FORM OF TRADEMARK LICENSE AND CUSTOMER LIST AGREEMENT
This Trademark License and Customer List Agreement (this "Agreement") is
being entered into as of the __ day of _______, 1999 and is entered into by and
between xXXxX*s Inc., ("xXXxX*s"), a Delaware corporation, the subsidiaries of
xXXxX*s listed on Exhibit A hereto (the "xXXxX*s Subsidiaries," and,
collectively with xXXxX*s, "Licensors") and iTurf Inc. ("Licensee" or "iTurf"),
a Delaware corporation.
RECITALS
A. Licensors own or license and use the name(s) and/or trademark(s) and/or
registered trademark(s) set forth in Exhibit A, as it may be amended from
time to time in accordance with this Agreement, together with associated
logos, designs and trade dress (collectively referred to as the "Marks");
B. Licensee engages in direct marketing services on the Internet and performs
other Internet-related services and desires to use the Marks in
furtherance of such activities; and
C. Licensors are willing to permit such use of the Marks under the terms and
conditions set forth in this Agreement.
THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS
1.1 "Content" means text, graphics, photographs, video, audio and/or other
data or information containing the Marks.
1.2 "Customer List" means all information (including without limitation
names, addresses, e-mail addresses, transactional histories and demographic
information), held by a Person regarding its customers, users, and potential
customers and users as such information may exist from time to time during the
term of this agreement.
1.3 "Effective Date" means the date on which the initial public offering
of Licensee is completed or such earlier date as the parties hereto shall agree
in writing.
1.4 "Net Sales" means the net sales of Licensee and its subsidiaries
derived from all (i) sales of goods and services under the Marks, including
sales from web sites that are identified by or branded with the Marks, and (ii)
the Applicable Percentage of sales from each web site in the iTurf Network on
which greater than 50% of such sales are of goods obtained from xXxxX*s or a
subsidiary thereof, in each case determined in accordance with generally
accepted accounting principles and, if applicable, consistent with reporting
made by Licensee in its periodic quarterly and annual statements required by the
Securities and Exchange Commission.
1.5 "Applicable Percentage" means the percentage of sales from a given web
site in the iTurf Network that is represented by sales of goods obtained from
xXXxX*s or a subsidiary thereof.
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1.6 "Intellectual Property Rights" means all inventions, discoveries,
trademarks, patents, trade names, copyrights, moral rights, jingles, know-how,
intellectual property, software, shop rights, licenses, developments, research
data, designs, technology, trade secrets, test procedures, processes, route
lists, computer programs, computer discs, computer tapes, literature, reports
and other confidential information, intellectual and similar intangible property
rights, whether or not patentable or copyrightable (or otherwise subject to
legally enforceable restrictions or protections against unauthorized third party
usage), and any and all applications for, registrations of and extensions,
divisions, renewals and reissuance of, any of the foregoing, and rights therein,
including without limitation (a) rights under any royalty or licensing
agreements, and (b) programming and programming rights, whether on film, tape or
any other medium.
1.7 "Internet" means global network of interconnected computer networks,
each using the Transmission Control Protocol/Internet Protocol and/or such other
standard network interconnection protocols as may be adopted from time to time,
which is used to transmit Content that is directly or indirectly delivered to a
computer or other digital electronic device for display to an end-user, whether
such Content is delivered through on-line browsers, off-line browsers, or
through "push" technology, electronic mail, broadband distribution, satellite,
wireless or otherwise, and any subset of such global network, such as
"intranets."
1.8 "Internet Site" means any site or service delivering Content on or
through the Internet.
1.9 "Person" means any natural person, legal entity, or other organized
group of persons or entities. (All pronouns whether personal or impersonal,
which refer to Person include natural persons and other Persons.)
1.10 "Scope" means on the Internet and similar electronic media, and for
promotional purposes in any media incidental to the foregoing, but excluding
packaged software products such as CD-ROMS (and in any event not in connection
with the sale of any alcoholic beverages, tobacco products, gambling services,
pornographic products and services and other goods and services inappropriate
for minors).
1.11 "iTurf Network" means any Internet Sites owned or controlled by
Licensee.
1.12 "Related Content" means copyrightable work owned or controlled by a
Licensor and used by such Licensor in connection with its Marks.
2. LICENSE
2.1 Each Licensor hereby grants to Licensee, during the Term (as defined
in Section 3.1) of this Agreement and subject to the terms and conditions
contained herein, an exclusive, nontransferable license, and shall not grant a
license or authorize another to license any Person, to use and reproduce the
Marks set forth beside its name on Exhibit A and all Related Content owned or
controlled by such Licensor in conjunction with Licensee's (a) marketing or sale
of products and services and (b) use on community web pages, worldwide, solely
within the Scope contemplated by this Agreement. Nothing in this Agreement
grants Licensee ownership or other rights in or to the Marks or Related Content,
except in accordance with and to the extent of this license. This
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Section 2.1 shall not be construed to prohibit the use of any Xxxx and Related
Content by xXXxX*s, its divisions, business units, affiliates and subsidiaries
outside the Scope.
2.2 Each Licensor shall have the right to demand the withdrawal of any
Content from the web pages on the iTurf Network on which the Marks and Related
Content it licenses appear which in such Licensor's sole opinion conflicts with,
interferes with or is detrimental to such Licensor's interests, reputation or
business or which might subject such Licensor to unfavorable regulatory action,
violate any law, infringe the rights of any Person, or subject such Licensor to
liability for any reason. Upon notice from such Licensor to withdraw any
Content, Licensee shall, in its discretion, either (a) cease using any such
Content on such web pages or (b) remove the Marks and Related Content from such
web pages, in either case as soon as commercially and technically feasible, but
in any event within three (3) days after the date of such Licensor's notice. If
Licensee cannot cease using such Content or remove such Marks and Related
Content, as the case may be, within twenty-four (24) hours, Licensee will so
notify such Licensor detailing why the cessation or removal cannot be effected
within twenty-four (24) hours and when the cessation or removal will be
effected, subject to the terms of the preceding sentence.
3. TERM
3.1 The term of this Agreement shall begin on the Effective Date and shall
continue for an indefinite period in full force and effect until it is
terminated in accordance with this Article 3.
3.2 Each Licensor shall have the right (but not the obligation) to
terminate immediately the licence(s) it has granted under this Agreement:
(a) if Licensee is in material breach of any of its obligations or
representations hereunder, which breach is not cured within 20 days of receipt
of written notice from such Licensor of such breach; provided, however, that no
Licensor shall have a right to terminate this Agreement based on a breach by
Licensee of Sections 9.2(iv), 9.2(v) or 11.3 unless such breach arises out of
the gross negligence or willful misconduct of Licensee and the conduct
constituting the breach has not ceased within such 20-day period,
(b) if Licensee is the subject of a voluntary petition in bankruptcy
or any voluntary proceeding relating to insolvency, receivership, liquidation,
or composition for the benefit of creditors, if such petition or proceeding is
not dismissed within sixty (60) days of filing; or (iii) becomes the subject of
any involuntary petition in bankruptcy or any involuntary proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within sixty (60)
days of filing,
(c) if the business of the Licensee is liquidated or otherwise
terminated for insolvency or any other basis,
(d) if Licensee becomes insolvent or unable to pay its debts as they
mature or makes an assignment for the benefit of its creditors.
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3.3 Licensee shall have the right (but not the obligation) to terminate
immediately this Agreement:
(a) if any Licensor is in material breach of any of its obligations
or representations hereunder, which breach is not cured within 20 days of
receipt of written notice from Licensee of such breach,
(b) if any Licensor is the subject of a voluntary petition in
bankruptcy or any voluntary proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors, if such petition or
proceeding is not dismissed within sixty (60) days of filing, or becomes the
subject of any involuntary petition in bankruptcy or any involuntary proceeding
relating to insolvency, receivership, liquidation, or composition for the
benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing,
(c) if the business of any Licensor is liquidated or otherwise
terminated for insolvency or any other basis,
(d) if any Licensor becomes insolvent or unable to pay its debts as
they mature or makes an assignment for the benefit of its creditors.
3.4 Each Licensor shall have the right (but not the obligation) to
terminate the rights granted to Licensee hereunder, upon 90 days written notice
to Licensee, following the acquisition of the direct or beneficial ownership of
20% or more of the voting power represented by the voting securities of Licensee
by any Person other than an affiliate of xXXxX*s or a Strategic Partner. For
purposes of this Agreement, (i) the term beneficial ownership shall have the
meaning set forth in Section 13(d) of the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, (ii) the term voting
securities shall mean the Class A common stock and Class B common stock of
Licensee and any other securities issued by Licensee having the power to vote in
the election of directors of Licensee, including without limitation any
securities having such power only upon the occurrence of a default or any other
extraordinary contingency, and (iii) "Strategic Partner" has the meaning given
to it in Licensee's Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on ________, 1999. For purposes of this Section
3.4, an acquisition shall not include the acquisition by a Person of voting
securities of Licensee pursuant to an involuntary disposition by xXXxX*s through
foreclosure or similar event, but shall include a subsequent acquisition of
voting securities pursuant to a disposition by the Person that acquired the
voting securities in such involuntary disposition.
3.5 A party may exercise its right to terminate pursuant to this Article 3
by sending appropriate notice to the other party. No exercise by a party of its
rights under this Article 3 will limit its remedies by reason of the other
party's default, the party's rights to exercise any other rights under this
Article 3, or any of that party's other rights.
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4. TRADEMARKS
4.1 (a) The parties acknowledge that the Marks are trademarks owned or
controlled by the respective Licensors and that all goodwill generated by
Licensee's use of the Marks shall inure to such Licensor's benefit or to the
benefit of the Marks' owner, as the case may be. Nothing contained herein shall
constitute an assignment of the marks or grant to the Licensee any right, title
or interest therein, except as specifically set forth herein. Licensee shall
maintain such Licensor's quality standards with respect to its use of the Marks,
and otherwise use the Marks subject to any restrictions or requirements
disclosed by the Licensor of such Marks.
(b) In the event that during the term of this Agreement Licensee
shall create any proprietary right in any Marks, as a result of the exercise by
Licensee of any right granted to it hereunder, such proprietary right shall
immediately vest in the Licensor of such Xxxx and Licensee shall be authorized
to use such new proprietary right as though same had specifically been included
in this Agreement.
4.2 (a) Licensee shall not file any application in any country to register
a trademark which is the same as, similar to, or misleading with respect to the
Marks or any other trademark of Licensors. If any application for registration
is filed in any country by Licensee in contravention of this paragraph 4.2, the
applicable Licensor shall have the right to take appropriate action against
Licensee, including seeking injunctive relief, to prohibit or otherwise restrain
Licensee's use of the infringing xxxx.
(b) Licensee shall furnish each Licensor proofs of all materials
bearing any Marks licensed hereunder by such Licensor (including, without
limitation, advertising and publicity materials). Licensee will not authorize
full scale production of any such material until after obtaining such Licensor's
approval in each instance. Any changes in such material shall also be subject to
such Licensor's prior approval. Approval by a Licensor shall not relieve
Licensee of any of its warranties or obligations under this Agreement and all
materials that bear any Marks shall strictly conform with the samples and proofs
approved by the applicable Licensors. Samples and materials to be approved by
xXXxX*s shall be submitted to such person that may be designated in writing by
xXXxX*s.
4.3 In the event that Licensee learns of any infringement, threatened
infringement, or passing off of the trademarks or logos licensed for use
under this Agreement, or that any Person claims or alleges that the such
trademarks or logos are liable to cause deception or confusion to the public,
then Licensee shall notify the applicable Licensor of the particulars thereof.
4.4 Upon the expiration or termination of this Agreement, Licensee shall
cease all use of the Marks and Related Content, as soon as commercially and
technically practicable, and shall remove or erase the Marks and Related Content
from the iTurf Network, and from any advertising and promotional materials, as
soon as commercially and technically practicable, given customary Internet
business practices, but in no event shall any such material remain on the iTurf
Network more than thirty (30) days after expiration or notice of termination, as
applicable, and at the applicable Licensor's request, Licensee shall certify in
writing to each Licensor such removal or erasure.
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4.5 The Licensee shall cause the trademark notice "(R)" or "(TM)" and/or
the legend: "[Trademark] is a trademark of [the applicable Licensor] and is
used under license" and/or such other legend as requested by the applicable
Licensor from time to time, to appear on promotional materials and, to the
extent consistent with general Internet practices, on or in connection with
services provided by Licensee.
5. CUSTOMER LISTS
5.1 Subject to applicable law, Licensee and xXXxX*s shall provide each
other with access on a royalty-free basis to their respective Customer Lists in
machine-readable form from time to time to be used for any reasonable business
purpose other than the marketing to minors of alcoholic, pornographic, tobacco
or gambling products or services.
5.2 Neither Licensee nor xXXxX*s shall disclose, sell, lease, rent the
other party's Customer List to any third party without the written consent of
the other party, except that for a period ending on the third anniversary of the
Effective Date xXXxX*s may lease or rent Licensee's Customer Lists (but
excluding email addresses) to third parties that are not direct competitors of
Licensee.
6. OWNERSHIP
6.1 (a) As between the Licensor and Licensee: the Licensor is or shall be
the exclusive owner of and shall retain all right, title and interest to the
Marks set forth beside such Licensor's name on Exhibit A, including all
Intellectual Property Rights therein (the "xXXxX*s Property").
(b) Licensee is the exclusive owner of and shall retain all right,
title and interest to the iTurf Network and all Intellectual Property Rights
therein, excluding the xXXxX*s Property.
6.2 Each party agrees to take all action and cooperate as is reasonably
necessary, at the other party's request and expense, to protect the other's
respective rights, titles, and interests specified in this Article 6, and
further agrees to execute any documents that might be necessary to perfect each
party's ownership of such rights, titles, and interests.
7. COMPENSATION
In consideration of the rights herein granted, Licensee shall pay each
Licensor a royalty equal to 5% of Net Sales associated with the Marks licensed
by such Licensor, provided that aggregate royalty payments hereunder shall not
exceed 5% of all Net Sales.
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8. ACCOUNTINGS
8.1 Licensee will compute Net Sales as of each April 30, July 31, October
31 and January 31 for the prior three (3) months. Within sixty (60) days after
the fourth quarterly period and within sixty (60) days after each of the first
three (3) quarterly periods concerned, Licensee will deliver to each Licensor a
statement covering Net Sales due such Licensor and will pay such Licensor the
royalty amount as computed in accordance with Article 7. Acceptance by a
Licensor of any statement or payment shall not preclude the Licensor from
challenging the accuracy thereof.
8.2 Licensee will maintain accurate books and records which report the
recognition of Net Sales. Each Licensor may, at its own expenses, examine and
copy those books and records, as provided in this paragraph. Each Licensor may
make such an examination for a particular statement within three (3) years after
the date when Licensee sends each Licensor the statement concerned. The
Licensors may make those examinations only during Licensee's usual business
hours, and at the place where it keeps the books and records. Each Licensor will
be required to notify Licensee at least ten (10) days before the date of planned
examination. If an examination has not been completed within two months from
commencement, Licensee may require the applicable Licensor to terminate it on
seven (7) days notice to such Licensor at any time, provided that Licensee has
cooperated with such Licensor in the examination of such books and records.
9. WARRANTIES; REPRESENTATIONS
9.1 Each Licensor represents and warrants that:
(i) it has full power and authority to enter into this Agreement;
(ii) it either owns or has a valid license to use the Marks and
Related Content licensed by it hereunder and has sufficient
right and authority to grant to Licensee all licenses and
rights granted by such Licensor hereunder;
(iii) the Marks and Related Content licensed by it hereunder and the
use thereof as permitted pursuant to this Agreement will not
violate any law or infringe upon or violate any rights of any
Person;
(iv) the execution, delivery and performance by such Licensor of
this Agreement will not conflict with, or result in a breach
or termination of or constitute a default under, any lease,
agreement, commitment or other instrument to which such
Licensor is a party; and
(v) this Agreement constitutes the valid and binding obligations
of such Licensor enforceable against it in accordance with its
terms.
9.2 Licensee represents and warrants that:
(i) it owns or controls all right, title, and interest in and to
the iTurf Network and all Intellectual Property Rights
therein, necessary to carry out its obligations hereunder;
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(ii) it is has the full power and authority to enter into and fully
perform this Agreement;
(iii) this Agreement constitutes the valid and binding obligations
of Licensee enforceable against it in accordance with its
terms;
(iv) the iTurf Network, any iTurf Network content and any content
developed or furnished by Licensee hereunder and the use
thereof will not infringe upon or violate any rights of any
Person; and
(v) the iTurf Network will be advertised, distributed, transmitted
and licensed in compliance with all applicable federal, state,
local and foreign laws and in a manner that will not reflect
adversely on any Licensor.
10. NON-COMPETITION
The parties hereto hereby agree to the terms contained in Exhibit B.
11. GENERAL
11.1 Neither the Licensors (or any of them) nor Licensee may assign this
Agreement, or its respective rights and obligations hereunder, in whole or in
part without the other party's prior written consent. Any attempt to assign this
Agreement without such consent shall be void and of no effect ab initio.
Notwithstanding the foregoing, any party may assign this Agreement or any of its
rights and obligations hereunder to any entity controlled by it or to any entity
that acquires it by purchase of stock or by merger or otherwise, or by obtaining
substantially all of its assets (a "Permitted Assignee"), provided that any such
Permitted Assignee, or any division thereof, thereafter succeeds to all of the
rights and is subject to all of the obligations of the assignor under this
Agreement.
11.2 Each party hereto irrevocably submits to the exclusive jurisdiction
of (a) the Supreme Court of the State of New York, New York County, or (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby or thereby. Each party
agrees to commence any such action, suit or proceeding either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each
party further agrees that service of any process, summons, notice or documents
by U.S. registered mail to such party's respective address set forth above shall
be effective service of process for any action, suit or proceeding in New York
with respect to any maters to which it has submitted to jurisdiction in this
Section 11.2. Each party irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or
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the transactions contemplated hereby and thereby in (i) the Supreme Court of the
State of New York, New York County, or (ii) the United States District Court for
the Southern District of New York, and hereby and thereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
11.3 Each party shall comply with all laws and regulations applicable to
its activities under this Agreement.
11.4 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforcability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
11.5 All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service), as follows:
(i) if to Licensee,
iTurf Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: President
(ii) if to a Licensor,
c/o xXXxX*s Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
11.6 The parties to this Agreement are independent contractors. There is
no relationship of partnership, joint venture, employment, franchise, or agency
between the parties. No party shall have the power to bind any other or
incur obligations on any other's behalf without the other's prior written
consent.
11.7 No failure of any party to exercise or enforce any of its rights
under this Agreement shall act as a waiver of such right.
11.8 This Agreement, along with the Exhibits hereto, contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes
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all prior agreements and understandings relating to such subject matter. No
party shall be liable or bound to any other party in any manner by any
representations, warranties or covenants relating to such subject matter except
as specifically set forth herein.
11.9 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to each of the other parties.
11.10 This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto; provided, however, that as long
as xXXxX*s has direct or beneficial ownership of 30% or more of the voting power
represented by the voting securities of Licensee and no other person directly or
beneficially owns a greater percentage of such voting power, no amendment of a
material term or waiver of a material obligation of this Agreement shall be
valid unless it has been approved by a majority of the members of the board of
directors of Licensee who are not directors or officers of xXXxX*s or the
beneficial owners of five percent or more of the outstanding voting securities
of xXXxX*s.
11.11 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State.
11.12 This Agreement is for the sole benefit of the parties hereto and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto any legal or equitable rights hereunder.
11.13 The headings contained in this Agreement or in any Exhibit hereto
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All Exhibits annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Any capitalized terms used in any Exhibit but not
otherwise defined therein, shall have the meaning as defined in this Agreement.
When a reference is made in this Agreement to a Section or an Exhibit, such
reference shall be to a Section of, or an Exhibit to, this Agreement unless
otherwise indicated.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO TRADEMARK LICENSE AND CUSTOMER LIST AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
iTurf Inc.
By: _________________________
Name: _________________________
Title:_________________________
xXXxX*s Inc.
By: _________________________
Name: _________________________
Title:_________________________
xXXxX*s Properties Inc.
By: _________________________
Name: _________________________
Title:_________________________
TSI Soccer Corporation
By: _________________________
Name: _________________________
Title:_________________________
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EXHIBIT A
(Attached to and forming a part of the Trademark License and Customer List
Agreement, made ________ __, 1999 among Licensors and iTurf)
Trademark and
Intellectual Property
Marks Licensor
----- --------
xXXxX*s xXXxX*s Inc.
CONTENTS xXXxX*s Inc.
TSI SOCCER TSI Soccer Corporation
STORYBOOK HEIRLOOMS xXXxX*s Properties Inc.
XXXXX xXXxX*s Properties Inc.
DISCOUNT DOMAIN xXXxX*s Inc.
SCREEEM! xXXxX*s Properties Inc.
DOTDOTDASH xXXxX*s Properties Inc.
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EXHIBIT B
(Attached to and forming a part of the Trademark License and Customer List
Agreement, made ________ __, 1999 among Licensors and iTurf)
NON-COMPETITION PROVISIONS
1. Definitions. Capitalized terms used but not defined in this Exhibit B
have the respective meanings given to them in the body of the Agreement. The
following capitalized terms have the meanings set forth below when used in this
Exhibit B.
"xXXxX*s Affiliate" means (a) a subsidiary of xXXxX*s other than iTurf and
any iTurf Affiliate, and (b) Xxxxxxx X. Xxxx, only so long as he is the direct
or beneficial owner of at least 20 percent of the issued and outstanding capital
stock of xXXxX*s, and only in his capacity as an executive officer of or the
beneficial owner of at least 30 percent of the issued and outstanding capital
stock of a Generation Y Internet Business.
"Generation Y" means persons between the ages of 10 and 24 (or any subset
thereof)
"Generation Y Internet Business" means a business, or component of a
business, that is engaged in (i) the sale of goods or services intended
primarily for Generation Y on the Internet or similar electronic media, which
sales are originated or consummated online or (ii) the offering of interactive
services intended primarily for Generation Y on the Internet supported by paid
advertising or sponsorships.
"iTurf" means iTurf Inc., a Delaware corporation.
"iTurf Affiliate" means a subsidiary of iTurf.
"xXXxX*s Non-Compete Period" means that period beginning on the Effective
Date and ending
(a) six months after termination of this Agreement, if this Agreement is
terminated by xXXxX*s pursuant to Section 3.4 following a
transaction (other than a transaction described in clause (b),
below) in which a person (or persons acting as a group) other than
an affiliate of xXXxX*s would have direct or beneficial ownership of
35 percent or more of the voting power represented by the voting
securities of iTurf and no other person directly or beneficially
owns a greater percentage of such voting power (a "Controlling
Interest");
(b) one year after termination of this Agreement, if this Agreement is
terminated by xXXxX*s pursuant to Section 3.4 following a
transaction in which voting securities of iTurf are sold to the
public or distributed to the stockholders of xXXxX*s through a
tax-free spin-off, sale or other distribution;
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(c) two years after termination of this Agreement, if this Agreement is
terminated by xXXxX*s pursuant to Section 3.4 following a
transaction in which xXXxX*s sells a portion of the common stock of
iTurf owned by it that does not convey to any person a Controlling
Interest, or if this Agreement is terminated by iTurf pursuant to
Section 3.3; and
(d) on termination of this Agreement if this Agreement is terminated for
any other reason, including without limitation by xXXxX*s pursuant
to Section 3.2.
"iTurf Non-Compete Period" means that period beginning on the Effective
Date and ending
(a) two years after termination of this Agreement if this Agreement is
terminated by xXXxX*s pursuant to Section 3.2; and
(b) on termination of this Agreement if this Agreement is terminated for
any other reason, including without limitation by iTurf pursuant to
Section 3.3.
"Post-Acquisition Period" with respect to a particular business that is
acquired by xXXxX*s (or a xXXxX*s Affiliate) and engages in a Generation Y
Internet Business or that is acquired by iTurf (or an iTurf Affiliate) means the
nine-month period following the date of the acquisition of that business.
"Offline Business" means a business or component of a business that is
primarily engaged in the establishment or operation of paper catalogs or
physical retail stores for the sale of goods.
2. Non-Competition Obligations.
2.1 During the xXXxX*s Non-Compete Period, xXXxX*s shall not, and
shall not permit any xXXxX*s Affiliate to, engage in any Generation Y Internet
Business except:
(a) during a Post-Acquisition Period, xXXxX*s or a xXXxX*s
Affiliate may engage in the acquired business, and
(b) a Permitted xXXxX*s Business (as defined in Section 3).
2.2 During the iTurf Non-Compete Period iTurf shall not, and shall
not permit any iTurf Affiliate to, engage in any Offline Business except:
(a) during a Post-Acquisition Period, iTurf or an iTurf
Affiliate may engage in the acquired business, and
(b) a Permitted iTurf Business (as defined in Section 4).
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2.3 Nothing contained herein shall be construed so as to preclude
(a) iTurf from promoting its Generation Y Internet Businesses in media other
than the Internet, including without limitation direct mail and in-store
advertising, or (b) xXXxX*s from promoting its Offline Businesses on the
Internet or similar electronic media.
3. First Offer/First Refusal of Generation Y Internet Business to iTurf.
Prior to xXXxX*s or a xXXxX*s Affiliate engaging in a Generation Y Internet
Business, other than a Generation Y Internet Business that is acquired from a
third party, or within twenty (20) days following the acquisition of a
Generation Y Internet Business from a third party, the parties shall engage in
the following procedures:
3.1 xXXxX*s shall notify iTurf in writing of its intention to engage
in a Generation Y Internet Business (a "Generation Y Internet Business First
Offer Notice"), which notice shall describe the business in sufficient detail to
permit iTurf to make an informed decision about whether to acquire or license
that business. Upon iTurf's written request, xXXxX*s shall promptly provide
iTurf with such additional information as iTurf reasonably requests regarding
the business, pursuant to the terms of an appropriate confidentiality agreement
between the parties.
3.2 Within ninety (90) days of the receipt of a Generation Y
Internet Business First Offer Notice, iTurf may deliver to xXXxX*s an offer to
acquire or license the business described in the Generation Y Internet Business
Offer Notice (a "Generation Y Internet Business First Offer Proposal"). Such
offer shall set forth all of the material terms and conditions pursuant to which
iTurf proposes to acquire or license the business.
3.3 If iTurf does not deliver a Generation Y Internet Business First
Offer Proposal, then the business that was the subject of the Generation Y
Internet Business First Offer Notice shall be deemed to be a Permitted xXXxX*s
Business.
3.4 If iTurf delivers a Generation Y Internet Business First Offer
Proposal, then, within ninety (90) days of receipt of the Generation Y Internet
Business First Offer Proposal, xXXxX*s shall notify iTurf of (a) its intention
to accept such offer (a "Generation Y Internet Business First Offer Acceptance
Notice") or (b) unless iTurf has delivered a Generation Y Internet Business
First Offer Acceptance Notice, the material terms of the best bona fide third
party offer (a "Generation Y Internet Business Third Party Offer") it has
received to acquire or license the business (a "Generation Y Internet Business
Best Offer Notice").
3.5 Within 30 days following a Generation Y Internet Business First
Offer Acceptance Notice, iTurf and xXXxX*s shall act in good faith to complete
definitive documentation of the acquisition or licensing transaction proposed in
the Generation Y Internet Business First Offer Proposal.
3.6 Within 30 days following receipt of a Generation Y Internet
Business Best Offer Notice, iTurf may notify xXXxX*s of its offer to acquire the
business on the terms described in the Generation Y Internet Business Third
Party Offer (a "Matching Notice").
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3.7 If iTurf delivers a Matching Notice, then iTurf and xXXxX*s
shall act in good faith to complete definitive documentation of the acquisition
or licensing transaction proposed in the Generation Y Business Best Offer Notice
within 30 days of receipt by xXXxX*s of the Matching Notice.
3.8 If iTurf does not deliver a Matching Notice, then xXXxX*s may
consummate the transaction described in the Generation Y Internet Business Third
Party Offer.
4. First Offer/First Refusal of Offline Business to xXXxX*s. Prior to
iTurf or an iTurf Affiliate engaging in an Offline Business, other than an
Offline Business that is acquired from a third party, or within twenty (20) days
following the acquisition of an Offline Business from a third party, the parties
shall engage in the following procedures:
4.1 iTurf shall notify xXXxX*s in writing of its intention to engage
in an Offline Business (an "Offline Business First Offer Notice"), which notice
shall describe the business in sufficient detail to permit xXXxX*s to make an
informed decision about whether to acquire or license that business. Upon
xXXxX*s's written request, iTurf shall promptly provide xXXxX*s with such
additional information as xXXxX*s reasonably requests regarding the business,
pursuant to the terms of an appropriate confidentiality agreement between the
parties.
4.2 Within ninety (90) days of the Offline Business First Offer
Notice, xXXxX*s may deliver to iTurf an offer to acquire or license the business
described in the Offline Business Offer Notice (an "Offline Business First Offer
Proposal"). Such offer shall set forth all of the material terms and conditions
pursuant to which xXXxX*s proposes to acquire or license the business.
4.3 If xXXxX*s does not deliver an Offline Business First Offer
Proposal, then the business described in the Offline Business First Offer Notice
shall be deemed to be a Permitted iTurf Business.
4.4 If xXXxX*s delivers an Offline Business First Offer Proposal,
then, within ninety (90) days of the Offline Business First Offer Proposal,
iTurf shall notify xXXxX*s of (a) its intention to accept such offer (an
"Offline Business First Offer Acceptance Notice") or (b) unless xXXxX*s has
delivered an Offline Business First Offer Acceptance Notice, the material terms
of the best available bona fide third party offer (an "Offline Business Third
Party Offer") it has received to acquire or license the business (an "Offline
Business Best Offer Notice").
4.5 Within 30 days following an Offline Business First Offer
Acceptance Notice, xXXxX*s and iTurf shall act in good faith to complete
definitive documentation of the acquisition or licensing transaction proposed in
the Offline Business First Offer Proposal.
4.6 Within 30 days following an Offline Business Best Offer Notice,
xXXxX*s may notify iTurf of its offer to acquire the business on the terms
described in the Offline Business Third Party Offer (a "Matching Notice").
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4.7 If xXXxX*s delivers a Matching Notice, then xXXxX*s and iTurf
shall complete definitive documentation of the acquisition or licensing
transaction proposed in the Generation Y Business Best Offer Notice within 30
days of receipt by iTurf of the Matching Notice.
4.8 If xXXxX*s does not deliver a Matching Notice, then iTurf may
consummate the transaction described in the Offline Business Third Party Offer.
5. Miscellaneous.
5.1 Each party agrees not to disclose to any third party other than
its legal counsel and financial advisers any information delivered pursuant to
this Exhibit B, including without limitation the terms of any notice delivered
hereunder without the prior written consent of the other party.
5.2 The taking of any action by iTurf (including without limitation
the giving of any notice) pursuant to Sections 3 or 4 hereof shall be approved
by a majority of the members of the board of directors of iTurf who are not
directors or officers of xXXxX*s or the beneficial owners of five percent or
more of the outstanding voting securities of xXXxX*s.
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