Fulfillment Services Agreement - Deluxe Laboratories Inc. and Visual Bible International Inc.
FULFILLMENT SERVICES AGREEMENT
by and between
DELUXE LABORATORIES, INC.
and
VISUAL BIBLE INTERNATIONAL, INC.
Dated: As of January 9, 2004
TABLE OF CONTENTS
Page
1. Definitions 1
2. Fulfillment Services. 1
2.1 Exclusive Services 1
2.2 Provision of Fulfillment Services 1
2.3 First-Class Quality 2
3. Supply; Shipment 2
3.1 Supply of VBI Materials 2
3.2 Shipping and Packing Materials 2
4. Receiving; Warehousing. 2
4.1 General 2
4.2 Storage 2
5. Order Fulfillment 2
6. Shipping 2
6.1 Tracking 3
6.2 Reports 3
7. Creation of On-Line Inventory Management System 3
8. Deluxe Fees and Charges 4
9. VBI Materials. 4
9.1 Title to the VBI Materials 4
9.2 Insurance 4
9.3 Accuracy and Review of the VBI Materials 4
9.4 Content of the VBI Materials 4
9.5 Internet Access and Security 4
10. Destruction of VBI Materials 4
11. Payment 5
12. Taxes, Insurance, Freight 5
13. Return of Materials 5
14. Warranties; Indemnification. 5
14.1 VBI Warranties 5
14.2 Deluxe Warranties 6
14.3 Indemnification 6
15. Proprietary Rights; Ownership of Materials. 6
15.1 Proprietary Rights of VBI 6
15.2 Proprietary Rights of Deluxe 7
16. Exclusivity 7
17. Term 7
18. Early Termination 8
19. Enforcement. 8
19.1 Claims 8
19.2 Disclaimer; Limitation of Liability 8
19.3 Remedies Cumulative 9
19.4 No Implied Waiver 9
20. Miscellaneous. 9
20.1 Governing Law 9
20.2 Independent Contractors; No Third Party Beneficiaries 9
20.3 Amendments and Waivers 9
20.4 Notices 10
20.5 Force Majeure 11
20.6 Entire Agreement 11
20.7 Confidentiality 11
20.8 Severability 11
20.9 Headings 11
20.10 Currency 11
20.11 Successors and Assigns 11
20.12 Counterparts 12
SCHEDULES
Schedule A Fulfillment Services
DEFINED TERMS USED IN AGREEMENT
Page
Agreement 1
Confidential Information 11
Deluxe 1
Deluxe Agreements 1
Deluxe Materials 7
Deluxe Media 1
DMM 1
Effective Date 1
Fulfillment Services 1
Hosting Services 7
Payment Date 5
System 3
Term 8
Third Party Agreement 7
VBI 1
VBI Materials 1
Web Site(s) 3
FULFILLMENT SERVICES AGREEMENT
This Fulfillment Services Agreement (oAgreementoe) is entered
into as of the 9th day of January, 2004 by and between Deluxe
Laboratories, Inc., a Delaware corporation (oDeluxeoe), and Visual
Bible International, Inc., a Florida corporation.
WHEREAS, Deluxe provides certain fulfillment services through
its Deluxe Media Management division (oDMMoe).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the parties agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) oDeluxe Agreementsoe shall include all of the
following agreements: (i) that certain Video Duplication, DVD
Replication and Distribution Services Agreement, dated as of August
2002, by and between VBI and Deluxe Media Services, Inc. (oDeluxe
Mediaoe ); (ii) that certain Film Processing Agreement, dated August
2002, by and between VBI and Deluxe; and (iii) that certain
Inducement Agreement, dated as of August 2002, by and between VBI,
Deluxe and Deluxe Media.
(b) oEffective Dateoe shall mean the date of this
Agreement.
(c) oFulfillment Servicesoe shall mean the management
and fulfillment of DVD and VHS sets and other material provided to
Deluxe by or on behalf of VBI (oVBI Materialsoe), and the
development of the on-line inventory management system for use on a
Internet web site(s) designed, developed, operated and maintained by
VBI, as further described in Schedule A hereto.
(d) oVBIoe shall meanVisual Bible International, Inc.,
and any corporation, partnership, limited liability company, joint
venture or other entity or division, now existing or hereafter
acquired, of which substantially all of the assets or greater than
fifty percent (50%) of the issued and outstanding shares or other
interests are owned, directly or indirectly, by VBI, or in respect
of which VBI shall have the right, by contract or otherwise, to
select the companies to provide Fulfillment Services to such entity.
2. Fulfillment Services.
2.1 Exclusive Services. On the terms and subject to the
conditions hereafter set forth, during the Term Deluxe shall provide
to VBI, and VBI shall be required to purchase exclusively from
Deluxe as provided in Section 16 hereof, all of VBIAEs United States
and Canadian requirements for Fulfillment Services.
2.2 Provision of Fulfillment Services. Deluxe shall
have the discretion to provide the Fulfillment Services to VBI under
this Agreement from any facility in the United States that is owned
or controlled by Deluxe, provided that with VBIAEs consent, which
shall not be unreasonably withheld, Deluxe may subcontract such
Fulfillment Services to unaffiliated third parties. No such
subcontract shall relieve Deluxe of its obligations hereunder.
Subject to the provisions of this Agreement relating to VBIAEs
failure to deliver materials in a timely manner, if Deluxe elects to
perform the Fulfillment Services at a facility other than the Deluxe
facility from which VBI requested the Fulfillment Services, Deluxe
shall bear any increase in costs for such Fulfillment Services.
2.3 First-Class Quality. The Fulfillment Services
provided hereunder shall be of a first-class quality. First-class
quality shall mean the higher of: (i) the highest industry standards
for comparable services provided to similar customers; or (ii) the
highest quality Deluxe provides to any other similar customer.
3. Supply; Shipment. VBI shall purchase from Deluxe, and
Deluxe shall furnish to VBI, all labor, equipment, tools, cartage
and adequate personnel and supervision to perform the Fulfillment
Services in accordance with this Agreement.
3.1 Supply of VBI Materials. Deluxe will coordinate
with VBI to receive at its premises all VBI Materials to be
distributed during the term hereof. VBI will be responsible for
ensuring that the quantity of VBI Materials it provides is
sufficient to fulfill orders received by Deluxe. VBI will provide
Deluxe with an order form (or will utilize the provided online
ordering system) indicating destination, Deluxe account number,
title, description and quantities to be received and distributed.
3.2 Shipping and Packing Materials. Deluxe shall
provide normal shipping and packing materials and supplies for use
in assembling the VBI Materials for distribution, as provided in
Section IV(C) of Schedule A hereto. VBI may provide instructions on
packaging methods reasonably desired which Deluxe agrees to follow.
VBI shall have thirty (30) business days from the time Deluxe
receives the initial inventory to review and approve all packing
materials, the application of mailing labels, packing slips and bar
code labels, in advance of shipping, or the submitted packing
materials shall be deemed approved.
4. Receiving; Warehousing.
4.1 General. All materials shall be delivered to Deluxe
by VBI as provided in Section I of Schedule A. Deluxe shall provide
VBI with a receiving report as soon as possible after receipt of VBI
Materials.
4.2 Storage. Deluxe will provide storage of VBI
Materials at the rates set forth in Section IV(F) of Schedule A hereto.
5. Order Fulfillment. VBI shall place orders with Deluxe,
using a Deluxe purchase order, for the purchase of materials which
are to be provided by Deluxe in order to perform the Fulfillment
Services.
6. Shipping. Deluxe shall prepare VBI Materials for shipping
based on routing instructions provided by VBI or its designees. All
materials shall be delivered by Deluxe F.O.B. DeluxeAEs Valencia
facility. VBI will schedule pick-ups with couriers and freight
vendors and will be solely responsible for shipping VBI Materials
and related costs, as provided in Section IV(B) of Schedule A
hereto. Deluxe shall complete Fulfillment Services based on
specified due date(s) set forth in VBIAEs order, provided that
Deluxe shall not be required to ship any VBI Materials less than
twenty four (24) hours from the time that such materials have
actually been received at the Deluxe facility from which such
shipment shall be made, and subject to the availability of adequate
quantity VBI Materials in inventory. Notwithstanding the
immediately foregoing sentence, Deluxe shall use its best efforts to
ship orders of up to 1,000 units within six (6) hours after receipt
of the respective materials at the Deluxe facility from which
shipment shall be made, subject to the availability of adequate
quantity VBI Materials in inventory. Deluxe shall provide
Fulfillment Services during normal business hours Monday through
Friday, unless prior arrangements have been made. Deluxe shall be
excused from liability for unusual delays or failure to deliver or
fill any order where such delay or failure is caused by a force
majeure event as provided in Section 20.5 of this Agreement. A
daily cut off time for orders shall be determined and established
based on the carrierAEs shipping deadline provided to the given
Deluxe facility. Depending on volume and preparation of orders,
Deluxe shall be allowed adequate time to successfully fulfill and
package the requested VBI Materials prior to delivery to the given
carrier. Any claim by VBI for damage occurring during shipment via
a carrier as provided herein shall be made directly against the
carrier, with a copy of such claim forwarded to Deluxe within seven
(7) business days.
6.1 Tracking. Deluxe shall use its computer database
and other means available to Deluxe to track the progress and
location of VBI Materials, and will advise VBI as appropriate.
6.2 Reports. Deluxe shall furnish daily and monthly
reports as set forth in Section V(A) of Schedule A hereto.
7. Creation of On-Line Inventory Management System. Deluxe
shall develop and maintain on behalf of VBI an on-line inventory
management system (the oSystemoe ) with the functionality described
in Section IV(A) of Schedule A hereto, which will be accessible
through the web site(s) designed, developed, operated and maintained
by VBI or by a third party engaged by VBI, in each case at VBIAEs
sole cost and expense (the oWeb Site(s)oe). VBI agrees that it
shall cause such third party to cooperate with Deluxe in the
development of an interface for the Web Site(s), as further provided
in Section II of Schedule A hereto. Deluxe shall provide fifteen
hours of programming services to create the System at no charge to
VBI. For all additional time spent by Deluxe on the System, Deluxe
shall invoice VBI at the rate of $95 per hour.
DeluxeAEs sole obligation regarding the Web Site and other Web
Services to be provided by Deluxe pursuant to this Agreement shall
be as set forth in this Agreement. VBI shall be solely responsible
for developing the Web Site, providing telecommunication services,
Web Site security, servers and any other hardware and software in
respect of the Web Site, and for providing or separately obtaining
all domain names, storage, access (including secure access) and
other web hosting services in respect thereto. Deluxe shall have no
obligations as respects such web hosting services and Deluxe shall
have no other obligations as respects the maintenance, update or
support of the Web Site and such enhancements and functionality. At
VBIAEs request, Deluxe shall perform other services related to the
Web Site as shall be requested by VBI and agreed to by Deluxe, upon
agreement by VBI and Deluxe regarding the prices and terms
applicable to such additional services; provided, however that
Deluxe shall not be obligated to agree to perform such other services.
8. Deluxe Fees and Charges. The prices to be paid by VBI for
the Fulfillment Services provided by Deluxe pursuant to this
Agreement are as set forth in Schedule A hereto. Unless otherwise
indicated, amounts owed by VBI for the Fulfillment Services are to
be calculated using the total quantity of Fulfillment Services
ordered by VBI and performed by Deluxe in a calendar month. Pricing
in respect of any additional services not provided for herein, or
for Fulfillment Services requested by VBI outside of the United
States and Canada, will be agreed upon by the parties as a condition
to, and at the time, such Fulfillment Services are requested.
9. VBI Materials.
9.1 Title to the VBI Materials. Title (subject to the
security interest reserved in Section 11 of this Agreement) to the
VBI Materials delivered to or held by Deluxe pursuant to this
Agreement, and risk of loss or damage, shall be at all times in VBI.
9.2 Insurance. VBI shall fully insure all VBI Materials
delivered to, deposited with or created by Deluxe and which are the
property of VBI against all insurable risks.
9.3 Accuracy and Review of the VBI Materials. VBI
assumes sole responsibility for: (i) the accuracy of all materials
provided to Deluxe, including without limitation, the VBI Materials,
descriptive claims, warranties, guarantees, nature of business and
address where business is conducted; and (b) ensuring that the VBI
Materials and the performance of Fulfillment Services by Deluxe
hereunder do not infringe or violate any right of any third party.
9.4 Content of the VBI Materials. VBI shall ensure that
the VBI Materials do not contain any content or materials which are
obscene, threatening, malicious, which infringe on or violate any
applicable law or regulation or any proprietary, contracts, moral,
privacy or other third party right, or which otherwise expose Deluxe
to civil or criminal liability. In the event any VBI Materials do
not satisfy the foregoing requirements in this Section 9.4, VBI
shall be deemed to be in material breach of this Agreement.
9.5 Internet Access and Security. VBI shall be solely
responsible for establishing and maintaining procedures assuring
secure access to the System from the Web Site(s) or from VBIAEs own
operating environment, and monitoring and verifying the security and
integrity of that operating environment.
10. Destruction of VBI Materials. From time to time, as
requested in writing by VBI, Deluxe will destroy VBI Materials
specified by VBI pursuant to the terms and conditions of this
Agreement. In any and all instances where Deluxe provides
destruction Fulfillment Services for VBI, Deluxe shall be
responsible for coordinating and implementing such destruction
Fulfillment Services including, without limitation, transportation,
dumping, security and providing VBI with a certificate of
destruction (to include, at a minimum, the quantity and description
of the particular item(s) destroyed, date and method of
destruction). Pricing in respect of destruction Fulfillment
Services will be agreed upon by the parties at the time such
Fulfillment Services are requested and as a condition to the
performance of such Fulfillment Services by Deluxe.
11. Payment. Deluxe shall provide VBI with monthly invoices
for work performed hereunder. VBI shall pay all charges in full
within thirty (30) days from the postmark date on each such invoice
(each, a oPayment Dateoe). Deluxe shall assess a late charge of one
percent (1%) per month, or portion thereof, commencing on the
Payment Date.
Nothing in this Agreement or otherwise shall constitute a
waiver by Deluxe of any statutory or common law lien on any and all
VBI materials in its possession in respect of amounts owed by VBI to
Deluxe under this Agreement or any of the other Deluxe Agreements.
12. Taxes, Insurance, Freight. Unless otherwise stated, the
prices for Fulfillment Services set out on Schedule A hereto do not
include sales, use, value added, manufacturing, processing, excise
or other similar taxes, duties, insurance, or freight. VBI shall
indemnify and hold Deluxe and its parent, affiliated and subsidiary
companies and their respective officers, directors, employees,
agents, licensees and affiliates harmless against any and all
losses, damages, costs, expenses, reasonable attorneysAE fees or
other liabilities including, without limitation, costs incurred in
successfully asserting the right to indemnification hereunder, which
arise out of or are founded upon any claim against Deluxe for any
such tax, duty, insurance or freight liability incurred by Deluxe
under any existing or future law in connection with the Fulfillment
Services provided to VBI hereunder or the sale, purchase, delivery,
storage, processing, use or consumption of any material. Deluxe
shall indemnify and hold VBI harmless against any and all expenses
which arise as a result of any relocation of facilities or
Fulfillment Services by Deluxe that results in tax liability
incurred by VBI under any existing or future law, provided that the
cause of such tax liability is not the result of relocation of
Fulfillment Services by Deluxe pursuant Section 2.2 hereof due to
VBIAEs failure to comply with its lead time obligations pursuant to
Section 6 hereof. Either party shall, upon request of the other
party, reasonably assist in defending any audit or other proceeding
brought by the taxing authority in any jurisdiction with respect to
such tax. VBI shall provide Deluxe, upon request, resale tax
jurisdiction numbers and certificates for all applicable jurisdictions.
13. Return of Materials. Upon expiration or termination of
this Agreement, all inventory of the VBI Materials not sold or
otherwise utilized during the term of this Agreement shall be
promptly returned to VBI. For any and all labor costs associated
with the disposition of the inventory as instructed by VBI, Deluxe
shall issue an invoice for payment of said services in accordance
with the labor rates set forth in Schedule A hereto. VBI shall be
permitted to conduct a physical inventory of the VBI Materials at
VBIAEs expense at Deluxe facilities at VBIAEs discretion. Such
physical inventory shall be conducted upon at least twenty-four (24)
hours advance notice, during normal business hours and in a manner
so as not to interfere with normal business activities of Deluxe.
14. Warranties; Indemnification.
14.1 VBI Warranties. Visual Bible International, Inc.
hereby represents and warrants that:
(a) it has the right to enter into this Agreement
and perform its obligations hereunder in accordance with the terms
and conditions hereof;
(b) it has or shall have all such rights and third
party authorizations and consents with respect to the VBI Materials
and the Web Site as shall be required in order to order Fulfillment
Services pursuant to this Agreement and the provision of such
Fulfillment Services by Deluxe shall not violate the copyright or
other intellectual property rights, privacy rights or any other
rights of any other person in such VBI Materials; and
(c) by entering into and performing its
obligations under this Agreement, it will not be in violation of,
and Deluxe will not be improperly interfering with any term of, any
other agreement, arrangement, or prospective relationship to which
VBI or any affiliate of VBI, or any supplier of Fulfillment Services
to VBI which are to be provided by Deluxe under this Agreement, is a
party.
14.2 Deluxe Warranties. Deluxe hereby represents and
warrants that:
(a) it has the right to enter into this Agreement
and perform its obligations hereunder in accordance with the terms
and conditions hereof;
(b) the Fulfillment Services shall be performed in
a manner consistent with the highest quality Deluxe provides to any
other comparable customer for comparable services;
(c) to the best of DeluxeAEs knowledge, the Deluxe
Materials do not and will not infringe, or be misappropriations of,
the property rights of third parties, provided, however, that Deluxe
shall not be deemed to have breached such warranty to the extent
that VBI or its agent(s) have modified the System in any manner or
if the System incorporates unauthorized third-party materials.
14.3 Indemnification. Each party hereby agrees to
indemnify, defend, protect, save and hold harmless the other and its
affiliates from and against any and all third party claims, actions,
suits, costs, liabilities, judgments, obligations, lawsuits,
penalties, expenses or damages (including, without limitation,
reasonable legal fees and expenses) incurred or sustained by such
party by reason of or resulting from any breach of the warranties,
representations or obligations of such party hereunder.
15. Proprietary Rights; Ownership of Materials.
15.1 Proprietary Rights of VBI. As between VBI and
Deluxe, the VBI Materials shall remain the sole and exclusive
property of VBI, including, without limitation, all copyrights,
trademarks, patents, trade secrets and any other proprietary rights.
Nothing in this Agreement shall be construed to grant Deluxe any
ownership right in, or license to, the VBI Materials, except as
provided herein. VBI hereby grants to Deluxe a non-exclusive,
worldwide, royalty-free license for the Term of this Agreement to
edit, modify, adapt, translate, exhibit, publish, transmit,
participate in the transfer of, reproduce, create derivative works
from, distribute, perform, display and otherwise use the VBI
Materials as necessary to render the Fulfillment Services to VBI
under this Agreement.
15.2 Proprietary Rights of Deluxe. Subject to VBIAEs
ownership interest in the VBI Materials and the content, data and
information relating directly thereto as further provided in Section
15.1 above, the System and all materials, including but not limited
to, any computer software (in object code and source code form),
script, programming code, data, information, content and materials,
developed or provided by Deluxe or its suppliers under this
Agreement (with the exception of original elements of audiovisual
displays created hereunder specifically for VBI, which shall be
deemed to be part of the VBI Materials), and any trade secrets,
know-how, methodologies and processes related to DeluxeAEs products
or services, shall remain the sole and exclusive property of Deluxe
or its suppliers, including, without limitation, all copyrights,
trademarks, patents, trade secrets, and any other proprietary rights
inherent therein and appurtenant thereto (collectively oDeluxe
Materialsoe). To the extent, if any, that ownership of the Deluxe
Materials does not automatically vest in Deluxe by virtue of this
Agreement or otherwise, VBI hereby transfers and assigns to Deluxe
all rights, title and interest which VBI may have in and to the
Deluxe Materials. VBI acknowledges and agrees that Deluxe is in the
business of developing on-line inventory management systems and
designing and hosting web sites, and that Deluxe shall have the
right to provide to third parties services which are the same or
similar to the Fulfillment Services, and to use or otherwise exploit
any Deluxe Materials in providing such services. VBI agrees not to
alter or obscure any Deluxe proprietary markings on the Deluxe
Materials. Deluxe hereby grants to VBI a limited, non-exclusive,
non-transferable license solely for the Term of this Agreement for
VBI or the entity it retains to provide the hosting services for the
Web Site (oHosting Servicesoe) to make use of Deluxe Materials which
are required for the operation of the Web Site and to conduct the
Hosting Services. Deluxe hereby reserves for itself all rights in
and to the Deluxe Materials not expressly granted to VBI in the
immediately foregoing sentence. In no event shall VBI use any
trademarks or service marks of Deluxe without DeluxeAEs prior
written consent. Unless otherwise agreed to in writing by Deluxe,
the transfer or attempted transfer of the System to any unauthorized
host server shall automatically terminate the foregoing license.
16. Exclusivity. During the entire Term of this Agreement,
VBI hereby agrees to use Deluxe exclusively for all of VBIAEs
requirements for Fulfillment Services in the United States and
Canada. In the event VBI shall acquire control of an entity
subsequent to the date of this Agreement, that entity shall be bound
by this section except (i) to the extent the entity is bound by a
bona fide agreement with a third party to perform some or all of the
Fulfillment Services (a oThird Party Agreementoe), or (ii) the
entity owns or controls a facility at which some or all of the
Fulfillment Services are performed, then until such time as the
operations of such facility cease, which in no event shall exceed
one (1) year. The entity may comply with the terms of a Third Party
Agreement (with respect to the covered Fulfillment Services only)
until the earlier of the expiration of any current mandatory term of
the agreement or the date that such agreement can be validly
terminated without penalty, provided that within thirty (30) days
after the acquisition of such entity, VBI so notifies Deluxe of the
Third Party Agreement and the expiration date thereof.
17. Term. The term of this Agreement (the oTermoe) shall
commence on the Effective Date, and shall terminate on the third
(3rd) anniversary of the Effective Date, unless terminated earlier
under Section 18 of this Agreement. Upon termination of this
Agreement for any reason, Deluxe shall promptly return to VBI all
materials, elements or other VBI property.
18. Early Termination. This Agreement shall terminate prior
to the third (3rd) anniversary of the Effective Date as follows:
(a) either party may terminate this Agreement by
providing notice to the other party of termination if the other
party is in material breach of any of its covenants or obligations
under this Agreement and such other party has not rectified the
breach within thirty (30) days of having received notice of the
breach from the terminating party (or as regards matters that cannot
reasonably be cured within such period, where reasonable steps to
correct or cure such failure have not been commenced in a timely
manner within such thirty (30) day period), provided that such cure
period shall be reduced to ten (10) business days after receipt of
the foregoing written notice of breach in the event that the breach
was the result of a failure to pay amounts due on a timely basis;
(b) either party may terminate this Agreement by
providing notice of termination to the other party if the other
party files a petition in bankruptcy or is adjudicated a bankrupt or
has an involuntary bankruptcy proceeding instituted against it
(which proceeding is not dismissed within ninety (90) days), is
insolvent, makes an assignment for the benefit of creditors or takes
advantage of or is subject to any insolvency law or if a receiver is
appointed in respect of the other partyAEs business (unless such
receiver is removed within ninety (90) days from the date of its
appointment);
(c) either party may terminate this Agreement if (i)
there is any sale, lease, exchange or other transfer of fifty
percent (50%) or more of the outstanding voting or equity securities
of the other party, or (ii) if either party sells substantially all
of its assets to an unrelated third party, or (iii) if VBI sells or
licenses the right to select the provider of fulfillment services;
(d) Deluxe may terminate this Agreement if any of the
Deluxe Agreements is terminated for any reason whatsoever, or in the
event of a default by VBI under any of the Deluxe Agreements or the
inventory security agreement to be entered into among VBI, Deluxe,
Deluxe Media Services, Inc. and Deluxe Toronto Ltd., after the
expiration of any applicable notice and cure periods; and/or
(e) Either party may terminate this Agreement upon sixty
(60) days prior written notice of such termination to the other
party. No such termination by Company shall be effective until all
amounts payable by Company to Deluxe pursuant to this Agreement have
been paid in full by Company.
19. Enforcement.
19.1 Claims. Neither party shall be responsible for any
act, default or negligence on the part of the other party. Deluxe
shall not be responsible for any defect due to defects in the
materials provided or approved by VBI or damage in transit by a
common carrier. In no event shall either party be entitled to
assert any claim more than one (1) year after the date of shipment
of a defective product or the incident precipitating such claim.
19.2 Disclaimer; Limitation of Liability. DELUXE HEREBY
DISCLAIMS ALL WARRANTIES AND LIABILITIES OF ANY KIND, EXPRESS OR
IMPLIED, ORAL OR IN WRITING, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, EXCEPT FOR THE LIMITED WARRANTIES PROVIDED IN SECTION 14.2
HEREOF. UNDER NO CIRCUMSTANCES WHATSOEVER SHALL DELUXE OR ANY OF
ITS AFFILIATES BE LIABLE TO VBI OR ANY OTHER PERSON FOR ANY SPECIAL
OR CONSEQUENTIAL DAMAGES INCLUDING, WITHOUT LIMITATION, LOSS OF
PROFITS, INCURRED BY VBI OR ANY OTHER PERSON AND RESULTING FROM ANY
ACTS, OMISSIONS, NEGLIGENCE OR BREACH OF DUTY (CONTRACTUAL OR
OTHERWISE) OF THE EMPLOYEES, AGENTS OR SUBCONTRACTORS OF DELUXE.
DELUXE SHALL HAVE NO LIABILITY FOR UNAUTHORIZED ACCESS TO, OR
ALTERATION, THEFT OR DESTRUCTION OF, THE WEB SITE, THE SYSTEM OR
VBIAES MATERIALS, DATA FILES, PROGRAMS OR INFORMATION THROUGH
ACCIDENT, FRAUDULENT MEANS OR DEVICES. THE AGGREGATE LIABILITY OF
DELUXE TO VBI FOR ANY REASON AND UPON ANY AND ALL CAUSES OF ACTION
ARISING FROM OR RELATED TO THE WEB SITE OR THE SYSTEM SHALL NOT
EXCEED THE TOTAL FEES PAID BY VBI TO DELUXE FOR THE SERVICES TO BE
PROVIDED BY DELUXE TO VBI PURSUANT TO THIS AGREEMENT.
19.3 Remedies Cumulative. None of the rights, powers or
remedies conferred upon any party shall be mutually exclusive, and
each such right, power or remedy shall be cumulative and in addition
to every other right, power or remedy, whether conferred thereby or
hereafter available at law, in equity, by statute or otherwise.
19.4 No Implied Waiver. No course of dealing between
the parties and no delay in exercising any right, power or remedy
conferred hereby or now or hereafter existing at law, in equity, by
statute or otherwise, shall operate as a waiver of, or otherwise
prejudice, any such right, power or remedy.
20. Miscellaneous.
20.1 Governing Law. This Agreement shall be construed
in accordance with the laws of the State of California without
reference to its choice of law rules. Deluxe and VBI agree that any
judicial proceeding arising out of or relating to this Agreement
shall be brought in the federal and state courts sitting in Los
Angeles, California and Deluxe and VBI hereby irrevocably submit to
the exclusive jurisdiction of such courts and waive any objection
they may have to the venue of such courts.
20.2 Independent Contractors; No Third Party
Beneficiaries. The relationship between the parties hereto is that
of independent contractors and nothing herein contained shall be
construed to create any partnership, joint venture, agency,
fiduciary or employment relationship between the parties. This
Agreement is not made for the benefit of any third party, and no
third party shall have any rights as a result of this Agreement.
20.3 Amendments and Waivers. No amendment or waiver of
this Agreement shall be effective unless executed and agreed in
writing by the party to be bound thereby. No waiver of this
Agreement shall constitute a waiver of any other provision of this
Agreement or a continuing waiver unless expressly provided.
20.4 Notices. Any notices required or permitted to be
given hereunder shall be in writing and given in person or by
certified mail or facsimile to the following address or at such
other address as may be designated in writing by either of the
parties or by facsimile transmission at the facsimile number shown
below or at such other facsimile number as may be designated in
writing by either of the parties. Notice shall be deemed to have
been received on the date received if delivered in person, four (4)
business days after being mailed postage prepaid, and on the date
sent and on which machine confirmation is provided by the senderAEs
facsimile equipment if sent by facsimile.
If to Deluxe: Deluxe Laboratories, Inc.
1377 North Serrano Avenue
Hollywood, California 90027
Attention: President
Telephone No.: 323-462-6171
Telecopy No.: 323-466-6325
With a copy to: Deluxe Media Management
200 South Flower Street
Burbank, California 91501
Attention: Michael Alvarez
Telephone No.: 818-525-2100
Telecopy No.: 818-525-2101
and: Piper Rudnick LLP
203 North LaSalle Street, Suite 1800
Chicago, Illinois 60601-1293
Attention: Larry S. Goldberg
Telephone No.: 312-368-8550
Telecopy No.: 312-630-6320
If to VBI: Visual Bible International, Inc.
1235 Bay Street, Suite 300
Toronto, Ontario M5B 3K4, CANADA
Attention: Executive Vide President and
Chief Financial Officer
Telephone No.: 416-323-2333
Telecopy No.: 416-323-2334
and: Lang Michener
BCE Place - Suite 2500
181 Bay Street
Toronto, Ontario M5J 2TJ, CANADA
Attention: Howard M. Drabinsky
Telephone No.: 416-307-4033
Fax No.: 416-304-3750
20.5 Force Majeure. Deluxe shall not be obligated to
perform Fulfillment Services at any time during the Term when Deluxe
is unable to perform or is materially hampered from performing
because of failure of communications or postal services, fire,
strike, accidents, acts of God or of the public enemy, labor strife,
war, governmental regulations or other force majeure contingencies.
In the event that a force majeure contingency occurs, the Term of
this Agreement shall be extended for a period equal to the time
during which Deluxe was unable to perform Fulfillment Services
hereunder.
20.6 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes and replaces all
prior written or oral agreements and understandings, if any, between
the parties relating to the subject matter hereof. There are no
warranties, representations or agreements between the parties in
connection with the subject matter of this Agreement except as
specifically set forth or referred to in this Agreement.
20.7 Confidentiality. Each party agrees that during the
course of this Agreement, information that is confidential or
proprietary may be disclosed to the other party, including, but not
limited to, software, technical processes and formulas, source
codes, product designs, sales, cost and other unpublished financial
information, product and business plans, advertising revenues, usage
rates, advertising relationships, projections and marketing data
(oConfidential Informationoe ). Confidential Information shall not
include information that the receiving party can demonstrate (a) is,
as of the time of its disclosure, or thereafter becomes part of the
public domain through a source other than the receiving party, (b)
was known to the receiving party as of the time of its disclosure,
(c) is independently developed by the receiving party without use of
or reliance upon the information provided to the receiving party, or
(d) is subsequently learned from a third party not under a
confidentiality obligation to the providing party. Except as
provided for in this Agreement, each party shall not make any
disclosure of the Confidential Information to anyone other than its
employees who have a need to know in connection with this Agreement.
Each party shall notify its employees of their confidentiality
obligations with respect to the Confidential Information and shall
require its employees to comply with these obligations. The
confidentiality obligations of each party and its employees shall
survive the expiration or termination of this Agreement.
20.8 Severability. Each of the provisions contained in
this Agreement is distinct and severable and the declaration of
invalidity or unenforceability of any such provision by a court of
competent jurisdiction shall not affect the validity or
enforceability of any provision hereof.
20.9 Headings. The inclusion of headings in this
Agreement is for convenience of reference only and shall not affect
the construction or interpretation hereof.
20.10 Currency. All currency amounts referred to in
this Agreement are United States dollars.
20.11 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
successors and permitted assigns. Neither party hereto may assign,
transfer or in any manner convey its rights under this Agreement, in
whole or in part, or delegate any of its obligations hereunder
without the prior written consent of the other party, which consent
shall not be unreasonably withheld, provided that either party may
assign this Agreement and all of its interest and rights herein, and
delegate all of its obligations hereunder, to any entity
controlling, controlled by or under common control with it, or to an
entity which has succeeded to substantially all of that partyAEs
business and assets, provided that the assignee is a financially
responsible party as determined by the non-assigning party (or, if
the non-assigning party determines that the assignee is not a
financially responsible party and the assignor guarantees the
assigneeAEs performance hereunder) and, provided that the assignee
assumes and agrees to perform the obligations of the assigning party
and a copy of such assignment and assumption is delivered to the
other party. No such assignment or assumption will relieve the
assigning party of its obligations under this Agreement up to the
date of the assignment. As between the parties, any attempted
assignment in violation of the foregoing shall be deemed void and of
no force and effect.
20.12 Counterparts. This Agreement may be executed in
two (2) or more counterparts and by different parties hereto in
separate counterparts, with the same effect as if all parties had
signed the same document. All such counterparts shall be deemed an
original, shall be construed together and shall constitute one and
the same instrument.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first set forth above.
DELUXE LABORATORIES, INC.
By:
Name:
Title:
VISUAL BIBLE INTERNATIONAL, INC.
By:
Name:
Title:
(PR#30372700.doc)
SCHEDULE A
FULFILLMENT SERVICES
I. RECEIVING
All materials to be delivered by VBI and its vendors to Deluxe
Valencia facility at the following address:
Deluxe Media Management
29125 Avenue Paine
Valencia, California 91355
(661) 702-1374
(661) 702-1375
All materials will be inventoried in reasonable detail, assigned a
specific location and entered into the Deluxe proprietary inventory
control system.
All pricing set forth in this Schedule A assumes VBI Materials are
arriving complete and that no further assembly is required, other
than putting units into a shipper box.
II. WEB SITE INTERFACE TO ORDERING SYSTEM
Includes the following to be undertaken in connection with the
integration of the System into the Web Site(s) developed and
operated by VBI pursuant to Section 7 of this Agreement:
- Coordination and management of conference calls and information
exchange
- IT labor and consulting fees
- Create Statement of Work for interface
Cost: $95.00/hour following the initial fifteen hours, which shall
be provided at no hourly charge.
Any hardware/software purchased by Deluxe on VBIAEs behalf will be
subject to an agency fee (markup) of 25%.
III. TIMELINE
The Gospel of John:
Anticipated deliveries to/from Deluxe:
- 25,000 sets* to be delivered to Deluxe Valencia as per Section
I above on or about 10/28
- 25,000 sets* to be delivered to Deluxe Valencia as per Section
I above on or about 10/29
- 25,000 sets* to be delivered to Deluxe Valencia as per Section
I above on or about 10/30
- 75,000 sets* to be available for delivery from Deluxe Valencia
on or about 10/31
November Shipments:
- 175,000 sets* to be delivered to Deluxe Valencia as per Section
I above on or about 11/21
- 175,000 sets* to be available for delivery from Deluxe Valencia
on or about 11/25
December Shipments:
- 250,000 sets* to be delivered to Deluxe Valencia as per Section
I above on or about 12/13
- 250,000 sets* to be available for delivery from Deluxe Valencia
on or about 12/17
*All amounts are estimates only, and are comprised 2/3 of DVD sets
and 1/3 of VHS sets.
IV. FULFILLMENT AND STORAGE SERVICES
A. Account Set-Up: Includes the following:
- Creation of VBI on-line inventory management system by Deluxe IT
personnel to be accessed by means of the Web Site(s) being developed
and operated by VBI in accordance with Section 7 of this Agreement.
Such on-line inventory management system will permit VBI to access
an active list of current inventory of VBI Materials as well as an
archive list of inactive inventory of VBI Materials. The on-line
inventory management system shall provide for capabilities
including, without limitation the ability of VBI and/or Deluxe to:
(i) view access, (ii) print inventory, (iii) import function, (iv)
search by order number, product number, description/element and
title, (v) view full shipping history by order number, product
number, title and description.
- Basic information technology support of on-line inventory
management system. Includes full online support for the first year
to assist users in navigating the inventory and to provide technical
updates to the system. After one year Deluxe and VBI will negotiate
in good faith the costs payable by VBI to maintain the inventory
system thereafter.
- Initial verification of VBI Materials or physical oroughoe count
- Upload of digital image of VBI Materials to on-line inventory
system including quantity and description
- Assign a specific pallet location
- Physical relocation of materials in Deluxe facility racks/open bays
Cost: NO CHARGE for the initial fifteen hours of labor provided.
Each additional hour shall be charged at $95.00/hour.
The Fulfillment Services set forth in this Section IV(A) relate only
to the development and support of an on-line inventory management
system and not to designing, building, servicing and/or hosting of a
web site or web sites. Deluxe is not providing any hardware or
software (other than the on-line inventory management system) to VBI.
B. Shipper Carrier: VBI has selected the United States Postal
Service (USPS) to facilitate all domestic and international
shipments. Deluxe will obtain and integrate the software necessary
to facilitate shipping via the USPS. VBI is responsible for setting
up all accounts with the USPS (i.e. Bulk Mail, Media Mail permits,
etc.) and ensuring that there are sufficient funds deposited in
these accounts, at all times, to cover the shipping of VBI
Materials. In the event the USPS at any time refuses to take or
ship any packages from Deluxe due to lack of funds, Deluxe will not
bear any responsibility for such delay in shipment. VBI
acknowledges and agrees that all shipments made by Deluxe hereunder
are made solely for VBIAEs account, and VBI is solely responsible
for all costs and expenses associated with such shipments (including
without limitation the costs of freight and insurance). VBI hereby
agrees that Deluxe shall not be deemed a oconsignoroe of the VBI
Materials on any bill of lading, invoice, or otherwise, and further
agrees that it shall instruct the USPS (and any other shipper
engaged by VBI pursuant to this Agreement) in writing (with a copy
to Deluxe) that Deluxe is not a consignor on any shipments made on
VBIAEs behalf. All queries made to the USPS shall be made by VBI
directly to the USPS.
C. Supplies: Supplies considered onormaloe shall be the following:
- Tape
- Packing paper (if needed)
- Shipping labels
Cost: NO CHARGE
All custom supplies (i.e., master carton) shall be billed separately
at cost to VBI. The final master carton will be sized to fit
contents so that it does not require any additional packing supplies
for shipments.
The USPS may provide custom packaging, depending on certain criteria
such as the number of shipments being done with them or possibly the
total dollar amount of shipments. Deluxe will provide to the USPS
recommended carton sizes. However, any agreement to produce custom
boxes will be between VBI and the USPS.
D. Returns:
For DVDs and/or VHS sets returned due to damage that occurred during
shipment, reimbursement will be issued by the chosen carrier (i.e.,
USPS).
For DVDs and/or VHS sets returned due to defective manufacturing and
which defects have been verified by Deluxe, reimbursement will be
issued by Deluxe. Customers will be issued a return or prepaid
label for returned VBI Materials.
E. Order Fulfillment: Includes the following:
- Receipt of order via web site
- Pulling of the VBI Materials(s) from stock
- Adjustments to stock via on-line inventory system
- Coordination and management for creation of the personalized
shipping label
- Packaging of the materials
- Affixing the shipping label to the package
- Quality control inspection of package
- Shipping confirmation e-mail to VBI
- Tracking of the shipment
- Inventory control management
Cost: $4.50/unit 0-100K units
$3.00/unit 101K-200K units
$2.50/unit 201K-300K units
$2.00/unit 301K-400K units
$1.25/unit 401K and over
$0.25 per unit for additional units shipped to same address as part
of the same order
The term ounitoe, as used in this Section E only, includes 1 DVD
Disc or 1 Videocassette or 1 packaged box set of DVD Discs or
Videocassettes, plus, in each case, up to one promotional material
item. The included promotional material item must add no more than
one and one-half (1 ) pound to the weight of the shipment. Any
promotional material items weighing more than one and one-half (1 )
pound or otherwise requiring custom packaging or packaging materials
shall incur additional costs and shall be billed separately to VBI.
Promotional material items consisting of garments that require
folding, repackaging or other specialty handling shall incur an
additional per unit charge of $0.10.
CD soundtracks that are shipped together with a unit (as defined
above) to the same address as part of the same order shall be
considered an additional unit in that order and shall incur a per
unit charge of $0.25. CD sountracks that are shipped separately
(without another unit) shall incur a per unit charge of $1.25.
F. Storage: Includes the following:
- 4AE x 4AE x 4AE Pallet space allocation in warehouse
- Monthly inventory control reports as requested by VBI
- 24-hour security
- Required liability insurance coverage
Cost: $14.00 per pallet/month
Pallet counts are conducted at the end of each calendar month and
VBIAEs storage costs for that month are based on the total number of
pallets stored in DeluxeAEs facility at that time.
V. ADDITIONAL SERVICES
A. Reports. Deluxe shall generate and provide to VBI the following
reports:
1. Daily Reports.
Daily shipment recap report
Daily receiving report
Daily pending orders
Daily inventory report
2. Monthly Reports.
Inventory Item Shortage
Items Shipped Shipping
Shipped Orders Summary Returns
Fulfillment Service Charges Order Status Summary
Storage Service Charges
NOTE: At the mutual agreement of the parties, some of the reports
may be consolidated. Some reports may also be modified to include
additional pertinent information that is not being provided
currently and such modifications shall be provided as follows: (i)
all minor modifications, defined as a modification that requires
less than thirty (30) minutes of programming time, shall be provided
at no additional cost to VBI; and (ii) all major modifications,
defined as a modification that requires thirty (30) minutes or more
of programming time, shall be provided at the applicable custom
programming rates as set forth in Section V(B) hereof.
B. Custom Programming / Web Development: Any and all development
requiring Deluxe information technology personnel over and above the
services outlined above shall be discussed and billed separately.
Prior to work being performed, the parties shall agree on all
pricing related thereto.
Cost: $95.00/hour
C. This Schedule A does not cover fulfillment of any configuration
other than DVD or VHS sets. Any custom packaging (i.e. to include a
promotional item, any bounce-back material, etc.) will be quoted
separately.
D. The prices set forth in this Schedule A shall be effective
throughout the first year of the Term of the Agreement. After one
year Deluxe and VBI will negotiate in good faith the prices to apply
thereafter. If, after good faith negotiations, the parties cannot
agree on the prices to apply thereafter, either party shall have the
right to terminate this Agreement.