LICENSE
AND SERVICES AGREEMENT

     

    THIS
LICENSE AND SERVICES AGREEMENT dated this
1st
day of April, 2008,

     

    BETWEEN:

     

    PHOTOCHANNEL NETWORKS INC., a
company having an office at Suite 590, 425
Carrall Street, Vancouver, British Columbia, Canada, V6B 6E3

     

    (hereinafter called
"PhotoChannel")

     

    
      	
              -  

            	
              and
      –

            


    

    
 

    BLACK’s  PHOTO
COPORATION

     

    (hereinafter called
"Black’s")

     

    WHEREAS PhotoChannel is the developer and owner of a
proprietary Internet based digital imaging network solution for the upload and distribution of digital images for printing
of photographs or other products (“System”);

     

    AND WHEREAS PhotoChannel is entitled to license the System
and provide the Services (as hereinafter
defined) to Black’s as provided herein;

     

    AND WHEREAS Black’s wishes to acquire a license for the System and to receive the Services as provided herein;
and

     

    AND WHEREAS Black’s wishes to acquire, and PhotoChannel
wishes to provide to Black’s, a Black’s branded System for its 1 Hour Photo
Operations (the “Branded Site”) on the terms and
conditions set out herein;

     

    NOW THEREFORE in consideration of the
premises, the mutual covenants contained in this Agreement, and other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties agree as follows:

     

    1.           The
Branded Site.    PhotoChannel
agrees to deliver the System components described in attached Schedule A in accordance with the roll-out schedule
set out in Section 2 below. PhotoChannel represents and warrants that the Branded
Site will perform the functions set out in, in the manner and to the standards
provided in, Schedule A.  PhotoChannel shall promptly correct any
errors, malfunctions or defects in the System, including any hardware supplied
or sold by PhotoChannel to Black’s.  PhotoChannel shall design, host and operate the
Branded Site subject to the following conditions:

     

    (a)            Black’s
shall have the right to preapprove the design, layout, content and look and feel
of the Branded Site, and any changes thereto.

    (b)            As
between the Consumer and PhotoChannel, PhotoChannel’s Terms and Conditions of
Use and Privacy Policy shall apply to the Branded Site, subject to Black’s
approval.  Changes will not be made to such Terms and Conditions or
Privacy Policy without the prior written consent of Black’s.

    (c)           Black’s
will provide the jump page for the link from Blackphoto.com to the Branded
Site.  The   form and content of the jump page will be
in Black's discretion.

    (d)           Black’s
controls all pricing for any products or services sold through the Branded
Site.

     

    
      
         

      

      
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    (e)            Other
than the link to and from Blackphoto.com and the data feed to a Black’s store,
the Branded Site will not be linked to any other web site and there shall be no
advertising on the Branded Site except that approved by Black’s in its sole
discretion..

    (f)           PhotoChannel
shall ensure that the Branded Site not contain any content, features, or
materials that:  (i) violate or infringe the rights of any person,
(ii) are abusive, profane, or offensive, obscene, pornographic or sexually
explicit, or (iii) are false or misleading, defamatory or harassing, excessively
violent, or which violate or encourage others to violate any applicable
law.

     

    
      	
              2.  

            	
              Roll-Out
      Schedule.  See Schedule C.

            


    

     

    3.           Support, Maintenance and
Training.  PhotoChannel shall
promptly and competently provide the support, maintenance and training services
provided for in Schedule B.

     

    4.           Billing and
Payments.  Black’s shall make the
payments set out in, and on the terms provided in, Schedule B. 

     

    5.           Project Co-ordinators. Each
party shall designate a project co-ordinator to deal with the day-to-day matters
arising under this Agreement.  These individuals will, on behalf of
their respective employers, co-ordinate the provision of the products and
services contemplated herein, including installation, acceptance, operation,
maintenance and support. 

     

    6.           Access To
Facilities.  Black’s shall at all reasonable times give
PhotoChannel and its employees, independent contractors and agents sufficient
access to the Black’s premises and assets of Black’s as is necessary to permit
PhotoChannel to fulfil its obligations under this Agreement.  At all
times while upon any premises of Black’s, PhotoChannel's employees, independent
contractors, and agents shall observe all rules which Black’s may prescribe in
writing, including Black’s’ then-current computer access rules and
policies.

     

    7.           Term.  This Agreement shall be for a term of three (3) years
commencing on the date hereof and ending on April 1, 2011 (the
“Term”).   After seventeen months Blacks shall have the
right to terminate this contract at anytime with 90 days prior written
notice.

     

    8.           Confidentiality.  Each
party agrees that the Confidential Information of the other party will be held
in confidence to the same extent and the same manner as each party protects its
own Confidential Information, but each party agrees that in no event will less
than reasonable care be used.  Each party shall, however, be permitted
to disclose relevant aspects of such Confidential Information to its officers,
employees, and consultants on a need-to-know basis, provided that they have
undertaken to protect the Confidential Information to the same extent as
required under this Agreement.  Each party agrees to use all
reasonable steps to ensure that the other party's Confidential Information
received under this Agreement is not disclosed in violation of this Section
8.  Without limiting the generality of
the foregoing, PhotoChannel acknowledges that any information from or relating
to Black’s Consumers including, without limitation, Consumer names, addresses,
lists and image files (collectively, “Consumer Information”) is Black's
Confidential Information.  Consumer Information collected by or
submitted to PhotoChannel by Black’s or its Consumers pursuant to this Agreement
is not subject to the exceptions in clauses 8(b) and (d) below simply because
Consumers share Consumer Information with PhotoChannel as part of the services
offered through the Branded Site and related customer
service.  Further, all sales related information, including, without
limitation, number of orders processed, number of prints processed and prints
per order processed, and other such sales information, whether generated on the
Branded Site or otherwise (collectively, “Sales Information”) is Black's
Confidential Information.  Each party agrees not to use the
Confidential Information of the other party other than in the performance of its
obligations under this Agreement and only in accordance with applicable law
including privacy legislation.  The terms of this Agreement shall be
deemed Confidential Information and shall not be disclosed by either party to
any third party without the other party's prior written consent.  The
obligations set forth in this Section 8 do not apply if and to the extent the
party receiving Confidential Information ("Receiving party") establishes
that:

     

    
      
         

      

      
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    (a)           the
information disclosed to the Receiving party was already known to the Receiving
party, without obligation to keep it confidential;

     

    (b)           the
Receiving party received the information in good faith from a third party
lawfully in possession thereof without obligation to keep such
information;

     

    (c)           the
information was publicly known at the time of its receipt by the Receiving party
or has become publicly known other than by a breach of this
Agreement;

     

    (d)           the
information is independently developed by the Receiving party without use of the
other party's Confidential Information; or

     

    (e)           the
information is required to be disclosed by applicable statute or regulation or
by judicial or administrative process; provided that, in the case of (a) through
(e) above, such circumstances are demonstrated with written evidence thereof and
that, in the case of (e) above, the Receiving party will use reasonable efforts
under the circumstances to notify the other party of such requirements so as to
provide such party the opportunity to obtain such protective orders or other
relief as the compelling court or other entity may grant.

     

    9.           Intellectual Property
Rights.

     

    (a)           PhotoChannel’s Intellectual
Property.   PhotoChannel
hereby grants Black’s a non-exclusive license to use during the Term and any
renewal term, if any, all copyrighted material, trademarks, inventions and all
other industrial or intellectual property rights (collectively, “PhotoChannel’s
Intellectual Property”) forming part of or necessary to use the System and the
Branded Site.  Except as set forth in this Section 9, Black’s
acknowledges that pursuant to this Agreement it is not acquiring any interest in
or right to use any of PhotoChannel’s Intellectual Property.

     

    (b)           Black’s Intellectual
Property.  Black’s hereby grants
PhotoChannel a limited, nonexclusive, nontransferable license to use during the
Term and any renewal term, if any, Black's proprietary trademarks and tradenames
(collectively, “Black’s Intellectual Property”), but solely on the Branded Site
and always in accordance with Black’s’ then current trademark usage guidelines
and prior written approval.  PhotoChannel shall not use any
trademark, service mark, logo, computer program, tradename or mark,
including Black’s Intellectual Property, whether owned by or licensed to Black’s
and presently in existence, or hereafter established, in any fashion, without
the express written consent of Black’s.  Black’s further grants to PhotoChannel a limited,
nonexclusive, nontransferable license to create the Branded Site, the hypertext
link from the Black’s.ca website to the Branded Site and the data links to the
Black’s warehouse locations in Canada designated by Black’s.  Black's
licenses to PhotoChannel will not survive termination or expiration of this
Agreement.  Except as set forth in this Section 9, PhotoChannel
acknowledges that pursuant to this Agreement it is not acquiring any interest in
or right to use any of Black’s Intellectual Property.

     

    10.           Termination.  A party shall be entitled to terminate this
Agreement if:

     

    
      	
              (a)  

            	
              the other party makes a general assignment for the
      benefit of its creditors or a proposal or arrangement under the
      Bankruptcy and
      Insolvency Act or any successor
      legislation (“the Act”), if a petition is filed against the other party
      under the Act, if the other party is declared or adjudicated bankrupt, if
      a liquidator, trustee in bankruptcy, custodian, receiver, receiver and
      manager or any other officer with similar powers shall be appointed,
      either privately or judicially, of or for the other party or if the other
      party shall commit an act of bankruptcy or propose a compromise,
      arrangement or otherwise have recourse to any law for the protection of
      debtors; or 

            


    

     

    
      
         

      

      
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              (b)  

            	
              if the other party fails to fulfil any of its
      obligations hereunder and does not cure such failure, to the reasonable
      satisfaction of the non-breaching party, within thirty (30) days
      after receiving written notice of such
  failure.

            


    

     

    Upon any
termination or expiration of this Agreement, PhotoChannel shall immediately
return to Black’s (i) all Consumer Information, including the digital images
upon Black’s written request and at Black’s cost, and (ii) all outstanding
orders, if any, in its possession.  

     

    11.           Harmful Components.  PhotoChannel represents and warrants that
any and all software, hardware or data it provides to Black’s will not
contain any program, routine, device or other undisclosed feature, including
without limitation, a so-called time bomb, virus, software lock, drop dead
device, malicious logic, worm, Trojan horse or trap or back door, or other
harmful device which is designed to delete, disable, deactivate, provide
unauthorized access, interfere with or otherwise harm any software, program,
data, device, system or service, or which is intended to provide unauthorized
access or to produce unauthorized modifications.

     

    12. Indemnification.  PhotoChannel shall hold harmless,
defend and indemnify Black’s and its affiliates (and their respective employees,
directors and representatives) against any and all claims, actions, proceedings
and suits and any and all liabilities, damages, settlements, penalties, fines,
costs or expenses (including reasonable attorneys' fees and other litigation
expenses) incurred by Black’s, arising out of or relating to:

     

    (a)            any
actual or alleged infringement or misappropriation of the intellectual property
rights of any person or entity by (i) the System (including, but not limited to,
patents, hardware and software), or (ii) any services provided on the Branded
Site by PhotoChannel or its employees, representatives or agents;

     

    
      	
              (b) 

            	
              any
      actual or alleged violation by PhotoChannel of any law, statute or
      ordinance or any administrative order, rule or regulation relating to the
      System or any services provided on the Branded Site by PhotoChannel or its
      employees, representatives or
agents;

            


    

     

    
      	
              (c) 

            	
              any
      act, activity or omission of PhotoChannel, or any of its employees,
      representatives, independent contractors or agents, including activities
      on Black's premises and the use of any vehicle, equipment, fixture or
      material of PhotoChannel in connection with any service or right provided
      by PhotoChannel under this Agreement;
or

            


    

     

    
      	
              (d) 

            	
              PhotoChannel's
      breach of any of its representations, warranties or undertakings in this
      Agreement.

            


    

    


    (e)           PHOTOCHANNEL HEREBY DISCLAIMS ANY
WARRANTIES ITS SALESPERSONS OR OTHER STAFF MAY HAVE MADE PRIOR TO THE DATE OF
THIS AGREEMENT EXCEPT THOSE EXPRESSLY STATED IN THIS
AGREEMENT.

     

    13.           Arbitration.  All
claims and disputes that (1) are between PhotoChannel and Black’s or either’s
subsidiaries, parents, affiliates, officers, directors and/or employees, and (2)
arise out of or relate to this Agreement or its subject matter, interpretation,
performance or enforcement, (including any tort or statutory claim) ("Dispute")
shall be arbitrated by a sole arbitrator in Vancouver, British Columbia, in
accordance with the British Columbia Commercial Arbitration Act and judgement
upon the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof.  All documents and information relevant to the
Dispute in the possession of any party shall be made available to the other
party not later than sixty (60) days after the demand for arbitration is served,
and the arbitrator may permit such depositions or other discovery deemed
necessary for a fair hearing.  The hearing may not exceed two
days.  The award shall be rendered within 120 days of the
demand.  The parties have included these time limits to expedite the
proceeding, but they are not jurisdictional, and the arbitrator may for good
cause permit reasonable extensions which shall not affect the validity of the
award.  The arbitrator may award interim and final injunctive relief
and other remedies, but may not award punitive, exemplary, treble, or other
enhanced damages.  To the fullest extent permitted by applicable law,
no arbitration described herein shall be joined to an arbitration involving any
other party, whether through class arbitration proceedings or
otherwise.  In the case of contradiction between the provisions of
this Section and the rules of the British Columbia Commercial Arbitration Act,
this Section shall prevail.  The limitations on remedies described
above may be deemed ineffective to the extent necessary to preserve the
enforceability of the agreement to arbitrate.  If any provision of
this agreement to arbitrate is held invalid or unenforceable, it shall be so
held to the minimum extent required by law and all other provisions shall remain
valid and enforceable.

     

    
      
         

      

      
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    15.           Schedules.  Schedule A, Schedule B and Schedule C, attached hereto, are incorporated herein and form part
of this Agreement. In the event of a
conflict between the terms of this Agreement and either or both of such
Schedules, the terms of this Agreement shall supersede and
prevail.

    


    16.           Notices.  All notices, demands, approvals, consents
and acceptances under this Agreement shall be in writing and shall be deemed to
have been duly given if mailed or delivered to a party at its address mentioned
above or faxed to the attention of:

    


    
      	
               
      

            	
              TO:  PhotoChannel

              Attn:  President

              Fax No. (604)
893-8966 

            	
              TO:  Black’s

              Attn:  AGMM,
      Ancillary

              Fax No. (613)
      221-2279

            


    

                                                               

    17.           Non-Assignability.  Neither party may assign this Agreement
without the prior written consent of the other party, such consent not to be
unreasonably withheld; provided that both parties have the unrestricted
right to transfer and assign their interest in this Agreement, in whole or in
part, to any entity:  (a) acquiring all or substantially all of its
assets or stock, (b) surviving a merger or amalgamation with or resulting from a
reorganization, or (c) to any affiliate.  Subject to the provisions of
this Section 17, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective permitted
successors and assigns.

     

    18.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the Province of British Columbia,
Canada.  Each party submits to the non-exclusive jurisdiction of the
courts of the Province of British Columbia, Canada.

     

    19.           Entire
Agreement.    This Agreement, together with its
attachments, constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous oral or written communications with respect
hereto.  This Agreement may not be altered, amended, or modified
except by a written instrument signed by an authorized employee of each
party.  If there is any conflict between PhotoChannel’s
representations, warranties and indemnification obligations under this Agreement
and PhotoChannel’s Terms and Conditions, this Agreement shall supercede.

     

    
      
         

      

      
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                                              PHOTOCHANNEL NETWORKS INC.

                                            
	 	 
	 	 
	 
      	
                                              By:

                                            	 
      
	 
      	 
      	
                                              Name:

                                            
	 
      	 
      	
                                              Title:

                                            
	 	 	 
	 	 	 
	 
      	
                                              BLACK’S PHOTO
CORPORATION

                                            
	 	 
	 	 
	 
      	
                                              By:

                                            	 
      
	 
      	 
      	
                                              Name:

                                            
	 
      	 
      	
                                              Title:

                                            


                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    


    
      
         

      

      
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