, without
limitation, all System Content) once every day;
(c) upon any backup provided under this Section 4.7 being completed,
store all backup materials in a safe and secure environment fit for
the back-up media and not located at the same location as the
Initial Computer Facilities, the Computer Facilities or the Recovery
Facility; and
(d) retain all backup materials created under this Section 4.7 for at
least 2 months after the date the respective backup was made.
4.8 CONTENT STORAGE. During the term of this Agreement, PhotoChannel shall
store on the Computer Facilities (or the Initial Computer Facilities as
the case may be) all information related to, generated by or uploaded to
the Branded System, including without limitation, all System Content.
Notwithstanding the foregoing, Photos and Selected Pictures shall only be
retained on the Computer Facilities (or the Initial Computer Facilities as
the case may be) for the following period of time:
(i) 45 days from the date any Photo is uploaded to an Online
Album; and
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(ii) 15 days from the date a Selected Picture was created in the
context of a Gift Transaction or a Print Transaction and for
which said Selected Picture is not part of an Online Album,
provided, however, that prior to deleting any such Photo, PhotoChannel
shall provide the relevant Member with the option to lease storage space
for the archival of such Photo as same is set forth in Section 7.7 unless
Wal-Mart requests otherwise.
4.9 MONITORING.
(a) SECURITY. PhotoChannel shall monitor access and use of the Branded
System, the Computer Facilities (or the Initial Computer Facilities,
as the case may be) and the Recovery Facility, and shall take all
measures necessary, including without limitation, the diligent
implementation, application and periodic review, update and upgrade
of the Security Measures (as same may be required), so as to ensure
that the security and integrity of the Branded System is not
compromised and that any confidential, personal or proprietary
information stored on the Computer Facilities (or the Initial
Computer Facilities as the case may be) or the Recovery Facility is
not accessed, altered or destroyed by or communicated to an
unauthorized person. PhotoChannel shall maintain records of all
attempts to obtain unauthorized access, all actual instances of
unauthorized access and all other attempts to compromise the
security of the System (including, without limitation, the Security
Measures) or to obtain any confidential, personal or proprietary
information from the Computer Facilities (or the Initial Computer
Facilities as the case may be) or the Recovery Facility, shall
maintain a log of same and shall forthwith notify Wal-Mart and the
following individuals of any such attempts whether they be
successful or unsuccessful:
(i) Wal-Mart Canada Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Director of ISD
(ii) Wal-Mart Canada Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Director of Loss Prevention and Risk Prevention
(b) USAGE. PhotoChannel shall monitor and log access and use of the
Branded System and shall provide Wal-Mart with such statistics and
other information relating to use of the Branded System as Wal-Mart
may request, including without limitation, the following
information:
(i) the number of Members during a specified period;
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(ii) the number of Members accessing the Branded System during a
specified period;
(iii) the average size of Members' Online Album(s) at any given
time;
(iv) the number of Print Transactions and/or Gift Transactions
during a specified period;
(v) the originating Member or Guest of any Print Transaction
and/or Gift Transaction;
(vi) the name and particulars of Members who have terminated their
respective account or who have asked for termination of same;
and
(vii) the origin of any Print Transaction and/or Gift Transaction,
namely whether the Print Transaction and/or Gift Transaction
resulted from use of the Wal-Mart Site, from use of Windows XP
Ordering Wizard or from use of any other site, resource or
system.
(C) COMPLIANCE AND USER COMPLAINTS. PhotoChannel shall forthwith report
to Wal-Mart any breach of the Terms and Conditions of Use by any
user of the Branded System which it discovers or becomes aware of.
Without any limitation to the generality of the foregoing,
PhotoChannel shall forthwith notify Wal-Mart of any complaint
received from any user of the Branded System which relates to such
user's use or any third party's use of the Branded System and/or
which relates to any System Content and shall concurrently provide
Wal-Mart with full particulars of such complaint.
(D) TERMINATION OF MEMBER ACCOUNTS. PhotoChannel shall forthwith notify
Wal-Mart of any request by any Member to terminate said Member's
account on the Branded System. Notwithstanding the provisions of
Section 4.8, PhotoChannel shall preserve all Member Content for said
Member until such time as Wal-Mart may in its sole discretion
specify. Upon Wal-Mart providing PhotoChannel with written notice,
PhotoChannel shall send an e-mail message, the content of which
shall be provided by Wal-Mart in writing, to the user's e-mail
address, as same is set forth in the Member Information, and to such
other e-mail address as said Member may request in writing,
confirming deletion of said Member's account.
The logs discussed in this Section 4.9 shall collectively be referred to
as the "SYSTEM LOGS". PhotoChannel shall provide Wal-Mart with a copy of
the System Logs (or any portion thereof) within six (6) Business Days of
Wal-Mart requesting same.
4.10 SUPPORT SERVICES. PhotoChannel and Wal-Mart agree that PhotoChannel shall
be solely responsible for the support and maintenance of all the Software
and each of the Order Processing Systems, all of which shall be provided
in accordance with the standards and other requirements set forth herein
and all of which shall be provided as Wal-Mart's agent and according to
the Wal-Mart Standards. Without limitation to the foregoing, PhotoChannel
shall be solely responsible for providing turnkey software support
services (the "SUPPORT SERVICES") to Printers, Producers, Members and any
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users of the Branded System by way of telephone, e-mail or through
web-based devices, such support to include without limitation:
o providing and operating a toll-free support line available on
Business Days between the hours of 9:00 a.m. and 5:00 p.m.
(Eastern Time) or as mutually agreed to by the parties, based on
maintaining a high level of customer support as same is provided
in or envisaged by the Wal-Mart Standards;
o receiving support requests on a 24 hour, 7 day a week basis;
o creating, maintaining and updating an interactive problem-solving
engine and developing FAQs (Frequently Asked Questions guides),
tutorial and demonstration tools available through the Branded
System;
o confirming whether a support request involves a possible software
and/or hardware problem;
o providing assistance, information, instructions and advice to
answer questions and other needs relating to the Software and the
Order Processing System generally and/or to the use and
maintenance thereof;
o acquiring from the inquiring party the related information or
materials necessary to analyse any software problem(s);
o providing on-site support and maintenance services with respect
to each of the Order Processing Systems for a period of two (2)
years after the date of their respective successful installation
as same is provided under Section 3.2; and
o providing the inquiring party with the fixes, Updates or
Maintenance Updates produced by it which correct the software
problem or providing an acceptable work-around.
4.11 CLASSIFICATION OF PROBLEMS.
(a) SOFTWARE. If it is determined that the support request is the result
of a software problem, the software problem will be logged by
PhotoChannel and priority will be assigned according to the
following types:
Type A _____ The software problem causes the user to be unable
to use the Software or a critical feature of the
Software;
Type B _____ The software problem causes the user to be unable
to use a feature of the Software it deems necessary or
desirable;
Type C _____ The software problem causes the user to be
inconvenienced in its use of the Software but an
alternative procedure is reasonably available to
continue proper use of the Software; and
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Type D _____ The software problem constitutes a cosmetic
error.
(B) HARDWARE. If it is determined that the support request from a
Printer and/or Producer is the result of a hardware problem, the
hardware problem will be logged by PhotoChannel and priority will be
assigned according to the following types:
Type A _____ The hardware problem causes the Printer and/or
Producer to be unable to use the Order Processing System
or a critical feature of the Order Processing System;
Type B _____ The hardware problem causes the Printer and/or
Producer to be unable to use a feature of the Order
Processing System it deems necessary or desirable; and
Type C _____ The hardware problem causes the Printer and/or
Producer to be inconvenienced in its use of the Order
Processing System but an alternative procedure is
reasonably available to continue proper use of the Order
Processing System.
4.12 SUPPORT SERVICE LEVELS. The following service levels shall apply to the
Support Services provided hereunder:
(a) PhotoChannel shall respond to the user(s) within a reasonable period
of time not to exceed six (6) hours, after receipt of such request,
during Business Day hours of support as same is provided in Section
4.10, such response to provide the software resolution if available
(and if applicable), and/or the assistance, additional information
or materials required. If the request involves a software and/or
hardware problem which cannot be resolved immediately, PhotoChannel
shall provide the user with a status of the software problem
including, but not limited to, an estimate of the time required to
produce a resolution.
(b) PhotoChannel shall correct a software problem within a period of
time not to exceed:
(i) 6 hours in the case of a Type A software problem;
(ii) 1 day in the case of a Type B software problem;
(iii) 1 week in the case of a Type C software problem or such later
date as may be mutually agreed to by the parties;
(c) PhotoChannel shall diligently attempt to correct a hardware problem
within a period of time not to exceed:
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(i) 4 hours in the case of a Type A hardware problem;
(ii) 4 hours in the case of a Type B hardware problem; or
(iii) 3 days in the case of a Type C hardware problem or such later
date as may be mutually agreed to by the parties,
provided however, that should PhotoChannel be unable to correct a
Type A and/or a Type B problem in the time frames provided in
Sub-paragraphs 4.12(c)(i) and 4.12(c)(ii), PhotoChannel shall
replace the equipment within 24 hours of having first been notified
of the hardware problem, the foregoing being subject to the
availability of product and means of transportation, provided that
but in no event shall the aforesaid equipment replacement take place
later than 48 hours after having been first notified of the hardware
problem.
(d) Type D software problems shall be resolved in the next Maintenance
Update of the relevant Software item or items (as the case may be).
(e) Without limitation to the any of the foregoing, PhotoChannel shall
allocate a sufficient number of qualified individuals to meet the
above requirements. All services provided by PhotoChannel shall be
provided in a professional manner in accordance with the highest
industry standards. For greater certainty, nothing herein shall in
any way limit the scope of PhotoChannel's obligations, covenants,
representations, warranties or indemnities set forth hereunder or
any liability of PhotoChannel which may arise under this Agreement.
(f) PhotoChannel shall monitor and compile statistics with respect to
support requests and shall, at Wal-Mart's request, provide Wal-Mart
with a management report containing details regarding the following
within five (5) Business Days of said request being made:
(i) Number of support requests during month;
(ii) Average time to respond to support request received during
month;
(iii) Average call length for support requests received during
month;
(iv) Unresolved support requests as at the end of month;
(v) Resolved support requests as at the end of month;
(vi) Time to resolve support requests resolved during month, both
on an individual and average basis;
(vii) Support request aging for each unresolved support request at
the end of the month; and
(viii)Severity level reporting for open and resolved support
requests.
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The information provided with respect to each of the foregoing shall
be broken down as follows: (i) support requests relating to proper
use of software; (ii) support requests relating to a Type A software
problem; (iii) support requests relating to a Type B software
problem; (iv) support requests relating to a Type C software
problem; (v) support requests relating to a Type D software problem;
(vi) support requests relating to proper use of Order Processing
System; (vii) support requests relating to a Type A hardware
problem; (viii) support requests relating to a Type B hardware
problem; and (ix) support requests relating to a Type C hardware
problem.
4.13 MAINTENANCE UPDATES. PhotoChannel shall ensure that the Software is fully
operational with both current and new commercial operating system software
and application platforms currently used by Wal-Mart, Printers and, in the
case of PCUploader, typical users of software applications similar to
PCUploader. Such improvements and/or modifications shall be made at no
cost to Wal-Mart. At intervals no greater than once every two (2) months,
PhotoChannel shall release an update (a "MAINTENANCE UPDATE")
incorporating such improvements and any bug fixes or patches produced
since the last Maintenance Update. For greater certainty, to the extent
that no such improvements, bug fixes or patches need to be produced in a
particular 2 month interval, PhotoChannel shall not be required to release
a Maintenance Update within the aforesaid 2 month period. PhotoChannel
shall notify Wal-Mart at least ten (10) Business Days prior to
incorporating any Maintenance Update, such notice to include full
particulars of the proposed Maintenance Update, including without
limitation all Documentation relating thereto. The incorporation of a
Maintenance Update shall in no way limit the scope of PhotoChannel's
obligations, covenants, representations, warranties or indemnities set
forth hereunder or any liability of PhotoChannel which may arise under
this Agreement.
ARTICLE 5
UPDATES AND ENHANCEMENTS
5.1 UPDATES.
(a) INCORPORATION. PhotoChannel will forthwith notify Wal-Mart of any
update, upgrade, revision and/or improvement to the then current
version of the System, PCUploader and/or the PhotoChannel Lab System
Software (an "UPDATE") at least ten (10) Business Days prior to
incorporating said Update, such notice to include full particulars
of the proposed Update, including without limitation all
Documentation relating thereto. The incorporation of an Update shall
in no way limit the scope of PhotoChannel's obligations, covenants,
representations, warranties or indemnities set forth hereunder or
any liability of PhotoChannel which may arise under this Agreement.
(b) CONTINUOUS DEVELOPMENT. PhotoChannel will, at its cost and expense,
conduct such research and development activities relating to the
Software and the Branded System for the secure, integrated operation
thereof as may be reasonably necessary to ensure that the Software
and the Branded System continue to be market leaders and leading
edge products in the Online Print Business and PhotoChannel shall,
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at its sole cost and expense, upgrade, update, enhance, modify,
develop and fix the Software to the extent necessary to give effect
to the foregoing.
(c) THIRD PARTY SOFTWARE. PhotoChannel agrees that any and all Third
Party Software to be bundled into or used with the Branded System
after the date hereof must be approved in writing by Wal-Mart in
advance, such approval not to be unreasonably withheld.
5.2 ENHANCEMENTS. Wal-Mart may from time to time during the term of this
Agreement require PhotoChannel to make Enhancements to the System,
PCUploader and/or the PhotoChannel Lab System Software or to create
accessories or utilities for the Branded System. Subject to Section 5.2,
all such work shall be done on a time and material basis at the lowest
rate PhotoChannel then charges to any of its customers; provided that such
rate shall be no higher than $150 per hour and that PhotoChannel shall
obtain Wal-Mart's consent prior to engaging any expenses. Should Wal-Mart
desire the development of an Enhancement, it shall deliver to PhotoChannel
a written statement of requirements for the Enhancements in the form set
forth in Schedule 5.2 (the "STATEMENT OF WORK"). Within five (5) Business
Days of receiving the Statement of Work, PhotoChannel shall provide
Wal-Mart with a price quote for the work it estimates will be required to
implement the required Enhancements. PhotoChannel shall also provide
Wal-Mart with a project schedule for the development of the required
Enhancements in the form set forth in the Statement of Work. Should
Wal-Mart authorize PhotoChannel to proceed, PhotoChannel shall use its
best efforts to complete the Enhancements within the time period allotted
for each phase of development and to complete said Enhancements on or
before any deadline set forth and mutually agreed to in any accepted
Statement of Work. The development of said Enhancements shall be subject
to the terms and conditions set forth in the Statement of Work, provided,
however, that should such terms and conditions be inconsistent with the
terms and conditions hereof, the terms and conditions hereof shall
prevail. PhotoChannel shall notify Wal-Mart at least ten (10) Business
Days prior to incorporating said Enhancements, such notice to include full
particulars of the proposed Enhancements, including without limitation all
Documentation relating thereto. The incorporation of Enhancements shall in
no way limit the scope of PhotoChannel's obligations, covenants,
representations, warranties or indemnities set forth hereunder or any
liability of PhotoChannel which may arise under this Agreement. Unless
Wal-Mart otherwise consents in writing, PhotoChannel shall refrain from
allowing any of its customers from using any Enhancement for a period of
six (6) months after such Enhancement has been implemented with respect to
the Branded System; provided, however, that where PhotoChannel can show
that it had committed to delivering an Update incorporating the same or
substantially the same functionality as said Enhancement within a period
of six (6) months from the date Wal-Mart delivered the relevant Statement
of Work, no such exclusivity period shall apply.
5.3 FREE ENHANCEMENTS. PhotoChannel shall provide to Wal-Mart, at no charge,
such reporting tools for the Branded System (and for the use, operation
and administration thereof and for the Online Print Business conducted
thereon) as Wal-Mart may reasonably request.
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5.4 UPDATE OF DOCUMENTATION. Prior to any Update, Maintenance Update or
Enhancement being incorporated to the Branded System, PhotoChannel shall
ensure that the Documentation is updated and/or expanded so as to reflect
the changes and/or additions to the Branded System resulting from the
incorporation of such Maintenance Update, Update and Enhancement. Nothing
herein shall serve to extend any period of time within which PhotoChannel
must incorporate any such Maintenance Update, Update and/or Enhancement to
the Branded System.
ARTICLE 6
TRAINING
6.1 BRANDED SYSTEM ET AL. At the request of Wal-Mart, PhotoChannel shall
provide at its sole cost and expense training in the use and operation of
the Branded System, the Software and any other software licensed to
Wal-Mart pursuant to this Agreement, including any Enhancement,
Maintenance Update and/or Update thereto. Such training shall be provided
to such Wal-Mart personnel as Wal-Mart may designate and shall be provided
at such locations as Wal-Mart may reasonably designate.
6.2 PHOTOCHANNEL LAB SYSTEM SOFTWARE. At the request of Wal-Mart, PhotoChannel
shall provide at its sole cost and expense training in the use and
operation of the PhotoChannel Lab System Software to such Wal-Mart
personnel and to such Printer and/or Producer personnel as Wal-Mart may
designate.
ARTICLE 7
FEES
7.1 GENERAL. Except as expressly provided in this Article 7 , no other fees,
charges, costs or other benefits or consideration shall be payable by
Wal-Mart under the terms of this Agreement.
7.2 CUSTOMISATION. In consideration for the creation, installation and the
configuration of the Wal-Mart Site and the Branded Environment and the
rendering of other services and the supply of other products related
thereto, Wal-Mart shall pay PhotoChannel the amount of $______
(collectively, the "CUSTOMISATION FEE").
7.3 DEVELOPMENT FEE.
(a) FUNDAMENTAL CHANGES. Subject to Section 2.5, in consideration for
the services rendered by PhotoChannel with respect to the making of
fundamental changes to the Branded Environment and the rendering of
other services and the supply of other products related thereto,
Wal-Mart shall pay PhotoChannel the amounts set forth in Section
2.5.
(b) ENHANCEMENTS. Subject to Section 5.2, in consideration for the
services rendered by PhotoChannel with respect to the creation of
Enhancements and the rendering of other services and the supply of
other products related thereto, Wal-Mart shall pay PhotoChannel the
amounts set forth in Section 5.2.
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(collectively, the "DEVELOPMENT FEE")
7.4 INSTALLATION FEE. In consideration for the services rendered by
PhotoChannel with respect to the installation and configuration of the
PhotoChannel Lab System Software and the rendering of other services and
the supply of other products related thereto, Wal-Mart shall pay
PhotoChannel a one time set-up fee for each Order Processing System that
is integrated to the Branded System for the purpose of receiving and
processing Gift Order Forms and/or Print Order Forms, as follows:
(a) $________ in the case of an Order Processing System used by a
Wal-Mart Printer, by Photo Gift Company Ltd. or by Kodak; or
(b) $________ in the case of an Order Processing System used by a
Printer, other than:
(i) a Wal-Mart Printer;
(ii) Photo Gift Company Ltd.; and
(iii) Kodak
(collectively, the "INSTALLATION FEE")
7.5 MANAGEMENT FEE. In consideration for the services rendered by PhotoChannel
with respect to the turn-key management of the Branded System, the
Computer Facilities (or the Initial Computer Facilities, as the case may
be) and the Recovery Facility, and the rendering of other services and the
supply of other products related thereto, PhotoChannel shall be entitled
to receive the following amounts:
(a) __% of the Net Print Transaction Fees generated each month by any
Printer, excluding Kodak;
(b) __% of the Net Print Transaction Fees generated each month by Kodak;
and
(c) __% of the Net Gift Transaction Fees generated each month; provided,
however, that the amount of this percentage shall be reduced based
on the number of Wal-Mart Printers who are connected to the Branded
System, as same is calculated in Section 7.6, as follows:
-----------------------------------------------------------------------
Number of Wal-Mart Printers Percentage of Net Gift Transaction
connected to the Branded System Fees generated during a relevant month
-----------------------------------------------------------------------
0-14 __%
-----------------------------------------------------------------------
15-29 __%
-----------------------------------------------------------------------
30-44 __%
-----------------------------------------------------------------------
45-59 __%
-----------------------------------------------------------------------
60-74 __%
-----------------------------------------------------------------------
75+ __%
-----------------------------------------------------------------------
(collectively, the "MANAGEMENT FEE").
26
7.6 SERVICE FEE. In consideration for the provision of services relating to
connecting the Order Processing Systems to the Branded System, the
maintenance of the Order Processing Systems and the rendering of Support
Services, PhotoChannel shall be entitled to receive a monthly service fee
equal to:
(a) $___ for each Wal-Mart Printer, if there are 1 to 10 Wal-Mart
Printers connected to the Branded System;
(b) $___ for each Wal-Mart Printer, if there are 11 to 29 Wal-Mart
Printers connected to the Branded System; or
(c) $___ for each Wal-Mart Printer, if there are more than 29 Wal-Mart
Printers connected to the Branded System;
provided, however, that the highest number of Wal-Mart Printers in
existence at any given time during the relevant month shall be utilised
for the purposes of the above calculation (the "SERVICE FEE").
7.7 STORAGE FEE.
(a) PHOTO ARCHIVAL SERVICE. In consideration for the supply by
PhotoChannel of storage space for the Member Content beyond the time
periods specified in Section 4.8 (to the extent same may be
requested from time to time by Wal-Mart in its sole discretion),
PhotoChannel shall be entitled to offer Members the option of
purchasing from it storage space on the Computer Facilities (or the
Initial Computer Facilities, as the case may be) in exchange for the
payment of a storage fee (a "STORAGE FEE") subject to the following
terms and conditions:
(i) The Storage Fee shall be charged individually for each Photo
which is archived by the Member and shall be calculated based
on the file size of such Photo;
(ii) The Storage Fee shall be set by Wal-Mart in its sole
discretion, provided, however, that the Storage Fee shall be
no lower than $____ per year (or such prorated amount derived
therefrom) for every megabyte of storage space used for the
archival by a Member of a Photo located in said Member's
Online Album.
(iii) The archival period for a Photo being purchased shall be no
less than one (1) month and shall be no greater than 12 months
(the "ARCHIVAL PERIOD");
(iv) The Storage Fee shall be calculated based on the Archival
Period;
(v) The Archival Period for a Photo shall only commence after the
expiry of the relevant period of time set forth in Section
4.8;
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(vi) The terms and conditions shall comply with and/or implement
the Wal-Mart Standards and the Terms and Conditions of Use to
the extent possible; and
(vii) The terms and conditions shall be subject to Wal-Mart's prior
written approval.
(b) LIMITED AND EXHAUSTIVE RIGHTS. It is acknowledged and agreed that
nothing in this Section 7.7 shall limit or terminate any right
granted to Wal-Mart or any covenant, representation, warranty and/or
indemnity of PhotoChannel hereunder or shall limit or exclude any
liability of PhotoChannel arising hereunder. It is further
acknowledged and agreed that PhotoChannel shall forthwith cease
providing the services contemplated in this Section 7.7 upon
Wal-Mart providing it with written notice of same.
7.8 REBATE. At the end of each twelve (12) month period commencing on the
System Launch Date (the "YEAR"), PhotoChannel shall pay Wal-Mart the
following rebate (the "Rebate"):
(a) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_______ but less than $_______;
(b) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_______ but less than $_______;
(c) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_________ but less than $_________;
(d) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_________ but less than $_________;
(e) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_________ but less than $_________;
(f) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_________ but less than $_________; or
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(g) __% of all Management Fees, excluding those related to Net Print
Transaction Fees generated by Kodak, paid during said Year if said
aggregate amount (rounded up to the dollar) is equal to or greater
than $_________.
7.9 ENHANCEMENT REBATE. To the extent PhotoChannel is permitted under the
terms hereunder to provide an Enhancement requested by Wal-Mart to its
other customers, Wal-Mart shall be entitled to a rebate of the Development
Fee paid for said Enhancement equal to the Development Fee less Wal-Mart's
prorated share of the Development Fee, namely the following amount (the
"ENHANCEMENT REBATE"):
--------------------------------------------------------------------------------
Development Fee - Development Fee
-----------------------------------------------------------
(number of PhotoChannel customers using said Enhancement + 1)
--------------------------------------------------------------------------------
7.10 COMMISSION. For each Storage Fee charged by PhotoChannel to a Member,
PhotoChannel shall pay Wal-Mart an amount equal to:
(a) the applicable Storage Fee, expressed on a monthly basis, multiplied
by the number of megabytes of storage purchased by said Member for
the archival of the relevant Photo and multiplied by the Archival
Period (expressed in months); LESS
(b) $_______ multiplied by the number of megabytes of storage purchased
by said Member for the archival of the relevant Photo multiplied by
the Archival Period (expressed in months),
(a "COMMISSION")
For Greater certainty, a Commission derived from a Storage Fee charged by
PhotoChannel may be calculated using the following formula:
--------------------------------------------------------------------------------
monthly Storage Fee ($/Megabyte) * file size of Photo (in MegaBytes) * Archival
Period (in months)
LESS
$_______/Megabyte * Photo File Size (in MegaBytes) * Archival Period (in months)
--------------------------------------------------------------------------------
7.11 PAYMENT TERMS.
(a) CUSTOMISATION FEE. Unless disputed, the Customisation Fee shall be
payable within thirty (30) days of the System Launch Date.
(b) INSTALLATION FEE. Within the end of each month, PhotoChannel shall
caculate the amount of the Installation Fee which is payable (if
any) and invoice Wal-Mart for said month. Unless disputed, Wal-Mart
shall pay any invoice within thirty (30) days of said invoice being
received by it.
(c) DEVELOPMENT FEE. PhotoChannel shall render invoices to Wal-Mart for
any Development Fee incurred hereunder on the last Business Day of
every month. At a minimum, each invoice for services performed by
PhotoChannel shall be accompanied by supporting documentation,
29
including without limitation name of employee(s) or subcontractors
having rendered services being invoiced, hours worked by each during
the billing period and total for each category of services. Unless
disputed, Wal-Mart shall pay any invoice within thirty (30) days of
said invoice having been received by it.
(d) MANAGEMENT FEE. Within thirty (30) days after the end of each month,
PhotoChannel shall calculate the amount of the Management Fee which
is payable (if any) and invoice Wal-Mart for said month. Unless
disputed, Wal-Mart shall pay any invoice within thirty (30) days of
said invoice having been received by it.
(e) SERVICE FEE. Within thirty (30) days after the end of each month,
PhotoChannel shall calculate the amount of the Service Fee which is
payable, prorated by the number of days in the applicable month (if
any) and invoice Wal-Mart for said month or portion thereof. Unless
disputed, Wal-Mart shall pay any invoice within thirty (30) days of
said invoice having been received by it.
(f) REBATE. The Rebate shall be payable by PhotoChannel to Wal-Mart
within thirty (30) days after the end of the relevant Year.
(g) COMMISSION. The Commissions generated during each calendar month
shall will be paid by PhotoChannel to Wal-Mart on or before the
twenty-first (21st) day of the calendar month following the end of
the relevant calendar month.
(h) ENHANCEMENT REBATE. The Enhancement Rebate shall be calculated by
PhotoChannel at the end of each calendar month. To the extent any
additional customers have been permitted to use an Enhancement
requested by Wal-Mart during said month, PhotoChannel shall pay
Wal-Mart on or before the twenty-first (21st) day of the following
calendar month the difference between the adjusted rebate
(incorporating the additional customers) and the sum of all
Enhancement Rebates previously paid to Wal-Mart for said
Enhancement.
7.12 DISPUTED AMOUNTS. Wal-Mart shall notify PhotoChannel in writing on or
before the due date of any amounts in any invoice that Wal-Mart is
disputing in good faith. Wal-Mart and PhotoChannel shall use commercially
reasonable efforts to resolve said dispute. If no agreement is reached
within sixty (60) days of the date the amount became due, then such
disputed amounts shall be paid as may be required by law or legal process.
7.13 SUSPENSION OF PAYMENT. Wal-Mart may withhold any payment it is required to
make hereunder if PhotoChannel commits a material breach of this Agreement
which has not been remedied to the full satisfaction of Wal-Mart provided
that Wal-Mart has given notice in writing to PhotoChannel of the alleged
material breach.
7.14 __________________________________________________________________________
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7.15 AUDIT. For purposes of validating fees and charges made and paid for under
this Agreement, Wal-Mart shall have the right to inspect PhotoChannel time
cards, or any other documents that reveal time spent by PhotoChannel
personnel on services provided on a time and materials basis or any costs
incurred hereunder for which it is seeking reimbursement under the terms
hereof. Wal-Mart shall also be entitled to verify all financial records or
other documents used by PhotoChannel to calculate any fees or costs which
are payable by Wal-Mart hereunder. PhotoChannel shall make available such
documents during normal hours of business, and for at least three (3)
years following the termination or expiration of this Agreement. Any costs
relating to the foregoing shall be borne exclusively by Wal-Mart unless
such inspection reveals a material deficiency (which, for purposes of this
Section, shall mean a discrepancy greater than _%) in said records which
has resulted in an overpayment by Wal-Mart of such fees or expenses
hereunder, in which case any such costs shall be borne exclusively by
PhotoChannel. PhotoChannel shall forthwith remit any overpayment to
Wal-Mart.
ARTICLE 8
PROPRIETARY RIGHTS &
CONFIDENTIAL INFORMATION
8.1 PHOTOCHANNEL RIGHTS. With the exception of any Wal-Mart Materials and/or
Branded Environment embodied therein, PhotoChannel shall retain all rights
in and to the System, PCUploader and the PhotoChannel Lab System Software
and shall have exclusive rights in the Enhancements (except as provided
for in Section 8.4), the Maintenance Updates (except as provided for in
Section 8.4) and the Updates (except as provided for in Section 8.4) and
that PhotoChannel shall hold any and all of the Intellectual Property
Rights embodied therein or represented thereby, subject to the terms and
conditions herein contained. Wal-Mart acknowledges PhotoChannel's
exclusive right, title and interest in and to the System and acknowledges
that nothing herein shall be construed to accord to Wal-Mart any rights in
the System, except as expressly provided herein.
8.2 RIGHTS TO WAL-MART MATERIALS. Wal-Mart shall have and/or retain all rights
in and to the Wal-Mart Materials and/or the Branded Environment, including
any and all of the Intellectual Property Rights embodied therein or
represented thereby. PhotoChannel acknowledges Wal-Mart's exclusive right,
title and interest in and to the Wal-Mart Materials and the Branded
Environment and acknowledges that nothing herein shall be construed to
accord to PhotoChannel any rights in any of the Wal-Mart Materials and/or
the Branded Environment except as expressly provided herein. Without any
limitation to the foregoing, PhotoChannel acknowledges that any
proprietary rights arising through the operation of the Branded System
shall automatically vest in Wal-Mart. Without any limitation to the
foregoing, PhotoChannel hereby acknowledges that any use of the Wal-Mart
31
Marks on the Branded System and the goodwill symbolized by and connected
with such use of the Wal-Mart Marks will inure solely to the benefit of
Wal-Mart (or its licensors). To the extent Wal-Mart requires PhotoChannel
to participate in the creation and/or modifications of Wal-Mart Materials
and/or Branded Environment, PhotoChannel shall obtain from any of its
employees, subcontractors and/or employees of any such subcontractors it
may employ to perform such work, prior to the commencement of any such
work, an assignment from each such employee and/or subcontrator in favour
of Wal-Mart assigning all Intellectual Property Rights arising from or
embodied in such work as well as a waiver of any moral rights each such
employee may hold with respect to their work, all in a form satisfactory
to Wal-Mart. All such assignments and waivers shall be remitted by
PhotoChannel to Wal-Mart forthwith upon their execution.
8.3 RIGHTS TO SYSTEM CONTENT. All System Content shall be the exclusive
property of Wal-Mart and Wal-Mart shall hold any and all of the
Intellectual Property Rights embodied therein or represented thereby.
8.4 RIGHTS TO ENHANCEMENTS, ETC. Wal-Mart shall have the exclusive right to
any patent (including without limitation the exclusive right to file a
patent application) relating to any invention embodied in:
(a) any Enhancement it may request be created during the term of this
Agreement, but only to the extent that PhotoChannel had not already
independently developed such invention; and
(b) any Maintenance Update or Update, but only to the extent it or its
employees, agents, subcontractors and/or Affiliates have
communicated the particulars of such invention to PhotoChannel and
only to the extent that PhotoChannel had not already independently
developed such invention.
8.5 CONFIDENTIALITY OF INFORMATION. The parties hereto acknowledge that the
terms of this Agreement as well as all material and information which has
or will come into the possession of the other party and any knowledge
gained by one party from the other party in connection with this Agreement
or the performance of this Agreement (the "CONFIDENTIAL INFORMATION"), is
confidential and proprietary to the originating party, which disclosure to
or use by third parties will cause irreparable harm to the originating
party. Both parties agree to hold the Confidential Information in
strictest of confidence, not to make use thereof other than for the
performance of this Agreement, to release it only to such employees
requiring such information for the performance of this Agreement, and not
to release or disclose it to any other party. Without any limitation to
the foregoing, all System Content shall be deemed to be Confidential
Information of Wal-Mart.
8.6 CONFIDENTIALITY OF MEMBER CONTENT. PhotoChannel acknowledges that Member
Content may constitute confidential, personal and/or proprietary
information of respective Members. PhotoChannel agrees to hold such
material and information in the strictest of confidence and not to make
any use or copies thereof other than for the performance of this
Agreement. PhotoChannel further agrees not to record and/or collect any
32
information from any Person who accesses the Wal-Mart Site (including
without limitation the conducting of any data matching and/or data mining)
or solicit any such Person except as expressly provided hereunder and
except as expressly directed by Wal-Mart.
8.7 INJUNCTIVE RELIEF. The parties hereto acknowledge that each is obligated
to protect the other's proprietary information and confidential
information and such protection is essential to the business interest of
the originating party and that the unauthorized disclosure or use of such
proprietary information or confidential information would cause the other
party immediate, substantial and irreparable harm, the value of which
would be extremely difficult to determine. Accordingly, the parties agree
that, in addition to any other remedies that may be available in law,
equity, or otherwise for the unauthorized disclosure, use, reproduction or
retention of the proprietary information or confidential information, the
originating party shall be entitled to obtain a temporary restraining
order, injunctive relief, or other equitable relief against the other
party.
ARTICLE 9
LICENSES
9.1 BRANDED SYSTEM. For the Term of this Agreement, PhotoChannel hereby grants
to Wal-Mart:
(a) a worldwide, non-exclusive, transferable license to use the System
(including without limitation all Enhancements, Updates and
Maintenance Updates relating thereto) and to allow others to use the
System, as same relates to Wal-Mart's or such other Person's use of
the Branded System and/or Wal-Mart's Online Print Business;
(b) a worldwide, non-exclusive, transferable license to use the
PhotoChannel Lab System Software, which license includes the right
to grant sublicenses to Producers and/or Printers in conjunction
with Wal-Mart's Online Print Business;
(c) a worldwide, non-exclusive, transferable license to use PCUploader,
which license includes the right to grant sublicenses to users of
the Branded System;
(d) a worldwide, non-exclusive, transferable license to use any Update,
Maintenance Update and Enhancement which Wal-Mart does not own,
which license includes the right to grant sublicenses to Producers
and/or Printers where the foregoing relate to the PhotoChannel Lab
System Software and which license includes the right to grant
sublicenses to users of the Branded System where the foregoing
relate to PCUploader,
which licenses also includes the right to grant sublicenses in each of the
foregoing to any Affiliate of Wal-Mart.
9.2 WAL-MART MATERIALS. Wal-Mart hereby grants to PhotoChannel a
non-exclusive, non-transferable license to use the Wal-Mart Materials
strictly for the purposes of performing its obligations under this
Agreement. Notwithstanding the foregoing, nothing in this Section 9.2
33
shall provide PhotoChannel with the right to use the Wal-Mart Marks;
provided, however, that PhotoChannel shall be permitted to make
reproductions of the Wal-Mart Marks solely for the purposes of performing
its obligations under this Agreement. PhotoChannel hereby acknowledges
that it is acting as Wal-Mart's agent in operating the Branded System and
further acknowledges that said operation of the Branded System will be for
the sole benefit of Wal-Mart and shall not be interpreted as granting to
it any license (implied or otherwise) to use any of the Wal-Mart Marks
except as same is expressly set forth in Section 9.3.
9.3 WAL-MART MARKS.
(a) LICENSE. Wal-Mart hereby grants to PhotoChannel a revocable,
non-exclusive, non-transferable license to use the Wal-Mart Marks
which are displayed on such section(s) of the Wal-Mart Site through
which PhotoChannel offers the photo archiving services set forth in
Section 7.7, solely in connection with the provision of said photo
archiving services and only on such section(s) of the Wal-Mart Site
where said photo archiving services are provided. For greater
certainty, Wal-Mart may revoke this license in its sole discretion.
(b) RESTRICTIONS. Any use of the relevant Wal-Mart Marks provided in
this Section 9.3 shall be subject to the section of the Vendor
Agreement entitled "Vendor's Requirements with respect to Wal-Mart's
Trade Marks" and such other restrictions as Wal-Mart may impose from
time to time and, in all cases, shall be subject to Wal-Mart's prior
written approval.
9.4 MEDIA. Notwithstanding what is provided herein, all physical media
embedding the Wal-Mart Site, the Code, the Documentation, the System
Content, the Branded Environment and/or the Wal-Mart Materials, delivered
to Wal-Mart in the performance of this Agreement, shall be the exclusive
property of Wal-Mart.
ARTICLE 10
REPRESENTATIONS, WARRANTIES & INDEMNITY
10.1 REPRESENTATION - STATUS. PhotoChannel hereby represents and warrants that
it is a limited partnership duly organized and validly existing and in
good standing under the laws of the Province of British Columbia.
PhotoChannel further represents and warrants that 620077 is its sole
general partner.
10.2 REPRESENTATION - EXECUTION. PhotoChannel hereby represents and warrants it
has the requisite power and authority to enter into this Agreement and
that 620077 has the requisite power and authority to execute this
Agreement. PhotoChannel further represents that it has the requisite power
and authority to perform its obligations under this Agreement and this
Agreement has been duly executed and delivered by it. PhotoChannel further
represents and warrants that the execution of this Agreement and the
performance of its obligations will not constitute an infringement of any
obligations and/or covenants which it is subject to. Wal-Mart hereby
represents and warrants that it has the requisite power and authority to
enter into and perform its obligations under this Agreement and this
34
Agreement has been duly executed and delivered by it. Wal-Mart further
represents and warrants that the execution of this Agreement and the
performance of its obligations will not constitute an infringement of any
obligations and/or covenants which it is subject to.
10.3 REPRESENTATION - FACILITIES. PhotoChannel hereby represents and warrants
that it has and will continue to have access to necessary systems,
equipment and facilities to perform its duties and obligations under this
Agreement including, without limitation systems, equipment and facilities
which meet or exceed the specifications provided in Schedule 10.5(a)
and/or the specifications attributable to those items set forth in
Schedule 10.5(a). Without any limitation to the foregoing, PhotoChannel
hereby represents and warrants that each of the Initial Computer
Facilities, the Computer Facilities and the Recovery Facility will each
meet or exceed the specifications and requirements provided in Schedule
10.5(a).
10.4 REPRESENTATION - IP. PhotoChannel hereby represents and warrants that it
holds the right to sublicense the System, PCUploader and the PhotoChannel
Lab System Software and all other software, documents or other materials
to be used or provided under the terms of this Agreement in the manner and
to the extent contemplated hereunder. PhotoChannel further represents and
warrants that the System, PCUploader and the PhotoChannel Lab System
Software, do not and will not infringe any Intellectual Property Right,
contractual right, trade secret or other proprietary right of any third
party.
10.5 REPRESENTATION - HARDWARE REQUIREMENTS. PhotoChannel hereby warrants that:
(a) the Branded System will be capable of being fully and successfully
integrated with the hardware environment listed in Schedule 10.5(a);
(b) the PhotoChannel Lab System Software will be capable of being fully
and successfully integrated with the hardware environment listed in
Schedule 10.5(b); and
(c) the minimum system requirements for PCUploader are those listed in
Schedule 10.5(c).
10.6 REPRESENTATION - THIRD PARTY SOFTWARE. PhotoChannel hereby represents and
warrants that the software listed in Schedule 10.6 is the only Third Party
Software used in conjunction with the Branded System or used in
conjunction with the rendering of services hereunder. PhotoChannel further
represents and warrants that the licenses governing the use of Third Party
Software are and will remain in good standing. Without any limitation to
the foregoing, PhotoChannel hereby represents and warrants that the
performance of PhotoChannel's obligations hereunder is and shall remain in
conformity with the rights afforded to and the obligations imposed upon
PhotoChannel under the terms of said licenses.
10.7 PHOTOCHANNEL HEREBY DISCLAIMS ANY WARRANTIES ITS SALESPERSONS OR OTHER
STAFF MAY HAVE MADE EXCEPT THOSE EXPRESSLY STATED IN THIS AGREEMENT.
35
10.8 WARRANTY - ORIGINAL DEVELOPMENT. PhotoChannel hereby warrants that all
software, Code, Documentation, Enhancements, Updates, Maintenance Updates,
customisations and all other materials provided under this Agreement,
including without limitation the Wal-Mart Site and the Branded
Environment, will be of original development by either it or PNI and will
not infringe any Intellectual Property Right, contractual right, trade
secret or other proprietary right of any third party.
10.9 WARRANTY - SUCCESSFUL INTEGRATION. PhotoChannel warrants that the System,
the Wal-Mart Site, the PhotoChannel Lab System Software and PCUploader
will be capable of being fully and successfully integrated and be fully
functional with one another.
10.10 WARRANTY - CONFORMITY WITH SPECIFICATIONS. PhotoChannel hereby warrants
that the software, programs and computer systems developed, customized
and/or enhanced under this Agreement, including without limitation the
Branded System, PCUploader and the PhotoChannel Lab System Software will
function properly and will function in all material respects in accordance
with their respective Functional Requirements and Specifications. Without
any limitation to the foregoing, the Branded System, PCUploader and the
PhotoChannel Lab System Software, the Enhancements, the Updates,
Maintenance Updates, Code, Documentation, and all other work and/or
materials developed or provided by PhotoChannel hereunder shall be
conceptualised, developed and/or prepared or have been conceptualised,
developed and/or prepared according to the highest industry standards.
10.11 WARRANTY - VIRII, TROJANS, BACKDOORS, ETC. PhotoChannel hereby warrants
that the software, programs and computer systems developed, customized,
enhanced and/or provided under this Agreement, including without
limitation the Branded System, PCUploader and PhotoChannel Lab System
Software:
(a) do not and will not contain any viruses, trojan horses, backdoors,
Easter eggs, time bombs, worms, traps or other similar disabling
mechanisms which are intentionally designed to disable, erase,
destroy, damage or adversely affect said software, programs and
computer systems or reduce or otherwise limit their effectiveness;
(b) do not and will not contain any invisible text, hidden text, hidden
information, hidden graphics or other hidden materials; and
(c) do not and will not contain any data collection tools, data matching
tools or data mining tools other than those indicated in the
Functional Requirements and Specifications.
10.12 WARRANTY - SERVICE LEVELS. PhotoChannel hereby warrants that the Branded
System shall meet or exceed the Service Levels.
10.13 WARRANTY - SECURITY. PhotoChannel hereby warrants that the Security
Measures meet and shall continue to meet industry accepted measures to
prevent unauthorised access, communication, alteration and/or destruction
of the Branded System and any Confidential Information and/or System
Content contained thereon. Without any limitation to the foregoing,
36
PhotoChannel hereby warrants that the Security Measures are sufficient, as
generally accepted in the industry (including without limitation forthwith
implementing the most recent updates for any security or virus protection
software as they become available and/or upgrading any software and/or
hardware which is no longer supported and/or otherwise becomes outdated or
ineffective), to prevent, inter alia:
(a) any unauthorized access to the System (including without limitation
any circumvention of the Access Restrictions and/or Security
Measures);
(b) any unauthorized alteration, destruction, communication or
reproduction of personal information and/or Confidential
Information;
(c) any unauthorized alteration, destruction, communication or
reproduction of any System Content; and/or
(d) any viruses, trojan horses, worms, traps or other similar disabling
mechanisms which are intentionally designed to disable, erase,
destroy, damage or adversely affect the Software and/or the System
or reduce or otherwise limit their effectiveness.
10.14 WARRANTY - APPLICABLE LAWS. PhotoChannel covenants and warrants that in
performing its obligations hereunder it shall comply with all Applicable
Laws including, without limitation:
(a) the provisions of the Personal Information Protection and Electronic
Document Act (Canada) and any similar laws; and
(b) its obligations to withhold from all Storage Fees all taxes, customs
duties, rates, levies, assessments, reassessments and other charges,
together with all penalties, interest and fines with respect
thereto, payable to any federal, provincial, municipal, local or
other government or governmental agency, authority, board, bureau or
commission, domestic or foreign, and its obligation to remit same to
the proper tax or other receiving authorities within the time
required under Applicable Laws.
10.15 WARRANTY - WAL-MART STANDARDS. PhotoChannel covenants and warrants that it
shall comply with, respect and/or implement all Wal-Mart Standards in
performing its obligations under this Agreement. Without any limitation to
the foregoing, PhotoChannel covenants and warrants that it shall fully
adhere to and follow the Wal-Mart Standards and the Terms and Conditions
of Use in its dealings with Members, Guests and other users of the Branded
System.
10.16 NO WAIVER OR LIMITATION. For greater certainty, the participation of
Wal-Mart in any testing or the failure of Wal-Mart to participate in any
testing provided under the terms hereof and/or the conducting of any due
diligence and/or investigations by Wal-Mart (including without limitation
any Performance Audit) shall not:
37
(a) relieve PhotoChannel from any of its obligations, covenants,
representations, warranties and indemnities hereunder;
(b) reduce the scope of any of its obligations, covenants,
representations, warranties and indemnities hereunder; or
(c) relieve PhotoChannel from any liability it may otherwise incur under
the terms hereof.
10.17 REMEDIAL ACTIONS. In the event of a failure of the Wal-Mart Site, the
Branded System, the System or any Enhancement, Update, Maintenance Update
or other software provided hereunder, PhotoChannel shall, at its sole
expense, use its best efforts to remedy and rectify said failure. The
foregoing shall not release PhotoChannel from any of its obligations
hereunder nor will it limit any of the rights and remedies available to
Wal-Mart which may arise in contract or at law as a result of any such
failure.
10.18 INDEMNITY. PhotoChannel will indemnify and hold Wal-Mart harmless from and
against any action, claim, demand, loss, cost, damage, liability or
expense (including reasonable legal fees) arising from: (i) any breach or
alleged breach by it of any warranty set out in this Article 10 ; (ii) any
breach of any of its obligations or covenants contained in this Agreement;
(iii) the inaccuracy, incorrectness or untruthfulness of any of its
representations contained herein or contained in any document or
certificate given in order to carry out the transactions contemplated
hereby; and/or (iv) the provision of photo archival services as same is
contemplated under Section 7.7 hereof. Wal-Mart will indemnify and hold
PhotoChannel harmless from and against any action, claim, demand, loss,
cost, damage, liability or expense (including reasonable legal fees)
arising from the inaccuracy, incorrectness or untruthfulness of any its
representations contained herein.
10.19 PNI AGREEMENT. PhotoChannel shall deliver to Wal-Mart an agreement in the
form set out in Schedule 10.19 (the "PNI AGREEMENT"), executed by PNI
which shall contain, inter alia, a guarantee with respect to the
performance of PhotoChannel's obligations, covenants and warranties
hereunder and with respect to the truth, correctness and accuracy of the
representations provided by PhotoChannel hereunder, which representations
and warranties shall be made by PNI in the PNI Agreement. The PNI
Agreement shall also contain a waiver from PNI in favour of Wal-Mart and
PhotoChannel with respect to the rights conferred to Wal-Mart hereunder
which may infringe on PNI's rights or which may otherwise be inconsistent
with the rights PNI has granted to PhotoChannel with respect to the
Software (and any restrictions or limits thereto) or any other materials
used or provided by PhotoChannel under the terms hereunder. Finally the
PNI Agreement shall impose upon PNI the obligations set out in Article 11
, mutatis mutandis.
ARTICLE 11
SOURCE CODE ESCROW
11.1 DELIVERY OF SOURCE CODE. Upon execution of this Agreement, PhotoChannel
shall cause PNI to enter into a source code escrow agreement with Wal-Mart
substantially in the form attached hereto as Schedule 11.1 (the "SOURCE
38
CODE ESCROW AGREEMENT") and upon so doing, PhotoChannel shall cause PNI to
deliver the Escrow Materials to the Escrow Agent (as such capitalised term
is described and/or defined in the Source Code Escrow Agreement). Upon any
Update, Maintenance Update, Enhancement and/or other modification being
incorporated to the Branded System, PCUploader and/or the PhotoChannel Lab
System Software, PhotoChannel shall cause PNI to forthwith deliver to the
Escrow Agent the Escrow Material relating to said Update, Maintenance
Update, Enhancement or other modification. Should Wal-Mart obtain the
Escrow Materials, as same is provided in the Source Code Escrow Agreement,
PhotoChannel shall no longer be entitled to receive any fees under the
terms of this Agreement. The foregoing shall be in addition to any other
rights and remedies which may be available to Wal-Mart.
11.2 SOURCE CODE LICENSE. The Source Code Escrow Agreement shall provide, inter
alia, that :
(a) upon either PhotoChannel or PNI being adjudged bankrupt or upon a
receiver being appointed for either PhotoChannel or PNI or upon
either PNI or PhotoChannel ceasing to carry on business, Wal-Mart
shall have the right (but not the obligation) to obtain the Escrow
Materials;
(b) should Wal-Mart elect to obtain the Escrow Materials, PNI shall
grant to Wal-Mart a perpetual, irrevocable, transferable,
non-exclusive, worldwide license to use and modify the Escrow
Materials, including without limitation all source code for the
Software, and to use and modify object code versions derived from
any such source code or derived from the modified source code; and
(c) if Wal-Mart elects to obtain the Escrow Materials, PNI shall be
entitled to receive a one time license fee of $10.
ARTICLE 12
PERFORMANCE AUDIT
12.1 PERFORMANCE AUDIT.
(a) Upon reasonable prior notice to PhotoChannel, Wal-Mart and/or its
designated representative may conduct a performance audit of the
Computer Facilities, of the Recovery Facility or of any premises
and/or facilities where the Branded System is installed and/or
operated and/or where any System Content, Wal-Mart Materials or
Confidential Information is stored or processed (including, without
limitation, any embodiments thereof), so as to ensure PhotoChannel's
compliance with the terms of this Agreement and so as to evaluate
PhotoChannel's performance with respect thereto (such inspection and
review, a "PERFORMANCE AUDIT"). PhotoChannel will provide to
Wal-Mart and/or its designated representative all support services
and facilities reasonably necessary in connection with the
Performance Audit at a level at least equal to the level of support
services and facilities available to the internal staff of
PhotoChannel.
39
(b) PhotoChannel shall use its best efforts to forthwith remedy any
default, deficiency or non-compliance with its obligations or
covenants hereunder revealed by any Performance Audit.
ARTICLE 13
TERM & TERMINATION
13.1 TERM. This Agreement shall commence on the date hereinabove set forth and,
subject to earlier termination as provided herein, continue in effect for
a term of two (2) years (the "INITIAL TERM"). This Agreement shall be
automatically renewed for one (1) year periods (each such period, a
"RENEWAL TERM") unless written notice is provided by Wal-Mart to
PhotoChannel not less than thirty (30) days prior to the end of the Term
or the then current Renewal Term (the Initial Term and any and all Renewal
Terms, as the case may be, are collectively referred to herein as the
"TERM").
13.2 TERMINATION WITHOUT CAUSE. Wal-Mart may terminate this Agreement for any
reason on 30 days' prior written notice. In the event that Wal-Mart elects
to terminate this Agreement without cause, Wal-Mart shall pay PhotoChannel
all undisputed amounts payable hereunder to PhotoChannel up to the date of
termination.
13.3 TERMINATION. A party shall be entitled to terminate this Agreement
forthwith if:
(a) the other party makes a general assignment for the benefit of its
creditors or a proposal or arrangement under the Bankruptcy and
Insolvency Act (Canada) or any successor legislation, if a petition
is filed against the other party under the Bankruptcy and Insolvency
Act (Canada), if the other party is declared or adjudicated
bankrupt, if a liquidator, trustee in bankruptcy, custodian,
receiver, receiver and manager or any other officer with similar
powers shall be appointed, either privately or judicially, of or for
the other party or if the other party shall commit an act of
bankruptcy or propose a compromise, arrangement or otherwise have
recourse to any law for the protection of debtors; or
(b) if the other party fails to fulfill any of its obligations hereunder
and does not commence to take reasonable steps to cure such failure
within thirty (30) days after receiving written notice of such
failure.
13.4 EFFECT OF TERMINATION.
(a) Upon termination or expiration of this Agreement, PhotoChannel shall
immediately return to Wal-Mart all Wal-Mart Confidential
Information, all Wal-Mart Materials, all materials relating to the
Branded Environment and/or the Wal-Mart Site and all System Content
and all proprietary information and all materials containing,
incorporating and/or embodying any of the foregoing, and upon so
doing, PhotoChannel shall provide Wal-Mart with an officer's
certificate attesting that it has fully complied with its
obligations under this Paragraph 13.4(a).
(b) With the exception of the licenses contemplated under Section 11.2,
upon termination or expiration of this Agreement, all licenses
granted hereunder shall forthwith terminate and any use of the
40
subject matter of said licenses shall forthwith cease.
(c) Upon termination or expiration of this Agreement, PhotoChannel shall
immediately pay Wal-Mart any amounts then outstanding.
(d) Upon termination or expiration of this Agreement, Wal-Mart shall
immediately return to PhotoChannel all of PhotoChannel's
Confidential Information and shall pay any amounts then outstanding
which are not disputed by Wal-Mart.
13.5 SURVIVAL. The obligations, covenants, representations and/or warranties
set forth in Article 8 and Article 10 Sections 7.15, 13.4 and 13.5 and
Paragraph 12.1(a) shall survive expiration or termination of this
Agreement.
ARTICLE 14
GENERAL MATTERS
14.1 PROJECT ADMINISTRATION.
(a) PROJECT COORDINATORS. Each party shall designate the name, address,
telephone, fax and e-mail address of a project coordinator (the
"PROJECT COORDINATORS"). The Project Coordinator of each party shall
be responsible for arranging all meetings, visits and consultations
between the parties, and for the transmission and receipt of
Statement of Work, Code, Documentation, Enhancements, Updates,
Maintenance Updates and any other materials and technical
information between the parties under this Agreement. The Project
Coordinators shall also be responsible for receiving all notices
under this Agreement and for all administrative matters such as
invoices, payments and Statement of Work.
The Project Coordinator for Wal-Mart shall be:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (905) 821-2111 ext. 3172
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail : ▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇-▇▇▇▇.▇▇▇
The Project Coordinator for PhotoChannel shall be:
▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Each of the above Parties may change its respective Project
Coordinator by providing written notice to the other.
(b) AVAILABILITY. Each party shall use commercially reasonable efforts
to ensure that its Project Coordinator is available Business Days
between 7:30 a.m. PST and 5:30 p.m. PST, and will endeavour to have
41
its Project Coordinator respond as expediently as possible to any
communication of the other Project Coordinator.
(c) PROJECT MEETINGS. The Project Coordinators shall liaise between
Wal-Mart and PhotoChannel and shall participate in regular
development meetings, project status meetings, project
implementation meetings and post implementation meetings (including
without limitation any meeting which relates in whole or in part
with the operation of the Branded System and any Update, Maintenance
Update and/or Enhancement). Such meetings shall take place within
five (5) days of a request for same being made by Wal-Mart's Project
Coordinator.
14.2 NON-EXCLUSIVITY. Nothing herein shall be construed to provide PhotoChannel
with exclusive rights with respect to the development and/or supply of any
of the products and services contemplated hereunder.
14.3 PUBLIC NOTICES. No press release or other announcement concerning this
transaction shall be made by any of the parties without the prior approval
of all such parties, such approval not to be unreasonably withheld. The
parties agree that at a minimum a general announcement announcing this
Agreement will be made upon execution hereof containing sufficient
information to satisfy securities regulatory requirements which may apply
to any of the parties hereto.
14.4 EXPENSES. Except as otherwise provided in this Agreement each of the
parties hereto will pay its own legal, accounting expenses and other
expenses relating to the rendering of professional services.
14.5 WAIVER. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
14.6 NOTICES.
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and, if sent by facsimile transmission
or delivered by another form or recorded communication, shall be
deemed to have been received on the next Business Day following
dispatch and acknowledgement of receipt by the recipient's facsimile
machine or other form or recorded communication, or if delivered by
hand shall be deemed to have been received at the time it is
delivered. Notice of change of address shall also be governed by
this Paragraph 14.6(a).
(b) Notices shall be addressed to the Project Coordinator of the other
party and shall be directed to the following as follows (unless a
notice of change of address is provided to the other party in which
case all future notices shall be delivered to the address provided
in said notice of change of address):
42
To Wal-Mart:
Wal-Mart Canada Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Operations Manager, PhotoCentre
To: PhotoChannel
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
#▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Facsimile number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy of any default or termination notice to:
620077 BC Ltd.
5th Floor - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: CEO
14.7 TIME OF ESSENCE. Time shall be of the essence in the performance by
PhotoChannel of its obligations under this Agreement.
14.8 FURTHER ASSURANCES. The parties hereto agree to promptly do, make,
execute, deliver or cause to be done, made, executed or delivered all such
further acts, documents and things as the other party hereto may
reasonably require for the purpose of giving effect to this Agreement
whether before or after the Closing.
14.9 ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any party without the prior written consent of the
other party, which consent shall not be unreasonably withheld. Without any
limitation to the foregoing, each party shall be permitted to assign all
of its rights and obligations hereunder (and shall only be permitted to
assign all of its rights and obligations hereunder) to an Affiliate of
said party provided it shall remain liable for the performance of its
obligations hereunder and for the representations and warranties it
provided hereunder.
14.10 USE OF SUBCONTRACTORS. Wal-Mart acknowledges that it is PhotoChannel's
intent to use its authorized representatives (the "SUBCONTRACTORS") to
render certain or all the services provided hereunder. PhotoChannel agrees
to provide Wal-Mart with a list of any such Subcontractors for Wal-Mart's
prior acceptance thereof, which acceptance shall not be unreasonably
withheld. PhotoChannel acknowledges and agrees that it shall be fully
liable for the conduct of such Subcontractors (including without
limitation any conduct which constitutes a breach of any of its
43
obligations under this Agreement, any tortious or negligent conduct of
said Subcontractors or any infringement of any Applicable Law by said
Subcontractors) and for the performance of any obligations it delegates.
14.11 FORCE MAJEURE. No party shall be in default if failure to perform any of
its obligations hereunder is caused solely by supervening conditions
beyond such party's control, including acts of God, civil commotion,
strikes, labor disputes, or governmental demands or requirements not
existing at the date of this Agreement.
14.12 ATTORNMENT. Each party hereby irrevocably attorns to and submits to the
non-exclusive jurisdiction of the Courts of Ontario with respect to any
matter arising hereunder or related hereto and waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
institution or maintenance of any action in such courts.
14.13 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which taken together shall constitute one instrument. Delivery of
this Agreement or of any other agreement or instrument contemplated hereby
may be made by facsimile transmission. The sender undertakes to deliver
promptly to each recipient an original of this Agreement or such other
agreements or instrument executed by the sender.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WAL-MART CANADA CORP.
Per:
-------------------------------
Name:
Title:
620077 B.C. LTD., IN ITS CAPACITY AS
GENERAL PARTNER OF PHOTOCHANNEL
NETWORKS LIMITED PARTNERSHIP
Per:
-------------------------------
Name:
Title:
Per:
-------------------------------
Name:
Title:
44
SCHEDULE 1.1(B)
ACCESS RESTRICTIONS
For Wal-Mart:
------------
o Wal-Mart will have password protected access to global reporting on
activity within Member accounts;
o Wal-Mart will have password protected access to all Gift Transactions and
Print Transactions generated through the Branded System; and
o Wal-Mart, at it sole discretion, shall determine which employees,
Printers, Producers or other third parties may have access to these
reports and the Order Processing Systems.
For Printers/Producers:
----------------------
o Each Printer and/or Producer, as determined and authorized by Wal-Mart,
will have access to its Order Processing System though a unique user ID
and password. The Order Processing System will only show the Printer
and/or Producer the Select Pictures it was designated to receive in
relation to a Gift Order Form or a Print Order Form.
For Members:
-----------
o Each Member may only access such sections of the Wal-Mart Site which
Wal-Mart may in its sole discretion designate.
o Each Member may access its respective Member Content through use of a
unique user id and password.
For Guests:
----------
o Each Guest may only access such sections of the Wal-Mart Site which
Wal-Mart may in its sole discretion designate.
o Each Guest may access the Member Content of a particular Member through
use of a specific URL address and associated password created by that
particular Member.
For other Persons accessing the Wal-Mart Site other than those provided above:
-----------------------------------------------------------------------------
o General access to the Wal-Mart Site shall be limited to those sections of
the Wal-Mart Site which Wal-Mart may in its sole discretion designate.
45
SCHEDULE 1.11.1(Z)
FUNCTIONAL REQUIREMENTS AND SPECIFICATIONS
(BRANDED SYSTEM)
Means those functional requirements and specifications set out in the User
Documentation delivered to Wal-Mart by e-mail on April 5th, 2003 at
approximately 2:33 p.m. (EST) as a file attachment named "PHOTOCHANNEL USER
DOCUMENTATION SCHEDULE 1.1(Y).DOC".
For greater certainty, the above referenced user documentation is only meant to
delineate and detail the functional requirements and specifications of the
Branded System and is not meant to create any new obligations as between the
parties or otherwise modify the terms and conditions of this Agreement.
In addition to the foregoing, the following functions and features discussed
here below shall also constitute Functional Requirements and Specifications of
the Branded System:
1. Explain general purpose of our systems. Collect images from various
scanning devices -> Upload images from Lab -> Notification to
Consumer -> Preview, Edit, Share, & Order -> Download images to Lab
-> distribute to various printing devices -> use Lab System software
to manager orders.
2. When Lab Server is re-booted (should also be left on to get images
for orders) - user login: administrator and password: administrator
3. Go to site and show customize areas: Home Page, Shop linked to their
site (if appropriate), Pricing and Promotions, Customer Care/Help,
About Us, Contact Us, Resolution Requirements.
4. Explain two customer service numbers: Store # for order questions
and PhotoChannel for technical support.
5. Ask for user without a login id on website.
6. Go to Lab System. Login: storename (no punctuation) Password: camera
7. Explain each button from a high level:
a. Create an Account for a user that does not exist
b. Retrieve a User - update user info, get customer order history
c. Order Inquiry System - see all orders by status
i. In Transmission
ii. Open
iii. Printed
46
iv. Ready for Delivery
v. Closed
vi. Resubmit (if order was placed and lab server was not
running, quality issues, etc.)
d. Upload scanned rolls to customer accounts on website
8. Go into Create Account. Setup user with no login noted before.
Explain that Email is the website login name (per PRO) and First
Name is the temporary password (Case sensitive). Explain that Save &
Create Another is for multiple data entry. Use Save and Continue.
9. Show how to apply a coupon.
10. Email was sent to user that provides login, password, and basic
instructions. [Explain that email are generic until their database
email technology is complete].
11. Upload Procedure:
a. Go to a scanning device. Scans a few images (or use existing)
to JPG (Lab System only takes JPGs).
b. To go into proper user account, the images need to be saved
into a folder with the users login name (email). The "@"
symbol will not be a problem with the save.
c. In the user folder, the images should be saved into a folder
named after the twincheck number or the bag number. Explain
how this will put the images into a folder in the darkroom
(i.e. "Photolab"). Leave a couple of images directly in the
user folder to illustrate this.
d. Save folder structure and scans into shared PhotoChannel
Folder (on desktop)/ToUpload.
e. Go back to Lab server. Show how images are stored on Lab
Server in PhotoChannel/ToUpload folder.
f. Lab System -> Upload Images -> Click FTP Account button ->
drag all scanned folders (explain how many can be moved at one
time) from ToUpload into FTP window. Allow upload to occur.
g. The FTP window is swept every hour by our systems in
Vancouver. Ask Technology team to push upload through.
h. When an order is uploaded, the folder and images will be named
.done (i.e. ▇▇▇@▇▇▇▇▇▇▇.▇▇▇.▇▇▇▇). This indicates that the
folder has been loaded into the consumers account correctly.
Explain that if an order does not get a .done extension there
can be only two problems: 1. the user id does not exist or 2.
they typed the user id incorrectly.
12. When upload is complete login to the users account and show the
uploaded images. Note that the folder with images in it
(twincheck/bag number) and the two images in the darkroom based on
how the folders were set up prior to upload.
13. Explain that another email was sent to the customer notifying them
that their images are ready for Preview, Edit, Share, & Order.
14. Explain that the images will remain in the customer's account for
FREE for a period of 30 days (this time period is customizable).
During that time the status indicator underneath each image will
change color as the expiration date draws near (notification emails
47
will be sent out to the customer as well). After the expiration date
the images will disappear unless the customer chooses to pay to
archive the images.
15. Show the Demo tab and explain that this is where they should direct
consumers/staff to learn how to use all features of the website (but
we will demo during the training).
16. Show the Setting Tab, so they can change the temporary password.
17. Show Upload button and two consumer upload options: PC Uploader
program (requires a download - up to 30MB/file, 360MB/upload) and
the 1-24 upload option.
18. Go to My Studio and float mouse over various items and note that
instructions for each item appears to left.
19. Use preview button (large image). Explain that this is only 640x480
low resolution. User can download, but cannot get high-resolution
files. Also note that we save copies of the uploaded images for use
on the website. The original image can always be retrieved by the
user, as we do not edit the original image. Close.
20. Use edit button. Explain each feature (show some of them):
a. Keywords for searching
b. Description
c. Edit
i. Auto Fix
ii. Red Eye
iii. Rotate
iv. Crop (show this one - specifically the free float and
the aspect ratio selection).
v. Flip
vi. Advanced tab: Brightness and Contrast
d. Effects with multiple tabs
e. Clipart with tabs for faces, greeting, objects. Demo rotation.
f. Cards with tabs for Edges, Frames, Birthday, Baby, Thank You,
Get Well
g. Show Reset (like Undo)
h. Save edit.
i. Explain the Revert to Original button.
21. Go back to darkroom and select a few items. Click on New Show
button. Walk them through wizard.
48
a. Show how to select Slide Show versus Photo Album and how they
have different options for each. Use: Slide Show, Small, 2
Second, Random, pick a color
b. Select photos by checking off and pressing add button. Add
some from another folder. Press save.
c. Select order of images in slide show and transitions for each.
Click done.
d. Show them how the images becomes an object in the darkroom (or
folder where saved). Run show and note that they can change
the size by pressing the L & S buttons.
22. Select the show just created and a few photos. Click the Share
button. Explain that the PhotoSite is a URL specific to the consumer
user id --- they can give the link to anyone without the guest
having to go into their users account. Explain that emailing just
sends a link to the PhotoSite. Click Post to PhotoSite.
23. It will ask for a password for the items being posted (optional) and
whether guests can order prints.
24. Click on the PhotoSite Admin button (under the Darkroom button).
a. Show the link to the PhotoSite
b. Press A to apply a title, add an introductory photo, provide a
description and select overall PhotoSite appearance.
c. Press B to add more photos and shows.
d. Press C to add favorite links to the PhotoSite
e. Press link and show PhotoSite.
25. Select a couple of images and press the Order Prints button. Show
how the +/- buttons will add/remove a line. Order 2+ of an image.
Show how items with a star do not meet the minimum resolution
requirements (show link to the requirements). Press Proceed to
Checkout and let the resolution minimum error box pop up. Modify
order to remove the low-resolution line item.
26. Select delivery method of pickup (possible multiple locations) or
shipment method (if used).
27. Fill out the credit card information. This order will be refunded,
as it is a test. Complete the order. An email will be sent to the
consumer confirming the order number. Have Technology Team push the
order down. Normally the orders will drop into the
PhotoChannel/ToPrint folder every hour.
28. Go to Lab System -> Retrieve an Account -> pull up test account ->
Click on Order History -> review the new order and the order details
29. Review each view in the Order Inquiry System:
a. Open Orders - main list used in the lab - displays order
waiting to be printed. For each order in that status, there
will be a folder (named the order #) with the required images
in the PhotoChannel/ToPrint folder. Also in the folder is a
text file with the order details for reference. These images
can be passed/pulled to the appropriate printing device(s).
After the order is printed, the store needs to change the
order status to Printed: Order Detail Page -> pull down box ->
select status Print -> Press Submit button. [Note that this
status will include "sub-groupings" by print-size, order time,
method of shipment, etc.]
b. Printed Orders - the lab has printed all images.
49
c. Ready for Delivery - list of orders waiting to be picked-up or
shipped. Once pick-up or shipment has occurred (note
collection of money is NOT required as the order was taken
online), the order needs to be moved to the Closed status by
following the procedure above. Please note:
The notification email to the customer is triggered when you
set the status to READY FOR DELIVERY. The PRINTED status is
optional. If you are a single store, you will not need to use
the PRINTED status. Instead, you will move orders from OPEN
directly to READY FOR DELIVERY.
If you have multiple locations, you can use the PRINTED
status to keep track of workflow in your lab. When your
local delivery is complete and the order has been
brought to your secondary pick-up location, you would
then set the status to READY FOR DELIVERY and your
customer will be notified.
d. Closed Orders - The Order is closed and no further action is
required (please note, the Resubmit button is always available
should a customer issue arise).
e. In Transmission - The online order is received, waiting for
image generation, and transmission to the Lab.
f. Enter a specific order number into the Search by Order ID to
get the order details.
g. In the order detail screen, the order can be change to the
status Resubmit. By doing this, the images will drop back down
into the ToPrint folder in case an transmission was
interrupted (power outage) or a customer complained of a
quality issue that needs to be reprinted.
h. Show Status History details.
i. Show Invoice Details.
j. Show process for refund of the test order.
50
SCHEDULE 1.1(Z)
FUNCTIONAL REQUIREMENTS AND SPECIFICATIONS
(PCUPLOADER)
Means those functional requirements and specifications set out in the User
Documentation delivered to Wal-Mart by e-mail on April 5th, 2003 at
approximately 2:33 p.m. (EST) as a file attachment named "PCUPLOADER SCHEDULE
10.5(C).DOC".
For greater certainty, the above referenced user documentation is only meant to
delineate and detail the functional requirements and specifications of
PCUploader and is not meant to create any new obligations as between the parties
or otherwise modify the terms and conditions of this Agreement.
51
SCHEDULE 1.11.1(Z)
FUNCTIONAL REQUIREMENTS AND SPECIFICATIONS
(PHOTOCHANNEL LAB SYSTEM SOFTWARE)
PHOTOCHANNEL LAB SYSTEM SOFTWARE
--------------------------------
Means the functionality and features which are mentioned and/or described below:
I.PHOTOCHANNEL LAB SYSTEM USER GUIDE
PURPOSE
These detailed procedures are meant as an introduction for Lab/Store Staff
personal to the PhotoChannel Lab System. This document can be used as a user
guide for the present version only. The general purpose of our system is to
collect images from various scanning devices for upload through the lab to
PhotoChannel's servers where they are stored for a fixed period of time. Once
the images are uploaded, consumers receive an email notification informing
them that they are now able to Preview, Edit, Share, & Order Prints. When
consumers place orders, PhotoChannel downloads images to Lab, which can be
distributed to various printing devices. The Lab System is used to manage the
orders. It is for Lab/Store personnel only.
If a Lab Server is included in your service, it should be left on 24/7 to
accept orders. User login: administrator and password: administrator. To
access your lab system, go to the Lab Server and click on the Lab System
link. Lab System Login: storename (no punctuation) Password: photo. Upon
login you will see the Main Menu.
MAIN MENU
Create a New User Account
Retrieve an Account
Order Inquiry System
Upload Images
Upload Inquiry System
Sign off
CREATE A NEW USER ACCOUNT
Go into Create a New User Account. This option allows lab/store
personnel to create an account for any user that does yet have an
account. Please note that the Email address you enter will become
the website login name and the First Name will become the temporary
password (Case sensitive). At this point, only the email address,
name, and zip are required. Please note that if you retrieve an
account later and need to update information, the system will at
that point force you to finish entering the address information.
52
Consumers may also sign up for their own account at a syndicated
site.
(such as ▇▇▇▇://▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇? ).
After selecting Save and Continue, The screen will now reset with
the new account and you will see two new fields appear:
a. Account Type - this is used to determine what type of billing
the customer will be set up under. The default, credit card,
will be used for almost all of your customers. By selecting
credit card, the customer will see a page in the shopping cart
on which their card information will be gathered. PhotoChannel
will be responsible for collecting payment on these accounts.
For the few In-House accounts your store may have, you can
also set the billing type to "On Account" in which case these
special customers would skip the card information page when
placing an order. Your store would then be responsible for
collecting payment for any orders placed by these customers.
b. Coupon - if you would like to add a coupon to the customer's
account, please press this button. If you are using the coupon
system for the first time, you will need to call your Network
Coordinator to have the coupon system turned on. The default
amount can be set at any dollar value that you wish. Please
note that to remove a coupon you only need to reset the value
to $0 and press the update button.
Once you have finished creating the new account, an
Email was sent to the customer that provides the login,
password, and basic instructions for accessing the
account.
RETRIEVE AN ACCOUNT
This option allows the update of user information, including the ability to
set the customer status to `credit card' or `house account' and the addition
of a coupon to the user account.
The user's Order History and Upload History are viewable here as well.
ORDER INQUIRY SYSTEM
This option is the most heavily used because it is the order
management system. It enables us to see all orders by status. It
also enables us to change the status of orders as they are
processed. This is important because if the status of the orders
does not change, we cannot send the email notification to the user,
we cannot collect the money, and we cannot credit you your revenue.
In Transmission
Open
Printed
53
Ready for Delivery
Closed
Resubmit (if order was placed and lab server was not running,
quality issues, etc.)
IN TRANSMISSION - The online order is received, waiting for image
generation, and transmission to the Lab. At this point there are no
options to change status from the lab system.
OPEN - It displays orders waiting to be printed. Also in the folder is a text
file with the order details for reference. These images can be passed/pulled
to the appropriate printing device(s) using the shared folders. ____ The
images have been generated and dropped into the FTP site at the Retailer's
Lab for printing. The order will appear in the "To Print" folder and will
also show as open in the lab system. After the order is printed, you will
need to change the order status to Printed: Click on the Order to open the
Detail Page -> pull down arrow -> select status Print -> Press Submit button.
[Note that this status will include "sub-groupings" by print-size, order
time, method of shipment, etc.]
PRINTED - The Lab has printed all images and checked them for quality
assurance. This status was created for fulfillment labs, which then in turn
send orders to a retail location for pickup.
READY FOR DELIVERY - The Lab has packaged all prints and the order has
arrived at the pickup point or is being shipped from the fulfillment
processor. The notification email to the customer is triggered here. Due to
this change, the PRINTED status has now become optional. If you are a single
store, you will not need to use the PRINTED status anymore. Instead, you will
move orders from OPEN directly to READY FOR DELIVERY.
CLOSED - The Order is closed and no further action is required (please note,
the RESUBMIT button is always available should a customer issue arise). If
RESUBMIT is selected the order will go back into the IN TRANSMISSION status
and will drop into the lab system again. NOTE: All orders must be closed
before the customer's credit card can be charged and the lab can receive
credit for the order. Please note that orders that are resubmitted
cannot/will not be charged for the order on the reprint order.
UPLOAD IMAGES
Upload scanned rolls to customer accounts on website.
If the customers have not created their own account, go into Create Account.
Setup user by completing all fields of information. Explain that Email is
equivalent to the website login name and First Name is the temporary password
(Case sensitive). Use Save & Create if multiple accounts need to be created.
Once the new user data has been entered choose `Save and Continue' from the
options below. This will send a welcome email to the user that provides
login, password, and basic instructions
54
UPLOAD PROCEDURE:
o Go to a scanning device. Scans a few images (or use existing) to JPG
(Lab System only takes JPGs).
o For the images to be uploaded to the correct account, the images
need to be saved into a folder with the users login name (will be an
email address if the lab created the account).
o In the user folder, the images should be saved into a folder named
after the twin check/bag/or roll number.
o NOTE: The Upload system only accepts 2 layers/levels of folders. The
first layer is the folder labeled with the user id. The second layer
contains the roll numbers. Inside the roll number folders reside the
images.
o ***Depending on your digital equipment the process varies here
slightly. See the instructions, which pertain to your equipment. ***
o Now save the folder structure and scans into the shared PhotoChannel
Folder -ToUpload. (This will be done from the digital printing
device.) The folders and images can now be viewed on the
PhotoChannel Lab Server in PhotoChannel/ToUpload folder.
o In ________________________ the ________________________ Lab
________________________ System
(▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇/'▇▇▇▇▇▇▇'/▇▇▇▇▇▇▇▇/▇▇▇▇▇.▇▇▇)
click Upload Images then click FTP Account button. With the
PhotoChannel shared folder also open, open the ToUpload folder. Drag
the username folder from ToUpload into FTP window. Allow upload to
copy in to the ftp window. The FTP window is swept every 3 hours by
our systems in Vancouver.
o When an order has been uploaded, the folder and images will be named
.done
o (i.e. ▇▇▇@▇▇▇▇▇▇▇.▇▇▇.▇▇▇▇). This indicates that the folder has been
loaded into the consumers account correctly. If an order does not
get a .done extension (after pressing F5 for refresh) there can be
only two problems: 1. The user id does not exist or 2. The user id
was typed incorrectly. Once the .done designation is received the
folder can be removed from the ftp window.
o When the image upload was completed, another email was sent to the
customer notifying them that their images are ready for Preview,
Edit, Share, & Order.
o From the day they are uploaded, the images will remain in the
customer's account for FREE for a period of 30 days (this time
period is customizable). During that time the status indicator
underneath each image will change color as the expiration date draws
near (notification emails will be sent out to the customer as well).
After the expiration date the images will disappear unless the
55
customer chooses to pay to archive the images.
UPLOAD INQUIRY SYSTEM
This view allows you to see what folders were uploaded by account
and date.
A. Walmart Canada will have complete access to the secure
PhotoChannel Lab System software. This web-based system
may be accessed directly in store and/or centrally by
Lab Managers. Lab operators will use the PhotoChannel
Lab System to retrieve daily orders, manage orders, add
new customers, upload images from the store to the site
and manage existing customer information and more - all
in real time.The full line-up of digital fulfillment
products offered by Walmart Canada , will be available
for ordering from the Walmart Canada Photosite.
HOW DO I USE THE COUPON FEATURE IN MY LAB SYSTEM?
Use the Retrieve Account feature to pull up the customer's account. Once the
account is opened you will see a red button marked "add coupon". Click on the
button and add the amount you would like the customer to receive in coupons
towards thier next purchase. The customer will be able to see the coupon in the
shopping cart when they are in the process of placing an order.
PhotoChannel participates in the coupon by not charging our normal transaction
fees and revenue percentage for the value of the coupon. For example, if a
customer places a $10 order and applies a $5 coupon towards the purchase, the
retailer would only be charged transaction fees (and revenue percentages) for
the remaining $5 of the order. We are working on a feature that would allow
retailers to apply coupons towards a larger group of customers instead of having
to open each account individually to use the feature.
HOW DOES YOUR SYSTEM OPERATE IN TERMS OF WORKFLOW?
Our system uses folders to move images from device to device. Each of your
scanning devices will be linked via shared folders to your PhotoChannel Lab
Server. Once an image has been scanned it will automatically appear on your Lab
Server in a folder marked "To Upload". You will simply drag and drop the folders
(which should be marked with twin check numbers, then placed into a folder that
is labeled with the customer's account name) into the FTP site when you are
ready to upload them. A specific folder will be dedicated to your IP address and
we will sweep that folder and load images from there into the Network and onto
your branded website.
Once an order has been placed on your website an order folder will drop into a
specific folder marked "To Print" that you will be able to access from your
PhotoChannel Lab Server. Located within the order folder will be several files:
the images to be printed, along with a data file containing all of the
information about what has been purchased (customer name, size of prints, number
of prints, etc). Within the "To Print" folder we will create sub-folders for
each of your printing devices. Once an order has been placed into your "To
Print" folder it can then be moved to the printing device you would like to
fulfill the order with. A series of system screens on the PhotoChannel Lab
56
Server will allow you to track orders, customer history etc. at various steps in
the ordering process.
57
SCHEDULE 1.1(AA)
GIFT ORDER FORM
[WEB SITE OF GIFT ORDER FORM[
All of the following information is collected from a Guest or Member and
captured within a Gift Order Form:
Selected Pictures for the specific order
Items selected for each Selected Picture
Number of each set of items
Store pickup location
Customer name
Customer phone number
Customer home address
Customer e-mail address
58
SCHEDULE 1.1(GGG)
PRINT ORDER FORM
[WEB SITE OF PRINT ORDEER FORM]
All of the following information is collected from a Guest or Member and
captured within a Print Order Form:
Selected Pictures for the specific order
Prints selected for each image (namely, print size, borders, etc.)
Number of prints for each type of print
Store pickup location
Customer name
Customer phone number
Customer home address
Customer e-mail address
59
SCHEDULE 1.1(JJJ)
PRINTERS
As at the date of execution of this Agreement:
1. Kodak
60
SCHEDULE 1.1(NNN)
PROJECT PLAN
--------------------------------------------------------------------------------
DELIVERABLE COMPLETION DATE
--------------------------------------------------------------------------------
1. Creation of Branded Environment for Wal-Mart Site April 5th, 2003
--------------------------------------------------------------------------------
2. Integration of Wal-Mart Materials with System engine April 5th, 2003
--------------------------------------------------------------------------------
3. Integration of Wal-Mart Materials with PCUploader April 5th, 2003
engine
--------------------------------------------------------------------------------
4. Preparation of a fully functional and operational April 5th, 2003
prototype model of the Branded System
--------------------------------------------------------------------------------
5. Integration of print order wizard function with April 5th, 2003
Branded System
--------------------------------------------------------------------------------
6. Porting of Branded System to allow processing of April 5th, 2003
orders received from third party systems (e.g. or such other
TELUS portal customers through the Web Site we have date as may be
developed ▇▇▇.▇▇▇▇▇▇▇.▇▇▇) requested by
Wal-Mart, in its
sole discretion.
--------------------------------------------------------------------------------
7. Integration of Windows XP Ordering Wizard with April 5, 2003
Branded System
--------------------------------------------------------------------------------
8. Integration of wireless imaging technology with Dependent upon
Branded System so as to permit, inter alia, the Canadian wireless
sending prints to Printer via "Cam Phones". wireless carrier's
carriers' rollout
schedule for MMS
capabilities.
--------------------------------------------------------------------------------
9. Creation of Documentation and Support Materials for April 5th, 2003
the Branded System
--------------------------------------------------------------------------------
10. Creation of Documentation for PCUploader April 5th, 2003
--------------------------------------------------------------------------------
11. Creation of Documentation for the PhotoChannel Lab April 5th, 2003
System Software
--------------------------------------------------------------------------------
12. Finalisation of the Final Release April 11, 2003
--------------------------------------------------------------------------------
13. Enablement of feature permitting Members to stop June 1, 2003
displaying pop up disclaimer prior to accessing
photo archive section of Wal-Mart Site and of
feature recording such instructions and consent.
--------------------------------------------------------------------------------
61
--------------------------------------------------------------------------------
14. Modification of content of automated e-mail June 1, 2003
confirming terms of Print Order or Gift Order so as
to provide full transaction particulars of said
Print Order or Gift Order
--------------------------------------------------------------------------------
15. Removal of Wal-Mart Marks from photo archive As may be mutually
transaction screens agreed by the
parties.
--------------------------------------------------------------------------------
16. New design of shopping cart (see diagram attached June 30, 2003
as Exhibit "A")
a. Add link to products on the Product page to
direct to the shopping cart
b. Editing features within Preview window of
shopping cart
c. Product selection with multiple attributes:
i. Pop-up graphical displays at attributes
ii. Text-based attributes
d. Greeting Card allows to select:
i. Background
ii. Greetings
iii. Personal text message
e. Calendar shopping cart
i. Add an attribute for `Starting Month'
--------------------------------------------------------------------------------
17. Preferences Setting June 30, 2003
a. Allow customers to select "Load
customer info automatically" in the
Preference section. If customers
select this option, their contact
information will automatically display
in the `contact details' section in
the shopping cart.
--------------------------------------------------------------------------------
18. Create a pop-up to notify customers about the June 30, 2003
enhancement features of Picture IQ, such as
`putting text on the photo gift products'.
--------------------------------------------------------------------------------
62
--------------------------------------------------------------------------------
19. Delivery of Photo CD viewing software linking back June 30, 2003
to the Wal-Mart Canada PhotoCentre site.
--------------------------------------------------------------------------------
20. Enablement of shopping cart to utilize pre-paid June 30, 2003
print cards.
--------------------------------------------------------------------------------
63
SCHEDULE 1.1(NNN)
PROJECT PLAN
EXHIBIT "A"
PHOTOCHANNEL NETWORKS INC.
Proposed Shopping Cart Changes
[CHART OF PROPOSED SHOPPING CART CHANGES]
64
SCHEDULE 1.1(RRR)
SECURITY MEASURES
Physical security measures include:
Access to all network and server devices used to operate the
Branded System must be maintained in a locked environment.
Use of video surveillance to prevent unauthorised access to
the Initial Computer Facilities, the Computer Facilities and
the Recovery Facility. On or before June 1, 2003, use of alarm
system with built-in capability of advising police authorities
and/or security company of any unauthorised access to Initial
Computer Facilities, the Computer Facilities and the Recovery
Facility.
Temperature/humidity needs to be continuously monitored and
kept at hardware specification levels.
Only authorized PhotoChannel or authorized TELUS employees are
to have access to the Initial Computer Facilities, the
Computer Facilities and the Recovery Facility or as mutually
agreed to by the parties.
Presence of fully operational halon automatic fire
extinguishing system in Computer Facilities. Presence of fire
extinguishers and smoke detectors in premises neighbouring the
Initial Computer Facilities, the Computer Facilities and the
Recovery Facility.
The non-physical security measures include:
Minimum required TCP ports open on the firewall(s) to allow
Branded Site functionality in accordance with network
infrastructure diagram attached hereto as Exhibit "A". Access
to the Branded System through the firewall shall be
continuously maintained and monitored.
All passwords and user IDs must be kept confidential and must
remain within the Initial Computer Facilities or the Computer
Facilities (as the case may be) and the Recovery Facility and
can only be provided to authorized employees or
representatives of Wal-Mart.
Any employee of PhotoChannel, subcontractor retained by
PhotoChannel or employee of such a subcontractor who will have
access to any System Content must enter into a non-disclosure
agreement containing provisions at least as restrictive as
those contained herein which apply to PhotoChannel.
65
Use of intrusion detection system which shall be continuously
updated and monitored to prevent unauthorised access.
Virus scanning on the gateway and on each of the servers upon
any creation, addition or modification of files stored in
Computer Facilities (or Initial Computer Facilities, as the
case may be) and/or on the Recovery Site and implementation
and application and enforcement of procedures to ensure
regular and prompt updating of virus definitions and/or
upgrade of virus detection software;
Use of account and file system security controls;
Use of database security controls;
Use of SSL layer for all customer admin functions; and
Use of SSL layer for all e-commerce transactions.
Only developers from PhotoChannel will have access to change
Code which affects Wal-Mart Site. All others will be
restricted from having access to said Code.
PhotoChannel shall ensure that all software and hardware used
by it in connection with the Branded System remains current so
as to permit continuous and effective monitoring and
enforcement of all of the foregoing Security Measures.
66
SCHEDULE 1.1(RRR)
SECURITY MEASURES
EXHIBIT "A"
--------------------------------------
PHOTOCHANNEL NETWORKS INC. JAN 2003
--------------------------------------
NETWORK INFRASTRUCTURE DIAGRAM
--------------------------------------
--------------------------------------
[DIAGRAM OF NETWORK INFRASTRUCUTURE]
67
SCHEDULE 1.1(UUU)
SYSTEM SERVICE LEVELS
SYSTEM UPTIME. The Branded System shall be continuously available and fully
operational no less than ninety-nine percent (99%) of the time, including any
down time for system backups and/or maintenance.
MAXIMUM PAGE SIZE. All web pages displayed by the Branded System shall be no
larger than 150 kilobytes and the average page size will be under 50 kilobytes,
not including any Photo(s) which may be displayed by the Member(s) and/or
Guest(s) within the Wal-Mart Site.
SCALABILITY. The Branded System shall be fully scalable to meet any increase in
data volumes, file volumes, storage requirements and/or usage levels of the
Branded System.
CAPACITY. To the extent that the Computer Facilities (or the Initial Computer
Facilities as the case may be) and/or the Recovery Facility reaches 75% capacity
in terms of storage, bandwidth and/or processor usage, PhotoChannel shall
forthwith provide Wal-Mart with notification of same and shall provide Wal-Mart
with an action plan setting out how it will upgrade the Computer Facilities (or
the Initial Computer Facilities), the Recovery Facility and/or the Branded
System to meet such increases. In no event shall PhotoChannel permit capacity
with respect to any of the foregoing areas to exceed 85%.
BANDWIDTH. The Computer Facilities (or the Initial Computer Facilities as the
case may be) and the Recovery Facility shall have at least 2 dedicated fail-over
full T-1 lines provided by different service providers each from different
central offices and that each meet the foregoing requirements and criteria and
which will be available for the hosting of the Branded System on the world wide
web. Such bandwidth shall be scalable as may be required for the hosting of the
Branded System on the world wide web.
68
SCHEDULE 1.1(JJJJ)
TRANSACTION RECORD
Print Confirmation Form
[WEB SITE OF PRINT CONFIRMATION FORM]
Gift Order Confirmation
[WEB SITE OF GIFT ORDER CONFIRMATION PAGE]
69
SCHEDULE 1.1(PPPP)
WAL-MART PRINTERS
None as at the date of execution of this Agreement.
70
SCHEDULE 1.1(RRRR)
WAL-MART STANDARDS
1. Those terms, conditions, standards, procedures, requirements and other
obligations set forth in the section of the Vendor Agreement entitled "Wal-Mart
Standards for Vendors"; and
2. Those terms, conditions, standards, procedures and requirements relating to
customer servicing and customer relations management as Wal-Mart may specify
from time to time.
71
SCHEDULE 5.2
STATEMENT OF WORK
DATE: ___________________
PROJECT COORDINATOR'S SIGNATURE: ______________________________________
CUSTOMER NAME: (FULL LEGAL NAME) Wal-Mart Canada Corp.
CUSTOMER PROJECT COORDINATOR CONTACT:
Name/Title:
Address:
City:_________________________Province:________ Postal Code:________________
Phone: Ext:_________Fax:_______________Email:
PRIMARY TECHNICAL CONTACT: (Main technical contact for all sites)
Name/Title:
Address:
City:_________________________Province:________ Postal Code:________________
Phone: Ext:_________Fax:_______________Email:
AUTHORIZED REPRESENTATIVE
Name/Title:
Address:
City:_________________________Province:________ Postal Code:________________
Phone: Ext:_________Fax:_______________Email:
5. SERVICE DESCRIPTION AND REQUIREMENTS:
PROJECT OVERVIEW:
PROJECT SCOPE:
SERVICES RENDERED / DELIVERABLES PRODUCED
----------------------------------------------------------------------------
Description of Service / Deliverable Service Requested/Customer Initial
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
|_| Additional Description of
Services / Deliverable attached
hereto as Schedule "A"
----------------------------------------------------------------------------
72
6. ESTIMATED DURATION AND SCHEDULE:
----------------------------------------------------------------------------
MILESTONE COMPLETION DATE ESTIMATED
EFFORT
(HOURS)
----------------------------------------------------------------------------
Start of project xx/xx/xxxx 0
----------------------------------------------------------------------------
Milestone #1 xx/xx/xxxx
----------------------------------------------------------------------------
Milestone #2 xx/xx/xxxx
----------------------------------------------------------------------------
......
----------------------------------------------------------------------------
End of project xx/xx/xxxx
----------------------------------------------------------------------------
7. QUOTED SERVICE FEES (TO BE COMPLETED BY PHOTOCHANNEL AND ACCEPTED BY
CUSTOMER):
----------------------------------------------------------------------------
Customer Approval (initialed)
----------------------------------------------------------------------------
Customization Fee: $
----------------------------------------------------------------------------
Monthly Service Fee $
(if applicable)
----------------------------------------------------------------------------
Completion Date
----------------------------------------------------------------------------
-------------------------------------------------------------------------------
PHOTOCHANNEL SERVICE TERMS AND CONDITIONS
THE PARTIES REPRESENT AND WARRANT THAT THEY HAVE FULL CORPORATE POWER AND
AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT AND TO PERFORM THEIR OBLIGATIONS
HEREUNDER, AND THAT THE PERSON WHOSE SIGNATURE APPEARS BELOW IS DULY AUTHORIZED
TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE PARTY WHOM THEY REPRESENT.
|_| Additional Terms and Conditions are attached hereto as Schedule "B"
For PhotoChannel Networks Limited For: Wal-Mart Canada Corp.
Partnership.
Signature: Signature:
------------------------- -------------------------
Name: Name:
------------------------------- -------------------------------
Title: Title:
------------------------------ ------------------------------
Date: Date:
------------------------------- -------------------------------
73
SCHEDULE 10.5(A)
HARDWARE ENVIRONMENT (BRANDED SYSTEM)
Requirements:
------------
The hardware and equipment which comprise part of the Computer Facilities (or
the Initial Computer Facilities as the case may be) or the Recovery Facility
must be subject to a service contract with the respective vendor of such
hardware and equipment. The terms and conditions of said service contract must
contain such provisions so as to ensure that the Branded System is fully
operational and operates at or beyond the Service Levels (including without
limitation the 99% uptime Service Level). Moreover, the Computer Facilities (or
the Initial Computer Facilities as the case may be) and the Recovery Facility
must have access to a backup generator so as to ensure the availability of the
Branded System during any power outage for a minimum period of one (1) hour.
The hardware and equipment which comprise part of the Computer Facilities (or
the Initial Computer Facilities as the case may be) or the Recovery Facility
must be kept up to date with updates and upgrades, both in firmware and
technologies, so as to allow the handling of any increase in the load of the
Branded System and other demands made of the Branded System. All such hardware
and equipment must be fully redundant in case of system failure. Room
temperature and room humidity and electrical power of the Computer Facilities
(or the Initial Computer Facilities as the case may be) and the Recovery
Facility must be within hardware specifications stated by the respective vendor.
PhotoChannel must use comparable hardware and equipment than that used by the
Computer Facilities (or the Initial Computer Facilities as the case may be)
and/or by the Recovery Facility for testing and development of updates and
upgrades to the Branded System. For greater certainty, although such hardware
and equipment must also be serviced by the respective Vendor of such hardware
and equipment, such agreement need not provide as high a level of service as
contemplated with respect to the hardware and equipment which comprise part of
the Computer Facilities (or the Initial Computer Facilities as the case may be)
and/or the Recovery Facility.
Specifications:
--------------
Without any limitation to the foregoing, the Initial Computer Facilities shall
initially include, at a minimum, the following equipment, hardware and software:
DATA CENTER
6 x Compaq Proliant Server (nonstop) WEBSERVERS
Hardware - Standard Hardware
- 512 MB RAM
- 100Mbps NICs
- 2 x 18 GB HD SCSI (mirror)
Software -
- Windows 2000 Server
- Weblogic 5.1 sp12
74
3 x PictureIQ imaging appliances - photoForce server IMAGE SERVERS
1 x Sun Enterprise 450 DATABASE SERVER
Hardware - Standard Hardware
- 2 HBAs
- 4 GB RAM
- 4 Disks 36 GB (Internal mirrored)
See SAN - 0.5 TB usable space (RAID) to start
Software -
- Solaris 7/8
- Veritas Volume Manager/File System/Cluster Server
1 x SAN - StorageTek 9176
Hardware - Standard Hardware (Array and Control Frame)
- 2 ACP Pairs
- 0.5 - 8 GB Cache
- 2 Logical Control Units
- 7 GBICs
- 2 TB of RAW disk
2 x Fibre Channel Switch - QLogic : SanBox-16 HA (or equivalent)
Hardware - Standard Hardware
- 2 Power Supplies
- 7 GBICs See SAN
1 x KVM - Omniview (or equivalent)
Hardware - Standard Hardware with cables
- Hardware with cables for Sun
5 x Network Switches - Cisco/3Com 100Mbps (12 Port)
1 x Miscellaneous Equipment
Keyboards
Mice
Fiber Cable
Network Patch Cables
Extra HBAs, NICs
1 x UPS - Liebert/APC - 3-phase 20KVA
1 x Tape Backup Library (500 GB+)
- Software (Veritas NetBackup) + Backup Server required.
2 x Computer/Telco Equipment Storage Racks
75
SCHEDULE 10.5(B)
HARDWARE ENVIRONMENT (PHOTOCHANNEL LAB SYSTEM SOFTWARE)
Minimum System Requirements for PhotoChannel Lab System Software:
----------------------------------------------------------
ITEM REQUIRED SPECIFICATIONS
----------------------------------------------------------
Case Mini desktop
----------------------------------------------------------
CPU Intel Celeron 1.3Ghz
----------------------------------------------------------
Fan Ball Bearing
----------------------------------------------------------
Memory 256MB SDRAM, PC133
----------------------------------------------------------
Hard Drive Seagate 40GB ▇▇▇▇ 7200rpm
----------------------------------------------------------
Floppy Drive 1.44
----------------------------------------------------------
Controller Integrated
----------------------------------------------------------
I/O Integrated
----------------------------------------------------------
Video Card Integrated
----------------------------------------------------------
CD ROM Aopen 56X - CDRW Optional
----------------------------------------------------------
Sound Card Integrated
----------------------------------------------------------
Speakers N/A
----------------------------------------------------------
Modem N/A
----------------------------------------------------------
Network Card Integrated 10/100
----------------------------------------------------------
Optical Drive N/A
----------------------------------------------------------
Keyboard 104
----------------------------------------------------------
Mouse Scroll
----------------------------------------------------------
Software Pre-Load per PNI
----------------------------------------------------------
Operating ▇▇▇.▇▇ Windows 2000 Pro
----------------------------------------------------------
Monitor SVGA 15" Refurbished - New optional
----------------------------------------------------------
76
SCHEDULE 10.5(C)
MINIMUM SYSTEM REQUIREMENTS (PCUPLOADER)
Minimum system requirements for PCUploader:
Windows 95
64MB RAM
30MB disk space
77
SCHEDULE 10.6
THIRD PARTY SOFTWARE
1. PhotoForce online image edting, conversion and enhancement software
licensed from Picture IQ Corporation
2. WebLogic Server e-commerce transaction platform software (version
5.1) licensed from BEA Systems Inc.
3. Oracle database management software (version 8i - Enterprise
Edition) licensed from Oracle Corporation.
4. Windows 2000 Advanced Server
5. Solaris 7
6. Veritas Foundation Suite/HA
7. Veritas NetBackup v.3.4
78
SCHEDULE 10.19
FORM OF PNI AGREEMENT
See attached.
79
SCHEDULE 11.1
SOURCE CODE ESCROW AGREEMENT
See attached.