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Website Development Agreement

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Sectors: Specialty Retail
Governing Law: Massachusetts, View Massachusetts State Laws
Effective Date: December 17, 1999
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EXHIBIT 10.4
WEB SITE DEVELOPMENT AGREEMENT


This AGREEMENT (the "Agreement") is made and entered into as of the 17th day of December, 1999 (the "Effective Date"), by and between Miller Systems, Inc., a Massachusetts corporation with offices at 364 Boylston Street, Boston Massachusetts ("Developer") and LearningExpress.com LLC, a Delaware limited liability company with offices at 29 Buena Vista Street, Ayer, MA 01432("Client").


W I T N E S S E T H


WHEREAS, Developer is in the business of offering Internet services relating to, among other things, development of sites on the World Wide Web portion of the Internet, and is willing to provide services to Client on the terms and subject to the conditions set forth below; and


WHEREAS, Client desires to engage Developer, and Developer desires to be engaged by Client, to provide Internet services on the terms and subject to the conditions set forth below.


NOW, THEREFORE, in consideration of the mutual promises set forth herein, Developer and Client (collectively, the "Parties") hereby agree as follows:


1. DEVELOPER SERVICES


Developer agrees to provide Client with services relating to the development of an online store as set forth or described in "Part II. Functionality specifications for online store" of Exhibit A (the "Development Services") attached hereto and made a part hereof. Obligations of Developer, if any, to provide ongoing maintenance tasks for the on-line store described in the Development Services (the "On-Line Store") shall be set forth and included as part a separate agreement between the parties. (The Development Services are hereinafter referred to collectively as the "Services.") Client agrees that Developer is responsible only for providing the Services, and Developer is not responsible for providing any services or performing any tasks not specifically set forth in the Services.


2. DEVELOPMENT SERVICES


2.1 SPECIFICATIONS AND CLIENT CONTENT


Developer, in consultation with Client, has developed written specifications for the Development Services. (the "Specifications")-- which are attached hereto as Part II of Exhibit A.


2.2 DELIVERY OF CLIENT CONTENT


"Client Content" shall mean any materials provided by Client for incorporation in the On-Line Store, including, but not limited to, any images, photographs, illustrations, graphics, audio clips, video clips or text. Client shall deliver the Client Content to Developer in an electronic file format specified and accessible by Developer (e.g., .txt, .gif) or as otherwise specified in the Specifications. Any services required to convert or input Client Content not set forth in the Specifications shall be charged on a time and materials basis pursuant to the fees schedule listed in the COSTS portion of Exhibit A hereto. Client shall promptly deliver all Client Content to Developer as reasonably required by Developer. 2
2.3 INITIAL VERSION


Upon Developer's receipt of the Client Content and any fees then due and payable in accordance with the COSTS portion of Exhibit A hereto, Developer shall commence tasks associated with the completing the Development Services and, to the extent applicable, making the initial version available to Client (an "Initial Version"). Developer shall use combinations of technology as Developer, in consultation with the Client, deems appropriate to the Development Services.


2.4 REVISIONS


Client shall have ten (10) days, or such time as otherwise agreed by the Parties in writing, from the date of a written notice of completion of the Initial Version (or any version completed pursuant to a "Change Order," as defined below, any such version is a "Change Order Version")) from Developer to review and request in writing from Developer revisions to the Initial Version (or such Change Order Version). Upon receipt of such requests, Developer shall use commercially reasonable efforts to implement such revision requests that are within the scope of, and consistent with, the Specifications. If Client wishes to implement any revisions to the On-Line Store that deviate in any material respect from the Specifications, Client shall submit to Developer a written change order containing (i) such revisions in detail and (ii) a request for a price quote for each change (collectively, the "Change Order"). Developer shall promptly evaluate the Change Order and submit to Client for its written acceptance a proposal for undertaking the applicable tasks and a price quote reflecting all fees associated with Client's Change Order. Client shall have ten (10) business days from receipt of such proposal to accept or reject Developer's proposal in writing. If Client accepts Developer's proposal to undertake the work described in by the Change Order, then the Change Order, as supplemented and/or modified by Developer's proposal, shall amend and become a part of the Specifications and the COSTS portion of Exhibit A hereto, and Developer shall proceed to implement such revisions in accordance with the Specifications and such costs structure as so modified. If Client has not made any requests for revisions by the end of ten (10) days from the date of written notice of completion of the an Initial Version (or a Change Order Version) from Developer, or by such time as otherwise agreed by the Parties in writing, the Initial Version (or such Change Order Version) shall be deemed accepted by Client ("Acceptance").


Any accepted Change Order, any failure of the Client to comply with the timeframes contained in this Section 2.4, or any mutually agreed deviations from such timeframes, may materially alter the timeframes in which the Development Services are to be provided, and Developer shall notify Client promptly in writing of the projected alterations to the timeframes caused by any such event.


2.5 TRANSFER


Upon Acceptance of the Services and payment of all fees called for in Exhibit A hereto, Developer shall transfer the online store to the computer system owned and operated by Client's designated third party contractor, through which the online store may be accessed via the World Wide Web portion of the Internet (the "Host Server").


2.6 ADDITIONAL WORK


Subsequent to the execution of this Agreement by the Parties, the Developer shall perform services for the Client which are not in the original scope of Services hereunder only pursuant to a written agreement between the parties.


3. PROPRIETARY RIGHTS
3.1 PROPRIETARY RIGHTS OF CLIENT


As between Client and Developer, Client Content and "DC Content," as defined in Section 3.2, shall remain the sole and exclusive property of Client, including, without limitation, all copyrights, trademarks,


-2- 3 patents, trade secrets, and any other proprietary rights. Nothing in this Agreement shall be construed to grant Developer any ownership right in, or license to, the Client Content or the DC Content, except as provided in Section 4.1 of this Agreement. To the extent, if any, that ownership of the Client Content, or the DC Content does not automatically vest in Client by virtue of this Agreement or otherwise, Developer hereby transfers and assigns to Client all right, title and interest which Developer may have in and to the Client Content and/or the DC Content.


3.2 PROPRIETARY RIGHTS OF DEVELOPER


Subject to Client's ownership interest in Client Content, all materials, including, but not limited, to any computer software (in object code and source code form), script, programming code, data, or information developed or provided by Developer or its suppliers under this Agreement (with the exception of original elements of audiovisual displays and/or any HTML script created hereunder specifically for Client, which shall be the sole and exclusive property of Client and shall be referred to herein as "DC Content), and any trade secrets, know-how, methodologies and processes related to Developer's products or services, shall remain the sole and exclusive property of Developer or its suppliers, including, without limitation, all copyrights, trademarks, patents, trade secrets, and any other proprietary rights inherent therein and appurtenant thereto (collectively "Developer Materials"). To the extent, if any, that ownership of the Developer Materials does not automatically vest in Developer by virtue of this Agreement or otherwise, Client hereby transfers and assigns to Developer all rights, title and interest which Client may have in and to the Developer Materials. Client acknowledges and agrees that Developer is in the business of designing and hosting Web sites, and that Developer shall have the right to provide to third parties services which are the same or similar to the Services, and to use or otherwise exploit any Developer Materials in providing such services.


3.3 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 (including without limitation, the parameters applicable to Client's VIP program and Client's proposed multi-facility distribution and fulfillment network), 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 ("Confidential Information"). 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, (d) is subsequently learned from a third party not under a confidentiality obligation to the providing party, or (e) is required to be disclosed by a duly issued order of a court of competent jurisdiction, provided that the party so ordered to disclose shall use best efforts to notify the other party hereto prior to such disclosure. 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.


3.4 DEVELOPER NOTICES


Unless otherwise agreed to in writing by the Parties, Developer shall have the right to place the proprietary notices of Developer set forth on Exhibit 3.4 attached hereto and made part hereof (the "Developer Notice"), on the bottom of the home page for the On-Line Store in a font and typeface and type size reasonably acceptable to Client. In no event may Client remove or alter the Developer Notice from the On-Line Store without Developer's prior written consent.


4. LICENSE


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4.1 GRANT OF LICENSE -- CLIENT


Client hereby grants to Developer a non-exclusive, worldwide, royalty-free license for the Initial Term and any Renewal Term (as those terms are hereinafter defined) to edit, modify, adapt, translate, exhibit, publish, transmit, participate in the transfer of, reproduce, create derivative works from, distribute, perform, display, and otherwise use Client Content and the DC Content as necessary to render the Services to Client under this Agreement.


4.2 GRANT OF LICENSE -- DEVELOPER


Subject to Section 10, Developer hereby grants to Client a perpetual, limited, non-exclusive, nontransferable license to make use of the Developer Materials which are incorporated in the online store and which are required for the operation of the On-Line Store solely to allow the Client to operate and utilize the On-Line Store (the "License"). Developer hereby reserves for itself all rights in and to the Developer Materials not expressly granted to Client in the immediately foregoing sentence. Other than as expressly set forth in this Agreement, in no event shall Client use any trademarks or service marks of Developer without Developer's prior written consent. The License is not transferable or assignable without the prior written consent of the Developer, except in the case of a sale of a majority of the assets or equity of the Client or a merger, consolidation or reorganization of the Client, in which case the License may be assigned without the prior written consent of the Developer.


5. CLIENT CONTENT
5.1 ACCURACY AND REVIEW OF CLIENT CONTENT


Client assumes sole responsibility for: (a) acquiring any authorization(s) necessary for hypertext links to third party Web sites; and (b) the accuracy of materials provided to Developer, including, without limitation, Client Content, descriptive claims, warranties, guarantees, nature of business, and address where business is conducted; and (c) ensuring that the Client Content does not infringe or violate any right of any third party.


5.2 LIMITATIONS ON CLIENT CONTENT


Client shall provide Client Content that does not contain any content or materials which are obscene, threatening, malicious, which infringe on or violate any applicable law or regulation or any proprietary, contract, moral, privacy or other third party right, or which otherwise expose Developer to civil or criminal liability. Any such materials provided by Client to Developer which do not satisfy the foregoing requirements in this Section 5.2 shall be deemed to be a material breach of this Agreement.


6. FEES AND TAXES
6.1 ON-LINE STORE SERVICES FEES


In consideration for the Services, the Client shall pay to the Developer the fees listed in the COSTS portion of Exhibit A hereto pursuant to the timeframe listed in such Exhibit A. Any hourly rates listed in Exhibit A are good through December 1, 2000, and thereafter are subject to change in Developer's sole discretion.


6.2 MAINTENANCE FEES


The fee for any maintenance services that Developer provides to Client shall be set forth in the separate maintenance agreement executed by the parties.


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6.3 LATE PAYMENT


Client shall pay to Developer all fees not specifically itemized on Exhibit A within thirty (30) days following the receipt of the applicable Developer invoice. If Client fails to pay any fees within thirty (30) days from the date due according to Exhibit A, or within (30) days from the date of an invoice, where applicable, late charges of the greater of one point five percent (1.5%) per month or the maximum allowable under applicable law shall also become payable by Client to Developer. In addition, failure of Client to fully pay any fees within sixty (60) days after the applicable due date shall be deemed a material breach of this Agreement, justifying suspension of the performance of the Services by Developer, and will be sufficient cause for immediate termination of this Agreement by Developer. Any such suspension does not relieve Client from paying past due fees plus interest and in event of collection enforcement, Client shall be liable for any costs associated with such collection, including, but not limited to, legal costs, attorneys' fees, court costs, and collection agency fees.


6.4 TAXES


Client shall pay or reimburse Developer for all sales, use, transfer, privilege, excise, and all other taxes and all duties, whether international, national, state or local, however designated, which are levied or imposed by reason of the performance by Developer under this Agreement; excluding, however, income taxes on profits which may be levied against Developer.


7. WARRANTIES
7.1 DEVELOPER WARRANTIES


Developer represents and warrants that (a) Developer has the power and authority to enter into and perform its obligations under this Agreement, and (b) Developer's Services under this Agreement shall be performed in a workmanlike manner. Developer further represents and warrants that, (i) for a period of sixty 60 days after Client's Acceptance thereof, the On-Line Store will operate substantially in accordance with the Specifications relating thereto. Developer further warrants to Client that, no component of the Developer Materials or the DC Content does or shall infringe on or violate any applicable law, regulation or right of a third party, including, without limitation, export laws, or any proprietary, contract, moral, or privacy right or any other third party right, and that Developer owns the Developer Materials and (except as assigned to Client) the DC Content or otherwise has and shall have the right to place the Developer Materials and the DC Content on the On-Line Store, provided, however, that Developer shall not be deemed to have breached such warranty to the extent that Client or its agent(s) have modified the On-Line Store in any material manner or to the extent any purported breach arises in connection with the Client's incorporation in the On-Line Store unauthorized third-party materials, through framing or otherwise.


7.2 CLIENT WARRANTIES


Client represents and warrants that (a) Client has the power and authority to enter into and perform its obligations under this Agreement, (b) Client Content does not and shall not contain any content, materials, advertising or services that are inaccurate or that infringe on or violate any applicable law, regulation or right of a third party, including, without limitation, export laws, or any proprietary, contract, moral, or privacy right or any other third party right, and that Client owns the Client Content or otherwise has the right to place the Client Content on the On-Line Store, and (c) Client has obtained any authorization(s) necessary for hypertext links from the On-Line Store to other third party Web sites.


7.3 DISCLAIMER OF WARRANTY


EXCEPT FOR THE LIMITED WARRANTY SET FORTH IN SECTION 7.1, DEVELOPER MAKES NO WARRANTIES HEREUNDER, AND DEVELOPER EXPRESSLY DISCLAIMS ALL OTHER


-5- 6 WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.


8. INDEMNIFICATION
8.1 CLIENT


Client agrees to indemnify, defend, and hold harmless Developer, its directors, officers, employees and agents, and defend any action brought against same with respect to any claim, demand, cause of action, debt or liability, including reasonable attorneys' fees, to the extent that such action is based upon a claim that: (i) if true, would constitute a breach of any of Client's representations, warranties, or agreements hereunder; (ii) arises out of the negligence or willful misconduct of Client; or (iii) any of the Client Content to be provided by Client hereunder or other material on the On-Line Store infringes or violates any rights of third parties, including, without limitation, rights of publicity, rights of privacy, patents, copyrights, trademarks, trade secrets and/or licenses.


8.2 DEVELOPER


Developer agrees to indemnify, defend, and hold harmless Client, its directors, officers, employees and agents, and defend any action brought against same with respect to any claim, demand, cause of action, debt or liability, including reasonable attorneys' fees, to the extent that such action is based upon a claim that: (i) if true, would constitute a breach of any of Developer's representations, warranties, or agreements hereunder; (ii) arises out of the negligence or willful misconduct of Developer; or (iii) any of the Developer Materials or DC Content to be provided by Developer hereunder infringes or violates any rights of third parties, including, without limitation, rights of publicity, rights of privacy, patents, copyrights, trademarks, trade secrets and/or licenses.


8.3 NOTICE


In claiming any indemnification hereunder, the indemnified party shall promptly provide the indemnifying party with written notice of any claim which the indemnified party believes falls within the scope of the foregoing paragraphs. The indemnified party may, at its own expense, assist in the defense if it so chooses, provided that the indemnifying party shall control such defense and all negotiations relative to the settlement of any such claim and further provided that any settlement intended to bind the indemnified party shall not be final without the indemnified party's written consent, which shall not be unreasonably withheld.


9. LIMITATION OF LIABILITY


DEVELOPER SHALL HAVE NO LIABILITY WITH RESPECT TO DEVELOPER'S OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL, OR PUNITIVE DAMAGES EVEN IF DEVELOPER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. OTHER THAN WITH RESPECT TO DEVELOPER'S OBLIGATIONS IN SECTION 8.2(III), THE LIABILITY OF DEVELOPER TO CLIENT FOR ANY REASON AND UPON ANY CAUSE OF ACTION SHALL BE LIMITED TO THE AMOUNT ACTUALLY PAID TO DEVELOPER BY CLIENT UNDER THIS AGREEMENT. THIS LIMITATION APPLIES TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING, WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATIONS, AND OTHER TORTS.


-6- 7
10. TERMINATION AND RENEWAL
10.1 TERM


This Agreement shall be effective when signed by the Parties and shall continue in effect thereafter indefinitely unless terminated by either party pursuant to the terms of Section 10.2 (the "Term").


10.2 TERMINATION


Either party may terminate this Agreement if the other party materially breaches any of its representations, warranties or obligations under this Agreement, and such breach is not cured within thirty (30) days of receipt of notice specifying the breach, except that there shall be no cure period for beaches of either party's obligations under Section 3.3 Confidentiality


10.3 TERMINATION AND PAYMENT


Upon any termination or expiration of this Agreement, Client shall pay all unpaid and outstanding fees due and payable through the effective date of termination or expiration of this Agreement.


11. DESIGNATED CONTACT


Each party shall designate one person who will act as the primary liaison for all communications regarding the Services to be rendered by Developer hereunder.


12. MISCELLANEOUS
12.1 ENTIRE AGREEMENT


This Agreement and attached Schedules constitute the entire agreement between Client and Developer with respect to the subject matter hereof and there are no representations, understandings or agreements which are not fully expressed in this Agreement.


12.2 COOPERATION


The Parties acknowledge and agree that successful completion of the Services shall require the full and mutual good faith cooperation of each of the Parties.


12.3 INDEPENDENT CONTRACTORS


Developer and its personnel, in performance of this Agreement, are acting as independent contractors and not employees or agents of Client.


12.4 AMENDMENTS


No amendment, change, waiver, or discharge hereof shall be valid unless in writing and signed by the party against which such amendment, change, waiver, or discharge is sought to be enforced.


12.5 CLIENT IDENTIFICATION


Developer may use the name of and identify Client as a Developer client, in advertising, publicity, or similar materials distributed or displayed to prospective clients, provided that Developer shall provide advance written notice to Client including therein a copy of such materials and Client shall have approved in writing the form and substance of any such materials prior to distribution, publication or display thereof by Developer, which approval shall not be unreasonably withheld and which


-7- 8 approval shall be deemed to have been granted if Client does not respond in writing to Developer within ten (10) days following such written notice from Developer.


12.6 FORCE MAJEURE


Except for the payment of fees by Client, if the performance of any part of this Agreement by either party is prevented, hindered, delayed or otherwise made impracticable by reason of any flood, riot, fire, judicial or governmental action, labor disputes, act of God or any other causes beyond the control of either party, that party shall be excused from such to the extent that it is prevented, hindered or delayed by such causes.


12.7 MASSACHUSETTS LAW


This Agreement shall be governed in all respects by the laws of the Commonwealth of Massachusetts without regard to its conflict of laws principles, and Client and Developer agree that the sole venue and jurisdiction for disputes arising from this Agreement shall be the appropriate state or federal court located in the City of Boston, and Client and Developer hereby submit to the jurisdiction of such courts.


12.8 ASSIGNMENT


Client shall not assign, without the prior written consent of Developer, its rights, duties or obligations under this Agreement to any person or entity, in whole or in part, whether by assignment, merger, transfer of assets, sale of stock, operation of law or otherwise, and any attempt to do so shall be deemed a material breach of this Agreement.


12.9 NOTICE


Any notice provided pursuant to this Agreement, if specified to be in writing, shall be in writing and shall be deemed given (i) if by hand delivery, upon receipt thereof, (ii) if by mail, three (3) days after deposit in the United States mails, postage prepaid, certified mail, return receipt requested, (iii) if by facsimile transmission, upon electronic confirmation thereof, or (iv) if by next day delivery service, upon such delivery. All notices shall be addressed as follows (or such other address as either party may in the future specify in writing to the other):


In the case of Developer: Miller Systems, Inc. 364 Boylston Street Boston, MA 02116 Attention: General Counsel


In the case of Client: Devens Business Community 29 Buena Vista Street Ayer, MA 01432 Fax: (978) 889-1010 Attention: President


12.10 WAIVER


The waiver of failure of either party to exercise any right in any respect provided for herein shall not be deemed a waiver of any further right hereunder.


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12.11 SEVERABILITY


If any provision of this Agreement is determined to be invalid under any applicable statute or
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