CONTENT LICENSE, MARKETING AND SALES AGREEMENT
Exhibit
10.2
Portions
of this Exhibit have been omitted pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. The
omissions have been indicated by asterisks (“*****”), and the omitted text has
been filed separately with the Securities and Exchange Commission.
This
CONTENT LICENSE, MARKETING AND SALES AGREEMENT (the “Agreement”) is entered into
and effective as of January 15, 2008, (the “Effective Date”) by and between
eFashion Solutions, LLC, a New Jersey limited liability company having its
principal place of business at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(“EFS”) and ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Client,” which shall include affiliates
controlling, controlled by or under common control with ▇▇▇▇▇▇▇.▇▇▇,
Inc.).
WHEREAS,
Client is in the business of, inter alia, developing, marketing, promoting,
distributing and selling branded and unbranded merchandise via physical media,
worldwide, via mail order catalogs (the “Catalogs”) where orders are
taken via multiple order channels including online, phone, fax and mail and via
the Internet through its PLAYBOY-branded and BUNNY SHOP-branded e-commerce
websites as designated on Exhibit 1 (the “Websites”) (the Catalogs and Websites
shall be collectively referred to as the “Playboy Commerce
Business”).
WHEREAS,
the parties intend that EFS will operate under license from Client the Playboy
Commerce Business, including, but not limited to, the marketing, promotion and
distribution of branded, unbranded and co-branded soft and hard goods which
include but are not limited to men’s and women’s apparel, home, lingerie, men’s
and women’s accessories, jewelry, books and DVD’s and related products
(collectively, “Merchandise”) via the Catalogs and the Websites (including other
Micro-Sites (as defined in Section 1.1(d)(vii))).
NOW
THEREFORE, in consideration of the promises contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto each intending
to be legally bound, agree as follows:
1. Operation of the Playboy Commerce
Business
1.1.
Obligations of
EFS.
(a) Operations. EFS,
at its sole cost and expense, shall be solely responsible for (i) developing,
designing, operating, maintaining and distributing the Catalogs; (ii)
developing, designing, operating, maintaining and hosting the Websites; (iii)
except as otherwise set forth in this Agreement, the creation (except for that
provided by Client) and use of all content to be displayed in the Catalogs and
on the Websites; and (iv) marketing and promotion of the Playboy Commerce
Business. EFS shall be permitted to display on the bottom of each
page of the Websites “Powered by eFashionSolutions” which shall appear
substantially as set forth in Exhibit 2, attached hereto and hereby incorporated
by reference.
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(b) Fulfillment
Services. EFS, at its sole cost and expense or (with respect
to pass-through expenses such as shipping, gift wrapping, etc.) at the
consumer’s expense, shall be solely responsible for conducting all business
activities related to the Playboy Commerce Business, including, but not limited
to the following activities: (i) setting the price consumers will pay
for Merchandise offered through the Catalogs and Websites and for shipping
thereof; (ii) processing all Catalog and Website orders placed by consumers,
including, but not limited to, all picking, packing, billing, shipping, gift
wrapping and other value-added services necessary to process orders from order
placement to delivery, which shall be performed substantially as set forth in
Exhibit 3, attached hereto and hereby incorporated by reference (collectively,
“Fulfillment Services”); (iii) providing pricing, billing and financial
clearinghouse services in connection with the Playboy Commerce Business; (iv)
handling all customer service matters (provided, however, that Client and EFS
shall agree upon a “hot transfer” process whereby non-e-commerce-related
customer calls will be rerouted); (v) handling all financial transactions
related to the Playboy Commerce Business, including, but not limited to,
establishing merchant accounts with a banking institution to be approved by
Client; (vi) handling all aspects of procuring Merchandise to be made available
for sale through the Playboy Commerce Business, including, without limitation,
all warehouse and inventory maintenance and control; and (vii) except as
otherwise set forth in this Agreement, handling all advertising, promotion and
marketing relating to the Playboy Commerce Business. Client
acknowledges that the efficient and cost effective fulfillment of orders on the
Websites will require that third parties that provide Merchandise to EFS under a
Playboy license adhere to certain shipping and packaging guidelines provided by
EFS, and which comply with Client’s packaging guidelines as set forth in Exhibit
3. Client agrees to provide reasonable assistance to EFS to enable
EFS to have such third parties agree to abide by the EFS
guidelines.
(c) Client
Approval. All aspects of the Websites and the Catalogs,
including, but not limited to, their “look and feel” (including as set forth in
Section 1.1(d)(iii) below), use of the Playboy Marks (as defined in Section
7.2), functionality, models to be used and all Merchandise sold therein, shall
be subject to Client’s prior written approval, which shall not be unreasonably
withheld. Further, EFS acknowledges that Client reserves the right to
change the names of the PlayboyStore and ShopTheBunny/BunnyShop Catalog and
Websites to new Client brands and/or to add names to be used provided that
Client provides EFS with no less than six (6) months prior written
notice. In the event that names are changed, except to the extent
that there is an extenuating reason for such name change, EFS shall be permitted
to continue to use domain names then in use for purposes of Micro Sites and/or
forwarding domains (i.e., driving traffic to the
new names).
(d) Websites
(i) Unless
otherwise agreed by the parties and provided that this Agreement is executed not
later than January 15, 2008, EFS agrees that no later than March 1, 2008, both
Websites shall launch and be fully operational, with the exception of the gift
wrapping which EFS shall make available as set forth in the time and action
calendar (attached hereto as Exhibit 12 and hereby incorporated by reference)
and local billing (pursuant to Section 3.1, below), and EFS shall be ready to
perform all aspects of administration of the Website business, including, but
not limited to, all Fulfillment Services. In furtherance of this
launch
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date,
EFS and Client shall perform all activities and deliver all deliverables in
accordance with the time and action calendar. Client acknowledges
that if it is unable to perform any obligations within the time period agreed to
in the time and action calendar that the launch of the Websites may be delayed
accordingly.
(ii) Client
and EFS acknowledge that design and functionality of the Websites consistent
with best practices for e-commerce is critical to ensure the maximum sales
performance of the Websites and to maintain the goodwill of Client’s
customers. EFS will utilize best industry practices to maintain the
shopping areas of the Websites in order to ensure that such areas feature
functionality that is deemed best practice in the e-commerce industry and is
updated with all content and brand imagery necessary to keep the shopping areas
of the Websites up-to-date and fresh, in all instances maintaining the high
level of brand integrity of the PLAYBOY brand while focusing on customer
experience. From time to time, Client will provide updated photo and
brand elements for purposes of utilization by EFS in Website
design.
(iii) In
addition to any guidelines provided by Client, EFS shall use and comply with any
style guides provided by Client to ensure consistency among retail channels
(e.g., graphics,
patterns, colors, logos, etc.), visual brand displays and seasonal color
palettes. EFS shall maintain the shopping areas of the Websites
consistent with the style guides (as modified for e-commerce) to maximize sales,
brand appearance and marketability. Client will provide new brand and
content assets from time-to-time along with updated style guides in both digital
and hard copies, and EFS will update the Websites and future Catalogs
accordingly within a commercially reasonable time following
receipt. As of the Effective Date hereof, updated style guides are
provided twice per year. EFS will have not less than six (6) months
advance notice of upcoming new style guides.
(iv) EFS
will host all content displayed on the Websites on an EFS-hosted server provided
by EFS at its sole cost and expense. EFS may at its election use a
reputable third party hosting service to host the Websites; provided, however,
that EFS shall nevertheless be responsible for ensuring the availability of the
Websites as set forth in this Agreement. EFS shall provide as
required all updates of content on the Websites, including enhancements,
modifications and additions thereto.
(v) EFS
agrees to at all times during the Term use its best efforts to market the
Websites no less diligently than it does other online properties managed by EFS
on behalf of third parties (including without limitation, maintaining best
practice functionality, search engine optimization tactics, utilizing customer
acquisition and retention campaigns, etc.).
(vi) EFS
shall take all reasonable measures to ensure the performance of each of the
Websites, including, at a minimum, availability at least ninety-nine and
one-half percent (99.5%) of the time per month as averaged over any one (1)
month period, excepting scheduled maintenance or a Force Majeure Event (as
defined in Section 14.7).
(vii) Subject
to the prior, written approval of Client, which shall not be unreasonably
withheld, EFS shall have the right at its sole cost and expense to design and
launch as many micro- and sub-domain websites as EFS deems appropriate in order
to take full
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advantage
of online marketing channels (collectively, “Micro Sites”); provided, however,
that all such Micro Sites shall be designed and maintained consistent with the
terms of this Agreement. At a minimum, EFS agrees to launch a version
of the ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Website, which does not contain products or content
containing nudity, marital aid or massager Merchandise, within forty-five (45)
days following launch of the ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Website.
(viii) Front-End
Platform. In the event that EFS chooses to use the Demandware,
Inc. (“Demandware”) front-end platform software and services for the Websites,
EFS shall enter into a separate agreement directly with Demandware; provided,
however, that the terms of any such agreement must be approved by Client in
advance in writing.
(e) Catalogs
(i) EFS
agrees that (A) the first issue of each of the Catalogs shall be sent to
consumers by March 15, 2008; and (B) no later than ▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇ shall be
ready to perform all aspects of administration of the Catalog business,
including, but not limited to, all Fulfillment Services.
(ii) EFS
shall provide a copy of each Catalog to Client for review and approval not less
than five (5) business days prior to printing. EFS shall promptly
make any changes to the Catalog as may be reasonably requested by
Client. No Catalog shall be sent to printing without the written
approval of Client, which shall not be unreasonably withheld.
(f) Models and
Photography. EFS agrees that all female models depicted in or
in connection with the Playboy Commerce Business shall be approved by Client and
shall be Playmates (or other Playboy models, including, but not limited The
Girls Next Door) as requested by the Client unless otherwise mutually agreed in
advance in writing by the parties. In addition, EFS agrees to shoot
major photography in connection with the Playboy Commerce Business in Los
Angeles and in coordination with Client, as requested by Client and in line with
current and past practices (taking into account changes in Client’s
Catalog-related strategy) with respect to process, cost and
frequency. EFS shall be responsible for all costs and expenses in
connection with such photography, including, but not limited to, payments to
models and photographers, based upon an estimated schedule of costs attached as
Exhibit 4. EFS shall secure model and photographer releases in a form
provided by Client and shall provide all content created under this Section
1.1(f) to Client within thirty (30) days of creation. All such
photographs shall be deemed Playboy Content for purposes of this Agreement, for
which EFS shall have a license to use during the Term solely in connection with
the Playboy Commerce Business and as is necessary to promote the
Websites. During the Term, Client shall not be permitted to sell or
otherwise provide such photographs to third party retailers (except for those
retailers operating under the PLAYBOY brand) or Licensees (as defined in Section
2.4), without the prior written approval of EFS.
(i) Client
shall own all content produced pursuant to Section 1.1(f) (whether or not
actually used), and EFS hereby assigns to Client all right, title and interest,
including all rights in copyright, in and to the photographs and materials, and
agrees to cooperate with all reasonable requests by Client, and take all
reasonable actions, to effect or perfect such assignment. EFS hereby
provides Client with an irrevocable power of attorney appointing Client as its
irrevocable attorney-in-fact coupled with an interest to execute all such
assignments on
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behalf
of EFS in the event that EFS fails to do so within thirty (30) days following
written request by Client. Client hereby grants to EFS a limited and
perpetual right and license to use such photographs and materials for research
and forecasting purposes, including, but not limited to, combining the same with
reports and analytics concerning the performance of the Websites, providing
information to strategic partners to better define consumer purchasing habits,
and for trend forecasting and planning purposes. In addition, during
the Term, EFS may use such photographs and materials to provide information to
Client Licensees to better define consumer purchasing habits, refine the design
and performance of the Websites and EFS Portals on which the Merchandise is sold
in connection with any EFS Analysis (as defined below), and for marketing and
planning purposes. For the avoidance of doubt, no information
provided to third parties under this Section 1.1(i) shall: (i) specifically or
by inference identify or in any way reference Client; (ii) disclose any
proprietary information of Client; or (iii) disclose any personally identifiable
information of or otherwise identify any consumer of the Websites or the
Catalogs.
(g) Compliance with
Guidelines. EFS shall at all times comply with the provisions
and limitations set forth in Client’s editorial and advertising guidelines,
which are attached hereto as Exhibit 5 and hereby incorporated by reference, as
the same may be amended from time to time at Client’s sole discretion, effective
upon fifteen (15) business days prior written notice to EFS (the
“Guidelines”).
(h) Compliance with
Laws. Throughout the Term, EFS shall be solely responsible for
knowledge of and compliance with all applicable international, federal, state
and local laws, rules, regulations, ordinances, industry guidelines and similar
restrictions (collectively, “Laws”) in connection with operation of the Playboy
Commerce Business. EFS shall be responsible for monitoring such Laws
and taking any actions necessary to keep compliant all aspects of the Playboy
Commerce Business, including, but not limited to, the Privacy Policy (as defined
in Section 5.1(a)), as well as best practices relating to Direct Marketing
Association (“DMA”) Guidelines (as they relate to the DMA Privacy Promise,
pander files, etc.).
(i) Product
Placement. At no additional cost to Client, EFS will provide
preferential placement in the Catalogs and/or on the Websites, as requested by
Client, for certain Merchandise from time-to-time, e.g. apparel, magazines,
books, DVD’s, etc. or marketing campaigns that tie to events and initiatives of
Client and its affiliates, consistent with Client’s past practices in the prior
placement of such items in the Catalogs and/or on the Websites.
(j) Staffing/Retention of Client
Employees. EFS agrees to staff the Playboy Commerce Business
sufficiently to operate and grow the Playboy Commerce Business. An
initial organizational chart approved by both parties is attached as Exhibit 6,
attached hereto and hereby incorporated by reference. EFS agrees to
employ certain individuals who are currently employed by the Client (names,
titles and current salaries are listed in Exhibit 6), the hiring of whom shall
be complete no later than March 1, 2008. Client shall coordinate with
EFS regarding the termination of these employees and their subsequent hire by
EFS. Each of the hired employees shall be required to comply with all
policies and procedures of EFS which are generally applicable to its employees;
provided however that levels of seniority and tenure of hired employees (as they
relate to vacation time, etc.) will carry over to EFS. Client shall
have
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input
and approval rights regarding the hiring of key positions in connection with the
Playboy Commerce Business, including replacement personnel, which approval shall
not be unreasonably withheld. EFS agrees that ***** primary
responsibilities will continue to be the Playboy Commerce Business.
(k) Keywords. EFS
may use Playboy Marks as keyword-targeted advertising on any portal, search
engine or other website; provided, however that such use is directly related to
the Merchandise available on the Playboy Commerce Business or the promotion of
the Websites. Any use of Playboy Marks as keywords not directly
related to Merchandise shall be subject to Client’s prior written
approval.
(l) Service Model
Option. Client shall have the right upon not less than six (6)
months prior written notice to request that, at any time as of the third
anniversary of the Effective Date, EFS provide its services to Client via a
“service model,” in which case, upon effective date of transition to a service
model, EFS will no longer be a licensee but rather a vendor. In such
transition to a service model, the parties will work in good faith to establish
a reasonably equivalent economic benefit for EFS (adjusting for operational
responsibilities and economic risk being transferred to Client). The
parties agree that Client will not be charged a higher fee than what is being
made available by EFS to its other Clients for similar services. The
terms of such arrangement will allow for Client to recognize the top-line
revenues from the Playboy Commerce Business as well as assume responsibility for
various operations of the business as determined by Client, with the remaining
services to be provided by EFS. In such event, EFS shall provide
Client with all best practice services and tools that are provided to EFS’
largest clients. The parties further agree that in the event Client
elects to receive services hereunder via the “service model,” during the
transition to the service model, the operation of the Websites will remain on
the EFS core technology platform.
(m) Insurance. EFS
shall maintain at all times during the Term of this Agreement insurance as
provided below and shall name Client, its parent company, subsidiaries and
affiliated entities and their respective officers, directors, shareholders,
agents and employees as additional insureds to the extent of indemnity provided
herein under its liability policies as follows:
(i) Commercial
general liability insurance including premises/operations, broad form property
damage, independent contractors, and contractual liability covering EFS’
obligations hereunder for bodily injury and property damage, with a combined
single limit of not less than $1,000,000 each occurrence and $6,000,000 umbrella
coverage;
(ii) Workers’
compensation insurance in statutory amounts covering EFS and its employees;
and
(iii) Errors
and omissions insurance, and employer’s liability insurance in an amount not
less than $1,000,000 per accident/disease.
(iv) All
insurance required above shall be carried with insurance companies licensed to
do business in the state(s) where operations are maintained with a rating
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of
no less than A-. EFS shall deliver to Client, upon execution of the
Agreement, certificates of insurance as evidence of the required
coverages. EFS agrees that these policies shall not be canceled or
materially changed without at least thirty (30) days’ prior written notice to
Client. Such notice shall include written confirmation and details of
replacement insurance coverages and other material revisions to the policies,
which shall be effective immediately upon any cancellation or material change in
EFS’ policies in order that no gap in coverage results.
1.2. Obligations of
Client.
(a) Client
will provide instructions and specifications for linking to the Licensed Domain
Names (as defined in Section 7.3) from the EFS-hosted server.
(b) Client
will provide image and descriptive content, the selection of which shall be at
Client’ discretion, related to the Client Inventory (as defined in Section 2.2)
as may be in Client’s possession, subject to rights availability and the license
grant contained in Section 7.1 (collectively, the “Playboy Content”), for use by
EFS in connection with the Playboy Commerce Business. Client shall
use commercially reasonable efforts to ensure that all digital images provided
to EFS conform to the file format and size requirements specified by
EFS. Client will use commercially reasonable efforts to provide EFS
with at least six (6) months notice prior to providing any new brand imagery,
brand elements or style guides, and EFS will prepare a time and action calendar
for the updating of respective sections of the Websites and/or
Catalogs.
(c) Client
shall be solely responsible for the design and maintenance of ▇▇▇.▇▇▇▇▇▇▇.▇▇▇
(the “Playboy Site”). Client agrees to place a persistent shopping button on the
main navigation bar of the Playboy Site (with “Shop Playboy” or such other
wording as may be mutually agreed upon by the parties), and Client further
agrees that the shopping button will be located on the main navigation bar of
all sub pages. Client will also promote the Playboy Commerce Business
with calls to action in its rotation of house ads throughout the Playboy Site
(the placement of which to be determined by Client in its sole reasonable
discretion, taking into account conversion rates and click-through success),
with creative to be provided by EFS and approved by Client. EFS
acknowledges that the Playboy Site is currently undergoing a
redesign. The parties will work together in good faith to provide
additional promotion on the Playboy Site of the Playboy Commerce Business, which
shall fit within context of the new design of the Playboy
Site. Notwithstanding the foregoing, Client agrees that the shopping
button directing customers to the Websites will continue to be located on the
main navigation bar appearing above the fold on the Playboy Site and all sub
pages. Client and EFS will work together in good faith to provide additional
promotion of the Websites licensed by EFS.
2. Merchandise.
2.1. Merchandise
Assortment.
(a) The
Merchandise mix shall be determined by EFS in its reasonable discretion in
operating the business with input and collaboration from Client, provided that
EFS agrees it will merchandise individual items as directed by Client based on
factors such as alignment with Client’s retail stores (for Bunny Shop only) or
for new Client media initiatives (e.g., a new book, special
edition of PLAYBOY Magazine, etc.) with unit decisions made by
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EFS
in its reasonable discretion. The parties agree that there will be
regular merchandising meetings between the parties to discuss sales performance,
fashion, brand and retail trends, and initiatives. It is contemplated
that such meetings shall take place no less than once per month during the first
year of the Term and then no less than quarterly thereafter.
(b) The
parties agree that the Merchandise mix as of the Effective Date for each of the
Websites and Catalogs is an approved baseline of categories and the general mix
of Merchandise and that there will be no material deviations from such mix
without the mutual agreement of Client and EFS, provided however that (i) EFS
shall use commercially reasonable efforts to work with Client to align the
merchandising of the Bunny Shop with that of Client's retail stores and (ii) EFS
shall collaborate with Client to reduce the amount of unbranded (i.e., non-Playboy branded)
apparel from its current levels (currently ***** of all apparel and ***** of the
total Merchandise mix), which shall in no event comprise more than ***** of EFS’
total Merchandise mix. For the avoidance of doubt, Merchandise shall
not include ticket sales to Client-sponsored or other events. For
purposes of this Agreement, the term “branded Merchandise” shall refer to
Merchandise which contains or references any of the Playboy Marks or is
otherwise branded or labeled with a Playboy ▇▇▇▇, and the term “unbranded
Merchandise” shall refer to Merchandise which does not contain or make reference
to any of the Playboy Marks.
(c) Notwithstanding
the provisions of this Section 2.1, if Client determines in its sole discretion
that certain Merchandise must be removed or altered for legal reasons, EFS shall
promptly take such action required by Client. If Client requests that
EFS change or discontinue any Merchandise for reasons other than legal, Client
will provide EFS with sufficient notice and a reasonable sell-off period to
minimize any disruption to the Playboy Commerce Business and EFS shall
comply. In the event that the Merchandise required to be removed is a
current item being sold and such removal results in an actual material impact on
revenues or Merchandise Gross Margin as demonstrated by EFS, EFS and Client will
work together to agree on an equitable adjustment to the Minimum
Royalty.
2.2. Purchase and Use of Existing
Inventory. EFS will purchase from Client all existing product
inventory of Merchandise held by or on behalf of Client in connection with the
Playboy Commerce Business, including, but not limited to, back issues of PLAYBOY
Magazine held by Client as of forty-five (45) days after as of the Effective
Date hereof, as determined by Client (collectively, the “Client Inventory”), as
set forth in Section 6.6. During the Term, Client Inventory supplied
to EFS shall be sold by EFS solely through the Playboy Commerce
Business.
2.3. Transition
Period. In addition, prior to launch of the Websites, Client
(in collaboration with EFS) shall purchase new and replenishment Merchandise on
behalf of EFS for March 1, 2008 orders, with such Merchandise to be shipped to
EFS directly. For such orders, EFS shall pay the vendor in full, with such
payments to be made directly to each vendor in accordance with such vendor’s
payment terms, and therefore, the Merchandise purchased in connection with March
1, 2008 orders shall not be subject to the discount for Client Inventory set
forth in Section 6.6.
2.4. Licensees. Client
shall notify each of its Licensees (as defined below) of the provisions of this
Agreement relating to the sale and provision of Merchandise to
EFS. EFS
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shall
be permitted to deal directly with and purchase Merchandise directly from those
third parties licensed by Client to produce products under the PLAYBOY brand
(“Licensees”). EFS shall be free to negotiate directly with
Licensees, and Client will use commercially reasonable efforts to assist EFS in
securing favorable terms on pricing and service levels. EFS
acknowledges, however, that Client cannot guarantee that EFS will secure such
favorable terms. EFS shall enter into
separate agreements with all Licensees and any such agreements shall supersede
any agreement between Client and such Licensee solely with respect to EFS’
relationship with such Licensee, as approved by Client.
2.5. International
Sales. For a period of one (1) year after launch of the
Websites, EFS shall be permitted to fulfill orders placed by customers in the UK
and Australia *****; provided, however that: (a) EFS is solely responsible for
the collection and remittance of all regulations, tariffs, VAT and any other
taxes or charges; and (b) during this period, EFS may not sell or otherwise ship
EFS Produced Merchandise apparel. During the foregoing one (1) year
period (the “US Shipping Period”), EFS shall be permitted to initiate
negotiations for the terms of purchase of Merchandise from local Licensees in
the territories. In the event that EFS has not entered into
meaningful negotiations with any Licensee within three (3) months following the
end of the US Shipping Period, or if negotiations do not result in an actual
agreement within six (6) months following the end of the US Shipping Period,
then Client may remove such market(s) from the Territory (as defined in Section
3.4) in its sole discretion.
2.6. Manufacture of
Merchandise.
(a) Subject
to provisions in existing agreements as disclosed herein on Exhibit 7, which
shall be updated from time-to-time, Client’s prior written consent and the
Licensees’ right of first refusal as set forth below, EFS shall be permitted to
design and manufacture, or arrange for third parties (which have been approved
by Client in advance in writing, said approval not to be unreasonably withheld)
to manufacture on its behalf, products branded with the Playboy Marks to be sold
on the Websites and/or through the Catalogs (“EFS Produced
Merchandise”). EFS agrees that it shall approach Licensees regarding
any planned EFS Produced Merchandise and give such Licensees a seven (7) day
right of first refusal with respect to the design and manufacture thereof,
whereby EFS may set forth commercially reasonable requirements with respect to
pricing, delivery and product specifications. If such Licensee is
unwilling or unable to comply with EFS’ request, EFS shall be free to proceed
with the manufacturing of EFS Produced Merchandise as set forth in this Section
2.6. *****
(b) In
EFS’ discretion, EFS Produced Merchandise may be created in any product
categories where there is no exclusivity conflict with a Client Licensee, as set
forth in Exhibit 7.
(c) Subject
to Sections 2.6(a) and (b), EFS may subcontract the manufacture of EFS Produced
Merchandise, provided: (i) EFS notifies Client in advance of any intended
supplier/subcontractor and obtains Client’s prior written approval of such
supplier/subcontractor, which shall not be unreasonably withheld; (ii) EFS
obtains from each such supplier/subcontractor an executed written agreement in
the form substantially identical to that attached hereto and made a part hereof
as Exhibit 8; and (iii) furnishes a copy of each such executed agreement to
Client. EFS shall abide by, and shall ensure that any third-party
9
supplier/subcontractor
it uses to design and/or manufacture any EFS Produced Merchandise abides by any
design, manufacturing and other guidelines of Client. At the end of
each Year of the Term hereof and at any other time so requested by Client during
the Term, EFS shall provide Client with an updated list of the names and
addresses of all manufacturing sources, subcontractors, suppliers and others
which have been engaged in the design and/or manufacture of EFS Produced
Merchandise.
(d) EFS
understands and agrees that any and all EFS Produced Merchandise and any other
items bearing the Playboy Marks or intended for use in connection with
the EFS Produced Merchandise must be approved in accordance with the
approval process as set forth in Exhibit 9, attached hereto and hereby
incorporated by reference. In the event Client fails to provide its
approval or disapproval of any or all things submitted to Client pursuant to
this Section 2.6(d) within fourteen (14) days of Client’s receipt thereof, EFS
may send written notice to Client advising no response was
received. If Client does not respond within five (5) days of Client’s
receipt thereof, then Client shall be deemed to have given
disapproval.
2.7.
Co-branding. EFS
shall have the right to co-brand or co-market certain Merchandise, combining a
Playboy ▇▇▇▇ with other current EFS clients, subject to Client’s approval at
Client’s sole discretion as to the co-brand partner, the Merchandise that will
be co-branded and the appearance of the branding on the Merchandise. Any
co-branding with non-EFS clients will be subject to prior written approval by
Client on a case by case basis. The parties agree that the
co-branding or co-marketing of any Merchandise shall be subject to a separate
agreement to be negotiated between the parties, including provisions regarding
the royalties to be paid to Client for such Merchandise and any approval process
to be followed.
2.8.
Shopping
Portal. EFS shall be permitted to sell Merchandise on EFS
owned and operated shopping portal websites (“EFS Portals”) subject in all
respects to the standards, approvals and requirements applicable to the sale of
Merchandise on the Websites and provided that integration with third party
brands and products is acceptable to Client, approval not to be unreasonably
withheld. EFS agrees that it will use the merchandising presence on
the EFS Portals to also market the Websites in order to drive additional
customer acquisition.
2.9.
Mass-Customized
Merchandise. Client agrees that mass-customized Merchandise
(i.e., Merchandise
allowing consumers to choose customizable options, including, but not limited
to, color) shall be available for sale on the Websites and/or through the
Catalogs, such that customers may select and order pre-configured
semi-customized Merchandise based upon specifications that shall be agreed upon
in advance by Client and EFS. EFS shall be responsible for fulfilling
orders of all semi-customized Merchandise, including fulfilling any
build-to-order or special features requested by the customer, as permitted
during the order process.
2.10. Exclusive
Merchandise. Subject to Client’s prior written approval in
each case, EFS shall have the right to work with Client’s manufacturers for the
production of Merchandise that will be designed and offered for sale exclusively
via the Playboy Commerce Business.
2.11. Merchandise. All
EFS Produced Merchandise, co-branded Merchandise, mass-customized Merchandise,
exclusive Merchandise and Client Inventory shall be deemed “Merchandise” for
purposes of the calculation of Royalties (defined below) to be paid by
EFS.
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2.12. Merchandise Supplied to
Client and Employees. EFS agrees to make Merchandise available
to Client for Client’s own use, such as for events, photo shoots, gifts, etc.
***** when at least two (2) weeks’ notice is provided, and ***** when less than
two (2) weeks’ notice is provided. In addition, employees of Client
and EFS shall be permitted to purchase Merchandise through the Playboy Commerce
Business and shall receive a ***** discount on posted
prices. Further, EFS acknowledges that Client may offer discounts of
up to ***** to Client’s premium customers at Client’s discretion as part of a
loyalty program or other promotional incentive, and EFS shall honor such
discounts.
2.13. Product
Quality. EFS hereby warrants and agrees that: (a) the
Merchandise designed, manufactured, advertised, promoted, sold or distributed
under this Agreement shall meet the high standards of quality, workmanship,
material, design, size, color and style established by Client from time to time
and in accordance with the terms and conditions of this Agreement, provided that
EFS can rely on the approvals granted by Client pursuant to Section 2.6; (b) EFS
will not knowingly or negligently cause or authorize any or all of the
Merchandise not conforming to this Agreement to be sold or distributed, as doing
so may adversely affect Client’s goodwill in the Playboy Marks; and (c) any such
non-conforming Merchandise shall be destroyed at EFS’ expense. All of
the Merchandise shall conform to and comply with, in all respects, all Laws
governing the design, quality, labeling and safety of such Merchandise and shall
not violate the rights of any third parties. EFS shall not cause,
condone or authorize: (x) the use of any substandard or offensive materials in
or in connection with any of the Merchandise; (y) any violation of any Law,
including, but not limited to, provisions thereof imposing advertising standards
or requiring trade or content description of the Merchandise; or (z) the use of
any Playboy ▇▇▇▇ or any other word, device or symbol associated in any way with
any or all of Client and its subsidiaries and affiliates in connection with any
product or activity that is not the subject of this Agreement.
3.
Territory.
3.1. International
Sales. Upon the launch of Websites, the exclusive territory
for the Websites will include the USA, Canada, UK and Australia (collectively,
the “Website Territory”). For any market that is included in the
initial Website Territory or is added later, EFS agrees to (a) actively market,
including, but not limited to, via SEO (optimizing the Websites and creating
custom pages to maximize search engine optimization in local markets), search
engine marketing and affiliate marketing, (b) provide local billing and
customized Websites for local audiences, vis a vis language and targeted
merchandising, and (c) provide competitive and timely
fulfillment. Client agrees to register and maintain the applicable
domain name extensions in each such market, including .ca, .au, .com, and .uk
for the Websites; provided that such domain names are
available. Client acknowledges that the functionality for local
billing will not be deployed by March 1, 2008, but will be deployed for the UK
and Australia not later than ninety (90) days following launch of the
Websites.
3.2. Pilot
Program. Client agrees that within six (6) months of the
launch of the Websites, Client and EFS will use commercially reasonable efforts
to collaborate on a strategy for an international expansion of the customer base
for the Websites beyond the established Website Territory and to identify up to
two (2) markets for a pilot test to actively market. If the test is
successful as determined by Client in its reasonable discretion, these markets
will be added
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to
the Territory under the terms of the Agreement.
3.3.
Continuation of
Current Online Business. Client agrees that, barring cultural
sensitivities, or regulatory or legal circumstances, EFS shall be permitted to
continue operating the Websites to fulfill international online business as is
currently being conducted.
3.4. Catalog
Territory. Upon the launch of the Catalogs, the exclusive
territory for the Catalog will include the USA and Canada (“Catalog
Territory”). The Website Territory and the Catalog Territory shall be
collectively referred to as the “Territory.” The parties agree that
the Catalog Territory is the initial territory for the Catalogs and, within a
reasonable time period after the launch of the Websites, to discuss and agree
upon the strategy for the distribution of the Catalogs throughout the Website
Territory. In the event that if within one (1) year of launch of the
Websites, EFS has not begun distribution of the Catalogs in the UK or Australia,
Client may, in its sole discretion: (a) rescind EFS’ right to pursue such
distribution; and (b) either by itself or through third parties, effect Catalog
distribution in those countries; provided that in either case, EFS
shall perform all order fulfillment in connection therewith in accordance with
the terms and conditions of this Agreement and provided the parties can reach
agreement on the financial terms associated with such services.
3.5. Pre-Existing Domestic and
International Partners. EFS understands that Client has
pre-existing agreements internationally and domestically (e.g., product Licensees,
retail store partners, location-based entertainment venues and media
partners). EFS agrees that it will work in good faith with such
Client partners to identify areas of cross promotion and other
synergies.
3.6. International
Products. EFS understands that certain markets will have their
own product Licensees, and EFS will comply fully with all restrictions
(including, but not limited to, with respect to regulatory and brand issues) and
exclusive arrangements for all markets. Given that there may be
different product margins in such territories, the associated Royalty will be
computed separately for international markets (pursuant to Section 6.1(c)), as
necessary.
4. Advertising
Commitments.
4.1. Catalog
Budget. EFS will commit to an annual Catalog budget equal to
or greater than *****, which represents ***** of the actual amount spent by
Client on the Catalogs for 2007. In addition, EFS shall use
commercially reasonable efforts to achieve a target in 2008 of not less than
***** of 2007 Catalog circulated pages. It is EFS’ intent to maximize
both Website and Catalog sales, and the parties agree that they will collaborate
during the Term to define the budget and sales matrix to maximize sales in both
channels to bring the greatest overall sales growth. EFS shall
have the right to decrease the Catalog budget below the ***** minimum only if
EFS can demonstrate that online marketing activities yield a higher
return-on-investment and provided all such reduced dollars are then reinvested
in online marketing spend over and above the minimum online marketing commitment
described in Section 4.2, below.
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4.2. Online Marketing
Budget. EFS understands and acknowledges that agreement to an
online marketing plan is critical to the success of the Playboy Commerce
Business. Accordingly, EFS agrees it will spend annually a minimum of
***** of Net Website Sales (as defined below) on online marketing (“Online
Marketing Budget”). “Net Website Sales” shall mean total Merchandise
sales derived through the Websites via any order channel less applicable, actual
Merchandise returns, if any, during the applicable period. In the
event such online marketing yields a ***** return or more on spend at an average
gross margin return on advertising of *****, then EFS will increase the Online
Marketing Budget as it deems appropriate to maximize sales of
Merchandise. The Online Marketing Budget will be used by the EFS
marketing team to promote the PLAYBOY and BUNNY SHOP brands online, drive
traffic to and sales on the Websites, purchase search engine placement, drive
affiliate sales and to participate in other online marketing
initiatives. In addition, EFS commits to continuous SEO efforts
during the Term to maximize discovery of, and algorithmic search results for,
the Websites.
4.3. Corporate Marketing
Commitments. Client agrees that the following marketing
activities shall be performed:
(a) Client
and EFS shall jointly issue a press release following the execution of this
Agreement announcing Client’s selection of EFS as its end-to-end ecommerce
services and platform provider for the Websites; which release shall be subject
to Client’s final approval not to be unreasonably withheld;
(b) Subject
to confidentiality obligations hereunder, EFS may prepare and distribute a case
study upon launching the Websites with respect to the business arrangement
between EFS and Client, subject to Client’s prior written approval not to be
unreasonably withheld;
(c) Subject
to confidentiality obligations hereunder, EFS may to prepare and distribute a
second case study within three (3) to six (6) months of the launch of
the Websites detailing the return on investment resulting from the business
relationship between Client and EFS, subject to Client’s prior written approval
not to be unreasonably withheld;
(d) Client
shall provide a reasonable and appropriate reference on behalf of EFS to EFS
customers and potential customers contingent upon EFS’ successful implementation
of services hereunder;
(e) Client
shall provide reasonable press and investment analyst (in the event that EFS
becomes a publicly traded company) support for articles, interviews, and other
public relations activities relating to the relationship between EFS and
Client.
(f) EFS
may not issue any press release or make any public statement concerning the
subject matter of this Agreement or the parties’ relationship without Client’s
prior review and written approval, which shall not be unreasonably
withheld. EFS agrees to promptly make any changes reasonably
requested by Client to any public announcement, statement or use of Client’s
name and/or intellectual property prior to any public release.
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4.4.
Third Party
Advertising. Client grants EFS the right to: (a) sell and place on the
Websites promotional banner advertisements (the frequency, placement and volume
of which to be mutually agreed upon by the parties) that advertise and market
third party products and services that do not compete with Client’s products or
services and comply with Client’s advertising guidelines (“Advertisements”),
provided that such advertising efforts are mutual (i.e., equivalent promotion of
Client and its affiliates on third party websites) and are executed in a manner
that minimizes adverse impact on sales; and (b) send emails containing
Advertisements to customers who specifically opt in to receive email
notifications from EFS and Client. All Advertisements on the Websites
and emails to Playboy Commerce Business customers will require the prior written
consent of Client (which will not be unreasonably withheld or
delayed). EFS shall provide quarterly reports detailing page exits,
abandonment rates and overall Website conversion rates. If Client
determines based upon such reports that any such advertising is adversely
impacting Website conversions, EFS will, at Client’s direction, cease placing
Advertisements on the Websites and/or sending third party Advertisement
emails. Client shall be entitled to receive an Advertising Fee in
connection with the sale of Advertisements as set forth in Section
6.4.
(a)
EFS shall be responsible for maintaining the Advertisements on the
Websites. EFS shall ensure that the Advertisements do not violate any
Law or right of any third party or otherwise contain content reasonably likely
to diminish the value of Client’s brand or detract from the goodwill of the
Client. Upon written request of Client, EFS shall discontinue or
modify any Advertisement that in the reasonable opinion of Client is not
appropriate for the Client brand or is competitive with Client
business.
4.5.
Promotion of Client
Partners. At no additional cost to Client, EFS will
continuously and prominently promote Client’s related businesses on the Websites
and in emails to customers confirming orders, including without limitation
PLAYBOY-branded online, publishing and television properties, or such other
businesses as Client may request from time to time; provided, however, that in
the event any such promotional activities interfere with or diminish sales on a
Website, as demonstrated by EFS to Client’s reasonable satisfaction, EFS shall
be permitted to reduce or restructure such promotions as reasonably necessary to
improve sales on the applicable Website. EFS shall be responsible for
determining the timing, frequency and scope of all such promotional activities
with input from Client. Creative shall be provided by Client at
Client’s expense. Where there is traceable resulting commerce from
the above activities, EFS will be entitled to Client’s then current standard
bounties or affiliate fees.
4.6. Catalog Inserts &
Packaging Onserts. At Client’s cost for materials (but
excluding costs for labor or other EFS charges), EFS agrees to include up to two
(2) inserts per month in each of the Catalogs and up to two (2) onserts per
month in all outgoing Merchandise packaging, promoting Client products and
services and/or those of Client’s affiliates, Licensees or
sponsors. Client shall be responsible for all creative and printing
costs associated with such inserts and onserts. EFS may include
onserts in product packaging but only with the prior written approval of Client,
not to be unreasonably withheld.
5. User Agreements and
Data.
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5.1. Terms of Use & Privacy
Policy.
(a)
EFS shall prominently display, as is customary in the industry, and implement a
terms of use policy (“TOU”) on the Websites, which shall comply with all
applicable Laws and which at a minimum prohibits orders from any customer under
eighteen (18) years of age (or the applicable age of majority in the
jurisdiction in which the customer resides) and explains EFS’ purchasing and
return policies. EFS shall implement a privacy policy (“Privacy
Policy”) applicable to users of the Websites and the Catalogs that is no less
protective of user privacy than is required under the Laws of or otherwise
applicable to the Territory. Such Privacy Policy shall be prominently
displayed, as is customary in the industry, within the Websites and the Catalogs
and be easily accessible to users. EFS shall not take any action, and
shall not operate the Websites or the Catalogs, in contravention of such Privacy
Policy or of any applicable Law, including, but not limited to, data protection
provisions imposed by the United Sates, the European Union or the other
countries of the Territory and other applicable Laws.
(b) Client
shall have the right to review the TOU and Privacy Policy, to require reasonable
changes thereto (subject to applicable Laws), and to request certification from
EFS that it is complying with this Section 5.1. All such requests
shall be promptly met.
5.2. Information on Usage and
Users. EFS shall be solely responsible for and shall ensure
the security of all customer data collected in connection with the Playboy
Commerce Business, including, but not limited to, personally identifiable
information and transaction information (collectively, the “User
Data”). Client and EFS shall jointly own and have rights to all User
Data collected hereunder provided, however, that EFS shall only use the User
Data in strict accordance with the Privacy Policy and, subject to the remainder
of this Section 5, solely in connection with the Playboy Commerce
Business. EFS shall gather, retain in its records, and take all
necessary measures (which may include disclosure in the Privacy Policy and/or an
opt-in mechanism) in order to provide such User Data to Client, as well as
information on usage and viewing of the Websites and such additional information
as Client may reasonably request. EFS warrants that it has
implemented and will maintain during the Term of this Agreement an information
security program that is reasonably designed to: (a) ensure the security,
integrity and confidentiality of User Data collected hereunder; (b) protect
against anticipated threats or hazards to the security or integrity of User
Data; and (c) protect against unauthorized access to or use of User Data. EFS
agrees that included in EFS’ information security program are policies and
administrative and technical measures specifically prohibiting and preventing
the placement of User Data in or on any form of mobile media (e.g., CD’s or flash drives
and other external storage media). EFS shall notify Client
immediately in the event EFS believes that User Data collected hereunder has
been or potentially could have been accessed by an unauthorized individual and
shall cooperate with Client and indemnify Client regarding any investigation or
response to a security breach, including any claims, notifications or protection
of Client’s employees related therewith.
5.3. Existing User
Data. Client holds certain customer data relating to the
Playboy Commerce Business (“Existing Customer Data”) and hereby grants to EFS a
non-exclusive, limited, non-sublicensable, non-transferable, revocable license
to store and use such Existing Customer Data solely for purposes of the
operation and promotion of the Playboy Commerce
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Business. To
the extent that EFS makes available to Client any customer data previously
collected by EFS and permitted to be disclosed to Client (“EFS Customer Data”),
EFS shall retain ownership of such EFS Customer Data and Client shall have the
right to use such user data solely in connection with the
Websites. Existing Customer Data shall be deemed User Data for
purposes of this Agreement; provided, however, that notwithstanding anything to
the contrary in Section 5.2, Existing Customer Data shall be owned solely by
Client.
5.4. Reporting and Use of User
Data. Upon request from Client, EFS agrees to provide to
Client any and all User Data generated hereunder and such reports as reasonably
requested by Client from time to time relating to User Data. EFS
shall use User Data solely for purposes of the operation and promotion of the
Playboy Commerce Business, and except as specifically approved in advance in
writing by Client, shall not use such User Data to market any other EFS or
third-party products or services to users or otherwise use, transfer or sell any
User Data collected hereunder. Notwithstanding the foregoing, EFS may
use and exchange User Data in accordance with standard DMA practices for
purposes of customer prospecting solely in order to grow the Playboy Commerce
Business. EFS shall not cross-market between the PLAYBOY-branded
Catalog and Website and the BUNNY SHOP-branded Catalog and
Website. Client may use User Data free of charge and in any
manner (including, to the extent permitted by applicable Laws, sharing such data
with its affiliates and partners). Client reserves the right to
periodically audit EFS’ customer lists to ensure compliance with this Section
5.4 provided, however, that any such audit shall be performed at the offices of
EFS (or at such other location(s) as EFS’ customer lists may be held) and
conducted in such a manner so as to preserve EFS’ customer lists as a trade
secret. In no event shall Client be permitted to copy, possess, or
use EFS’ confidential customer data other than to ensure compliance with this
Section 5.4.
5.5. Opt-In
List. EFS shall be permitted to offer customers who
visit the Websites the option to receive emails from EFS concerning the
Merchandise as well as offers by EFS or third-parties with which EFS has an
established relationship and which have been approved in advance in writing by
Client. Any customers who do not specifically opt-in to receiving
email communications from EFS shall be excluded from such
communications.
5.6. Demographic
Data. EFS shall be permitted to collect demographic data from
customers that visit the Websites, which shall include: IP address, geographic
information regarding the location of the customer (i.e., zip code, area code,
city, state and country), age, and gender (“Demographic
Data”). Client and EFS shall jointly own and have rights to all
Demographic Data collected hereunder.
5.7. Analysis of User Data and
Demographic Data. EFS shall have the right to analyze the User
Data and Demographic Data for a variety of purposes including, but not limited
to, performing market studies, trend reporting, sales performance, demographic
studies and comparison/analysis with third party market data and consumer
purchasing information (“EFS Analysis”). EFS shall be permitted to
combine the EFS Analyses with other EFS studies and, further, to share the EFS
Analyses with third parties provided that no proprietary information of Client
or personally identifiable information of consumers is disclosed to such third
parties.
6. Payments and
Fees.
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6.1. Royalties. EFS
shall pay a royalty (“Royalty”) to Client to be calculated and paid as follows:
(a) the Royalty shall be determined based upon the percentage applicable to the
Merchandise Gross Margin (pursuant to the chart in Exhibit 10, attached hereto
and hereby incorporated by reference); (b) multiplied by the Net Merchandise
Sales (as defined below) as applicable in each case for the applicable Calendar
Quarter or Year (each as defined below). The Royalty calculation
period shall begin upon the first order received by EFS via any order channel
(e.g., on a Website,
via mail, fax or telephone) and shall be paid to Client within fifteen (15) days
following the conclusion of each calendar quarter (“Calendar Quarter”) based on
the calendar year (“Year”), as calculated on the actual Merchandise Gross Margin
and Net Merchandise Sales (each as defined below) for such Calendar
Quarter.
(a) For
purposes of this Agreement, “Merchandise Gross Margin” shall be defined as the
Net Merchandise Sales through the Playboy Commerce Business during the
applicable Calendar Quarter or Year, less (i) the actual unit cost of goods sold
paid by EFS for the manufacture of such goods, which shall not include expenses
relating to overhead or allocations, (ii) reductions for markdowns, discounts
and allowances, and (iii) actual Merchandise inventory shrinkage during the same
period, which shall in no event exceed *****. The Merchandise Gross
Margin scale for purposes of calculating the Royalty shall be determined from
Exhibit 10 based upon the Minimum Royalty (as defined in Section 6.2) set forth
in Exhibit 10.
(b)
For purpose of this Agreement, “Net Merchandise Sales” shall be defined as
total Merchandise sales derived through the Playboy Commerce Business via any
order channel less applicable, actual Merchandise returns, if any, during the
applicable Calendar Quarter.
(c) Pursuant
to Section 3.6, EFS shall pay a quarterly Royalty to Client calculated as set
forth in Section 6.1 using separate Royalty percentages on a country-by-country
basis based on product margins for each such country, as agreed upon by the
parties.
6.2. Minimum
Royalty. Notwithstanding revenue actually generated by EFS in
connection with the Playboy Commerce Business hereunder, it is understood and
agreed that the Royalty paid to Client in each Year of the Term shall not be
less than the amounts set forth in Exhibit 10 (the “Minimum
Royalty”). In the event the Minimum Royalty is not achieved in any
Year based on the Royalty payments made in such Year, EFS shall pay the
shortfall between the Royalty earned and the applicable Minimum Royalty due, if
any, within sixty (60) days of the end of such Year.
(a) In
the event that the Minimum Royalty is met in any applicable Year, (i) EFS shall
not be permitted to carry over any overages into the next Year and (ii) EFS will
not be eligible for any refund from any Minimum Royalty or Royalty previously
owed or paid to Client. In the event EFS does not meet the full
amount of the Minimum Royalty during the applicable Year in which such Minimum
Royalty was owed to Client, EFS will not be permitted to offset the shortfall
with any overages from any previous or subsequent Year, and a new Minimum
Royalty will be due as set forth in this Section 6.2. For the
avoidance of doubt, the Minimum Royalty is a minimum net sum from which no taxes
or charges of any sort may be deducted.
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(b) In
the event that this Agreement is terminated prior to the end of the Initial
Term, any portion of the Year 1 Minimum Royalty that has been spread across
Years 2 through 5 of the Term pursuant to Exhibit 10 and which has not yet been
paid to Client, shall immediately become due and owing.
6.3. Royalty on Shipping
Charges. In addition, Client shall be entitled to receive a royalty
payment on the shipping and handling charges paid by customers during the
applicable Calendar Quarter (“Shipping Royalty”) equal to the Royalty percentage
multiplied by the shipping profit. For purposes of this Section 6.3,
the shipping profit shall be calculated as the gross charges for shipping less
shipping materials, cost of freight and dunnage. The Shipping
Royalties paid to Client shall be counted towards the Minimum Royalty for the
applicable Year. If there is no shipping profit, Client shall not be
owed any Shipping Royalty, nor will Client be impacted by any shipping
losses.
6.4. Advertising
Revenues. Client shall be entitled to receive an advertising
fee of ***** of the Net Advertising
Revenue derived by EFS from Advertisements pursuant to Section 4.4 (“Advertising
Fee”). “Net Advertising Revenue” shall be defined as the gross
revenue derived from the sale of Advertisements less: (a) all direct costs
(i.e., commissions and
ad-server related fees) incurred by EFS and third party fees paid out by EFS for
the execution, maintenance and ongoing facilitation of Advertisements on the
Websites and (b) ***** of gross revenue derived from the sale of Advertisements,
which shall be reinvested by EFS for online promotions and advertising
(“Advertising Marketing Allocation”). Neither Net Advertising Revenue
nor the Advertising Fee shall be counted toward the Minimum Royalty obligation
of EFS.
6.5. Payment of Royalties;
Reports. Except as otherwise specifically set forth, all fees
due to Client shall be due and payable on or before the fifteenth (15th) day
following the applicable Calendar Quarter. EFS shall use commercially
reasonable efforts to provide within three (3) days, but in no event
later than five (5) days, following such Calendar Quarter, regardless of whether
any payment is due, a report that includes at a minimum: (a) gross sales broken
down by each Website, Catalog and product, gross shipping charges and gross
advertising revenue generated during such Calendar Quarter; (b) a detailed
calculation of Merchandise Gross Margin, Net Merchandise Sales, shipping profit
and Net Advertising Revenue; (c) a detailed calculation of the Royalty, Shipping
Royalty and Advertising Fee payable to Client for such Calendar Quarter; (d)
Client’s aggregate Royalty, Shipping Royalty and Advertising Fee earned and paid
to date; and (e) such other information as may be requested by Client from time
to time. In addition, EFS shall provide to Client interim monthly
reports.
6.6. Purchase of Product
Inventory. Pursuant to Section 2.2, EFS shall pay Client a
non-refundable purchase price of ***** of the wholesale price (i.e., the
Client’s original cost) as determined as of forty-five (45) days after the
Effective Date for all Client Inventory. Such amount shall be paid
Net ninety (90) days following entry of such Client Inventory into EFS’ system;
provided, however, that EFS shall enter all such Client Inventory upon receipt
or shall promptly notify Client in the event it is unable to do so due to
missing information (i.e. barcodes) or because any product is incomplete or
otherwise in a condition not fit for immediate resale.
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6.7. Method of
Payment. All payments required to be made by EFS hereunder
shall be made by electronic transfer of immediately available funds in United
States Dollars through a bank designated by Client. In the event that
EFS receives orders through the Playboy Commerce Business or otherwise hereunder
involving foreign currency, in order to determine the proper rate of exchange to
be applied to the payments due hereunder, it is agreed that EFS shall calculate
such payments on a Calendar Quarter basis in local currency (with each such
quarter considered to be a separate accounting period for the purpose of
computing the payments) and that EFS shall compute a conversion of each such
Calendar Quarter total into United States Dollars utilizing the selling rate of
exchange in effect on the last day of each relevant Calendar Quarter as quoted
by Reuters in the Wall Street Journal.
6.8. Costs and
Expenses. Unless expressly stated otherwise in this Agreement
or otherwise agreed in writing, each party shall be responsible for any costs or
expenses incurred by it in connection with its obligations under this
Agreement.
6.9. Taxes. As
between the parties, EFS shall be responsible for, without limitation, any tax,
duty, levy, income, royalty, withholding tax or charge required by any Law now
in effect or hereafter enacted (other than Client’s direct net income taxes)
including, without limitation, sales, use, value-added, property, royalty and
excise or other similar taxes, licenses, import permits, state, county, city or
other taxes arising out of or relating to this Agreement. EFS will be
responsible for the timely notification, remittance, filing and reporting of all
such taxes to the proper tax authorities at the rates required by
Law.
6.10. Accounting
Reports. EFS shall provide, at its sole expense:
(a)
Client acknowledges that EFS is not currently able to provide a SAS 70 Type II
Report. EFS will endeavor to become SAS 70 compliant and once
compliant, shall provide a SAS 70 Type II Report to Client or its
affiliates. Until EFS becomes compliant EFS may provide an
alternative report acceptable to Client or its affiliates. Reports
pursuant to this Section 6.10(a) shall be provided for the one-year period
ending September 30th of each year by December 31st of each year of the Term;
and
(b) A
copy of EFS’ Independent Auditors’ Report and audited balance sheet for each
Year of the Term within thirty (30) days of the close of such
audit.
6.11. Verification of Information;
Audit Right Generally. During the Term of this Agreement and
for two (2) years thereafter, (a) EFS shall maintain complete and accurate books
and records relating to revenue generated under this Agreement; and (b) Client
and/or its authorized representative(s) shall have the right to examine, review,
copy and audit EFS’ books and records relating to revenue generated under this
Agreement to verify the accuracy of the payments and associated information
provided by EFS and to verify EFS’ compliance with the terms and conditions of
this Agreement. If the result of the audit reveals deviations that
indicate that Client was underpaid, EFS shall immediately pay the sum of such
underpayment plus interest at a rate of ***** from the date such payment was
first due. If the result of the audit reveals deviations by ***** or
more for any one year of the Term, EFS shall pay the sum due plus interest as
set out above and shall further bear the reasonable costs and expenses
associated with audit.
19
7. License Grants
7.1.
Playboy
Content. During the Term and subject to the terms, conditions,
and limitations set forth in this Agreement, Client grants EFS a limited,
non-exclusive, non-transferable, non-assignable (without any right to
sublicense), world-wide license to use, modify, create derivative works of,
publish, reproduce, broadcast, exhibit and display the Playboy Content solely in
connection with the design, publication, distribution, operation and promotion
of the Playboy Commerce Business.
(a)
In the event that EFS creates any modifications, alterations or other
derivative works of any Playboy Content (“Derivative Works”), EFS hereby
irrevocably assigns to Client all right, title and interest in and to all of
those Derivative Works, including the copyrights and other proprietary rights
therein. EFS further agrees to cooperate with Client’s reasonable
requests to effect or perfect such assignment and hereby provides Client with an
irrevocable power of attorney appointing Client as EFS’ irrevocable
attorney-in-fact coupled with an interest to execute all such assignments on
behalf of EFS. All Derivative Works are hereby licensed back to EFS
subject to the limitations that are applicable hereunder to the Playboy
Content. EFS shall deliver to Client all original versions of
Derivative Works upon the request of Client.
7.2. Client
Trademarks. During the Term and subject to the terms,
conditions, and limitations set forth in this Agreement, Client grants EFS a
limited, non-exclusive, non-transferable, non-assignable (without any right to
sublicense), world-wide license to use the Client trademarks and/or service
marks as set forth on Part A of Exhibit 1 (the “Playboy Marks”) solely in
connection with the design, publication, distribution, operation and promotion
of the Playboy Commerce Business. Except in connection with marketing
obligations hereunder or as otherwise expressly permitted by Client in writing,
EFS shall not use any Playboy ▇▇▇▇ on or in connection with, or to permit or
facilitate any presentation or promotion of, any Internet website(s) other than
the Websites or any other catalog other than the Catalogs.
(a)
Use of Playboy
Marks. EFS recognizes and acknowledges that the Playboy Marks
are internationally well-known by the general public and are associated in the
public mind with Client’s affiliate, Playboy Enterprises International, Inc.
(“PEII”), and are marks in which PEII has acquired considerable and valuable
goodwill. EFS acknowledges that Client and PEII have an interest in
maintaining the worldwide goodwill, recognition and standards of the Playboy
Marks. Consequently, with respect to uses of the Playboy Marks in the
normal course of business (i.e., for marketing and
promotional purposes), EFS shall submit representative samples of such uses to
Client as soon as practicable for purposes of post-use audit. If as a
result of any post use audit, Client determines in its reasonable discretion
that the use of a Playboy ▇▇▇▇ is improper or inappropriate, Client will notify
EFS, and EFS shall correct the problem as soon as reasonably
practicable. Any uses not in the ordinary course must be approved in
advance in writing by Client, and Client shall have the right to require EFS to
make any changes and/or corrections with regard to the Playboy Marks as Client
may reasonably deem necessary to maintain the quality standards and the goodwill
associated with the Playboy Marks. EFS agrees to make and incorporate
such changes or corrections promptly upon notice from Client and at EFS’ sole
cost and expense.
20
(b) Modifications of Playboy
Marks. EFS may modify or alter the Playboy Marks or combine
the Playboy Marks with any other words or symbols only if, and to the extent
that, Client shall have authorized such modification or alteration or
combination specifically in advance in writing. Any such permitted
modification/alteration and/or combination shall be referred to herein as an
“Authorized Modification.” No such authorization by Client shall
constitute a representation or warranty that use of the Authorized
Modification(s) by EFS or by anyone else will not violate the rights of others
in any jurisdiction or that such Authorized Modification will constitute an
enforceable trademark in any jurisdiction.
(c)
Assignment of
Authorized Modifications. EFS hereby irrevocably assigns, and
Client hereby accepts, all right, title and interest in and to each and every
Authorized Modification, and EFS agrees to cooperate with all reasonable
requests by Client to effect or perfect such assignment. All Authorized
Modifications (if any) are hereby licensed back to EFS subject to the
limitations applicable to the Playboy Marks hereunder.
(d) Goodwill. EFS
will not obtain any right, title or interest in the Playboy Marks by virtue of
their use of the Playboy Marks under this Agreement and any additional goodwill
associated with the Playboy Marks that is created through use of the Playboy
Marks shall inure solely to the benefit of PEII.
(e)
Variations. During
and after the Term, EFS will not apply for or use any domain names, trademarks
or service marks that include or are confusingly similar to any of the Licensed
Domain Names (as defined in Section 7.3, below), Playboy Marks or any other
similar marks or variations thereto.
(f) Notices. EFS
must display on the Websites and Catalogs such trademark and copyright notices
as requested by Client and/or as required by applicable Law. Except
as expressly approved in writing by Client, neither the Playboy Marks nor any
notices associated therewith may be changed, manipulated or modified in
appearance.
7.3. Domain
Names. During the Term and subject to the terms, conditions
and limitations of this Agreement, Client hereby grants EFS, a limited,
non-transferable, non-assignable (without any right to sublicense) world-wide
license to use the Internet location or resource designators (URLs, domain
names, etc.) set forth in Part B of Exhibit 1 hereto, and/or to the extent
approved in advance in writing by Client, as the case may be, modifications
thereof (the “Licensed Domain Names”), as the domain name(s) and Internet
locators/designators for the Websites during the Term. The Licensed
Domain Names shall at all times be owned by PEII as
registrant. Client agrees that the registration for the Licensed
Domain Names and for any successor URL’s shall be maintained and that EFS shall
remain the technical contact for the duration of the
Agreement. If EFS desires to use any other domain names or
Internet locators/designators in connection with the Websites, Micro Sites or
otherwise utilizing PLAYBOY- or PLAYBOY-related marks, EFS shall so notify
Client, which may at its sole discretion, choose to register the same at its
expense. Any such additional domain names or Internet
locators/designators shall be owned by PEII as registrant, and EFS shall receive
a limited license to use the same as Licensed Domain Names hereunder, solely in
connection with the Websites and/or Micro Sites during the
Term. Unless otherwise agreed by the parties in
21
writing,
the Licensed Domain Names shall at all times remain on PEII servers and will be
redirected to the Websites.
7.4. Client Take-Down
Rights. Despite conformity to the Guidelines and/or the terms
and conditions of this Agreement and/or the prior written approval by Client,
Client shall be entitled to review all uses of the Playboy Marks and all
utilizations of the Playboy Content at any time and in its sole
discretion. Client shall be entitled to require alteration or
termination of any specific use if it determines in its reasonable and good
faith discretion that such action is necessary or appropriate and EFS shall
promptly comply with any such demand. Nothing in this Section 7.4
shall create any obligation on the part of Client to identify or prevent
improper uses of material or inclusion of improper material in connection with
the Playboy Commerce Business, nor shall Client or its affiliates have any
liability for nonfeasance, negligence, or other conduct in such reviews or for
failing to conduct any such reviews.
7.5. Exclusions. Nothing
in this Agreement shall restrict Client (or its affiliates) from the following
commerce activities in the Territory: any DVD commerce (rental or
sales), sales by product Licensees via third-party commerce websites or mail
order sales or similar activities. In addition, EFS agrees that
Client’s location-based entertainment partners, as listed in Exhibit 11,
attached hereto and hereby incorporated by reference, which may be updated from
time to time, may engage in limited e-commerce activities primarily, but not
limited to, for co-branded products (e.g., Playboy at the Palms co-branded
merchandise).
8. Confidentiality.
8.1. Confidential
Information. EFS and Client each acknowledge that during the
Term of this Agreement each party may have access to the proprietary or trade
secret information of the other concerning the other’s business affairs,
property, methods of operation, processing system or other information provided
by the disclosing party to the receiving party that is identified as, or should
reasonably be understood to be (given its content or the circumstance of its
disclosure), proprietary (collectively, the “Confidential
Information”). Information shall not be considered Confidential
Information under this Agreement that the recipient can document: (a) is
publicly known prior to or after disclosure hereunder other than through acts or
omissions attributable to the recipient or its employees or representatives; (b)
is already known to the recipient at the time of disclosure hereunder without
reference to the disclosing party’s Confidential Information; (c) is disclosed
in good faith to the recipient by a third party having a lawful right to do so;
(d) is the subject of written consent of the party which supplied such
information authorizing disclosure; or (e) is independently developed by the
receiving party without reference to Confidential Information of the disclosing
party.
8.2. Obligations. EFS
and Client each agree to use the Confidential Information of the other party
solely to the extent necessary to fulfill its obligations or exercise its rights
hereunder, and not for any other purpose. Each party agrees (a) that
it will not disclose to any third party or use any Confidential Information
disclosed to it by the other except as expressly permitted in this Agreement and
(b) that it will take all reasonable measures to maintain the confidentiality of
all Confidential Information of the other party using at least the degree of
care and security as each uses to maintain the confidentiality of its own
Confidential Information. Notwithstanding the foregoing, each party
may disclose Confidential Information (x) to their officers, directors,
22
employees,
agents, attorneys and consultants who need to know such information and who are
bound by restrictions regarding disclosure and use of such information
comparable to and no less restrictive than those set forth herein, (y) as
required by applicable Law, provided that in the case of any filing with a
governmental authority that would result in public disclosure of the terms
hereof, the parties shall mutually cooperate to limit the scope of public
disclosure to the greatest extent possible; and (z) to the extent required by a
court of competent jurisdiction or other governmental authority or otherwise as
required by Law, provided that the receiving party uses reasonable efforts to
provide the disclosing party with prior notice of such obligation in order to
permit the disclosing party a reasonable opportunity to take legal action to
prevent or limit the scope of such disclosure.
9. Ownership.
9.1. In
General. Each party hereby reserves for itself all rights not
specifically granted to the other party in this Agreement. Each party
will use good faith efforts to cooperate with the other party in the protection
of their intellectual property rights.
9.2. EFS. As
between the parties, EFS retains ownership of, and all right, title and interest
in and to any intellectual property including trademark, trade name, patent,
copyright, technology, trade secret, software, source code or know-how created
for or relating to the Playboy Commerce Business that was affixed to, used with
or incorporated into the Playboy Commerce Business by EFS, but specifically
excluding the Client Property, as defined below (collectively, the “EFS
Property”). Nothing contained in this Agreement shall be deemed to
transfer or convey to Client any ownership rights whatsoever in or to the EFS
Property or grant any license to the EFS Property other than in connection with
the Playboy Commerce Business. To the extent that Client is deemed to
obtain any interest or ownership rights in the EFS Property, Client hereby
assigns, transfers and conveys to EFS, to the maximum extent permitted by
applicable Law, all of Client’s right, title and interest therein used by Client
under or in connection with this Agreement so that EFS will be the sole owner of
all rights therein and further agrees to cooperate with EFS during and after the
Term to effect and perfect all assignments.
9.3. Client. As
between the parties, Client retains ownership of, and all right, title and
interest in and to any and all Playboy Marks, Playboy Content, Derivative Works,
Licensed Domain Names, User Data and any other materials provided by or on
behalf of Client to EFS hereunder, which are incorporated in or are otherwise
related to the Playboy Commerce Business (collectively, the “Client
Property”). Nothing contained in this Agreement shall be deemed to
transfer or convey to EFS any ownership rights whatsoever in or to the Client
Property. To the extent that EFS is deemed to obtain any interest or
ownership rights in the Client Property, EFS hereby assigns, transfers and
conveys to Client, to the maximum extent permitted by applicable Law, all of
EFS’ right, title and interest therein used or created by EFS under or in
connection with this Agreement so that Client will be the sole owner of all
rights therein and further agrees to cooperate with Client during and after the
Term to effect and perfect all assignments.
10. Term and
Termination.
23
10.1. Term. This Agreement
shall commence as of the Effective Date and, unless earlier terminated as
provided under this Agreement, shall terminate five (5) years following the date
of launch of the first Website, but in no event later than February 28, 2013
(the “Initial Term”). This Agreement shall automatically renew for an
additional period of three (3) years (such renewal and each subsequent renewal
shall be defined as a “Renewal Term”) provided that EFS achieves Net Merchandise
Sales of at least ***** during the fourth year following launch of the first
Website. In such event, the annual Minimum Royalty during the Renewal
Term, if any, shall be equal to the greater of: (a) ***** of the actual Royalty
paid to Client in Year 5; and (b) *****. The Initial Term and any and
all Renewal Terms shall be collectively referred to as the “Term.”
10.2. Termination for
Breach. Each party shall have the right to terminate this
Agreement, in whole or in part, if the other party materially breaches this
Agreement and such breach is not cured within thirty (30) days’ written notice
from the non-breaching party.
10.3. Termination for
Bankruptcy. Each party shall have the right to immediately
terminate this Agreement if the other party (a) is involuntarily made subject to
any bankruptcy or insolvency proceedings and such proceedings are not dismissed
within sixty (60) days of the filing of such proceedings or (b) voluntarily
institutes any bankruptcy or insolvency proceedings, corporate reorganization,
liquidation, assignment for the benefit of creditors, or appointment of a
receiver or trustee.
10.4. Effects of
Termination. Upon and after the termination of this Agreement
(the “Termination Date”):
(a) All
accrued and unpaid amounts shall become immediately due and payable, including
the pro rata amount of the annual Minimum Royalty for the applicable Year based
upon the Termination Date;
(b)
All licenses granted pursuant to this Agreement shall immediately
terminate;
(c) EFS
shall cease the display and use of the Playboy Content, Derivative Works,
Playboy Marks, Authorized Modifications, Licensed Domain Names in any
manner;
(d) EFS
shall return any and all Playboy Content and Derivative Works to Client within
five (5) business days of the Termination Date;
(e) Each
party will promptly, at the direction of the other party, return or destroy any
and all Confidential Information of the other party in any medium and all copies
thereof;
(f)
EFS shall discontinue the use of any User Data collected hereunder, and
subject to applicable Laws, shall promptly deliver and assign all User Data to
Client per Client’s instructions; and
24
(g)
If so requested by Client in connection with a planned or potential
continuation of the business, EFS shall cooperate with Client and its affiliates
in order to transfer any remaining operations to them or any other entity that
Client may so designate without interruption of the Playboy Commerce Business’
availability.
10.5. Outstanding
Orders. As of the Termination Date, EFS shall not process any
new orders placed through the Playboy Commerce
Business. Notwithstanding the foregoing, EFS may fulfill any
outstanding orders placed through the Playboy Commerce Business prior to the
Termination Date and may continue collection activities related thereto, which
shall be subject to Section 6 hereof.
10.6. Survival. Sections
6.11, 7.5, 8, 9, 10.4, 10.5, 10.6, 11.4, and 12 through 14 shall survive any
expiration or termination of this Agreement. In addition, Sections
6.1 through 6.10 shall survive any termination of this Agreement until all
amounts due in connection with activities during the Term are paid and all
reports provided.
11. Warranties and
Disclaimers.
11.1. By Both
Parties. Each party represents and warrants that (a) it has
the full right and authority to enter into this Agreement, perform its
obligations and grant the rights and licenses granted hereunder; and (b) its
execution, delivery and performance of this Agreement will not result in a
breach of any material agreement or understanding to which it is a party or by
which it or any of its material properties may be bound.
11.2. By
EFS. EFS further represents and warrants that (a) the Websites
and the Catalogs and all content contained therein (but specifically excluding
the Playboy Marks and Playboy Content) do not and will not infringe any
intellectual property right of any third party; (b) it has all necessary
intellectual property rights in and to the Merchandise to be offered for sale
through the Playboy Commerce Business; (c) it will at all times abide by and
comply with the Privacy Policy and all other Laws applicable to operation of the
Playboy Commerce Business, including, but not limited to the CANSPAM Act of 2003
and those related to privacy; (d) it (i) shall use its best efforts to ensure
that all performers featured in any content and/or Merchandise offered for sale
through the Catalogs and/or the Websites were at least eighteen (18) years of
age at the time of production and (ii) shall comply with all record keeping,
labeling and other requirements pursuant to Section 2257, as the same may be
amended from time to time; (e) it will at all times take commercially reasonable
steps to ensure the accuracy of all information contained on the Websites and in
the Catalogs; and (f) the Playboy Commerce Business, including, without
limitation, the Catalogs and Websites and all aspects thereof, will be operated
in a workmanlike, timely and professional manner consistent with industry
standards and EFS’ operation of other third-party branded commerce
offerings.
11.3. By
Client. Client further represents and warrants that it has the
full right and authority to grant the rights and licenses to the Playboy Marks,
the Licensed Domain Names and Playboy Content set forth herein.
25
11.4. Disclaimer. Except
as expressly set forth in this Agreement, and to the extent permitted by Law,
each party expressly disclaims all warranties and representations, whether
express, implied or statutory, including any implied warranty of
merchantability, non-infringement or fitness for a particular
purpose. Client does not warrant that the Playboy Content will be
error-free or will meet EFS’ specific needs. Client makes no warranty
whatsoever regarding the accuracy of the information contained in the Playboy
Content.
12. Indemnification.
12.1. By
EFS. EFS shall indemnify, defend and hold Client, its parent,
subsidiaries and affiliates and the directors, officers, shareholders, employees
and agents of each harmless against any claims, suits, losses, liabilities,
injuries or damages (including, without limitation, reasonable attorneys’ fees
and litigation expenses) arising out of any third party claim relating to (a)
the Playboy Commerce Business, including, the marketing and operation thereof;
(b) the Privacy Policy; (c) EFS’ use of any Client Property not permitted by or
inconsistent with this Agreement; (d) any claims brought by users, service
providers or others in connection with this Agreement; (e) the User Data,
including the collection, storage and/or use thereof; (f) any alleged action or
failure to act whatsoever in regard to EFS’ performance of its obligations and
duties under this Agreement; (g) the EFS Sites, including, but not limited to,
the operation of the EFS Sites and content contained thereon; (h) any breach by
EFS of any of its representations and warranties set forth above; (i) the sale
or availability through the Catalogs and/or Websites of any content and/or
Merchandise, which includes any performer who was less than eighteen (18) years
of age at the time of production; (j) any EFS Produced Merchandise; (k) any
alleged non-conformity to or non-compliance with any Law, including, but not
limited to, pertaining to the content, design or quality of any portion of the
Playboy Commerce Business; or (l) any claim or allegation by a third party
claiming rights (including, but not limited to, any copyright, trademark or
patent rights) in or to EFS Property, the Derivative Works (to the extent caused
by EFS), the Merchandise available for sale via the Playboy Commerce Business or
the operation of the Playboy Commerce Business.
12.2. By
Client. Client will indemnify, defend and hold EFS, its
parent, subsidiaries and affiliates and the directors, officers, shareholders,
employees and agents of each harmless against any claims, suits, losses,
liabilities, injuries or damages (including, without limitation, reasonable
attorneys’ fees and litigation expenses) arising out of any third party claim
relating to (a) the authorized use by EFS in compliance with this Agreement of
the Client Property in connection with Playboy Commerce Business; (b) any
alleged action or failure to act whatsoever in regard to Client’s performance of
its obligations and duties under this Agreement; (c) any breach by Client of any
of its representations and warranties set forth above; (d) any alleged
non-conformity to or non-compliance with any Law, including, but not limited to,
pertaining to the content, design or quality of any portion of the Client
Property; or (e) any claim or allegation by a third party claiming rights in or
to Client Property.
12.3. Procedure. If
a claim is made against an indemnified party, such party will promptly notify
the indemnifying party of such claim. Failure to so notify the
indemnifying party will not relieve the indemnifying party of any liability
which the indemnifying party might have, except to the extent that such failure
materially prejudices the indemnifying party’s legal
26
rights. The
indemnified party shall cooperate with the indemnifying party in the defense
and/or settlement of the claims at the expense of the indemnifying party;
provided however, the indemnifying party shall assume control of the defense of
such claim. The indemnified party may participate in the defense of
the claim at its own cost. Notwithstanding anything contained herein,
(a) the indemnified party shall not enter into any settlement or compromise that
provides for any remedy of the claim without the prior written approval of the
indemnifying party, which approval will not be unreasonably withheld; and (b)
EFS may not enter into any settlement or compromise that involves or affects any
Playboy ▇▇▇▇, Licensed Domain Name, Playboy Content, Derivative Work or
Authorized Modification without Client’s prior written approval.
13. Limitation of
Liability. EXCEPT IN THE EVENT OF A BREACH OF SECTION 8
(CONFIDENTIALITY) OR LIABILITY ARISING UNDER A PARTY’S INDEMNIFICATION
OBLIGATIONS UNDER SECTION 12, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR ANY MATTER RELATED HERETO,
INCLUDING WITHOUT LIMITATION, LOST BUSINESS OR LOST PROFITS, EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
14. Miscellaneous.
14.1. Independent
Contractors. The rights and powers herein granted to EFS are
those rights and powers of an independent contractor only, and this Agreement
shall not, and is not intended to, create any other relationship nor make,
constitute or appoint EFS an agent or employee of Client. It is
expressly understood and agreed that Client shall not under any circumstances be
liable to EFS for all or any part of any losses EFS may sustain. EFS
shall have no power to obligate or bind Client in any manner
whatsoever.
14.2. Severability. Each
provision of this Agreement shall be severable. If, for any reason,
any provision herein is finally determined to be invalid and contrary to, or in
conflict with, any existing or future law or regulation by a court or agency
having valid jurisdiction, such determination shall not impair the operation or
affect the remaining provisions of this Agreement, and such remaining provisions
will continue to be given full force and effect and bind the parties
hereto. Each invalid provision shall be curtailed only to the extent
necessary to bring it within the requirements of such law or
regulation.
14.3. Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties named
herein and their respective heirs, legal representatives, successors and
permitted assigns. Notwithstanding the foregoing, this Agreement and
all rights and duties hereunder shall not, without the prior written consent of
Client, in any manner be assigned, mortgaged, licensed, or otherwise transferred
or encumbered by EFS or by operation of law; provided, however, that EFS may
assign this Agreement to an acquirer of all or substantially all of its assets
without Client’s consent, but only in the event that in Client’s reasonable
determination (a) key EFS management (as defined by Client at the time of
acquisition) will remain indefinitely with EFS or replacement management is
reasonably acceptable to Client and no less experienced than those in place as
of the Effective Date hereof; (b) the acquirer can demonstrate to Client’s
reasonable satisfaction the availability of financial resources, and the ability
and intention, to
27
adequately
invest in growing the Playboy Commerce Business (by way of example, the acquirer
shall have a minimum net worth equal to or above that of EFS as of the Effective
Date hereof); (c) such assignment will not have a detrimental impact on the
Playboy Commerce Business or Client’s other businesses; and (d) the acquirer is
otherwise able to honor all financial terms and assume all obligations of EFS
hereunder. In addition, EFS may not assign this Agreement without
Client’s consent to a competitor of Client or any of Client’s
businesses. Client’s consent to any proposed assignment hereunder
shall not be unreasonably withheld or delayed. Any purported
transaction not specifically permitted under this Section 14.3 shall be null and
void ab initio.
14.4. Entire Agreement;
Counterparts. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, to the extent they
relate to the subject matter hereof. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
14.5. No Waiver; No Third Party
Beneficiary. None of the terms of this Agreement may be waived
or modified except by an express agreement in writing signed by the
parties. There are no representations, promises, warranties,
covenants or undertakings other than those contained in this
Agreement. No custom or practice of the parties hereto at variance
with the terms hereof shall constitute a waiver of either party’s right to
demand exact compliance with any of the terms herein at any time. The
failure of either party hereto to enforce, or the delay by either party hereto
in enforcing, any or all of its rights under this Agreement shall not be deemed
as constituting a waiver or a modification thereof, and either party hereto may,
within the time provided by applicable Law, commence appropriate proceedings to
enforce any or all of such rights. Except as expressly provided in
this Agreement, no individual or entity other than EFS and Client shall be
deemed to have acquired any rights by reason of anything contained in this
Agreement.
14.6. Headings. The
headings used herein are for convenience only and shall not be deemed to define,
limit or construe the contents of any provision of this
Agreement. The wording of this Agreement will be deemed to be the
wording chosen by the parties hereto to express their mutual intent, and no rule
of strict construction will be applied against any such party. Time
is the essence of this Agreement.
14.7. Force
Majeure. Neither party to this Agreement shall be liable for
its failure to perform any of its obligations hereunder during any period in
which such performance is delayed by circumstances beyond its reasonable control
(each a “Force Majeure Event”), including but not limited to: fire, act of
nature, embargo, riot, or the intervention of any government authority;
provided, however, that as soon as reasonably practicable prior to any such
circumstance, and in any event promptly thereafter, the affected party (a) has
so notified the other in writing; (b) takes reasonable measures to avoid or
limit the effect or duration of such circumstances; and (c) cooperates with the
other party to reasonably alter its obligations hereunder and/or resume
performance under this Agreement as soon as reasonably
practicable. If any such circumstance persists for longer than ninety
(90) days, Client may terminate this Agreement immediately upon written notice
without penalty.
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14.8. Notices. All
notices, demands, claims, requests, undertakings, consents and other
communications which may or are required to be given hereunder shall be in
writing and shall be deemed to be properly given when personally delivered to
the party entitled to receive the notice or when sent via confirmed email or
facsimile, or by United States or International mail, postage prepaid, properly
addressed to the respective parties as follows:
If
to Client:
▇▇▇▇▇▇▇.▇▇▇,
Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Executive
Vice President, Business Development
With
a copy to:
Playboy
Enterprises International, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: General
Counsel
If
to EFS:
eFashion
Solutions, LLC
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇▇▇, ▇▇., CEO
With
a copy to:
OlenderFeldman,
LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
14.9. Governing Law and
Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Illinois without giving effect to
its conflict of laws principles.
29
IN
WITNESS WHEREOF, the parties hereto, intending this Agreement to be effective as
of the Effective Date, have caused this Agreement to be executed by a duly
authorized representative of each.
|
▇▇▇▇▇▇▇.▇▇▇,
INC.
|
EFASHION
SOLUTIONS, LLC
|
|||||
|
By:
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇
|
|||
|
Name:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
Name:
|
▇▇▇▇▇▇
▇▇▇
|
|||
|
Title:
|
EVP,
Business Development
|
Title:
|
CEO
|
|||
30
Exhibit
1
Playboy
Marks & Licensed Domain Names
|
A.
|
Playboy
Marks:
|
|
|
·
|
PLAYBOY
|
|
|
·
|
▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
PLAYBOY
STORE
|
|
|
·
|
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
BUNNY
|
|
|
·
|
BUNNY
SHOP
|
|
|
·
|
BUNNY(RABBIT
HEAD DESIGN)SHOP
|
|
|
·
|
BUNNY(SILHOUETTE)SHOP
|
|
|
·
|
BUNNY
COSTUME
|
|
|
·
|
RABBIT
HEAD DESIGN
|
|
|
·
|
THE
GIRLS NEXT DOOR *
|
|
|
·
|
THE
GIRLS NEXT DOOR & RABBIT HEAD DESIGN *
|
|
|
·
|
FEMLIN
|
|
|
·
|
FEMLIN
DESIGN
|
|
|
·
|
CYBER
GIRL
|
|
|
·
|
CYBER
CLUB
|
|
|
·
|
CENTERFOLD
|
|
|
·
|
PLAYBOY
CENTERFOLD
|
|
|
·
|
CLASSIC
CENTERFOLD
|
|
|
·
|
PLAYMATE
|
|
|
·
|
PLAYMATE
OF THE MONTH
|
|
|
·
|
PLAYMATE
OF THE YEAR
|
|
|
·
|
PMOY
|
|
|
·
|
INNER
VIXEN
|
|
|
·
|
HMH
|
|
|
·
|
▇▇▇▇
▇. ▇▇▇▇▇▇
|
|
|
·
|
MISS
(MONTH)
|
|
* THE
GIRLS NEXT DOOR & RABBIT HEAD DESIGN ▇▇▇▇ ▇▇▇ be used in advertising
Merchandise bearing the ▇▇▇▇ only. It should not be used to advertise
other goods, such as PLAYBOY goods. If a cast member of “The Girls
Next Door” models PLAYBOY clothing for the Playboy Commerce Business or wears
PLAYBOY clothing on the show, an informational reference to that may be made,
but THE GIRLS NEXT DOOR & RABBIT HEAD DESIGN ▇▇▇▇ should not be used in
connection with such informational reference. Examples of acceptable
informational references include “As seen on The Girls Next Door” and “Modeled
by the stars of The Girls Next Door.”
|
B.
|
Licensed
Domain Names:
|
|
|
·
|
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
·
|
Other
URLs as may be approved in advance by Client in writing on a case by case
basis, including mutually agreed upon Micro
Sites
|
|
31
Exhibit
2
“Powered
by eFashionSolutions” Creative
32
33
Exhibit
3
Fulfillment
Services
Fulfillment Services shall
be handled by EFS as follows:
(a) Substantially
all Catalog and Website orders, including, without limitation, regular phone,
mail direct and online orders, received by the end of a Business Day will be
processed, picked, packed and shipped on the same day received, and in no event
later than the end of the next Business Day. Saturday and Sunday
orders will be processed with Monday orders. For purposes of this
Exhibit, “Business Day” shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the State of New Jersey for the USA or
the applicable country of the Territory are authorized or required by law or
executive order to close and shall begin at 9:00 AM and end at 6:00 PM (Eastern
Time).
(b) Substantially
all expedited (next day and 2–day delivery) orders, regardless of channel,
received in time for the Monday through Friday 2:00 PM ET cutoff will be picked,
packed and shipped that same day. Exceptions: Credit card
irregularities, which cannot be resolved same day, will ship the following
Business Day with notification to the customer. In the event of
system problems that prevent turnover to shipper by last pickup, customers will
be notified and packages will be shipped expedited the next Business
Day.
(c) Substantially
all customer returns will be processed within two (2) Business Days of dock
receipt.
(d) Websites
order confirmations or back order or cancellation notices to customers will be
provided within one (1) Business Day of receipt. Direct order letters
will be produced the next Business Day and substantially all will be mailed that
same day.
(e) Exact
Merchandise ordered at the price(s) specified will be shipped unless the
customer approves a substitution.
(f) Orders
will be packed in professional packaging material including appropriate filler
to prevent damage while in transit.
Customer
Service shall consist of the following:
(a) Telephone-based
order processing Monday through Friday, 7:00am to 9:00pm, Saturday and Sunday,
9:00am to 5:00pm (Eastern Time).
(b) Telephonic
and online (e-mail) customer service Monday through Friday, 8:00am to 7:00pm,
Saturday, 9:00am to 5:00pm (Eastern Time).
(c) Customer
service shall address inquiries and complaints with respect to any Merchandise,
gift certificates, Catalog orders, Website orders, etc.
34
(d) All
costs in connection with postage, printing and stationary expenses incurred by
EFS in furtherance of its customer service obligations hereunder shall be borne
solely by EFS.
Order Processing shall
consist of the following:
• Mail
order processing and data entry
• Phone
order processing and data entry
• Fax
order processing and data entry
• Check
verification processing
• Gift
certificate processing and support
• Deposit
preparation
• Held
order processing for fraud review/AVS
• Customer
Service
35
Exhibit
4
Photography
Costs *
Costs per day for a typical
photo shoot (based on a 7-day shoot):
Photographer
& Assistants: *****
Equipment
& Rentals: *****
Set
Design: *****
Styling:
*****
Make
Up Artist: *****
Playmates/Models:
*****
Travel
& Hotel: *****
Catering:
*****
Estimate:
*****
* The information set forth in this
Exhibit 4 is provided only as an example and estimate of costs associated a
typical photo shoot. Nothing herein shall be deemed or interpreted as
a guarantee of costs or expenses that may be encountered by
EFS.
36
Exhibit
5
Guidelines
A. PURPOSE
OF GUIDELINES GENERALLY
The
purpose of these Guidelines is to help ensure, among other things,
that:
1)
The Playboy Commerce Business meets the standards of excellence in content,
graphic appeal and other qualities that Client and its affiliates seek to
maintain;
2)
The Playboy Marks are associated only with material of the type and quality
generally associated therewith;
3)
The validity and effectiveness of the Playboy Marks and the Playboy Commerce
Business and the rights and value therein are fully protected; and
4)
EFS and its affiliates conduct their activities, both relating to the Playboy
Commerce Business and otherwise, in a way that does not jeopardize the Playboy
Marks or the reputation and image of any Playboy entity or
activity.
B. CONTENT
GUIDELINES
*****
C. LANGUAGE
*****
D. PROHIBITED
ADVERTISING CONTENT
*****
37
Exhibit
6
Staffing
|
A.
|
Organizational
Chart
|
| ***** |
|
B.
|
Client Employees to be
Hired by EFS
|
| ***** |
38
Exhibit
7
Licensee
Exclusives Restricting EFS Produced Merchandise
*****
39
Exhibit
8
SUPPLIER/SUBCONTRACTOR
CONTRACT
|
1.
|
By
execution of this Supplier/Subcontractor Contract (“Contract”),
_______________ (“Supplier”) agrees and acknowledges that: (i)
all images and/or trademarks, including, but not limited to PLAYBOY, (the
“Playboy Properties”) applied at the request of _______________
(“Purchaser”) to merchandise covered by this Contract are owned by Playboy
Enterprises International, Inc. (“Playboy”), and when used upon
merchandise means that such merchandise is sponsored, approved,
recommended or sold by Playboy or its licensees; (ii) Supplier will not
sell, ship or otherwise dispose of any such merchandise except upon the
order of Purchaser or Playboy; (iii) Supplier will never make, cause
others to make or assist others in making, any claim whatsoever to any or
all of the Playboy Properties or any trademark, copyright, designation,
name, phrase, design or symbol similar thereto in connection with the
manufacture, advertising, promotion, sale or distribution of merchandise;
and (iv) Supplier will defend, indemnify and hold harmless Purchaser and
Playboy and the distributors and dealers and the officers and employees of
each of the foregoing against all liability whatsoever which may be
incurred by them or any of them as a result of any alleged defects in
material or workmanship in the merchandise covered by this
Contract.
|
|
2.
|
Supplier
agrees that no production or manufacture of any merchandise covered by
this Contract will commence until this Contract has been signed, dated and
returned by Supplier to Purchaser. Supplier further agrees that
it will not produce, cause to be produced or assist in the production of
more units than are specified by Purchaser nor will Supplier produce,
cause to be produced or assist in the production of any product or item
not specifically requested by Purchaser using any or all of the Playboy
Properties or any trademark, copyright, designations, names, phrases,
designs or symbols similar to any or all of the Playboy Properties during
or at any time after the completion of merchandise requested by this
Contract.
|
|
3.
|
Supplier
will, upon request from Purchaser or Playboy, deliver to Purchaser or will
destroy in the presence of Purchaser or its representative(s), all molds,
designs or any other elements used in reproducing any or all of the
Playboy Properties.
|
|
4.
|
Playboy
is an intended third-party beneficiary of this
Contract.
|
|
5.
|
This
Contract, when attached to a purchase order, shall consist of the entire
agreement between the parties and shall supersede any conflicting or
contrary terms and conditions of any purchase order or other order form
whether supplied by Purchaser or
Supplier.
|
|
6.
|
This
Contract may not be modified or terminated except in writing, and no
claimed modification, termination or waiver shall be binding unless also
signed by an authorized representative of
Playboy.
|
40
|
7.
|
VIOLATION
OF THIS AGREEMENT BY SUPPLIER MAY RESULT IN PROSECUTION FOR PLAYBOY
PROPERTIES INFRINGEMENT, UNFAIR COMPETITION AND OTHER CAUSES OF ACTION AND
THE IMPOSITION OF FINES AND/OR CRIMINAL
PENALTIES.
|
|
SUPPLIER
|
PURCHASER
|
|||
|
(Name
of Company - Please Print)
|
||||
|
By:
|
By:
|
|||
|
Title:
|
Title:
|
|||
|
Date:
|
Date:
|
|||
|
SUPPLIER
INFORMATION
|
PLAYBOY
|
|||
|
Name:
|
Name:
|
▇▇▇▇▇▇▇.▇▇▇,
INC.
|
||
|
Address:
|
Address:
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
||||
|
Contact:
|
Contact:
|
|||
|
Telephone:
|
Telephone:
|
▇▇▇-▇▇▇-▇▇▇▇
|
||
|
Facsimile:
|
Facsimile:
|
▇▇▇-▇▇▇-▇▇▇▇
|
||
41
Exhibit
9
EFS
Produced Merchandise Approval Process
|
1.
|
EFS
understands and agrees that any and all EFS Produced Merchandise and any
other items bearing the Playboy Marks or intended for use in connection
with the Merchandise (hereinafter collectively referred to as the
“Materials”) must be approved in advance in writing by Client through
Client’s online approval submission system. The Materials
include, but are not limited to, photography, cartons, containers, labels,
wrappers, packaging and other inner and outer packaging materials,
fixtures, displays, artwork and printing, advertising, sales, marketing
and promotional materials. EFS shall, at its own expense,
submit to Client or its designee for written approval, samples of any EFS
Produced Merchandise and the Materials at each stage of development
thereof, which shall include, but not be limited to: (i) an
initial sketch or photograph prior to any manufacture thereof; (ii) a
sample prototype or equivalent acceptable to Client; and (iii) two final
production-quality samples of that which will be mass produced or
manufactured. EFS must obtain Client’s written approval of each
stage of development before proceeding to the next stage, and in no event
shall EFS commence or permit the mass manufacture, advertising, promotion,
sale or distribution of any EFS Produced Merchandise or Materials unless
and until EFS has received Client’s written approval of the samples
provided pursuant to (iii) of this Section 1. In the event
Client fails to provide its approval or disapproval of any or all things
submitted to Client pursuant to this Section 1 within ***** of Client’s
receipt thereof, EFS may send written notice to Client advising no
response was received. If Client does not respond within *****
of Client’s receipt thereof, then Client shall be deemed to have given
disapproval.
|
|
|
|
2.
|
To
ensure that EFS Produced Merchandise and the Materials are constantly
maintained in conformance with the previously approved samples pursuant to
Section 1 of this Exhibit 9 above, EFS shall, within ten (10) days of
receipt of a request from Client, send or cause to be sent to Client at
EFS’ expense: (i) such actual samples requested by Client of
the EFS Produced Merchandise and the Materials EFS is using,
manufacturing, selling, distributing or otherwise disposing of; and (ii) a
listing or revised listing of each location where any of the EFS Produced
Merchandise and the Materials or either thereof are designed,
manufactured, stored or otherwise dealt with, except to the extent such
listing or revised listing duplicates currently accurate information
previously provided. Client and its nominees, employees, agents
and representatives shall have the right to enter upon and inspect, at all
reasonable hours of the day, any and all such location(s) and to take,
without payment, individual samples of any of the EFS Produced Merchandise
and the Materials as Client reasonably requires for the purposes of such
inspection.
|
|
|
|
3.
|
If
any of the EFS Produced Merchandise or Materials sent or taken pursuant to
Section 2 of this Exhibit 9 above or that otherwise come to the attention
of Client does or do not conform in Client’s sole opinion to the
previously approved samples, Client shall so notify EFS, in writing,
specifying in what respect such of the EFS Produced Merchandise or
Materials is or are unacceptable. Immediately upon receipt of
such notice, EFS shall suspend all manufacture, sale and distribution of
all such EFS Produced Merchandise and Materials and shall not resume the
manufacture, sale or distribution thereof unless and until EFS has
made
|
42
|
|
|
|
all
necessary changes to the satisfaction of Client and has received Client’s
written re-approval of each of such EFS Produced Merchandise and
Materials.
|
|
|
|
4.
|
Except
as otherwise specifically provided in this Agreement, all EFS Produced
Merchandise and/or Materials that are not approved by Client or that are
determined by Client to be non-conforming or unacceptable shall not be
sold, distributed or otherwise dealt with by EFS. All such EFS
Produced Merchandise and Materials shall be destroyed by EFS with, if
Client so requests, an appropriate certificate of destruction furnished to
Client.
|
|
|
|
5.
|
Any
and all sales, distribution or use by EFS of unapproved, non-conforming or
unacceptable EFS Produced Merchandise or Materials shall not only
constitute an incurable default under the terms of this Agreement, but
such EFS Produced Merchandise or Materials also shall be considered
unlicensed and an infringement of Client’s proprietary rights, and Client
shall have the right to bring legal action against EFS for any and all
remedies available to Client in addition to the remedies available under
this Agreement. EFS acknowledges and agrees that to the extent
EFS has followed the approval process as outlined in this Exhibit 9 with
respect to EFS Produced Merchandise, EFS shall have had notice of any
non-approval, non-conformance and/or unacceptability
thereof.
|
|
|
|
6.
|
Client
shall have final approval with respect to the following elements of the
Products: (i) selection of Client’s images for use on such
Merchandise; (ii) manipulation and adaptation of the Playboy Marks for
reproduction on such Merchandise; (iii) approval of “strike offs” or other
pre-production samples as the parties may agree; and (iv) approval of
actual materials to be used for manufacture of such
Merchandise.
|
|
|
|
7.
|
It
is specifically agreed by EFS that there shall be no approval by
default. No product may be manufactured unless there is a
written approval by Client.
|
43
Exhibit
10
Payments
and Fees
*****
44
Exhibit
11
Location-Based
Entertainment Partners
Playboy
Club at the Palms Casino Resort
Playboy
Mansion at Macao Studio City
45
Exhibit
12
Time
& Action Calendar
|
EFS
Transition Key Dates
|
|||
|
Date
|
|||
|
Contract
Signing
|
1/15/2008
|
||
|
Shipping
& Receiving
|
|||
|
IRI
to Prepare Inventory for Shipment
|
Week
of 1/21/2008
|
||
|
3
Stages
|
|||
|
60
Days +
|
Week
of 1/28/2008
|
||
|
Majority
of Inventory
|
Week
of 2/11/2008
|
||
|
Final
Shipment
|
Week
of 3/1/2008
|
||
|
EFS
to Receive Inventory
|
|||
|
Customer
Service
|
|||
|
Transfer
of 800 numbers
|
2/15/2008
|
||
|
Test
Orders
|
2/18/2008-2/23/2008
|
||
|
Create
Live Chat
|
2/15/2008
|
||
|
Turn
on phone Lines
|
3/1/2008
|
||
|
IRI
terminates taking returns
|
6/1/2008
|
||
|
Turn
off IRI CS Lines
|
6/1/2008
|
||
|
Site
Development
|
|||
|
Recreation
of current store design
|
1/1/2008-2/15/2008
|
||
|
Site
Testing
|
2/23/2008
|
||
|
Change
DNS from current Host
|
2/1/2008
|
||
|
Point
DNS to new EFS IP
|
2/27/2008
|
||
|
Go
Live
|
3/1/2008
|
||
|
Other
IT
|
|||
|
Abacus/Epsilon
Integration
|
1/1/2008-2/15/2008
|
|
PLAYBOY/BUNNY
SHOP Summer Catalog 2008
|
||||
|
START
|
END
|
|||
|
PRODUCTION
SCHEDULE
|
||||
|
Style
Out
|
11/27/2007
|
Merchandiser
|
||
|
Samples
due Final
|
12/5/2007
|
|||
|
Photography
|
12/10/2007
|
12/14/2007
|
Complete
|
|
|
tabletop
pre pro
|
12/7/2007
|
|||
|
TableTop
Photography
|
12/10/2007
|
12/17/2007
|
Creative
|
|
|
Page
Building
|
12/12/2007
|
12/25/2007
|
Creative
|
|
|
Selects
Review
|
1/3/2008
|
Mktng/Merch/Crtve
|
||
|
Proof
One
|
1/7/2008
|
1/11/2008
|
Mktng/Merch
|
|
|
Proof
one Revisions
|
1/14/2008
|
1/16/2008
|
Creative
|
|
|
Proof
Two
|
1/16/2008
|
1/23/2008
|
Mktng/Merch
|
|
|
Final
Proof
|
1/28/2008
|
2/1/2008
|
Mktng/Merch
|
|
|
Release
Pages
|
2/4/2008
|
2/8/2008
|
Separator
|
|
46
|
Proof
Separations
|
2/11/2008
|
2/15/2008
|
Creative/Separator
|
|
|
Files
DUE to Printer
|
2/21/2008
|
Separator
|
||
|
Printer
Proofs DUE
|
2/22/2008
|
Printer
|
||
|
Correction
Due to Printer
|
2/22/2008
|
Creative
|
||
|
ON
PRESS
|
2/25/2008
|
Printer
|
||
|
PRINTING
SCHEDULES
|
||||
|
Paper
DUE (40 Days Prior)
|
2/20/2008
|
Creative
|
||
|
Print
Order/Distrib. info Due
|
2/17/2008
|
Creative/Mktng
|
||
|
Process
Tapes DUE
|
2/21/2008
|
Marketing
|
||
|
Postal
DUE
|
3/6/2008
|
Marketing
|
||
|
Order
Form DUE
|
2/19/2008
|
Creative
|
||
|
Begin
Bindery
|
2/26/2006
|
3/2/2006
|
Printer
|
|
|
DROP
1-IN HOME
|
3/19/2008
|
3/21/2008
|
Printer
|
|
|
DROP
2-IN HOME
|
4/23/2008
|
4/25/2008
|
Printer
|
|
|
DROP
3-IN HOME
|
5/21/2008
|
5/23/2008
|
||
47