-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R95VLpifF5myfqfbvQK6W2yScrW/xTboq1qkQDiFwp5DFM7Ul/ogyhGDa9zHN6rT FDqRywmH+YGaE3fSaIdHtg== 0001021408-02-001469.txt : 20020414 0001021408-02-001469.hdr.sgml : 20020414 ACCESSION NUMBER: 0001021408-02-001469 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010929 FILED AS OF DATE: 20020207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL SPORTS INC CENTRAL INDEX KEY: 0000828750 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 042958132 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16611 FILM NUMBER: 02529342 BUSINESS ADDRESS: STREET 1: 1075 FIRST AVE STREET 2: RTE 3 INDUSTRIAL PARK CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6102653229 MAIL ADDRESS: STREET 1: 1075 FIRST AVE CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q/A 1 d10qa.txt FORM 10-Q/A AMENDMENT #1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ================================================================================ FORM 10-Q/A AMENDMENT NO. 1 TO THE QUARTERLY REPORT (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended SEPTEMBER 29, 2001. ------------------------------------------------------------------- or [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from _____to _____. ------------------------------------------------------------------- Commission File Number 0-16611 ------- GLOBAL SPORTS, INC. ------------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2958132 ------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 1075 FIRST AVENUE, KING OF PRUSSIA, PA 19406 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 610-265-3229 ------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 29, 2001: Common Stock, $.01 par value 37,193,091/(1)/ (Title of each class) (Number of Shares) (1) Excludes approximately 37,000 shares of the registrant's Common Stock which are issuable to former shareholders of Fogdog, Inc. in connection with the registrant's acquisition of Fogdog, but which, as of October 29, 2001, had not yet been issued. PURPOSE OF AMENDMENT The Registrant previously filed certain of its material contracts as exhibits to its Quarterly Report on Form 10-Q for the nine-month period ended September 29, 2001. The Registrant requested confidential treatment as to certain portions of certain of the contracts. The Registrant hereby amends Item 6 of its Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2001, as set forth in the pages attached hereto. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Exhibit No. Description ----------- ----------- 2.1/(1)/ Agreement and Plan of Merger and Reorganization, dated as of September 13, 2001, among Global Sports, Inc., a Delaware corporation, Ruby Acquisition Corp., a Delaware corporation, and Ashford.com, Inc., a Delaware corporation. 2.2/(1)/ Form of Voting Agreement, dated as of September 13, 2001, entered into between Global Sports, Inc., a Delaware corporation, and certain stockholders of Ashford.com, Inc., a Delaware corporation. 4.1(3) Form of Investor Warrant. 4.2(3) Form of Partner Warrant. 10.1/(2)/ Stock Purchase Agreement, dated as of July 20, 2001, by and among Global Sports, Inc., Michael G. Rubin and Interactive Technology Holdings, LLC. 10.2+ License and E-Commerce Agreement, dated July 6, 2001, by and among Global Sports Interactive, Inc., The Sports Authority, Inc. and The Sports Authority Michigan, Inc. 10.3+ E-Commerce Agreement, dated as of August 10, 2001, by and between Global Sports Interactive, Inc., Bluelight.com LLC and Kmart Corporation. 99.1/(2)/ Letter Agreement, dated as of July 20, 2001, among Global Sports, Inc., Interactive Technology Holdings, LLC, SOFTBANK Capital Partners LP and SOFTBANK Capital Advisors Fund LP. _____________ /(1)/ Incorporated by reference to the Company's Current Report on Form 8-K dated September 13, 2001. /(2)/ Incorporated by reference to the Company's Current Report on Form 8-K dated July 13, 2001. (3) Previously filed on Form 10-Q for the nine-month period ended September 29, 2001. + Confidential treatment has been requested as to certain portions of this exhibit. The omitted portions have been separately filed with the Securities and Exchange Commission. (b) REPORTS ON FORM 8-K The Company completed the acquisition of Fogdog, Inc. on December 28, 2000. On July 24, 2001, the Company filed a Current Report on Form 8-K to include the consent of PricewaterhouseCoopers LLP ("PWC"), Fogdog's accountants, to the incorporation by reference into certain of the Company's registration statements of PWC's report dated January 31, 2000 on the financial statements of Fogdog contained in the Company's Current Report on Form 8-K filed on January 12, 2001. The Company filed a Current Report on Form 8-K on August 27, 2001 reporting that the Company completed the sale of 3,000,000 shares of its common stock to Interactive Technology Holdings, LLC ("ITH") at a purchase price of $10.00 per share for an aggregate purchase price of $30,000,000 and that Michael G. Rubin, Chairman of the Board, President and Chief Executive Officer of the Company, sold 1,000,000 shares of the Company's common stock to ITH at a purchase price of $10.00 per share for an aggregate purchase price of $10,000,000. The Company filed a Current Report on Form 8-K on September 18, 2001 reporting that the Company entered into a merger agreement to acquire all of the outstanding shares of Ashford.com, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed on its behalf by the undersigned, hereunto duly authorized. GLOBAL SPORTS, INC. DATE: February 5, 2002 By: /s/ Jordan M. Copland ----------------------------------- Jordan M. Copland Executive Vice President & Chief Financial Officer EX-10.2 3 dex102.txt LICENCE AND E-COMMERCE AGREEMENT EXHIBIT "A" EXHIBIT 10.2 Confidential Treatment has been requested with respect to portions of the agreement indicated with an asterisk [*]. A complete copy of this agreement, including the redacted terms, has been separately filed with the Securities and Exchange Commission. EXECUTION COPY License and E-Commerce Agreement This License and E-Commerce Agreement (the "Agreement"), is entered into as of July 6, 2001 (the "Effective Date"), by and between The Sports Authority, Inc., a Delaware corporation ("TSA"), The Sports Authority Michigan, Inc., a Michigan corporation ("TSAMI"), and Global Sports Interactive, Inc., a Pennsylvania corporation ("GSI" or "Licensee"), and solely for purposes of Section 2.6 [*], Global Sports, Inc. ("Global Sports"). TSA and TSAMI are sometimes collectively referred to as the "Licensor". Recitals WHEREAS, Licensee is in the business of developing and operating e-commerce sporting goods businesses for specialty retailers, general merchandisers, Internet companies and media companies and providing for those companies Licensee's proprietary technology and product database, Web site design and development capabilities, order processing capabilities, customer service capabilities, fulfillment capabilities, centralized inventory management, and on-line marketing to enable those companies to offer e-commerce to their customers; WHEREAS, Licensor and its retailing subsidiaries are in the business of selling Sporting Goods (as hereinafter defined) and other related goods and services through the TSA Stores (as hereinafter defined); WHEREAS, through TheSportsAuthority.com, Inc., a subsidiary of Licensee owned in part by TSA (the "Joint Venture"), Licensee operated the TSA.com Site (as defined below) on behalf of Licensor, including offering and selling Sporting Goods, and providing inventory management, Web Site design and development services, hosting, maintenance and operations services and support, order processing, fulfillment and returns services and support, customer service, on-line marketing and other related services and support; WHEREAS, Licensor and Licensee recently restructured their relationship to terminate the Joint Venture. Licensee shall continue to provide the services and support necessary to operate the TSA.com Site but shall provide such services and support directly on behalf of Licensor rather than through the Joint Venture; 1 WHEREAS, Licensor desires to continue to extend certain of its lines of retail distribution through the TSA.com Site; WHEREAS, Licensor has made a substantial investment to establish its trade name, trademarks, service marks, trade dress and goodwill among consumers and suppliers so as to create a retail identity connoting a specific manner in which merchandise is presented and sold through the TSA Stores; WHEREAS, both Licensor and Licensee recognize that the protection of Licensor's trade name, trademarks, service marks, trade dress and goodwill, as well as the overall success of the TSA.com Site, depends in part upon consumers perceiving the TSA.com Site to continue to be an extension of the TSA Stores that is as consistent as possible with those stores with respect to merchandise quality, availability, pricing, terms of sale and other aspects of the retail purchasing experience; WHEREAS, Licensor and Licensee expect that the TSA.com Site will continue to complement the TSA Stores, enhancing Licensor's competitive position relative to other sellers of the same or similar merchandise by offering to Licensor's customers an on-line shopping experience in addition to Licensor's in-store shopping experience; and WHEREAS, Licensor and Licensee desire to have Licensee continue to provide to Licensor a full e-commerce solution that will be, except as otherwise provided herein, the exclusive means by which Licensor will sell Sporting Goods through the Internet (as defined below) during the Term (as defined below) of this Agreement. NOW, THEREFORE, in consideration of the promises contained herein, TSA, TSAMI and GSI, intending to be legally bound, agree as follows: Section 1. Definitions Whenever used in this Agreement, the following capitalized terms shall have the following specified meanings: 1.1 "Advertising and Marketing Partner(s) of Licensee" means members of Licensee's affiliate programs, search engines, portals, community sites, content sites, on-line retailers, shopping, regional and industry directories, push sites, and any other Internet sites engaged by Licensee to attract Customers to the TSA.com Site, with whom Licensee contracts for exchanges of advertising and promotional services and/or any form of compensation. 1.2 "Affiliate(s)" means, as to any Person, any other Person that directly or indirectly controls (through one or more intermediaries), is controlled by or is under common control with such Person, but only as long as such control exists. For purposes of this Section "control" means the ownership or control of fifty percent (50%) or more of all of the voting power of the shares (or other securities or rights) in question or the power to direct or cause the direction of 2 management or policies of such Person, whether through voting securities, by contract or otherwise. 1.3 "Business Day" means any day which is not a Saturday, Sunday or official federal holiday in the United States. 1.4 "Confidential Information" means all nonpublic information relating to a Party or its Affiliates that is designated as confidential or that, given the nature of the information or the circumstances surrounding its disclosure, reasonably should be considered as confidential. Confidential Information includes (a) all nonpublic information relating to a Party's or its Affiliates' product plans, designs, product costs, product prices, other costs, allowances, rebates, assortment plans, advertising plans, strategies or buys, marketing plans or strategies, technology, business plans, promotional and marketing activities, finances, strategic business opportunities, personnel, research, development, know-how and other business and financial affairs, (b) all third party information that a Party or its Affiliates is obligated to keep confidential, (c) all information obtained by a Party in connection with any audit conducted hereunder, and (d) all information of the type specifically designated as such in this Agreement. Confidential Information may be contained in tangible materials, such as drawings, data, specifications, reports and computer programs, or may be in the nature of unwritten knowledge. Confidential Information does not include any information that (i) has become publicly available without breach of this Agreement, (ii) can be shown by documentation to have been known to the receiving Party at the time of its receipt from the disclosing Party or its Affiliates, (iii) is received from a third party who did not acquire or disclose such information by a wrongful or tortious act, or (iv) can be shown by documentation to have been independently developed by the receiving Party without reference to any Confidential Information. 1.5 "Customer" means a Person who accesses the TSA.com Site in any manner, whether or not a purchase is made or other Services or Sporting Goods are received from, by or through the TSA.com Site. 1.6 "Customer Information" means any and all identifying information collected or possessed by Licensee and relating to Customers of the TSA.com Site , including information relating to Customers referred by or through the Advertising and Marketing Partners of Licensee to the TSA.com Site. Such data may include names and other identifying information such as addresses, phone numbers and e-mail addresses, credit card numbers and related data, preferences, gift and shipping information, purchase, payment and connection histories, correspondence, inquiries, and the skus and quantities of items purchased by any such persons. "Customer Information" shall not include (i) Financial Information, or (ii) any information obtained by Licensee from Customers independent of the transactions contemplated pursuant to this Agreement or the prior agreements referenced Section 19.12. 1.7 "Databases" means all data structures, data schema, database dictionaries, attributes, validation tests for each element, table sizes and formats, access requirements, data dependencies and other elements involving the management or storage of data on or for the TSA.com Site, and all refinements, updates, releases, improvements and enhancements thereto, all Intellectual 3 Property Rights embedded therein (except those owned by Licensor) and all software applications created specifically for management and use of the GSI Furnished Materials, Customer Information, Financial Information and Licensed Property, but excluding the Customer Information, Financial Information and Licensed Property per se. 1.8 "Designated URL" means the URL http://www.thesportsauthority.com, or any successor or replacement URL, as mutually designated by the Parties. 1.9 "Financial Information" means all information relating to the financial performance and/or operations of the TSA.com Site which is not specific to a Customer, does not refer to or identify any specific Customer, and cannot be used, alone or in conjunction with other information, to identify any specific Customer. 1.10 "Fiscal Year" means Licensee's fiscal year. Licensee shall give at least ninety (90) days prior notice to Licensor of any change in designation of Licensee's Fiscal Year. 1.11 "GSI Content" means any and all content or information owned or controlled (e.g., by license other than this Agreement, or otherwise) by Licensee or any of its Affiliates, including, text, graphics, photographs, video and audio, together with all Intellectual Property Rights associated therewith, and furnished by Licensee or any of its Affiliates in connection with the TSA.com Site or otherwise in connection with the performance of its obligations under this Agreement. "GSI Content" includes any adaptation, modification, improvement and/or derivative work of any GSI Content that is developed by any Party or jointly by the Parties. "GSI Content" shall not include any Licensed Property or any derivative work of any Licensed Property whether developed by any Party or jointly by the Parties. 1.12 "GSI Furnished Materials" means any and all GSI Content, Databases of GSI and GSI Technology, together with all Intellectual Property Rights associated therewith, that (a) is owned or controlled (e.g. by license other than this Agreement, or otherwise) by Licensee or any of its Affiliates, and (b) is made available by Licensee of any of its Affiliates in connection with the transactions contemplated hereunder. "GSI Furnished Materials" includes any adaptation, modification, improvement and/or derivative work of any GSI Furnished Materials that is developed by any Party or jointly by the Parties. "GSI Furnished Materials" shall not include any Licensed Property or any derivative work of any Licensed Property whether developed by any Party or jointly by the Parties. 1.13 "GSI Partners" means any third party, including any TSA Competitor, with which Licensee or any its Affiliates contracts to develop and operate all or a substantial portion of such third party's Web Site for e-commerce businesses in the field of Sporting Goods. By way of example, as of the Effective Date, such GSI Partners include [*] The specific GSI Partners shall be subject to change from time to time throughout the Term. 1.14 "GSI Technology" means all HTML, Java and other language files (and/or all derivatives thereof), graphics files, animation files, data files, Databases, technology, method, user interface, process, software, functionality, features, scripts and programs, both in object and source code 4 form, and all documentation and all other information and materials relating thereto, together with all Intellectual Property Rights associated therewith, used by or on behalf of Licensee in the design, development, hosting, maintenance and operation of the TSA.com Site or otherwise made available to Licensor hereunder. "GSI Technology" includes any adaptation, modification, improvement and/or derivative work of any GSI Technology that is developed by any Party or jointly by the Parties. "GSI Technology" shall not include any Licensed Property or any derivative work of any Licensed Property, whether developed by any Party or jointly by the Parties. 1.15 "GSI Venture" or "GSI Ventures" means any Person engaged in the sale of goods over the Internet, including (i) Licensee or any of its Affiliates, or (ii) any Person in which Licensee or any of its Affiliates owns or controls fifty percent (50%) or more of the voting power of the capital stock (or other securities or rights) or the power to direct or cause the direction of management or policies of such Person, whether through voting securities, by contract or otherwise; provided such Person directly or indirectly generates in excess of twenty (20%) percent of its revenues from the sale of Sporting Goods. 1.16 "Intellectual Property Rights" means any and all now or hereafter known tangible and intangible (a) rights associated with works of authorship throughout the universe, including copyrights or works of copyright, moral rights, and mask-works, (b) trademark, trade dress, service mark and trade name rights and similar rights, (c) trade secret rights, (d) patents, designs, algorithms and other industrial property rights, (e) all other intellectual and industrial property rights of every kind and nature throughout the universe and however designated (including domain names, logos, "rental" rights and rights to remuneration), whether arising by operation of law, contract, license, or otherwise, and (f) all registrations, initial applications, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force (including any derivative rights in any of the foregoing). 1.17 "Internet" means the 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 accessing a URL, whether such content is delivered through on-line browsers, off-line browsers, or through "push" technology, electronic mail, broadband distribution, satellite, wireless or other successor technologies. 1.18 "Land Based Stores Gift Certificates" means gift certificates, pre-programmed gift cards, and other successor forms of gift certificates or cards, bearing the marks THE SPORTS AUTHORITY and/or THE SPORTS AUTHORITY & Design, in fixed denominations, printed and distributed by Licensor and which are redeemable only in the TSA Stores and not through the TSA.com Site. 1.19 "Licensed Property" means the Marks, Names, TSA Content and the Look and Feel, together will all Intellectual Property Rights associated therewith, which Licensor has licensed to Licensee hereunder. "Licensed Property" includes any adaptation, modification, improvement 5 and/or derivative work of any Licensed Property that is developed by any Party or jointly by the Parties. "Licensed Property" does not include any GSI Furnished Materials or any derivative work of any GSI Furnished Materials, whether developed by any Party or jointly by the Parties. 1.20 "License Guidelines" means the clearance, form, format and use restrictions and instructions set forth in Exhibit A attached hereto. --------- 1.21 "Look and Feel" means, either with respect to the TSA.com Site or the TSA Stores, as the case may be, the appearance, coloring, graphics, fonts, and other look and feel characteristics of the TSA.com Site or TSA Stores, as the case may be, which are unique to the TSA.com Site or TSA Stores, as the case may be, and are generally consistent across all media and applications, and which suggest a common identity for the TSA.com Site or the TSA Stores, as the case may be. 1.22 "Marks" shall mean the mark THE SPORTS AUTHORITY in English in block letters and any equivalent in foreign language characters, certain THE SPORTS AUTHORITY logotypes, and such other trademarks and service marks of Licensor, which are proprietary to Licensor, all as more specifically described in Exhibit ------- B attached hereto and incorporated herein, as Exhibit B may be modified from - - --------- time to time in writing by Licensor as set forth in Section 2.1(b), together with all associated Intellectual Property Rights, including trademark and service mark applications and registrations therefor. 1.23 "Materials" shall mean exterior and interior signs, billboards, flags, banners, buttons, Web pages or portions of Web pages, frames, links, icons, packaging, labels, print, electronic and broadcast advertising and promotional media, indexes and pages on Websites (whether visible or not to the general public), meta-tags, manuals, brochures, flyers, posters, sales literature, business forms, gift certificates, credit cards, debit cards, membership or consumer loyalty or gift program cards and related materials, stationery, employee uniforms, badges, merchandise bags and boxes, baskets, trolleys and carts, sales receipts and charge slips, tickets and tags, business forms and stationery, and the like, to the extent that such materials bear any of the Marks and to the extent such materials are developed, controlled or authorized by Licensee (or with respect to the Core Marks, by the Advertising and Marketing Partners of Licensee) for use on or in connection with furnishing the Services, Sporting Goods, advertising or promoting the TSA.com Site, or otherwise in the operation of the TSA.com Site. 1.24 "Names" means those Internet domain names registered in the name of either TSAMI or TSA, or both, together with any additions as may be provided to Licensee from time to time in writing by Licensor, or any deletions as mutually agreed upon by the Parties, all as set forth in Exhibit C, attached hereto. --------- 1.25 "Net Revenue(s)" means the total sales revenues received for Sporting Goods and Services sold or furnished by or through the TSA.com Site (including Orders placed through the customer service telephone number applicable to the TSA.com Site), and any proxy sites or sublicensed sites of the TSA.com Site operated by any Advertising and Marketing Partners of Licensee, whether for cash or credit, except that the following shall be excluded in calculating 6 Net Revenues: (i) sales of Sporting Goods or Services subsequently returned for refund or credit; (ii) sales tax, value added tax, goods and services tax, consumption tax and any other applicable taxes imposed by governments, excluding any withholding taxes, which are required to be paid by Licensor with respect to the Royalties, if any; (iii) sales of Land Based Stores Gift Certificates; (iv) charges for any fulfillment-related services such as shipping, handling, gift wrapping, delivery and assembly; (v) credit card chargebacks; (vi) credits for coupons, discount codes or similar non-cash discounts; (vii) amounts received from Advertising and Marketing Partners for Services pursuant to Section 1.33(b) or otherwise; and (viii) any amounts received from any Person for the purpose of advertising or marketing such Person or such Person's products. For the purposes of calculating Net Revenue with respect to On-Line Gift Certificates, the applicable royalty shall be payable upon the redemption of On-Line Gift Certificates rather than upon the initial sale of such On-Line Gift Certificate. 1.26 "Non-Shopping Features" means such content and information on the TSA.com Site, provided by or through Licensor, that contain or make accessible as part of the TSA.com Site such information as the following: TSA corporate information (e.g., historic background, mission statement, names of officers and directors), store locator, TSA public financial information (e.g., SEC filings, annual reports, etc.), TSA's press releases (but not Licensee's press releases, unless Licensor has reviewed and approved the same), community programs, employment opportunities in TSA Stores or corporate positions, frequently asked questions (concerning the TSA Stores and not the TSA.com Site), a "contact us" section relating to the TSA Stores, and any other information which serves to inform Customers about the TSA Stores, all as set forth in greater detail in Exhibit D --------- attached hereto. 1.27 "On-Line Gift Certificates" means gift certificates, pre-programmed cards, and other successor forms of gift certificates or gift cards, bearing the marks THE SPORTS AUTHORITY, THE SPORTS AUTHORITY & Design, THESPORTSAUTHORITY.COM, and/or THESPORTSAUTHORITY.COM & Design, in fixed denominations, printed and distributed by Licensee and which are redeemable only through the TSA.com Site and not through the TSA Stores. 1.28 "Order" means an order to purchase Sporting Goods or Services. 1.29 "Party" means Licensor or Licensee; "Parties" shall mean both of them. 1.30 "Person" means, whether or not capitalized, any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or governmental body. 1.31 "Private Label Merchandise" means any Sporting Goods offered and sold under any trademarks owned by Licensor, whether or not such trademarks have been registered in Licensor's name. 7 1.32 "Royalties" means the compensation for use of the Licensed Property due and payable from Licensee to Licensor hereunder, as set forth in greater detail in Exhibit E and pursuant to Section 11.2. Royalties shall accrue at the time --------- when any Order is shipped to a Customer. 1.33 "Services" means those services: (a) offered by Licensee to Customers at or through the TSA.com Site, including, without limitation, retail store services in the field of Sporting Goods, as well as, to the extent Licensee chooses to offer in its sole discretion, Sporting Goods assembly, warranty programs, repair and maintenance, racquet stringing, layaway, customer loyalty and gift card programs, and like services; and (b) those advertising and promotional services furnished by Licensee directly or by or through Advertising and Marketing Partners of Licensee, including, without limitation, services intended to increase Customer traffic and purchases at the TSA.com Site, and services intended to attract Customers to the TSA.com Site from the Advertising and Marketing Partners of Licensee. 1.34 "Sporting Goods" means sports, recreational, athletic and/or fitness-related (i) equipment (e.g., bats, balls, gloves, racquets, clubs, helmets, skis, fishing equipment, exercise equipment, table games, memorabilia and licensed products), (ii) apparel (e.g., jerseys and exercise clothing) and (iii) footwear. "Sporting Goods" shall also include any other specific products that are sold from time to time by Licensor in the TSA Stores. 1.35 "Term" means the period set forth in Section 17.1 of this Agreement. 1.36 "Territory" means throughout the world, excluding Japan and excluding other countries from time to time pursuant to Sections 16.4, if any. 1.37 "TSA Competitor" means any Person (other than Licensor and each of its Affiliates) which directly or indirectly derives [*] or more of its revenues from the retail or wholesale sale or distribution of Sporting Goods, whether by mail order, home shopping through audio or video programming, over the Internet, or from land-based stores located in the Territory. However, a Sporting Goods manufacturer or distributor that supplies Licensee on a wholesale basis that also happens to operate Sporting Goods retail stores or a business-to-consumer e-commerce Web Site of its own, shall not be considered a TSA Competitor for purposes of this Agreement if the subject manufacturer or distributor derives less than [*] of its revenues from such Sporting Goods retail stores and/or Web Sites. 1.38 "TSA Content" means: (a) all Non-Shopping Features, text, graphics, photographs, video, audio and/or other data or information (excluding Customer Information) owned or controlled by Licensor and furnished by Licensor to Licensee and intended solely for use in connection with the TSA.com Site; (b) Licensor selected print advertisements for the TSA Stores or the goods and services offered by Licensor in the TSA Stores, including run of press and insert advertisements which appear in newspapers and magazines, as well as printed in store signage, point of sale and display signage and information promoting events and the goods and services offered in the TSA Stores; and (c) such information concerning the goods and services offered by Licensor in the TSA Stores in the U.S. as Licensor owns or controls, and which Licensor furnishes to Licensee for use in connection with the TSA.com Site, including information which 8 is related to the sourcing, manufacturing, development, design, fabrication, construction, test procedures, performance features, quality control standards, merchandise specifications, reliability standards, distribution, costs, allowances, pricing, rebates, sizes, colors, decoration, display, margins, vendor economic information, and similar information and know-how necessary to the procurement, merchandising, inventory management and sales of such goods and services in the TSA Stores. 1.39 "TSA Stores" means any land-based retail store operated by TSA or any its Affiliates under the principal name and mark THE SPORTS AUTHORITY and related AUTHORITY marks, and devoted to the sale of Sporting Goods. 1.40 "TSA.com Site" means that Web Site, the primary Home Page for which is identified by the Designated URL (and any successor or replacement Web Site), and any backup or mirror Internet Web site operated by Licensee. 1.41 "URL" means the uniform resource locator of a Web Site. 1.42 "Web" means the Internet client-server hypertext distributed information retrieval system known as the World Wide Web. 1.43 "Web Site" means any point of presence maintained on the Internet. With respect to any Web Site maintained on the World Wide Web, such Web Site includes all HTML pages (or similar unit of information presented in any relevant data protocol) that either (a) are identified by the same second-level domain (such as http://www.thesportsauthority.com) or by the same equivalent level identifier in any relevant address scheme, or (b) contain branding, graphics, navigation or other characteristics such that a user reasonably would conclude that the pages are part of an integrated information or service offering. Section 2. Licenses. 2.1 Grant of License by Licensor. (a) Grant. Subject to the terms and conditions set forth in this Agreement, Licensor hereby grants to Licensee, for the Term and within the Territory only, a non-transferable, exclusive (as to third parties but not as to Licensor and its Affiliates other than as provided herein) right and license to use the Licensed Property on and in connection with the Services and Materials furnished at or in connection with the TSA.com Site if, and only if, such Services and Materials comply with the quality standards set forth herein, and such other mutually agreed upon standards. Licensor may monitor and control, in accordance with the terms of this Agreement, the nature and quality of the Services and Materials as set forth herein to determine whether such Services and Materials are in compliance with such quality standards, and Licensor may appoint one or more representatives to so monitor and to exercise such control on Licensor's behalf. Such monitoring shall in no way lessen or limit Licensee's obligation to use the Marks, Names and TSA Content only as set forth herein. No other, further or different license is granted or implied and no assignment of any right or interest is made or intended herein. In particular, 9 except as set forth in Section 2.3, no license is granted to sublicense or otherwise permit any third party to use the Licensed Property. Licensee is prohibited from using the Marks, or any name or mark incorporating the word AUTHORITY or otherwise confusingly similar to the Marks, including any abbreviations of the Marks, as part of Licensee's registered corporate or business name in any jurisdiction in the world, or as part of any Internet domain name or subdomain name not otherwise registered in Licensor's name. Except as licensed hereunder, Licensee shall not use or apply to register the Licensed Property or any identical or deceptively or confusingly similar trademarks, service marks, corporate names, domain names, trade names, trade dress, copyrights, industrial models or designs, or any derivations thereof, during the Term and thereafter. (b) Changes to Exhibit B. Licensor and Licensee acknowledge that the "Core Marks" as set forth in Exhibit B are: THE SPORTS AUTHORITY, --------- THESPORTSAUTHORITY.COM, THESPORTSAUTHORITY.COM & Design and THE SPORTS AUTHORITY & Design. Licensor may make changes to Exhibit B from time to time as it sees --------- fit to add Marks and to update information in records for existing Marks by delivering an updated version of Exhibit B to Licensee. Licensor may only change --------- Exhibit B to delete non-Core Marks (or records for non-Core Marks) by giving 30 - --------- days prior written notice to Licensee (stating Licensor's reasons for the proposed deletion(s) in reasonable detail). During such 30-day period, Licensee may object in writing to any proposed deletion of non-Core Marks by Licensor. If, prior to the end of such 30-day period, Licensee does not object in writing to any proposed deletion of Non-Core Marks by Licensor, the proposed deletion may be made and Licensor shall deliver an updated Exhibit B to Licensee. If --------- Licensee objects in writing within such 30-day period, Licensee will furnish in reasonable detail the basis for its objection. Licensor may accept the objection and forego the deletion(s), but if not, Licensor and Licensee will negotiate in good faith and use commercially reasonable efforts to achieve a mutually acceptable resolution. Notwithstanding the foregoing, if, with Licensor's prior knowledge, Licensee has made a substantial and material investment in a non-Core Mark which Licensor proposes to delete, and the reason for the proposed deletion is not a binding court order, judgment or other injunction prohibiting Licensor's or Licensee's continued use of the subject Mark, the Parties shall strive to preserve Licensee's continued right to use the non-Core Mark and to retain the non-Core Mark as part of Exhibit B. --------- (c) Duty to Exploit License. Licensee shall use commercially reasonable efforts appropriate to an experienced e-commerce retailer, during the Term: (i) to furnish the TSA.com site throughout the Territory, and (ii) in the United States, Canada and such other countries within the Territory which Licensor, directly or indirectly through a third party, maintains TSA Stores (A) to advertise, promote, sell and furnish the TSA.com Site and the Services and Sporting Goods offered and sold through the TSA.com Site, and (B) to exploit the rights granted herein in connection with the TSA.com Site, generally consistent with the exploitation by Licensor in connection with the TSA Stores. 2.2 Marking, Samples, Inspection, Quality Control (a) Marking Materials; Ownership. Licensee shall comply with the License Guidelines set forth in Exhibit A. Licensor reserves the right to change the --------- provisions of Exhibit ------- 10 A in order to protect and enhance the Licensed Property, or Licensor's interests - - in the Licensed Property, provided that such changes: (a) may be imposed without Licensee's consent if such changes are necessary to preserve consistency with Licensor's own use of the Licensed Property; or (b) subject to the consent of Licensee, which shall not be unreasonably withheld, in any other case. Licensee shall have a reasonable period, but no more than ninety (90) days, to fully implement such changes. (b) Submission of Samples of Materials; Approval Process. Upon the reasonable request of Licensor, and prior to producing, publishing or distributing any proposed Materials for the first time which bear any Mark which has been altered by Licensee from the original form of such Mark as supplied by Licensor, Licensee shall furnish at Licensee's expense samples of such Materials, including the trademark, copyright and disclaimer notices thereon and any other labels, tags or markings. Further, Licensor shall have the right to reasonably inspect the TSA.com Site, including all underlying code and data structures (solely for purposes of protecting its interests in the Licensed Property and to ensure Licensee's compliance with the terms hereof), to review upon request all Materials being furnished by Licensee to any of its Advertising and Marketing Partners, and to know the identity and applicable URLs of such Advertising and Marketing Partners of Licensee. Licensor shall review in a timely manner all such samples, requests and uses which contain any altered Mark and use commercially reasonable efforts to communicate in writing its approval or disapproval as soon as practicable after receiving any request for the same from Licensee or after reviewing such samples or uses. Failure to communicate approval within five (5) Business Days of receipt of such a specific request from Licensee shall be deemed disapproval. Licensee shall amend to the satisfaction of Licensor any sample of Materials containing any proposed alterations of the Marks as may be directed by Licensor. A further sample shall be provided to Licensor for its prior review and written approval if any subsequent changes are made in approved Materials or in the Marks. (c) Quality Control. As of the Effective Date, Licensor is familiar and satisfied with the current standards of quality of the Services, Materials and Sporting Goods of Licensee, of the uses of the Licensed Property by Licensee and the Advertising or Marketing Partner of Licensee, and by Licensee's efforts to maintain such standards and control such uses. Licensee agrees that the Services, Materials and Sporting Goods shall meet or exceed such current standards. Licensee shall not offer or furnish any Services, Materials or Sporting Goods, or, subject to Section 2.3, knowingly permit any uses of the Licensed Property by any Advertising or Marketing Partner of Licensee, if Licensor reasonably deems that any such Services, Materials or Sporting Goods, or any uses of the Licensed Property by any Advertising or Marketing Partner of Licensee, are not of a nature or quality that complies with the quality standards and License Guidelines in accordance with this Agreement. (d) Inspections, Testing. To ensure compliance with the quality standards set forth in this Agreement relating to the Licensed Property, Licensor, at its expense, directly or through representatives reasonably acceptable to Licensee, may inspect and test Sporting Goods (that is, those Sporting Goods not otherwise sold by Licensor in the TSA Stores) and Materials from time to time. Licensee shall reasonably cooperate and aid Licensor in making such inspections and tests. 11 (e) Delegation. Without limiting or waiving Licensor's rights in any manner, Licensor delegates in part to Licensee the continuing duty to exercise quality control regarding the nature and quality of the Services, Materials and Sporting Goods and the nature and quality of Licensee's (and the Advertising and Marketing Partners of Licensee's) uses of the Licensed Property. Licensee shall use commercially reasonable efforts to fulfill such delegated duties. Licensor may recommend and Licensee shall use commercially reasonable efforts to adopt and comply with any reasonable procedures, tests, surveys or the like to fulfill this delegation. Licensor may reasonably request reports, documentation, evidence or other proof of Licensee's performance under this provision and Licensee shall promptly furnish the same to Licensor. 2.3 Sublicense Template. Subject to the terms of this Agreement and Sections (a) through (g) below, and provided that Licensee strictly complies with the requirements set forth in this Section 2.3, Licensee may grant temporary, non-exclusive, non-transferable sublicenses to use the Core Marks to those Advertising and Marketing Partners of Licensee approved by Licensor to the extent required under Exhibit F attached hereto: --------- (a) All agreements containing sublicenses must be dated, in writing and executed by Licensee and the subject Advertising and Marketing Partner of Licensee; (b) The rights granted within any such agreements must be restricted to use of the Core Marks solely to advertise and promote the TSA.com Site, on a temporary, non-exclusive, non-transferable basis, during the Term and within the Territory only (provided that the fact that a Web Site of an Advertising and Marketing Partner of Licensee may be accessible by users in countries outside the Territory does not, in itself, preclude such sublicense or violate this Agreement subject to the prohibitions herein concerning shipment or delivery of Sporting Goods to Customers in such countries); (c) All sublicense provisions or agreements must expressly identify Licensor as the owner of the Core Marks, and provide that all goodwill associated with use of the Core Marks shall inure to Licensor; (d) All sublicensees must agree to use the Core Marks only as instructed by Licensee and only in the formats provided by Licensee (without alteration); (e) All sublicenses must provide that if any sublicensee is misusing the Core Marks, or if such sublicensee is using the Core Marks in violation of the usage guidelines in this Agreement, upon notice from Licensee, the subject sublicensee shall either immediately correct such misuse or defect, or immediately cease using the Core Marks; (f) The Parties shall work together in good faith to develop efficient methods of tracking, reporting, documenting and auditing all such sublicenses and sublicensees. Upon the reasonable request of Licensor, Licensee shall furnish full and accurate copies of all agreements containing sublicenses to the extent such agreements concern the TSA.com Site and/or Licensor, and furnish samples of any uses of the Core Marks by any Advertising and Marketing Partner of 12 Licensee. Licensee's duty to furnish such agreements shall be subject to any confidentiality provisions contained therein, provided that Licensee shall use commercially reasonable efforts to (i) avoid such provisions as they relate to Licensor when negotiating any such agreements, and, (ii) after the fact, to secure a suitable waiver if necessary from any such sublicensee to disclose all or as much of the subject agreement to Licensor as required hereunder; and (g) If Licensee becomes aware of, or is notified in writing by Licensor, that a given sublicensee has breached the above provisions, other provisions of this Agreement, or the provisions of any sublicense, the subject sublicensee's breach shall not be deemed a breach of this Agreement by Licensee until (i) Licensee has been afforded a reasonable amount of time, not to exceed thirty (30) days from receipt of such notice, to remedy the sublicensee's breach, and (ii) Licensee fails to remedy such sublicensee's breach or fails to terminate such sublicensee's use giving rise to such breach within such time. 2.4 Coining New Trademarks or Service Marks. Licensee acknowledges that Licensor's retail identity focuses in principal part upon use of a family of marks incorporating and featuring the word "Authority," many of which are listed in Exhibit B, attached. However, Licensor also owns and uses other marks outside --------- of its family of Authority marks, as detailed in part in Exhibit B. Licensee --------- shall not coin, adopt, use or attempt to register on or in connection with the TSA.com Site any new trademark or service mark featuring the word Authority, or otherwise similar to any of Licensor's Marks as detailed in Exhibit B, without --------- the prior review, clearance and approval of Licensor, which may be withheld by Licensor as it sees fit. Once a given new mark has been approved by Licensor, Licensee shall furnish all reasonably necessary assistance to Licensor to register and maintain such mark in Licensor's name, at Licensor's expense. Licensor shall update Exhibit B from time to time to reflect such newly coined --------- and adopted marks. 2.5 License Exclusions. Licensee agrees and acknowledges that: (a) Reservation of Rights. Notwithstanding Section 2.1, but subject to the other provisions of this Agreement (including Sections 9, 10 and 16), Licensor reserves to itself, its Affiliates, and their respective agents, distributors, representatives licensees, franchisees, customers, successors and assigns (now or hereafter existing), all rights to use (and the right to license or otherwise authorize others to use) the Licensed Property for any and all purposes including the right to use and exploit the Licensed Property throughout the world, including in the Territory (i) to manufacture, source, market, sell, furnish, advertise and promote and deliver goods and services offered at or through the TSA Stores; (ii) to print, source, market, sell, furnish, advertise and promote TSA Land Based Stores Gift Certificates, directly or indirectly through any third party, whether from TSA Stores, by mail order, over the Internet, an intranet or extranet (except from an Internet site owned or operated by Licensor directed at consumers, as opposed to Licensor's employees or other businesses), or otherwise; (iii) to create, develop, operate or maintain any Web Site exclusively devoted to the provision of information or to employee training and the sale of Sporting Goods and Services to employees of Licensor, but which shall not, in either case, offer for sale any Sporting Goods or services (other than for purchases by employees at a discount for their own benefit) or link to any Web Site selling 13 Sporting Goods or services other than the TSA.com Site and (iv) to manufacture, source, market, sell, furnish, advertise and promote goods and services offered by means of home shopping audio or video programs or successor technologies (not on the Internet). (b) Private Label Merchandise. Nothing contained herein will prevent or restrict Licensor or any of its Affiliates, or any third parties licensed by Licensor, from sourcing, manufacturing, marketing, advertising or selling Private Label Merchandise other than, directly or indirectly, through the Internet. Conversely, Licensee shall not source or manufacture Private Label Merchandise, and may only offer, advertise and sell Private Label Merchandise on the TSA.com Site that has been purchased from Licensor, as if Licensor were Licensee's vendor. Licensee may only purchase Private Label Merchandise directly from a vendor other than Licensor with Licensor's prior written approval. (c) Prohibited Use of TSA Content. Nothing contained herein shall permit Licensee (or any of its Affiliates) to use or authorize others to use the TSA Content in any manner on or in connection with any site of any TSA Competitor. Licensee will segregate and take all necessary measures to prevent the TSA Content, which is in the possession and control of Licensee, from being commingled with the content of any TSA Competitor. The foregoing limitation shall not be deemed to restrict Licensee from using content of any merchandise vendor on the TSA.Com Site in connection with the sale of such vendor's products through the TSA.Com Site. Such TSA Content as would be deemed "Confidential Information" as defined herein shall be governed by Section 19.3. (d) No Use of HEAD and Other Licensed Marks. Nothing contained herein shall authorize or permit Licensee (or any of its Affiliates) to source or manufacture goods bearing the trademark HEAD or other marks like the HEAD marks that are licensed by a third party to Licensor for use solely in connection with the TSA Stores. (e) Licensor's Other Authorized Users. Licensor has entered into, and may renew or continue to enter into, certain license agreements, sponsorship agreements, settlement agreements and other agreements regarding use of the Marks by others that do not, and will not, abridge Licensee's rights hereunder or otherwise conflict with this Agreement. (f) No Embarrassment. Neither Licensee nor any of its Affiliates, and subject to Section 2.3(g), none of the Advertising and Marketing Partners of Licensee will: (i) offer or sell Sporting Goods or render Services, or otherwise advertise or promote the TSA.com Site, in any way associated with, or reasonably determined by Licensor, to be associated with any illegal, vulgar, obscene, or offensive activities, nor cause material embarrassment to be suffered by Licensor by reason of acts or omissions which are illegal, vulgar, obscene, or offensive; (ii) disparage Licensor or any of its Affiliates, or their products or services; (iii) portray Licensor or any of its Affiliates, or their products or services, in a false, competitively adverse or poor light; or (iv) knowingly take any action that materially and adversely diminishes the value of the Licensed Property. Additionally, Licensee will require each of the Advertising and Marketing Partners of Licensee to agree to restrictions with respect to the TSA.com Site substantially similar to the restrictions set forth in this subsection (f). 14 (g) No Other Uses. Licensee shall not use the Licensed Property for any purpose other than the creation, development, operation, maintenance, advertising and promotion of the TSA.com Site as specifically provided for herein. (h) No Exports to Outside the Territory. While the TSA.com Site may be accessible by Persons outside the Territory (and such accessibility will not, by itself, be considered a breach of this Agreement), Licensee will not ship to addresses outside the Territory and will not knowingly sell Sporting Goods to any Person which it knows or has reason to believe intends to export such Sporting Goods to countries outside the Territory. (i) No Co-Branding. Licensee shall not "co-brand" the TSA.com Site, or use the Marks adjacent to other trademarks or service marks on the TSA.com Site or on the site of any Advertising and Promotion Partner of Licensee in a manner which, in comparison to any nearby marks of others, places less emphasis or imposes smaller dimensions upon the Marks. Notwithstanding the foregoing, Licensor acknowledges and agrees that as part of certain advertising and marketing arrangements entered into with Advertising and Marketing Partners of Licensee hereunder, (a) the TSA.com Site may be "framed" by certain of the Advertising and Marketing Partners of Licensee which frame will include trademarks or service marks of such Advertising and Marketing Partners of Licensee, and (b) certain Web Sites of the Advertising and Marketing Partners of Licensee may include logos, marks, trade names, trade marks, offers, and related material of third parties, in either case which are larger than the Marks or place more emphasis on such other logos, marks, trade names, trade marks, offers, and related material over the Marks. (j) Prohibition Of Gambling Activities. At no time shall Licensee: (i) publicize, advertise, promote or otherwise make available on the TSA.com Site any information about touting, gambling or lotteries (other than legal sweepstakes sponsored by or in conjunction with the TSA.com Site); or (ii) authorize or provide any links from the TSA.com Site to any third party site that contiguously publicizes, advertises, promotes or provides any information about touting, gambling or lotteries (other than scores and game lines for sporting events or legal sweepstakes). 2.6 Protection of Licensed Property. (a) Licensee shall use commercially reasonable efforts to inform Licensor promptly of any possible infringement, or of any passing off or unfair competition affecting any of the Licensed Property that comes to the attention of Licensee's management. Further, Licensee agrees to fully cooperate and assist Licensor as is reasonably necessary and at Licensor's expense, in the protection and defense of any of Licensor's rights in the Licensed Property, in the filing and prosecution of any trademark, trade dress, service mark, trade name, copyright, domain name, industrial model or design application, registration, renewal and the like, in the recording of this Agreement or any other relevant agreements, including registered user agreements, and in the doing of any other act with respect to the Licensed Property, including the prevention of the use thereof by any unauthorized person. 15 (b) Licensor deems the Licensed Property to be extremely valuable. Licensor shall have the sole right to determine whether or not any action shall be taken on account of any infringement, passing off or unfair competition activities or other enforcement of Licensor's rights in the Licensed Property. If Licensor so desires it may prosecute any actions, claims, lawsuits or proceedings in its own name or join Licensee as a party thereto, all at Licensor's expense. Licensor shall be entitled to recover any and all sums of money awarded and materials delivered up as a result of such actions, claims, lawsuits or proceedings. (c) Licensee shall not, and shall not be required, to institute any lawsuit or take any action against any third party on account of any actual or alleged infringement, passing off or unfair competition relating to the Licensed Property, and Licensee shall not have any right or claim against Licensor for Licensor's failure to enforce its rights in the Licensed Property or failure to prosecute any actual or alleged infringement, passing off or unfair competition by others in relation to the Licensed Property. Notwithstanding the foregoing, if, after Licensor is advised and has a reasonable opportunity to investigate and attempt to resolve an instance of actual or alleged infringement, passing off or unfair competition, yet Licensor determines not to institute any lawsuit or take any further action or because, in Licensor's reasonable opinion, the same are unwarranted or of no avail, Licensee may institute a lawsuit or take any action, solely in its own name, to remedy the actual or alleged infringement, passing off or unfair competition. As a prerequisite to instituting such a lawsuit and taking any such actions, Licensee shall deliver to Licensor a duly executed guarantee from Global Sports providing that Global Sports agrees to and shall pay any and all costs, expenses and damages, including attorneys' fees, expert fees and all court costs incurred by Licensee and by Licensor (including Licensor's internal costs) in the matter. Licensee agrees to keep Licensor fully informed regarding all such lawsuits and actions, and to obtain Licensor's prior written approval of any proposed settlement that affects the Licensed Property or Licensor's interest in the Licensed Property. Licensee shall apply any costs, fees, damages or other sums recovered in any such action or lawsuit to reimburse the amounts Licensee or Global has expended in the action or lawsuit. Once Licensee or Global has been fully reimbursed, the balance shall be delivered as determined by the court. Section 3. Creation and Operation of the TSA.com Site 3.1 Design and Development. Licensee, at its own expense, will continue to design and develop the TSA.com Site in accordance with this Agreement. Except for the Licensed Property, Non-Shopping Features and TSA Content to be provided by Licensor hereunder, Licensee shall provide all content, creative, design, programming and related services necessary to the design, development, operation and updating of the TSA.com Site, including incorporating the functionality and features provided for herein. Licensee shall update the content, offers, promotions and Look and Feel characteristics of the TSA.com Site as is reasonably necessary for the Site to compare favorably with then current industry standards for leading e-commerce businesses[*] The TSA.com Site will continue to contain at a minimum the functionality and features currently existing on the TSA.com Site and as set forth on Exhibit G attached hereto and --------- such other functionality and features as may be agreed upon by the Parties. The TSA.com Site will be comprised of a series of templates developed by Licensee that will define the format and 16 layout of a page on the TSA.com Site and establish the placement and size of content type blocks (e.g. text, graphics, promotions, advertising, navigation bar and images). Such templates shall be developed to correspond closely with the merchandise category and department structure in the TSA Stores. The Look and Feel characteristics of the TSA.com Site will continue to be consistent with the TSA Stores and the Marks, or as otherwise mutually upon by the Parties. Licensor will provide Licensee with the Non-Shopping Features information, TSA Content and Licensed Property necessary for the operation of the TSA.com Site and provision of the Services in connection therewith. Licensor will provide such Non-Shopping Features information, TSA Content and Licensed Property in such format as may be agreed upon by the Parties. In the event of a change in the Marks of Licensor, Licensee agrees that it shall update the TSA.com Site in a timely manner after Licensor provides Licensee with such updated Marks. Notwithstanding anything herein to the contrary, it shall be Licensee's sole responsibility to produce and maintain all camera-ready product information and images for use on the TSA.com Site. For purposes of this Agreement, such product information and images shall be deemed GSI Content. Notwithstanding the foregoing, Licensee shall, after giving reasonable advance notice, be permitted to reasonably use merchandise in the TSA Stores to prepare product images, so long as such use (i) is during normal business hours or other mutually agreed upon times, (ii) does not disrupt customers' ability to purchase merchandise in such TSA Stores, and (iii) does not damage such merchandise. 3.2 Web Site Enhancements and Updates. (a) Subject to the terms and conditions of this Section 3.2, in the event that [*] provided, however, that Licensee shall not have the obligation to [*] (b) Subject to the terms and conditions of this Section 3.2, in the event that [*] provided, however, that Licensee shall not have the obligation to [*] (c) Notwithstanding Section 3.2(a) and Section 3.2(b), Licensee shall not be obligated to [*] provided, however, if [*] The Parties will cooperate in good faith with each other and will use commercially reasonable efforts to [*] (d) Licensee's obligations under this Section 3.2 shall terminate [*] 3.3 Hosting, Maintenance and Operations of TSA.com Site. Licensee, at its own expense, will host, maintain and operate the TSA.com Site in accordance with this Agreement. Licensee will furnish a data center and all other "back-end" operations in order to fulfill its obligations hereunder. Licensee will be responsible for hosting, or arranging for the hosting by a reputable third-party hosting company, the TSA.com Site. Licensee agrees that, during the Term, it will comply with [*] The data center, equipment and software used by Licensee to host and operate the TSA.com Site, and the security and monitoring provided by Licensee with respect to the TSA.com Site and the data center, equipment and software used by Licensee to host and operate the TSA.com Site, will be equal or better in quality to that currently used or provided for the TSA.com Site; provided, however, that the communications link to the public Internet for the 17 TSA.com Site shall compare favorably to the communications link of the Web Sites of other leading e-commerce businesses having a similar amount of usage and which sell comparable products and services, [*] The TSA.com Site will be operated at the Designated URL. At all times during the Term, Licensor will cause the Names to be registered with Network Solutions Inc. (or other reputable registrars) in such a way that the Names point to the domain name servers designated by Licensee. Licensor will provide the information set forth on Exhibit "K" attached hereto with respect to security for and registration of the URLs for the TSA.com Site. 3.4 Non-Shopping Features. (a) Licensee will program, upload, display and maintain the Non-Shopping Features at its own expense, and shall promptly update all related aspects of the TSA.com Site, as requested from time to time by Licensor. Notwithstanding the foregoing, if and when Licensee provides access or technology to Licensor that enables Licensor to control and update any Non-Shopping Features directly, the updating burden as to the subject Non-Shopping Features shall shift to Licensor. (b) Upon request from Licensor, Licensee shall place a notice of copyright ownership on each page of the TSA.com Site that displays Non-Shopping Features in accordance with the License Guidelines. Further, Licensee shall cooperate fully with Licensor at Licensor's expense in connection with Licensor's obtaining appropriate copyright protection in the name of Licensor for any page containing Non-Shopping Features. Section 4. Merchandising the TSA.com Site. 4.1 General. Subject to the terms of this Agreement, (i) Licensee may continue to offer for sale on the TSA.com Site any and all types of Sporting Goods and Services offered in the TSA Stores, and (ii) to the extent reasonably practicable, Licensee will continue to offer for sale on the TSA.com Site as broad of a selection of Sporting Goods and Services as Licensor offers in the TSA Stores; provided, however, that (A) Licensee will not be required to offer for sale on the TSA.com Site any Sporting Goods or Services that Licensee is prohibited from offering for sale on the TSA.com Site by the manufacturer, licensor or licensee of such products, and (B) Licensee may continue to offer for sale on the TSA.com Site Sporting Goods and Services not offered for sale in the TSA Stores. Licensee shall merchandise the TSA.com Site so that (a) it appears to Customers that Sporting Goods and Services available on the TSA.com Site (i) are organized into categories and departments closely corresponding to the categories and departments found in Licensor's TSA Stores, and (ii) the assortment and selection of such Sporting Goods and Services is similar to that found in the TSA Stores and is no less broad in scope in comparison to that found on the Web Sites of the GSI Ventures or GSI Partners; and (b) for those Sporting Goods or Services offered by Licensee by or through the TSA.com Site and by Licensor in the TSA Stores, [*] In contrast to the foregoing, Licensee shall have no [*] The Parties will cooperate in good faith with each other and will use commercially reasonable efforts to obtain all consents required to permit the offer and sale of prohibited Sporting Goods or Services through the TSA.com Site. 18 4.2 Cooperation. Although Licensee shall be primarily responsible for selecting, ordering and displaying Sporting Goods and Services for the TSA.com Site, the Parties will continue to coordinate the merchandising of the TSA.com Site. Each Party will, if the other Party so requests, use commercially reasonable efforts to assist the other Party in obtaining the best prices from vendors for Sporting Goods or Services desired to be acquired by such other Party and/or overcoming any vendor's or other applicable third party's reluctance to sell to the other Party. 4.3 Merchandising Plans. Licensor shall share its merchandise assortment plans, pricing and advertising plans with Licensee in a timely manner, in advance, as is reasonably necessary for Licensee to merchandise the TSA.com Site as described herein. Such merchandise assortment plans, pricing and advertising plans are and shall be treated as Confidential Information of Licensor. Upon request, Licensor shall use commercially reasonable efforts to work with Licensee and/or vendors so that Licensee is able to purchase and maintain adequate inventories of Sporting Goods featured in Licensor's advertising inserts in order to support the demand for such Sporting Goods through the TSA.com Site. 4.4 Sales or Transfers of Sporting Goods from Licensor to Licensee. Upon request from Licensee, or as offered from time to time by Licensor, Licensee may agree to buy and Licensor may agree to sell, certain name brand and Private Label Merchandise owned by Licensor (including merchandise ordered but not yet received by Licensor). Licensee shall pay all of Licensor's invoices for any shipments of Sporting Goods or Private Label Merchandise (including freight) within 30 days of receipt of such invoices. Licensee agrees that any Private Label Merchandise purchased by Licensee shall be offered and sold only on the TSA.com Site, except as provided in Section 17.7(e). All other terms of such purchases shall be as mutually agreed upon by the Parties. 4.5 Restrictions and Exceptions. Notwithstanding anything contained herein to the contrary, Licensee will not offer, sell, advertise or promote on the TSA.com Site, or display any links to any Web page that offers, sells, advertises or promotes, either directly or indirectly, any of the following: (i) any firearm, ammunition, explosive, explosive material, or weapon or any related items, equipment and accessories which are subject to licensing, permitting and or other governmental restrictions on sales, distribution and/or exports of the same; (ii) any Sporting Goods which Licensee knows or is informed by Licensor is counterfeit, or the offer or sale of which Licensee knows or is informed by Licensor infringes the valid Intellectual Property Rights of third parties; (iii) any Sporting Goods or Service that the sellers of which are charged with in-person verification of identity or age or other qualification to own or purchase such merchandise; (iv) any Sporting Goods that is subject to any export prohibition from the U.S., or which are barred or otherwise prohibited from use in any export destination country outside the U.S, unless such merchandise is only sold and delivered to a customer within the United States; (v) subject to the last sentence of this Section 4.5, any Sporting Goods or Service that is illegal, vulgar, obscene, or offense; (vi) any Sporting Goods or Service that Licensee knows or is informed by Licensor would, which if offered or sold on the TSA.com Site, violate a prohibition against the same imposed by the subject vendor upon Licensor, including, without limitation, any provision restricting distribution to the territories served by Licensor's TSA Stores; and (vii) subject to the last sentence of this Section 4.5, any Sporting Goods which Licensor requests in writing be 19 removed from the TSA.com Site for legitimate business purposes set forth in Licensor's notice to Licensee, which if not removed, would have a materially adverse impact on Licensor. Such notice shall specify in reasonable detail the Sporting Goods item or items that Licensor desires Licensee to remove from the TSA.com Site and the reasons for its objection to the sale of the same. The Parties will in good faith attempt to resolve any disagreement they may have concerning the removal of such products from the TSA.com Site pursuant to (v) and (vii) above; provided, however, if, notwithstanding the use of good faith, the Parties are unable to agree as to whether a particular product can be offered on the TSA.com Site, the following resolution shall govern: (i) if the disputed product is a type of product then offered for sale in the TSA Stores, then Licensee may continue to offer such product on the TSA.com Site, and (ii) if the disputed product is not a type of product then offered for sale in the TSA Stores, then Licensee shall remove such product from the TSA.com Site. 4.6 No Diversion. Licensee shall not knowingly divert or permit diversion of any Order made by, for, through or in the name of the TSA.com Site so that it results instead in a sale on the Web Site or other outlet of any GSI Partner, GSI Venture or any third party. 4.7 Land Based Stores Gift Certificates. In the event that Licensor is willing to provide Land Based Stores Gift Certificates to Licensee on a consignment basis, then Licensee shall sell Land Based Stores Gift Certificates through the TSA.com Site in accordance with this Section 4.8, provided that such sales by Licensee do not subject it to nexus with any state for sales tax purposes. Subject to the foregoing, Licensor will furnish Land Based Stores Gift Certificates to Licensee on consignment in quantities and denominations as reasonably requested by Licensee. Licensee will remit to Licensor [*] of all proceeds received from the sale of Land Based Stores Gift Certificates, the balance being retained by Licensee as its fee and to cover all costs, including credit card fees. By the [*] day of each [*], Licensee shall report and make full payments to Licensor for all sales of Land Based Stores Gift Certificates made during the previous month, and provide all reasonable cooperation to Licensor to permit the latter to fulfill its escheat duties. 4.8 On-Line Gift Certificates. Unless otherwise agreed to in writing by Licensor, in no event shall Licensee authorize, create, offer, advertise, market or sell any form of gift certificate, gift card, rebate, voucher or the like (other than Land Based Stores Gift Certificates as set forth above) that is intended to be redeemed at the TSA Stores. However, subject to the License Guidelines, Licensee may develop, publish and offer for sale On-Line Gift Certificates on the TSA.com Site. Licensee shall clearly and conspicuously state in connection with any offer to sell such On-Line Gift Certificates, and state on the On-Line Gift Certificates themselves, that On-Line Gift Certificates are redeemable only on the TSA.com Site and not at TSA Stores, unless otherwise agreed to in writing by Licensor. Licensee shall bear all escheat duties with respect to On-Line Gift Certificates. 4.9 Tax Obligations. For all Sporting Goods and Services sold by or through the TSA.com Site, as between Licensor and Licensee, Licensee shall be responsible for the computation, notification, withholding, payment, and reporting of all applicable taxes of any kind that may be imposed on Licensee in connection with Licensee's activities, assets or operations as permitted 20 hereunder, including, without limitation, all sales and use taxes and all value added taxes. As between the Parties, Licensor shall be responsible for any taxes imposed by law on Licensor, including sales and use taxes as provided pursuant to Section 10.14. Licensee shall be responsible for the timely notification, withholding, remittance, filing and reporting of all applicable withholding taxes with respect to the Royalties payable to Licensor hereunder to the proper tax authority at the rate required by statute (but reduced to the fullest extent permitted by any tax treaty), and Licensee shall provide Licensor with reports and official receipts of all such withholding remittances sufficient to enable Licensor to claim appropriate federal income tax credits, if any. Section 5. Order Processing; Fulfillment and Customer Service. 5.1 Order Processing and Fulfillment. Licensee will continue to be responsible for all aspects of order processing, fulfillment and returns for the TSA.com Site, including those functions set forth on Exhibit I attached to this --------- Agreement. The order processing and fulfillment services provided by Licensee with respect to the TSA.com Site will comply with [*] Without limiting the generality of the foregoing, Licensee will: (i) enter into merchant agreements in its own name and on its own account with [*]; (ii) provide secure systems for submitting and processing such credit cards; (iii) provide timely order and shipping confirmations to Customers; (iv) promptly process all Orders received from Customers of the TSA.com Site, (v) process all transactions through the TSA.com Site under the name of "TheSportsAuthority.com", and (vi) make appropriate arrangements for the delivery of Sporting Goods and Services purchased through the TSA.com Site. 5.2 Returns. The returns policy for the TSA.com Site will continue to be as consistent as practicable with the returns policy of the TSA Stores; provided that GSI will accept returns of Sporting Goods or Services made through the TSA.com Site, so long as such returned Sporting Goods or Services are (a) defective or damaged during shipment, or (b) returned to Licensee, within a mutually agreed upon time, unused and in a condition suitable for resale as new goods. Licensor will not be required to accept in the TSA Stores any returns of Sporting Goods or Services purchased through the TSA.com Site, and if Licensor determines to accept any such returns, Licensor will not return any such Sporting Goods or Services to Licensee, and Licensee will not have any obligation to accept such returns from Licensor. Licensee will from time to time at Licensee's expense provide Licensor with sufficient quantities of return labels to enable Licensor to provide such labels to customers seeking to return to Licensor Sporting Goods and Services purchased through the TSA.com Site. The Parties agree that they will review the returns policy for the TSA.com Site annually upon request of either Party, and work in good faith to develop mutually agreeable procedures and policies regarding returns. The Parties acknowledge that Licensee has paid Licensor in full and complete satisfaction of any and all liabilities Licensee may have to Licensor relating to returns made prior to the Effective Date and accepted in the TSA Stores for products sold through the TSA.com Site. 5.3 Customer Service. Licensee will continue to be responsible for providing customer service to Customers of the TSA.com Site, including on-line and toll-free telephone support 24 hours per day, seven days per week. The customer service provided to Customers of the 21 TSA.com Site will be provided in the name of the TSA.com Site. Throughout the Term, Licensee will comply with [*] Without limiting the generality of the foregoing, Licensee will (i) provide customer service in a courteous and professional manner, (ii) provide for Customer feedback through appropriate features (e.g. "contact us" and "how are we doing?" sections of the TSA.com Site), and (iii) provide a toll-free telephone number for customer service which shall be available 24 hours a day / 7 days a week (other than Christmas Day) to receive and process inquiries, requests and complaints from Customers. In the event that Licensee receives inquiries or complaints from customers relating to the TSA Stores (e.g., customers attempting to contact Licensor), Licensee shall promptly refer all such customers to the email reply service and/or toll-free telephone number for customer service furnished to Licensee by Licensor. Conversely, in the event that Licensor receives inquiries or complaints from Customers relating to the TSA.com Site, Licensor shall promptly refer all such Customers to the email reply service and/or toll-free telephone number of Licensee posted on the TSA.com Site. 5.4 Customer Loyalty Programs. Licensee shall use commercially reasonable efforts to adopt customer loyalty programs integrated with Licensor's customer loyalty programs for the TSA Stores. Licensee may also establish customer loyalty programs, provided that: (a) any such program shall be used only to attract Customers to and generate Orders through the TSA.com Site or the TSA Stores, and not other Web Sites operated in connection with any of the GSI Partners or GSI Ventures; and (b) Licensee must obtain Licensor's review and approval prior to extending any Customer loyalty program to Licensor's TSA Stores. 5.5 Parts and Service. If and to the extent that, during the Term, Licensee offers after sales service and spare parts to Customers on the TSA.com Site, which shall be at Licensee's sole discretion, Licensee shall, for [*] following expiration or termination of this Agreement, provide comparable after sales service and spare parts to Customers as provided by Licensee immediately prior to such expiration or termination. In no event shall Licensor be responsible for providing after sales service or spare parts to Customers of the TSA.com Site. Section 6. Promotion and Advertising 6.1 Licensor's Activities and Obligations (a) Commencing no later than the Effective Date and on a rolling basis as it orders or prepares new printed materials or advertisements or other communications materials, and continuing throughout the Term, Licensor shall promote and advertise the TSA.com Site in compliance with Exhibit J, attached. --------- Licensor may use the following disclaimer (or similar message) if appropriate and necessary: "On-line merchandise offerings may vary from products offered in The Sports Authority stores." (b) Licensor shall provide to Licensee the e-mail addresses which it collects from customers in the TSA Stores as required pursuant to Exhibit J, --------- attached. Licensee agrees that such email addresses shall be used solely for the purpose of sending emails to such customers to promote the TSA.com Site, and that such information shall be Confidential Information of 22 Licensor. Except with respect to Licensor's obligation to coordinate emails with Licensee pursuant to Section 12, nothing in this Agreement shall prohibit Licensor from sending emails to its customers. 6.2 Promotional and Advertising Agreements. During the Term and throughout that portion of the Territory in which Licensee is so required by Section 2.1(c), Licensee will use commercially reasonable efforts to enter into promotional and advertising agreements and arrangements for the TSA.com Site. However, Licensee shall not contract with any TSA Competitor in connection with the marketing or promotion of the TSA.com Site, and for purposes of this Agreement, TSA Competitors shall not qualify as and shall be excluded from the definition of Advertising and Marketing Partners of Licensee. The review and approval processes applicable to such promotional and advertising agreements and arrangements are set forth on Exhibit F attached hereto. Notwithstanding the --------- preceding sentence, the review and approval process set forth on Exhibit F shall --------- not apply to any promotional or advertising agreement or arrangement which (i) grants a sublicense to a third party other than in accordance with Section 2.3 hereof, (ii) relates to a newly coined trademark or service mark which is subject to Licensor's approval pursuant to Section 2.4, or (iii) proposes to alter the Marks which shall be subject to Section 2.3. 6.4 Advertising and Marketing. (a) Commencing January 1, 2002, [*] (i) the [*] provided, that [*] which are provided pursuant to an agreement with [*] if (A) [*] (B) [*] and (C) the terms and conditions of the agreement [*] and (ii) subject to Section 6.4(c) below, [*] so long as [*] (b) If [*] Licensee shall not be deemed to have breached this Agreement [*] (c) If [*] then Licensee shall so inform Licensor, provide Licensor with all information it reasonably requests [*] and give Licensor [*] If Licensor [*] then Licensee shall [*] (d) Notwithstanding the foregoing, this Section 6.4 shall no longer be effective [*] 6.5 Maximization. Without negating the specific rights and obligations of each Party under this Agreement, each Party agrees to operate in a manner that has the intended effect of maximizing the customers and revenues from or through the TSA.com Site. 7. Ownership. 7.1 Licensor. As between the Parties, Licensor owns and reserves all right, title and interest in and to the Licensed Property, along with all Intellectual Property Rights associated therewith, and no right, title or interest to or in any of the foregoing is transferred or, except as expressly set forth in Section 2, licensed to Licensee or any other Person. Licensee hereby assigns to Licensor all right, title and interest that it may have or acquire in and to such items and all associated Intellectual Property Rights, and Licensee will take, at Licensor's expense, any actions (including 23 execution and delivery of affidavits and other documents) reasonably requested by Licensor to effect, perfect or confirm Licensor's or its designee's right, title and interest therein. Further, Licensee agrees and acknowledges that all goodwill associated with or created by use of the Licensed Property by Licensee shall inure to the benefit of Licensor. Upon termination of this Agreement all rights in and to the Licensed Property, including all right to the use thereof, and all goodwill associated with use of the Licensed Property, shall automatically revert back to Licensor. At the termination of the Agreement, Licensee will return all Licensed Property to Licensor, and Licensee shall have no further rights thereto. If, by operation of law or otherwise, any goodwill associated with Licensee's use of the Licensed Property shall be deemed to accrue or have accrued to Licensee, Licensee agrees to assign such goodwill to Licensor. Licensor shall not be required to compensate Licensee for any reversion or assignment of such goodwill. Licensee shall not contest Licensor's rights in the Licensed Property, or any of Licensor's applications or registrations therefor, nor assist anyone else in doing so. 7.2 Licensee. As between the Parties, Licensee owns and reserves all right, title and interest in and to the GSI Furnished Materials and the TSA.com Site (other than the Licensed Property and all Intellectual Property Rights associated therewith), along with all Intellectual Property Rights associated therewith, and no right, title, interest to or ownership of any of the foregoing is transferred or licensed to Licensor or any other Person. Licensor hereby assigns to Licensee all right, title and interest that it may have or acquire in and to such items and all associated Intellectual Property Rights, and Licensor will take, at Licensee's expense, any actions (including execution and delivery of affidavits and other documents) reasonably requested by Licensee to effect, perfect or confirm Licensee's or its designee's right, title and interest therein. Further, Licensor agrees and acknowledges that all goodwill associated with or created by use of the GSI Furnished Materials or TSA.com Site (other than the Licensed Property) shall inure to the benefit of Licensee. Upon termination of this Agreement all rights in and to the GSI Furnished Materials and the TSA.com Site (other than the Licensed Property), including all right to the use thereof, and all goodwill associated with use of the GSI Furnished Materials and TSA.com Site (other than the Licensed Property), shall automatically revert back to Licensee. At the termination of the Agreement, Licensor will return all GSI Furnished Materials to Licensee, and Licensor shall have no further rights thereto. If, by operation of law or otherwise, any goodwill associated with Licensor's use of the GSI Furnished Materials or TSA.com Site (other than the Licensed Property) shall be deemed to accrue or have accrued to Licensor, Licensor agrees to assign such goodwill to Licensee. Licensee shall not be required to compensate Licensor for any reversion or assignment of such goodwill. Licensor shall not contest Licensee's rights in the GSI Furnished Materials or the TSA.com Site (other than the Licensed Property), or any of Licensee's applications or registrations therefor, nor assist anyone else in doing so. 7.3 Ownership and Use of Databases. As between the Parties, Licensee shall own all right, title and interest in and to all Databases. During the Term, Licensor may use the Databases as specifically provided hereunder, without payment to Licensee, but to the extent Licensor's use requires access to a third party's technology, Licensor shall be required to obtain and pay for such access. 24 Section 8. Account Managers 8.1 Account Managers. (a) Each Party will assign one (1) dedicated account manager with the experience and status equivalent to an on-line business manager, as well as one (1) dedicated merchandising manager. The work time and energies of Licensor's managers shall be devoted entirely to the TSA.com Site. All managers shall be subject to change from time to time by the assigning Party upon written notice to the other Party. Such managers shall oversee the performance of the Party's respective obligations under this Agreement. It is anticipated that the account managers shall meet at least once every month (or with such other frequency as may be mutually agreed upon) during the Term to review the implementation of this Agreement and to explore methods for improving performance. (b) Notwithstanding subsection (a), until December 31, 2001, Licensor shall furnish at least two (2) account managers. Licensor's obligation to provide two (2) managers shall cease as of December 31, 2001. Licensee shall [*] Licensee agrees to [*] In no event shall Licensee [*] Section 9. Kiosks. Licensor may, on its own or through a third party, elect to install, or permit the installation of, kiosks in any or all of the TSA Stores at any time or from time to time. All such kiosks shall be configured to enable customers at such TSA Stores to purchase Sporting Goods and Services through such kiosks only through the TSA.com Site. It is understood by the Parties that Licensee has the exclusive right, in the Territory, to provide all customer service, order processing and fulfillment services with respect to the sale of Sporting Goods and Services through such kiosks. Sales resulting from orders entered through kiosks on the TSA.com Site will be sales of Licensee included in Net Revenues and, for purposes of Exhibit E, Licensor-Generated Net Revenues. --------- Section 10. Group and Team Sales. During the Term and in the Territory, Licensee has the exclusive right to make group and team sales on behalf of Licensor through the Internet. Nothing in the preceding sentence shall limit Licensor's ability to make group and team sales on its own behalf other than through the Internet. Licensor agrees that it will integrate the URL and shop-on-line message for group and team sales through the TSA.com Site into its TSA Stores group and team sales efforts, consistent with its obligations set forth on Exhibit "J" attached hereto. Section 11. Compensation and Expenses 11.1 General. Except as expressly provided for elsewhere in this Agreement, each Party will be responsible for all costs and expenses incurred by such Party in performing its obligations under this Agreement. 11.2 Royalty Payments, Reports. 25 (a) Within forty-five (45) days after the end of each quarter of Licensee's Fiscal Year, Licensee shall: (i) Deliver to Licensor a report, certified by its chief financial officer, giving the following particulars concerning Net Revenues and corresponding Royalties that accrued during the preceding quarter of Licensee's Fiscal Year, together with [*] (A) Net Revenues derived from sale of Sporting Goods and Services other than for which Licensee is required to pay a revenue share, impressions fee, cost-per-click fee, or other promotional or advertising fee; (B) Net Revenues derived from sale of Sporting Goods and Services for which Licensee is required to pay a revenue share, impressions fee, cost-per-click fee, or other promotional or advertising fee; (C) Net Revenues derived from the sale of Sporting Goods and Services to Customers who access the TSA.com Site from kiosks in TSA Stores, and the Operating Profit from such Kiosk sales; (D) Net Revenues of the TSA Site derived from all other sources; (E) Amount of Royalties due to Licensor with respect to the TSA Site itemized with respect to items (A) through (D) above; and (F) Amount of tax of any kind properly withheld and/or paid to tax authorities by Licensee. (ii) Pay: (A) the Royalties to TSAMI; and (B) all other payments due hereunder to TSA. Payments made in respect of the fourth quarter of each of Licensee's Fiscal Years shall be subject to subsequent adjustment, as necessary, to reflect the results of the independent auditor's report required by subsection (c) below. Subject to the limitations set forth in Section 11.3(b), receipt or acceptance of any report or payment shall not preclude Licensor from questioning the correctness thereof at any time. In the event that any inconsistency or mistake is discovered by either Licensor or Licensee in such reports, it shall be promptly rectified and, within fifteen (15) Business Days, the appropriate report shall be delivered by the Party with the duty to report. (b) Disputes. Time is of the essence with respect to Licensee's duty to pay all Royalties which are not subject to a good faith dispute when due and such payments are not subject to set-off. If either Party shall dispute the correctness of any payment due hereunder, it shall give written notice of the dispute and claimed amount to the other Party. The Party receiving such notice shall have ten (10) Business Days to investigate and respond (the "Payment Notice Period"). At the end of the Payment Notice Period, if no dispute remains, or if part of the 26 claimed amount is no longer in dispute, all, or that part that is undisputed, shall be promptly paid. However, if all or part of the claimed amount remains in dispute at the end of the Payment Notice Period the Parties shall confer and attempt in good faith to resolve the dispute. When the disputed amount is ultimately paid, the Party which owes the claimed amount shall promptly pay all or that part of the claimed amount which remains unpaid and is due to the complaining Party, together with interest at the annual rate of prime plus two percent (2%), and computed from the date when the underlying payment was first due. (c) Within ninety (90) days after the end of each Fiscal Year of Licensee, Licensee shall furnish to Licensor a report certified by its chief financial officer as to the accuracy of Licensee's Royalty payments and reports for each such Fiscal Year. 11.3 Records and Audit. (a) During the Term of this Agreement, and for a period of three (3) years thereafter, each party will keep true, complete and accurate books and records (and in the case of Licensee, Databases, subject to Section 7.3) sufficient to verify Licensee's compliance or non-compliance with the provisions of this Agreement. All financial records shall be maintained in conformance with generally accepted accounting principles in effect in the United States. Licensee's books and records shall be sufficient to accurately reflect the business of the TSA.com Site, the Net Revenues as provided for hereunder and the transactions contemplated hereunder. The books and records required to be maintained hereunder shall be kept at the applicable Party's principal place of business and shall be available for inspection by the other Party, upon reasonable prior notice and during normal business hours. (b) Upon reasonable notice to Licensee, during the Term and for a period of three (3) years after expiration or termination of this Agreement, Licensor, and/or its independent certified public accountants, may audit all books, records and Databases (subject to Section 7.3) related to the TSA.com Site provided for in this Agreement to verify Licensee's compliance or non-compliance with the provisions of this Agreement. Any such audit: (a) shall be conducted during normal business hours and in a manner designed to not unreasonably interfere with Licensee's ordinary business operations; and (b) may not occur more frequently than once every twelve (12) months, unless an audit shows a material discrepancy, then no more frequently than once every six (6) months until such time as the results of an audit no longer show a material discrepancy and (c) may only cover the period commencing after the period covered by the last audit conducted pursuant to this Section 11.3; provided, however, such limitation shall not prevent the review of information related to a prior audit to the extent such information is necessary to conduct a subsequent period audit hereunder. Licensee will cooperate with Licensor in the conduct of such audit. Any error(s) discovered in an audit shall be corrected by Licensee within fifteen (15) Business Days after having been notified of any such error by such auditor. If an audit of Licensee's books and records reveals that Licensee has failed properly to account for and pay any monies owing to Licensor and the amount of any monies which Licensee has failed properly to account for and pay for any quarter exceeds, by [*] percent [*] or more, the monies actually accounted for and paid to Licensor for such period, Licensee shall, in addition to paying Licensor such past due monies (which shall be payable by Licensee without reference to the [*] 27 threshold), reimburse Licensor for its reasonable out-of-pocket expenses incurred in conducting such audit, together with interest on the overdue monies owed as computed under Section 11.2(b) (and subject to the dispute resolution process set forth in the same section). Section 12. Customer Information and Privacy Policy 12.1 Customer Information. Licensor and Licensee shall each have an equal and undivided ownership interest in and to all Customer Information. Licensor may use, subject to Section 12.2 and Section 16.1, the Customer Information to advertise, promote and operate the TSA Stores and for any other lawful purpose. Licensor will provide Licensee with information reasonably requested by Licensee relating to customers of the TSA Stores so that Licensee may provide marketing and promotions to such customers with respect to the TSA.com Site. Each party will coordinate with the other party all email and other electronic communications to Licensor's customers. Subject to Section 17.9(b), Licensee may use such Customer Information only to design, develop, operate, maintain, and promote the TSA.com Site and as may be necessary to perform its obligations under this Agreement. Subject to Section 17.9(b), each Party will treat such Customer Information as Confidential Information of Licensor. Subject to Section 17.9(b), Licensee shall not furnish, rent, sell or otherwise disclose Customer Information to any Person whatsoever without the prior written consent of Licensor, which Licensor may withhold as it sees fit, except that Licensee may temporarily furnish, subject to the Privacy Policy for the TSA.com Site, such Customer Information as is necessary for Licensee or any Person with which Licensee contracts to perform fulfillment, credit card or check transactions, email broadcasts and similar Customer activities required of Licensee hereunder. For those Customers directed to the TSA.com Site by or through the Advertising and Marketing Partners of Licensee, the Parties' ownership of the resulting Customer Information as provided for hereunder shall apply to all Customer Information collected from Customers of the TSA.com Site, but shall not preclude the Advertising and Marketing Partners of Licensee from owning the same information to the extent it is generated independently of the TSA.com Site. 12.2 Privacy Policy. With respect to Customer Information collected in connection with the TSA.com Site, each Party will abide by the privacy policy currently posted on the TSA.com Site, as it may be amended from time to time. Except as provided pursuant to Section 17.9(b), any amendments to such privacy policy must be agreed upon by the Parties; provided, however, that if any amendment to the privacy policy is required by applicable law, the privacy policy will be amended to comply with such requirements. Unless the Parties otherwise agree, the privacy policy shall provide that neither party may furnish, rent, sell or otherwise disclose Customer Information to any third party other than those permitted pursuant to such privacy policy, provided that such privacy policy shall also provide that Licensor may use such Customer Information to advertise and promote the TSA Stores, Licensor's goods and services, and the direct sales or mail order catalog, team/group sales and kiosk businesses of Licensor. With respect to any customer information collected by Licensor in the TSA Stores and furnished to Licensee, Licensee agrees to abide by the terms of Licensor's privacy policy for the TSA Stores; provided that such privacy policy for the TSA Stores shall permit Licensee to use such data to send e-mail promotions to such customers for the exclusive benefit of the TSA.com Site. 28 12.3 Financial Information. Each Party will have an equal and undivided ownership interest in Financial Information except that all use of the Financial Information by any of them shall always be subject to the restrictions set forth herein. Each Party will treat such Financial Information as Confidential Information of the other Party hereunder, except that each Party may incorporate such Financial Information as is reasonably necessary to prepare and report aggregate financial results or to comply with any applicable reporting requirement imposed by governmental agencies. 12.4 Delivery of Customer Information and Financial Information to Licensor. From time to time, upon Licensor's reasonable request, Licensee shall provide to Licensor any or all of the Customer Information or the Financial Information, as Licensor shall specify, including the following information: (a) Customers' names; (b) Customers' addresses; (c) Customers' phone numbers; (d) Customers' e-mail addresses; [*] Licensee shall use commercially reasonable efforts to make the information in items [*] Licensee shall furnish the information described in items [*] Licensee shall provide the Customer Information and/or Financial Information to Licensor in a commercially standard format, either via diskette, CD-ROM, electronically, or via another mutually agreeable method. Licensee shall use commercially reasonable efforts so that the Customer Information and Financial Information provided to Licensor accurately and completely reflects the Customer Information and Financial Information from the TSA.com Site (except that Licensee shall not be responsible for the truth or accuracy of any data supplied directly by any Customers). Section 13. Representations and Indemnification 13.1 Representations. Each Party represents and warrants to the other that: (a) it is a corporation, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (b) it has the full corporate right, power and authority (pursuant to its Articles of Incorporation, Bylaws and applicable laws) to enter into this Agreement and perform its obligations hereunder; (c) its execution, delivery and performance of this Agreement, and the other Party's exercise of such other party's rights under this Agreement, will not conflict with or result in a breach or violation of any of the terms or provisions or constitute a default under any material agreement by which it is bound; and (d) when executed and delivered, this Agreement will constitute its legal, valid and binding obligation enforceable against it in accordance with its terms. 13.2 Indemnity. (a) Licensee will defend, indemnify and hold harmless Licensor and its Affiliates (and their respective employees, officers, directors and representatives) from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) 29 arising out of any action, claim, proceeding or lawsuit (a "Claim" or "Claims") asserted by any Person other than Licensor or an Affiliate of Licensor to the extent that it is based upon: (i) any actual or alleged breach of representations, warranties or obligations of Licensee set forth in this Agreement; (ii) any actual or alleged infringement or misappropriation of Intellectual Property Rights of any Person other than Licensor, including, without limitation, Claims of misrepresentation, false advertising or unfair competition or violation of rights of privacy; (iii) subject to the last sentence of this Section 13.2(a), any Claims of product liability, property damage, personal injury or death relating to any Sporting Goods or Services sold by Licensee hereunder, except with respect to products manufactured by or on behalf of Licensor; (iv) Claims of violation of any applicable law, treaty, rule or regulation relating to the Sporting Goods or Services offered by Licensee, the TSA.com site, or the Web Sites of any Advertising and Marketing Partner of Licensee, including, without limitation, any failure to file, report or pay any applicable tax; and (v) Claims based upon the offer, advertising, marketing, distribution or sale of Sporting Goods or Services by Licensee or any Advertising or Marketing Partner of Licensee, except for product liability Claims. Notwithstanding the foregoing, aside from negligent implementation of its own related activities, Licensee shall not bear any indemnification duty hereunder with respect to (i) any advertising or promotional program or project initiated by Licensor and directed at the TSA Stores, or (ii) TSA Content provided by Licensor. Subject to Section 13.3, Licensee will pay any award against Licensor and its Affiliates (and their respective employees, officers, directors or representatives) and any costs and attorneys' fees reasonably incurred by them resulting from any such Claim. Notwithstanding the foregoing, to the extent Licensee defends, indemnifies and holds harmless Licensor with respect to product liability Claims as provided herein, Licensor hereby transfers and assigns to Licensee all claims and rights Licensor may have against any Person related to any such product liability Claims. (b) Licensor will defend, indemnify and hold harmless Licensee and its Affiliates (and their respective employees, officers, directors and representatives) from and against any and all Claims asserted by any Person other than Licensee or an Affiliate of Licensee to the extent that it is based upon: (i) any actual or alleged breach of representations, warranties or obligations of Licensor set forth in this Agreement; (ii) any actual or alleged infringement or misappropriation concerning the Licensed Property in the United States, Japan or Canada and other countries within the Territory in which (a) the Licensee has a duty pursuant to Section 2.1(c)(ii) of this Agreement, or (b) the Licensor has requested Licensee to provide services and in which Licensee has agreed to do so, provided, however, that Licensor shall not bear any duty, obligation or liability pursuant to this Section 13.2(b) to the extent that Licensee uses the Licensed Property beyond the scope of any rights granted to Licensee under this Agreement or otherwise agreed to by Licensor, and such extended use is the primary cause of such actual or alleged infringement or misappropriation; (iii) Claims based upon Licensor's advertising and promotional activities as performed hereunder or otherwise in connection with the TSA Stores, and (iv) Claims of violation of any applicable law, treaty, rule or regulation relating to the TSA Stores or the products and services offered by Licensor,. Notwithstanding the foregoing, Licensor shall not bear any indemnification duty with respect to Licensee's negligent implementation of its activities hereunder. Subject to Section 13.3, Licensor will pay any award against Licensee and its Affiliates (and their respective employees, officers, directors or 30 representatives) and any costs and attorneys' fees reasonably incurred by them resulting from any such Claims. 13.3 Procedure. In case any Claim is at any time brought against a Party or its Affiliates (or any of their respective employees, officers, directors or representatives) (an "Indemnified Party") and such Indemnified Party is entitled to indemnification pursuant to Section 13.2, the party obligated to provide such indemnification (the "Indemnifying Party") will defend such Claim, at the sole expense of the Indemnifying Party, using counsel selected by the Indemnifying Party but subject to the Indemnified Party's reasonable approval. If the Indemnifying Party fails to take timely action to defend such a Claim after having received written notice from the Indemnified Party of such failure, the Indemnified Party may defend such a Claim at the Indemnifying Party's expense. The Indemnifying Party will keep the Indemnified Party fully advised with respect to such Claims and the progress of any suits, and the Indemnified Party shall have the right to participate, at the Indemnified Party's expense, in any suit instituted against it and to select attorneys to defend it, which attorneys will be independent of any attorneys chosen by the Indemnifying Party relating to such Claim or related claim. The Indemnifying Party will not settle, compromise or otherwise enter into any agreement regarding the disposition of any Claim against the Indemnified Party without the prior written consent and approval of the Indemnified Party. The obligations of the Indemnifying Party pursuant to this Section 13 shall survive expiration or earlier termination of this Agreement. Section 14. Reporting 14.1 Reports Concerning Royalties and Financial Performance. In addition to the reports required by Section 11.2, Licensee shall provide to Licensor [*] business review reports ("Business Review Reports") which shall include with respect to the TSA.com Site: [*] 14.2 Reports Concerning [*] of Licensee. The Parties will work in good faith to develop methods for Licensee to track, [*] Notwithstanding the foregoing, Licensee shall, to the extent in Licensee's reasonable control, provide Licensor with [*] 14.3 Reports Concerning the TSA.com Site [*]. As part of the Business Review Reports required pursuant to Section 14.1, Licensee shall [*] Upon the request of Licensor, Licensee shall provide Licensor with [*] 14.4 Additional Reports. From time to time during the Term, Licensee shall provide to Licensor such additional reports as may be reasonably requested by Licensee, bearing in mind the information which is readily available to Licensee, the reports which Licensee may have formatted already, the frequency of such requests, and the burden that designing and furnishing new reports would place upon Licensee. Section 15. Disclaimers and Limitations 15.1 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY WAIVES 31 AND DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES REGARDING THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR IMPLIED WARRANTIES ARISING OUT OF COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE. 15.2 LIMITATION OF DAMAGES. EXCEPT TO THE EXTENT AWARDED TO A THIRD PARTY IN A JUDGMENT AGAINST WHICH A PARTY IS ENTITLED TO INDEMNIFICATION PURSUANT TO SECTION 13 OR TO THE EXTENT ARISING OUT OF AN INTENTIONAL MATERIAL BREACH OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE (WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHER THEORY), TO THE OTHER PARTY OR ANY OTHER PERSON OR ENTITY FOR COST OF COVER OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES (INCLUDING DAMAGES FOR LOSS OF PROFIT, BUSINESS OR DATA) ARISING OUT OF THIS AGREEMENT. IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER FOR ANY PUNITIVE DAMAGES, EVEN IN CASES OF INTENTIONAL MATERIAL BREACH, EXCEPT TO THE EXTENT AWARDED TO A THIRD PARTY. Section 16. Exclusivity. 16.1 Licensor. Subject to Sections 2.5(a)(ii) and 16.4, during the Term and throughout the Territory, Licensee will be the exclusive provider of all services necessary to create and operate the Sporting Goods Internet businesses of Licensor and/or its Affiliates and neither Licensor nor its Affiliates shall, directly or indirectly through one or more third parties, offer, market or sell Sporting Goods and/or related services on or through the Internet and neither Licensor nor its Affiliates shall assist any third party in the offering, marketing and/or selling of Sporting Goods and/or related services on or through the Internet (the "Restricted Business"). If Licensor or any of its Affiliates desires to engage in any Restricted Business during the term of this Agreement, it shall only do so through Licensee and such business shall be conducted by Licensee on the terms and conditions set forth in this Agreement. Notwithstanding the foregoing, [*] Nothing in this provision shall prevent Licensor, or any entity that acquires all or substantially all of the outstanding stock or assets of Licensor, from engaging in any activities other than the Restricted Business. 16.2 Licensee. Licensee agrees that the TSA.com Site shall not be used directly or indirectly by Licensee to advertise or promote any TSA Competitor, GSI Partner or GSI Venture, or to click-through to the Web Site of any TSA Competitor, GSI Partner or GSI Venture. The foregoing limitation shall not be deemed to restrict Licensee from advertising or promoting any merchandise vendor on the TSA.Com Site in connection with the sale of such vendor's products through the TSA.Com Site. 16.3 Hiring. During the Term, neither Party will, directly or indirectly, solicit or hire or attempt to solicit or hire: (i) any existing employees, or (ii) former employees who have worked for the other Party at any time during the preceding 12 months, without the prior written approval 32 of such other Party. Nothing herein shall prevent a Party from hiring an employee or former employee of the other Party who responds to a public advertisement for employment. 16.4 Territory Regarding Internet. (a) Orders from the TSA.com Site may be delivered to Customers only within the Territory. (b) If, at any time after the Effective Date, Licensor decides to establish TSA Stores in a country within the Territory other than the United States, Canada or a country in which Licensee is "then operating an e-commerce Sporting Goods business on behalf of Licensor" (as defined below) (a "New Country"), either on its own or through a third party, then the following procedures will apply. Licensor shall notify Licensee of its intention within a reasonable time after its decision, but in no event less than 180 days before the date Licensor plans to open TSA Stores for business in such country, and shall provide Licensee with all information on its business plans (including the projected date for opening the first TSA Store in the New Country and projected product assortments) relating thereto, both initially and on an updated basis until 30 days before the deadline for Licensee's notice to Licensor provided for in the next sentence, and Licensor shall deliver to Licensee a written term sheet (the "Term Sheet") setting forth the terms and conditions on which Licensor proposes that Licensee operate the e-commerce Sporting Goods business on behalf of Licensor in such New Country. Licensee shall have the right (the "New Country Right"), exercisable by written notice to Licensor within 90 days ("Licensee's Notice Period") after such notice from Licensor, to operate the e-commerce Sporting Goods business on behalf of Licensor in such New Country in accordance with this following. (c) If, prior to the end of Licensee' Notice Period, Licensee does not exercise its New Country Right or Licensee and Licensor cannot agree upon the terms and conditions on which Licensee will operate the e-commerce Sporting Goods business on behalf of Licensor in such New Country, then Licensor shall have the right to offer to a third party the opportunity to operate the e-commerce Sporting Goods business on behalf of Licensor in such New Country; provided that the terms and conditions that Licensor offers to such third party shall not be materially more favorable to such third party than the terms and conditions offered by Licensor to Licensee in the latest Term Sheet delivered by Licensor to Licensee; and provided further that if (i) within 180 days after the end of Licensee's Notice Period, Licensor is unable to enter into a legally binding agreement with a third party in accordance with such terms and conditions, (ii) within 360 days after the end of Licensee's Notice Period, such third party is not "then operating an e-commerce Sporting Goods business on behalf of Licensor" in such New Country or Licensor has not opened for business in such New Country a TSA Store, or (iii) Licensor and such third party subsequently modify the terms and conditions of their agreement to make them materially more favorable to such third party than the terms and conditions offered by Licensor to Licensee in the latest Term Sheet or after "then operating an e-commerce Sporting Goods business on behalf of Licensor" in such New Country, such third party ceases to do so for a period exceeding 30 days, then in the case of any of (i), (ii) or (iii), Licensor shall not establish an e-commerce Sporting Goods business in such New Country without again complying with the procedures set forth in this Section 16.4. If Licensee does not exercise its New Country Right in 33 accordance with this Section 16.4, then the Territory of this Agreement will be deemed to exclude the New Country commencing with the first day that the third party is "then operating an e-commerce Sporting Goods business on behalf of Licensee" in such New Country and continuing for so long as Licensor is not required to again comply with the procedures set forth in this Section 16.4. (d) If, prior to the end of Licensee's Notice Period, Licensee notifies Licensor that it is exercising its New Country Right, then (i) within 180 days after the end of Licensee's Notice Period, Licensee will establish a Web Site in the principal language and currency of such New Country that is accessible to customers in such New Country and the capability to ship Sporting Goods to customers in such New Country with competitive fulfillment charges to the customers, and (ii) within 360 days after the end of Licensee's Notice Period, Licensee will offer on such Web Site an assortment and selection of Sporting Goods similar to that found in the TSA Stores in such New Country or, if no TSA Stores are open for business in such New Country, similar to that offered on the TSA.com Site; provided, however, that Licensee will not be required to offer on such Web Site any Sporting Goods that Licensee is prohibited from offering by the manufacturer, licensor or licensee of such products. (e) If Licensor decides to establish TSA Stores in a country in the Territory in which Licensee is "then operating an e-commerce Sporting Goods business on behalf of Licensor", then the Territory of this Agreement will continue to include such country; provided that within 360 days after the first TSA Store opens for business in such country, Licensee shall offer on the Web Site for such country an assortment and selection of Sporting Goods similar to that found in the TSA Stores in such country; provided, however, that Licensee will not be required to offer on such Web Site any Sporting Goods that Licensee is prohibited from offering by the manufacturer, licensor or licensee of such products. If Licensee, within thirty (30) days after written notice from Licensor, does not offer the assortment and selection of Sporting Goods as required in the preceding sentence, then the Territory of this Agreement will be deemed to exclude such country. (f) For the purposes of this Section 16.4, a Person will be considered to be "then operating an e-commerce Sporting Goods business on behalf of Licensor" in a country if such Person (i) has established a Web Site in the principal language and currency of such country that is accessible to customers in such country and that uses Licensor's or its Affiliate's trademarks or trade names, (ii) offers on such Web Site an assortment and selection of Sporting Goods similar to that found in the TSA Stores in such country or, if there are no TSA Stores in such country, the TSA Stores in the United States, and (iii) has shipped more than a de minimis amount of Sporting Goods to customers in such country. Section 17. Term and Termination 17.1 Term. The Term of this Agreement will commence on the Effective Date and, unless earlier terminated as provided herein, will automatically terminate on November 8, 2019. 17.2 Licensor Termination. Subject to Section 17.4, Licensor shall be entitled to terminate this Agreement immediately upon written notice to Licensee: (a) if Licensee or Global Sports 34 becomes insolvent, admits in writing its inability to pay debts as they mature, institutes or has instituted against it any bankruptcy, reorganization, debt arrangement, assignment for the benefit of creditors, or other proceeding under any bankruptcy or insolvency law or dissolution, receivership, or liquidation proceeding (and, if such proceeding is instituted against it, such proceeding is not dismissed within sixty (60) days); (b) if Licensee shall fail to make any payments, which are not subject to a good faith dispute, promptly when due or to deliver any reports as required hereunder; (c) if Licensee otherwise breaches in any manner the terms of this Agreement; or (d) if Global Sports breaches its obligations under Section 2.6 [*] of this Agreement. 17.3 Licensee Termination. Subject to Section 17.4, Licensee shall be entitled to terminate this Agreement immediately upon written notice to Licensor: (a) if Licensor becomes insolvent, admits in writing its inability to pay debts as they mature, institutes or has instituted against it any bankruptcy, reorganization, debt arrangement, assignment for the benefit of creditors, or other proceeding under any bankruptcy or insolvency law or dissolution, receivership, or liquidation proceeding (and, if such proceeding is instituted against it, such proceeding is not dismissed within sixty (60) days); or (b) if Licensor otherwise breaches in any manner the terms of this Agreement. 17.4 Notice, Cure. Except as provided below, in the event of breach by Licensee or Global Sports (as applicable) of any provision of this Agreement as provided in 17.2(b), (c) or (d), or by Licensor of any provision of this Agreement as provided in 17.3(b), the non-breaching Party shall give the breaching Party notice in writing to cure the breach within sixty (60) days (the "Notice Period"), and if the breach is not cured within such period, the non-breaching Party shall be entitled to exercise any remedies it may have hereunder, in law or equity, including, without limitation, its right to terminate this Agreement effective upon expiration of the Notice Period, provided however, that if such breach is capable of being cured but incapable, by reason of its nature, of being cured within the Notice Period, the non-breaching Party may not terminate this Agreement so long as the breaching Party continues diligently to attempt to cure such breach and such breach is cured within an additional sixty (60) day period. Notwithstanding the foregoing, Licensor shall be deemed to have cured a breach premised upon failure to comply with any of its obligations set forth in Exhibit J in an applicable measurement period by fully complying with such - --------- obligation in the first full measurement period after notice of default is received, and Licensee shall be deemed to have cured a breach premised upon failure to achieve any standard set forth in [*]in an applicable measurement period by achieving the standard in the first full measurement period after notice of default is received. 17.5 Termination by Mutual Agreement. This Agreement may be terminated at any time by mutual written agreement of the Parties. 17.6 Survival of Obligations. Expiration or termination of this Agreement for any reason shall not affect obligations which (i) have accrued as of the date of expiration or termination, (ii) arise out of occurrences prior to the termination date, (iii) become effective upon termination or (iv) by their terms continue after termination. 35 17.7 Post-Termination Process. Upon termination of this Agreement, the Parties shall mutually cooperate to effect an orderly termination of their relationship as Licensor and Licensee, and Licensee shall within thirty (30) days: (a) Return to Licensor (or destroy) all TSA Content and Materials, to the extent that such Materials contain Licensed Property, in its possession and control, cease using and cause all Advertising and Marketing Partners of Licensee to cease using the Licensed Property in any manner and for any purpose, and take all steps necessary to delete any and all references to any Licensed Property from its business licenses, permits, business forms, packaging, labels, advertisements, promotions and other Materials; (b) Upon reasonable request of Licensor, furnish sworn affidavits attesting to compliance with subsection (a); (c) Cease holding itself out as a licensee of Licensor or as an entity otherwise authorized or permitted to use (or to sublicense others to use) the Licensed Property; and (d) Cooperate with Licensor at Licensor's expense in obtaining the cancellation of any registration of this Agreement and amendment or cancellation of any registered user agreements and corporate, domain name, business name or like registrations relating to the Licensed Property. Licensee, upon Licensor's written request and at Licensor's expense, shall execute all such documents as may be necessary to fulfill this provision. If Licensee shall fail to execute any such documents within thirty (30) days after Licensor's request, Licensee hereby confirms that Licensor shall automatically be considered Licensee's attorney-in-fact solely for the purpose of executing such documents pursuant to this Section 17.7(d). (e) Notwithstanding the foregoing, upon termination or expiration of this Agreement for any reason, Licensee shall have, for a period of 180 days thereafter, the right to sell off, on a nonexclusive basis, all of the unsold Private Label Merchandise in Licensee's inventory that was on hand prior to such termination or expiration. 17.8 Injunctive Relief. Subject to section 17.7(e) above, should Licensee fail to cease using any Licensed Property upon termination of this Agreement, Licensor may obtain, and Licensee hereby consents to a decree of any court of competent jurisdiction ordering Licensee to immediately cease the use of the Licensed Property and to otherwise comply with Section 17.7 above, to amend or cancel any registration of this Agreement and any registered user agreements and to amend or cancel any corporate or business name registrations and to change its business name accordingly. Licensee's consent to this remedy is based upon express recognition by Licensee that Licensor would otherwise suffer irreparable harm and that monetary damages would therefore be an inadequate remedy for Licensor. 17.9 Effect of Bankruptcy or Failure to Perform. (a) Within forty-five (45) days from the Effective Date and throughout the remaining Term of this Agreement, [*] 36 [*] Section 18. [*] Section 19. Miscellaneous 19.1 Press Releases. All voluntary public announcements concerning the transactions contemplated by this Agreement will be mutually acceptable to both Licensor and Licensee. Unless required by law, neither Party will make any public announcement or issue any press release concerning the transactions contemplated by this Agreement without the prior consent of the other Party. With respect to any announcement that any of the Parties is required by law to issue, such Party shall, to the extent possible under the circumstances, review the necessity for and the contents of the announcement with the other Party before issuing the announcement; provided, however, if either Party cannot obtain the consent of the other Party in a timely manner after submission of a request for consent, the Party required to comply with law may issue the press release or public announcement without obtaining the consent of the other Party. Notwithstanding the preceding sentences in this Section 19.1, after the initial public announcement of a particular matter or transaction contemplated by this Agreement has been approved by the Parties, either Party's subsequent reference to that particular matter or transaction will not require another approval from the other Party. 19.2 No Partnership, Joint Venture or Agency. The Parties are entering this Agreement as independent contractors, and this Agreement will not be construed to create a partnership, joint venture, agency or employment relationship between them. Neither Party will represent itself to be an employee or agent of the other or enter into any agreement or legally binding commitment or statement on the other's behalf of or in the other's name. Further, each Party shall be completely responsible for the payment of all sums of money which may be due at any time to its own employees, contractors, vendors, agents and representatives, and for all other claims made by such Persons against another Party. No Party shall for any reason be liable under this Agreement in any way for another Party's termination of employment or other relationships with such Persons. 19.3 Confidentiality. (a) Each Party will protect the Confidential Information of the other Party from misappropriation and unauthorized use or disclosure, and at a minimum, will take precautions at least as great as those taken to protect its own Confidential Information of a similar nature. Without limiting the foregoing, the receiving Party will (i) use such Confidential Information solely for the purposes for which it has been disclosed; and (ii) disclose such Confidential Information only to those of its employees, agents, attorneys, auditors, consultants, and others who have a need to know the same for the purpose of performing this Agreement and who are informed of and agree to a duty of nondisclosure (it being understood that each Party will remain liable with respect to disclosure by its employees, agents, attorneys, auditors, consultants, and others who have been provided by Confidential Information by such Party). Further, the receiving Party will use, and cause its employees, agents, attorneys, auditors, consultants, and others who have a need to know the same for the purpose of performing this 37 Agreement to use such Confidential Information solely for the purposes for which it has been disclosed. Further, the receiving Party may also disclose Confidential Information of the disclosing Party to the extent necessary to comply with applicable law or legal process, provided that the receiving Party uses reasonable efforts to give the disclosing Party prompt advance notice thereof. Upon request of the other Party, or in any event upon any termination or expiration of the Term, each Party will return to the other all materials, in any medium, which contain, embody, reflect or reference all or any part of any Confidential Information of the other Party. (b) Neither Party will disclose this Agreement or the transactions contemplated herein, or make any filing of this Agreement or other agreements relating to the transactions contemplated herein, without the consent of the other. If either Party reasonably determines that such disclosure is required by applicable law, such Party shall be entitled to make such disclosure but will first use all reasonable efforts to coordinate the disclosure with the other Party, including the submission to the Securities and Commission (and any other applicable regulatory or judicial authority) of an application for confidential treatment of certain terms (which terms will be agreed upon by the Parties) of this Agreement. Each Party will provide to the other for review a copy of any proposed disclosure of this Agreement or its terms and any application for confidential treatment prior to the time any such disclosure or application is made, and the parties shall work together to mutually approve such disclosure or application. (c) If either Party is required to disclose Confidential Information hereunder, but such disclosure is prohibited by confidentiality and non-disclosure provisions contained in any agreement between a Party and any third party such Party shall not be obligated to disclose such Confidential Information; provided, however, that Party shall use commercially reasonable efforts to secure a waiver from such third party and to make the disclosure required hereunder. 19.4 Force Majeure. If either Party is unable to perform any of its obligations under this Agreement due to an event wholly beyond the control of that Party, including natural disaster, acts of God, actions or decrees of governmental bodies, act of war, failure or discontinuance of the Internet or failure of third party communications lines or networks, that Party will give written notice to the other Party and will use commercially reasonable efforts to resume performance of its obligations but will have no liability to the other Party for failure to perform its obligations under this Agreement for so long as it is unable to do so as a result of such event. 19.5 Compliance with Laws. In its performance of this Agreement, each Party will comply in all material respects with all applicable laws, rules, regulations, orders and other requirements, now or hereafter in effect, of governmental authorities having jurisdiction over this Agreement, the TSA.com Site, or the transactions contemplated herein, including compliance with export and import control laws, applicable consumer protection, content labeling, country of origin, health and safety laws, and privacy laws, and obtaining, at the applicable Party's own expense, any and all approvals, licenses, business registrations and/or permits required under the laws or regulations of such governmental authority. 38 19.6 Insurance. Each Party will at its own expense obtain and maintain such policy or policies of insurance as are required by law or as are commercially reasonable for the transactions and business contemplated by this Agreement. In addition, Licensee will obtain and maintain, with an insurer in good standing and authorized to do business under the laws of the states where performance shall occur, a comprehensive general liability policy, naming Licensor as an additional insured, including contractual liability and products liability, with broad form property damage and bodily injury (including personal injury) coverage. The minimum limits for each shall be [*] per occurrence and [*] annual aggregate. Such limits shall be adjusted by mutual agreement of the Parties from time to time to reflect inflation and loss experience. Upon request from Licensor, Licensee will furnish a certificate of insurance and such other documentation relating to such policy as reasonably requested. Such certificate of insurance shall provide that no change that would adversely affect Licensor or cancellation of insurance shall be made without thirty (30) days prior notice to Licensor. 19.7 Notices. Unless otherwise provided, all notices, consents or other communications required or permitted to be given under this Agreement must be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) three business days after being mailed by first class mail, postage prepaid, or (c) one business day after being sent by a reputable overnight delivery service, postage or delivery charges prepaid, to the Parties at their respective addresses stated on the signature page of this Agreement. Notices may also be given by electronic mail or facsimile and shall be effective on the date transmitted if confirmed within 24 hours thereafter by a signed original sent in the manner provided in the preceding sentence. Notices to Licensee shall be sent to its address stated on the signature page of this Agreement to the attention of the General Counsel, with a copy sent simultaneously to the same address to the attention of its Chief Financial Officer. Notices to TSA shall be sent to its address stated on the signature page of this Agreement to the attention of the Chief Executive Officer, with a copy sent simultaneously to the General Counsel. Notices to TSAMI shall be sent to its address stated on the signature page of this Agreement to the attention of the General Counsel. All notices to Licensor hereunder shall be sent to both TSA and TSAMI. Any party may change its address for notice and the address to which copies must be sent by giving notice of the new addresses to the other parties in accordance with this Section 19.7, except that any such change of address notice shall not be effective unless and until received. 19.8 Prohibition on Assignment. Neither party may assign any of its rights or obligations under this Agreement without the prior written consent of the other party, which consent may be withheld if, in the judgment of the other party, such assignment would have an adverse effect on it. The licenses granted herein may not be mortgaged or pledged by the applicable licensee without the prior written consent of the applicable licensor. 19.9 Amendment. Except as otherwise provided herein, this Agreement may only be amended, modified or supplemented by the Parties in writing and signed by authorized officers of the Parties. 19.10 Waiver. Silence, acquiescence or inaction shall not be deemed a waiver of any right. No waiver by a Party with respect to this Agreement will be effective or enforceable against the other 39 Party unless in writing and signed by the other Party. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by a Party, and no course of dealing between or among any of the Parties, will constitute a waiver of, or shall preclude any other or further exercise of the same or any other right, power or remedy. 19.11 Counterparts and Transmitted Copies. This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original, but all of which taken together will constitute but one and the same instrument, and it will not be necessary in making proof of this Agreement to produce or account for more than one original counterpart hereof. The Parties acknowledge that Transmitted Copies of this Agreement will be equivalent to original documents until such time (if any) as original documents are completely executed and delivered. "Transmitted Copies" means copies that are reproduced or transmitted via facsimile, or another process of complete and accurate reproduction and transmission. 19.12 Entire Agreement. This Agreement, together with the Exhibits to this Agreement, represents the entire understanding between the Parties with respect to the subject matter hereof and supersedes all previous oral or written communications or agreements, and all contemporaneous oral communications and agreements, between the Parties and their respective Affiliates regarding such subject matter, including the following agreements which are hereby terminated: (a) E-Commerce Venture Agreement, dated May 7, 1999, by and between GSI and TSA, (b) Amendment No. 1 to the E-Commerce Venture Agreement, dated May 14, 1999, by and between GSI and TSA, (c) License Agreement, dated May 14, 1999, by and among TSA, TSAMI and TSA.com, (d) E-Commerce Services Agreement, dated May 14, 1999, by and between GSI and TSA.com, (e) E-Commerce Agreement, dated May 14, 1999, by and between TSA and TSA.com, and (f) Agreement, dated May 14, 1999, by and between TSA and GSI. Notwithstanding the foregoing, the indemnification rights and obligations of the Parties pursuant to the foregoing agreements with respect to events occurring on or before the Effective Date shall survive the execution and delivery of this Agreement. 19.13 Severability. In the event that any part or portion of this Agreement shall be deemed to be invalid or illegal, then such invalid or illegal portion shall, so far as possible, not affect the validity or legality of the remainder of this Agreement. Further, the Parties agree that they shall attempt to arrive at a modification of any illegal or invalid part so as to render the same legal and valid and within the keeping of the original tenor and spirit of the Agreement. 19.14 CHOICE OF LAW. THIS AGREEMENT WILL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES. 19.15 Headings. The headings of sections and subsections of this Agreement are for convenience of reference only and are not intended to restrict, affect or otherwise influence the interpretation or construction of any provision of this Agreement. 40 19.16 References. All words used in this Agreement shall be construed to be of such number and gender as the context requires or permits. Unless a particular context clearly provides otherwise (i) the words "hereof" and "hereunder" and similar references refer to this Agreement in its entirety and not to any specific section or subsection hereof, and (ii) the word "including" shall mean including but not limited to. 19.17 Construction. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement or any other agreements or documents delivered in connection with the transactions contemplated by this Agreement. 19.18 Waiver of Jury Trial. Each Party hereby knowingly, voluntarily, intentionally and irrevocably waives such right as any Party may have to a jury trial in every jurisdiction in any action, proceeding or counterclaim brought by either of the Parties hereto and/or their respective Affiliates in respect of any matter arising out of or in connection with this Agreement (including any action to cancel or rescind this Agreement, and any claims or defenses asserting that this Agreement was fraudulently induced or otherwise void or voidable). 19.19 Further Documents. Each Party shall, upon request, make, execute and deliver such documents as shall be reasonably necessary to take such action as may be reasonably requested to fully implement and carry out the purposes of this Agreement. 19.20 Binding Effect. Subject to Section 19.8, this Agreement, including all covenants, agreements, representations, warranties and indemnifications set forth herein, will be binding on and enforceable by the Parties and their respective Affiliates and permitted assigns, including any trustee appointed pursuant to Chapters 7 or 11 of the Bankruptcy Code. 19.21 Taxes on Agreement. Each Party shall pay any stamp duty or other tax or duty applicable to such Party which is imposed on such Party in connection with this Agreement. 19.22 Evolution. The Parties acknowledge that e-commerce, the Internet and associated technologies and ways of doing business are evolving rapidly, and as a result, that the form and content of this Agreement as of the Effective Date, may not be optimally suited to either the relationship of the Parties or prevailing conditions throughout the entire Term of the Agreement. Accordingly, the Parties agree to confer and discuss in good faith either Party's reasonably perceived need to modify this Agreement in order: (a) to adjust to prevailing or anticipated conditions, (b) to provide a more positive customer experience on the TSA.com Site; (c) to maximize customers and revenues from or through the TSA.com Site; or (d) to maximize return on investment to all Parties. Notwithstanding the foregoing, no modification to this Agreement shall be effective except pursuant to Section 19.9 hereof. (***************) SIGNATURES APPEAR FOLLOWING PAGE 41 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date. Global Sports Interactive, Inc. The Sports Authority, Inc. By: /s/ Michael G. Rubin By: /s/ Martin Hanaka --------------------- ---------------------------- Name: Michael G. Rubin Name: Title: President Title: Address: 1075 First Avenue Address: 3383 North State Road 7 King of Prussia, PA 19406 Fort Lauderdale, FL 33319 Telephone: (610) 265-3229 Telephone: (954) 735-1701 Facsimile: (610) 265-2866 Facsimile: (954) 730-4288 The Sports Authority Michigan, Inc. By: /s/ Martin Hanaka -------------------------- Name: Title: Address: 3383 North State Road 7 Fort Lauderdale, FL 33319 Telephone: (954) 735-1701 Facsimile: (954) 730-4288 Acknowledged and Agreed to With Respect to Sections 2.6 [*]: Global Sports, Inc. By: /s/ Michael G. Rubin --------------------- Name: Michael G. Rubin Title: President and Chief Executive Officer Address: 1075 First Avenue King of Prussia, PA 19406 Telephone: (610) 265-3229 Facsimile: (610) 265-2866 42 FINAL EXHIBIT A LICENSE GUIDELINES AND RESTRICTIONS ----------------------------------- A. General ------- Unless a Vice President of Licensor agrees in advance, the following guidelines and restrictions apply to Licensee and each company or other entity that may be authorized under the License and E-Commerce Agreement dated July 6, 2001 (the "LECA") to use certain of the "Marks" and "Names" as described in the LECA. A consistent corporate image or identity is one of Licensor's strongest assets. It provides immediate recognition and creates goodwill for Licensor, the "TSA Stores" (as defined in the LECA) and Licensor's goods and services. The purpose of this guide is to ensure a clear and consistent presentation of the Marks and Names to Licensor's and Licensee's customers. Licensee shall not alter the Marks from the form or formats used by Licensor or received from Licensor, unless such alterations are approved in advance by Licensor as set forth in Article 2.2(b) of the LECA. For example, the addition of hyphens or spaces to a word Mark, creation of unauthorized acronyms, or alteration of any design Marks or logos could weaken public recognition of the Marks and damage their strength as a brand designation. B. The Design mark THE SPORTS AUTHORITY & Design --------------------------------------------- [Insert examples, with width to height ratios, labels for PMS colors, etc.] C. The Design mark THE SPORTS AUTHORITY.COM & Design ------------------------------------------------- [Insert examples, with width to height ratios, labels for PMS colors, etc.] D. Use. --- 1) Unacceptable Uses of the Marks. ------------------------------ Do not extend the top, bottom or center bars of the THE SPORTS AUTHORITY & Design mark to extend beyond the ratios set forth above. Do not substitute designs or objects for letters in any Mark. Do not use old design versions of the Marks. Do not combine any Mark with any other mark or element. Do not use any other mark confusingly similar to the Marks. Do not rotate or tilt any Mark at an angle. Do not pluralize any Mark. Do not use any design Mark in a sentence. Do not add graphic elements to any design Mark. Do not create repeating patterns of the Marks. Do not place the Marks in a containing shape. Do not change the horizontal or vertical scale of any design Mark. Do not use any Mark in the possessive. Do not print the design Marks or logos in any color other than as specified by Licensor. Do not reverse the design Marks or logos out of a background with insufficient contrast. Do not reverse the design Marks or logos out of a photograph. Do not reverse the design Marks or logos out of patterned backgrounds. 1 2) Clear Space. A minimum clear space on all sides of any Mark shall be ----------- kept free of other visual elements. The minimum clear space shall be appropriate under the circumstances under which such Mark is being used. 3) Staging. Staging involves proper placement, scale, and proportion of ------- any Mark and how it aligns with typography and other elements. Licensee shall always surround the subject Mark by the minimum preferred clear space as provided in Section 2 above. Licensee shall avoid staging any Mark at the edge of a page. Licensee shall not place any Mark so that it "bleeds" off the edge of materials. 4) Presentation with Third-Party Trademarks. When presented with any ---------------------------------------- third party trademark, the Marks must be of at least equal size in comparison to such third party trademark. Licensee shall not print any Mark in black if the third party trademark appears in color. Notwithstanding the foregoing, Licensor acknowledges and agrees that certain advertising and marketing arrangements entered into with Advertising and Marketing Partners of Licensee hereunder, (a) the TSA.com Site may be "framed" by certain of the Advertising and Marketing Partners of Licensee which frame will include trademarks or service marks of such Advertising and Marketing Partners of Licensee, and (b) certain Web Sites of the Advertising and Marketing Partners of Licensee may include logos, marks, trade names, trade marks, offers, and related material of third parties, in either case which are larger than the Marks or place more emphasis on such other logos, marks, trade names, trade marks, offers, and related material over the Marks. 5) Design Marks or Logos. Except as provided in Article 2.2(b) of the --------------------- LECA, Licensee shall always reproduce each logo or design exactly as specified by Licensor using approved original reproduction art or digital files available from Licensor's Advertising and Marketing Department. The above usage rules are "best practices." When circumstances beyond Licensee's control prevent full compliance with any given rule, Licensee shall submit the proposed deviation to Licensor for prior review and approval as set forth in Section 2.2(b). E. Corporate Names versus Marks. Licensor's proper corporate names are: ---------------------------- The Sports Authority, Inc., and The Sports Authority Michigan, Inc. When referring to either company in any format be sure to use the full corporate name, without dropping the article "The" or the comma (and be sure to place the comma in the proper place). Both names are proper nouns, like "Smith" or "Lincoln." In contrast, the Marks are adjectives and should not be used as nouns. For example, one would refer to THE SPORTS AUTHORITY brand athletic bags. The Mark should be used as an adjective and not as a noun, and it should appear in all capital letters to set it off from other printed matter. Finally, although either corporate name can be used in the possessive form (e.g., "The Sports Authority, Inc.'s"), the Marks should not be used in the possessive form. F. Marks - Notices --------------- As soon as a given Mark is registered with respect to certain goods or certain services in the U.S., Canada and/or other key markets as determined by Licensor, Licensor may inform Licensee and Licensee shall commence marking all "Materials" (as defined in the LECA) subject to such registration(s) with one or more of the following phrases, as determined by the application and available space, taking care to use the second phrase whenever possible: 2 "Registered Trademark" [In English or such other languages as instructed by Licensor] or "(R) Registered Trademark of The Sports Authority, Inc. and/or The Sports Authority Michigan, Inc., used under license." [In English or such other languages as instructed by Licensor] or "(R) The Sports Authority Michigan, Inc." or "(R)" The registration notices should be placed immediately adjacent to any Mark, logo, slogan or other Materials incorporating registered trademarks or service marks wherever possible. Such notices advise third parties of the existence of the subject registration(s), and warn them to refrain from adopting or using an identical or confusingly similar mark. G. Content of TSA.com Site ----------------------- 1. Each party shall notify the other of all errors, omissions, and/or inaccuracies in the TSA Content, as developed, used or authorized by Licensee, within forty-eight (48) hours after it becomes aware thereof. 2. If Licensee provides such notice, it shall specify to Licensor what action, if any, it has taken to correct the error, omission and/or inaccuracy. 3. If Licensor provides such a notice, or receives such notice, it may specify reasonable actions to be taken by Licensee to correct the error, omission and/or inaccuracy or resubmit such content. H. Copyright Notices ----------------- 1. Upon request from Licensor, Licensee shall place an appropriate copyright notice to be furnished by Licensor on all pages containing Non-Shopping Content. 2. Licensee and Licensor shall mutually develop the procedures for placing any third party copyright notice on any page containing Non-Shopping Content. 3 Exhibit B - The Marks
MARK GOODS/SERVICES CL SER. NO. REG. NO. AUTHORITY retail store services in the field of sporting 42 74-695,504 2,074,354 goods and equipment, apparel, footwear, headgear and related goods and services AUTHORITY apparel, namely, rainwear, jackets, coats, 25 366,111 1,245,417 suits, slacks and vests AUTOGRAPH AUTHORITY computerized on-line retail store services 35 75-711,996 2,335,979 featuring collectibles, trading cards and 42 autographed memorabilia (35); computer services, namely providing information on collectibles, trading cards and autographed memorabilia, by means of a global computer information network (42). BASKETBALL AUTHORITY retail store services in the field of sporting 42 74-695,510 2,074,358 goods and equipment, apparel, footwear, headgear and related goods and services EXERCISE AUTHORITY retail store services in the field of sporting 42 74-695,506 2,082,095 goods and equipment, apparel, footwear, headgear and related goods and services FISHING AUTHORITY retail store services in the field of sporting 42 74-695,507 2,074,356 goods and equipment, apparel, footwear, headgear and related goods and services FITNESS AUTHORITY retail store services in the field of sporting 42 74-695-513 2,079,864 goods and equipment, apparel, footwear, headgear and related goods and services FOOTWEAR AUTHORITY retail store services in the field of sporting 42 74-695,653 2,082,096 goods and equipment, apparel, footwear, headgear and related goods and services GET OUT AND PLAY retail outlets featuring clothing, footwear, 35 76-124,181 outerwear and headgear; advertising for others; sales promotion for others GOLF AUTHORITY retail store services in the field of sporting 42 74-695,512 2,074,359 goods and equipment, apparel, footwear, headgear and related goods and services HOCKEY AUTHORITY retail store services in the field of sporting 42 74-695,651 2,079,866 goods and equipment, apparel, footwear, headgear and related goods and services HOT NEW NOW retail store services featuring apparel, 35 76-010,291 footwear, headgear, sporting goods and equipment, gifts and related goods and services; computerized retail store services featuring apparel, footwear, headgear, sporting goods and equipment, gifts and related goods and services; cooperative advertising services HUNTING AUTHORITY retail store services in the field of sporting 42 74-695,508 2,074,357 goods and equipment, apparel, footwear, headgear and related goods and services IN-LINE SKATE AUTHORITY retail store services in the field of sporting 42 74-695,502 2,074,353 goods and equipment, apparel, footwear, headgear and related goods and services
1 Exhibit B - The Marks
MARK GOODS/SERVICES CL SER. NO. REG. NO. MAIL AUTHORITY telephone answering, photocopying and business 35 75-167,549 2,284,347 management services (35); postal services, 42 namely rental of mail boxes, mail forwarding, packaging articles for transportation, and receipt and delivery of mail and parcels for others (42) MARINE AUTHORITY retail store services in the field of sporting 42 74-695,655 2,079,867 goods and equipment, apparel, footwear, headgear and related goods and services MUSCLE AUTHORITY magazines and newsletters pertaining to exercise 16 75-618,602 2,335,185 and fitness OUTDOOR AUTHORITY retail store services in the field of sporting 35 74-695,514 goods and equipment, apparel, footwear, headgear and related goods OUTERWEAR AUTHORITY retail store services in the field of sporting 42 74-695,509 2,076,213 goods and equipment, apparel, footwear, headgear and related goods and services PANTS AUTHORITY retail outlets featuring clothing, footwear, 35 75-509,313 outerwear and headgear PARTS AUTHORITY retail outlets featuring sporting goods and 42 75-076,697 equipment and parts, components and materials for use with the same; rental of sporting goods and protective clothing and equipment PREPARE YOURSELF retail store services in the fields of fitness, 35 75-277,570 2,176,490 sporting goods and equipment, apparel, footwear, 42 headgear and related goods and services; cooperative advertising (35); computer services, namely providing information on fitness, sporting goods and equipment, apparel, footwear, headgear and related goods and services by means of a global computer information network in class 42 RUNNING AUTHORITY retail store services in the field of sporting 42 74-695,654 2,082,097 goods and equipment, apparel, footwear, headgear and related goods and services SHOE & APPAREL AUTHORITY retail store services in the field of sporting 42 74-695,501 2,074,352 goods and equipment, apparel, footwear, headgear and related goods and services SPORTS AUTHORITY FOOD, restaurant services 42 74-256,187 2,074,782 SPIRITS AND SPORTS and Design
2 Exhibit B - The Marks
MARK GOODS/SERVICES CL SER. NO. REG. NO. SPORTSAUTHORITY.COM computerized on-line retail store services 35 75-636,136 featuring clothing, footwear, outerwear and 42 headgear; retail outlets featuring clothing, footwear, outerwear and headgear; dissemination of advertising for others via an on-line electronic communication network; promoting the goods and services of others by preparing and placing advertisements on a web site accessed through a global computer network; promoting sports teams, competitions and events for others (35); computer services, namely providing information on clothing, footwear, outerwear and headgear by means of a global computer information network (42) TEAM SPORTS AUTHORITY retail store services in the field of sporting 42 74-695,505 2,074,355 goods and equipment, apparel, footwear, headgear and related goods and services in Class 42 TENNIS AUTHORITY retail store services in the field of sporting 42 74-695,511 2,076,214 goods and equipment, apparel, footwear, headgear and related goods and services THE SPORTS AUTHORITY retail store services featuring sporting 42 73-736,556 1,527,526 equipment and clothing THE AFFILIATE AUTHORITY promoting the goods and services of others 35 76-176,168 through partnership marketing programs, providing access to a partnership marketing network of merchants and other businesses; and computerized on line retail store services featuring clothing, footwear, outerwear and headgear. THE AUTHORITY ON rental of sporting goods, including protective 41 75-136,153 2,101,178 SPORTING GOODS clothing and equipment; retail store services in 42 the fields of fitness, sporting goods and equipment, apparel, footwear, headgear and related goods. THE BICYCLE AUTHORITY repairs and maintenance of bicycles in 37 74-471,949 2,003,381 International Class 37; retail store services in 42 the field of bicycles and related accessories in International Class 42 THE CLUB AUTHORITY management of recreation and fitness clubs of 35 74-708,805 1,999,520 others; and business consulting services relating to health, recreation and fitness clubs THE KNIFE AUTHORITY retail store services featuring sale of sporting 42 74-596,250 1,963,911 goods and equipment, footwear and clothing THE LEAGUE AUTHORITY retail outlets featuring clothing, footwear, 35 76-054,340 outerwear and headgear; advertising for others; sales promotion for others. THE LOW PRICE AUTHORITY retail store services comprising sale of 42 74-595,324 1,937,000 sporting goods and equipment, footwear and clothing THE OUTLET AUTHORITY retail outlets featuring clothing, footwear, 35 76-176,169 outerwear and headgear; advertising for others; sales promotion for others. THE SHOE AUTHORITY retail store services in the field of sporting 42 74-622,104 goods and equipment, apparel, footwear and related products and accessories
3 Exhibit B - The Marks
MARK GOODS/SERVICES CL SER. NO. REG. NO. THE SKI AUTHORITY retail store services featuring ski equipment 42 74-116,271 1,688,221 and clothing THE SPORTS AUTHORITY ladies apparel, namely shirts, and mens apparel, 25 74-362,909 1,821,430 namely hats, visors, pants, shirts, shorts and swim trunks THE SPORTS AUTHORITY athletic tape and pre-wrap; balls, bats and 28 75-076,695 gloves for games; body-building machines; fishing hooks and tackle; hand, knee and elbow guards for sports use; nets for sports; protective paddings for sports; racket strings for tennis, badminton, squash and racquetball; toy figures, inflatable ride-on toys, plush toys, and water-squirting toys; wax for skis. THE SPORTS AUTHORITY for computer services, namely interactive 42 75-076,694 2,102,208 on-line publications in the fields of sporting goods and equipment, apparel, footwear, headgear and related goods and services THE SPORTS AUTHORITY 16: scorebooks, instruction guides and books in 16 75-076,675 2,071,449 the fields of sports, exercise, fitness and 18 recreation; clip boards; printed forms; printed 24 matter, namely art pictures, art prints, bags 25 for merchandise packaging, calendars, gift 26 certificates, illustrations, price tags, and 35 magazines in the fields of sports, exercise, 36 fitness and recreation; score cards; stationery. 18: bags for travel and sports. 24: towels. 25: clothing, namely shirts, tops, pants and shorts; head wear; hosiery; sweat bands. 26: shoe laces. 35: advertising for others; import-export agency; marketing research; purchasing agents; sales promotion for others; promoting sports teams, competitions and events for others; 36: sponsoring sports teams, competitions and events for others THE SPORTS AUTHORITY stringing and re-gripping racquetball, squash 37 75-501,083 2,274,172 and tennis racquets, sizing and drilling bowling 39 balls, line winding for fishing reels, 40 customizing arrows for archery, sighting of firearms (37); parcel delivery; delivery of goods by truck and van (39); and assembly of goods for others (40). THE SPORTS AUTHORITY telephone calling card services 36 75-521,226 2,249,780 THE SPORTS AUTHORITY credit card services 36 75-539,949 2,333,857 THE SPORTS AUTHORITY & retail store services featuring sporting 42 73-736,555 1,529,035 Design equipment and clothing THE SPORTS AUTHORITY DIRECT electronic retailing services via a global 35 76-133,396 computer network, direct mail advertising and mail order services, all in the fields of sporting goods and equipment, apparel, footwear, headgear and related goods and services
4 Exhibit B - The Marks
MARK GOODS/SERVICES CL SER. NO. REG. NO. THE SPORTS AUTHORITY electronic retailing services via a global 35 76-133,997 DIRECT YOUR 24/7 SPORTS computer network, direct mail advertising and STORE mail order services, all in the fields of sporting goods and equipment, apparel, footwear, headgear and related goods and services THESPORTSAUTHORITY.COM computerized on-line retail store services 35 75-636,870 featuring clothing, footwear, outerwear and 42 headgear; retail outlets featuring clothing, footwear, outerwear and headgear; dissemination of advertising for others via an on-line electronic communication network; promoting the goods and services of others by preparing and placing advertisements on a web site accessed through a global computer network; promoting sports teams, competitions and events for others (35); computer services, namely providing information on clothing, footwear, outerwear and headgear by means of a global computer information network (42) TSA.COM mens and ladies apparel, namely shorts, pants, 25 75-925,065 shirts, hats, caps, visors, hosiery and 28 outerwear (25); balls, bats and gloves for 35 games, protective guards and paddings for 42 sports, toy figures, inflatable ride on toys, plush toys, and water-squirting toys (28); retail store services featuring apparel, footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services, computerized on-line retail store services featuring apparel, footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services, cooperative advertising (35); rental of sporting goods, bicycles and protective clothing and equipment (41); computer services, namely providing information on apparel, footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services by means of a global computer information network (42). YOUR ONLINE AUTHORITY retail store services featuring apparel, 35 76-083,584 footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services, computerized on-line retail store services featuring apparel, footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services, cooperative advertising YOUR SUMMER AUTHORITY retail store services featuring apparel, 35 76-083,583 footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services, computerized on-line retail store services featuring apparel, footwear, headgear, sporting goods and equipment, collectibles, gifts and related goods and services, cooperative advertising
5 Exhibit C - The Names Domain Name Reg. Date Registrar Pointed At BUY-SPORTSAUTHORITY.COM 11/1/99 Network Solutions HOME-SPORTSAUTHORITY.COM 11/1/99 Network Solutions SEARCH-SPORTSAUTHORITY.COM 11/1/99 Network Solutions SKIAUTHORITY.COM 8/17/98 Network Solutions SKIAUTHORITY.NET 12/4/98 Network Solutions SKIAUTHORITY.ORG 12/4/98 Network Solutions SPORTSAUTHORITY.COM 7/27/95 Network Solutions SPORTS-AUTHORITY.COM 5/15/00 Network Solutions SPORTSAUTHORITY.NET 12/4/98 Network Solutions SPORTS-AUTHORITY.NET 12/4/98 Network Solutions SPORTSAUTHORITY.ORG 12/4/98 Network Solutions SPORTS-AUTHORITY.ORG 12/4/98 Network Solutions THESKIAUTHORITY.COM 8/17/98 Network Solutions THESKIAUTHORITY.NET 12/4/98 Network Solutions THESKIAUTHORITY.ORG 12/4/98 Network Solutions THESPORTSAUTHORITY.COM 9/29/97 Network Solutions THESPORTSAUTHORITY.NET 12/4/98 Network Solutions THESPORTSAUTHORITY.ORG 9/29/97 Network Solutions THEOUTLETAUTHORITY.COM Network Solutions AUCTIONAUTHORITY.COM Network Solutions CLEARANCEAUTHORITY.COM Network Solutions EXHIBIT D --------- Non-Shopping Features (a) Employment Opportunities - At the TSA Stores or at Licensor's offices. Licensee shall furnish technology to allow Licensor to update as frequently as Licensor desires. (b) Public Financial Information SEC Filings and Annual Reports - SEC filings shall be provided by a link so long as the government (or Licensor) makes such filings available at no cost. Both SEC filings and annual reports shall be provided only if available in portable document format; in the alternative, Licensee shall provide such information to Customers as received from Licensor's investor relations or legal departments, in a form and format in as agreed upon by the Parties. (c) TSA Store Locator - to be updated as such information changes and is received from Licensor. (d) Licensor's Corporate Information - to be updated as such information changes and is received from Licensor. (e) Licensor's Community Programs - to be updated as such information changes and is received from Licensor. (f) Press Releases - Licensee shall furnish technology to allow Licensor to update and post Licensor's Press Releases on the TSA.com Site directly. Licensor shall be able to post its press releases on the TSA.com Site as it desires. Unless the Parties otherwise agree to the contrary, this feature and such press releases shall deal with Licensor and the TSA Stores, and not with Licensee or the TSA.com Site. (g) "Contact Us" Section for TSA Stores (rather than TSA.com Site) to be updated as such information changes and is received from Licensor. EXHIBIT E Royalties 1. Definitions. ------------ A. "Net Revenues" means Net Revenues, as defined in the License and E-Commerce Agreement (the "LECA"). B. "Licensee-Generated Net Revenues" means Net Revenues described in Section 11.2(a)(i)(B) of the LECA. C. "Licensor-Generated Net Revenues" means all Net Revenues other than Licensee-Generated Net Revenues. D. "Deemed Licensee-Generated Net Revenues" means [*] E. "Deemed Licensor-Generated Net Revenues" means Net Revenues, less Deemed Licensee-Generated Net Revenues. [*] G. "Year" means calendar year unless otherwise indicated. 2. Royalty on Deemed Licensee-Generated Net Revenues. The royalty on Deemed ------------------------------------------------- Licensee-Generated Net Revenues shall be [*] for each year during the term of the LECA. 3. Royalty Rates for 2001 and 2002. ------------------------------- A. Royalty for 2001. The royalty on Deemed Licensor-Generated Net Revenues ---------------- shall be at the rate of [*] thereof for 2001 [*] provided that if [*] the royalty on Deemed Licensor-Generated Net Revenues for 2001 [*] shall be at the rate of [*] unless [*] in which case such royalty shall be adjusted to the fractional percentage between [*] B. Royalty for 2002. The royalty on Deemed Licensor-Generated Net Revenues ---------------- shall be at the rate of [*] thereof for 2002. 4. Minimum and Maximum Royalties on Deemed Licensor-Generated Net Revenues for --------------------------------------------------------------------------- years after 2002. The royalty on Deemed Licensor-Generated Net Revenues for each - ---------------- year shall never be lower than the minimum royalty set forth below and shall never be higher than the maximum royalty set forth below. A. Minimum Royalty. The minimum royalty on Deemed Licensor-Generated Net --------------- Revenues shall be at the rate of [*] thereof for 2003 and each year thereafter during the Term of the LECA. B. Maximum Royalty. The maximum royalty on Deemed Licensor-Generated Net --------------- Revenues shall be at the rate of [*] thereof for each year during the Term of the LECA. 5. Calculation of Royalties on Deemed Licensor-Generated Net Revenues for ---------------------------------------------------------------------- years after 2002. - ---------------- 1 A. Calculation of Royalty on Deemed Licensor Generated Net Revenue for ------------------------------------------------------------------- 2003. Subject to the minimum royalties and maximum royalties set forth in - ---- Section 4 of this Exhibit E, the royalty on Deemed Licensor-Generated Net Revenues for 2003 shall be equal the lesser of (i) the amount obtained by multiplying (a) [*] times (b) the percentage obtained by multiplying (1) [*] times (2) a fraction, the numerator of which is [*] and the denominator of which is [*] and (ii) the amount obtained by adding (a) the amount obtained by multiplying (1) [*] times (2) [*] plus (b) [*] B. Calculation of Royalty on Deemed Licensor-Generated Net Revenue for ------------------------------------------------------------------- years after 2003. Subject to the minimum royalties and maximum royalties set - ---------------- forth in Section 4 of this Exhibit E, the royalty on Deemed Licensor-Generated Net Revenues for each year beginning with 2004 shall be at the rate equal to [*] multiplied by a fraction, the numerator of which is [*] and the denominator of which is [*] provided, that if the [*] 6. Additional Royalties on Kiosk Sales. For each period, with respect to that ----------------------------------- portion of Net Revenues which result from orders placed from kiosks in TSA Stores ("Kiosk Net Revenues"), in lieu of the royalties provided for above, Licensee shall pay a royalty as calculated below. The royalty attributed to the Kiosk Net Revenues shall be [*] 7. Interim Royalty Payments; Year-End Adjustments. Royalty payments made in ---------------------------------------------- respect of each of the first three quarters during each year shall be at the higher of the royalty rate paid for the prior year or the minimum rate in effect for the year for which they are being paid. Royalty payments made in respect of the fourth quarter of each year shall be adjusted as necessary (including a payment from Licensor to Licensee, if necessary) such that the total royalty paid for the year equals the amount as calculated above. 8. Fractional Years. The royalty rate for the partial year at the end of the ---------------- term of the LECA will be based on a proration of all dollar amounts. 2 Exhibit F Three Tier Approval Process for Advertising ------------------------------------------- and Promoting the TSA.com Site ------------------------------ Except with respect to any proposed sublicense, newly coined trademark or service mark, or proposed alterations of the Marks, all of which shall be governed first by Article 2 of the License and E-Commerce Agreement, there shall be three tiers of online and/or offline promotional or advertising agreements or arrangements that Licensee may enter into with Advertising and Marketing Partners of Licensee for the TSA.com Site, and corresponding three tier approval process. A) Tier 1. Licensee may enter into these types of agreements or ------ arrangements without the prior review and approval of Licensor, provided that, [*] This tier applies primarily to [*] Tier 1 agreements or arrangements: (1) [*] (2) [*] (3) [*]; and (4) [*] B) Tier 2. Licensee may enter into these types of agreements or ------ arrangements only with the prior review and approval of Licensor's [*] or other authorized officer of Licensor. Tier 2 agreements or arrangements: (1) [*] (2) [*] (3) [*]and (4) [*] C. Tier 3. Licensee may enter into these types of agreements or ------ arrangements only with the prior review and approval of [*] Tier 3 agreements or arrangements: (1) [*] (2) [*] or (3) [*] [*] 1 Exhibit G Functionality and Features -------------------------- Shop by Brand Search by Keyword or Online Item Number Browse Category/Family/Item The Outlet Authority Gift Shop Professional and Collegiate Licensed Goods Shops Group Sales Product Presentation Related Products "Info Zone" Tips & Guides Product Comparison Shopping Cart Online Checkout with Secure Ordering Email Notification of Orders Order Tracking User Login/Registration User Profile Management Reporting Tools for Site Performance, Sales and Traffic 24 /7 Real Time Customer Service Via Toll-Free Telephone Affiliate Program Gift Giving Functionality (including Gift Certificates) Order Processing (including tax and shipping costs configurators) Discount entry Shipping Information Non-shopping Content (as described in Exhibit D) "About Us" Privacy Policy 1 EXHIBIT H [*] [*] 1 EXHIBIT I Order Processing and Fulfillment -------------------------------- . Order Receipt, Confirmation and Processing . Establishment of Terms and Conditions of Sale of Merchandise . Credit Card Authorization and Processing . Inventory, Receipt, Control and Management . Pick, Pack and Ship Orders . Shipping Management and Tracking . Returns Processing 1 Exhibit J Web Site Integration and Promotional and Advertising Requirements ----------------------------------------------------------------- Licensor shall comply with the following requirements at a rate of no less than [*] The foregoing compliance shall be measured quarterly during the Term. Notwithstanding the foregoing compliance requirements, no quantitative requirements shall apply to (i) individual store-specific promotional events and advertising, such as grand openings, promotional appearances and exhibitions, (ii) Licensor's collection of customer e-mail addresses, (iii) Licensor's efforts to stuff shopping bag inserts, (iv) directional billboards, and (v) vendor advertisements. I. Print and Email Integration --------------------------- 1. The 800 number of the TSA.com Site shall be promoted in all Licensor circulars in conjunction with the URL integration, unless Licensee requests otherwise. The Parties agree that the 800 number of direct mail catalogs distributed by or on behalf of Licensor (each a "Catalog") may be promoted in all Licensor circulars in addition to the 800 number for the TSA.com Site; so long as (i) the promotion of the Catalog 800# would not cause confusion for a reasonable customer viewing such circular, and (ii) the promotion of the Catalog 800# is not done in conjunction with the URL integration required hereunder. 2. Subject to acceptance of the TSA credit card by Licensee at the TSA.com Site: (a) at Licensee's expense and at Licensee's option, Licensor shall provide exclusive (except as to Licensor) credit card inserts promoting the TSA.com Site no less than one time each calendar quarter; and (b) each TSA credit card invoice and any other inserts where the subject merchandise or service is available at the TSA.com Site shall prominently include the shop online message. Nothing herein shall require Licensor to make the TSA credit card available for purchases on the TSA.com Site. 3. In all circulars containing products available both on the TSA.com Site and in TSA Stores, Licensor shall place an "Online Item" icon and product identification number adjacent to each applicable product, which shall be no less proportionate in size to the applicable products as compared to the size of the icons and product numbers relative to the products as depicted in Example J1, attached. ---------- 4. With the exception of clearance ads, and single market run of press ("ROP") ads that Licensor runs in non-major (as Licensor reasonably determines) markets, all circulars and ROP ads shall 2 include the shop online message. The shop online message in circulars shall appear: (a) in a 1-inch high band that runs across the entire length of the front cover of the circular; (b) a 1/2-inch band that runs across the entire length of the back cover of the circular, unless such circular provides additional placements for the promotion of the TSA.com Site; and (c) a 1/2-inch high band in certain footers within the circular. See Example J2. Blank figures are specified on Exhibit J1, attached. Clearance ---------- ---------- ads shall include the shop online message to the extent that Licensee is able to, and does, (i) accommodate general department discounts that vary by department, (ii) show high-low pricing with the proper sale terminology, (iii) react with a turnaround time quick enough that it does not delay Licensor's schedule, and (iv) handle "buy this, get that" situations. Single-market ROP ads shall include the shop online message at Licensee's option, upon notification to Licensor within 24 hours of Licensor's notice of such ad to Licensee. See Example J3. ---------- 5. The shop online message in ROP ads shall be proportionate in size to the shop online message in the circulars and, unless Licensee elects otherwise, shall include the 800 number for the TSA.com Site, as depicted in Example ------- J3. -- 6. All circulars shall include, in addition to the shop online message and "Online Item" icons, at least one 2x7-inch inside editorial placement (or equivalent, based upon page size and layout, location to be determined by Licensor) for the promotion of the TSA.com Site. Subject to Licensor's approval under Exhibit F, this placement may promote Advertising and --------- Marketing Partners of Licensee who are contemporaneously promoting the TSA.com Site. If the placement occurs on the back cover then the 1/2-inch band discussed above shall not be included on the back cover. See Example ------- J1. -- 7. Subject to the "Note" which follows and Exhibit J1, each direct mail post ---------- card or booklet distributed by Licensor shall include: (a) a 3/4-inch high shop online message band that runs across the entire length of the front page; (b) a 1x 3-inch space on the back page of a booklet which includes a corresponding coupon/promotion; (c)1/4-inch inside footers as specified in Exhibit J1; and (d) "Online Item" icons in the same manner as the ---------- circulars. In the event the size of Licensor's direct mail post cards or booklets change from that depicted in the attached examples, Licensor shall promote the TSA.com Site in a proportionate manner as provided for herein. Note: Licensee's advertising herein may be omitted if Licensee is not participating in the subject direct 3 mail campaign, post card or booklet, provided Licensee receives prior notice and agrees to the exclusion. 8. Licensor's interactive online and email advertisements shall each provide for direct links to the applicable portion(s) of the TSA.com Site. For example, Licensor's logo or name shall provide a hot link directly to the TSA.com Site homepage, product images shall provide a hot link directly to corresponding products on the TSA.com Site, and product category titles shall provide a hot link directly to the corresponding product category on the TSA.com Site. Such interactive advertising shall not include a link to any other web site that is an e-commerce business selling Sporting Goods, but with notice to Licensee, may include links to any web site that is not an e-commerce business selling Sporting Goods. 9. No more than once each quarter, upon Licensee's request and at its expense, Licensor shall use commercially reasonable efforts for a period of at least four weeks to collect and deliver to Licensee email addresses from customers of the TSA Stores. Licensor shall standardize the quarterly email collection requirement within the TSA Stores and provide incentives to Licensor's employees for acquiring email addresses (incentives at Licensee's expense and subject to Licensee's prior written approval). II. Integration Within TSA Stores ----------------------------- 1. Specific signs shall be located within each TSA Store for the promotion of the TSA.com Site, and/or for the approved promotion of the Advertising and Marketing Partners of Licensee, including no less than: (a) a single 4x20-foot permanent banner in each TSA Store (at Licensee's expense); (b) two event signs (per Licensor's campaigns) in each TSA Store (at Licensor's expense); (c) four 22x28-inch signs positioned throughout each TSA Store (at Licensor's expense); and (d) two window decals as depicted in Example ------- J4 (at Licensor's expense). Licensee shall develop the creative content of -- item (a). Licensor shall develop the creative content of items (b), (c) and (d). All creative content shall be subject to the mutual approval of the Parties. 2. Employee uniforms in the TSA Stores shall include the URL (at Licensor's expense). 3. Shopping bags in the TSA Stores shall include the URL (at Licensor's expense). The size of the URL on such shopping bags shall be no less proportionate in size relative to the size of the TSA logo as is currently provided in Example J4 item 8. The URL for the shopping bags may include either, at Licensee's option (i) "shop on- 4 line at www.thesportsauthority.com" or (ii) "www.thesportsauthority.com". 4. At Licensee's request and expense, with creative content developed by Licensee but subject to Licensor's approval, Licensor shall use commercially reasonable efforts to stuff shopping bag inserts at checkouts in the TSA Stores. 5. When Licensor's in-store audio broadcast message system is in use within a given TSA Store, Licensor, shall, at its expense, prepare and insert two 15 second messages promoting the TSA.com Site per program rotation (creative messages shall be subject to mutual approval). III. Radio, Television, Billboards, Sponsorships ------------------------------------------- 1. Licensor's billboards and sports sponsorship signs shall integrate the URL and/or the shop online message, unless inappropriate under the circumstances. Directional billboards may exclude the online reference, at Licensor's option. 2. Each of Licensor's out of store 60 second radio advertisements shall include a five (5) second tag at the end containing the shop online message, except that Licensor may exclude store-specific promotion events, such as grand opening and promotional appearances. 3. Each of Licensor's out of store 30 second television advertisements shall include a three (3) second (or a five (5) second message within each 60 second ad) visual message at the end containing the shop online message. IV. Vendors ------- 1. In any vendor print advertisement that "tags" Licensor or directs customers to the TSA Stores, and provided that the applicable brands and products are available through the TSA.com Site, Licensor shall use commercially reasonable efforts to persuade vendors to include the shop online message. V. Group and Team Sales 1. Licensor shall integrate the URL and shop on-line message with respect to its group and team sales efforts generally consistent with its obligations under this Exhibit J. VI. Licensee -------- 5 1. Upon request, Licensee shall include Licensor's mail order catalogs and/or direct mail booklets (prepared and delivered to Licensee by Licensor at Licensor's expense) within each package delivered to a Customer of the TSA.com Site, unless a given package is not of sufficient size to accommodate such catalogs or booklets or the inclusion of such catalog or booklets increases Licensee's postage costs for such package (unless Licensor reimburses Licensee for such additional postage costs). Licensee's obligation under this Section V shall not apply to packages delivered to a Customer of the TSA.com Site directly through a manufacturer, distributor or vendor. VII. Phase-In, Future Enhancements, Developments ------------------------------------------- 1. The Parties acknowledge that as of the Effective Date, (i) Licensor has an existing inventory of signs, shopping bags, employee uniforms and the like which Licensor may use up in the ordinary course of business, and that Licensor's integration duties hereunder may be phased in as Licensor replenishes or replaces its supply of such materials, and (ii) Licensor's name is shown on billboards and sports sponsorship signs, and that Licensor's integration duties hereunder may be phased in as such billboards and signs are replaced or otherwise updated. 2. As new signs, banners, posters and advertising formats are developed by Licensor to replace or supplement the corresponding items reflected herein, it is the intent of the Parties that the URL and the shop online message shall be integrated in such items in a manner that is equal to or greater than that which has been established through Exhibits J, and J1, and the attached examples. 6 Exhibit J1 Circulars: Integration Space Requirements
Circular 1 inch 2 inches x 7 inches 1/2 inch 1/4 inch Page Count Front Cover Footer Inside Editorial Back Cover Footer Inside Footers 4 YES NO YES 1 8 YES YES YES 2 12 YES YES YES 4 16 YES YES YES 6 24 YES YES YES 10
Direct Mail Post Cards & Booklets -- Integration Space Requirements* Size 3/4 inch Front Coupon Back 1/4 inch Cover Footer Cover Offer Inside Footers Postcard NO YES * NO 12 Page Booklet YES YES 3 24 Page Booklet YES YES 5 * If Licensee is participating EXAMPLE J1 ---------- [Sample Sports Authority advertising circular containing product images, descriptions and pricing information] EXAMPLE J2 ---------- [Sample Sports Authority advertising circular containing product images, descriptions and pricing information] EXAMPLE J3 ---------- [Sample Sports Authority advertising circular containing product images, descriptions and pricing information] Example J4 ---------- TSA.com integration into The Sports Authority Stores ---------------------------------------------------- Below are the components, which will be used to integrate the web address in-store: 1. Window Decals [Sample Sports Authority window decal here] 2. Online Window Banners (Shop on line anytime tagline) [Sample Sports Authority Window banner here] 3. Store Hours Signs (Shop online anytime tagline) [Sample Sports Authority store hour sign here] 4. Interior Banner (4 feet x 20 feet) [Sample Sports Authority interior banner here] 5. Aisle Directories (web address on the bottom of The Sports Authority logo slat) [sample Sports Authority store Aisle directory here] 6. Theme/Seasonal Toppers, Shelf Talkers and Banners Topper (#4, #5) [3 samples of Sports Authority store banners here] Shelf Talker [sample of Sports Authority shelf talker here] In-Store Banner with tagline [sample of Sports Authority store banners here] 7. 4 - 22 inches x 28 inches locations In-Store 8. Shopping Bags - All sizes (TSA.com logo is placed below the TSA logo) [SPORTS AUTHORITY LOGO HERE] EXHIBIT "K" Site Security and URL Registration . SSL Certificates. These certificates are used for secure e-commerce ---------------- transactions. The certificates certify that the customer is giving their personal information to a site which indeed is an authorized representative of the store where they are shopping. Verisign is the certification body and will need to contact an officer within the company regarding our request for these SSL certificates as a third party. Main store url (domain): www.thesportsauthority.com Internic registrant company name for this domain: The Sports Authority, Inc. Company address: 3383 North State Road 7 Ft. Lauderdale, FL 33319 (Corporate contact must be an officer in the company named above who has sufficient authority to approve the validity of GSI's request to represent the said company in e-commerce transactions) Corporate contact: Janis Altshuler Title: Vice President of E-Commerce Phone: (954) 677-6314 Fax: (954) 677-6243 Dun and Bradstreet number for above company: 17-539-1242 . DNS. DNS is the Internet address system which allows a customer to reach the --- new store via the desired URL such as www.store.com. This needs to be changed at ------------- least one week prior to the expected store launch so that the changes have been propagated to all DNS servers on the Internet. Our policy is to support your existing store ip address on our servers, so that even after the DNS has been updated to point to our servers, your existing site will still be reachable until we have launched the new store. DNS Technical contact for main URL listed above: Engineer on duty Contact phone: (877) 239-4014 Contact email address: engineeringsa@globalsports.com ------------------------------ . Email aliases. These are the email aliases which customers will use associated ------------- with the e-commerce store such as customersupport@domain.com. If your company -------------------------- uses this domain for mail, you need to add forwarding for the listed email aliases below that will point to the corresponding mailbox on our servers. Email aliases which need to be created on your mail server: Your mail server points to our mail server contactus@store.com storecustomersupport@globalsportsinc.com ---------------------------------------- webmaster@store.com storewebmaster@globalsportsinc.com ---------------------------------- info@store.com storecustomersupport@globalsportsinc.om --------------------------------------- customersupport@store.com storecustomersupport@globalsportsinc.com ---------------------------------------- specialoffers@store.com storespecialoffers@globalsportsinc.com -------------------------------------- grandopening@store.com storegrandopening@globalsportsinc.com ------------------------------------- newsletter@store.com storenewsletter@globalsportsinc.com ----------------------------------- jobs@store.com corporate email address for jobs at your company auctionauthority@store.com auctionauthority@globalsportsinc.com - -------------------------- ------------------------------------ bugs@store.com bugs@globalsportsinc.com ------------------------ my2cents@store.com my2cents@globalsportsinc.com For example, if the main domain is thesportsauthority.com, then the first email alias mapping would be: contactus@thesportsauthority.com forwards to - -------------------------------- thesportsauthoritycustomersupport@globalsportsinc.com Who to contact for updating company email server with new aliases: Engineer on duty Phone: (877) 239-4014 Email: engineeringsa@globalsports.com - ------------------------------ EX-10.3 4 dex103.txt E-COMMERCE AGREEMENT EXHIBIT "B" EXHIBIT 10.3 Confidential Treatment has been requested with respect to portions of the agreement indicated with an asterisk [*]. A complete copy of this agreement, including the redacted terms, has been separately filed with the Securities and Exchange Commission. EXECUTION COPY Global Sports Interactive, Inc. ----------------------- E-Commerce Agreement between Global Sports Interactive, Inc. and Bluelight.com, LLC E-Commerce Agreement This E-Commerce Agreement, dated as of August 10, 2001 (the "Effective Date"), is made and entered into by and between Global Sports Interactive, Inc., a Pennsylvania corporation ("GSI"), Bluelight.com, LLC, a Delaware limited liability company (the "Company") and Kmart Corporation, a Michigan corporation (together with its subsidiaries and Affiliates, "Kmart"). Recitals WHEREAS, GSI is in the business of developing and operating e-commerce businesses for specialty retailers, distributors, general merchandisers, Internet companies and media companies and providing for those companies GSI's proprietary technology, Web Site design and development capabilities, order processing capabilities, customer service capabilities, fulfillment capabilities, centralized inventory management and on-line marketing to enable those companies to offer e-commerce to their customers; WHEREAS, Kmart is in the business of selling a broad assortment of goods and services to consumers through the Stores (as defined below); WHEREAS, the Company is in the business of selling goods and services through the Internet (as defined below) using certain Kmart Trademarks; and WHEREAS, the Company desires to transfer the operation of the Company Site (as defined below) to GSI to continue to offer for sale Merchandise (as defined below) through the Internet and to permit the Company and Kmart to engage in certain Internet marketing and promotions to promote the Stores in accordance with the terms of this Agreement. NOW, THEREFORE, in reliance upon the above recitals (which are made a part of the Agreement below) and in consideration of the agreements herein, the Company and GSI (each a "Party" and collectively, the "Parties"), intending to be legally bound, agree as follows: Section 1. Definitions. Whenever used in this Agreement, the following capitalized terms shall have the following specified meanings: 1.1 "Adjusted Operating Profit" means, with respect to a given period, the Gross Profit for that period less the sum of (i) [*] for that period, as determined in accordance with GAAP; (ii) the amount obtained by multiplying (A) the applicable [*] for that period, times (B) the aggregate of all [*] for that period, as determined in accordance with GAAP; and (iii) any applicable [*] for that period. 1.2 "Affiliate" means, as to any Person, any other Person that, directly or indirectly, is controlled by, is under common control with or controls such Person, but only as long as such control exists. For this purpose, control means ownership or voting rights over at least 50% of 1 the outstanding voting or equity securities of the Person in question or the power to direct or cause the direction of management or policies of such Person, whether through voting securities, by contract or otherwise. For purpose of this Agreement, Kmart will be deemed an Affiliate of the Company. 1.3 "Aggregate Information" means (i) any information or data derived from Customer Information, and (ii) all information relating to the financial performance and/or operations of the Company Site, which in each case is not specific to a person, does not in either case refer to or identify any specific Person, and cannot be used, alone or in conjunction with other information, to identify any specific Person. 1.4 "Allocated Overhead Rate" means, with respect to a given period, the percentage obtained by dividing (i) the [*] for that period, by (ii) the sum of (A) [*] for that period, and (B) [*] (determined in a manner consistent with [*] for that period. 1.5 "Business Day" means any day which is not a Saturday, Sunday or official federal holiday in the United States. 1.6 "Company Content" means the following content or information owned or controlled (e.g., by license or otherwise) by the Company or its Affiliates and furnished by the Company or its Affiliates to GSI in accordance with the terms of this Agreement: (a) text, graphics, photographs, video, audio and/or other data or information, and e-mail addresses furnished by the Company or its Affiliates, solely for use in connection with the Company Site or the promotion of the Stores, and (b) Kmart's selected print advertisements for the Stores or the goods and services offered by Kmart in the Stores, including run of press and insert advertisements which appear in newspapers and magazines, as well as printed in-store signage, point of sale and display signage and information promoting events and the goods and services offered by Kmart. 1.7 "Company Provided Merchandise" means Merchandise which is owned or controlled by the Company, Kmart or any of their Affiliates and provided to GSI for the purpose of fulfilling Orders hereunder. "Company Provided Merchandise" shall not include samples of Merchandise provided by the Company, Kmart or any of their Affiliates pursuant to Section 3.2. 1.8 "Company Site" means the Web Site as operated by GSI pursuant to this Agreement, the primary Home Page for which is identified by the Designated URL (and any successor or replacement Web Site). 1.9 "Company Site Functionality" means, collectively: (a) functionality and features available on the Company Site that GSI may or is required to make available from time to time, and (b) any future equivalents, improvements and enhancements of any of the foregoing. 1.10 "Stores" means any land-based retail store established and/or operated by Kmart and devoted to the retail sale of a broad assortment of merchandise and to the provision of related services. 2 1.11 "Confidential Information" means all nonpublic information relating to a Party or its Affiliates that is designated as confidential or that, given the nature of the information or the circumstances surrounding its disclosure, reasonably should be considered as confidential. Confidential Information includes, without limitation, (a) all nonpublic information relating to a Party's or its Affiliates' technology, customers, business plans, agreements, promotional and marketing activities, finances and other business affairs, and (b) all third party information that a Party or its Affiliates is obligated to keep confidential. Confidential Information may be contained in tangible materials, such as drawings, data, specifications, reports and computer programs, or may be in the nature of unwritten knowledge. Confidential Information does not include any information that (i) has become publicly available without breach of this Agreement, (ii) can be shown by documentation to have been known to the receiving Party at the time of its receipt from the disclosing Party or its Affiliates, (iii) is received from a third party who did not acquire or disclose such information by a wrongful or tortious act, or (iv) can be shown by documentation to have been independently developed by the receiving Party without reference to any Confidential Information. 1.12 "Customer" means a Person who accesses the Company Site in any manner, whether or not a purchase is made. 1.13 "Customer Information" means the name, mailing address, telephone number, e-mail address, Order and Order processing information (including Order history) and any other identifying information provided by or obtained from Customers through the Company Site and/or provided by or obtained from customers of the Stores; provided, however, Customer Information does not include (i) any information that either GSI or the Company owns or to which GSI or the Company has the rights and which is obtained from Customers other than through transactions contemplated under this Agreement, or (ii) any Aggregate Information. 1.14 "Designated URL" means www.bluelight.com and/or www.kmart.com or any successor or replacement URLs as designated by the Company or Kmart. 1.15 "Fiscal Year" means GSI's fiscal year, which currently ends on the Saturday closest to December 31 of a given year. 1.16 "GAAP" means generally accepted accounting principles, consistently applied. 1.17 "Gross Profit" means, with respect to a given period, the aggregate Net Merchandise Revenue for that period less the actual aggregate cost of goods sold [*] related to the Net Merchandise Revenue for that period. 1.18 "GSI Content" means any and all content or information owned or controlled (e.g., by license or otherwise) by GSI or its Affiliates, including text, graphics, photographs, video and audio, and furnished by GSI or Affiliates in connection with the Company Site or otherwise in connection with the performance of its obligations under this Agreement. 1.19 "Home Page" means, with respect to a Web Site, the Web page designated by the operator of the Web Site as the initial and primary end user interface for the Web Site. 3 1.20 "Intellectual Property Rights" means any and all now known or hereafter known tangible and intangible (a) rights associated with works of authorship throughout the universe, including but not limited to copyrights, moral rights, and mask-works, (b) trademark, trade dress and trade name rights and similar rights, (c) trade secret rights, (d) patents, designs, algorithms and other industrial property rights, (e) all other intellectual and industrial property rights of every kind and nature throughout the universe and however designated (including domain names, logos, "rental" rights and rights to remuneration), whether arising by operation of law, contract, license, or otherwise, and (f) all registrations, initial applications, renewals, extensions, continuations, divisions or reissues hereof now or hereafter in force (including any rights in any of the foregoing). 1.21 "Internet" means the system of computer networks interconnected with routers, worldwide in scope, that facilitates data communication services such as remote login, file transfer, electronic mail, and the Web, and any successor to such system. 1.22 "Inventory Turnover Rate" means, with respect to any given [*] period, the rate determined by dividing (i) the product obtained by multiplying (A) the aggregate cost of goods sold for the product in question during the applicable measurement period, times (B) [*] by (ii) the average inventory (at cost) of the product in question during the applicable measurement period. 1.23 "Joint Developments" means any Technology that is jointly developed through the significant efforts of each Party during the Term; provided, however, that Joint Developments does not include any GSI Furnished Item or any Company Furnished Item, as the case may be, or any adaptation, modification, improvement or derivative work of any GSI Furnished Item or any Company Furnished Item, as the case may be. 1.24 "Launch Date" means the date on which the Company Site, as operated by GSI hereunder, is first made available to the public on the Web. 1.25 "Look and Feel" means the appearance, coloring, graphics, fonts, logos and other look and feel characteristics of a Web Site which are unique to the Web Site and are consistent from page to page and which indicate a common identity of the various pages and identify such pages as forming a part of a single Web Site. 1.26 "Merchandise" means the products and related services offered for sale by the Company through the Company Site. 1.27 "Net Merchandise Revenue" means all cash consideration received from Customers for Orders of Merchandise less all applicable shipping and handling charges, taxes, returns for which GSI issues a credit, and charges for valued added services such as gift wrapping. 4 1.28 "Non-Company Provided Merchandise" means Merchandise which is not Company Provided Merchandise. Non-Company Merchandise includes Sporting Goods Merchandise provided by or through GSI. 1.29 "Non-Shopping Features" means such content and information on the Company Site, provided by or through the Company, Kmart or their Affiliates that may contain or make accessible as part of the Company Site or through links from the Company Site such information as the following: Company and Kmart corporate information (e.g. historical background, mission statement, officers and directors), Store locations, community programs, a link to a Web Site (operated by the Company or a third party) that provides information about and the ability to apply to participate in the Company's Internet service provider program, promotions, Company and Kmart employment opportunities, Company and Kmart contact information and other information which serves to inform Customers about the Company, Kmart and the Stores. 1.30 "Order" means an order for Merchandise made by a Customer. 1.31 "Person" means, whether or not capitalized, any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or governmental body. 1.32 "Secondary URLs" means uniform resource locators that (i) are derivatives of Designated URL, and (ii) such other uniform resource locators designated by the Company. 1.33 "Sporting Goods Merchandise" means sports, recreational, athletic and/or fitness related (i) equipment (e.g. bats, balls, gloves, racquets, clubs, helmets, skis, fishing and hunting equipment, table games and exercise equipment), (ii) apparel (e.g. licensed products, hats, jerseys and exercise clothing), (iii) footwear, and (iv) memorabilia. Sporting Goods Merchandise shall not include private label sporting goods merchandise and sporting goods merchandise made exclusively for the Company or Kmart or their Affiliates. 1.34 "Technology" means any design, specification, content (which includes product files, catalogs, images and editorial content), data, database, software, code, template, user interface, technique, algorithm, method, process, device, procedure, functionality or other technology. 1.35 "Term" is defined in Section 13.1 of this Agreement. 1.36 "Trademark" means any trademark, service mark, trade name, URL, domain name, trade dress, proprietary logo or insignia or other source or business identifier. 1.37 "URL" means the uniform resource locator of a Web Site. 1.38 "Web" means the Internet client-server hypertext distributed information retrieval system known as the World Wide Web. 5 1.39 "Web Site" means any point of presence maintained on the Internet or on any other public data network. With respect to any Web Site maintained on the World Wide Web or any successor public data network, such Web Site includes all HTML pages (or similar unit of information presented in any relevant data protocol) that either (a) are identified by the same second-level domain (such as http://www.kmart.com) or by the same equivalent level identifier in any relevant address scheme, or (b) contain branding, graphics, navigation or other characteristics such that a user reasonably would conclude that the pages are part of an integrated information or service offering. Section 2. Creation and Operation of the Company Site. 2.1 Design and Development. GSI will design and develop the Company Site in accordance with this Agreement. The Company Site will contain at a minimum the functionality and features set forth on Exhibit "A" attached to this ---------- Agreement and such other functionality and features as may be agreed upon from time to time by the Parties. Except for the Company Content and Non-Shopping Features to be provided by the Company hereunder, GSI will provide all content, creative, design, programming and related services necessary to the design, development, operation and updating of the Company Site, including incorporating the features and functionality provided for herein. Subject to Section 2.2, the Company Site will be comprised of a series of templates developed by GSI that will define the format and layout of a page on the Company Site and establish the placement and size of content type blocks (e.g. text, graphics, promotions, advertising, navigation bar and images). Throughout the Term, GSI will use commercially reasonable efforts to (i) develop such value added content and services for the Company Site as may be mutually agreed upon by the Parties, and (ii) integrate into the operation of the Company Site the contracts set forth on Exhibit "G" to which the Company or any of its Affiliates are a party (which - ---------- Exhibit "G" must be mutually agreed upon by the Parties prior to the Launch - ---------- Date) [*] GSI will make available to the Company [*] The Look and Feel characteristics of the Company Site will be consistent with the Look and Feel of the Company's current e-commerce Web Site. The Company will provide, and will cause Kmart and their Affiliates to provide, GSI with the Company Content necessary for the operation of the Company Site in such format as may be agreed upon by the Parties. Unless and until GSI provides the Company with the technology to update the Non-Shopping Features directly, GSI will program, upload, display and maintain the Non-Shopping Features and will promptly update the Non-Shopping Features as may be reasonably requested by the Company from time to time. Upon providing the Company with such technology, the Company will be responsible for updating the Non-Shopping Features content and GSI will provide initial training and/or instructions on the use of the technology and will thereafter provide such assistance that may be reasonably requested by the Company with respect to the use of such technology. 2.2 Launch and Modifications. The Parties will work together in good faith and use commercially reasonable efforts to cause the Launch Date to be on or before September 17, 2001 or as soon as practicable thereafter. The Company will have the right to approve the overall design templates and the Look and Feel characteristics of the Company Site prior to the Launch Date, with such consent not to be unreasonably withheld or delayed. After the Launch Date, no material changes to the templates or Look and Feel of the Company Site will be made without the approval of the Parties. [*] 6 2.3 Hosting, Maintenance and Operation of the Company Site. GSI will host, maintain and operate the Company Site in accordance with this Agreement. GSI will be responsible for hosting, or arranging for the hosting by a reputable third-party hosting company, the Company Site. The equipment and software used by GSI to host and operate the Company Site and the security provided by GSI with respect to the Company data and Company Site will be at least generally comparable to then current industry standards for the Web Sites of other leading general merchandisers. GSI agrees that during the Term it will [*]. The Company Site will be operated at the Designated URL and at such other URL as may be agreed upon by the Parties. The Company will ensure that, during the Term, the Designated URL and all Secondary URLs are registered with Network Solutions Inc. (or another reputable registrar) in such a way that the Designated URL and all Secondary URLs point to the domain name servers designated by GSI for the Company Site. The Company will comply with the requirements of and, prior to the Launch Date, provide the information set forth on, Exhibit "B" attached to this ---------- Agreement with respect to security for and registration of all URLs for the Company Site. 2.4 Order Processing, Fulfillment and Returns. GSI will be responsible for all aspects of Order receipt, processing and fulfillment for the Company Site, including those functions set forth on Exhibit "C" attached hereto. The Order ---------- receipt, processing and fulfillment services provided by GSI with respect to the Company Site will [*]. GSI has the right only to accept Orders for shipments to addresses in the United States and APO/FPO addresses and such other countries or territories to which GSI then generally accepts Orders for shipment. The returns policy for the Company Site will provide that all returns of Merchandise will be returned to the Stores or Company's designated returns processing facility. For returns to the Stores, [*] For returns to the Company's returns processing facility, [*] 2.5 Customer Service. GSI will be responsible for providing customer service to users of the Company Site, including on-line and through toll-free telephone support. Initially the telephone support shall be provided by GSI, and, at the Company's option, through a toll-free telephone number established by the Company that will provide a link to GSI's customer service for the Company Site. The customer service provided to users of the Company Site will be provided in the name of the Company Site (unless otherwise required by law or privacy policy or not to be misleading) and will [*]. GSI will provide customer service in a courteous and professional manner and provide for Customer feedback through appropriate features on the Company Site and through the toll-free number for the Company Site. In the event that GSI receives inquiries or complaints from customers relating to the Stores, GSI will promptly refer all such customers to a the email reply service and/or toll-free telephone number for customer service furnished to GSI by the Company. In the event that the Company receives inquiries or complaints from customers relating to the Company Site, the Company will promptly refer all such customers to the email reply service and/or toll-free telephone number for GSI's customer service for the Company Site. If, in any quarter during the Term, GSI's customer service for the Company Site receives telephone inquires concerning matters for which GSI does not have responsibility hereunder in a number greater than [*], then the Company shall pay to GSI [*]. 2.6 ISP Maintenance and Support. The Company acknowledges and agrees that GSI does not, and will not, have any obligations (other as provided in Section 2.5) with respect 7 to the maintenance, support or any other aspects of the Company's current or any future Internet service provider programs. 2.7 Web Site Transition Plan. As soon as practicable after the Effective Date, the Parties will mutually agree upon a transition plan to address (i) the transfer of account information from users of the current Company e-commerce Web Site to GSI for use in connection with the Company Site, (ii) the redemption of on-line gift cards, gift certificates, coupon and discount codes issued prior to the Launch Date, (iii) customer service requests received after the Launch Date which relate to events occurring prior to the Launch Date, and (iv) such other transition matters as may be necessary to transition the operation of the Company's current e-commerce Web Site to GSI as contemplated hereunder. 2.8 Seamless Operations. The Parties agree that it is important for Customers to perceive the Company Site as an extension of the Stores and as part of Kmart's multi-channel distribution plans. Accordingly, the Parties agree to work in good faith and use commercially reasonable efforts to perform their respective obligations hereunder as seamlessly as practicable under the Company's and/or Kmart's brand. As a result of the need for Customers to perceive the Company Site as an extension of the Company and Kmart, the Company agrees to, and will cause Kmart to, provide GSI with prior notice of any intended actions if they believe such actions will have a material impact on the Company Site, the ability of GSI to perform its obligations hereunder, and/or the volume of Customers or callers accessing the Company Site or customer service telephone support for the Company Site. The failure of the Company to provide any such notice will not be deemed a breach of this Agreement, and GSI will not be responsible for any failure to perform resulting from such failure to notify. 2.9 E-commerce Transactions prior to the Launch Date. The Company acknowledges and agrees that GSI does not, and will not, have any obligations (other than as agreed to pursuant to Section 2.7) with respect to the design, development, operation, or maintenance of the Company's or its Affiliate's (other than Kmart) e-commerce businesses or Web Sites that existed prior to the Launch Date. Section 3. Merchandising; Inventory Maintenance. 3.1 Merchandising; Assortment Plans. In order to facilitate appropriate and comprehensive inventory planning (including capacity, staffing, economic and other related factors) and to maximize merchandise revenues and profit from the Company Site, the Parties will work together in good faith to prepare mutually agreed upon merchandising assortment plans (each a "Merchandise Assortment Plan") for the Company Site at least [*] prior to the beginning of each [*] (other than the first Merchandise Assortment Plan which will be prepared as soon as practicable prior to the Launch Date). Each Merchandise Assortment Plan will include the following, in reasonable detail, with respect to all Merchandise: [*] With respect to Company Provided Merchandise, the Merchandise Assortment Plan will also include: [*]. The Parties will work together to update the Merchandise Assortment Plans as may be reasonably necessary or desirable to maximize merchandise revenues and profit from the Company Site. The Company will make the final determination on the actual Merchandise to be offered for sale 8 through the Company Site; provided, however GSI will not, at its option, be obligated to offer for sale through the Company Site [*] 3.2 Product Images and Descriptions; Samples. Subject to the Company providing GSI with all reasonably requested information for the Merchandise to be included on the Company Site, GSI will be responsible for the creation and maintenance of the digital images and product descriptions related to such Merchandise. The Company agrees to use commercially reasonable efforts to obtain and/or to assist GSI in obtaining product images and descriptions directly from vendors, manufacturers and other third parties. All such product images and descriptions created by GSI (other than product images and descriptions relating to Merchandise that is exclusive to the Company or its Affiliates, which will be deemed Company Content) will be deemed GSI Content for purposes of this Agreement; [*]. The Company agrees to provide GSI with such samples of Merchandise reasonably requested by GSI for Merchandise to be included on the Company Site. The Company will retain ownership to all such samples. 3.3 Company Provided Merchandise Shipments. The Company will use commercially reasonable efforts to deliver, or cause Kmart or its Affiliates to deliver, to GSI the Company Provided Merchandise in such quantities and at such times as may be required to [*]. The Company will, and will cause Kmart and its Affiliates to, use commercially reasonable efforts to require merchandise suppliers to package products in a manner to minimize GSI's receiving costs based upon specifications provided by GSI. If the amount or type of Merchandise actually received by GSI differs from the amount and type of Merchandise reported by the Company as shipped, GSI will notify the Company of such discrepancy within [*] days after receipt of such Merchandise, and the Parties will adjust their records to reflect such verifiable differences. Additionally, GSI will notify the Company of any obviously damaged or defective Merchandise within an average of [*] Business Days of receipt and will notify the Company of any non-obviously damaged or defective Merchandise promptly after discovering such damage or defect. GSI agrees to provide the Company with all reasonably requested information related to such damaged or defective Merchandise to permit the Company to file claims for such Merchandise. The Company may inspect such delivered Merchandise to verify any discrepancy in quantity and/or damage or defect. GSI will provide the Company with [*]. GSI will provide the Company with receiving documents for Company Provided Merchandise on a timely basis through a mutually agreed upon process. 3.4 Physical Inventory[*]. The Company may, at its expense, upon at least sixty (60) days prior written notice (but in no event between October 1 and December 31 of any year), conduct a physical inventory of the Company Provided Merchandise located at GSI owned or controlled facilities; provided that (i) any such physical inventory is conducted in a manner designed not to unreasonably interfere with GSI's ordinary business operations; and (ii) such physical inventory may not occur more frequently then one time every twelve (12) months. GSI will reasonably cooperate with the Company in the performance of such physical inventories. If any [*] Additionally, GSI will be [*] The Company will have the right to file UCC-1 statements, which shall be subject to GSI's reasonable approval, to identify the Company Provided Merchandise in the possession of GSI. GSI agrees to take, at the Company's expense, such other actions as may be reasonably requested by the Company to protect Company's ownership in the 9 Company Provided Merchandise; provided, however, in no event will GSI be obligated to segregate the Company Provided Merchandise from other merchandise. 3.5 Drop Ship Arrangements. From time to time during the Term, the Company may enter into appropriate arrangements with drop ship vendors which are selected by the Company to provide Merchandise to be offered for sale through the Company Site. The Company agrees that such drop ship vendors will be required to agree to comply with the applicable GSI service level standards relating to drop ship vendors as provided to the Company by GSI. 3.6 Sporting Goods Merchandise. Notwithstanding any provision herein to the contrary, GSI will be the exclusive source of Sporting Goods Merchandise for sale through the Company Site to the extent GSI chooses to provide such Sporting Goods Merchandise and shall provide such Merchandise in accordance with the purchase order terms and conditions set forth on Exhibit "H", which will be ---------- agreed upon by the Parties prior to the Launch Date. GSI may provide such Sporting Goods Merchandise directly or through drop ship vendors chosen by GSI. The Company will pay GSI for each unit of Sporting Goods Merchandise sold through the Company Site an amount equal to [*]. 3.7 Return of Unsold Merchandise. Notwithstanding any provision herein to the contrary, in the event that GSI retains any Company Provided Merchandise for more than [*] and for which [*] then GSI will have the right to return such excess Merchandise to the Company. GSI will deliver such excess inventory to the Company, "freight collect," to a single destination as specified by the Company. Additionally, upon the expiration or termination of this Agreement, GSI will promptly return to the Company all Company Provided Merchandise then in GSI's possession and control, pursuant to the same procedures as apply to the return of excess inventory in this Section 3.7. 3.8 Product Recalls. The Parties agree that in the event that GSI is obligated to process any product recalls, or in the event that the Company requests that GSI process any product recalls, for Merchandise sold through the Company Site, then the Parties will mutually agree upon the procedures to effectuate such recall and the Company will reimburse GSI for its reasonable costs associated with such recall, other than costs associated with recalls of Sporting Goods Merchandise, which, as between the Parties, will be the responsibility of GSI. Section 4. Treatment of Sales; Pricing; Sales and Use Taxes. 4.1 Treatment of Sales. The Company will be the seller of all Merchandise and related fulfillment services (i.e. shipping, gift wrapping and other value added services) sold or furnished through the Company Site, and all revenues from the sale of such Merchandise and such services will be Company revenues. The Parties agree to execute additional mutually agreed upon documentation necessary or desirable to reflect such treatment of sales. GSI agree to use commercially reasonable efforts to resolve and minimize chargebacks relating to the Company Site. 4.2 Pricing of Merchandise and Services. The Company will be responsible for 10 establishing the selling price for the Merchandise and related Customer fulfillment services (i.e. shipping, gift wrapping and other value added services) which will be charged to the Customer with respect to Orders through the Company Site; provided, however, the Company agrees that until the first anniversary of the Effective Date, the shipping charges with respect to Orders for Merchandise will be [*] Notwithstanding the preceding sentence [*] After the first anniversary of the Effective Date, the Company will have the right to, subject to reasonable technological constraints, establish revised shipping charges for Orders of Merchandise through the Company Site. 4.3 Sales and Use Taxes. As between the Parties, the Company will be responsible for all sales and use taxes imposed on sales pursuant to Orders through the Company Site and the Company 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. GSI will provide to the Company or its Affiliates information necessary for the Company to meet its filing requirements with respect to such sales and use taxes. With respect to Orders though the Company Site, GSI will only be obligated to collect, on behalf of the Company, sales and use taxes from Customers at the rates and in those jurisdictions as specified in writing by the Company. GSI will remit all such taxes collected by GSI to the Company as provided in Section 7.4 hereof. The Parties further agree that all Orders to be fulfilled with Sporting Goods Merchandise will be treated as purchases for resale by the Company to the end users. For accounting, financial reporting, and sales and use tax purposes, the Parties agree to treat such purchases accordingly. In connection with GSI owned inventory, the Company will furnish to GSI resale certificates for the Commonwealths of Pennsylvania and Kentucky and such other jurisdictions as may be reasonably requested by GSI from time to time. Upon the reasonable request of a Party, the other Party will provide the requesting Party with satisfactory evidence of its compliance with the obligations in this Section 4.3. 4.4 Kmart Gift Cards. The Parties will mutually agree upon procedures and the accounting to permit Customers to pay for Orders through the use of Kmart gift cards [*] Sales of the Kmart's gift cards will [*] Section 5. Promotion and Advertising. 5.1 Company Activities and Obligations. Commencing no later than the Launch Date and continuing during the Term, the Company will, and will cause Kmart to, promote and advertise the Company Site and integrate a "shop-on-line" message and the Designated URL and the other URLs for the Company Site, into its promotions and advertising, including in the Stores, in accordance with Exhibit ------- "D" to this Agreement. - -- 5.2 GSI Activities and Obligations. GSI [*] and may use the Company's Trademarks in connection therewith; provided however, GSI will only use such Trademarks in conformance with the use guidelines of the Company set forth on Exhibit "E" attached hereto. Upon the approval by the Company of an affiliate - ---------- program created by GSI for the Company Site, GSI may offer through the Company Site an affiliate program. Section 6. Implementation. 11 6.1 Account Managers. Each Party will assign a dedicated account manager to oversee the performance of such Party's obligations under this Agreement and to facilitate coordination of the Parties' performance of their respective obligations. Additionally, the Company will assign a dedicated marketing manager, operations manager and merchandise manager (and appropriate supporting buying staff) to oversee the applicable Company obligations under this Agreement. Each Party's managers will be subject to change from time to time by the assigning Party upon notice to the other Party. The account managers will meet at least once every quarter (or with such other frequency as may be mutually agreed upon) during the Term to review the implementation of this Agreement and to explore methods for improving performance. 6.2 Cooperation. During the Term, the Parties will cooperate in good faith and use commercially reasonable efforts to (i) provide a positive customer experience on the Company Site, (ii) maximize customers and revenues from or through the Company Site and (iii) review opportunities for marketing the Company Site. Section 7. Collection of Sales Proceeds; Compensation and Expenses. 7.1 General. Except as expressly provided for elsewhere in this Agreement, each Party will be responsible for all costs and expenses incurred by such Party in performing its obligations under this Agreement. 7.2 Collection of Sales Proceeds. All proceeds from the sale of Merchandise and related services through the Company Site will be collected and processed by GSI on behalf of the Company. 7.3 Operational Fees. In addition to any other amounts due GSI hereunder, the Company will pay to GSI, by wire transfer of immediately available funds, the following fees for the operation of the Company Site: [*] 7.4 Transaction Payments. Within [*] days after the end of each [*] of GSI's Fiscal Year during the Term, GSI will remit to the Company[*] an amount equal to the difference obtained by subtracting from the result obtained by adding (i)(A) through (i)(D), the result obtained by adding (ii)(A) through (ii)(G), less all amounts paid by GSI to the Company pursuant to Section 7.10 with respect to the [*] in question: (i) Amounts payable to the Company: ------------------------------ (A) the aggregate [*] (B) the aggregate amounts [*] (C) the Revenue Share, if any, payable to the Company pursuant to Section 7.5 below for [*] 12 (D) the Profit Share, if any, payable to the Company pursuant to Section 7.6 below for [*] (ii) Amounts payable to GSI: ---------------------- (A) the aggregate [*] (B) the [*] payable to GSI pursuant to Section 7.7 below [*] (C) the actual aggregate [*] (D) the actual aggregate[*] (E) if positive, an amount, if any, equal to the product obtained by subtracting (i) the actual aggregate [*] from (ii) the aggregate [*] (F) if positive, an amount, if any, equal to the product obtained by subtracting (i) the actual aggregate [*] from (ii) the aggregate [*] (G) an amount equal to the aggregate [*] and (H) an amount equal to the aggregate [*] In the event that the difference from subtracting (ii) from (i) above is negative, GSI will submit an invoice to the Company for such amount and the Company will remit to GSI such payment within [*] from such invoice. Each payment hereunder will include a report, showing in reasonable detail, the calculation of the payments provided for therein. 7.5 Revenue Share. Commencing with Orders received after [*] and continuing throughout the remaining Term, GSI will pay to the Company a [*] revenue share equal to [*] provided, however, GSI will not be required to pay any revenue share to the Company in connection with Orders which result from a Customer clicking through to the Company Site as a result of any online marketing, advertising or promotional agreement or arrangement for which GSI paid or is required to pay a revenue share, transaction fee, impression fee, promotional or advertising fee or other fee in connection with such Order. GSI will pay such revenue share to the Company as provided in Section 7.4 above. [*] 7.6 Profit Share. Commencing with [*] and continuing throughout the remaining Term, GSI will pay to the Company a [*] profit share in an amount equal to the amount determined by multiplying (i) [*] times (ii) [*] GSI will pay such profit share to the Company as provided in Section 7.4 above. [*] 13 7.7 [*] As a service fee for the performance of its services hereunder, the Company shall pay GSI, [*] an amount based on [*] (a) Commencing on [*] and continuing through [*] the Company agrees that, with respect to any given [*] GSI will be entitled to [*] in an amount equal to the greater of (i) [*] and (ii) [*] in an amount equal to the sum of (A) the product obtained by multiplying (1) [*] times (2) [*] and (B) the product obtained by multiplying (1) [*] times (2) [*] (b) Commencing on [*] and continuing through [*] the Company agrees that, with respect to any given [*] GSI will be entitled to [*] in an amount equal to the greater of (i) [*] and (ii) [*] an amount equal to the sum of (A) the product obtained by multiplying (1) [*] times (2) [*] and (B) the product obtained by multiplying (1) [*] times (2) [*] (c) The Company will pay to GSI [*] as calculated above in accordance with Section 7.4. 7.8 Designated Account; Interest Income. GSI will establish and maintain a separate account(s) for the funds collected by GSI on behalf of the Company pursuant to this Agreement. The Parties agree that GSI will retain any interest income on any funds collected by GSI pursuant to this Agreement. 7.9 Records and Audit Rights. During the Term of this Agreement, and for a period of [*] after their creation, each Party will keep complete and accurate books and records sufficient to verify compliance or non-compliance with the provisions of this Agreement. Each Party will, upon at least thirty (30) days' prior written request by the other Party, allow such Party, or a representative of such Party who is reasonably acceptable to the audited Party, to audit such books and records at the audited Party's premises to the extent necessary to verify the performance of the other Party's obligations hereunder; provided that (a) any such audit is conducted during normal business hours and in a manner designed to not unreasonably interfere with the audited Party's ordinary business operations; (b) audits may not occur more frequently than once every twelve (12) months; and (c) each such audit may only cover periods that were not previously audited. The audited Party will cooperate with the auditing Party and its representatives in the conduct of such audit. If any audit reveals that the audited Party has failed properly account for, charge and/or pay any amount hereunder which results in an overpayment by the auditing Party or an underpayment by the audited Party, then the audited Party will promptly pay the auditing Party any such amount, together with interest on the monies owed at an annual rate of two percent (2%) over the prime rate of interest reported in The Wall Street Journal from on the date on which such overpayment was made or such overdue amount should have been paid to the auditing Party. If any audit reveals that the audited Party has failed properly account for, charge and/or pay any amount hereunder which results in an overpayment by the audited Party or an underpayment by the audited Party, by [*] or more, then in addition to paying any such amount due, the audited Party will reimburse the other Party for its reasonable out-of-pocket expenses incurred in conducting such audit. Each Party agrees that any information learned by or disclosed to it or its auditor in connection with such audit is Confidential Information of the audited Party. 14 7.10 Company Provided Merchandise Cost of Sales. Within [*] after [*] GSI will remit,[*] to the Company [*] Section 8. Customer Information and Privacy Policies. 8.1 Customer Information. [*] Each Party will use the Customer Information in compliance with the privacy policy for the Company Site and applicable law. Each Party will treat such Customer Information as Confidential Information of the [*] 8.2 Privacy Policy. Within thirty (30) days after the date of this Agreement, but in any event prior to the Launch Date, the Parties will mutually agree upon the privacy policies for, and that will be posted on, the Company Site. Each Party will abide by such privacy policies, as such may be amended from time to time. Any amendments to such privacy policies must be agreed upon by the Parties; provided, however, that if any amendment to the privacy policies is required by applicable law, the privacy policies will be amended to comply with such requirements. 8.3 Aggregate Information. [*] will own the Aggregate Information;[*] Subject to the foregoing, [*] will treat such Aggregate Information as Confidential Information of [*] hereunder. 8.4 E-Mail Promotions. GSI may send e-mail promotions to those Customers who have not opted-out for the promotion of the Company Site, so long as the form and content are approved in advance by the Company. Section 9. Proprietary Rights. 9.1 Ownership. (a) The Company. As between the Parties, the Company reserves all right, title and interest in and to the "Company-Furnished Items" (as defined below), along with all Intellectual Property Rights associated with any of the foregoing, and no title to or ownership of any of the foregoing is transferred or, except as expressly set forth in Section 9.2, licensed to GSI or any other Person. GSI hereby assigns to the Company all right, title and interest that it may have or acquire in and to such items and all associated Intellectual Property Rights, and GSI will take, at the Company's expense, any actions (including execution and delivery of affidavits and other documents) reasonably requested by the Company to effect, perfect or confirm the Company's or its designee's right, title and interest therein. As used herein, "Company-Furnished Item" means any Company Content or any Trademark or Look and Feel of the Company Site that (a) is owned or controlled (e.g., by license or otherwise) by the Company or its Affiliates, as the case may be, and (b) is furnished by the Company for use in connection with the activities contemplated by this Agreement. As used herein, "Company-Furnished Item" will also include, without limitation, any adaptation, modification, improvement or derivative work of any Company-Furnished Item that is developed by either Party or jointly by the Parties; provided, however, that the Company-Furnished Items do not include any GSI-Furnished Item (as defined below), any Joint Developments, or any adaptation, modification, improvement or 15 derivative work of the any GSI-Furnished Item or any Joint Developments. At the termination of the Agreement, GSI will return all Company-Furnished Items to the Company, and GSI will have no further rights thereto. (b) GSI. As between the Parties, GSI reserves all right, title and interest in and to the "GSI-Furnished Items" (as defined below) and the "GSI-Owned Developments" (as defined below), along with all Intellectual Property Rights associated with any of the foregoing, and no title to or ownership of any of the foregoing is transferred or licensed to the Company or any other Person. The Company hereby assigns and agrees to assign to GSI all right, title and interest to such items and all associated Intellectual Property Rights, and the Company will take, at GSI's expense, any actions (including execution and delivery of affidavits and other documents) reasonably requested by GSI to effect, perfect or confirm GSI's or its designee's right, title and interest therein. As used herein, "GSI-Furnished Item" means any GSI Content or any Technology or Trademark of GSI that (a) is owned or controlled (e.g., by license or otherwise) by GSI or its Affiliates, as the case may be, and (b) is furnished by GSI for use in connection with the activities contemplated by this Agreement. "GSI-Owned Development" means any Technology (including any adaptation, modification, improvement or derivative work of any GSI-Furnished Item) that is developed solely by GSI or jointly by the Parties for use on the Company Site in connection with the activities contemplated by this Agreement or that is developed by GSI for use on the Web Sites that it operates, which may include the Company Site. Notwithstanding the foregoing, neither the GSI-Furnished Items nor the GSI-Owned Developments will include any Company-Furnished Item or any Joint Developments, or any adaptation, modification, improvement or derivative work of the any GSI-Furnished Item or any Joint Developments. The GSI-Owned Developments will, however, include all adaptations, modifications, improvements or derivative works of the Company Site Functionality that are developed by GSI or jointly by the Parties. At the termination of the Agreement, the Company will return all GSI-Furnished Items to GSI, and the Company will have no further rights thereto. (c) Joint Developments. GSI will own all Joint Developments; provided, however, upon the termination or expiration of this Agreement, GSI hereby grants to the Company a perpetual, royalty-free license to use the Joint Developments solely to operate a Company or Kmart controlled Web Site. Joint Developments will be deemed Confidential Information of GSI; provided, however, [*] 9.2 Company License. The Company, and as applicable Kmart, hereby grants to GSI, during the Term, a worldwide, non-transferable license to use the Company-Furnished Items supplied by the Company as may be reasonably necessary to perform its obligations under this Agreement and to sublicense the Company-Furnished Items supplied by the Company to third parties in connection with advertising and promotion agreements and arrangements permitted under this Agreement; provided, however, that GSI will not use Trademarks of the Company or its Affiliates, including in any advertising, except in conformance with the use guidelines of the Company set forth on Exhibit "E" attached to this Agreement ---------- [*] All goodwill arising out of any use of any of the Company's or its Affiliate's Trademarks by, through or under GSI will inure solely to the benefit of the Company or such Affiliate, as the case may be. 16 9.3 Non-Disparagement. Neither GSI nor any of its Affiliates will use the Trademarks of the Company or its Affiliates in a manner that disparages the Company or its Affiliates, as the case may be, or its products or services, or portrays the Company or its Affiliates, as the case may be or its products or services in a false, competitively adverse or poor light. GSI and its Affiliates will avoid knowingly taking any action that diminishes the value of such marks. Section 10. Representations and Indemnification. 10.1 Representations. Each Party represents and warrants to the other that: (a) it has the full right, power and authority to enter into this Agreement and perform its obligations hereunder; and (b) when executed and delivered, this Agreement will constitute its legal, valid and binding obligation enforceable against it in accordance with its terms. 10.2 Indemnity. (a) GSI will defend, indemnify and hold harmless the Company and its Affiliates (and their respective employees, officers, directors and representatives) from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of any third party claim, action, suit or proceeding (a "Claim"), to the extent it is based on (i) the creation, operation or content of the Company Site (other than any items or materials supplied by the Company for use on the Company Site or otherwise pursuant to this Agreement, including the Company Content) and the fulfillment obligations of GSI hereunder, (ii) any actual or alleged breach of GSI's representations, warranties and/or obligations as set forth in this Agreement, (iii) any actual or alleged infringement of any Intellectual Property Rights by any materials provided by GSI for use on the Company Site or provided by GSI to the Company for its use under this Agreement, (iv) any failure or alleged failure of GSI to comply with any applicable law, rule or regulation concerning the performance of its obligations hereunder, or (v) Claims based upon product liability, product labelling, personal injury or death relating to any Sporting Goods Merchandise supplied by or on behalf of GSI. Subject to Section 10.3, GSI will pay any award against the Company and its Affiliates (and their respective employees, officers, directors or representatives) and any costs and attorneys' fees reasonably incurred by them resulting from any such Claim. (b) The Company will defend, indemnify and hold harmless GSI and its Affiliates (and their respective employees, officers, directors and representatives) from and against any and all claims, costs, loses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of any third party Claim, to the extent it is based on (i) any actual or alleged breach of the Company's representations, warranties and/or obligations as set forth in this Agreement, (ii) any actual or alleged infringement of any Intellectual Property Rights by any materials provided by the Company to GSI for its use on the Company Site or otherwise under this Agreement, including the Company Content, (iii) the offer, marketing or sale of any products or services through the Company Site (other than marketing provided by GSI), including Claims based upon product liability, personal injury or death relating to any products (other than any Sporting Goods Merchandise supplied by or on behalf of GSI) or services (other than GSI performed services) sold by the Company hereunder, (iv) any act, omission, event, 17 transaction or matter concerning or related to the operation of the Company's business prior to the Launch Date any Web Site operated by or on behalf of the Company other than the Company Site as operated by GSI, or the cessation of the operation of any such Web Site, any agreement or arrangement entered into by the Company prior to the Launch Date, or any current or future Company Internet service provider programs, or (v) any failure or alleged failure of the Company to comply with any applicable law, rule or regulation. Subject to Section 10.3, the Company will pay any award against GSI and its Affiliates (and their respective employees, officers, directors or representatives) and any costs and attorneys' fees reasonably incurred by them resulting from any such Claim. 10.3 Procedure. In case any claim, action, suit or proceeding is at any time brought against a Party or its Affiliates (or any of their respective employees, officers, directors or representatives) (an "Indemnified Party") and such Indemnified Party is entitled to indemnification pursuant to Section 10.2, the party obligated to provide such indemnification (the "Indemnifying Party") will defend such claim, action, suit or proceeding, at the sole expense of the Indemnifying Party, using counsel selected by the Indemnifying Party. The Indemnified Party will give prompt notice of any Claim to the Indemnifying Party. If the Indemnifying Party fails to take timely action to defend such a Claim or proceeding after having received written notice from the Indemnified Party of such failure, the Indemnified Party may defend such a Claim at the Indemnifying Party's expense. The Indemnifying Party will keep the Indemnified Party fully advised with respect to such Claims and the progress of any suits, and the Indemnified Party will have the right to participate, at the Indemnified Party's expense, in any suit instituted against it and to select attorneys to defend it, which attorneys will be independent of any attorneys chosen by the Indemnifying Party relating to such claim or related claim. The Indemnifying Party may settle, compromise or otherwise enter into any agreement regarding the disposition of any claim against the Indemnified Party without the prior written consent and approval of the Indemnified Party, so long such settlement, compromise or disposition does not adversely affect the Indemnified Party. The obligations of the Indemnifying Party pursuant to this Section 10 will survive expiration or earlier termination of this Agreement. Section 11. Disclaimers and Limitations. 11.1 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY WAIVES AND DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES REGARDING THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR IMPLIED WARRANTIES ARISING OUT OF COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING (A) THE AMOUNT OF SALES REVENUES THAT MAY OCCUR DURING THE TERM, AND (B) ANY ECONOMIC OR OTHER BENEFIT THAT IT MIGHT OBTAIN THROUGH ITS PARTICIPATION IN THIS AGREEMENT (OTHER THAN THE SPECIFIC SUMS TO BE PAID PURSUANT TO THIS AGREEMENT). 18 11.2 LIMITATION OF DAMAGES. EXCEPT TO THE EXTENT AWARDED TO A THIRD PARTY IN A JUDGMENT AGAINST WHICH A PARTY IS ENTITLED TO INDEMNIFICATION PURSUANT TO SECTION 10, OR TO THE EXTENT ARISING OUT OF AN INTENTIONAL BREACH OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE (WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE), PRODUCT LIABILITY OR OTHER THEORY), TO THE OTHER PARTY OR ANY OTHER PERSON OR ENTITY FOR COST OF COVER OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING DAMAGES FOR LOSS OF PROFIT, BUSINESS OR DATA) ARISING OUT OF THIS AGREEMENT. Section 12. Company and its Affiliates E-Commerce Activities. 12.1 Company Site. During the Term, GSI will [*] for the Company and its Affiliates. [*] GSI will be entitled to provide all services necessary to create and operate the business of the Company and its Affiliates relating to the sale of merchandise to consumers on or through the Internet, including through the Company Site, and (ii) neither the Company nor its Affiliates will, directly or indirectly, sell merchandise or services to consumers on or through the Internet or assist any third party with which the Company or any of its Affiliates has an agreement or arrangement to, directly or indirectly, sell merchandise or services to consumers on or through the Internet ("Third Party Providers"), [*] The Company will keep, and will cause [*] Notwithstanding anything in this Section 12 to the contrary, the Company and Kmart will be entitled to promote and advertise the Stores over the Internet without limitation. 12.2 Web-Enabled Kiosks. The Parties acknowledge that, as of the Effective Date, [*] GSI will use commercially reasonable efforts to [*] The Parties agree that, during the Term, all kiosks will be [*]. Section 13. Term and Termination. 13.1 Term. Subject to the earlier termination rights of the Parties set forth herein, the Term of this Agreement will commence on the Effective Date and, unless extended or earlier terminated as provided elsewhere in this Agreement, will automatically expire on [*]. 13.2 Termination for Breach. Without limiting any other rights or remedies (including, without limitation, any right to seek damages and other monetary relief and the rights under Sections 13.3 and 13.4) that either Party may have in law or otherwise, either Party may terminate this Agreement if the other Party fails to perform any of its obligations hereunder; provided that (a) the non-breaching Party sends written notice to the breaching Party describing in reasonable detail the breach and stating its intention to terminate this Agreement unless such breach is cured, and (b) the breaching Party does not cure the breach within sixty (60) days following its receipt of such notice; provided, however, that if the breaching party has diligently attempted to cure the breach during such sixty (60) day period but has not cured the breach by the end of such sixty (60) day period, the non-breaching party may not terminate this Agreement so long as the breaching party continues to diligently attempt to cure the breach and such breach is cured by the end of the thirty (30) day period following such sixty (60) day period. 19 Notwithstanding the foregoing, GSI will be deemed to have cured a breach premised upon failure to comply with any of its obligations set forth in [*] in an applicable measurement period by fully complying with such obligation in the first full measurement period after notice of default is received. 13.3 Company Termination. The Company will be entitled to terminate this Agreement immediately upon written notice to GSI if GSI becomes insolvent, admits in writing its inability to pay debts as they mature, institutes or has instituted against it any bankruptcy, reorganization, debt arrangement, assignment for the benefit of creditors, or other proceeding under any bankruptcy or insolvency law or dissolution, receivership, or liquidation proceeding (and, if such proceeding is instituted against it, such proceeding is not dismissed within sixty (60) days). 13.4 GSI Termination. GSI will be entitled to terminate this Agreement immediately upon written notice to the Company if the Company becomes insolvent, admits in writing its inability to pay debts as they mature, institutes or has instituted against it any bankruptcy, reorganization, debt arrangement, assignment for the benefit of creditors, or other proceeding under any bankruptcy or insolvency law or dissolution, receivership, or liquidation proceeding (and, if such proceeding is instituted against it, such proceeding is not dismissed within sixty (60) days). 13.5 Effect of Termination. Upon termination of this Agreement, each Party in receipt, possession or control of the other Party's intellectual or proprietary property, information and materials (including any Confidential Information) pursuant to this Agreement must return to the other Party (or at the other Party's written request, destroy) such property, information and materials. Sections 2.6, 2.9, 3.2 (third sentence), 4.3, 7.9, 8.1, 8.2 (second sentence), 8.3, 9, 10, 11 and 13 (together with all other provisions that reasonably may be interpreted as surviving termination or expiration of this Agreement) will survive the termination or expiration of this Agreement. Notwithstanding the foregoing, termination of this Agreement will not relieve either Party from its obligation to pay any monies due to the other Party for any period prior to the effective date of termination. 13.6 Post-Termination Process. Upon expiration or termination of this Agreement, the Parties will mutually cooperate to effect an orderly termination of their relationship hereunder and to effectuate the transition of the Company Site during the one-hundred eighty (180) days following such expiration or termination. Without limiting the generality of the foregoing, at the Company's option, GSI agrees to continue to operate the Company Site on the same terms and conditions hereof, for up to one-hundred eighty (180) days following the date of such expiration or termination of this Agreement. 13.7 Continuation of Services. The Parties will work in good faith to [*]. Section 14. Miscellaneous. 14.1 Press Releases. All voluntary public announcements concerning the transactions contemplated by this Agreement will be mutually acceptable to both the Company and GSI. 20 Unless required by law, neither the Company nor GSI (nor any of their respective Affiliates) will make any public announcement or issue any press release concerning the transactions contemplated by this Agreement without the prior consent of the other Party. Notwithstanding the preceding sentences in this Section 14.1, (a) after the initial public announcement of a particular matter or transaction contemplated by this Agreement has been approved by the Parties, either Party may make subsequent reference to the other Party and describe its relationship with the other Party so long as such reference or description is consistent with and no broader than the initial public announcement approved by both Parties and such subsequent reference remains factually accurate, and (b) each Party may make any public announcement or issue any press release that it is required by law to issue, provided such Party gives reasonable prior notice of such announcement or press release to the other Party. 14.2 Independent Contractors. The Parties are entering this Agreement as independent contractors, and this Agreement will not be construed to create a partnership, joint venture or employment relationship between them. Neither Party will represent itself to be an employee or agent of the other or enter into any agreement or legally binding commitment or statement on the other's behalf of or in the other's name. 14.3 Confidentiality. (a) Each Party will protect the Confidential Information of the other Party from misappropriation and unauthorized use or disclosure, and at a minimum, will take precautions at least as great as those taken to protect its own confidential information of a similar nature. Without limiting the foregoing, the receiving Party will: (i) use such Confidential Information solely for the purposes for which it has been disclosed; and (ii) disclose such Confidential Information only to those of its employees, agents, consultants, and others who have a need to know the same for the purpose of performing this Agreement and who are informed of and agree to a duty of nondisclosure. The receiving Party may also disclose Confidential Information of the disclosing Party to the extent necessary to comply with applicable law or legal process, provided that the receiving Party uses reasonable efforts to give the disclosing Party prompt advance notice thereof. Upon request of the other Party, or in any event upon any termination or expiration of the Term, each Party will return to the other all materials, in any medium, which contain, embody, reflect or reference all or any part of any Confidential Information of the other Party. (b) Neither Party will disclose this Agreement or the transactions contemplated herein, or make any filing of this Agreement or other agreements relating to the transactions contemplated herein, without the consent of the other; provided, however, that if a Party is required by applicable law to provide public disclosure of this Agreement or the transactions contemplated herein, such Party will use all reasonable efforts to coordinate the disclosure with the other Party before making such disclosure, including the submission to the Securities and Commission (and any other applicable regulatory or judicial authority) of an application for confidential treatment of certain terms (which terms will be agreed upon by the Parties) of this Agreement. Each Party will provide to the other for review a copy of any proposed disclosure of this Agreement or its terms and any application for confidential treatment 21 prior to the time any such disclosure or application is made and the parties will work together to mutually approve such disclosure or application. 14.4 Force Majeure. If either Party is unable to perform any of its obligations under this Agreement due to an event beyond the control of that Party, including natural disaster, acts of God, actions or decrees of governmental bodies, act of war, failure or discontinuance of the Internet or failure of communications lines or networks, that Party will give written notice to the other Party and will use commercially reasonable efforts to resume performance of its obligations and, if substitute performance is reasonably available, the notifying Party will offer the other Party such substitute performance, which the other Party may accept or reject in its reasonable discretion, but the notifying Party will have no liability to the other Party for failure to perform its obligations under this Agreement for so long as it is unable to do so as a result of such event. 14.5 Compliance with Laws. In its performance of this Agreement, each Party will comply in all material respects with all applicable laws, regulations, orders and other requirements, now or hereafter in effect, of governmental authorities having jurisdiction. 14.6 Insurance. Each Party will at its own expense obtain and maintain such policy or policies of insurance as are required by law or as are commercially reasonable for the transactions and business contemplated by this Agreement. Upon request from a Party, the other Party will furnish a certificate of insurance and such other documentation relating to such policies as reasonably requested. 14.7 Notices. Unless otherwise provided, all notices, consents or other communications required or permitted to be given under this Agreement must be in writing and will be deemed to have been duly given (a) when delivered personally, (b) three business days after being mailed by first class mail, postage prepaid, or (c) one business day after being sent by a reputable overnight delivery service, postage or delivery charges prepaid, to the parties at their respective addresses stated on the signature page of this Agreement. Notices may also be given by electronic mail or facsimile and will be effective on the date transmitted if confirmed within 24 hours thereafter by a signed original sent in the manner provided in the preceding sentence. Notices to GSI will be sent to its address stated on the signature page of this Agreement to the attention of the General Counsel, with a copy sent simultaneously to the same address to the attention of its Chief Financial Officer. Notices to the Company and Kmart will be sent to their respective address stated on the signature page of this Agreement to the attention of General Counsel, with a copy sent simultaneously to the Chief Financial Officer. Any party may change its address for notice and the address to which copies must be sent by giving notice of the new addresses to the other parties in accordance with this Section 14.7, except that any such change of address notice will not be effective unless and until received. 14.8 Assignment. Neither Party may assign this Agreement or any of its rights or obligations hereunder, whether voluntarily, involuntarily, by operation of law or otherwise, without the other Party's prior written consent, except to (a) a wholly-owned subsidiary of such Party, (b) any corporation or other entity resulting from any merger, consolidation, or other reorganization involving such Party, or (c) any Person to which such Party transfers all or 22 substantially all of its business or assets; provided that such Party will require, as a condition to such assignment, any assignee or successor to all or substantially all of its business or assets to assure and agree in writing to perform this Agreement and to be bound by all the terms and conditions of this Agreement in the same manner and to the same extent that such Party would be required to perform or would be bound if no assignment or succession had taken place. Subject to the foregoing, this Agreement will be binding on and enforceable by the Parties and their respective successors and permitted assigns. 14.9 Amendment. This Agreement may be amended, modified or supplemented by the Parties, provided that any such amendment, modification or supplement shall be in writing and signed by the Parties. 14.10 Waiver. No waiver by a Party with respect to this Agreement will be effective or enforceable against a Party unless in writing and signed by that Party. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by a Party, and no course of dealing between or among any of the Parties, will constitute a waiver of, or will preclude any other or further exercise of the same or any other right, power or remedy. 14.11 Counterparts and Transmitted Copies. This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original, but all of which taken together will constitute but one and the same instrument, and it will not be necessary in making proof of this Agreement to produce or account for more than one original counterpart hereof. The Parties acknowledge that Transmitted Copies of this Agreement will be equivalent to original documents until such time (if any) as original documents are completely executed and delivered. "Transmitted Copies" means copies which are reproduced or transmitted via facsimile, or another process of complete and accurate reproduction and transmission. 14.12 Cost of Litigation. The prevailing Party in any legal action or proceeding arising out of or relating to this Agreement will be entitled to an award of its reasonable legal expenses in connection therewith. 14.13 Entire Agreement. This Agreement, together with the Exhibits to this Agreement, (a) represents the entire understanding between the Parties with respect to the subject matter hereof and supersedes all previous oral or written communications or agreements, and all contemporaneous oral communications and agreements, between the Parties and their respective Affiliates regarding such subject matter, including, effective upon the date that the Parties agree upon the purchase order terms and conditions set forth on Exhibit "H", the Strategic ----------- Alliance Agreement, dated February 28, 2000, by and between GSI and Bluelight.com LLC, and (b) may be amended or modified only by a written instrument signed by a duly authorized agent of each Party. No breach of this Agreement by either Party will affect the rights or obligations of either Party under any other agreement between the Parties. 23 14.14 Severability. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, then the remaining provisions hereof will not be affected thereby and will be enforceable without regard thereto. 14.15 CHOICE OF LAW. THIS AGREEMENT WILL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [*], WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES. EXCEPT TO THE EXTENT THAT [*] THE PARTIES AGREE [*] 14.16 Headings. The headings of sections and subsections of this Agreement are for convenience of reference only and are not intended to restrict, affect or otherwise influence the interpretation or construction of any provision of this Agreement. 14.17 References. All words used in this Agreement will be construed to be of such number and gender as the context requires or permits. Unless a particular context clearly provides otherwise (i) the words "hereof" and "hereunder" and similar references refer to this Agreement in its entirety and not to any specific section or subsection hereof, and (ii) the word "including" will mean including but not limited to. 14.18 Construction. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not be applied in the construction or interpretation of this Agreement or any other agreements or documents delivered in connection with the transactions contemplated by this Agreement. 14.19 [*] (********************) SIGNATURES APPEAR ON THE FOLLOWING PAGE 24 IN WITNESS WHEREOF, intending to be legally bound, the Parties hereby execute this Agreement on the date first written above. Global Sports Interactive, Inc. Bluelight.com, LLC By: /s/ Michael G. Rubin By: /s/ Richard Blunck ------------------------------- ---------------------------- Name: Michael G. Rubin Name: Richard Blunck Title: President, Chairman Title: CEO and Chief Executive Officer Address: 1075 First Avenue Address: c/o Kmart Corporation King of Prussia, PA 19406 3100 West Big Beaver Road Troy, MI 48084 Telephone: (610) 265-3229 Telephone: (248) 463-1400 Facsimile: (610) 265-2866 Facsimile: (248) 463-1054 Kmart Corporation By: /s/ Randy L. Allen ------------------------------- Name: Randy L. Allen Title: EVP Address: 3100 West Big Beaver Road Troy, MI 48084 Telephone: (248) 463-1400 Facsimile: (248) 463-1054 25 EXHIBIT "A" Functionality and Features . Search and Browse . Shopping Cart . Online Checkout with Secure Ordering . E-mail Notifications relating to Orders . Order History and Tracking . User Login/Registration . Affiliate Program Management . Company and Kmart Information and Store Locator . Corporate Information . Employment Opportunities and Press Releases . Frequently Asked Questions . "Contact Us" EXHIBIT "B" Site Security and URL Registration SSL Certificates These certificates are used for secure e-commerce transactions. The certificates certify that the customer is giving their personal information to a site which indeed is an authorized representative of the store where they are shopping. Verisign is the certification body and will need to contact an officer within the company regarding our request for these SSL certificates as a third party. Main store URLs (domain): __________________________ Internic registrant company name for this domain: __________________________ Company address: (Corporate contact must be an officer in the company named above who has sufficient authority to approve the validity of GSI's request to represent the said company in e-commerce transactions) Corporate contact: __________________________ Title: __________________________ Phone: __________________________ Fax: __________________________ Dun and Bradstreet number for above company: __________________________ DNS DNS is the Internet address system which allows a customer to reach the new store via the desired URL such as www.store.com. This needs to be changed at ------------- least one week prior to the expected store launch so that the changes have been propagated to all DNS servers on the Internet. Our policy is to support your existing store ip address on our servers, so that even after the DNS has been updated to point to our servers, your existing site will still be reachable until we have launched the new store. DNS Technical contact for main URLs listed above: __________________________ Contact phone: __________________________ Contact e-mail address: __________________________ Secondary URLs which will be supported by GSI: 1. ___________________ Technical contact: __________________________ 2. ___________________ Technical contact: __________________________ 3. ___________________ Technical contact: __________________________ List any additional on back. E-mail Aliases These are the e-mail aliases which customers will use associated with the e-commerce store such as customerssupport@domain.com. If your company uses this --------------------------- domain for mail, you need to add forwarding for the listed e-mail aliases below that will point to the corresponding mailbox on our servers. E-mail aliases which need to be created on your mail server: Your mail server points to Our mail server contactus@store.com storecustomersupport@globalsportsinc.com - ------------------- ---------------------------------------- webmaster@store.com storewebmaster@globalsportsinc.com - ------------------- ---------------------------------- info@store.com storecustomersupport@globalsportsinc.com - -------------- ---------------------------------------- customerservice@store.com storecustomersupport@globalsportsinc.com ---------------------------------------- help@store.com storecustomersupport@globalsportsinc.com - -------------- ---------------------------------------- customersupport@store.com storecustomersupport@globalsportsinc.com ---------------------------------------- specialoffers@store.com storespecialoffers@store.com - ----------------------- ---------------------------- grandopening@store.com storegrandopening@store.com - ---------------------- --------------------------- newsletter@store.com storenewsletter@store.com - -------------------- ------------------------- jobs@store.com corporate e-mail address for jobs at your - -------------- company For example, if the main domain is kmart.com, then the first e-mail alias mapping would be: contactus@kmart.com forwards to kmartcustomersupport@globalsportsinc.com - -------------------- Who to contact for updating company e-mail server with new aliases: __________________________ Phone: __________________________ E-mail: __________________________ _______________________________________ __________________________ Your name Title Date EXHIBIT "C" Order Processing and Fulfillment . Order Receipt, Confirmation and Processing . Credit Card Authorization and Processing . Inventory, Receipt, Control and Management . Pick, Pack and Ship Orders . Shipping Management and Tracking EXHIBIT "D" Web Site Integration and Promotional and Advertising Requirements . Kmart will include on [*] Nothing contained herein will require Kmart to [*] If any such advertising medium [*] . Within ninety (90) days after the Launch Date, [*] . Kmart will include the shop on-line message on Kmart's in-store signage to the same extent as previously displayed with respect to the Company's e-commerce Web Site operated prior to the Launch Date. . Kmart will work towards including a shop on-line message for the Company's Site on Store shopping bags. . Kmart will in review in good faith all on-line, email and other interactive advertising conducted by Kmart to include a direct hot link to the applicable portion of the Company Site, based on the message of the advertising being conducted. . To the extent Kmart controls the production and/or content message, [*] EXHIBIT "E" Company Trademark Use Guidelines GSI will not, with respect to the Company Trademarks: . alter the overall design, color or shape of any such Trademarks . commingle or combine any such Trademarks with any other mark . use any other mark that is confusingly similar to such Trademarks . substitute designs or objects for letters in any Trademark . use in conjunction with any illegal, immoral, obscene or pornographic activities EXHIBIT "F" [*] EXHIBIT "G" Company Agreements EXHIBIT "H" Purchase Order Terms -----END PRIVACY-ENHANCED MESSAGE-----