Document:

Exhibit 10.17

 

***                           CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83 AND
230.406.

FIRST ADDENDUM TO LICENSE
AND SUPPLY AGREEMENT

This First Addendum represents a revision to payment terms stipulated
in the License and Supply Agreement between BioKool, LLC, (hereinafter
“BioKool”) and Bare Escentuals,, Inc. (hereinafter “Licensee”) in August 2005.

The parties have mutually proposed and accepted modifications as
referenced in this First Addendum to the Agreement. BioKool and Licensee hereby
agree to revise the payment amounts in Section
1 Payments as it pertains to the Milestone
Payments Year One and Two of the Agreement.

Under such revision, the revised terms will immediately be in effect in
the following manner:

Milestone
Payments Years One and Two. Subject to the terms and
conditions of this Agreement, Licensee shall pay BioKool the amount set forth
in the table below under the heading “Payment Amount” within thirty (30) days
following the achievement of the milestone listed next to such amount under the
heading “Product Milestone.” These milestone payments shall be considered an
advance on excess royalties (i.e., royalties payable over and above any minimum
royalty payments) for such products, as specified in Section 6.1:

 

	
  Product Milestone

  	
   

  	
  Payment Amount

  (U.S. Dollars)

  
	
  1.

  	
  ***

  	
   

  	
  $***

  
	
  2.

  	
  ***

  	
   

  	
  $***

  

This is a First Addendum to the License and Supply Agreement executed
is effective on December 29th 2005. All other terms and conditions
reflected in the original Agreement remain in effect.

 

	
  BioKool LLC

  	
   

  	
  Bare Escentuals, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Roger Blotsky

  	
   

  	
  By:

  	
  /s/ Myles McCormick

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Roger Blotsky

  	
   

  	
  Name:

  	
  Myles McCormick

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Owner

  	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

***         PORTIONS OF THIS PAGE
HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.EXHIBIT 10.18

***         CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83 AND
230.406.

 

Datapak Services Corporation                                          
New Hudson ••• Phoenix ••• Reno

 

MASTER SERVICES AGREEMENT

 

 

                This MASTER SERVICES AGREEMENT
(this “Agreement”) is made effective as of January 3, 2006, by and between
Datapak Services Corporation, a Michigan corporation ("Datapak"), and
Bare Escentuals, Inc. a California corporation ("Bare Escentuals").

 

RECITALS

 

                WHEREAS, Datapak provides
comprehensive inventory warehousing, order fulfillment, call center and
administrative services; and

 

                WHEREAS, Datapak
desires to provide such services to Bare Escentuals, and Bare Escentuals wishes
to purchase such services from Datapak, upon the terms and conditions set forth
in this Agreement.

 

AGREEMENT

 

                NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises
hereinafter set forth, the parties hereto agree as follows:

 

1.             SERVICES.  Datapak shall provide to Bare Escentuals
all services (the “Services”) set forth on the Schedule of Work (“SOW”)
attached as Schedule 1 to this Agreement.  The SOW may be amended or modified at any
time during the Term (as defined in Section 4 of this Agreement) upon
the mutual agreement of the parties, which shall be set forth in writing and
executed by an authorized representative of each party.  All such services shall be performed in
accordance with the “Operational Procedure” set forth on Schedule 2 to
this Agreement, and in accordance with the “Service Level Objectives” set forth
on Schedule 3 to this Agreement, which “Service Level Objectives” shall
become effective thirty (30) days after the date this Agreement is signed.

 

2.             PRICING; PAYMENT.  In consideration of the provision of
services set forth on the SOW and otherwise in this Agreement, Bare Escentuals
agrees to make payment to Datapak in accordance with the “Pricing Schedule” set
forth on Schedule 4 to this Agreement; provided, 

 

 

 

however, that Datapak shall discount the pricing set forth on the
Pricing Schedule as follows: (i) after Bare Escentuals has made orders for
Services in any calendar year which cumulatively represent *** in gross service
revenues, all future orders for Services during the remainder of such calendar
year (which represent up to *** in gross service revenues) shall be ***; (ii)
after Bare Escentuals has made orders for Services in any calendar year which cumulatively
represent *** in gross service revenues, all orders for Services during the
remainder of such calendar year shall be ***. 
Notwithstanding the Effective Date of this Agreement, all orders since
January 1, 2006 shall be credited towards the calculation of gross service
revenues during calendar year 2006 for purposes of establishing the *** set
forth above.  All payments shall be due
within thirty (30) days of receipt by Bare Escentuals of an invoice from
Datapak, except for invoices related solely to transportation costs, which
invoices shall be paid within ten (10) days of receipt.  Beginning on the thirty-first (31st),
or eleventh (11th) (as applicable), day after receipt of an invoice,
any unpaid amounts will accrue interest at a rate equal to the lesser of ***
per month or the maximum rate allowable by law.   Unless Bare Escentuals disputes the accuracy
of an invoice in good faith, if a Bare Escentuals fails to make payment on or
before the sixtieth (60th) day after receipt of the invoice, or with
respect to invoices related solely to transportation costs on or before the
forty-fifth (45th) day, Datapak may, upon fourteen (14) days prior
written notice to the Bare Escentuals, institute any one or a combination of
the following actions:

 

a.             discontinue processing orders until
payment in full is received;

b.             place all existing orders on hold until
payment in full is received; or 

c.             terminate this Agreement. 

 

In the event of
such a good faith dispute, Bare Escentuals shall identify the specific line
items of the invoice which are disputed. 
Bare Escentuals shall pay the full amount of the undisputed line items
in the subject invoice in a timely manner as set forth above, and the remedies
of Datapak set forth above for failure to so timely pay such undisputed line
items shall apply.  The parties shall
promptly meet to attempt to resolve such disputed line items, and if no such
resolution is achieved within a commercially reasonable time period, then such
dispute shall be submitted to binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association presided over by a
single arbitrator selected pursuant to those rules, but who has never performed
any services for either party, at the office located in San Francisco,
California.  Any such dispute shall not
be considered an audit for purposes of Section 3 of this Agreement.

 

                For purposes of tiered pricing
set forth above and revenue commitments as set forth in Section 12 of
this Agreement, “gross service revenue” shall: (i) include revenue for Services
rendered by Datapak under this Agreement; and (ii) exclude revenue for (1)
materials and packaging materials, (2) transportation and shipping, (3)
postcards and printing jobs, and (4) all outside purchases/charges.

 

3.             AUDIT.  Datapak agrees to maintain complete
records of each transaction involving the purchase, sale, or shipping of any
Bare Escentuals merchandise by Datapak for a period of two (2) years following
the transaction.  Upon reasonable notice, Bare Escentuals (or a certified
public accountant appointed by Bare Escentuals in its sole discretion) shall
have the right to audit Datapak’s invoices and business processes to verify that
they are in compliance with the Pricing Schedule.  In the event that such audit indicates that
Datapak has overcharged 

 

***         PORTIONS OF THIS PAGE HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

2

 

Bare Escentuals by more than ***, then such overpaid amount plus
the costs of such audit, shall be immediately paid by Datapak to Bare
Escentuals.    

 

                Bare
Escentuals shall also have the right to conduct monthly audits (or other
mutually agreed upon review procedure) to confirm Datapak’s compliance with
Service Level Objectives.  In the event
that such audit (or other review) indicates that Datapak has failed to comply
with the Operational Procedure or Service Level Objectives, then, in addition to Bare Escentuals’
other rights and remedies under this Agreement, Datapak shall immediately
reimburse Bare Escentuals the cost of the audit.    

 

4.             TERM.  This
Agreement shall become effective on January 3, 2006, and shall continue in
effect through December 31, 2007 (the “Term”), at which time it shall
automatically renew for a period of one (1) year, unless either party has
provided written notice to the other at least ninety (90) days prior to the
expiration of the Term (or any extension thereof) of its intention not to so renew.  Notwithstanding the foregoing, except in the
event of a termination pursuant to Section 5 of this Agreement, in the
event that Bare Escentuals elects not to renew the Term for a third (3rd
) year, Bare Escentuals shall reimburse Datapak for a “pro rata” portion of the
monthly rent payments which become due and payable during such third (3rd)
year under Datapak’s lease of the warehouse premises located at 9000 General
Drive, Plymouth, Michigan, provided:

 

a.             Datapak cooperates in good faith with
all of Bare Escentuals’ efforts to sublet, assign or otherwise transfer
Datapak’s obligations under the lease, including, without limitation,
cooperating with the reasonable requests of any Bare Escentuals or its agents,
representatives or real estate brokers retained by it for purposes of
subletting, assigning or transferring such lease;

 

b.             Datapak does not amend or modify such
lease without the prior written consent of Bare Escentuals;

 

For purposes of
this Section 4 of this Agreement, the “pro rata” portion of the monthly
rent shall be the product obtained by multiplying the total monthly rent of the
premises by a fraction, the numerator of which is the square footage of the
premises which is not utilized for customers other than Bare Escentuals, and
the denominator of which is the total square footage of the premises.

 

5.             TERMINATION.    

 

a.             Termination by Bare Escentuals.  Upon the occurrence of any of the following, Bare
Escentuals may terminate this Agreement by delivering written notice of such
election to Datapak:

                

i.              any material change in the ownership or control of
Datapak or any sale, transfer or relinquishment by Datapak of a substantial
interest in the ownership of the business to be carried on by Datapak under
this Agreement, without the prior written consent of Bare Escentuals;

***         PORTIONS OF THIS PAGE HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

3

 

ii.             the insolvency of Datapak, the
filing of a petition in bankruptcy by or against Datapak, the appointment of a
receiver for Datapak or Datapak’s property, the execution of an assignment by
Datapak of all or substantially all of its assets for the benefit of its
creditors, or the conviction of Datapak or any principal or manager of the
Datapak for any crime tending to adversely affect the ownership or operation of
business, notice of which shall immediately be given by Datapak to Bare
Escentuals, and the failure by Datapak to remedy such circumstance within
thirty (30) days of its occurrence; 

 

iii.            the breach by Datapak of any of its
obligations under this Agreement and the failure by Datapak to remedy such
breach within thirty (30) days of being notified of its existence by Bare
Escentuals, unless the nature of the breach is such that it requires more
immediate remedy as set forth in this Agreement, in which event such remedy
must be completed in such lesser period of time; or

 

iv.            Bare Escentuals determines that
Datapak has (1) failed to remedy its noncompliance with any Service Level
Objectives in a timely manner (as set forth in the Service Level Objectives),
or (2) failed to comply with Service Level Objectives three (3) or more times
during any twelve (12) month period regardless of whether such noncompliance
was timely cured.  For purposes of this Section
5(a)(iv) of this Agreement, “failure to comply” or “noncompliance” shall
mean that Datapak’s performance deviates from an established Service Level
Objectives by a magnitude of ***. 
Notwithstanding the foregoing, if Datapak’s noncompliance with a Service
Level Objective results from Bare Escentuals’ failure to provide Datapak information
reasonably sufficient for Datapak to comply with such Service Level Objectives
or from other causes outside of Datapak’s control, including but not limited to
impacts on Datapak’s operations caused by Bare Escentuals or its agents and
employees, then such noncompliance shall not constitute “noncompliance” or
“failure to comply” hereunder; provided that, in such event, Datapak shall use
commercially reasonable efforts to remedy such noncompliance within a
commercially reasonable time period.

 

b.             Effect of Termination.  Termination of the Agreement shall not
relieve the parties of any obligation or liability arising prior to such
termination, including the obligation to maintain the confidentiality of the
Confidential Information (as defined in Section 7 of this Agreement).  In the event of expiration or termination of
this Agreement, Datapak will:

 

i.              not have any further right to distribute any Bare
Escentuals merchandise; 

 

ii.             make available for pick up by Bare
Escentuals any and all merchandise, materials, manuals, price lists,
Confidential Information or other property of Bare Escentuals which is within
the possession or control of Datapak; and 

 

iii.            discontinue any and all call center
services.

 

c.             Survival.  The terms and conditions of Sections 4, 5.b,
6, 7, 8.b, 9, and 12.e of this Agreement shall survive the expiration or other
termination of this Agreement.

***         PORTIONS OF THIS PAGE HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

4

 

 

 

 

6.             OWNERSHIP
OF INVENTORY/CUSTOMER DATA.  

 

a.             Bare Escentuals’
Proprietary Rights.  The Bare
Escentuals’ merchandise warehoused or otherwise held by Datapak, and any and
all customer data or other Confidential Information (as defined in Section 7
of this Agreement) obtained or learned by Datapak pursuant to this Agreement
involve valuable patent, copyright, trade secret, trade name, trademark and
other proprietary rights of Bare Escentuals. 
No title to or ownership of any such proprietary right is transferred to
Datapak under this Agreement or by use of any trademark, patent or other
proprietary right.  Bare Escentuals
reserves all such proprietary rights. 
Datapak will not infringe, misappropriate or violate any proprietary
rights of Bare Escentuals.  Without
limiting the generality of the foregoing, Datapak will not register or attempt
to register, directly or indirectly, any such patents, copyrights, trade names,
trademarks or other proprietary rights other than in the name of Bare
Escentuals.  Bare Escentuals shall own
all of the merchandise and other inventory it deposits in Datapak’s warehouses
(collectively, the “Inventory), and all
of the customer data.  

 

b.             Datapak’s Proprietary
Rights.  Datapak is not authorizing,
selling, transferring, licensing or permitting the use of any of its
intellectual property, including but not limited to proprietary data, formulas,
database structures, database format,
computer applications, programming and software owned, licensed
or developed by Datapak.  All computer
applications, programming and software, either purchased, owned, licensed or
developed by Datapak in connection with any services rendered by Datapak under
this Agreement shall remain exclusive property of Datapak and the Bare
Escentuals shall never have any right, entitlement or claim to said property,
and Bare Escentuals disclaims all rights, claims, or entitlement to same.       

 

7.             CONFIDENTIALITY.  "Confidential Information" means information that
is provided by or on behalf of either party (the "Discloser") to the
other party (the "Recipient"), or to which a party otherwise gains
access, in the course of or incidental to the performance of this Agreement, is
of value to the Discloser and is not generally known to others, including,
without limitation, customer lists, customer information, employee lists,
technology, processes, marketing techniques, price lists, pricing policies,
business methods, contracts and contractual relations with the Discloser's
customers and suppliers, know-how, software, future and proposed products and
services, financial information, business forecasts, sales and merchandising,
and marketing plans and information. 
Confidential Information may be disclosed in written or other tangible
form (including on magnetic media) or by oral, visual or other means.  The terms, conditions and provisions of this
Agreement shall be deemed by the parties hereto to be Confidential Information of
both parties hereto.  The Recipient of
Confidential Information shall use the Confidential Information only for the
purposes of this Agreement or as otherwise expressly permitted by this
Agreement.  Recipient of Confidential
Information shall protect such Confidential Information from disclosure to
others, using the same degree of care used to protect its own confidential or
proprietary information of like importance, but in any case using no less 

 

5

 

than a reasonable degree of care. 
Recipient may disclose Confidential Information received hereunder (a)
to its affiliates, (b) to Recipient's employees and independent contractors,
and (c) to Recipient's affiliate's employees and independent contractors, and
who in all of the foregoing cases have a need to know such information and are
bound to protect the received Confidential Information from unauthorized use
and disclosure under terms no less restrictive than those contained in this
Agreement.  Confidential Information
shall not otherwise be disclosed by Recipient to any third party without the
prior written consent of the Discloser. 
The restrictions herein on the use and disclosure of Confidential
Information shall not apply to information that:  (i) was publicly known at the time of
Discloser's communication thereof to Recipient or becomes publicly known
through no fault of Recipient subsequent to the time of such communication;
(ii) was in Recipient's possession free of any obligation of confidence at the
time of Discloser's communication to Recipient; (iii) is developed by Recipient
independently of and without reference to any of Discloser's Confidential
Information or other information that Discloser disclosed in confidence to any
third party; (iv) is rightfully obtained by Recipient from third parties
authorized to make such disclosure without restriction; (v) is identified in
writing by the Discloser as no longer proprietary or confidential.  In the event Recipient is required by law,
regulation or court order to disclose any of Discloser's Confidential
Information, Recipient will promptly notify Discloser in writing prior to
making any such disclosure and shall reasonably cooperate in any efforts of
Discloser to seek a protective order or other appropriate remedy from the
proper authority.  If Discloser is not
successful in precluding the requested disclosure, Recipient will furnish only
that portion of the Confidential Information that is legally required and will
exercise all reasonable efforts to obtain reliable assurances that confidential
treatment will be accorded the Confidential Information.  All Confidential Information disclosed under
this Agreement (including information in computer software or held in
electronic storage media) shall be and remain the property of Discloser or its
licensors. All such information in any computer memory or data storage
apparatus shall be erased or destroyed, and all such information in tangible
form in the possession or under the control of the Recipient shall, at the
discretion of the Recipient, either be destroyed or returned to the Discloser
promptly upon the earlier of: (i) the written request of the Discloser or (ii)
termination or expiration of this Agreement, and in any of such events and to
the applicable extent shall not thereafter be retained in any form by or
through Recipient unless otherwise expressly permitted hereunder.

 

8.             INSURANCE/RISK
OF LOSS.  

 

a.             Insurance.  Datapak shall maintain in full force and
effect policies of insurance for the full replacement cost of all Bare
Escentuals’ merchandise located in Datapak's warehouses. Datapak shall likewise
maintain in full force and effect policies of insurance on buildings and
equipment at Datapak's facilities, including commercial general liability
insurance, property damage and personal injury insurance and fire and theft
coverage with limits (in combination with excess liability insurance) of Two
Million Dollars ($2,000,000) per occurrence combined single limit and Four
Million Dollars ($4,000,000) in the aggregate, and shall maintain workers’
compensation coverage as required by applicable law.  Such policies of insurance shall be issued by
a responsible insurer satisfactory to Bare Escentuals, shall include Bare
Escentuals as an additional insured, shall provide Bare Escentuals not less than
thirty (30) days advance notice of cancellation or material change in the
policy, and shall not include a policy deductible in excess of $10,000.  Upon Bare Escentuals’ request, Datapak shall
provide (i) a copy of 

 

6

 

the insurance
policies required to be carried under this Section 8.a of this Agreement, and
(ii) a certificate of insurance from the insurer certifying that such coverage
is in place.

 

b.             Risk of Loss.  Bare Escentuals shall be fully responsible
for the Inventory until it is physically received at Datapak's warehouses.  Datapak shall be responsible for the Inventory
once delivered to its warehouses until such time as such Inventory is delivered
by Datapak and accepted by a shipping company pursuant to an order for
shipment.  Thereafter, Bare Escentuals
shall bear the risk of loss unless and until such Inventory is returned to the
custody of Datapak.

 

9.             INDEMNIFICATION.  

 

a.             Datapak Indemnity.  Datapak shall defend, indemnify and hold Bare
Escentuals harmless against all claims, losses, damages, costs, and expenses,
including reasonable attorneys’ fees, arising out of or related to (i)
Datapak’s breach or default under this Agreement; (ii) any personal injury,
death or property damage, sustained by any person arising out of or resulting
from the Datapak’s activities contemplated by this Agreement, (iii) the
negligence or misconduct of Datapak, or its employees, agents or contractors in
the provision of call center services.

 

b.             Bare Escentuals Indemnity.  Bare Escentuals shall
defend, indemnify and hold Datapak harmless against all claims, losses,
damages, costs, and expenses, including reasonable attorneys’ fees, arising out
of or related to Bare Escentuals’ products, provided that (i) Datapak notifies Bare
Escentuals in writing within thirty (30) days of Datapak’s receipt of notice of
the claim, (ii) Bare Escentuals has sole control of the defense and all related
settlement negotiations, and (iii) Datapak provides Bare Escentuals with the
assistance, information and authority necessary to perform the above.

 

10.          DATAPAK’S REPRESENTATIONS AND
WARRANTIES.  Datapak
represents and warrants to Bare Escentuals that (i) it has the full capacity
and authority and all necessary licenses, permits and consents to enter into
and to provide the services under this Agreement and any other documents to be
entered into by it hereunder, (ii) all statements and representations in this
Agreement and in all materials provided to Bare Escentuals prior to the date hereof
are true and accurate, (iii) it will perform its obligations under this
Agreement in good faith, with a high quality of care and in accordance with any
representations made herein or in any other materials provided to Bare
Escentuals prior to the date hereof, (iv) its employees, agents and or
contractors are appropriately qualified to perform their duties and
responsibilities contemplated herein and will perform their obligations with
all due skill, care and diligence, including without limitation all call center
related activities, and (v) it will perform its obligations under this
Agreement in compliance with all applicable laws and regulations now in effect
or hereinafter promulgated or enacted.  

 

11.           LIMITATION
OF LIABILITY.  NEITHER
PARTY WILL BE HELD LIABLE FOR ANY INDIRECT, SPECULATIVE, CONSEQUENTIAL,
INCIDENTAL, AND/OR SPECIAL DAMAGES INCLUDING, BUT NOT LIMITED TO, LOSS OF USE,
BUSINESS 

 

7

 

INTERRUPTIONS, AND
LOSS OF PROFITS, REGARDLESS OF WHETHER SUCH PARTY HAS ADVANCE NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES.  

 

 

12.          REVENUE COMMITMENT.  As further consideration for the mutual
promises set forth in this Agreement, Bare Escentuals guarantees that for each
calendar year during the Term of this Agreement and for each calendar year of
any renewal period, it shall provide Datapak enough work for the Services
Datapak performs under this Agreement to generate gross service revenue to
Datapak equal to or greater than *** of the gross service revenue earned by
Datapak in calendar year 2005.

 

13.          NOTICES. 
All notices and other communications required or
permitted hereunder will be in writing and will be mailed, hand delivered, sent
by Federal Express or other recognized overnight courier service, or sent by facsimile
transmission, to the parties as follows:

 

	
  If to Datapak:

  	
  Datapak Services
  Corporation

  55353 Lyon Industrial
  Drive

  New Hudson, Michigan
  48165

  Attention:   Larry W. Kinney, President

  Telephone: (248)
  446-9500

  Facsimile: (248)
  446-9595

  Email: lkinney@datapakservices.com

   

  
	
  With copy to:

  	
  Datapak Services
  Corporation

  55353 Lyon Industrial
  Drive

  New Hudson, Michigan
  48165

  Attention:   Robert G. Lahiff, General Counsel

  Telephone: (248)
  446-9500

  Facsimile: (248)
  446-9595

  Email:
  rlahiff@datapakservices.com

   

  
	
   

  	
   

  
	
  If to Bare
  Escentuals:

  	
  Bare Escentuals, Inc.

  71 Stevenson Street

  San Francisco,
  California 94105

  Attention: 

  Telephone: (415)
  288-3500

  Facsimile:

   

  

 

Any party may from
time to time, by written notice to the others, designate a different address or
additional persons that will be substituted for and/or added to the address(es)
above specified.  Notices by mail will be
sent by United States certified or registered mail, return receipt requested,
postage prepaid, and will be deemed given and effective upon receipt or refusal
of receipt.  Notices by hand delivery
will be deemed given and effective upon the delivery thereof.  Notices by overnight courier will be deemed
given and effective on the first business day following the delivery thereof to
Federal Express or another recognized overnight courier 

***         PORTIONS OF THIS PAGE HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

8

 

 

service.  Notices by electronic mail or facsimile will
be deemed given upon transmission (provided, in the case of facsimile
transmission, a send confirmation is received and retained by the sending party).

 

14.          MISCELLANEOUS.

 

a.   Assignment.  Datapak will not
assign this Agreement, in whole or in part, directly, by operation of law, or
otherwise, except with the prior written consent of Bare
Escentuals.  

 

b.   Attorneys’ Fees.  If any action will
be instituted between Datapak and Bare Escentuals in connection with this
Agreement or in connection with the enforcement of any indemnity under this
Agreement (including appeals), the party prevailing in such action will be
entitled to recover from the other party all of its costs of action, including
actual consultants’ and attorneys’ fees and attorneys’ costs.  For purposes of this Agreement, the terms
“attorneys’ fees” and “attorneys’ costs” will include the fees and expenses of
counsel to the prevailing party, which may include printing, photocopying,
duplicating and other expenses, air freight charges and fees billed for law
clerks, paralegals and other persons not admitted to the bar but performing
services under the supervision of an attorney.

 

c.   Construction.  This Agreement will
not be construed more strictly against any party merely by virtue of the fact
that the same has been prepared by such party or its counsel, it being
recognized both of the parties hereto have contributed substantially and
materially to the preparation of this Agreement.  All words in this Agreement that are
expressed in the neuter gender will be deemed to include the masculine,
feminine and neuter genders and any word in this Agreement that is expressed in
the singular or plural will be deemed, whenever appropriate in the context, to
include the plural and the singular.

 

d.   Counterparts.  This Agreement may
be executed in any number of counterparts, each of which will be deemed an
original, but all of which when taken together will constitute one and the same
instrument.  The signature page of any
counterpart may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by the other party or parties to this Agreement attached thereto.

 

e.   Governing Law/Venue.  This
Agreement will be governed in all respects by the laws of the State of
California.  The United Nations
Convention on Contracts for the International Sale of Goods shall have no
application whatsoever to this Agreement. 
The parties submit to the personal jurisdiction of the Courts (Federal
and State) in the State of California, with respect to all matters related to
or arising out of this Agreement, including post judgment proceedings.  The parties agree that the venue for all
disputes, claims or litigation arising out of or related to this contract shall
be exclusively in the State or Federal Courts in the City and County of San
Francisco, California.

 

f.   Headings.  Headings of
Sections are for convenience of reference only, and will not be construed as a
part of this Agreement.

 

9

 

g.   No Third Party Beneficiary.  This Agreement is
solely for the benefit of the parties hereto and, to the extent provided in
this Agreement, their respective partners, directors, officers, employees,
agents and representatives, and no provision of this Agreement will be deemed
to confer upon other third parties any remedy, claim, liability, reimbursement,
cause of action or other right.

 

h.   Partial Invalidity.  In the event that
any provision of this Agreement will be unenforceable in whole or in part, such
provision will be limited to the extent necessary to render the same valid, or
will be excised from this Agreement, as circumstances require, and this
Agreement will be construed as if said provision had been incorporated in this
Agreement as so limited, or as if said provision has not been included in this
Agreement, as the case may be.

 

i.    Waiver.  No waiver of any
provision or condition of this Agreement by any party will be valid unless in
writing signed by such party.  No such
waiver will be taken as a waiver of any other or similar provision or of any
future event, act, or default.

 

j.   Relationship of the Parties.  Datapak is an independent contractor and not
an agent, employee, franchisee or partner of Bare Escentuals, and is acting in
the ordinary course of business.  Datapak
has no authority to create or assume any obligation, express or implied, on
behalf of Bare Escentuals.  This
Agreement does not create or evidence any joint venture or partnership of the
parties.

 

k.  Entire Agreement.  This Agreement,
including all schedules and exhibits attached hereto and documents to be delivered
pursuant hereto, will constitute the entire agreement and understanding of the
parties, and there are no other prior or contemporaneous written or oral
agreements, undertakings, promises, warranties, or covenants not contained in
this Agreement.  This Agreement may be
amended only by a written amendment executed by both of the parties hereto.

 

[REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK]

 

10

 

                IN WITNESS WHEREOF, the parties have executed this Order
Fulfillment and Administrative Services Agreement as of the date first set
forth above:

 

	
  DATAPAK SERVICES CORPORATION,

  A Michigan corporation:

  	
   

  	
  BARE ESCENTUALS, INC.,

  A California corporation:

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Larry W. Kinney

  	
   

  	
  By:

  	
  /s/ Myles McCormick

  
	
  Name:

  	
  Larry W. Kinney

  	
   

  	
  Name:

  	
  Myles McCormick

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

 

11

SCHEDULE 1

Statement of
Work

 

WAREHOUSING AND ORDER FULFILLMENT SERVICES

 

Datapak
shall provide to Bare Escentuals a customized order fulfillment and
administrative program in connection with the sale of Bare Escentuals'
products. This shall include the following:

 

(a)           Establishing customized programs and
services to meet Bare Escentuals' storage and order fulfillment needs related
to the Bare Escentuals’ spa/professional markets and international distributor
sales and infomercial business;

 

(b)           Processing
orders daily via electronic transfer, email, fax and telephone; the orders will
include among other things, the name of the customer, the shipping address, the
goods to be shipped, the freight carrier to be used for shipping and any
special packing instructions (the “Shipping Order”).  

 

(c)           Arranging for
the shipment of the ordered merchandise on behalf of the Bare Escentuals to
customers, with Bare Escentuals customer invoices included for orders taken on
account, and providing avenues for invoice payment and collections with an Aged
Accounts Receivable (AAR) Report;

 

(d)           Providing
adequate warehouse space for Bare Escentuals’ inventory, including appropriate
temperature and humidity controls so as to avoid damage or mutation of the
Inventory. Bare Escentuals shall (i) specifically identify each such SKU that
requires particular temperature and humidity controls, and (ii) specify the
specific temperature and humidity controls for each such SKU, and the parties
will reach mutually agreeable price additions or modifications required for
Datapak to implement such additional controls, which additions or modifications
shall be reflected in a written amendment to the Pricing Schedule signed by
both parties.

 

(e)           Providing to Bare
Escentuals on a daily basis via electronic transfer, email, fax and telephone,
tracking information and confirmation of shipping of all packages sent on
behalf of Bare Escentuals.

 

(f)            Offering to Bare Escentuals full
access to its program at Datapak through electronic data transfers, email or
report facsimile.

 

(g)           Providing a web
accessible inventory balance system, updated every 15 minutes.

 

 

 

 

(h)           Providing to Bare
Escentuals on a monthly basis a complete detailed report on all project
activity. This monthly report shall include:

 

(i)        Inventory value
status;

(ii)       Aging accounts
receivable status:

(iii)      Item sales
analysis:

(iv)      Bank transaction
report reconciliation:

(v)       Sales tax
information.

(vi)      Other reports
periodically requested by Bare Escentuals.

 

 

CALL
CENTER SERVICES

 

I.              Datapak will
provide Bare Escentuals with inbound customer contact services as follows: 

 

(a)           Answer all inquiries received from
Bare Escentuals customers via multiple communication methods (e.g., telephone,
email, fax, voice message, web chat, etc.), including: 

 

                                (i)            taking orders;

 

                                (ii)           checking the status of orders;

 

                                (iii)          processing credits;

 

                                (iv)          changing or canceling continuity
shipment membership;

                

                                (v)           updating customer profile
information;

 

(vi)          addressing customers’ issues with
their online accounts at bareminerals.com (or other web sites);

 

                                (vii)         providing product information;

 

                                (viii)        answering general questions about the
company and its retail outlets;

 

(ix)           or providing any other customer
service related to Bare Escentuals’ products;

                

(x)            provide friendly, courteous customer
service in accordance with Bare Escentuals’ customer service philosophy

 

All of the
above services, and any attempts to “save the sale” or otherwise “cross-sell or
up-sell” to Bare Escentuals’ customers shall be conducted in strict accordance
with the Operational Procedure set forth on Schedule 2 to this Agreement
and any training materials or other product documents provided by Bare
Escentuals.

 

 

II.            Datapak
will provide Bare Escentuals with outbound customer contact services as
follows:

 

(a)           Contact Bare Escentuals’ customers in
order to rectify order issues such as incorrect address or declined credit
card, etc.; and 

 

(b)           Initiate outbound telephone and/or
email campaigns as directed by Bare Escentuals.

 

 

SCHEDULE 2

Operational
Procedure Standards

 

1.             Datapak
will consult with Bare Escentuals on any significant facility, personnel,
resource or technology decision to be made by Datapak that may impact Bare
Escentuals’ business.

 

2.             Datapak
and Bare Escentuals will adhere to mutually agreed upon communication plans
governing the relationship between the two parties and participate in agreed
upon weekly, monthly and periodic meetings. 
Datapak will establish a permanent fulltime position for an account
manager dedicated to the Bare Escentuals’ account.  

 

3.             Datapak
and Bare Escentuals will adhere to mutually agreed upon escalation procedures
to address issues arising out of the normal course of business.

 

4.             Datapak
and Bare Escentuals will work together to reach mutually agreeable processes
and controls and auditing procedures within the spirit of the Sarbanes-Oxley
Act of 2002, Type II SAS 70 review, with the acknowledgment that Datapak is not
a publicly traded company and not subject to that act.

 

5.             Datapak
and Bare Escentuals will work together to arrive at mutually agreeable
invoicing and reporting formats, content and timing.

 

6.             Datapak
shall ship Bare Escentuals’ products in accordance with mutually agreed to
procedures, in compliance with applicable laws, rules, regulations and other governmental
requirements and guidelines and shall obtain any proper licenses to for
shipping Bare Escentuals’ products domestically and internationally.

 

7.             Datapak’s
systems and business policies will be PCI (Payment Card Industry) compliant as
a Level 1 Merchant.  Upon request, Datapak
will provide Bare Escentuals with periodic status reports on its compliance and
remediation efforts.  

 

8.             Datapak
will process customer returns, refunds, credits and replacements according to
the procedures detailed in Addendum C, Bare Escentuals Customer Service Policy.
 Bare Escentuals shall be responsible for
paying all applicable sales tax on products shipped to Bare Escentuals’
customers by Datapak on behalf of Bare Escentuals.

 

9.             Bare
Escentuals may negotiate contracts separately with freight carriers which
Datapak will utilize for shipping Bare Escentuals’ products.  In the event Bare Escentuals enters such a
contract, Datapak shall abide by the terms and conditions of such contract.

 

10.           Credit/Debit
and Check Transactions. A merchant account and checking account will be
established for the purpose of processing sales of Bare Escentuals’ products
warehoused by Datapak, as follows:  A
Bare Escentuals merchant account shall be established at a processor or bank of
Bare Escentuals’ choosing. This shall be a separate contract between Bare
Escentuals and the processor/bank and Datapak shall not be a party to that
contract.  When a credit/debit 

 

 

order is received by Datapak, it will be
transmitted by Datapak to the merchant account processor/bank selected by Bare
Escentuals.  When the merchant account
processor/bank informs Datapak that the credit/debit order has been approved,
Datapak will then package and ship the order. 
If checks will be accepted by Bare Escentuals, a checking account will
be established by Datapak in Bare Escentuals’ name.  When a check order is received for Bare
Escentuals’ product, Datapak will deposit the check into the checking
account.  When the check clears, Datapak
will then package and ship the order.

 

11.           Bare
Escentuals understands that regardless of any refusal to provide a refund,
credit or replacement to a customer, the customer may seek a chargeback from
his/her credit card company or other financial institution, over which Datapak
has no control.  Datapak has no obligation
or duty to challenge or fight a chargeback request from a customer.  Datapak will respond to the chargeback by
providing the information it has at its disposal to the financial institutions
involved and will bill the Bare Escentuals for this activity at the rate of ***
per minute. The chargeback request may be processed and such chargeback may be:
1) charged to Bare Escentuals’ account; or 2) charged to Datapak’s account if
Datapak is D/B/A Bare Escentuals.  Bare
Escentuals shall reimburse Datapak for all chargebacks and bank fees to any
Datapak account and for any liability or loss Datapak incurs related to the
chargeback, regardless of the merit of customer’s entitlement to a chargeback,
refund, return or replacement.

 

12.           BareEscentuals will
provide monthly call volume projections for each month no later than one month
prior to the first day of the month for which projections are made.  Bare Escentuals may adjust the call volume
projections no later than two weeks prior to the first of the month for which
projections are being made.

 

13.           Datapak
shall participate with Bare Escentuals in weekly discussions of event calendar
for next 30-90 days.  Each event must be
disclosed at least 21 days in advance.

 

14.           Promptly upon
request by Bare Escentuals, Datapak shall meet and confer in good faith in
order to establish “mutually acceptable guidelines” (including modifying or
adding charges for same which will then be set forth as a written amendment to the
Pricing Schedule signed by both parties) as set forth in this Agreement,
including, without limitation, with respect to establishing Service Level
Objective criteria as set forth on Schedule 3 to this Agreement.  Any such guidelines may be set forth in
writing and attached to this Agreement after confirmation of their accuracy by
both parties. 

 

*** PORTIONS OF
THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

SCHEDULE 3

 

Service Level
Objectives

 

***

 

SCHEDULE 4

 

Pricing Schedule

 

***

 

 

***         PORTIONS OF THIS PAGE HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

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