ITURF INC
8-K, 1999-09-07
CATALOG & MAIL-ORDER HOUSES
Previous: SENIOR HOUSING PROPERTIES TRUST, S-11/A, 1999-09-07
Next: MIH LTD, 20-F, 1999-09-07


<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 7, 1999

- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 1, 1999

                                   iTURF INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

   DELAWARE                         0-25347                         13-3963754
(STATE OR OTHER               (COMMISSION FILE NO.)               (IRS EMPLOYER
JURISDICTION OF                                                   IDENTIFICATION
INCORPORATION)                                                        NUMBER)

435 HUDSON STREET
NEW YORK, NEW YORK                                                     10014
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICERS)                           (ZIP CODE)


                                 (212) 741-7785
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


<PAGE>

STATEMENTS CONTAINED IN THIS DOCUMENT MAY BE FORWARD-LOOKING STATEMENTS (WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934). WHEN USED IN THIS DOCUMENT, THE WORDS
"BELIEVE," "PLAN," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH APPLY ONLY AS OF THE DATE OF
THIS REPORT. THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN THE
FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT
LIMITED TO: FLUCTUATIONS IN CONSUMER PURCHASING PATTERNS AND ADVERTISING
SPENDING; TIMING OF, RESPONSE TO AND QUANTITY OF OUR PARENT'S CATALOG MAILINGS
AND OUR OWN ELECTRONIC MAILINGS; CHANGES IN THE GROWTH RATE OF INTERNET USAGE
AND ONLINE USER TRAFFIC LEVELS; ACTIONS OF OUR COMPETITORS; THE TIMING AND
AMOUNT OF COSTS RELATING TO THE EXPANSION OF OUR OPERATIONS AND ACQUISITIONS OF
TECHNOLOGY OR BUSINESSES AND THEIR INTEGRATION; GENERAL ECONOMIC AND MARKET
CONDITIONS; AND OTHER FACTORS OUTSIDE OUR CONTROL. THESE FACTORS, AND OTHER
FACTORS THAT APPEAR IN THIS REPORT OR IN OUR OTHER SECURITIES AND EXCHANGE
COMMISSION FILINGS, INCLUDING OUR REGISTRATION STATEMENT (NO. 333-15153) ON FORM
S-1, COULD AFFECT OUR ACTUAL RESULTS AND COULD CAUSE OUR ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE BY
US OR ON OUR BEHALF.


Item 2. Acquisition or Disposition of Assets.

         On September 1, 1999, iTurf Inc. ("iTurf") acquired [email protected],
Inc., a New Jersey corporation ("Taponline"). Taponline was acquired pursuant to
an Agreement and Plan of Merger, dated as of August 9, 1999, by and among
iTurf, iTurf Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of iTurf ("Merger Sub"), Taponline, the stockholders of Taponline and
MarketSource Corporation, a Delaware corporation (as amended, the "Merger
Agreement"). Pursuant to the Merger Agreement, Merger Sub was merged with and
into Taponline.com, with Taponline.com as the surviving corporation (the
"Merger"). As a result of the Merger, Taponline.com became a wholly-owned
subsidiary of iTurf.

         The merger consideration consisted of 1,586,996 shares of iTurf Class A
common stock. The Merger is intended to qualify as a tax-free reorganization and
will be accounted for under the purchase method of accounting

         Taponline operates a community and content Web site focusing on college
and university students between the ages of 18 and 24. The description of the
Merger Agreement, which is filed as an exhibit to this report, does not purport
to be complete and is qualified in its entirety by the provisions of the Merger
Agreement.

         In connection with the transaction, MarketSource Corporation, which is
owned by certain of the shareholders of Taponline, including Martin Levine, who
was recently elected as a member of our board of directors, entered into an
arrangement to purchase advertising and other inventory on our network of sites
for resale to MarketSource's clients. Separately, we have agreed to enter into a
marketing alliance with MarketSource to promote our network of sites through
MarketSource's offline marketing channels. We committed to purchasing
approximately $6.5 million in promotional opportunities through these channels
over the next three years. The descriptions of these arrangements do not
purport to be complete and is qualified in its entirety by the provisions of the
Online Authorized Advertising Reseller Agreement and the Offline Advertising
Purchase Agreement which are filed as exhibits to this report.


Item 7.   Financial Statements, Pro Forma Financial Information and Exhibits

          (a)    FINANCIAL STATEMENTS OF BUSINESS ACQUIRED

                 In accordance with Instruction 4 of this Item 7, we will file
                 financial statements required by this item on a report on Form
                 8-K/A as soon as practicable, but in no event later than 60
                 days after the date we are required to file this report on Form
                 8-K.

          (b)    PRO FORMA FINANCIAL INFORMATION

                 In accordance with Instruction 4 of this Item 7, we will file
                 pro forma financial information required by this item on a
                 report on Form 8-K/A as soon as practicable, but in no event
                 later than 60 days after the date we are required to file this
                 report on Form 8-K.


<PAGE>

          (c)    EXHIBITS

                 Exhibit 2.1   Agreement and Plan of Merger dated August 9,
                               1999, by and among iTurf Inc., iTurf Acquisition
                               Corporation, [email protected], Inc. ("Taponline"),
                               the stockholders of Taponline.com and
                               MarketSource Corporation (the "Merger Agreement")
                               (incorporated by reference to Exhibit 10.17 of
                               iTurf's Quarterly Report on Form 10-Q for the
                               period ended July 31, 1999).*

                 Exhibit 2.2   Amendment No. 1, dated September 1, 1999, to
                               Merger Agreement

                 Exhibit 99.1  Online Advertising Authorized Reseller
                               Agreement between iTurf, Taponline and
                               MarketSource Corporation, dated September 1,
                               1999.

                 Exhibit 99.2  Offline Advertising Purchase Agreement
                               between iTurf and MarketSource Corporation, dated
                               September 1, 1999.

* The table of contents to the Merger Agreement lists the exhibits and schedules
to the Merger Agreement. In accordance with Item 601(b)(2) of Regulation S-K,
the exhibits and schedules to the Merger Agreement have been excluded; such
exhibits and/or schedules will be furnished supplementally upon request by
the Securities and Exchange Commission.




<PAGE>

                                   SIGNATURES

              Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

Dated: September 7, 1999               iTurf Inc.

                                       By: /s/ Stephen I. Kahn
                                           ------------------------
                                           Stephen I. Kahn
                                           Chairman of the Board, President and
                                           Chief Executive Officer




<PAGE>


                                 AMENDMENT NO. 1

                                       TO

                          AGREEMENT AND PLAN OF MERGER


                  THIS AMENDMENT NO. 1 (this "AMENDMENT NO. 1") is made and
entered into as of September 1, 1999, by and among iTurf Inc., a Delaware
corporation ("ITURF"), iTurf Acquisition Corporation, a Delaware corporation and
a wholly-owned subsidiary of iTurf (the "MERGER SUB"), [email protected], Inc., a
New Jersey corporation (the "COMPANY"), MarketSource Crorporation, a Delaware
corporation ("MARKETSOURCE"), Martin D. Levine ("LEVINE"), the Jonathan L.
Levine Grantor Trust u/t/a/d January 1, 1995, the Lauren E. Levine Grantor Trust
u/t/a/d January 1, 1995, David Bidwell, Deborah Cheezum, Donald Clifford, Frank
P. Morelli, Derek S. White and Anthony Fiore. Levine, the Jonathan L. Levine
Grantor Trust u/t/a/d January 1, 1995, the Lauren E. Levine Grantor Trust
u/t/a/d January 1, 1995, David Bidwell, Deborah Cheezum, Donald Clifford, Frank
P. Morelli, Derek S. White and Anthony Fiore are collectively referred to
hereinafter as the "SELLING SHAREHOLDERS." Capitalized terms used herein not
otherwise defined shall have the meanings set forth in the Merger Agreement (as
defined below).

                                    RECITALS

                  WHEREAS, iTurf, Merger Sub, the Company, MarketSource and the
Selling Shareholders have previously entered into an Agreement and Plan of
Merger, dated as of August 9, 1999 (the "MERGER AGREEMENT"), pursuant to which
Merger Sub will merge with and into the Company upon the terms and subject to
the conditions set forth therein and in accordance with New Jersey Law and
Delaware Law; and

                  WHEREAS, the parties desire to amend the Merger Agreement as
more fully set forth herein.

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Amendment No. 1, and for other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

                  1. EFFECT OF THE MERGER. Section 1.4 of the Merger Agreement
relating to the certificate of incorporation and bylaws of the Surviving
Corporation is hereby amended in its entirety to read as follows:

                     CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective
                  Time, the certificate of incorporation of the Company as in
                  effect immediately prior to the Effective Time shall be the
                  certificate of incorporation of the Surviving Corporation,
                  except that the name of the Surviving Corporation

<PAGE>


                  shall be "OnTap.com, Inc." and the bylaws of the Company shall
                  be the bylaws of the Surviving Corporation, each of which
                  shall continue in full force and effect until thereafter
                  amended.

                  2. AMENDED CONTRACTS SCHEDULE. SCHEDULE 2.13 relating to the
material contracts, lease and commitments of the Company is hereby amended to
(i) delete the Agreement, dated as of March 17, 1999, by and between
MarketSource Interactive, Inc. and Contiki Holidays from the list of agreements
set forth therein; (ii) add the Agreement, dated July 27, 1999, by and between
MarketSource Canada Ltd. and [email protected] (the "NEW AGREEMENT") to the list of
agreements set forth therein; and (iii) attach to SCHEDULE 2.13 a true and
complete copy of the New Agreement in the form attached as Exhibit A hereto.

                  3. EXPENSES PAID BY THE COMPANY. Section 4.21 of the Merger
Agreement relating to certain expenses to be paid by the Company to MarketSource
after the Closing is hereby amended in its entirety to read as follows:

                     EXPENSES PAID BY THE COMPANY. The Company shall pay to
                  MarketSource within thirty (30) days following the Closing
                  an amount in cash equal to the amount of expenses actually
                  paid by the Company or MarketSource between the date hereof
                  and the Closing Date relating to the following Company
                  marketing programs: campus newspaper advertising and
                  decoder insert shipping, sweepstakes, premiums/incentives,
                  CollegeSource Board production, registration opt-in and
                  guerilla marketing and $4,142 of the cost of decoder insert
                  production.

                  4. PAYMENT OF LIABILITIES. Section 5.2(i) of the Merger
Agreement relating to the payment of certain Liabilities by the Company prior to
the Closing Date is hereby amended in its entirety to read as follows:

                     PAYMENT OF LIABILITIES. The Company shall have paid in
                  full all Liabilities relating to the Microsoft software
                  licenses and Dell Computers.

In addition, a new Section 4.22 of the Merger Agreement is hereby added as
follows:

                     4.22 PAYMENT OF LIABILITIES. MarketSource shall pay to
                  the Surviving Corporation within thirty (30) days following
                  the Closing an amount in cash equal to the sum of all
                  Liabilities relating to decoder insert production owed by
                  the Company prior to the Closing Date, including
                  Liabilities owed pursuant to that certain World Color
                  Direct invoice number 3088909041, dated August 31, 1999.

                                       2

<PAGE>


                  5. RESTATEMENT OF MERGER AGREEMENT. Upon execution of this
Amendment No. 1, the Merger Agreement shall automatically be amended and
restated to include the provisions of this Amendment No. 1 as though such
provisions had been contained in the Merger Agreement as of the date of its
original execution.

                  6. COUNTERPARTS. This Amendment No. 1 may be executed in one
or more counterparts, each of which will be deemed an original, but all of which
will constitute one and the same instrument and shall become effective when one
or more counterparts have been signed by each of the parties and delivered to
you.




                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       3

<PAGE>


         IN WITNESS WHEREOF, the parties have duly executed this Amendment No. 1
as of the date first above written.

ITURF INC.


By: /s/ DENNIS GOLDSTEIN
    ---------------------------------
     Name:  Dennis Goldstein
     Title: Chief Financial Officer


ITURF ACQUISITION CORPORATION


By: /s/ DENNIS GOLDSTEIN
    ---------------------------------
     Name:  Dennis Goldstein
     Title: Chief Financial Officer


[email protected], INC.


By: /s/ MARTIN LEVINE
    ---------------------------------
     Name:  Martin D. Levine
     Title: President


MARKETSOURCE CORPORATION


By: /s/ MARTIN LEVINE
    ---------------------------------
     Name:  Martin D. Levine
     Title: President

                                       4

<PAGE>


SELLING SHAREHOLDERS:


/s/ MARTIN LEVINE
- -------------------------------
Martin D. Levine



/s/ MARTIN LEVINE
- -------------------------------
Martin D. Levine, as Trustee of
the Jonathan L. Levine Grantor
Trust u/t/a/d January 1, 1995


/s/ MARTIN LEVINE
- -------------------------------
Martin D. Levine, as Trustee of
the Lauren E. Levine Grantor
Trust u/t/a/d January 1, 1995


/s/ MARTIN LEVINE
- -------------------------------
Martin D. Levine, as Attorney-
in-Fact for David Bidwell,
Deborah Cheezum, Donald Clifford,
Frank P. Morelli, Derek S. White and
Anthony Fiore

                                       5

<PAGE>

                                                                   Exhibit 99.1

                ON-LINE ADVERTISING AUTHORIZED RESELLER AGREEMENT

     AGREEMENT (this "AGREEMENT") entered into as of September 1, 1999 by and
between ITURF Inc., a Delaware corporation ("ITURF"), [email protected], Inc. a New
Jersey corporation (the "Company"), and MarketSource Corporation, a Delaware
corporation ("MARKETSOURCE").

     WHEREAS, concurrently with or immediately after the execution of this
Agreement, the parties hereto, the shareholders of the Company and ITURF
Acquisition Corporation, a Delaware corporation ("MERGER SUB") are consummating
a merger (the "MERGER") contemplated by a Plan and Agreement of Merger dated
August 9, 1999 (the "MERGER AGREEMENT");

     WHEREAS, MarketSource is prepurchasing the advertising amounts specified
below in anticipation that it may be necessary for MarketSource to include
internet advertising in the "full service" integrated solutions it delivers to
its clients;

     WHEREAS, as a material inducement to ITURF and Merger Sub to enter into the
Merger Agreement, MarketSource has agreed to enter into this Agreement;

     NOW, THEREFORE, In consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

     1. PURCHASE AND SALE. MarketSource hereby agrees to purchase from ITURF and
the Company (for its own use and for resale to its clients, subject to the terms
and conditions hereof), and ITURF and the Company hereby agree to sell to
MarketSource, advertising inventory (the "INVENTORY") on Web sites of ITURF and
the Company in the Commitment Amount and at the prices set forth on SCHEDULE 1
attached hereto.

     2. ROLLOVER RIGHT. Notwithstanding Section 1 hereof, MarketSource may defer
the purchase of up to 25% of the dollar value of Inventory it is required to
purchase each fiscal year (as set forth on SCHEDULE 1 hereof) to the subsequent
fiscal year; PROVIDED, HOWEVER, that (i) such deferral shall be non-cumulative
(e.g., MarketSource may only defer 25% of the amount originally required to be
purchased in fiscal year 2000 to fiscal year 2001, and may not defer to fiscal
year 2001 any portion of any amount deferred from fiscal year 1999 to fiscal
year 2000) and (ii) MarketSource may not defer any purchases beyond fiscal year
2002.

     3. PAYMENT TERMS. MarketSource shall pay for the Inventory on terms
consistent with the terms generally applicable to third party advertisers, as
communicated from time to time by ITURF and the Company to MarketSource, subject
to ITURF and the Company providing industry standard proof of performance for
services rendered.

     4. QUALITY OF INVENTORY. The Inventory shall be designated by ITURF and
shall be of size and placement generally consistent with other inventory sold on
the ITURF network of Web sites (the "ITURF NETWORK"), subject, however, to the
reasonable requests of MarketSource clients. Subject to SCHEDULE 1 and the other
terms and conditions hereof, the Inventory may consist of:

                  (1) banner advertising

                  (2) internet promotions


<PAGE>


                  (3) category sponsorship

                  (4) performance advertising agreements

                  (5) e-commerce agreements

         5. RESALE OF THE INVENTORY. Subject to the limitations set forth
herein, MarketSource may resell the Inventory to third party advertisers.

                  5.1 Without prior written or electronic approval from ITURF or
the Company, as applicable, which may be withheld at ITURF's or the Company's
(as applicable) sole discretion, MarketSource may not, directly or indirectly,
resell the inventory to advertising sales firms or advertising resellers;
PROVIDED, HOWEVER, that MarketSource may resell Inventory to advertising
agencies purchasing Inventory for the account of particular clients specified in
advance by such agencies.

                  5.2 Without prior written approval from ITURF or the Company,
as applicable, which may be withheld at ITURF's or the Company's sole
discretion, MarketSource may not list the Inventory for resale in any
liquidation or auction environment.

                  5.3 Without prior written approval from ITURF or the Company,
as applicable, which may be withheld at ITURF's or the Company's (as applicable)
sole discretion, MarketSource may not resell the Inventory at a price less than
a 20% discount from ITURF's rate card in effect at the time of the proposed
resale; PROVIDED, HOWEVER, MarketSource may include Inventory in any "integrated
solution" proposal to third parties so long as the proposal does not allocate
(or permit a third party to "back into") an allocated cost for such Inventory.
"Integrated solutions" refers to multiple services (on line and off line
advertising and promotion) offered together to enhance the effectiveness of a
given proposal to a prospective third party client.

                  5.4 MarketSource may not resell the Inventory to any third
party without the written approval of ITURF or the Company, as applicable, which
approval shall not be unreasonably withheld or delayed, except in the case of
resale to (i) any third party in the business of manufacturing or selling
apparel or (ii) to on-line content or community sites that target teen-agers
(e.g., Bolt.com, Seventeen.com), in which case ITURF may withhold its approval
at its sole discretion. Reasons for which ITURF may reasonably withhold its
approval of any resale of Inventory include, but are not limited to, (a)
age-appropriateness and (b) exclusive arrangements with other third party
advertisers. Notwithstanding anything to the contrary contained herein, neither
ITURF nor the Company shall unreasonably withhold approval of any proposed sale
of Inventory by MarketSource to J.C. Penney's Arizona Jeans division.

                  5.5 All advertising shall be subject to ITURF's and the
Company's technical guidelines then in effect and applicable to all third
parties, which shall be agreed to in writing by such third party purchasers.

                  5.6 All advertising sales by MarketSource to third parties
shall be subject to ITURF's and the Company's standard terms and conditions then
in effect and applicable to all third parties, which shall be agreed to in
writing by such third party purchasers.

                                       2

<PAGE>


         6. RESTRICTION ON USE OF ADVERTISING BY MARKETSOURCE. MarketSource may
not use any Inventory itself for purposes that could not be used by a third
party purchaser from MarketSource.

         7.       SALES MARKETING COORDINATION.

                  7.1 Each of the parties shall use best efforts to avoid
conflict or confusion in its sales and marketing activities on behalf of ITURF's
and the Company's Web sites.

                  7.2 ITURF and the Company will provide MarketSource with
reasonable quantities of customary sales materials and use best commercial
efforts to assist any sales negotiations with prospective third party clients.

         8. UNSOLD ITURF INVENTORY. For a period of six months from the
effectiveness of this Agreement, ITURF shall provide MarketSource a right of
first offer on unsold inventory (as determined in accordance with ITURF's
standard sales practices in effect from time to time) on sites within the ITURF
Network. In the event that any offer MarketSource may make on such unsold
inventory is not acceptable to ITURF, ITURF may sell, liquidate or otherwise
dispose of such unsold inventory at its discretion.

         9.       PREFERRED STATUS; SALES EXCLUSIVITY.

                  9.1 MarketSource shall give first preference to ITURF/OnTap
sites as the preferred on-line advertising venue to its clients.

                  9.2 ITURF hereby designates MarketSource as an official
sales agent for ITURF and the Company.

                  9.3 Neither ITURF nor the Company shall appoint another
person, firm or entity whose principal business is marketing on college campuses
as an official sales agent for its Web sites.

                  9.4 As used in this Section 9, the following terms have
the meanings ascribed to them below:

                          "MARKETSOURCE CUSTOMERS" means the fifty (50)
companies named on a list (the "CUSTOMER LIST") to be provided by MarketSource
to ITURF not later than thirty (30) days from the date hereof, each of which
shall have purchased at least $25,000 in advertising from MarketSource in the
twelve (12) month period preceding the date hereof (the "CUSTOMER CRITERIA").

                           "EXCLUSIVITY PERIOD" means, with respect to any
MarketSource Customer, the period beginning on the date hereof and concluding
upon the later of (i) six months from the date hereof or (ii) six months after
posting of the last advertising on the ITURF Network paid for by such
MarketSource Customer.

                  9.5 ITURF shall not market advertising services to
MarketSource Customers during the respective Exclusivity Periods applicable to
each MarketSource Customer, PROVIDED, HOWEVER, that ITURF may market to such
MarketSource Customers that MarketSource fails to contact within twenty-one (21)
days of ITURF's request that MarketSource contact such MarketSource Customers.

                                       3

<PAGE>


                  9.6 MarketSource shall have the right to include ITURF's and
the Company's Web site properties on all of its advertising and sales materials,
subject to ITURF's and the Company's quality control guidelines relating to use
of logos and brand integrity.

                  9.7 ITURF shall have full access to inspect MarketSource's
books and records during business hours for the sole purpose of verifying that
each company on the Customer List satisfies the Customer Criteria.

         10. PRIZEFEST. Neither ITURF nor the Company shall sell advertising
inventory on the "Prizefest" Web site currently located at WWW.PRIZEFEST.COM
without the prior consent of MarketSource, which shall not be unreasonably
withheld.

         11. NON-COMPETITION AGREEMENT. MarketSource shall not, directly or
indirectly, act as an agent for, refer sales to or purchase advertising
inventory for resale from Web sites or other interactive properties and
publishers (e.g., Student Advantage, Alloy.com, Bolt.com) that are directly
competitive with either Taponline.com or other Web sites in the ITURF Network;
PROVIDED, HOWEVER, that MarketSource is not restricted from representing
non-competitive Web sites that subsequent to the date hereof become competitive
as a result of future ITURF acquisitions.

         12. SALES MEETINGS. At ITURF's request MarketSource shall make its
advertising sales personnel available for meetings with ITURF personnel at
MarketSource' principal offices in New Jersey no less often than once every
calendar quarter for the purpose of receiving training regarding the Inventory.

         13. MARKETSOURCE INTERNAL SALES COMMISSIONS. [deleted]

         14. COMMISSIONS ON ADDITIONAL SALES. In the event that MarketSource
uniquely sources (in accordance with the restrictions set forth in SCHEDULE 2
attached hereto) a sale of additional advertising inventory by ITURF or the
Company on the ITURF Network (excluding Inventory purchased pursuant to Section
1 hereof) after having sold all the Inventory purchased by MarketSource in that
Fiscal Year, ITURF shall pay MarketSource a 30.0% commission on the net sales
price received by ITURF and or the Company, unless such additional advertising
inventory is inventory with significant expenses associated with it in which
case the commission shall be mutually agreed upon by the parties hereto. ITurf
shall have the right to accept or reject any additional advertising in its sole
discretion. Notwithstanding anything to the contrary contained herein, it is
understood that commissions shall be due on advertising sales to third parties
which extend beyond the term hereof, provided the sales agreement was made
during the term hereof.

         15. EFFECTIVENESS; TERM.

                  15.1 This Agreement shall not become effective until the time
of consummation of the merger contemplated by the Merger Agreement (the
"EFFECTIVE TIME"). The term of this Agreement shall commence at the Effective
Time and shall terminate at the end of Fiscal Year 2001 (as defined in SCHEDULE
1).

                  15.2 ITURF and the Company, on the one hand, or MarketSource,
on the other hand, may terminate this Agreement upon 30 days' written notice
with opportunity for cure following:

                                       4

<PAGE>


                           (a) a material breach by the other party/parties; or

                           (b) the other party/parties becoming (i) the subject
of a bankruptcy or insolvency proceeding under Federal or state statute or (ii)
insolvent or subject to direct control by a trustee, receiver or similar
authority.

                  15.3 Upon request of either party, the parties hereto shall
meet in the thirty (30) day period following the second anniversary of the date
hereof to discuss in good faith the possibility of extending the Term hereof on
mutually acceptable terms. This provision shall not be construed as an
"agreement to agree" or otherwise create a binding commitment to extend the Term
hereof.

         16.      MISCELLANEOUS.

                  16.1 ENTIRE AGREEMENT. This Agreement (which includes the
schedules and exhibits hereto) sets forth the parties' final and entire
agreement with respect to its subject matter and supersedes any and all prior
understandings and agreements. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by a written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, change or waiver is sought.

                  16.2 ASSIGNMENT; BINDING EFFECT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns; PROVIDED, HOWEVER, that neither this Agreement nor any
right or obligation hereunder may be assigned or transferred without the written
consent of the other parties, which shall not be unreasonably withheld or
delayed, except that ITURF and/or the Company may assign this Agreement and its
rights hereunder to any direct or indirect wholly-owned subsidiary of ITURF.

                  16.3 NO THIRD PARTY BENEFICIARY. Except as otherwise expressly
provided herein, the terms and provisions of this Agreement are intended solely
for the benefit of the parties hereto and their respective successors and
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.

                  16.4 PARAGRAPH HEADINGS. The paragraph or section headings in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

                  16.5 SEVERABILITY. If any provision of this Agreement shall be
held by any court of competent jurisdiction to be illegal, invalid or
unenforceable, such provision shall be construed and enforced as if it had been
more narrowly drawn so as not to be illegal, invalid or unenforceable, and such
illegality, invalidity or unenforceability shall have no effect upon and shall
not impair the enforceability of any other provision of this Agreement.

                  16.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed and interpreted in accordance with the laws
of the State of New York. The state courts of the State of New York in New York
County and, if the jurisdictional prerequisites exist at the time, the United
States District Court for the Southern District of New York, shall have sole and
exclusive jurisdictions to hear and determine any dispute or controversy arising
under or concerning this Agreement. In any action or proceeding concerning such
dispute

                                       5

<PAGE>


or controversy, the parties consent to jurisdiction and waive personal service
of any summons, complaint or other process; a summons or complaint in any such
action or proceeding may be served by mail in accordance with Section 8.1 of
the Merger Agreement.

                  16.7 COUNTERPARTS. This Agreement may be executed by facsimile
and in one or more counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                       6

<PAGE>


      [SIGNATURE PAGE TO ON-LINE ADVERTISING AUTHORIZED RESELLER AGREEMENT]


     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.

ITURF INC.


By:/s/ ALEX S. NAVARRO
   -------------------------------
     Name:  Alex Navarro
     Title: Chief Operating Officer


[email protected], INC.


By:/s/ MARTIN LEVINE
   -------------------------------
     Name:  Martin Levine
     Title: President


MARKETSOURCE CORPORATION


By:/s/ MARTIN LEVINE
   -------------------------------
     Name:  Martin Levine
     Title: President

                                       7

<PAGE>


SCHEDULE 1 TO ON-LINE ADVERTISING AUTHORIZED RESELLER AGREEMENT BETWEEN ITURF
INC., [email protected], INC. AND MARKETSOURCE CORPORATION
      -------------------

AGGREGATE AMOUNT OF ADVERTISING REQUIRED TO BE PURCHASED BY MARKETSOURCE

<TABLE>
<CAPTION>
Fiscal Year*
Of Delivery      Commitment Amount (subject to "Agency Commissions" adjustments)
<S>              <C>
1999             $1,000,000
2000             $2,500,000
2001             $2,500,000
</TABLE>

PRICE FOR ADVERTISING SOLD BASED ON A GUARANTEED NUMBER OF IMPRESSIONS:

Inventory will be sold by ITURF to MarketSource at a 45% discount to rate
card**; provided, however, that in the event MarketSource is required to pay a
commission to an advertising agency in connection with the sale of any
Inventory, (i) the price paid by MarketSource to ITURF for such Inventory will
be decreased by the amount of such commission and (ii) the Commitment Amount for
that Fiscal Year shall be increased by 181-9/11% of the amount of such
commission; PROVIDED, FURTHER, HOWEVER, that no adjustment referred to in the
preceding clause shall be made for agency commissions in excess of 15%.

PRICE FOR ADVERTISING SOLD NOT BASED ON A GUARANTEED NUMBER OF IMPRESSIONS:

MarketSource may offer to purchase Inventory on a basis other than a guaranteed
number of impressions. If ITURF accepts such an offer from MarketSource (which
ITURF may reject at its sole discretion), the sale of such Inventory shall count
towards MarketSource's Commitment Amount to the extent agreed upon in writing by
the parties.

GENERAL APPLICABILITY

MarketSource shall, within thirty days before the beginning of each quarter with
each Fiscal Year, provide projections of its intention to purchase Inventory
over the next four quarters.

MarketSource must notify ITURF in writing at least 45 days in advance of its
commitment to advertising flight dates, which notice shall specifically set
forth (i) the number of impressions commited to, (ii) the price of such
impressions, (iii) the placement of such impressions and (iv) sufficient
information to permit ITURF to approve the third party advertiser, if any, for
whose benefit the Inventory is being committed to. If MarketSource fails to
provide timely notification to ITURF, the risk of Inventory not being available
shall be borne by MarketSource and ITURF shall not be obligated to deliver the
Inventory requested.

* "Fiscal Year" means the 52 or 53 week period ending on the Saturday closest to
the last Saturday of January in each year, except that for purposes of this
agreement, Fiscal Year 1999 means the period beginning on the date this
Agreement becomes effective and concluding on January 29, 2000.

** Calculated based on ITURF's rate card as in effect from time to time, except
that the rate card applicable to the first Fiscal Year is attached hereto.

                                       8

<PAGE>


SCHEDULE 2 TO ON-LINE ADVERTISING AGREEMENT BETWEEN ITURF INC.,
[email protected], INC. AND MARKETSOURCE CORPORATION
- -------------------

REQUIREMENTS FOR A SALE TO BE CONSIDERED "UNIQUELY SOURCED" BY MARKETSOURCE

1.        Billing and cash collection by MarketSource;

                           and

2.        Contact with advertiser initiated by MarketSource;

                           and

3.       There shall not have been any direct sales or sales contacts by ITURF
         or the Company to the advertiser in the six months preceding the date
         of execution of the applicable insertion order

                                       9

<PAGE>

                                                                   Exhibit 99.2

                     OFF-LINE ADVERTISING PURCHASE AGREEMENT

         AGREEMENT (this "AGREEMENT") entered into as of September 1, 1999 by
and between iTurf Inc., a Delaware corporation ("ITURF"), and MarketSource
Corporation, a Delaware corporation ("MARKETSOURCE").

         WHEREAS, concurrently with or immediately after the execution of this
Agreement, the parties hereto, the shareholders of [email protected], Inc., a New
Jersey corporation (the "Company"), and iTurf Acquisition Corporation, a
Delaware corporation ("MERGER SUB") are consummating a merger (the "Merger")
contemplated by a Plan and Agreement of Merger dated August 9, 1999 (the "MERGER
AGREEMENT");

         WHEREAS, as a material inducement to iTurf and Merger Sub to enter into
the Merger Agreement, MarketSource has agreed to enter into this Agreement;

         NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

         1. PURCHASE AND SALE. ITurf hereby agrees to purchase from
MarketSource, and MarketSource hereby agrees to sell to iTurf , advertising
inventory (the "INVENTORY") on marketing vehicles owned or controlled by
MarketSource in the amounts and at the prices set forth on SCHEDULE 1 attached
hereto. The primary purpose of the purchase is to advertise and promote iTurf's
and the Company's web properties.

         2.       [Deleted]

         3. PAYMENT TERMS. ITurf shall pay for the Inventory on terms consistent
with the terms generally applicable to third party advertisers, as communicated
from time to time by MarketSource to iTurf.

         4. QUALITY OF INVENTORY. The Inventory shall designated by
MarketSource, subject to iTurf's and the Company's reasonable requests, and
shall be of size and placement generally consistent with other inventory sold by
MarketSource in the following high-school and college directed vehicles: Campus
Trial Pak, Study Breaker, term Planner, The Campus Source, Sports
Illustrated/Campus Fest, Spring Into Action and High School Source
(collectively, the "MARKETSOURCE NETWORK").

         5. PROHIBITION ON RESALE OF THE INVENTORY. iTurf may not resell the
Inventory to third party advertisers without prior written approval of
MarketSource, which approval shall not be unreasonably withheld or delayed.

         6.       [Deleted]

         7.       [Deleted]

         8. UNSOLD MARKETSOURCE INVENTORY. For a period of six months from the
effectiveness of this Agreement, MarketSource shall provide iTurf a right of
first offer on unsold inventory (as determined in accordance with MarketSource's
standard sales practices in effect


<PAGE>


from time to time) on sites within the
MarketSource Network. In the event that any offer iTurf may make on such unsold
inventory is not acceptable to MarketSource, MarketSource may sell, liquidate or
otherwise dispose of such unsold inventory at its discretion.

         9.  [Omitted]

         10. [Omitted]

         11. NON-COMPETITION AGREEMENT. MarketSource shall not sell, or permits
others to sell, MarketSource advertising inventory to Web sites or other
interactive properties and publishers (e.g., Student Advantage, Alloy.com,
Bolt.com) that are directly competitive with either Taponline.com or Web sites
owned by iTurf as of the date of this Agreement.

         12. [Omitted]

         13. [Omitted]

         14. COMMISSIONS EARNED BY ITURF. In the event that iTurf uniquely
sources (as defined in SCHEDULE 2 attached hereto) a sale of additional
advertising inventory by MarketSource on the MarketSource Network (excluding
Inventory purchased pursuant to Section 1 hereof) after having sold or used all
the Inventory purchased by iTurf and the Company in that Fiscal Year,
MarketSource shall pay iTurf a 30.0% commission on the net sales price received
by MarketSource, unless such additional advertising inventory is inventory with
significant expenses associated (including, by way of example, custom programs,
sampling programs and events) in which case the commission shall be mutually
agreed upon by the parties hereto. MarketSource shall have the right to accept
or reject any additional advertising in its sole discretion. Notwithstanding
anything to the contrary contained herein, it is understood that commissions
shall be due on advertising sales to third parties which extend beyond the term
hereof, provided the sales agreement was made during the term hereof.

         15. EFFECTIVENESS; TERM. This Agreement shall not become effective
until the time of consummation of the merger contemplated by the Merger
Agreement (the "EFFECTIVE TIME"). The term of this Agreement shall commence at
the Effective Time and shall terminate at the end of Fiscal Year 2001 (as
defined in SCHEDULE 1).

         16. MISCELLANEOUS.

                  16.1 ENTIRE AGREEMENT. This Agreement (which includes the
schedules and exhibits hereto) sets forth the parties' final and entire
agreement with respect to its subject matter and supersedes any and all prior
understandings and agreements. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by a written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, change or waiver is sought.

                  16.2 ASSIGNMENT; BINDING EFFECT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns; PROVIDED, HOWEVER, that neither this Agreement nor any
right or obligation hereunder may be assigned or transferred without the written
consent of the other parties, which shall not be unreasonably withheld or
delayed, except that iTurf and/or the Company may assign this Agreement and its
rights hereunder to any direct or indirect wholly-owned subsidiary of iTurf.

                                       2

<PAGE>


                  16.3 NO THIRD PARTY BENEFICIARY. Except as otherwise expressly
provided herein, the terms and provisions of this Agreement are intended solely
for the benefit of the parties hereto and their respective successors and
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.

                  16.4 PARAGRAPH HEADINGS. The paragraph or section headings in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

                  16.5 SEVERABILITY. If any provision of this Agreement shall be
held by any court of competent jurisdiction to be illegal, invalid or
unenforceable, such provision shall be construed and enforced as if it had been
more narrowly drawn so as not to be illegal, invalid or unenforceable, and such
illegality, invalidity or unenforceability shall have no effect upon and shall
not impair the enforceability of any other provision of this Agreement.

                  16.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed and interpreted in accordance with the laws
of the State of New York. The state courts of the State of New York in New York
County and, if the jurisdictional prerequisites exist at the time, the United
States District Court for the Southern District of New York, shall have sole and
exclusive jurisdictions to hear and determine any dispute or controversy arising
under or concerning this Agreement. In any action or proceeding concerning such
dispute or controversy, the parties consent to jurisdiction and waive personal
service of any summons, complaint or other process; a summons or complaint in
any such action or proceeding may be served by mail in accordance with Section
8.1 of the Merger Agreement.

                  16.7 COUNTERPARTS. This Agreement may be executed by facsimile
and in one or more counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                       3

<PAGE>


           [SIGNATURE PAGE TO OFF-LINE ADVERTISING PURCHASE AGREEMENT]


                  IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.

ITURF INC.


By:/s/ ALEX NAVARRO
   ---------------------------------
     Name:  Alex Navarro
     Title: Chief Operating Officer

MARKETSOURCE CORPORATION


By:/s/ Martin Levine
   ---------------------------------
     Name: Martin Levine
     Title: President

                                       4

<PAGE>


SCHEDULE 1 TO OFF-LINE ADVERTISING PURCHASE AGREEMENT BETWEEN
[email protected], INC. AND MARKETSOURCE CORPORATION
- -------------------

<TABLE>
<CAPTION>
Fiscal Year*
Of Delivery       Price to iTurf                     Value of Inventory**
<S>               <C>                                <C>
1999              $1,500,000                         $2,727,000
2000              $2,500,000                         $4,545,000
2001              $2,500,000                         $4,545,000
</TABLE>

Within Fiscal Years 2000 and 2001, iTurf shall purchase at least 15% of the
aggregate amount of Inventory required to be purchased by it in such Fiscal Year
in each quarter.

ITurf must notify MarketSource in writing at least 90 days in advance of its
commitment to advertising flight dates. However, iTurf should plan its
advertising schedule with MarketSource at least six (6) months in advance to
ensure space availability. If iTurf fails to provide timely notification to
MarketSource, the risk of Inventory not being available shall be borne by iTurf
and MarketSource shall not be obligated to deliver the Inventory requested.

Advertising Materials: iTurf is responsible for providing appropriate
advertising materials (e.g., color separations, duratrans for Campus Source
postings, etc.) and meeting MarketSource's execution dates. MarketSource will
provide such requirements and dates at least ninety (90) days in advance.

If iTurf requests that MarketSource assist in creative design, production
assistance or advertising materials, then MarketSource will separately bill
iTurf at its standard rates for such services.

* "Fiscal Year" means the calendar year, except that for purposes of this
agreement, Fiscal Year 1999 means the period beginning on the date this
Agreement becomes effective and concluding on December 31, 1999.

** Calculated based on MarketSource's rate card as in effect from time to time,
except that the rate card applicable to the first Fiscal Year this agreement is
attached hereto (prices do not include advertising production materials).

                                       5




© 2019 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission