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EXHIBIT 10.28
TERMINATION AGREEMENT
This Termination Agreement ("AGREEMENT") is entered into as of
November
13, 2003 (the "EFFECTIVE DATE") between SVI
Solutions, Inc., a Delaware
corporation ("SVI") located at 5067 Palmer
Way, Carlsbad, California 92008, on
behalf of itself and its subsidiaries
(collectively "SVI"), and Toys "R" Us,
Inc. ("CUSTOMER"), a Delaware corporation
located at 461 From Road, Paramus, New
Jersey 07652. SVI and Customer shall
collectively be referred to as the
"PARTIES."
1. RECITALS. This Agreement is made with reference to the
following
recital of essential facts:
1.1. Effective May 29, 2002, SVI and Customer entered into a
Development Agreement (the "DEVELOPMENT
AGREEMENT");
1.2. SVI and Customer entered into a Purchase Agreement dated
May 29, 2002 (the "PURCHASE
AGREEMENT");
1.3. Pursuant to the Purchase Agreement, SVI issued to
Customer a warrant (the "WARRANT") to
purchase 2,500,000 shares of common stock
of SVI;
1.4. Pursuant to the Development Agreement, the Parties
entered into a Preferred Escrow Agreement
with DSI Technology Escrow Services
dated May 29, 2002 (the "PREFERRED ESCROW
AGREEMENT").
1.5. Pursuant to the Purchase Agreement, SVI issued to
Customer a Convertible Note (the "Note"),
in aggregate principal amount of
$1,382,602.00, which Note is convertible
into shares of common stock of SVI.
1.6. The Parties have agreed to terminate the Development
Agreement and Preferred Escrow Agreement in
exchange for the cancellation of the
Warrant and the Note and certain other
consideration, on the terms and
conditions set forth in this Agreement.
1.7. The
Parties wish to release each other in relation to all
claims arising prior to this Agreement.
2. DEFINITIONS.
"AFFILIATE" means any person or entity that (i) controls, or is
under
common control with, or is controlled by,
Customer, or (ii) has entered into an
agreement with Customer (including without
limitation a joint venture agreement)
for the purpose of conducting Licensed Toys
"R" Us Operations. As used in this
definition, "control" means an equity
ownership of at least fifty (50) percent.
"Deliverables" shall mean such Software and related Documentation
SVI
has delivered to Customer under this
Agreement prior to the Effective Date.
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"Documentation" shall mean such documentation in any form or media
that
SVI reasonably determines is necessary or
desirable to enable Customer to use
the Software and/or any available Updates
thereto, including without limitation
the documentation described on EXHIBIT 1
hereto.
"LICENSED TOYS "R" US OPERATIONS" means any retail operations by
a
third party authorized to use the "Toys "R"
Us" brand name, or any other store
name or trade name used by Customer or an
Affiliate, whether in English or a
different language.
"PROFESSIONAL SERVICES" shall be the types of services offered by
SVI
as described in Section 7.1 below.
"SOFTWARE" shall mean the software and related items as described
in
EXHIBIT 2 and delivered to Customer under
the Development Agreement and any
Update.
"UPDATES" shall mean modifications, debugging, fixes, updates,
upgrades, enhancements, improvements and
derivative works to the Software, which
shall be included in the definition of
"Software."
3. TERMINATION OF DEVELOPMENT AGREEMENT AND PREFERRED ESCROW
AGREEMENT.
3.1. The Development Agreement is hereby terminated and is of
no further force and effect, except to the
extent provided in this Section 3,
and the Parties are released and relieved
of their respective rights and
obligations under the Development
Agreement. Customer shall be deemed to have
irrevocably accepted all Deliverables
delivered by SVI prior to the Effective
Date.
3.2. Not later than the Effective Date, SVI shall cause the
escrow agent under the Preferred Escrow
Agreement to deliver to Customer all
Deposit Materials (as defined in the
Preferred Escrow Agreement). SVI hereby
authorizes Customer to notify the escrow
agent on SVI's behalf to deliver the
Deposit Materials to Customer. Following
Customer's receipt of the Deposit
Materials, the Preferred Development
Agreement shall be terminated and of no
further force and effect, except to the
extent provided in this Section 3, and
the Parties are released and relieved of
their respective rights and obligations
under the Preferred Escrow Agreement. SVI
shall take such further action as
requested by Customer to effectuate the
delivery of all Deposit Materials.
3.3. SVI grants to Customer a perpetual, worldwide,
non-transferable, non-exclusive right and
license, in all cases for Customer's
internal purposes only, to use, copy,
publish, display, perform and make Updates
to the Software. Such license covers all
(i) patents, copyrights, trade secrets
and other intellectual property rights,
(ii) object code and all Source
Materials (as hereinafter defined), and
(iii) third-party rights relating to the
Deliverables, if any.
3.4 EXCEPT FOR THE EXPRESS WARRANTIES AND UNDERTAKINGS SETS
FORTH IN THIS AGREEMENT, SVI DISCLAIMS ALL
WARRANTIES RESPECTING THE SOFTWARE
AND ALL SERVICES PROVIDED UNDER THIS
AGREEMENT OR ANY OF THE PRIOR AGREEMENTS,
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INCLUDING ALL IMPLIED WARRANTIES, INCLUDING
WITHOUT LIMITATION ANY IMPLIED
MERCHANTABILITY AND FITNESS FOR THE
PARTICULAR PURPOSE. IN NO EVENT SHALL SVI BE
LIABLE FOR ANY INDIRECT EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF OR OTHERWISE RELATING TO THE USE OR
PERFORMANCE OF THE SOFTWARE OR ANY
COMPONENT THEREOF, HOWEVER CAUSED EVEN IF
SVI HAD BEEN ADVISED OF THE
POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES.
CUSTOMER WARRANTS AND REPRESENTS TO
SVI THAT IT HAS FULLY INVESTIGATED ALL
ELEMENTS OF THE SOFTWARE TO ITS
SATISFACTION AND HAS DETERMINED THAT THE
SOFTWARE IS SUITABLE FOR CUSTOMER'S
PURPOSES.
3.5. The license granted in Section 3.2 may be sublicensed, in
whole or in part, at any time and from time
to time, to Customer's Affiliates or
Customer's Licensed Toys "R" Us Operations
(and/or, to the extent a sublicense
is required by such third-party use, any
third parties solely for the purpose of
assisting Customer in Updating the
Deliverables or providing other services with
respect thereto), without the prior consent
of SVI, (the foregoing,
"SUBLICENSEES"). The Customer may also
transfer the license granted to it
pursuant to this Agreement, in whole or in
part to a person or entity that
acquires all or substantially all of
Customer's business that uses the Software,
whether by merger, acquisition of assets or
stock or other similar means,
without the prior consent of SVI.
3.6. Customer and Sublicensees may install the Software and
Updates on as many IBM AS/400 CPUs and
successor AS/400 CPUs (collectively, the
"SPECIFIED CPUS") for use by an unlimited
number of users at as many of
Customer's and Sublicensee's locations as
Customer or Sublicensees desire to
support the business operations of Customer
or Sublicensees' Licensed Toys "R"
Us Operations, as the case may be. Customer
may create and hold a reasonable
number of back-up copies of the Software
and Updates at any given time,
reasonably consistent with Customer's
normal back-up policies and procedures.
3.7. In order to protect SVI's trade secrets and copyrights in
the Software and any Updates, Customer
agrees to reproduce and incorporate SVI's
copyright notice below in any copies made
by Customer, including partial copies
in any form: [Program property of SVI, Inc.
This work contains trade secrets
deemed valuable and proprietary to SVI.
Unauthorized use is prohibited. (C)
[year of publication] SVI, Inc. All rights
reserved.]
3.8. All Software, any Updates and all copies thereof are the
intellectual property of SVI. All
applicable proprietary and intellectual
property rights, copyrights, trademarks,
and trade secrets in the Software are
and will remain with and in SVI. Except as
provided in this Agreement, Customer
shall not use, copy, distribute, sell,
transfer, publish, disclose, display or
otherwise make available any Software,
Updates or copies thereof to others.
Customer shall own all physical and
tangible items comprising the Software and
all information stored or cached therein or
transmitted, processed or routed
thereby. Customer agrees that the Software,
Updates and copies thereof shall be
deemed "Confidential Information" in
accordance with Section 10.
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3.9. All applicable proprietary and intellectual property
rights, copyrights, trademarks and trade
secrets in all Documentation shall
remain with SVI. Customer agrees to take
reasonable steps to:
(a) secure and protect the confidentiality of any
Confidential Information in such
Documentation in accordance with Section 10;
(b) not copy any Confidential Information in such
Documentation except in accordance with
Section 10;
(c) use such Documentation only as permitted by this
Agreement; and
(d) not
sell, transfer or otherwise make such
documentation available to others, except
as permitted by this Agreement.
3.10. SVI will not be responsible for any Software problems
resulting directly or indirectly from (i)
Customer modifications or Updates to
the Software not performed at SVI's
direction or supervision, (ii)
incompatibility of any equipment not
specified as compatible or approved by SVI,
or (iii) the installation of any Software
or Updates that is not by or on behalf
of SVI or its authorized agents.
3.11. Customer warrants and represents to SVI that Customer
has not previously (i) assigned,
transferred, purported to assign or transfer to
any person, firm, corporation or entity the
Development Agreement, (ii)
exercised or purported to exercise any
rights or privileges under the
Development Agreement, or (iii) licensed
any right or interest in the
Development Agreement or licensed,
sublicensed, sold, assigned or otherwise
transferred any right to the Software, or
any part thereof, or any Update, or
any part thereof, in each case in violation
of the Development Agreement.
4. TERMINATION OF THE PURCHASE AGREEMENT.
4.1. The Purchase Agreement is hereby deemed terminated and of
no force and effect except with respect to
the provisions of Section 12 of the
Purchase Agreement which shall remain in
full force and effect to the extent
provided in Section 24. Customer shall not
be entitled to a refund or repayment
of any amount paid by Customer to SVI under
the Purchase Agreement.
4.2. Customer warrants and represents to SVI that Customer has
not previously (i) assigned, transferred,
purported to assign or transfer to any
person, firm, corporation or entity the
Purchase Agreement or any right or
interest in the Purchase Agreement, or (ii)
exercised or purported to exercise
any rights or privileges under the Purchase
Agreement.
5. CANCELLATION OF THE NOTE.
5.1. Concurrent with the execution of this Agreement, the Note
shall be cancelled and of no force and
effect. Customer hereby irrevocably
waives, renounces, assigns and transfers in
favor of and to SVI any right,
claim, interest, share, entitlement, equity
or other benefit or interest with
respect to or arising from the Note. Upon
execution of this Agreement, Customer
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shall deliver to SVI the Note, together
with instruments of transfer, executed
by Customer.
5.2. Customer warrants and represents to SVI that Customer (i)
has not previously assigned, transferred,
purported to assign or transfer to any
person, firm, corporation or entity the
Note or any interest in the Note, (ii)
is the sole record owner of the Note and
that the Note is free and clear of all
liens, encumbrance, security interests,
right of first refusal or other similar
restrictions, and (iii) has not exercised
or purported to exercise any rights or
privileges under the Note.
6. CANCELLATION OF THE WARRANT.
6.1. Concurrent with the execution of this Agreement, the
Warrant shall be cancelled and of no force
and effect. Customer hereby
irrevocably waives, renounces, assigns and
transfers in favor of and to SVI any
right, claim, interest, share, entitlement,
equity or other benefit or interest
with respect to or arising from the
Warrant. Upon execution of this Agreement,
Customer shall deliver to SVI the Warrant,
together with an instrument of
transfer, executed by Customer.
6.2.
Customer warrants and represents to SVI that Customer (i)
has not previously assigned, transferred,
purported to assign or transfer to any
person, firm, corporation or entity the
Warrant or any interest in the Warrant,
(ii) is the sole record owner of the
Warrant and that the Warrant is free and
clear of all liens, encumbrance, security
interests, right of first refusal or
other similar restrictions, and (iii) has
not exercised or purported to exercise
any rights or privileges under the
Warrant.
7. NO ADDITIONAL PAYMENTS BY CUSTOMER. The parties here agree that
the
Customer does not owe any amounts to SVI
for services rendered and that SVI has
been paid in full for such services.
8. REPRESENTATIONS/WARRANTIES/DISCLAIMERS/LIMITATION OF
LIABILITY.
8.1. Each party represents, warrants and covenants that: (i)
it is a corporation duly incorporated and
validly existing and in good standing
under the laws of its respective state of
incorporation; (ii) it has all
necessary corporate power and authority to
enter into this Agreement, to perform
its obligations hereunder and to consummate
the transactions contemplated
hereby; (iii) it has taken all corporate
action necessary to execute and deliver
this Agreement, to consummate the
transactions contemplated hereby; and to
perform its obligations hereunder; (iv)
this Agreement has been duly executed
and delivered by both parties; (v) it is
aware of no obligation, legal or
otherwise, which is inconsistent with its
obli
