Agreement for the Design, Manufacturing and Commissioning of a Books and Media Processing System, dated as of September 22, 2020, by and between the Registrant and the other party named therein

PARTIES

BACKGROUND

DEFINITIONS AND INTERPRETATION

SUBJECT

PROJECT MILESTONES

DESIGNING, MANUFACTURING AND DELIVERY OF THE SYSTEM

SERVICES

PERFORMANCE TEST

PERFORMANCE GUARANTEES

OBLIGATIONS OF THE PURCHASER

CHANGE ORDER

TIMING AND DELAY

COMPENSATION AND INVOICING

ACCEPTANCE

COMPENSATION REDUCTION

WARRANTY

LIMITATION OF LIABILITY

LANGUAGE

RIGHTS TO THE RESULT AND INTELLECTUAL PROPERTY RIGHTS

TITLE

CONFIDENTIALITY

EXCLUSIVITY

DAMAGES

TERMINATION

REMEDIES

MISCELLANEOUS

PARTIES

VALVAN BALING SYSTEMS NV, a limited liability company incorporated under the laws of Belgium, having its registered office at Krommebeekstraat 14, 8930 Menen, Belgium, registered with the Legal Entities Register under number 0460.789.392, duly represented by Dieter Wittouck, director (the “Supplier”); and

Value Village Stores, a partnership under the laws of British Columbia, having its registered office at 11400 SE 6^th Street, Suite 220, Bellevue, Washington 98004, duly represented by Mark Walsh, CEO (the “Purchaser”);

BACKGROUND

The Purchaser is a company which is active in the sortation and sales of used and new clothing and household goods and the Supplier is a company active in the design and manufacturing of automated sorting and baling systems.

The Purchaser has requested, and the Supplier has agreed to design and to manufacture one or more Books and Media Processing Systems for Purchaser and its Affiliates, any of which may submit a purchase order to Supplier and each of which may be deemed a Purchaser hereunder, subject to the terms and conditions set forth in this Agreement.

DEFINITIONS AND INTERPRETATION

Definitions

Interpretation and Order of Precedence

The headings and sub-headings of this Agreement are used for convenience and ease of reference only and in no way define, limit, describe or interpret the scope or intent of this Agreement.

The words “include”, “including” and all forms and derivations thereof shall mean including but not limited to.

The Addenda form an integrated part of this Agreement.

All time periods referred to in this Agreement, unless otherwise stated, shall be counted in days. A “day” is defined as the 24-hour period starting and finishing at midnight. Such time periods shall commence at midnight following the triggering event and shall terminate at midnight following the expiration date, unless this date does not fall on a Working Day, in which case the expiration date shall be postponed to the beginning of next Working Day.

If a time period is to be calculated in months or years, the period will start at midnight on the day in which the triggering event occurred and shall terminate at midnight preceding the determined monthly or yearly anniversary of the triggering event.

In the event of any inconsistency between this Agreement and any other related document, the order of precedence of documents, from highest to lowest, shall be:

this Agreement, excluding the Addenda;

the Addenda or associated Purchase Order; and

design documentation.

Wherever this Agreement requires an action to be performed or an obligation to be undertaken, such action or obligation shall be performed in a professional manner by the Party taking the action or fulfilling its obligation.

SUBJECT

On execution of the contract, the Supplier hereby agrees to perform the following for the Purchaser:

Design, manufacturing and delivery, in accordance with the terms set out in Section 6, of a Books and Media Processing System, in accordance with the Technical Offer;

the Services; and

Commissioning of the System.

The above specified deliveries and services shall be performed in accordance with the terms and conditions stated in this Agreement.

PROJECT MILESTONES

Milestone 1 = the Signing of the Agreement

Milestone 2 = Factory Acceptance Test meeting Performance Guarantees

Milestone 3 = the System is delivered to Purchaser’s Site

Milestone 4 = completion of Successful Hot Commissioning

Milestone 5 = delivery of the Acceptance Letter

DESIGNING, MANUFACTURING AND DELIVERY OF THE SYSTEM

Design

The Design shall include the mechanical design of the System, shall be based on the approved layouts – as attached to this Agreement as Addendum A or any Purchase Order issued hereunder. After approval of the draft layouts:

the detailed layouts;

the first draft of the equipment;

the specification of the components;

the detailed 3D design of the equipment;

the detailed 2D design of the equipment;

the calculation of floor loading; and

the specifications and locations of utilities (water, electricity, air).

In case the Purchaser decides for whichever reason to change the location of the Site or the lay-out of the System, after Milestone 1, the Supplier shall be compensated for the additional hours needed to finalize the Design, caused by the change of location or lay-out as set forth in a Change Order. The Delivery Date shall be delayed by the amount of days necessary for additional works caused by the change of Site as set forth in a Change Order.

Upon delivery of the Acceptance Letter and payment of the final installment of the Compensation (Milestone 5), Supplier shall deliver to Purchaser the final versions of all Designs, Design Documentation and Documentation.

Manufacturing

The Supplier shall manufacture the System in accordance with the Technical Data set out in Addendum A or any Purchase Order issued hereunder.

The Supplier has the right to amend and/or change the Technical Data without affecting the quality of the System or the Performance Guarantees and without any effect on the Compensation, so long as Supplier provides notice to Purchaser prior to making such change. Purchaser may request Supplier make small adjustments to the lay out of the System on Site at no additional Compensation or cost to Purchaser.

The Supplier shall provide an electronic manual, including a technical manual, maintenance manual and user manual (the “Manuals”) in English as PDF-file on USB stick.

Delivery

The Supplier shall deliver the System Incoterms DAP, DELIVERED AT PLACE UNLOADED, at the location(s) identified in Addendum A or any Purchase Order issued hereunder following the timeline as specified in Addendum A or any Purchase Order issued hereunder.

The obligations of the Parties shall be those indicated in the latest edition of the Incoterms published by the International Chamber of Commerce and applicable to the form of delivery specified in the previous Section 6.3.1.

SERVICES

The Supplier shall perform the following Services:

the mechanical installation of the System;

the electrical and technological installation of the System;

the Cold Commissioning of the System; and

the Hot Commissioning of the System (Milestone 4).

The Services shall include all costs and expenses associated with Supplier’s personnel and subcontractors, inclusive of travel, meal accommodations, visa and other work permit documentation, licensing and bonding. In no event will Purchaser be responsible for any costs and expenses associated with performing the Services unless pre-approved in writing.

The Supplier shall perform the Services as specifically documented on Addendum A or any Purchase Order issued hereunder and, if subcontracted, by such subcontractors that are pre-approved by Purchaser in writing:

on the dates specified;

in accordance with all applicable governmental regulations and laws in the jurisdiction where the Services are being performed, including but not limited to licensure and bonding, and best industry practice; and

with all due care and skill.

The Purchaser shall make available to the Supplier, free of charge and upon reasonable request by the Supplier, any necessary storage facilities and sufficient offices equipped with access to internet on Site.

Licenses and Bonding. Supplier and all approved subcontractors will have in place all licenses or authorizations required by federal, state, provincial or local law to allow such entity to perform the Services in the jurisdiction where the Services will be provided, and will require its employees, agents, subcontractors and any other person performing the Services under this Agreement to comply with all such applicable licensing and authorization requirements. Further, upon Purchaser’s request, each such entity will provide to Purchaser proof of such license or authorization, which may include such entity’s state, provincial and/or federal tax identification number, and any other documentation showing that such entity is authorized to do business in the jurisdiction in which the entity will perform the Services under the Contract.

Subcontractors. By an appropriate agreement, written where legally required for validity, Supplier shall require each approved subcontractor, to the extent of the Services to be performed by the subcontractor, to be bound to Supplier by the terms of this Agreement, and to assume toward Supplier all the obligations and responsibilities which Supplier, by this Agreement, assumes toward the Purchaser. Said agreement shall preserve and protect the rights of the Purchaser under this Agreement with respect to the Services to be performed by each subcontractor so that the subcontracting thereof will not prejudice such rights, and shall allow to the subcontractor, unless specifically provided otherwise in Supplier-Subcontractor agreement, the benefit of all rights, remedies, and redress against Supplier that Supplier, by this Agreement, has against the Purchaser. Where appropriate, Supplier shall require each subcontractor to enter into similar agreements with its sub-subcontractors. Supplier shall make available to each proposed subcontractor, prior to the execution of the subcontract, copies of this Agreement to which the subcontractor will be bound by this Section, and identify to the subcontractor any terms and conditions of the proposed subcontract which may be at variance with this Agreement.

PERFORMANCE TEST

Subject to completion of the installation of the System, the Supplier shall execute the following performance test (the “Performance Test”):

Supplier shall keep Purchaser generally appraised of its progress such that Purchaser can pre-arrange the schedules of its staff for their participation in the Hot Commissioning and Performance Test. The execution of the Hot Commissioning and the Performance Test shall be notified by the Supplier to the Purchaser at least ten (10) Working Days prior to execution and executed by the Supplier in close cooperation and with the approval of the Purchaser, not to be unreasonably withheld. The Performance Tests period shall start after the Hot Commissioning of the System and shall be completed as soon as reasonably practicable and in any event within a period of one (1) month following Hot Commissioning. In the event of a failed Performance Test, Purchaser will notify Supplier of such failure and Supplier shall remedy any deficiencies or defects in the System as soon as reasonably possible, not to exceed six (6) weeks. Supplier will notify Purchaser of the completion of all such deficiencies or defects, and Purchaser shall have an additional two (2) week period to procure sufficient personnel and consumables for an additional Performance Test, per Section 8.4 below.

The Performance Test can be carried out without the physical presence of the Supplier, with the understanding that the Supplier, in cooperation with Purchaser, shall be in remote control and will log all robot movements and all weights deposed at different stations.

The Purchaser shall procure that sufficient personnel and sufficient amounts of consumables and infeed materials as well as all necessary spare parts (as described in the Manuals) will be available on the Site during the Performance Test. Supplier shall promptly replace any spare parts used in or before the Performance Test.

Acceptance of the System, as set out in Section 14 will be subject to the successful completion of the Performance Test.

PERFORMANCE GUARANTEES

Under the assumption that conditions under Section 9.2 are fulfilled, the Supplier guarantees that the System will meet the following performance requirements (the “Performance Guarantees”):

Assumptions related to performance guarantees:

supply of incoming material is well balanced and steady and all utilities (electricity - air compressor) are provided during the performance test;

installation is fully manned;

The Supplier shall deliver the System in full compliance with all provincial, state and city electrical codes. The electrical work will conform to Canadian Standards Association (“CSA”) standards. If certification of CSA compliance is required by a provincial or other governmental agency, Supplier will complete all work to meet such certification at Purchaser’s cost.

OBLIGATIONS OF THE PURCHASER AND SUPPLIER

Payment of the Compensation

Site Specifications

The Purchaser shall execute all preparatory construction works in accordance with the Design Documentation.

In order to enable the Supplier to perform the Services, the Purchaser shall make available to the Supplier, when and as reasonable requested by the Supplier, access to, or supply of, the following:

electrical connections;

High speed internet connection;

pneumatic connection and compressors;

foundations, civil works based on the Design Documentation;

technical security control (safety inspections);

Providing of System operating consumables (labels, totes, etc.);

Test material;

Providing of operators, as required; and

Providing of local staff for cleaning and polishing of the equipment before the start of commissioning.

The Purchaser and Supplier shall review and agree in advance of any Service being performed that there is easy access to the Site and a clear and safe working area in order to allow a safe and practical performance of the Services. If, and during time periods safety cannot be guaranteed, the Parties agree that the performance of the Services may be suspended, until such time as it is safe and practical for Services to resume.

Import Permits or Licenses

Permits, Licenses and Approvals

The Purchaser shall reasonably assist the Supplier in ascertaining the nature and extent of any applicable laws, regulations, directives, and customs in the place where the System has to be installed and the Services performed, which may affect the Supplier in the performance of his obligations under the Agreement.

The Supplier shall in due time obtain or be granted all consents including permits to work and approvals required for commissioning of the System and performance of the Services.

The Supplier shall be responsible for obtaining the necessary permits for the temporary importation and for the re-export of the Supplier’s equipment to be temporarily imported for the execution of the Agreement, with assistance from Purchaser as reasonably necessary.

For the avoidance of doubt, the Purchaser and Supplier each confirms compliance with all applicable laws and regulations, including social, employment and environmental laws on Site for its own personnel and for subcontractors of which the Purchaser or Supplier is responsible, and undertakes to hold the other Party harmless from any claims from any third parties addressed to the other Party in this regard.

Additional Supplier Obligations. In furtherance of performing the Services, Supplier shall supply the hoisting equipment and elevated work platforms. The costs of the hoisting and elevated work platforms are included in the Compensation.

Visa Work Permits, Licenses and Bonding. Supplier shall be responsible for acquiring and the payment of any costs and fees associated with Supplier’s personnel and subcontractors, including visas, work permits, professional licensure and bonding as may be required in order to perform the Services at the Site.

CHANGE ORDER

Each Change shall be mutually agreed upon between and duly signed by the Parties and will be subject to a separate Change Order, including full details of the envisaged change and applicable compensation and payment terms.

TIMING AND DELAY

Subject to the specified cooperation required of the Purchaser, the Supplier shall manufacture and deliver the System, perform the Services and execute the Performance Test in accordance with the timetable, attached to this Agreement as Addendum A or any Purchase Order issued hereunder.

In case of a Delay in completion of a Milestone from the timetable set forth in Addendum A or any Purchase Order issued hereunder, the Purchaser shall only be entitled to claim liquidated damages equal to 0.3% of the Compensation for the System per (completed) week the delay continues (after a grace period of three (3) weeks), in the form of a reduction of the final instalment of the Compensation to be paid by the Purchaser in accordance with Section 13.4. The liquidated damages for a Delay will be limited to seven percent (7%) of the total Compensation.

Notwithstanding the provisions in Section 12.2 above, for the first System purchased by Purchaser only, no liquidated damages will be owed for a delay in completion of a Milestone unless such delay continues for more than Seventy-Five (75) days.

COMPENSATION AND INVOICING

As compensation for the manufacturing and delivery of the System, and the performance of the Services, the Purchaser shall pay the Supplier a total amount identified in Addendum A or any Purchase Order issued hereunder (the “Compensation”). Since the exact value will differ from System to System, we use the general term “Compensation” without specifying the amount.

For the avoidance of doubt, the Compensation also includes the costs for the execution of the Performance Test (excluding inter alia any costs in relation to consumables, utilities and personnel of the Purchaser).

For the avoidance of doubt, the Compensation does not include:

the applicable VAT rate that is legally effective on the date of the respective payment invoice issue;

the compensation of additional days of Services plus related costs which are needed due to delay caused by the Purchaser;

any other taxes, levies, import duties or custom duties in respect of the System or the Services, but excluding packaging, shipping and delivery;

any compensation, costs or expenses resulting from a Change Order; and

the matters to be provided by the Purchaser pursuant to Section 10.2.2.

The Compensation set out in Section 13.1 shall be due and shall be paid by the Purchaser in the following instalments:

forty percent (40%) at the signing of the Agreement (Milestone 1) upon receipt of invoice for down payment;

thirty-five percent (35%) of the Compensation will be payable within thirty (30) days after presentation of the shipping documents showing delivery of the System to the Site;

ten percent (10%) of the Compensation will be payable within thirty (30) days after presentation of Hot Commissioning Certificate (Milestone 4); and

fifteen percent (15%) of the Compensation will be payable within thirty (30) days after presentation of the Acceptance Letter (Milestone 5).

Except as expressly stated otherwise, all payments due shall be made available into the Supplier’s bank account mentioned on the respective invoice, within thirty (30) days after the Purchase has received the invoice.

If a Party fails to make any payment due to the other Party under this agreement within thirty (30) days following written notice specifying the defaulted payment, (due date), then, without limiting the other Party’s remedies the other Party may charge the defaulting Party simple interest on the overdue amount at the rate of five percent (5%) per annum. Such interest shall accrue on a daily basis from the due date until the date of actual payment of the overdue amount, whether before or after judgment. The defaulting Party shall pay the interest immediately on demand by the other Party. This Section 13 shall not apply to payments that are contested in good faith.

ACCEPTANCE

Acceptance of the System (the “Manufacturing Acceptance”) will be subject to the successful completion of the Performance Test in accordance with Section 8 above and Purchaser’s execution of the Acceptance Letter, which will be executed and provided to Supplier within ten (10) days of the successful Performance Test.

Upon successful completion of the Performance Test, Manufacturing Acceptance of the respective System shall not be unreasonable withheld by the Purchaser and shall be manifested by the Purchaser by issuing an Acceptance letter in the form attached to this Agreement as Addendum B (the “Acceptance Letter”).

In case of unsuccessful completion of the Performance Test, the provisions of Section 15 shall apply.

COMPENSATION REDUCTION

Before applying the Compensation Reduction set out below, the Supplier shall take all necessary efforts to achieve the Performance Guarantees. The Compensation Reduction shall only apply once it becomes clear that notwithstanding these efforts the Performance Guarantees cannot be reasonably achieved within the eight (8) week period in accordance with Section 8.2. Any non-compliance of the System included in Section 15.2 will only be compensated once per installation in accordance with the Compensation Reduction set out below.

Non-compliance of the System with the Performance Guarantees, (i) following expiry of the eight (8) week period in accordance with Section 8.2, shall result in compensation by the Supplier in the form of a reduction of the final instalment of the Compensation of the respective System to be paid in accordance with Section 13.4, as follows (the “Compensation Reduction”):

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Non-compliance with the Performance Guarantees within the range set out above can only result in a Compensation Reduction and will not result in or be regarded as a Defect or Material Default and therefore can in no event be invoked nor lead to a termination or right of Rescission of the Agreement. Non-compliance with the Performance Guarantees under the range set out above shall result in a Compensation Reduction and Shall also result in or be regarded as a Defect or Material Default and therefore can be invoked or lead to termination or right of Rescission of the Agreement.

WARRANTY

Subject to the provisions of Section 16.3 the electric, pneumatic and hydraulic components of the System, including the System Software, are subject to a Warranty Period of twelve (12) months, commencing on the date of the Hot Commissioning, provided that the System is operated and maintained materially in accordance with the instructions of the Manuals. To the extent that Hot Commissioning is delayed for reasons attributable to a breach of any obligations of the Purchaser expressly set forth in this Agreement, the Warranty Period shall be reduced by a period equivalent such period of delay

Subject to the provisions of Section 16.3, the mechanical construction of the System is subject to a Warranty Period of twenty-four (24) months, commencing on the date of the Hot Commissioning, provided that the System is operated and maintained in accordance with the instructions of the Manuals, maintained under guidance of a separate maintenance agreement. To the extent that Commissioning is delayed for reasons attributable to the Purchaser, the Warranty Period shall be reduced by a period equivalent such period of delay.

The warranties provided pursuant to Sections 16.1 and 16.2 do not invalidate any warranties on third-party components which remain valid as such. For the avoidance of doubt the same warranties agreed between the Supplier and their third-party suppliers and which were approved by Purchaser in writing on third party components shall also apply between the Supplier and the Purchaser, but without prejudice to Sections 16.1 and 16.2.

If a Defect is discovered during the Warranty Period and if the Purchaser has notified the Supplier in writing of such Defect in accordance with the provisions of Section 26.1 no later than three (3) Working Days after the expiry of the warranty period, the Supplier shall remedy such Defect. With regard to the notification of a Defect the day of dispatch of the notification by the Purchaser shall be decisive.

Any warranty will be void when the use of spare parts not of a similar quality or not provided by the Supplier, or any misuse or improper maintenance (not in accordance with the Manuals) of the System or any of its components is detected.

In any event, the Supplier’s aggregate maximum liability for its Warranty obligations under this Section will be limited to five hundred thousand Euro (€500.000) per installation.

During the Warranty periods, Supplier will replace or repair all System defects immediately upon notice of the defect from Purchaser, or, in the case of a repair or replacement that cannot by its nature be completed immediately, will initiate the process to complete such repair or replacement immediately upon notice.

Following the Warranty periods, Supplier will perform such repairs and maintenance at Purchaser’s request, pursuant to a separate Scope of Work stating the terms and fees for such services.

LIMITATION OF LIABILITY INDEMNIFICATION AND INSURANCE

The Supplier shall be liable for any loss or damage caused by it. The Supplier is generally not released from its liability by virtue of any insurance taken out by Supplier or by the Purchaser.

The Supplier undertakes to indemnify and hold harmless the Purchaser and any third party with respect to any damage and/or accident caused to its personnel. The Supplier assumes full responsibility for the actions of its personnel both inside and outside the site area. The Supplier shall be liable for damages with respect to any loss caused to the Purchaser or to any third party by its personnel.

However, the Purchaser and the Supplier declare that they are whole-hearted and professionally equivalent trading partners, having contracted out of their free will and mutual respect. Against this background they decide, for the purpose and for the performance of this agreement, to limit their liability.

Under no condition, even in the event of a provision to the contrary in other places in the contract, shall the Purchaser and the Supplier hold each other liable for any loss which exceeds the sole limit of Five Million Euro (€5.000.000) agreed here.

This amount shall include any claims or demands from their personnel, third parties, Suppliers, sub suppliers or other trading partners on which they call or whom they have under their control and responsibility.

The Purchaser and the Supplier shall make an exception if a Party should be shown to be guilty of a demonstrated, deliberate offence, willful misconduct or gross negligence or a breach by either Party of any of the confidentiality, exclusivity or indemnification obligations stated herein. In such a case, the Party at fault cannot invoke the aforementioned limit, and its liability is unlimited.

Indemnification. Supplier agrees to defend, hold harmless, and indemnify Purchaser, its Affiliates and their respective directors, officers, employees, agents, and assigns (“Indemnified Parties”), from and against any and all claims, suits, actions, demands, and proceedings of any kind threatened, asserted or filed against Purchaser and/or any Purchaser Indemnified Party by any third party (collectively “Claims”), and any damages, losses, expenses, liabilities or costs of any kind, (including but not limited to reasonable attorneys’ fees, witness fees and court costs) incurred in connection with such Claims (including those necessary to successfully establish the right to indemnification), arising out of or relating to: (i) bodily injury or death to any person caused by the System, Supplier or anyone acting on behalf of Supplier; (ii) loss, or damage to property of any person caused by the System, Supplier or anyone acting on behalf of Supplier; (iii) any breach or alleged breach of its confidentiality obligations hereunder; (iv) any Claims for infringement of Intellectual Property Rights arising from Purchaser’s use of the System; or (v) any breach or alleged breach of the warranties in Section 16.

Insurance. Supplier warrants that it will maintain sufficient insurance coverage to enable it to meet its obligations created by this Agreement and by law. Without limiting the foregoing, to the extent this Agreement creates exposure generally covered by the following insurance policies, Supplier will maintain (and shall cause each of its agents, independent contractors and subcontractors performing any services hereunder to maintain) at its sole cost and expense at least the following insurance covering its obligations under this Agreement:

Commercial General Liability including (A) bodily injury, (B) property damage, (C) products and completed operations, including contractual liability coverage, in an amount not less than One Million Euro (€1.000.000) per occurrence and Two Million Euro (€2.000.000) in the aggregate;

Business Automobile Liability for owned, hired and non-owned vehicles in an amount of not less than One Million Euro (€1.000.000) for combined single limit;

Workers Compensation at statutory limits and Employer’s Liability at limits not less than One Million Euro (€1.000.000) per occurrence; and

Professional Liability Insurance covering any and all errors, omissions or negligent acts in the design and conception of the products being provided to Purchaser or on behalf of Purchaser hereunder. Such errors and omissions insurance shall include:

Coverage for a rework of the products with a combined and aggregated limit of Five Million Euro (€5.000.000);

Coverage for purely financial losses as a result of errors, omissions or negligent acts in the design and conception of the products being provided, with a combined and aggregated sublimit of One Million Euro (€1.000.000).

LANGUAGE

RIGHTS TO THE RESULT AND INTELLECTUAL PROPERTY RIGHTS

The Purchaser acknowledges that all Intellectual Property Rights relating to the System, including but not limited to the Intellectual Property Rights of the Design, Design Documentation and Documentation, the System Software, and any other Intellectual Property Rights created by the Supplier during the performance of this Agreement, irrespective of their origin, whether created alone or in conjunction with the Purchaser or third parties and/or based on the proposals or (assisted) development of the Purchaser or third parties (“New IP”), are and remain the exclusive property of the Supplier. This shall equally apply to all future improvements, modifications and/or

Without prejudice to the license granted on improvements, modifications and additions to the System as set out in Section 19.1 of this Agreement, and the enhanced license to the System Software set forth in Section 19.7 below, nothing in this Agreement shall be construed as granting, or as an undertaking to subsequently grant, to the Purchaser any license, right, title or interest in the Intellectual Property Rights relating to the System. On Purchaser’s written request, the Parties agree to resolve in good faith a license fee payable to Supplier for the purpose of enabling Purchaser and its Affiliates to independently develop, manufacture and operate central processing centers similar to the System for Purchaser’s and its Affiliates’ internal business use only.

The Purchaser undertakes to fully respect the exclusivity of the Intellectual Property Rights set forth in Section 19.1 and 19.2 and agrees not to apply for a patent, trademark, utility model, design or any other registered Intellectual Property Right protection relating to the System. Subject to being indemnified for costs, the Purchaser shall take reasonable steps to assist the Supplier in protecting its Intellectual Property Rights.

The Purchaser shall promptly notify the Supplier in the event a third party alleges that the System infringe its Intellectual Property Rights (hereinafter referred to as “Third Party Claim”) in which case the Supplier shall at its sole discretion exercise one or more of the following rights at its cost: (a) replace or modify the System or the alleged infringing part thereof within a reasonable time period such that the replaced or modified System or part thereof is no longer (allegedly) infringing any third party’s Intellectual Property Rights, or (b) procure for the Purchaser the right to continue to use the System as contemplated by the Agreement under reasonable terms and conditions.

The Purchaser acknowledges that the Supplier shall take the lead in handling the Third Party Claim which implies amongst others that solely the Supplier has the right to determine, in its sole discretion, how it will handle the Third Party Claim and the Purchaser undertakes not to take any action in that respect and to reasonably cooperate with the Supplier.

The Supplier undertakes to hold the Purchaser harmless in case of Third-Party Claims in this regard as further set forth in Section 17.7.

In addition to the rights granted to Purchaser to the System Software for use in the System described in Addendum A or any Purchase Order issued hereunder, Supplier agrees to notify Purchaser of all software updates, enhancements and new releases (collectively “Updates”) that Supplier makes available to its clients. In the event Purchaser elects to have such Updates installed in any of its previously installed Systems, Purchaser shall not be obligated to the cost of such Updates, but shall be responsible for the cost of installation/implementation of such Updates. Further, Supplier grants Purchaser the right to copy the System Software as reasonably necessary to operate the System Software, and for backup, disaster relief and testing purposes. Any additional software implementation services or maintenance services outside the Warranty in Section 16.1 will be provided under a separate scope of work.

TITLE

The title to the System will remain with the Supplier until the Compensation instalments in accordance with Section 13.4 (subject to any reduction under Section 15) have been paid. The Purchaser will immediately inform the Supplier in case of arrest of any components of the System at his charge or in his hands.

Following payment of the instalments in accordance with Section 13.4 as set forth above in subsection 20.1, the title to the System will transfer to the Purchaser.

CONFIDENTIALITY

For the purposes of this Agreement, the Parties may provide each other with confidential and proprietary information including but not limited to all commercial, technical, or financial information, Documentation and Design Documentation (hereafter “Confidential Information”).

Each Party agrees not to, and undertakes that no Affiliate shall, disclose any Confidential Information to any third party, nor use the same for its own sole benefit, nor permits its use for the benefit of others, without the prior written consent of the other Party. Each Party may disclose Confidential Information to its employees who reasonably need access to such information in connection with their involvement in the Design of the System and who have undertaken, in writing, obligations of confidentiality comparable in scope to those set forth in this Agreement.

The obligations of confidentiality under this Agreement shall not apply to any information which:

becomes published or otherwise generally available to the public through no fault of any Party;

was already known to the recipient or otherwise available to that Party before the disclosure of the information pursuant to this Agreement;

is obtained by the recipient from a third party who is not restricted by any obligation of confidence;

is prepared or developed by a Party, which is unrelated to the disclosure of information under the terms of this Agreement; or

needs to be disclosed to comply with a court of administrative order, provided that the respective Party first uses reasonable efforts to obtain an order preserving confidentiality of the Confidential Information.

EXCLUSIVITY

Commencing on the Signing of this Agreement, Supplier shall not, and shall not authorize or permit any of its officers, directors, stockholders, affiliates, employees, agents, advisors or other representatives to, directly or indirectly, sell, lease, license or transfer the System, or any similar books and Media Processing System to any competitor of Purchaser or its Affiliates in the Territory and in the Segment (“Exclusivity Period”) which shall continue thereafter as follows:

One (1) year following the Successful Hot Commissioning date of the first System purchased pursuant to this Agreement; and

One (1) additional year for each System purchased; provided, however, that at no time shall the Exclusivity Period extend more than five (5) years beyond the Successful Hot Commissioning date of the last-commissioned System.

DAMAGES

In the event of a breach of obligations under Section 19, 21, or 22 the breaching Party shall pay the other Party an amount of One Hundred Thousand Euro (€100.000) for each breach, and in addition, an amount of One Thousand Euro (€1.000) for each day that breach continues, without the need to serve prior notice or the need of a court order and without prejudice to any right of the other Party to recover damages in excess of the amounts specified in this Section 23. The Parties acknowledge the importance of the obligations under this Section 23 for both Parties and that such amounts represent a genuine and reasonable estimate of the damage likely to be suffered by any Party in the event of a breach of the obligations under respectively the Section 19, 21, or 22.

TERMINATION

Termination with immediate effect

The Supplier shall have the right to terminate this Agreement at any time by notice with immediate effect without having to pay any damages to the Purchaser and without any Court intervention in the following cases:

if the Purchaser becomes insolvent, or goes into liquidation; or

if voluntarily or involuntarily any proceedings under bankruptcy, insolvency or reorganization laws are instituted by or against the Purchaser and, if involuntarily, they are not dismissed within ninety (90) days after proceedings are commenced; or

if the Purchaser is dissolved; or

if the Purchaser fails to pay the Supplier any amount outstanding which is due and payable, and not subject to reasonable dispute, within ninety (90) days following written notice specifying the exact nature of the default after the amount became due and payable pursuant to Section 13.4 and Purchaser fails to cure such default within the ninety (90) day time period.

The Purchaser shall have the right to terminate this Agreement at any time by notice with immediate effect without having to pay any damages to the Supplier and without any court intervention in the following cases:

if the Supplier becomes insolvent, enters into a debt rescheduling or discharge arrangement with its creditors, assigns substantially all of its assets to a third party or goes into liquidation; or

if voluntarily or involuntarily any proceedings under bankruptcy, insolvency or reorganization laws are instituted by or against the Supplier; or

if the Supplier is dissolved, except in the framework of a restructuring;

if the financial situation of the Supplier is or becomes such that its ability to duly perform this Agreement is substantially affected, or the Supplier terminates or suspends its business; or

if Supplier is in material default and fails to cure the default within thirty (30) days of written notice by Purchaser specifying the exact nature of the default, unless such default involves a repair to the System that, by its nature, cannot be completed within thirty (30) days, then in such event, as soon as is reasonably possible.

Return of Confidential Information

Surviving Provisions

REMEDIES

MISCELLANEOUS

Notifications

Unless otherwise specifically indicated in the Agreement, all notices, approvals, consents, authorizations and other communications required or permitted pursuant to the Agreement, shall be in writing and shall be delivered by personal delivery or courier to the Parties at the addresses shown in Section 1. Additional duplicate notices to Purchaser must be made to its legal department, as follows:

Either Party may change its contact information for the purposes of this Section 26.1 by providing the other Party within seven (7) days’ notice of such a change.

Invoices and all supporting documentation shall be mailed or delivered to the address shown below:

E-mail may be used for communication between the Parties, but e-mail shall not be used for the communication of a notice which is prescribed by the Agreement.

Amendments

Severability

Assignment

Waiver

Entire Agreement

Governing Law, Arbitration and Competent Courts

This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, with the exclusion of the United Nations Conventions on Contracts for the International Sale of Goods of 11 April 1980.

Any disputes that cannot be resolved between the Parties after good faith attempts to do so, including the license fee in 19.2, or disputes that cannot be resolved by any attempted mediation by the Parties will be finally determined by binding arbitration administered by the International Centre for Dispute Resolution (“ICDR”). There will be one (1) arbitrator if the amount in controversy is less than $1,000,000 USD and three (3) arbitrators if the amount in controversy is more than $1,000,000 USD. Arbitration will be held in Toronto, Ontario, Canada under the ICDR’s then-current dispute resolution rules. The prevailing Party in any arbitration will be entitled to recover its arbitration costs and attorneys’ fees.

VALUE VILLAGE STORES

By: VALUE VILLAGE CANADA, INC.

Its: Managing Partner

/s/ Dieter Wittouck

/s/ Mark Walsh

Dieter Wittouck

Mark Walsh