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.
CONTENT LICENSE, MARKETING AND SALES AGREEMENT
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.
(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
3
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
4
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) *****
(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) *****
5
(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 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) *****
2. Merchandise.
2.1. Merchandise Assortment.
6
(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 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) *****
(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. *****
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, *****
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 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 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. *****
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
7
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 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. *****
2.8. *****
2.9. *****
2.10. *****
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.
8
2.12. *****
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. *****
3.2. *****
3.3. *****
3.4. Catalog Territory. Upon the launch of the Catalogs, the exclusive
territory for the Catalog will include the ***** ("Catalog Territory"). The
Website Territory and the Catalog Territory shall be collectively referred to as
the "Territory." *****
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. *****
4. Advertising Commitments.
4.1. Catalog Budget. *****
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4.2. Online Marketing Budget. *****
(a) Corporate Marketing Commitments. *****
4.3. 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.
4.4. 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.
4.5. Catalog Inserts & Packaging Onserts. *****
5. User Agreements and Data.
5.1. Terms of Use & Privacy Policy.
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(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 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
11
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.
6.1. *****
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6.2. *****
6.3. *****
6.4. *****
6.5. *****
6.6. *****
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.
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6.11. Verification of Information; Audit Right Generally. During the Term
of this Agreement *****, (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. *****
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
14
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.
(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
15
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 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.
16
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, 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
17
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.
10.1. 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
(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
18
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.
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-
19
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 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
20
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 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
21
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.
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
22
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.
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: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇
23
Title: EVP, Business Development Title: CEO
24
Exhibit 1
Playboy Marks & Licensed Domain Names
A. Playboy Marks:
o PLAYBOY
o ▇▇▇▇▇▇▇.▇▇▇
o PLAYBOY STORE
o ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o BUNNY
o BUNNY SHOP
o BUNNY(RABBIT HEAD DESIGN)SHOP
o BUNNY(SILHOUETTE)SHOP
o BUNNY COSTUME
o RABBIT HEAD DESIGN
o THE GIRLS NEXT DOOR *
o THE GIRLS NEXT DOOR & RABBIT HEAD DESIGN *
o FEMLIN
o FEMLIN DESIGN
o CYBER GIRL
o CYBER CLUB
o CENTERFOLD
o PLAYBOY CENTERFOLD
o CLASSIC CENTERFOLD
o PLAYMATE
o PLAYMATE OF THE MONTH
o PLAYMATE OF THE YEAR
o PMOY
o INNER VIXEN
o HMH
o ▇▇▇▇ ▇. ▇▇▇▇▇▇
o 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:
o ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
o Other URLs as may be approved in advance by Client in writing on a
case by case basis, including mutually agreed upon Micro Sites
25
Exhibit 2
"Powered by eFashionSolutions" Creative
[GRAPHIC OMITTED]
26
[GRAPHIC OMITTED]
27
Exhibit 3
*****
28
Exhibit 4
*****
29
Exhibit 5
Guidelines
*****
30
Exhibit 6
Staffing
*****
31
CONFIDENTIAL TREATMENT
Exhibit 7
Licensee Exclusives Restricting EFS Produced Merchandise
*****
32
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.
33
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: ▇▇▇-▇▇▇-▇▇▇▇
34
Exhibit 9
EFS Produced Merchandise Approval Process
*****
35
Exhibit 10
Payments and Fees
*****
36
Exhibit 11
Location-Based Entertainment Partners
Playboy Club at the Palms Casino Resort
Playboy Mansion at Macao Studio City
37
CONFIDENTIAL TREATMENT
Exhibit 12
Time & Action Calendar
*****
38