Sample Business Contracts

Service Agreement - Bluefly Inc. and Marketing Out-of-the-Box Inc.

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                                SERVICE AGREEMENT

         This agreement (the "Agreement") is made as of the 16th day of August,
1999, by and between Bluefly, Inc., a New York corporation with offices at 42
West 39th Street, New York, New York 10018 ("Client") and Marketing
Out-of-the-Box Incorporated ("MOTB"), an Illinois corporation with offices at
7200 Oak Park Avenue, Niles, Illinois 60714.


         Client markets and sells clothing, fashion accessories, home
furnishings, and related items (collectively, the "Materials") over the Internet
to direct response customers from around the world.

         MOTB's services include, but are not limited to, storage and
warehousing, order processing, fulfillment, data management, client account
maintenance, print, media, advertising specialty items, internet services, and
other aspects of marketing support. Because MOTB offers services that are
intended to be tailored to its clients, contracts with its clients must be
flexible so as to meet changing needs and requirements of said clients. MOTB's
services, whether specifically described herein or as required to service Client
and as otherwise agreed to in writing are referred to herein as "Services." A
list of the Services to be provided by MOTB to Client as of the commencement of
this Agreement is set forth on Exhibit A hereto.

         Client desires to engage MOTB to perform Services in accordance with
the terms of this Agreement and MOTB desires to provide such Services to Client
in accordance with such terms.

         Now, therefore, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 1. REPRESENTATIONS AND WARRANTIES. MOTB hereby warrants and represents to
Client that it has the experience to perform the Services and MOTB hereby
covenants and agrees that it shall perform for Client the Services, in
accordance with generally accepted professional standards and in accordance with
such requirements or restrictions as may be lawfully imposed by any governmental
authority. MOTB further represents and warrants to Client that:


                  (a) MOTB is a corporation duly formed and in good standing
under the laws of the State of Illinois, which is the only jurisdiction in which
it is required to qualify to do business.

                  (b) MOTB owns or has obtained the legal right to use all
computer hardware and software and all other equipment, facilities, forms,
supplies required for the performance of the Services, and such use does not and
shall not infringe the common law or statutory copyright, trademark, licensing
or any other right of any person or entity.

                  (c) In providing the Services under this Agreement, MOTB shall
conduct its business and maintain all premises, including the Center
(hereinafter defined), in compliance with all applicable federal, state, county
and municipal laws, rules and regulations in all material respects.

                  (d) All Services to be performed by MOTB hereunder,
(hereinafter defined), shall be rendered using sound, professional practices and
in a competent and professional manner by knowledgeable, trained and qualified

                  (e) MOTB shall handle the Materials with due care and caution
consistent with the customs and practices of the industry and shall use its
reasonable best efforts to prevent loss, damage and theft of the Materials while
the Materials are in the custody of MOTB.

                  (f) To MOTB's knowledge, after due inquiry, all computer
hardware and software and all other equipment used by MOTB in the performance of
its duties and obligations hereunder is Year 2000 compliant such that, to the
extent that any such software records, stores, processes, calculates or presents
date or time sensitive data, no functionality is lost or otherwise adversely
affected upon the introduction of records containing dates falling on or after
January 1, 2000.

                  (g) This Agreement has been duly authorized, executed and
delivered by MOTB and constitutes the legal, valid binding obligation of MOTB,
enforceable in accordance with its terms.

                  (h) MOTB has the necessary experience and resources to perform
all of their duties and obligations hereunder and MOTB's execution, delivery and
performance of this Agreement do not and shall not contravene any contractual
obligation binding or affecting any of its property, certificate of
incorporation, bylaws, or any existing statute, rule, order, or judgement
applicable to it.


         2.1. General. MOTB agrees that in providing Services under this
Agreement, MOTB shall:

                           (i) inspect and count, all items contained in all
deliveries of the Materials, report all claims for damage to the delivering
carrier, prepare and deliver to Client


receiving reports for all deliveries of Materials, report all claims for
nonconforming or otherwise unacceptable deliveries to Client;

                           (ii) provide safe, effective, and efficient packaging
for the Materials;

                           (iii) print UPC or style tickets or stickers and
apply them to individual items of Merchandise as per Client's instructions;

                           (iv) maintain clean, dry, sanitary, ventilated and
orderly storage conditions at the Center and any Alternative Space (as
hereinafter defined);

                           (v) promptly deposit all monies received by MOTB on
behalf of Client in consideration for Materials, in an account to be designated
in writing by Client, and provide Client a reconciliation, setting forth in
reasonable detail the deposits made by MOTB to such account;

                           (vi) implement such software and/or hardware changes
or modifications regarding MOTB's computer management information systems (the
"System") as shall be required in order for the System to receive data file
imports containing Client's customer's orders in a secure manner directly from
Client's data server as often as required by Client;

                           (vii) implement such software and/or hardware changes
or modifications regarding the System as shall be required in order for the
System (a) to process such information relating to returned Merchandise and
new Merchandise received as Client and MOTB shall agree and (b) to transmit in
a secure manner such information as is reasonably required by Client to
Client's data server as often as reasonably required by Client; and

         2.2. Warehousing and Shipping. MOTB shall allocate sufficient warehouse
space at its principal pick, pack and ship facility (the "Center"), which shall
be located in, the Chicago metropolitan area or such other location
("Alternative Space") as may agreed upon in writing by the parties to store such
Merchandise as may be delivered to MOTB from time to time,. The equipment and
services to be provided by MOTB hereunder shall include but not be limited to
the following:

                           (i) all packaging materials (per Pricing Attachment
(as hereinafter defined)) and the facilities necessary for picking, packing and
shipping the Merchandise in a timely fashion;

                           (ii) all inventory, accounting and records systems
necessary for maintaining records regarding the Materials, including records
regarding the time and manner of shipping, returns, and levels of inventory
losses due to breakage, defects or spoilage;

                           (iii) any and all other equipment and services agreed
to in writing by Client and MOTB.


Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.

         2.3. Computer System and Retention of Records. MOTB, at its own
expense, shall supply all magnetic tapes, computer disks, and all other machine
and production supplies necessary to perform the Services. MOTB shall retain in
a readily accessible and, where possible, machine readable or hardcopy form all
processing records relating to the Services for a period of seven (7) years from
the date the record is created. Upon Client's request, MOTB shall transfer any
and all such records to Client or such person or entity as Client shall direct
in writing. All data relating to Client shall be backed-up on a nightly basis
and stored off-site in a secure fire proof facility.

         2.4. Insurance. Notwithstanding the foregoing, MOTB shall secure and
maintain in full force and effect for the duration of this Agreement a general
liability insurance policy from a national, reputable and licensed insurance
company protecting MOTB and Client against any loss, liability or expense
whatsoever from property damage, personal injury, death or otherwise occurring
in connection with any of the services rendered by MOTB hereunder,. Such
insurance policy shall be primary and non-contributory with any insurance
carried by Client or MOTB, provide for a thirty (30) day prior written notice to
Client in the event of cancellation, and provide coverage in an amount at least
equal to [***]. Client shall be named as an additional insured on such policy
and MOTB shall be responsible for all costs incurred in connection with
obtaining and maintaining such policy. MOTB shall provide Client with reasonable
evidence from the insurance carrier of the terms and conditions of the policy
and payment of the premiums within thirty (30) days of the date of this
Agreement and shall provide such other evidence of the existence of such policy
and payment of premiums as Client may reasonably request from time to time.


         3.1. Pick, Pack and Ship. MOTB acknowledges that the success of
Client's business may depend on MOTB's ability to accurately and efficiently
pick, pack, and ship the Materials to Client's customers in a timely manner,
that the failure to do so could have a material adverse effect on Client's
business, and that therefore time and accuracy are of the essence. MOTB agrees
that it shall pick, pack and ship all orders within [***] hours of their receipt
by MOTB (provided inventory is on hand at MOTB's facility); provided, however,
that with respect to any order received by MOTB after 2:00 p.m. (e.s.t) on any
Friday, or scheduled holiday (list attached to this contract) MOTB cannot
guaranty that such order will be picked, packed and shipped until the
immediately following business day (provided inventory is on hand at MOTB's
facility). MOTB agrees that any order that is not picked, packed and shipped
within the time frame described above will be automatically upgraded to
overnight delivery, and that MOTB will be solely responsible for all shipping
costs in connection with such order. MOTB agrees that it shall use its
reasonable best efforts to fill all orders as accurately as possible and that in
any event it shall correctly fill at least [***] of all orders it receives in
any one (1) month.


Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.

         3.2. Shrinkage Guaranty. MOTB agrees that it shall be responsible for
maintaining and securing all Materials its receives and that any and all loss
due to shrinkage or damage shall be immediately credited to Client's account
based on the actual cost of such damaged, lost or stolen Material plus freight
and refurbishment costs (unless Materials are received damaged from Client or
Client's supplier). MOTB shall promptly notify Client in writing of any
Materials that are received damaged from Client or Client's supplier. MOTB shall
include in its monthly invoices reports of any and all shrinkage or damage.

         3.3. Return Processing. MOTB acknowledges that the success of Client's
business may depend on MOTB' ability to process quickly and in a professional
manner the return of all Materials by customers of Client. MOTB agrees that it
shall inspect all returned Materials within [***] hours of their receipt by
MOTB. All returned Materials that MOTB reasonably determines do not need to be
refurbished shall be returned to stock within [***] hours of their receipt by
MOTB and such information shall be communicated to Client in the (at least)
daily upload of data to Client's data server. MOTB represents and warrants that
it is capable of applying UPC tickets or labels, refolding and re-bagging all
returned Materials in-house and that it will not require the assistance of a
third-party for such tasks. MOTB will work with the client to develop a steaming
capability (at Client's expense) for use in returns processing. All returned
Materials that MOTB reasonably determines require refurbishment shall be stored
by MOTB to be sold or disposed of at Client's direction.

 4. PRICING. For the performance of the services identified on Exhibit A hereto,
Client shall pay to MOTB the amounts set forth on the schedule attached hereto
as Exhibit B (the "Pricing Attachment"). MOTB shall have the right to increase
rates quoted on the pricing attachment only on the commencement date of each
renewal term so long as it shall have provided Client with at least one hundred
and ten (110) days' prior written notice of such increase. If Client shall
request the expansion or addition of any service during a term, such expansion
or addition shall be provided to the extent that MOTB and Client can agree on a
reasonable adjustment to the rates quoted on the Pricing Attachment. Without
limiting the foregoing, Client and/or its authorized representatives shall have
the right upon ten (10) days' prior written notice to conduct a reasonable
inspection of the books and records of MOTB solely for the purpose of verifying
the accuracy of the billing information provided to Client. Such inspection
shall not be conducted more than once in any six (6) month period and shall be
conducted on MOTB's premises during normal business hours in such a manner as to
minimize disruption to MOTB's business. The cost and expense of such inspection
shall be borne by Client unless the inspection reveals an aggregate overcharge
in excess of five percent (5%) of the average monthly charges billed Client
during the immediately preceding six (6) months in which event MOTB shall pay
all reasonable costs incurred in connection with such inspection and credit
Client's account for the total of such undisputed overcharge. MOTB agrees that
it shall maintain books and records regarding Client's billing information,
together with all backup material, for so long as this Agreement shall remain


in effect and for a period of one hundred and eighty (180) days thereafter or
until any billing dispute is finally resolved, whichever is longer.

 5. LENGTH OF AGREEMENT; TERMINATION. The initial term of this contract shall be
for a term commencing on the date hereof and ending on March 31, 2001, and may
be extended by the written agreement of both parties. Unless either party gives
written notice to the other of its intent to terminate this Agreement or modify
its terms at least ninety (90) days prior to the end of the then-current term,
this Agreement shall be automatically renewed for successive one (1) year terms.
Notwithstanding anything else to the contrary contained herein:

         (a) Client shall have the right to terminate this Agreement without
further liability upon any merger or sale of all or substantially all of the
assets of MOTB, any transaction or series of transaction resulting in the
transfer of over fifty percent (50%) of the voting or equity interests in MOTB
or any similar transaction or series of transactions pursuant to which control
of the operations of MOTB is transferred to a party or parties other than its
current majority shareholders.

         (b) Client shall have the right to terminate this Agreement without
further liability upon ten (10) business days' prior written notice to MOTB in
the event that MOTB has consistently failed to perform its obligations in
accordance with the standards set forth hereunder; provided, however, that, in
the case of the first such notice sent to MOTB under the terms of this
subsection (b), at MOTB's option, the parties shall meet during such period in
order to discuss MOTB's failure to perform and, thereafter, MOTB shall be
provided with a thirty (30) day period within which to demonstrate that it will
be able to consistently perform up to the standards set forth hereunder.
Client's right to terminate this Agreement pursuant to this subsection (c) shall
be in addition to, and not in substitution of, any rights provided to Client
pursuant to subsection (d) hereof.

         (c) Either party may terminate this Agreement without further liability
in the event that the other party has materially breached its obligations
hereunder upon ten (10) business days' prior written notice to the other, which
notice shall describe the alleged material breach; provided, however, that, to
the extent such breach is curable, the breaching party may notify the other
party within three (3) business days that it intends to cure such breach, in
which event it shall have ten (10) business days, or such other time period as
the parties may agree to in writing, to cure such breach, following the receipt
of such notice.

         (d) In the event Client fails to pay any undisputed amount for which it
has been properly invoiced within forty-five (45) days of having received such
invoice, MOTB may terminate this Agreement without further liability upon thirty
(30) days' prior written notice to Client.

 6. PROCEDURE UPON TERMINATION. In the event of termination by Client, Client
shall make all payments for services provided up to the date of cancellation.
Upon termination of this Agreement, MOTB agrees that it shall promptly deliver
to Client, or any other person designated by Client in writing, all records,
files, data, customer information and other property in its possession or under
its control relating to Client. MOTB acknowledges that the success of Client's
business may depend on MOTB's ability to pack and ship the Materials in a timely


manner upon termination of this Agreement, that the failure to do so could have
a material adverse effect on Client's business, and that therefore time will be
of the essence. In the event of a termination of this Agreement, MOTB agrees to
use its reasonable best efforts to pack and ship (at Client's expense) all
Materials to Client, or such other person as Client shall direct in writing, as
quickly as practicable. All fees imposed by MOTB in connection with its duties
and obligations under this shall be based solely on the standard per hour charge
and bulk shipping rates set forth on the Pricing Attachment, including the cost
of shipping materials.

 7. OWNERSHIP OF MATERIALS. MOTB acknowledges that, as between it and Client,
all of the Materials are owned by Client, and MOTB agrees that all Materials
shall be stored and identified in such a way that Client's ownership of the
Materials is readily apparent to third-parties.

 8. PERFORMANCE REVIEWS. Each month during the first six (6) months of the
initial term and at the end of each quarter thereafter during the initial term
and any renewal term of this Agreement, the parties shall meet and
comprehensively review the services and operations being performed and shall
identify and jointly seek to implement any productivity and methods improvements
that can reasonably be expected to reduce costs to the Client and otherwise
improve the level of the services performed by MOTB hereunder.

 9. RELATIONSHIP OF PARTIES. MOTB is and shall remain an independent contractor.
The acts, actions, past, present or future of MOTB and/or Client shall not be
construed as creating the relationship of a partnership or joint venture,.
Neither party shall hold itself out to third parties in any manner contrary to
this section.

 10. PRIOR AGREEMENTS. This Agreement sets forth the entire agreement between
the parties hereto and supersedes any and all prior agreements, written or oral,
between MOTB and Client.

 11. COUNTERPARTS. This Agreement may be separately executed in several
counterparts, all of which together shall constitute one Agreement;
notwithstanding that all signatories have not signed the same counterpart.

 12. AMENDMENTS. This Agreement shall not be changed or modified in any respect
except by a written agreement signed by each of the parties hereto.

 13. WAIVERS. Any waiver by either party of any breach of any kind or character
whatsoever by the other, whether such waiver is direct or implied, shall not be
construed as a continuing waiver of, or consent to, any subsequent breach of
this Agreement on the part of the other.

 14. STANDARD TERMS AND CONDITIONS. The Standard Terms and conditions here
attached are incorporated by reference and hereby made part of this Agreement.

 15. AUTHORIZED SIGNATORIES. This Agreement shall not be binding by either party
unless and until approved, signed and executed by authorized signatories of both
MOTB and Client.


         IN WITNESS WHEREOF, the parties have executed this contract as of the
date shown above. BLUEFLY, INC.

                                             By:  /s/ Patrick C. Barry
                                             Name:  Patrick C. Barry
                                             Title:  Chief Financial Officer


                                             By:  /s/ Allison Haftl
                                             Name:  Allison Haftl
                                             Title:  Vice President

                          STANDARD TERMS AND CONDITIONS

These Standard Terms and Conditions are made part of the "Contract," referring
to the certain Service Agreement made as of August 16, 1999 by and between
Bluefly, Inc. ("Client") and Marketing Out-of-the-Box Incorporated ("MOTB"). In
the event of conflict between any Standard Term and Condition, and language
contained elsewhere in the Contract, the latter shall govern.

1.       BILLING: For the performance of the Services (as defined in the
         Contract) MOTB shall invoice Client for the fees set forth in the
         Pricing Attachment to the Contract on a monthly basis. Each invoice
         shall be due in accordance with the terms of Net 30 from the date of
         receipt of invoice, opened within three (3) business days and date

2.       LATE PAYMENT: Client's failure to pay any charge due under this
         contract within forty-five (45) days of its receipt of this invoice
         will result in interest charges of one percent (1%) monthly on the
         unpaid balance, or the highest interest rate allowed by law, whichever
         is lower.

3.       ASSIGNMENT: MOTB may delegate any duties under this contract to another
         vendor or subcontractor with the written consent of the Client.
         Notwithstanding the foregoing and subject to Section 5 of the Contract,
         MOTB shall have the right to assign this agreement to any party which
         (by sale of assets, merger or otherwise) acquires all or substantially
         all of MOTB's assets. Any such subcontract shall require that
         subcontractors are subject to all terms and conditions set forth in
         this contract and agreement and MOTB shall be fully responsible for the
         works as if it had itself performed it. Client may sell, assign,
         license, franchise, sublicense or otherwise convey its rights, duties
         and obligations under this contract to another entity which (by sale of
         assets, merger or otherwise) acquires all or substantially all of
         Client's business with notice to MOTB, and may sell, assign, license,
         franchise, sublicense or otherwise convey its rights, duties and
         obligations under this contract to any other entity as long as Client
         remains bound by the terms and conditions hereof.

4.       FORCE MAJEURE: Neither party shall be liable to the other for a failure
         or delay in the performance of its obligations under the Contract if
         such failure or delay is caused in whole or in part by any act of God,
         act of governmental authority, act of public enemy, war, riot, flood,
         civil commotion, insurrection, severe weather conditions, or any other
         cause beyond the reasonable control of the party delayed (a "Force
         Majeure Event"); provided that the party delayed will provide the other
         party notice of any such delay or interruption as soon as reasonably
         practicable, and will use commercially reasonable efforts to minimize
         any delays or interruptions resulting from the Force Majeure Event.

5.       INDEMNIFICATION: Each party shall indemnify, defend and hold harmless
         the other party, its officers, agents and employees from and against
         any and all losses, liabilities, claims, suits, judgments, damages,
         costs and expenses, including reasonable attorneys' fees and costs
         associated therewith which may accrue against, be charged to, incurred
         by or recoverable from, its officers, agents and employees as a result
         of performance,


         non-performance, or improper performance under the Contract or which
         arise out of or are relate to the goods or services of either party
         under the Contract. To assert its rights of indemnification under this
         Section 5, an indemnitee shall promptly notify the indemnifying party
         in writing of any claim or legal proceeding which gives rise to such
         right, afford the indemnifying party the opportunity to participate in,
         or fully control, any proceeding and compromise, settlement, resolution
         or other disposition of the claim or proceeding so long as the
         settlement involves the payment of money damages only and the
         indemnitee is provided with a general release from the claimant and
         indemnifying party. Each party agrees to cooperate fully with the other
         in any proceeding for which an indemnification claim is made.


         A.       During the term of the Contract, each party may have access to
                  certain confidential information and materials of the other,
                  including but not limited to plans, specification, design,
                  client lists, customer lists, vendor lists, and other trade
                  secrets or proprietary confidential information, (collectively
                  "Confidential Information"). Each party agrees to maintain
                  procedures, equipment and facilities sufficient to preserve
                  the confidentiality of said information of the other and to
                  use such information during the term of this contract only for
                  the purposes set forth in and as permitted by this contract,
                  and to make no use of the Confidential Information following
                  the termination of this contract.

         B.       Confidential Information shall not include information that
                  (i) is contained in an issued patent or becomes published or
                  others becomes generally available to the public without
                  breach of this contract; (ii) was already known to either
                  party prior to disclosure by the other party; (iii) becomes
                  available to either party on a non-confidential basis from a
                  source other than a party to this contract, provided such
                  source is not bound by a confidentiality agreement with either
                  party; (iv) is independently developed by either party without
                  reliance on any confidential information supplied under this
                  contract; or (v) if in tangible form is not marked
                  confidential by the disclosing party.

         C.       All information concerning Client's customer list, vendor
                  lists, sales activity, costing model, past, present and future
                  business, fulfillment business activities and business and
                  promotion plans and methods, together with all names,
                  addresses and other customer information relating to Client or
                  Client's customers are the unique and valuable property of
                  Client. Unless compelled by law or directed by Client in
                  writing, MOTB shall not use such information for any purpose
                  other the performance of its duties and obligation under the
                  Agreement. MOTB shall take all reasonable and customary
                  precautions to ensure that such information, including
                  Client's customers' credit card information, is protected from
                  unauthorized disclosure to any party not required to have
                  access to such information. MOTB acknowledges that Client is a
                  publicly traded company and that the unauthorized disclosure
                  of Client's Confidential Information could have a material
                  adverse affect. MOTB shall take all appropriate precautions
                  necessary to


                  prevent its officers, directors, employees and agents from
                  directly or indirectly trading on any of Client's non-public
                  information. The terms contained in this Section 6 shall
                  survive the termination of the Agreement or this Contract.

7.       EXCLUSIVITY: MOTB agrees that during the term of the Contract and for a
         period of nine (9) months thereafter it shall not, nor shall any of its
         affiliates, officers, directors, employees, or agents render any
         fulfillment service to, or own any interest in, any Competitive
         Business without the prior written consent of Client. For purposes of
         this Agreement, a "Competitive Business" shall mean any person,
         corporation, partnership or other entity which sells or plans to sell
         via the Internet at a discount of the manufacturer's or designer's
         suggested retail price apparel, fashion accessories or home
         furnishings. Notwithstanding the foregoing, a "Competitive Business"
         shall not include a company which sells only the product which it
         designs. MOTB agrees that in the event of a breach or threatened breach
         of this paragraph, Client shall have no adequate remedy in money
         damages and, accordingly, shall be entitled to appropriate injunctive
         relief against such breach or threatened breach. Notwithstanding the
         foregoing, the ownership of less than five percent (5%) of any publicly
         traded company engaged in a Competitive Business shall not constitute a
         violation of this Section 7. Except as specifically provided in this
         Section 7, MOTB shall not be restricted hereunder from furnishing any
         type of service to any person or entity. In the event that the Contract
         is properly terminated by MOTB pursuant to Section 5(c) thereof, MOTB
         shall no longer have any ongoing obligations under this Section 7.

 8.      GOVERNING LAW: The Contract and any dispute arising thereunder shall be
         governed by the internal laws of the State of New York, without regard
         to conflicts of law principles.

 9.      COMPLETE AGREEMENT: The Contract contains the complete, final and
         exclusive agreement between the parties with respect to the subject
         matter thereof, and may not be modified, or amended, other than by
         written instrument executed by both parties.

10.      MOTB PERSONNEL: Client will have an assigned Account Manager, Project
         Manager and Associate Project Manager. Any changes to the assigned MOTB
         team will be communicated immediately to the Client contact.

11.      FORECASTING: Under the terms of the Contract, MOTB shall procure Raw
         Materials (i.e., packaging materials, labels, print paper, etc.) and
         labor resources that are to be used in the completion of the Client
         operations, from suppliers who appear on MOTB's Approved Vendor List.
         MOTB will procure these goods and resources based on forecast
         information provided by Client. It is understood that Client will make
         all necessary and reasonable effort to accurately forecast work to
         MOTB, realizing that the accuracy of the forecasting has a material and
         practical effect on MOTB and Client's business objectives. On a monthly
         basis, MOTB will review procurements made on behalf of Client and from
         forecasts provided by Client. Excess, obsolete, inactive or otherwise
         unnecessary resources that had been procured, will be reconciled to
         MOTB by Client at that time, in full.


12.      ARTWORK: All artwork camera-ready boards, dies, film, disk, or data via
         electronic files that are provided by the Client to MOTB shall remain
         the property of the Client. The Client shall be responsible for the
         accuracy of the data supplied to MOTB, regardless of the method of
         transfer (electronic or physical copy). MOTB will invoice the Client
         for any artwork generated at Clients request. Additional charges will
         apply for indirect costs associated with generating the artwork (such
         as transportation charges and programming charges) as a pass through

13.      INVENTORY REPORTING: Upon request, MOTB will provide the Client with
         copies of priced inventory reports that will show Client's Raw Material
         commitment and financial liability. The report will also show
         allocation of such Raw Material items as it pertains to Client's

14.      PACKAGING / ASSEMBLY SPECIFICATIONS: Client, with MOTB's assistance,
         will be responsible for developing and submitting complete
         specifications for the materials used in the delivery of goods to the
         Client's customers. Boxes, labels, tape, placement of identifying marks
         or logos, articles to be includes included in the box other than
         customer ordered items, etc. and the specifications for uses thereof,
         will be the responsibility of Client. Specifications are to be provided
         in writing to MOTB. It is further acknowledged that changes to these
         specifications can require variable times to implement, depending upon
         their complexity, and that these changes to specification can have an
         effect on the delivery of services from MOTB to Client.

15.      RECEIVING: Client covenants and agrees not to ship goods to MOTB as the
         named consignee. Client shall indemnify MOTB against any and all claims
         for unpaid transportation charges, including undercharges, demurrage,
         detention charges or against. MOTB therefore disclaims all liability
         for non-receipt or misdescription of the Products. MOTB will handle
         Client's Materials with frugality so as to prevent undue spoilage, but
         MOTB does not accept responsibility for shortages, concealed damages,
         mislabeled product, or spoilage. MOTB is only responsible for any
         damage it does to Client's Materials due to gross negligence or willful

16.      DELIVERY SCHEDULES: MOTB will process orders on a "first in, first out"
         basis unless otherwise specified by Client. MOTB is not responsible for
         fire, accidents, act of God, mechanical breakdown or other cause beyond
         its immediate and direct control. Materials that are delivered late to
         MOTB may affect the completion date of an order by a greater degree
         than the actual elapsed time that the Material is late.

17.      DELIVERY SCHEDULE CHANGES: Client may reschedule delivery of the
         Materials upon reasonable prior notice to MOTB with MOTB's consent,
         MOTB will use all reasonable efforts to accommodate these changes.

18.      FINANCIAL AUDITS: MOTB acknowledges that Client's auditors shall from
         time to time conduct audits of Client's business and MOTB agrees to
         provide Client's auditors with reasonable assistance and access to its
         facilities and personnel during normal business hours.


19.      NOTICE: All notices shall be in writing and deemed given if delivered
         personally, by a reputable guaranteed overnight delivery service, by
         facsimile or mailed by first class mail, postage prepaid, to the
         parties at the address for such party set forth in this Agreement.

20.      SALES AND USE TAXES: Client acknowledges that title to the Materials
         never passes to MOTB and liability and responsibility to remit all
         sales and use taxes relating to the Materials to the appropriate taxing
         authorities remains with Client. Client shall indemnify and defend
         MOTB, its officers, directors, shareholders, employees and agents from
         and against any and all claims, suits or liabilities and expenses
         (including costs and attorneys' fees) for the Client's failure to remit
         to the appropriate authorities any such sales or use taxes relating to
         the Materials as may be claimed as due and owing by reason of the
         Client's sale of the Materials to its customers.

21.      OBLIGATIONS AT TERMINATION OF AGREEMENT: Upon termination of the
         Contract, MOTB the following provisions of the Contract and these
         Standard Terms and Conditions shall survive indefinitely: Sections 1,
         2.3, 4, 6, 7 and 9 through 15 of the Contract and 1, 2, 5, 6, 7, 8, 9
         and 20 of these Standard Terms and Conditions.


Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.


MOTB eCommerce Fulfillment Services include receipt of Bluefly products,
warehousing, detailed management of inventory, order retrieval and confirmation,
supply of packaging materials, and pick/pack/ship operations.

Account Set-Up

MOTB will receive approximately [***] units of product being shipped from's prior fulfillment center managed by On-Demand Solutions in
Wilmington, Massachusetts. MOTB will use its best efforts to ensure that all
such product is processed and available for delivery to customers within one (1)
week of receipt.

MOTB will receive from and/or its suppliers merchandise consisting
of apparel, fashion accessories, and home furnishings and accessories on a daily
basis. Upon receipt, unit counts will be verified, with receiving reports
transmitted to

MOTB will provide quality assurance (QA) inspection through its
Bluefly-dedicated staff.

Storage Specifications
All incoming products and merchandise is to be shipped to MOTB in sealed cartons
and, where appropriate, on standard 40 x 48, 4-way entry pallets for rack

MOTB will provide secured storage of client materials and make infrastructure
improvements to optimize storage and flow of Bluefly merchandise, including
shelving and hanging racks.

MOTB will schedule inventory on its blanket policy as "property of
others" at replacement values provided by

Inventory Control
MOTB will monitor all incoming product within our inventory system. Product and
merchandise SKUs will be depleted per outbound orders and replenished with
incoming receipts. MOTB will provide with updated inventory reports
on a regular and frequent basis, as determined by


Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.

(MOTB is developing with Oracle an online inventory reporting site. When this is
up-and-running within a few months, clients will be able to view inventory via
secured password to a dedicated MOTB website.)

Inventory will be subject to regularly scheduled cycle counts and annual or
bi-annual physicals to coincide with Bluefly's accounting requirements.

Promotional Insertions
MOTB charges clients a Pick Fee based on the number of items pulled off the
shelves/racks for each order. Fees are scaled by volume of picks. For
promotional insertions (such as coupons and/or premiums) which are common to all
orders packed, there is a nominal insertion charge.

Order Transmission
Bluefly can transmit orders from the system that is currently utilized between
Bluefly and OnDemand. Alternatively, can initially transmit orders
to MOTB via email in a tab delimited format (to be provided by MOTB), for order
processing. MOTB will generate mailing labels and packing list. Orders will be
shipped within 24 hours via carrier specified by Order for which
the customer has requested overnight deliver will be shipped the same day that
they are received, if received prior to 4:00 p.m., Central Time.

It is recommended that orders be batched. Some clients transmit orders as
frequently as 4-times daily. In order to accommodate requests for next day
delivery, the first transmission should be at the beginning of the day to
pick-up online orders received overnight.

Once the Oracle tech interface is implemented, a socket connection could be made
between Bluefly's website and MOTB, whereby when the customer submits the
shopping cart order, orders are simultaneously directed to MOTB, if such a
transmission method is preferred by

Shipping Method
To be determined by Recommended carriers are Fedex and UPS due to
their advanced online package tracking capabilities; eventually USPS will also
be viable. Typically, MOTB establishes a dedicated online account for each
client so that carriers may bill directly with pick-up at MOTB. At's election, MOTB may prepay freight, with a [***]% surcharge added
to actual carrier freight invoices. For USPS shipments, Bluefly may deposit
postage funds with MOTB to avoid the surcharge.


Shipping Cartons and Packing Materials
MOTB will provide shipping cartons of varied sizes to handle different order
configurations. Currently stock kraft cartons are utilized, however at's election, these can be custom manufactured and imprinted with's graphics. has specified that its merchandise will be packed with a tissue
liner, that is sealed with custom-imprinted Bluefly graphics.

As warranted by ordered merchandise, filler material will be utilized.

Confirmation Report
MOTB will provide order confirmation reports showing order status and shipment
tracking numbers for

Again, once the Oracle tech interface is implemented, this confirmation report
will be online and available real-time.

Packing List/Order Receipt
MOTB will generate a customized Packing List/Order Receipt which is inserted
into the shipping carton. A custom printed document will be utilized and will be
imprinted with order data in fields predetermined fields. The order form also
features RMA shipping labels for returned merchandise. As this document is
generated directly off the Order Transmission form, it could also be customized
to include a message driven by the customer's ordering preference highlighting
complementary items for sale.

Gift Cards & Giftwrapping
At's election, MOTB will generate printed gift cards on
client-selected stock per copy submitted by customer. Hand-written cards would
also be available.

At's election, MOTB provides giftwrapping services. Bluefly will
select stock giftwrap patterns for MOTB to utilize, or giftwrap may be custom
imprinted. Coordinated ribbons and bows will be utilized.

Order Returns
------------- will provide customers with a Return Authorization Form. Returns
will be processed by MOTB in accordance with Section 3.3 of the Agreement.

Procurement Management
Upon's election, MOTB provides Procurement Management Services on an
hourly-fee basis to communicate and coordinate product and merchandise releases
from client warehouses or vendors in order to maintain adequate stock levels.
This service, outsourced by clients to MOTB, frees the client from having to
assign personnel for this purpose.

Procurement Management Services may also be expanded to include product and
merchandise sourcing and purchasing by experienced MOTB buyers either on behalf
of client, or for resale. For, this might means the procurement of
premiums or promotional products and


Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.

merchandise that would be offered for sale online at the site. Any
procurement management services to be provided by MOTB on an hourly fee basis
will be agreed to in writing by and MOTB prior to MOTB commencing
the provision of such services.

Purchases made on behalf of Bluefly by MOTB-such as shipping cartons, tissue,
order packing lists/invoices, giftcard stock, giftwrap, ribbons and bows-will be
invoiced to Bluefly on a cost-plus basis. Bluefly will pay MOTB 115% of the cost
of any of these types of purchases.

MOTB will charge Bluefly $[***] per square foot per month for warehouse space.
Furthermore, MOTB offers freight consolidation services for remainder
liquidation whereas bulk merchandise is consolidated and forwarded to specified
client-specified locations.

Other Services
MOTB can provide a variety of customized assembly and packing services,
including giftwrapping, as requested by From complex technology
assemblies to simple shrinkwrapped collations, MOTB offers a variety
of production/finishing capabilities to flexibly respond to new
product and/or new configuration offerings online.

Bluefly-Dedicated Services/Personnel
MOTB will employ a dedicated staff to manage receipts, inventory database,
quality assurance, and returns. At present the number of employees specified is
four. Bluefly will contract dedicated staff with MOTB, paying employee salary
and benefits on a cost-plus basis. This dedicated staff will be integrated
within MOTB operations and provide leadership and training to MOTB employees,
either contracted or on payroll, for the aforementioned functional

At the client's election, a Bluefly Project Coordinator will be in residence at
MOTB to coordinate operations with Bluefly headquarters. MOTB will provide
office space and resources for use by this Bluefly employee.


Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]", have been
separately filed with the Securities and Exchange Commission.


MOTB charges a Monthly Maintenance Fee which includes the following:
(a) storage of's merchandise; (b) inventory management, including
preparation and reporting of inventory; (c) processing of dataflow for incoming
receipts and outbound shipments; (d) account service communication and
coordination with client; (e) freight arrangements with carriers; and (f)
blanket insurance of client materials.

The Monthly Maintenance Fee has been discounted due to the dedicated staff that
will be contracted with Bluefly. This fee will be waived once volume exceeds
[***] orders per month.

Description                                          Fee
-----------                                          ---

Account Related Fees
Inventory Track Set-Up...                            [***]
Receiving...                                         [***]
Monthly Maintenance...                               [***]
Quality Assurance                                    [***]

Transactional Fees
Order Processing Charge...                           [***]
Pick Fee...                                          [***]
Promotional Insertion Fee...                         [***]
Packing List/Receipt                                 [***]
Optional Gift Card...                                [***]
Optional Giftwrapping...                             [***]

Other Fees
Returns (RMA)...                                     [***]
Shipping Carton/Materials...                         [***]
Freight...                                           [***]
Customs Documentation:                               [***]
Storage:                                             [***]
Procurement Management Services...                   [***]
Dedicated Staff                                      [***]
Other Services...                                    [***]


All invoices are due net 30 days with the exception of freight invoices which
are net 15 days. Inventory Track Set-Up Fee is invoiced upon contract execution.
Monthly Maintenance Fees are invoiced on the first of each month. Order
Transaction Fees are batched and invoiced weekly.