<PAGE>
As filed with the Securities and Exchange Commission on August 17, 1999
Registration No. 333-80165
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment No. 4
Form S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
PURCHASEPRO.COM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Nevada 7389 88-0385401
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
---------------
3291 N. Buffalo Drive, Las Vegas, Nevada 89129, (702) 316-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Christopher P. Carton
President and Chief Operating Officer
3291 N. Buffalo Drive, Las Vegas, Nevada 89129
(702) 316-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
with a copy to:
<TABLE>
<S> <C>
Michael J. Halloran, Esq. Peter Cohn, Esq.
James P. Clough, Esq. Scott D. Elliott, Esq.
Patrick J. Devine, Esq. Andrew P. Johnson, Esq.
Jeffrey S. Harrell, Esq. Orrick, Herrington & Sutcliffe LLP
Pillsbury Madison & Sutro LLP 1020 Marsh Road
235 Montgomery Street Menlo Park, CA 94025
San Francisco, CA 94104 (650) 614-7400
(415) 983-1000
</TABLE>
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement numbers of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
Calculation of Registration Fee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed maximum Amount of
Title of each class of securities to be registered offering price(1) registration fee(2)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock, $.01 par value........ $59,800,000 $16,625
</TABLE>
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2) Previously paid.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the SEC, acting pursuant to said
Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Explanatory Note:
This Amendment No. 4 is being filed solely for the purpose of filing exhibits.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the
securities being registered hereby, other than underwriting discounts and
commissions. All amounts are estimated except the Securities and Exchange
Commission registration fee and the National Association of Securities Dealers,
Inc. filing fee.
<TABLE>
<CAPTION>
Payable by
Registrant
----------
<S> <C>
SEC registration fee............................................. $ 16,625
National Association of Securities Dealers, Inc. filing fee...... 6,480
Blue Sky fees and expenses....................................... 5,000
Accounting fees and expenses..................................... 250,000
Legal fees and expenses.......................................... 600,000
Printing and engraving expenses.................................. 300,000
Registrar and Transfer Agent's fees.............................. 50,000
Miscellaneous fees and expenses.................................. 131,895
----------
Total.......................................................... $1,360,000
==========
</TABLE>
Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 78.7502 and 78.751 of the Nevada General Corporation Law provides
for the indemnification of officers, directors and other corporate agents in
terms sufficiently broad to indemnify such persons under certain circumstances
for liabilities (including reimbursement for expenses incurred) arising under
the Securities Act of 1933, as amended (the "Securities Act"). Article VII of
our articles of incorporation (Exhibit 3(i).2 hereto) provides for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by Sections 78.7502 and 78.751 of
the Nevada General Corporation Law. We have also entered into agreements with
our directors and officers that will require us, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors or officers to the fullest extent permitted by
law.
The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
ourselves, our underwriters and our directors and officers of the underwriters,
for certain liabilities, including liabilities arising under the Securities
Act, and affords certain rights of contribution with respect thereto.
Item 15. RECENT SALES OF UNREGISTERED SECURITIES
On January 12, 1998, Registrant sold and issued an aggregate of 7,700,000
shares of common stock to three founders for an aggregate purchase price of
$399,382. Of these shares, 925,000 were subsequently contributed to capital and
2,228,000 were sold by affiliates of PurchasePro.com as follows:
. January 15, 1998: 800,000 shares of common stock from Charles E. Johnson,
Jr., a founder and the Chairman and Chief Executive Officer of
Registrant, to Christopher P. Carton, the President and Chief Operating
Officer of Registrant, at a purchase price of $0.01 per share, for cash
consideration in the aggregate amount of $8,000.
. January 15, 1998: Mr. Johnson granted Robert G. Layne options to purchase
125,000 shares of common stock owned by Mr. Johnson at $0.50 per share.
II-1
<PAGE>
. January 15, 1998: Mr. Johnson granted Larry Hancock options to purchase
100,000 shares of common stock owned by Mr. Johnson at $0.50 per share.
. June 4, 1998: 75,000 shares of common stock from Mr. Johnson to Thomas
Leahy at a purchase price of $0.10 per share, for cash consideration in
the aggregate amount of $7,500.
. June 4, 1998: 75,000 shares of common stock from Mr. Johnson to John
Patrick Leahy at a purchase price of $0.10 per share, for cash
consideration in the aggregate amount of $7,500.
. June 4, 1998: 75,000 shares of common stock from Mr. Johnson to American
Hotel Register at a purchase price of $0.10 per share, for cash
consideration in the aggregate amount of $7,500.
. June 4, 1998: 75,000 shares of common stock from Mr. Johnson to Robert
Schmidt at a purchase price of $0.10 per share, for cash consideration in
the aggregate amount of $7,500.
. June 4, 1998: 6,000 shares of common stock from Mr. Carton to Peter
Keseric at a purchase price of $2.50 per share, for cash consideration in
the aggregate amount of $15,000.
. June 4, 1998: 40,000 shares of common stock from Mr. Johnson to John
Chiles at a purchase price of $2.50 per share, for cash consideration in
the aggregate amount of $100,000.
. June 4, 1998: 100,000 shares of common stock from Mr. Johnson to James N.
Gray Co. at a purchase price of $2.50 per share, for cash consideration
in the aggregate amount of $250,000.
. June 4, 1998: 40,000 shares of common stock from Mr. Carton and 40,000
shares of common stock from Dr. Erickson to SC Holdings LLC at a purchase
price of $2.50 per share, for cash consideration in the aggregate amount
of $200,000.
. June 4, 1998: 120,000 shares of common stock from Mr. Johnson to Bradley
D. Redmon at a purchase price of $2.50 per share, for cash consideration
in the aggregate amount of $300,000.
. August 5, 1998: 80,000 shares of common stock from Mr. Johnson and 20,000
shares of common stock from Mr. Carton to Black Mountain Investment Group
at a purchase price of $2.50 per share, for cash consideration in the
aggregate amount of $250,000.
. September 1, 1998: 20,000 shares of common stock from Mr. Carton to
Richard Yukes at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $50,000.
. September 14, 1998: 10,000 shares of common stock from Mr. Johnson to
Bruce D. Smith at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $25,000.
. October 1, 1998: 20,000 shares of common stock from Mr. Johnson to
Scheiner Family Trust at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $50,000.
. October 1, 1998: 15,000 shares of common stock from Mr. Johnson to
Millenium Partners LLC at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $37,500.
. November 6, 1998: 20,000 shares of common stock from Mr. Johnson to
Gerald F. Healy at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $50,000.
. November 6, 1998: 20,000 shares of common stock from Mr. Johnson to Traxx
Irrevocable Trust at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $50,000.
. December 10, 1998: 10,000 shares of common stock from Mr. Johnson to
Sigma XIII Irrevocable Trust at a purchase price of $2.50 per share, for
cash consideration in the aggregate amount of $25,000.
. December 10, 1998: 10,000 shares of common stock from Mr. Johnson to
Woodford Webb at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $25,000.
. January 12, 1999: 300,000 shares of common stock from Mr. Johnson to
Earnest Hanna at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $750,000.
II-2
<PAGE>
. January 22, 1999: 8,000 shares of common stock from Dr. Erickson to
Gerard Turiano at a purchase price of $2.50 per share, for cash
consideration in the aggregate amount of $20,000.
. March 8, 1999: 4,000 shares of common stock from Dr. Erickson to
McDonalds Investment, Inc., for the benefit of Nicholas A. Perrino, at a
purchase price of $2.50 per share, for cash consideration in the
aggregate amount of $10,000.
. May 17, 1999: 20,000 shares of common stock from Dr. Erickson to Maurice
Gallagher at a purchase price of $2.50 per share, for cash consideration
in the aggregate amount of $50,000.
. June 3, 1999: 225,000 shares of common stock from Mr. Johnson to Stephen
Dawahare at a purchase price of $3.50 per share, for consideration in the
aggregate amount of $787,500 consisting of a release and an assignment of
rights.
. June 29, 1999: options to purchase 378,000 shares of common stock owned
by Dr. Erickson from Dr. Erickson to Mr. Johnson for $13.23 per share.
On January 15, 1998, Registrant sold and issued an aggregate of 2,300,000
shares of common stock to a group of 13 investors (the "Lexington Investor
Group"), including Mr. Redmon, in connection with such investors' loan of
$2,300,000 to Registrant pursuant to a Loan and Stock Purchase Agreement at a
price per share of $0.03. The Lexington Investor Group subsequently contributed
1,475,000 of these shares of common stock back to Registrant in connection with
the repayment of the investors' loan and the Series A Preferred Stock
financing.
On June 4, 1998, Registrant sold and issued an aggregate of 2,100,000 shares
of Series A Preferred Stock, at a purchase price of $2.50 per share, for cash
in the aggregate amount of $5,250,000 to a group of 38 investors, including the
Gallagher Corporation, Flynn Corporation, Mr. Redmon and Mr. Chiles, pursuant
to a Securities Purchase Agreement.
On June 4, 1998, Registrant issued warrants to Jefferies & Company, Inc. to
purchase 200,000 shares of common stock at a purchase price of $0.01 per share,
in connection with assisting Registrant with its Series A Preferred Stock
financing and other financial advisory services. These warrants were exercised
in May 1999 and Jefferies & Company, Inc. was issued 200,000 shares of common
stock.
On June 4, 1998, Registrant issued warrants to John G. Chiles, at the
direction of Jefferies & Company, Inc., to purchase 30,000 shares of common
stock at a purchase price of $0.01 per share, in connection with assisting
Registrant with its Series A Preferred Stock financing and other financial
advisory services. These warrants were exercised in May 1999 and Mr. Chiles was
issued 30,000 shares of common stock.
On June 4, 1998, Registrant issued warrants to purchase 170,000 shares of
common stock to Ron Booth, Mr. Gallagher and Timothy Flynn at a purchase price
of $0.01 per share, in connection with their investment in Registrant's Series
A Preferred Stock. These warrants were exercised in February 1999 and these
individuals were issued an aggregate of 170,000 shares of common stock.
On September 18, 1998, Registrant issued warrants to purchase an aggregate
of 159,999 shares of common stock to Mr. Johnson, Alex Boone, Mr. Gallagher,
Mr. Flynn and RMC Capital Corporation at a purchase price of $0.01 per share,
in connection with a loan made to Registrant by such individuals. Mr. Johnson
exercised his warrant for 53,333 shares of common stock in June 1999.
On June 2, 1999, Registrant sold and issued an aggregate of 3,300,000 shares
of Series B Preferred Stock, at a purchase price of $3.50 per share, for cash
in the aggregate amount of $11,550,000 to a group of 57 investors, including
Mr. Gallagher, Mr. Flynn, Mr. Chiles, David I. Fuente and Mr. Redmon, pursuant
to a Securities Purchase Agreement.
On June 2, 1999, Registrant issued an aggregate of 450,000 shares of common
stock to the holders of Series A Preferred Stock, consisting of 38 holders,
including the Gallagher Corporation, Flynn Corporation, Mr. Redmon and Mr.
Chiles, in consideration of these holders' waiver of certain anti-dilution
rights triggered by the issuance of the Series B Preferred Stock.
II-3
<PAGE>
As of June 30 1999, we have granted options to purchase 2,725,280 shares of
common stock to employees, consultants and other service providers of
PurchasePro.com under our 1998 Stock Option and Incentive Plan.
The sales of the above securities were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act, or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act, as transactions by an issuer not involving a public
offering or transactions pursuant to compensatory benefit plans and contracts
relating to compensation as provided under Rule 701. The recipients of
securities in each of these transactions represented their intention to acquire
the securities for investment only and not with view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationship with the Registrant,
to information about the Registrant.
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
See exhibits listed on the Exhibit Index following the signature page of the
Form S-1 which is incorporated herein by reference.
(b) Financial Statement Schedules
Schedules other than those referred to above have been omitted because they
are not applicable or not required or because the information is included
elsewhere in the Financial Statements or the notes thereto.
Item 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) The Registrant will provide to the underwriters at the closing(s)
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 4 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 17th day of August, 1999.
PURCHASEPRO.COM, INC.
By /s/ Charles E. Johnson, Jr.
-----------------------------------
Charles E. Johnson, Jr.
Chief Executive Officer and
Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles E. Johnson, Jr. and Christopher P.
Carton, and each of them, his or her true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this Registration
Statement, and any registration statement relating to the offering covered by
this Registration Statement and filed pursuant to Rule 462(b) under the
Securities Act of 1933 and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each of said attorneys-
in-fact and agents or their substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<C> <S> <C>
/s/ CHARLES E. JOHNSON, JR. Chief Executive Officer and Chairman August 17,
____________________________________ 1999
Charles E. Johnson, Jr.
* Chief Operating Officer, President, August 17,
____________________________________ Secretary and Director 1999
Christopher P. Carton
* Senior Vice President, Chief August 17,
____________________________________ Financial Officer and Treasurer 1999
Richard C. St. Peter
* Vice President--Finance, Chief August 17,
____________________________________ Accounting Officer 1999
Scott H. Miller
* Director August 17,
____________________________________ 1999
John G. Chiles
* Director August 17,
____________________________________ 1999
David I. Fuente
* Director August 17,
____________________________________ 1999
J. Terrence Lanni
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
* Director August 17, 1999
____________________________________
Michael D. O'Brien
* Director August 17, 1999
____________________________________
Bradley D. Redmon
</TABLE>
*By: /s/ Charles E. Johnson, Jr.
___________________________
Charles E. Johnson, Jr.
(Attorney-in-Fact)
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1** Form of Underwriting Agreement.
3(i).1** Amended and Restated Articles of Incorporation.
3(i).2 Form of Amended and Restated Articles of Incorporation to be
effective upon completion of this offering.
3(ii).1** Bylaws of the Registrant, as amended.
3(ii).2** Form of Amended and Restated Bylaws to be effective upon completion
of this offering.
4.1 Form of Common Stock Certificate.
5.1 Opinion of Pillsbury Madison & Sutro LLP.
10.1** Form of Indemnification Agreement between the Registrant and each
of its directors and officers.
10.2** 1998 Stock Option and Incentive Plan and forms of agreements
thereunder.
10.3** 1999 Stock Plan.
10.4** Securities Purchase Agreement dated as of June 1, 1998 between
Registrant and the purchasers of its Series A Preferred Stock.
10.5** Securities Purchase Agreement dated as of April 30, 1999 between
Registrant and the purchasers of its Series B Preferred Stock.
10.6** First Amended and Restated Stockholders Agreement dated as of April
30, 1999 between the Registrant and the holders of Series A
Preferred Stock and Series B Preferred Stock.
10.7+** Agreement dated as of January 4, 1999 between Registrant and the
Greater Phoenix Chamber of Commerce.
10.8+ Software Agency and Services Agreement dated as of May 3, 1999
among Registrant, ZoomTown.com, Inc. and Bradley D. Redmon.
10.9+** Agreement dated as of May 1, 1999, between Registrant and
Hospitalitycity pte ltd.
10.10 Agreement dated as of January 1999 between Registrant and E-
Marketpro, LLC.
10.11** Letter of Employment between Registrant and Charles E. Johnson, Jr.
10.12** Letter of Employment between Registrant and Christopher P. Carton.
10.13** Employment Agreement between Registrant and Jeffrey A. Neppl.
10.14** Letter of Employment between Registrant and Robert G. Layne.
10.15** Warrant dated as of July 22, 1999, by and between Registrant and
Office Depot, Inc.
10.16** Letter of Employment between Registrant and Richard C. St. Peter.
23.1** Consent of Arthur Andersen LLP.
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see Page II-5).
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested with respect to certain portions
of these agreements.
II-7
<PAGE>
EXHIBIT 3(i).2
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PURCHASEPRO.COM, INC.
We the undersigned President and Secretary of PurchasePro.com, Inc. do
hereby certify that:
1. The Articles of Incorporation of said corporation are amended and
restated to read in full as follows:
FIRST: The name of the corporation is PurchasePro.com, Inc.
(hereinafter, the "Corporation").
SECOND: The authorized capital stock of the Corporation shall consist
of a total of Forty Five Million (45,000,000) shares of stock which are
divided into classes and which have such designations, preferences,
limitations and relative rights as follows:
A. Forty million (40,000,000) shares of common stock with a par value
of $.01 per share, designated as "Common Stock."
B. Five million (5,000,000) shares of preferred stock of $.001 par
value, designated as "Preferred Stock." The Board of Directors is vested
with the authority to authorize by resolution from time to time the
issuance of the Preferred Shares in one or more series, and to prescribe
the number of Preferred Shares within each such series and the voting
powers, designations, preferences, limitations, restrictions and relative
rights of each such series, including preferences and relative rights that
may be superior to the Common Shares.
THIRD: The governing board of this Corporation shall be known as
directors, and the number of directors may from time to time be increased
or decreased in such manner as shall be provided by the bylaws of this
Corporation.
A. The Board of Directors shall be divided into three classes, each
class to serve for a term of three years and to be as nearly equal in
number as possible. The term of office of the first, second and third
classes of directors shall expire at the 2000, 2001 and 2002 annual
meetings of stockholders, respectively. The number and classification of
directors shall be as set forth in the bylaws of this Corporation.
B. At all elections of directors of the Corporation, all holders of
Common Stock are entitled to as many votes as equal the number of their
shares of Common Stock multiplied by the number of directors to be elected,
and they may
-1-
<PAGE>
cast all of their votes for a single nominee or may distribute the votes
among the nominees to be voted for any two or more of them, as they see
fit.
FOURTH: The holder of each share of Common Stock shall have the right
to one vote, and shall be entitled to notice of any stockholders' meeting
in accordance with the bylaws of this Corporation, and shall be entitled to
vote upon such matters and in such manner as may be provided by law. No
action required or permitted to be taken by the stockholders of the
Corporation may be taken by written consent.
A. Any action required or permitted to be taken by the stockholders
that causes the acquisition of this Corporation by another entity or
entities by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent (50%) or more
of the outstanding voting power of this Corporation, or the sale, transfer
or lease (other than a pledge or grant of a security interest to a bona
fide lender) of all or substantially all of the assets of the Corporation
shall be taken only upon the affirmative vote of at least sixty-six and
two-thirds percent (66-2/3%) of the shares of the Corporation issued and
outstanding entitled to vote thereon.
B. The affirmative vote of the holders of at least sixty-six and two-
thirds percent (66-2/3%) of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal these Articles of Incorporation.
FIFTH: To the fullest extent permitted by Chapter 78 of the Nevada
Revised Statutes as the same exists or may hereafter be amended, an officer
or director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages due to breach of
fiduciary duty as such officer or director.
SIXTH: The Corporation is authorized to provide indemnification of
agents for breach of duty to the Corporation and its stockholders through
bylaw provisions or through agreements with agents, or both, in excess of
the indemnification otherwise permitted by law, subject to any limits on
such excess indemnification as set fourth therein.
2. The foregoing Amended and Restated Articles of Incorporation have been
duly approved by the Board of Directors.
3. The foregoing Amended and Restated Articles of Incorporation have been
duly approved by the required vote of stockholders in accordance with sections
78.390 and 78.403 of the Nevada Revised Statutes. The total number of
outstanding shares of Common Stock of the Corporation is 8,566,198, of which
4,633,000 have voted in favor of the Amended and Restated Articles of
Incorporation. The total number of outstanding shares of Series A Preferred
Stock of
-2-
<PAGE>
the Corporation is 2,100,000, of which 1,340,000 have voted in favor of the
Amended and Restated Articles of Incorporation. The total number of outstanding
shares of Series B Preferred Stock of the Corporation is 3,300,000, of which
1,785,714 have voted in favor of the Amended and Restated Articles of
Incorporation. The number of shares voting in favor of the amendment equaled or
exceeded the vote required. The percentage vote required under the law and the
Articles of Incorporation in effect at the time of this amendment was more than
fifty percent (50%) of the outstanding Common Stock and more than fifty percent
(50%) of the outstanding Preferred Stock, each voting separately as a class.
Subsequent to the stockholder vote and upon the consummation of the
Corporation's initial public offering of it Common Stock, all outstanding shares
of Preferred Stock are automatically converted into Common Stock and no shares
of Preferred Stock remain outstanding.
---------------------------------------------
Christopher P. Carton
President
---------------------------------------------
Christopher P. Carton
Secretary
-3-
<PAGE>
EXHIBIT 4.1
<TABLE>
<S> <C> <C>
COMMON STOCK COMMON STOCK
NUMBER SHARES
[ ] [PURCHASEPRO.COM(SM) LOGO] [ ]
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA CUSIP 746144 10 4
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE, OF
============================================= PURCHASEPRO.COM, INC. ===================================================
transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender
of this Certificate preoperly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrant.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
[CERTIFICATE OF STOCK]
Dated:
[PURCHASEPRO.COM, INC.]
CHRISTOPHER P. CARTON [CORPORATE SEAL] CHARLES E. JOHNSON
President and Secretary [1999] Chief Executive Officer
[NEVADA]
</TABLE>
<PAGE>
EXHIBIT 5.1
PILLSBURY MADISON & SUTRO LLP
P.O. Box 7880
San Francisco, CA 94120
Tel: (415) 983-1000
Fax: (415) 983-1200
August 17, 1999
PurchasePro.com, Inc.
3291 North Buffalo Drive
Las Vegas, NV 89129
Re: Registration Statement on Form S-1
Ladies and Gentlemen:
We are acting as counsel for PurchasePro.com, Inc., a Nevada corporation
(the "Company") in connection with the registration under the Securities Act of
1933, as amended, of 4,600,000 shares of Common Stock, par value $0.01 per share
(the "Common Stock"), of the Company (including 600,000 shares subject to the
underwriters' over-allotment option) to be offered and sold by the Company. In
this regard we have participated in the preparation of a Registration Statement
on Form S-1 relating to such 4,600,000 shares of Common Stock. (Such
Registration Statement, as amended, and including any registration statement
related thereto and filed pursuant to Rule 462(b) under the Securities Act (a
"Rule 462(b) registration statement") is herein referred to as the "Registration
Statement.")
We are of the opinion that the shares of Common Stock to be offered and
sold by the Company have been duly authorized and, when issued and sold by the
Company in the manner described in the Registration Statement and in accordance
with the resolutions adopted by the Board of Directors of the Company, will be
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
/s/ Pillsbury Madison & Sutro LLP
<PAGE>
EXHIBIT 10.8
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
- ------------------------------------------------------------------------------
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
- ----------------------------------------------------------------
SOFTWARE AGENCY AND SERVICES AGREEMENT
This Software Agency and Services Agreement ("Agreement") is entered into
this 3rd day of May, 1999 ("Effective Date"), between Purchase Pro
International, Inc., a Nevada Corporation whose address is 3291 North Buffalo
Drive, Las Vegas, Nevada 89129 (hereinafter "Purchase Pro"); ZoomTown.com, Inc.,
an Ohio corporation with headquarters at 201 East Fourth Street, Cincinnati,
Ohio 45202 (hereinafter "ZoomTown.com"); and E-MarketPro, LLC, a Kentucky
limited liability company whose address is 2623 Regency Road, Lexington,
Kentucky 40503 (hereinafter "E-MarketPro").
1. Definitions
-----------
Unless otherwise specified herein, the following terms shall be defined as
follows:
(a) Access shall mean the sale, license for use, or other means by which
------
Purchase Pro enables customers to use Software products.
(b) Advertising Revenue shall mean all revenue from advertising, banners,
-------------------
directories, and the like on the co-branded ZoomTown.com/Purchase Pro form of
the Software (i.e., the page(s) or areas of the co-branded Software that
Customers see when they Access the same).
(c) Agreed Deductions shall mean the amount to be deducted from the Bundled
-----------------
Revenues from a given Bundled Transaction in order to derive the portion thereof
that equitably is attributable to the Access included therein, as mutually
agreed by Purchase Pro and ZoomTown.com.
(d) Bundled Revenues shall mean the aggregate of all revenues attributable
----------------
to Bundled Transactions.
(e) Bundled Transaction shall mean a sale, license, lease or other
-------------------
transaction with a Customer in which Access is bundled together with other goods
and/or services (e.g., an ASDL line) in a single or combined economic package.
The simultaneous, but separate, sale of Access and other good(s) and services to
a Customer, per se, will not give rise to Bundled Transaction if such sale of
Access is for full price (without discount).
(f) Contiguous States shall mean the States of Indiana, Michigan, Missouri,
-----------------
Pennsylvania, Tennessee, Virginia and West Virginia.
(g) Customer Guaranteed Minimum shall mean the sum of ** per Customer per
--------------------------- --
month; provided, however, the term Customer Guaranteed Minimum shall apply only
to Customers located within the Initial Market Area.
(h) Customer ID shall mean a unique combination of a user-ID number or
-----------
code (or other identifier) and a password that enables a user of the Software to
have Access.
(i) Customers shall mean companies (which term is understood to include all
---------
types of business entities as well as sole proprietorships and individuals doing
business under their own or any
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
- --------------------------------------------------------------------------------
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
- ------------------------------------------------------------------------------
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION.
- -----------------------------------
Confidential
<PAGE>
other name) located within the Market Area that are granted Access to the
Software (determined based on whether such entity has a Customer ID and has
local telephone "dial tone" within the Market Area). Notwithstanding the
foregoing, Customers shall not include those existing customers of E-MarketPro
within the state of Kentucky as are set forth in Exhibit D, hereto, which may be
amended in the future by mutual agreement of ZoomTown.com and E-MarketPro. For
those parties identified on Exhibit D, rights and obligations shall instead be
governed by the provisions of the E-MarketPro Agreement.
(j) Dedicated Support Facility shall mean a suitably staffed and equipped
--------------------------
facility (which can serve one or more areas) maintained by Zoomtown.com that is
dedicated to providing First Tier Support in a specific geographic area. The
Dedicated Support Facility initially will serve the Initial Market Area.
(k) Defect shall mean any replicable Software programming error that
------
causes a material non-compliance by the then most recent release of the Software
with Purchase Pro's published or external specifications and/or operating
manuals (or similar documentation) for that Software release.
(l) Disruption shall mean the occurrence of any material disruption in the
----------
services to Customers in the ZoomTown.com networks that is solely caused by a
Severity Level 1 or Severity Level 2 (as those terms are defined in Exhibit A)
Defect in the then most recent release of the Software. For purposes of this
Agreement, the term Disruption shall not include (i) any scheduled maintenance
periods or any impairment, interruption or failure to perform or respond in the
services to Customers in the ZoomTown.com networks that is not caused by use of
the Software, in the form provided by Purchase Pro, in accordance with its
specifications and documentation or (ii) any thirty (30) day period during which
the Software is operational, on average, at least 99% of the time.
(m) E-MarketPro Agreement shall mean the agreement between E-MarketPro and
---------------------
Purchase Pro dated the 1st day of February 1999, as amended.
(n) Gross Revenue shall mean (1) all revenues attributable to use of the
-------------
Software by Customers, including but not limited to fees charged for Access,
Transaction Fees, Bundled Revenues less associated Agreed Deductions, fees for
or revenue from additional services, and Advertising Revenues minus (2) if
applicable, credit card fees and similar charges payable for merchant and/or
billing and collections services on Gross Revenues paid by credit card and, for
the avoidance of doubt, any royalties payable under subparagraph .2(d).
(o) Initial Market Area shall mean the States of Ohio and Kentucky.
-------------------
(p) Launch Date shall mean the date the parties mutually agree that the
-----------
Software in its co-branded ZoomTown.com/Purchase Pro form is operational and
Customers may commence to Access the Software.
(q) Launch Period shall mean the period commencing on the Effective Date
-------------
and ending on May 17, 1999 (or such other date the parties mutually agree upon
in writing).
(r) Market Area shall mean the Initial Market Area, together with the
-----------
ZoomTown.com network in the Initial Market Area, plus any expansion(s) of the
Market Area pursuant to subparagraph.
Confidential
-2-
<PAGE>
2.2(b) or the next sentence. Market Area shall also include any mutually agreed
(agreement to be in writing and not to be unreasonably withheld) future
expansions of the ZoomTown.com network or networks to any additional geographic
area(s) in which ZoomTown.com will actively market Access to the Software and
will provide First Tier Support for Customers via a Dedicated Support Facility.
(s) Net Revenue shall mean (I) Gross Revenue less the Customer Guaranteed
-----------
Minimum with respect to the Initial Market Area and (ii) Gross Revenue outside
of the Initial Market Area.
(t) Purchase Pro House Account Customers shall mean those customers of
------------------------------------
Purchase Pro that enter into a regional, national or international contract with
Purchase Pro for Access to the Software, together with their respective
suppliers and customers that have Access or use the Software under or pursuant
to such a contract, including without limitation those Purchase Pro House
Account Customers set forth in Exhibit B hereto.
(u) Software shall mean the Purchase Pro proprietary software for the
--------
supply, purchase, bid for, offer for sale, lease, trade, barter or exchange
goods or services through use of the internet, including all updates and
upgrades thereto, offered by Purchase Pro for use by customers, including
Customers of ZoomTown.com.
(v) Support
-------
(i) First Tier Support shall mean all initial direct Customer
------------------
contact and follow-up contact as appropriate regarding Customer calls
or inquiries for technical support, maintenance and error correction
for the Software and includes, without limitation, (i) information
gathering; (ii) handing off of support calls and pass through of
problem reports, in the format prescribed by Purchase Pro, to the
appropriate Second Tier Support personnel; and (iii) the distribution
of Software work-arounds, patches and fixes to Customers directly or
by download from the ZoomTown Website (unless Purchase Pro elects to
distribute the same as part of a general availability release of the
Software or the same is available by download from other internet
website(s)). Unless Purchase Pro agrees otherwise, all First Tier
Support will be provided on a 7 X 24 basis in accordance with Purchase
Pro's then standard Software support policies and procedures.
(ii) Second Tier Support shall mean problem isolation and
-------------------
identification and follow-up with the Customer and/or First Tier
Support personnel, as appropriate.
(iii) Third Tier Support shall mean providing prompt corrective
------------------
maintenance for the Software in accordance with Exhibit A and Purchase
Pro's standard guidelines as in effect from time to time. Corrective
maintenance will include action to verify a problem's existence and
determine conditions under which the problem may recur. After such
verification, one of the following will be provided (unless said
guidelines provide otherwise, in which said guidelines will be
followed): an appropriate prompt fix for the problem or a temporary
solution or workaround for the problem to be followed by a permanent
solution in a subsequent Software release, whichever is more
reasonable and suitable under the circumstances.
Confidential
-3-
<PAGE>
(w) Transaction Fees shall mean fees charged Customers for Access to the
----------------
Software based on or measured by the number, dollar volume or other attribute of
transactions between Customers or between Customers and third parties for the
internet sale, lease, trade, barter or exchange of goods or services via Access
to the Software.
(x) ZoomTown Website shall mean the internet website that ZoomTown.com
----------------
maintains to provide information about itself and the goods and services
(including the co-branded ZoomTown.com/Purchase Pro form of the Software) that
it markets and sells.
2. Appointment/Market Area
-----------------------
2.1 E-MarketPro Agreement Amendment
-------------------------------
During the term of this Agreement, (i) the E-MarketPro Agreement is hereby
amended to the extent it is inconsistent with this Agreement as it applies to
the Initial Market Area and the Contiguous States and (ii) E-MarketPro hereby
waives all rights under the E-MarketPro Agreement to market and offer Access
with respect to those specific geographic areas (which instead shall be governed
by this Agreement).
2.2 ZoomTown.com
------------
Purchase Pro, E-MarketPro and ZoomTown.com agree that this Agreement grants
ZoomTown.com the right, as Purchase Pro's agent and representative and on the
terms set forth herein, to market and offer (which terms may include the right
to issue Customer IDs in accordance with Purchase Pro's standard policies and
practices to Customers), on behalf of Purchase Pro, Access to Purchase Pro's
Software worldwide. ZoomTown.com also is granted a non-exclusive license to use
the Software and other proprietary materials of Purchase Pro as and for the
purposes set forth herein. The rights granted ZoomTown.com hereunder and
ZoomTown.com's appointment hereunder as Purchase Pro's agent to market and offer
Access to the Software are subject to the following:
(a) ZoomTown.com's right to market and offer Access in geographic
areas comprising the Initial Market Area shall be, subject to Purchase Pro's
rights with respect to Purchase Pro House Account Customers, (i) exclusive in
the State of Ohio and (ii) co-exclusive, with E-MarketPro's similar appointment
under Paragraph 2.3 below, in the State of Kentucky. Subject to subparagraphs
2.2(b) and 2.2(c) below, ZoomTown.com's right to market and offer Access in
geographic areas outside the Initial Market Area shall be non-exclusive,
notwithstanding any future expansions of the Market Area due to an expansion of
the ZoomTown.com network to geographic locations pursuant to subparagraph 1(r)
above.
(b) Purchase Pro reserves the right to grant third parties exclusive
rights to market and offer Access to the Software in specific geographic area(s)
within the Contiguous States, subject to the provisions of this subparagraph
2.2(b). If PurchasePro desires to grant exclusive rights to market and offer
Access to the Software in specific geographic area(s) within the Contiguous
States, then Purchase Pro shall offer that exclusivity in writing to
ZoomTown.com under the terms of this Agreement as an expansion of the Market
Area. If ZoomTown.com accepts Purchase Pro's offer in
Confidential
-4-
<PAGE>
writing within thirty (30) days, then the Market Area shall be expanded to
include said geographic area(s) on an exclusive basis (even as to E-MarketPro,
except for Access to the co-branded Software by persons or entities located in
that geographic area that result from E-MarketPro customers requesting Access
for their suppliers or customers who are in that geographic area). If
ZoomTown.com does not so accept Purchase Pro's offer, then E-MarketPro shall
have a right of first refusal to acquire exclusive rights (even as to
ZoomTown.com, except for Access by persons or entities located in that
geographic area that result from Customers requesting Access for their suppliers
or customers who are in that geographic area) in those geographic area(s) on a
"match-offer" basis (which right shall be exercisable, if at all, during the ten
(10) day period that follows the lapse of ZoomTown.com's thirty (30) day
acceptance period described in the preceding sentence). If ZoomTown.com does not
so accept exclusivity and expansion of the Market Area and E-MarketPro does not
so exercise its right of first refusal in a given geographic area, then if
Purchase Pro enters into such exclusive agreement with a third party, neither
ZoomTown.com nor E-MarketPro shall have any further right to market and offer
Access to the Software in that geographic area thereafter, except for Access by
persons or entities located in that geographic area that result from Customers
requesting Access for their suppliers or customers who are in that geographic
area.
(c) Purchase Pro reserves the right to grant third parties exclusive
rights to market and offer Access to the Software in specific geographic area(s)
outside of the Initial Market Area and the Contiguous States.
(d) ZoomTown.com may elect to provide (and license, to the extent of
any proprietary rights of ZoomTown.com therein) to Purchase Pro, and Purchase
Pro may in turn provide and, if applicable, sublicense to the third party, a
turnkey type package that will allow the third party to replicate ZoomTown.com's
First Tier Support structure and ZoomTown Website page(s) relating to the
Software and to develop, host, maintain, train and market and offer Access to
the Software in the third party's geographic area in a manner that is comparable
to ZoomTown.com's efforts in the Market Area. If a third party is so provided a
turnkey package pursuant to this subparagraph 2.2(d), then Purchase Pro shall
pay, quarterly, royalties equal to (i) ** of the Gross Revenue from such third
--
party's customers located (determined in the same manner as Customers are
determined; see subparagraph 1(r) above) in such third party's geographic area
to ZoomTown.com and (ii) two and one-half percent (2.5%) of such Gross Revenue
to E-MarketPro. Any amounts owed to ZoomTown.com pursuant to this provision
shall be in addition to any amounts that may otherwise be owed to ZoomTown
pursuant to Paragraph 5, below.
(e) ZoomTown.com's exclusive rights to market and offer Access to
the Software as provided in this Agreement notwithstanding, ZoomTown.com's
rights to market and offer Access to the Software to Purchase Pro House Account
Customers always shall be non-exclusive. Purchase Pro House Account Customers
that are located in the Market Area (see subparagraph 1(r) above) shall be
granted Access to (i) a fully-featured version of the co-branded Software, if
charged the full price determined according to Paragraph 5.1 below, or (ii) a
restricted version of the Software that is not co-branded and does not include
the ability to access the "public network" national market place that is a
feature of the co-branded Software, if charged less than the full price
determined according to Paragraph 5.1 below. ZoomTown.com may market and offer
an upgrade up to the fully-featured version of the Software to Purchase Pro
House Account Customers located in the Market Area that receive the restricted
version.
*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
- ------------------------------------------------------------------------------
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
- -----------------------------------------------------------------------------
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION.
- -----------------------------------
Confidential
-5-
<PAGE>
(f) ZoomTown.com is hereby authorized to enter into binding
agreements (licenses) granting Access to Customers that are obtained through the
efforts of ZoomTown.com hereunder, provided that each such Customer meets the
credit approval criteria employed by ZoomTown.com and Cincinnati Bell Inc. in
the ordinary course of business and that all such agreements shall be in a
standard form agreement provided by Purchase Pro from time-to-time, with only
such changes (other than Customer-specific information such as name, address and
the like) as Purchase Pro approves in writing. Purchase Pro shall consult with
ZoomTown.com regarding the form and content of such standard form agreement, and
ZoomTown.com shall have the right to approve any provision thereof that it
reasonably determines would create any obligation or liability on the part of
ZoomTown.com.
(g) ZoomTown.com shall only execute or otherwise enter into
agreements with Customers pursuant to subparagraph 2.2(f) as Purchase Pro's
agent and on Purchase Pro's behalf, and Purchase Pro and Customer shall be the
contracting parties under all such agreements.
2.3 E-MarketPro
-----------
Purchase Pro, E-MarketPro and ZoomTown.com agree that this Agreement grants
E-MarketPro the right, as Purchase Pro's agent and representative and on the
terms set forth herein, to market and offer (which terms may include the right
to issue Customer IDs in accordance with Purchase Pro's standard policies and
practices to Customers), on behalf of Purchase Pro, Access to Purchase Pro's
Software. The rights granted E-MarketPro hereunder and E-MarketPro's appointment
hereunder as Purchase Pro's agent to market and offer Access to the Software is
(i) co-exclusive, subject to Purchase Pro's rights with respect to Purchase Pro
House Account Customers, with the rights of ZoomTown.com under Paragraph 2.2 in
the State of Kentucky and (ii) except as otherwise provided in subparagraphs
2.2(b) and 2.2(c), non-exclusive in the Contiguous States. During the term of
this Agreement, E-MarketPro shall not have any rights to market or offer Access
in the State of Ohio, or in those areas of Kentucky which are part of the
Cincinnati Bell Telephone local service area or the ZoomTown.com networks except
for Access to the co-branded Software (as set forth in Paragraph 4.1(ix) below)
for E-MarketPro customers or E-MarketPro customers requesting Access for their
suppliers or customers who are in that geographic area. For sales of Access by
E-MarketPro in the State of Ohio or in those areas of Kentucky specified above,
payment to E-MarketPro shall be pursuant to paragraph 5.2(ii), below. E-
MarketPro's right to market and offer Access in geographic areas outside the
Initial Market Area and the Contiguous States shall remain as stated in the E-
MarketPro Agreement.
3. Responsibilities of ZoomTown.com
--------------------------------
3.1 Sales and Support Responsibilities
----------------------------------
In addition to its other rights, understandings and obligations created by
this Agreement, ZoomTown.com shall, during the term of this Agreement:
(i) Co-brand Purchase Pro's Software in the Market Area by altering,
with technical assistance from Purchase Pro, the look and graphics of
its advertising and promotional
Confidential
-6-
<PAGE>
materials and the pages of the ZoomTown Website so as to reflect ZoomTown.com's
offering of Access to the Software coupled with the statement "powered by
Purchase Pro" and to include on the ZoomTown Website information on how a
Customer may order Access to the Software.
(ii) Use its best commercially reasonable efforts to achieve the
Launch Date on or before the end of the Launch Period.
(iii) Use its best commercially reasonable efforts to promote, market
and offer Access to Purchase Pro's Software to Customers and to
maximize sales of Access throughout the Market Area.
(iv) Act solely as an independent organization, without authority to
commit Purchase Pro except as specifically provided in subparagraphs
2.2(f) and 2.2(g) above, and to employ its own facilities at its own
expense to perform its obligations hereunder.
(v) Complete and/or carry out before the Launch Date training of its
personnel, where applicable based on the training offered by Purchase
Pro on a "train-the-trainer" basis (see subparagraph 4.1(vi) below),
as reasonably required to maintain an informed and suitably qualified
and knowledgeable sales, technical support, and application
engineering organization and to maximize sales of Access in the Market
Area, to provide First Tier Support and carry out ZoomTown.com's other
obligations and duties hereunder and to assist Purchase Pro's
personnel with the application and service of the Software.
(vi) Provide Purchase Pro with electronic copies of any marketing
materials and web-specific content regarding the Software developed by
or for ZoomTown.com. Purchase Pro will be responsible for production,
at its expense, of literature and materials and/or web pages based on
content provided by ZoomTown.com. Any such production by Purchase Pro
may include quantities ordered by ZoomTown.com.
(vii) Provide First Tier Support to Customers in good standing in the
Market Area that are using Purchase Pro Software.
(viii) Provide such additional services as may be agreed upon with
Purchase Pro.
4. Responsibilities of Purchase Pro
--------------------------------
4.1 Support and Sales Responsibilities
----------------------------------
In addition to its other rights, understandings and obligations created by
this Agreement, Purchase Pro shall, during the term of this Agreement:
(i) Use its best commercially reasonable efforts to assist
ZoomTown.com in achieving the Launch Date on or before the end of the
Launch Period.
Confidential
-7-
<PAGE>
(ii) Promptly upon their general availability, provide all fully-
featured releases of the Software to ZoomTown.com, free of charge. The
parties may also enter into a mutually agreeable, separate written
beta-test agreement pursuant to which ZoomTown.com will receive and
undertake to test "beta" and other pre-general availability releases
of the Software.
(iii) Develop, install and maintain all client software necessary to
co-brand with ZoomTown.com the Purchase Pro Software as provided in
subparagraph 3.1(i) above, at no charge to ZoomTown.com.
(iv) Provide, at ZoomTown.com's cost for reasonable travel and living
expenses, an on-site subject matter expert to install, test and
maintain any Purchase Pro Software at any ZoomTown.com location at
mutually scheduled time(s) during the Launch Period.
(v) Provide Access to standard services and generally available
Software upgrades to Customers on the same basis and at the same cost
as to all other similarly situated customers of Purchase Pro. This
provision shall not prevent Purchase Pro from developing and offering
customized and/or dedicated solutions to particular customers.
(vi) Conduct mutually scheduled training sessions for the
ZoomTown.com's sales and support personnel, both before the Launch
Date and thereafter. Such training will be at no charge, except that
if conducted at ZoomTown.com's location, ZoomTown.com will bear the
reasonable travel and living expenses of the Purchase Pro personnel
involved. After the first anniversary of the Launch Date, any such
training will be provided on a "train-the-trainer" basis only.
(vii) Provide ZoomTown.com with electronic copies of any marketing
materials and web-specific content regarding the Software developed by
or for Purchase Pro. ZoomTown.com will be responsible for production,
at its expense, of literature and materials and/or web pages based on
content provided by Purchase Pro. Any such production by ZoomTown.com
may include quantities ordered by Purchase Pro.
(viii) Provide Second Tier Support and Third Tier Support, within the
time limitations specified in Exhibit A, to ZoomTown.com and to all
Customers in good standing that are using Purchase Pro Software.
(ix) Offer and allow Access only to the ZoomTown.com co-branded
Software (see subparagraph 4.1(ii)) to any Customers in the Cincinnati
Bell Telephone service area and to any Customer on the ZoomTown.com
networks, with the exception of Purchase Pro House Account Customers
as set forth herein.
(x) Provide such additional services as may be agreed upon with
ZoomTown.com.
Confidential
-8-
<PAGE>
4.2 Scope and Limitation of Purchase Pro's Authority
------------------------------------------------
Neither E-MarketPro nor Purchase Pro shall have any power or authority to
act for, bind or commit ZoomTown.com. Purchase Pro may not use the name of the
ZoomTown.com in any sales promotion literature, news release, or advertising
outside of that which is permitted under or contemplated by the terms of this
Agreement, without the express written consent of the ZoomTown.com in each
instance.
4.3 Quality Standards
-----------------
Purchase Pro shall provide a general availability release of the Software
in accordance with Purchase Pro's normal quality assurance that is free of any
Defects that are known to Purchase Pro and not corrected or subject to a
reasonable software patch or problem work-around, no later than the Launch Date.
Purchase Pro will not knowingly release any general availability version of the
Software that Purchase Pro believes is likely to have a substantial incidence of
Disruptions without notifying ZoomTown.com.
4.4 No Warranties
-------------
Subject to paragraph 4.6. (i) ZoomTown.com acknowledges that the Software
is provided "AS-IS" and (ii) Purchase Pro does not warrant its Software to be
free from any Defects or that its operation will be free from Disruption. In
lieu any warranty in respect of the Software, Purchase Pro will provide
ZoomTown.com with error correction services for the Software in accordance with
Exhibit A, free of charge.
4.5 Correction of Software Defects
------------------------------
In the event the Software is found to contain a Defect, Purchase Pro shall
take steps to remedy the Defect in accordance with the applicable provisions of
Exhibit A.
4.6 Year 2000 Compliance
--------------------
Purchase Pro represents and warrants as follows: that the Software is
designed to be used prior to, during, and after the year 2000 A. D. and that it
will operate during such time periods without error relating to its internal
processing of date data that is presented to the Software in an industry-
standard, year 2000 compliant format (referred to herein as being in a "Y2K
Compliant Date Format") which represent or reference different centuries or more
than one century; that no value for current date in Y2K Compliant Date Format
will cause interruptions in normal operation; that all manipulations of
calendar-related data (dates, duration, days of week, etc.) in Y2K Compliant
Date Format will produce correct results for all valid date values; that date
elements in interfaces and data storage within the Software permits specifying
century or uses another industry-standard technique to eliminate date ambiguity
by using a Y2K Compliant Date Format; and that for any date element represented
without century, the correct century is unambiguous for all manipulations
involving that element which occur during the warranty period set forth in the
next sentence. The Year 2000 Compliance Warranty set forth herein shall expire
on the date on which the Software has operated without a material breach of this
Year 2000 Compliance Warranty for a consecutive 12-month period after January 1,
2000. Any
Confidential
-9-
<PAGE>
failure of the Software to comply with this Year 2000 Compliance Warranty shall
be promptly repaired by Purchase Pro in accordance with the applicable
provisions of Exhibit A.
4.7 Disruption of the ZoomTown.com Network
--------------------------------------
Notwithstanding anything in this Agreement to the contrary, in the event
that there is any Disruption in the ZoomTown.com network which is caused by or
under the control of Purchase Pro, Purchase Pro shall take all commercially
reasonable actions necessary to terminate the Disruption as soon as practicable.
In the event the Disruption of in the ZoomTown.com network is not caused by or
under the control of Purchase Pro, Purchase Pro shall cooperate in
ZoomTown.com's efforts to terminate such Disruption as reasonably requested by
ZoomTown.com, at ZoomTown.com's expense.
4.8 Security
--------
Purchase Pro will include and maintain in the Software and/or otherwise use
such encryption and firewall technologies and/or other security systems or
procedures as it believes are reasonable and appropriate for the purpose that
data transmission to and from the Software will be secure. Purchase Pro does
not represent or warrant that the Software cannot be "hacked," that all such
data transmissions will be secure in all circumstances, or that the encryption
and firewall technologies and/or other security systems or procedures that it
maintains in the Software or uses cannot be broken or evaded. In addition, this
paragraph 4.8 shall not require Purchase Pro to use or maintain in the Software
any encryption and firewall technologies and/or other security systems or
procedures in violation of any applicable law or regulation.
4.9 Development of Enhanced Software
--------------------------------
The parties hereto anticipate that, from time-to-time, ZoomTown.com may
request the further development of the Software to include new features or
functions. In such event, ZoomTown.com shall make such requests in writing,
specifying with particularity the desired characteristics and specifications of
said improvements, features, or functions, and Purchase Pro shall promptly
prepare a written preliminary proposal for development of same, said proposal to
include a schedule for development and an estimated cost of completion. In the
event the preliminary proposal is acceptable to ZoomTown.com, the parties shall
negotiate in good faith the terms of a final proposal, including a final set of
design specifications, performance characteristics, development schedule, and
price, which upon written approval and acceptance by both parties shall
constitute a binding addendum to this Agreement.
5. Customer Sales
5.1 Price
-----
Purchase Pro, in consultation with ZoomTown.com, shall determine the market
sale price for all Access and all additional software and services to be
provided to Customers in the Market Area, including, without limitation,
upgrades to fully-featured versions pursuant to subparagraph 2.2(e). An initial
schedule of such fees for Access to the Software and services shall be
memorialized in writing before the Launch Date.
Confidential
-10-
<PAGE>
5.2 Invoicing and Terms of Payment
------------------------------
(i) For the initial 24 months after the Launch Date, Purchase Pro
shall invoice on a regular basis all Customers at the price determined
under paragraph 5.1 plus any amount owed for additional goods or services
provided to the Customer. Beginning with the twenty-fifth (25th) such
month, ZoomTown.com may elect in its sole discretion to invoice on a
regular basis all Customers on behalf of Purchase Pro, whereupon
ZoomTown.com shall invoice the Customers (with appropriate mention of
Purchase Pro's name on the invoice); in such event, the parties shall
cooperate to transition the billing and collection responsibility to
ZoomTown.com. Regardless of the party performing the billing and collection
function, all Gross Revenues subject to this Agreement are revenues of
Purchase Pro. Purchase Pro shall pay sales commissions to ZoomTown.com and
E-MarketPro on such revenues in accordance with subparagraphs 5.2(ii)
through 5.2(iv).
(ii) Purchase Pro shall pay (1) a sales commission to ZoomTown.com
equal to ** of the Net Revenues from Customers in the Initial Market Area
--
during the period ending on the first anniversary of the Launch Date and
(2) a sales commission to E-MarketPro equal to thirty-seven and one-half
percent (37.5%) of such Net Revenues. Purchase Pro shall pay (1) a sales
commission to ZoomTown.com equal to ** of the Net Revenues from Customers
--
in the Initial Market Area after the first anniversary of the Launch Date
and (2) a sales commission to E-MarketPro equal to twenty-five percent
(25%) of such Net Revenues. Purchase Pro shall pay (1) a sales commission
to ZoomTown.com equal to (a) ** of the Net Revenues from Customers in the
--
Contiguous States minus (b) the amount payable to E-MarketPro pursuant to
clause (2) of this sentence, and (2) a sales commission to E-MarketPro
equal to the lesser of fourteen and one-half percent (14.5%) of such Net
Revenues or $14.50 per such Customer per month. Purchase Pro shall pay (1)
a sales commission to ZoomTown.com equal to ** of the Net Revenues, and (2)
--
a sales commission to E-MarketPro equal to two and one half percent (2.5%)
of such Net Revenues from Customers in any expansion of the Market Area
outside of the Initial Market and the Contiguous States.
(iii) For Access by persons or entities located outside the Market
Area that have a Customer ID issued as a result of a sale by ZoomTown.com
pursuant to paragraph 2.2 or that result from Customers requesting Access
for their suppliers or customers who are in an area outside the Market Area
and/or from the marketing and sales efforts by ZoomTown.com outside the
Market Area (i.e., in both cases, persons or entities that ZoomTown.com has
"signed up" to have Access, but for whom ZoomTown.com is not obligated to
provide First Tier Support), Purchase Pro shall pay (1) a sales commission
to ZoomTown.com equal to ** of all Gross Revenue arising from such Access,
--
and (2) a sales commission to E-MarketPro equal to two and one-half percent
(2.5%) of all Gross Revenue arising from such Access, unless such Access is
within the Contiguous States in which case Purchase Pro shall pay (1) a
sales commission to ZoomTown.com equal to **
--
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
- --------------------------------------------------------------------------------
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
- ------------------------------------------------------------------------------
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION.
- -----------------------------------
Confidential
-11-
<PAGE>
of all Gross Revenue arising from such Access and (2) a sales commission to E-
MarketPro equal to two and one-half percent (2.5%) of all Gross Revenue arising
from such Access. The obligations contained in this subparagraph 5.2(iii) shall
extend to first line customers and suppliers only, and not to subsequent
downline customers or suppliers, unless such downline customers or suppliers
themselves are in the Market Area, in which case the applicable sales commission
set forth in subparagraph 5.2(ii), above, shall apply as to them.
(iv) Purchase Pro shall pay a sales commission on the portion of the
Gross Revenues remitted for any given month that is represented by the
Customer Guaranteed Minimum, as follows: (1) ZoomTown.com shall be entitled
to a sales commission equal to the Customer Guaranteed Minimum attributable
to the first ** Customers and (2) E-MarketPro shall be entitled to a sales
--
commission equal to the Customer Guaranteed Minimum attributable to all
remaining Customers times the sales commission percentage under the first
two sentences of subparagraph 5.2(ii) that applies to the corresponding Net
Revenues from such Customers. For avoidance of doubt, this counting of the
"first one thousand (1,000) Customers" applies separately and afresh for
each monthly remittance under subparagraph 5.2(v) and does not refer to the
first one thousand (1,000) Customers since the inception of this Agreement.
(v) The appropriate party (i.e., the party performing billing and
collection functions with respect to the Gross Revenues in question) shall
remit, on an end-of-calendar-month basis one month in arrears (e.g., remit
at the end of February for Net Revenues in January), to the other parties
hereunder the respective amounts to which they are entitled under the
provisions of subparagraph 2.2(d) (if applicable) and this Paragraph 5.2.
The party obligated to remit sums to the other under this paragraph 5.2(v)
shall provide to the other parties, with each monthly remittance, a written
report of all amounts invoiced, amounts collected, and any deductions from
amounts otherwise due to such other party.
(vi) Except as otherwise agreed in any "match-offer" agreement
entered into pursuant to subparagraph 2.2(b), and as to Gross Revenues and
Net Revenues on which E-MarketPro receives a sales commission under this
Agreement, the payment by Purchase Pro to E-MarketPro of sales commissions
on revenues from Access by customers that result from sales by E-MarketPro
shall be governed by the E-MarketPro Agreement.
5.3 Initial Payment
---------------
Upon execution of this Agreement, ZoomTown.com will pay to Purchase Pro the
amount of $500,000, which payment shall be non-refundable. Purchase Pro shall
pay a sales commission to E-MarketPro equal to sixty-five percent (65%) of such
amount.
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
- --------------------------------------------------------------------------------
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
- ------------------------------------------------------------------------------
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION.
- -----------------------------------
Confidential
-12-
<PAGE>
5.4 Taxes
-----
The party responsible under law will collect and remit as required by
applicable law any sales, use, value-added or excise taxes, in amounts legally
levied or imposed under the authority of a federal, state or local taxing
jurisdiction, on the Gross Revenues or royalties under subparagraph 2.2(d) (or
any part thereof) subject to this Agreement for Access to the Software, and the
provision of related services.
5.5 Exchange of Necessary Information
---------------------------------
The applicable party, in a timely fashion and periodically as the parties
mutually agree, shall provide the other party with the necessary billing, Gross
or Net Revenue and other information (including any applicable pre-paid amounts
and other offset credits and applicable tax calculations under paragraph 5.4) in
such party's possession or control in order that the party responsible hereunder
may invoice Customers for the correct amounts under paragraph 5.2 and collect
and remit taxes as required by paragraph 5.4.
5.6 Quarterly Settle-Up
-------------------
Not less frequently than quarterly, the parties will settle-up and
reimburse each other as required so that (i) any remittances under paragraph 5.2
that represent bad debt are reimbursed back to the party that made the
remittance and (ii) tax payments under paragraph 5.4 are borne by the parties in
proportion to their respective shares of the pertinent revenue under paragraph
5.2.
6. Intellectual Property
6.1 Ownership of Intellectual Property Rights
-----------------------------------------
The parties agree that all prior patent, copyright, trademark or other
intellectual property rights in and to any product or idea existing prior to the
date of this Agreement shall remain with the party holding such rights. Each
party grants to the other parties a license for use of such intellectual
property to the extent necessary to perform its obligations hereunder. All
materials developed pursuant to any accepted final proposal (including, without
limitation, all preliminary and final plans and all Software and collateral
materials, regardless of the medium) pursuant to Paragraph 4.9 above, and all
corresponding copyrights, trade secret rights, and patent rights, shall be the
property of parties as they may agree pursuant to paragraph 4.9. In no event,
however, will ZoomTown.com acquire any ownership rights to any underlying
intellectual property of Purchase Pro, notwithstanding any agreement under
paragraph 4.9 that ZoomTown.com shall have or acquire any ownership rights in a
derivative work thereof. Purchase Pro and ZoomTown.com shall execute and
deliver all documents reasonably requested by the other as necessary to perfect,
register, and/or enforce all patents, copyrights and other rights and protection
relating to materials subject to paragraph 4.9 in any and all countries.
Confidential
-13-
<PAGE>
6.2 Co-Branding
-----------
The parties acknowledge and agree that the other parties' own valuable
trademarks for various trade names, which will be contributed to the co-branding
of the Software. Each party agrees to take, in consultation with the other
party and at its written request and expense, all actions reasonably necessary
to protect the trademarks of the other and to avoid confusion in the public and
inadvertent loss of trademark rights, and to comply with the other's guidelines
and procedures on trademark usage.
6.3 Patent, Copyright and Trademark Indemnity
-----------------------------------------
Purchase Pro warrants that its Software does not and will not infringe upon
any US patent issued as of the Effective Date, US copyright, US trademark or
trade secret owned by any third party, and shall, at its expense, defend and
indemnify ZoomTown.com for costs and damages and expenses (including reasonable
attorneys fees) incurred in any suit, claim or proceeding brought against
ZoomTown.com alleging that the Software or software sold or offered for use
pursuant to this Agreement infringes any such patents, copyrights, trademarks or
other intellectual property rights, provided Purchase Pro has sole control over
and ZoomTown.com fully cooperates in such defense and any settlement of such
claim. Should Access or the use of any unit of the Software by ZoomTown.com or
its Customers be enjoined, or in the event that Purchase Pro desires to minimize
its liabilities hereunder, Purchase Pro may, at its option, either (i)
substitute a fully equivalent non-infringing unit of the Software, modify the
infringing item so that it no longer infringes but remains fully equivalent, or
obtain for ZoomTown.com and ZoomTown.com's Customers, at its own expense, the
right to continue use of such item or (ii) if the alternatives under clause (i)
are not available at commercially reasonable cost, terminate this Agreement as
to the subject Software.
7. Attorneys Fees
--------------
If any arbitration or litigation is commenced between or among parties to
this Agreement or their personal representatives concerning any of the
provisions of this Agreement or the rights and duties of any person in relation
thereto, the party or parties prevailing in such arbitration or litigation shall
be entitled, in addition to such other relief as may be granted, to a reasonable
sum for their attorneys fees which shall be determined by the Court in such
litigation or in a separate action brought for that purpose.
8. Force Majeure
-------------
A party shall be excused from any delay or failure in its performance
hereunder caused by any labor dispute, governmental requirement, act of God, and
other causes beyond its control. If such delaying cause shall continue for more
than ten (10) days, the party injured by the inability of the other to perform
shall have the right upon ten (10) days prior written notice to terminate this
Agreement.
Confidential
-14-
<PAGE>
9. Governmental Authorities
------------------------
No party shall be required to do anything contrary to any applicable
directive or obligation of any competent governmental authority, and shall
promptly notify the other parties if compelled by law, act, or government decree
to act otherwise than in accordance with this Agreement.
10. Assumption of Liabilities or Obligations
----------------------------------------
Except as specified herein, this Agreement in no way confers upon any party
the right to act as the legal representative or agent of any other party, nor
shall any party have the right or authority to assume any liability or
obligation of any kind on behalf of any other party.
11. Agreement Termination
---------------------
11.1 Termination
-----------
(i) The parties warrant that all identifying signs, literature, logos and
other evidence linking ZoomTown.com and Purchase Pro shall be removed
or destroyed upon termination of this Agreement.
(ii) Should this Agreement be terminated by any party in accordance with
paragraphs 11.2 or 11.3 prior to payment of amounts due hereunder or
pursuant hereto for periods prior to the date of termination, such
amount shall be paid (by the responsible party, as the case may be)
as when due in accordance with the terms hereof.
11.2 Termination by Default
----------------------
This Agreement shall terminate, at the option of a non-defaulting party,
upon substantial default or material breach of any of the terms, conditions, or
obligations hereunder unless the defaulting party is able to fully remedy the
default or breach within thirty (30) days (or one (1) business day in the case
of a default under paragraph 4.7). Upon termination of this Agreement by
substantial default or material breach, all rights and privileges granted under
this Agreement to the defaulting party shall immediately terminate. Termination
of this Agreement by default shall not relieve the defaulting party of its
obligations hereunder.
11.3 Insolvency or Bankruptcy
------------------------
This Agreement shall terminate if any party becomes insolvent or bankrupt,
or admits in writing its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors, or ceases to function as a going
concern or to conduct its operations in the normal course of business.
Confidential
-15-
<PAGE>
11.4 Provision for Customers in the Event of Termination
---------------------------------------------------
(i) In the event this Agreement is terminated, whether by default or
otherwise, the responsible party shall continue to remit to the other
party all amounts owed, pursuant to Paragraph 5.2, above.
(ii) In the event this Agreement is terminated, ZoomTown.com shall be
permitted to offer to any Customer any such other or additional
software and services, whether competing or not, or access thereto,
without further liability to Purchase Pro or E-MarketPro.
11.5 Escrow Agreement for the Retention of Software
----------------------------------------------
Within sixty (60) days after the Effective Date, ZoomTown.com and Purchase
Pro shall enter into a source code escrow with a mutually agreeable escrow
agent, substantially in the form attached as Exhibit C hereto.
11.6 Limitation of Default Rights and Remedies.
-----------------------------------------
Notwithstanding anything in this Agreement to the contrary, it is expressly
understood and agreed by the parties that the right to declare default hereunder
by E-MarketPro shall be limited to claims of non-payment under Paragraph 5 and
Paragraph 2.2(d) and claims of breach of obligations to offer the right of first
refusal under Paragraph 2.2(c), and E-MarketPro specifically waives any rights
to declare default except for those claims specified above. In the event E-
MarketPro declares default, remedies shall be limited to collection of amounts
found owing to E-MarketPro. In no event shall a declaration of default by E-
MarketPro constitute a default of any other provision hereunder, or relieve any
party including E-MarketPro, from continuing to perform all obligations
hereunder.
12. Assignment
----------
This Agreement may not be assigned in whole or in part by a party without
the consent of the other parties hereto. Such consent shall not be required in
the case of a sale of all or substantially all the assets of the assigning party
or an assignment to an entity directly or indirectly owning or controlling,
owned or controlled by, or under common control with the assigning party and, in
any event, shall not be unreasonably withheld except for good and just cause and
shall not be deemed a waiver of this Article for any proposed subsequent
assignments. Notwithstanding the foregoing, ZoomTown.com shall retain the right
to terminate this Agreement without further obligation or liability to Purchase
Pro or E-MarketPro, its successors or assigns, if, in its sole and exclusive
judgment, any assignment or purported assignment by Purchase Pro or E-MarketPro
is to be made to a competitor of Cincinnati Bell.
13. Sole Agreement
--------------
This Agreement contains the sole and only agreement of the parties and
correctly sets forth the rights, duties, and obligations of each party to the
other parties as of its date together with the standards
Confidential
-16-
<PAGE>
and any other agreements in writing which the parties mutually agree upon. Any
prior agreements, promises, negotiations, or representations with respect to the
specific subject matter of this Agreement that are not expressly set forth in
this Agreement are of no force and effect. This Paragraph 13 does not affect or
apply to the E-MarketPro Agreement, except so far as this Agreement specifically
supercedes or amends the E-MarketPro Agreement.
14. Paragraph Titles
----------------
Paragraph titles or captions contained herein are inserted only as a matter
of convenience and for reference, and in no way define, limit, extend, or
describe the scope of this Agreement, nor the intent of any provision thereof.
15. Confidentiality and Non-Disclosure
----------------------------------
Each party acknowledges that in the course of its performance hereunder,
and in offering services to Customers, it may obtain confidential information,
including without limitation customer lists, buying habits and marketing
strategies, concerning E-MarketPro, Purchase Pro, Cincinnati Bell Inc.,
ZoomTown.com, and/or the affiliates and/or customers of such entities. Each
party expressly agrees that it shall not, without express written consent of the
other party, disclose any such information of the other party or its affiliates
or customers to any third party, or use such information for purposes not
related to its performance hereunder. The parties will discuss in good faith a
separate agreement regarding the sale of Customer lists and other similar data
generated by operation of the Software as contemplated by this Agreement.
16. Jurisdiction
------------
16.1 Governing Law
-------------
This Agreement, and all of the rights and duties in connection therewith,
shall be governed by and construed under the laws of the State of Ohio, USA.
16.2 Subject Matter and Personal Jurisdiction
----------------------------------------
The courts located in the State Ohio shall have full subject matter
jurisdiction, and shall have full personal jurisdiction over E-MarketPro,
Purchase Pro and ZoomTown.com in connection with any controversy, claim, or
award arising out of this Agreement or between the parties. Any suit to enforce
the terms herein or between the parties shall be brought in any court of
competent jurisdiction in Hamilton County, Ohio, and the parties specifically
waive hereby any claims or defenses of personal jurisdiction, improper venue, or
forum non-conveniens with respect to litigation brought in accordance with this
paragraph 16.2.
17. Amendments
----------
This Agreement may be amended only by the mutual written consent of all the
parties hereto.
Confidential
-17-
<PAGE>
18. Waivers
-------
Except as herein provided to the contrary, failure by any party to insist
upon strict and complete performance of any or all of the terms or conditions
contained in this Agreement shall not constitute nor be construed as a waiver of
that party's right to thereafter enforce any such terms or conditions, nor shall
it be deemed a waiver of any other term or condition contained herein.
19. Construction and Severance
--------------------------
The language in all parts of this Agreement shall be in all cases construed
according to its fair meaning and not strictly for or against any party hereto.
If any term, covenant, condition, or provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unreasonable, the
remainder of the provisions hereof shall remain in full force and effect.
20. Access to Records
-----------------
The parties hereto shall keep accurate records in sufficient detail to
enable the determination of the payments payable to the other parties and each
party shall permit examination and inspection of the records by authorized
representatives of the other parties, upon reasonable notice, during usual
business hours to the extent necessary to verify the reports and payments
required hereunder.
21. Term of Agreement
-----------------
21.1 Initial Term of Agreement
-------------------------
This Agreement shall become effective on the date on which it is executed
and shall continue until the last day of the calendar month in which the third
anniversary of the Launch Date occurs.
21.2 Extensions of Agreement
-----------------------
At the expiration of this Agreement, as described in Paragraph 21.1 above,
and provided that it has not been subject to earlier termination, this Agreement
shall continue on a year to year basis thereafter unless a party advises the
other parties in writing at least thirty (30) days in advance of its intent to
terminate this Agreement, in which event such termination shall become effective
thirty (30) days after receipt of such notice.
22. Counterparts
------------
This Agreement may be executed in counterparts, all of which taken together
shall be deemed one original.
23. Corporate Authority
-------------------
The persons executing this Agreement warrant that they have the right,
power, legal capacity, and appropriate authority to enter into this Agreement on
behalf of the entity for whom they sign.
Confidential
-18-
<PAGE>
24. Remedies: Non-Exclusive
------------------------
No remedy conferred by any specific provision of this Agreement is intended
to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder now or
hereinafter existing in law, or in equity, or by stature, or by otherwise. The
election of one or more remedies by a party shall not constitute a waiver of the
right to pursue other available remedies.
25. Notices
-------
With the exception of bills, invoices, and shipping papers, all notices or
other communications provided for by this Agreement shall be made in writing and
shall be deemed properly delivered (i) when delivered personally, or (ii) by the
mailing of such notice to the parties entitled thereto, registered or certified
mail, postage prepaid to the parties at their address set forth below: (or such
address designated, in writing, by one party to the other parties).
To ZoomTown.com, Inc. To Purchase Pro, Inc.
--------------------- ---------------------
ZoomTown.com, Inc. Purchase Pro International, Inc.
Attention: Michael O'Brien Attention: Christopher P. Carton
Suite 102-715 3291 North Buffalo Drive
201 East Fourth Street Las Vegas, Nevada 89129
Cincinnati, Ohio 45202
With a copy to:
Purchase Pro International, Inc.
Attention: Brad Redmon
2623 Regency Road
Lexington, Kentucky 40503
To: E-MarketPro
---------------
E-MarketPro, LLC
Attention: Brad Redmon
2623 Regency Road
Lexington, Kentucky 40503
26. Participation on the Software Steering Committee
------------------------------------------------
It is acknowledged that Purchase Pro maintains a committee known as the
Software Steering Committee ("Committee") which is responsible for the design of
all software of Purchase Pro, including the Software, and all alterations,
upgrades and updates thereto, together with the implementation of such changes
to the Software or other Purchase Pro software. In furtherance hereof,
ZoomTown.com shall be entitled to appoint one member of the Committee during the
term of this Agreement, with full power as is granted all other members.
Confidential
-19-
<PAGE>
PURCHASE PRO INTERNATIONAL, INC. ZOOMTOWN.COM
(Purchase Pro)
BY:
Signature: /s/ CHARLES JOHNSON JR. Signature: /s/ MICHAEL O'BRIEN
----------------------- ---------------------------
Typed Name: Charles Johnson, Jr. Typed Name: Michael O'Brien
----------------------- --------------------------
Title: Chief Executive Officer Title: President ZoomTown.com
-------------------------- --------------------------------
Date: 5/19/99 Date: 5/19/99
---------------------------- --------------------------------
E-MARKETPRO, LLC
(E-MarketPro)
BY:
Signature: /s/ BRADLEY REDMON
-----------------------
Typed Name: Bradley Redmon
-----------------------
Title: Sole Member
---------------------------
Date: 5/19/99
----------------------------
Confidential
-20-
<PAGE>
Exhibit A
---------
Confidential
-21-
<PAGE>
Exhibit B
---------
List of the Purchase Pro House Account Customers
------------------------------------------------
as of the Effective Date
------------------------
Office Depot
CompUSA
HPS & Affiliates
Marriott
Hilton
Meristar
Starwood
Best Western
Orlando Chamber of Commerce (Orlando, FL)
Phoenix Chamber of Commerce (Phoenix, AZ)
Confidential
-22-
<PAGE>
Exhibit C
---------
Confidential
-23-
<PAGE>
Exhibit D
---------
Confidential
-24-
<PAGE>
EXHIBIT 10.10
AGREEMENT
---------
THIS AGREEMENT (the "Agreement") is made and entered into effective as of
the __ day of January, 1999, by and among PURCHASE PRO INTERNATIONAL, INC., a
Nevada corporation, whose address is 3291 North Buffalo Drive, Las Vegas, NV
89129 ("PPI"), and E-MARKETPRO, LLC, with its principal office and place of
business at _______________________________ ("Contractor").
RECITALS:
WHEREAS, PPI is the developer and owner of an Internet purchasing network
operated by PPI under the name "Purchase Pro" (the "Network"); and
WHEREAS, PPI and Contractor desire to enter into this Agreement relating to
Contractor's marketing of Network subscriptions;
NOW, THEREFORE, in consideration of their mutual covenants and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree to and affirm the foregoing recitals
and further agree as follows:
1. Marketing Rights; Revenue Sharing; Related Matters.
--------------------------------------------------
a. PPI hereby grants to Contractor the right from and after the date
of this Agreement and for the term set forth herein to sell subscriptions to the
Network to all persons or entities with their residence or principal place of
business located in the following designated area (herein the "Territory"): the
states of Kentucky and Ohio. Provided, however, Contractor shall have the right
to market the Network to persons and entities outside of the Territory if such
persons or entities are doing business with a subscriber within the Territory
and the existence of such other persons or entities is made aware to Contractor
by such subscriber. PPI agrees that neither it nor any other person to whom it
may grant Network marketing rights shall establish an office in the Territory
for the purpose of marketing Network subscriptions. Contractor shall not
establish an office or have a place of business for the purpose of marketing the
Network anywhere outside of the Territory without PPI's prior written consent.
Contractor acknowledges that third parties to whom PPI may grant marketing
rights and PPI itself have the right to market Network subscriptions to persons
or entities located within the Territory on the same terms as Contractor has the
right to market to persons outside of the Territory as stated above in this
paragraph. Contractor shall have no rights of any kind with respect to the
Network or the marketing of the Network outside of the Territory except as
provided in this Agreement.
a. For all Network subscriptions obtained by Contractor in
accordance with this Agreement from subscribers outside of the Territory but
from an area for which the Network marketing rights have been granted to a third
party or where PPI itself is marketing subscriptions (herein collectively the
"Ex-Territory Subscriptions"), Contractor agrees that such Ex-Territory
Subscriptions may, at the request of PPI, be serviced by either PPI or the owner
of the marketing rights in such area by installing and providing normal customer
support to such subscribers, in which case revenue from such Ex-Territory
Subscriptions shall be credited 50% each to Contractor and the person providing
the installation and customer service for as long as such customer support is
provided by PPI or such third person. Provided, however, if Contractor desires
to service such Ex-Territory Subscriptions and demonstrates its ability to do so
in accordance with PPI's customer service standards, Contractor shall retain the
servicing of such
Page 1
<PAGE>
subscriptions. Provided, further, however, all amounts credited to Contractor
for Ex-Territory Subscriptions shall remain subject to the revenue split in
favor of PPI as provided hereinbelow. Likewise, Contractor agrees that upon
request by PPI, Contractor shall install the Network software and provide normal
customer support to subscribers located within the Territory but which
subscribers are obtained by PPI or a third party (the "Support Only
Subscriptions"), in which case revenue from the Support Only Subscriptions shall
be credited 50% to Contractor for as long as such customer support is provided
by Contractor. Provided, further, however, such amounts credited to Contractor
shall remain subject to the revenue split in favor of PPI as provided
hereinbelow. Contractor agrees that in the event of any dispute between
Contractor and any third party regarding Ex-Territory Subscriptions or Support
Only Subscriptions, PPI shall be the sole and final arbiter of any such dispute,
whose determination shall be binding on all parties.
a. All Network subscriptions and other Network services shall be
marketed and sold by Contractor at a price approved in writing in advance by PPI
and upon such other terms as PPI may require in its sole discretion, which
prices and terms may not be same for all Network subscribers. PPI shall not
reduce the approved prices at which Contractor shall sell subscriptions or other
Network services without the Contractor's prior consent, not to be unreasonably
withheld. PPI shall provide Contractor with marketing materials, subscriber
contracts and other marketing materials as determined by PPI. Contractor's use
of the name "Purchase Pro" shall be subject to the prior written approval of
PPI, not to be unreasonably withheld. PPI may from time to time promulgate
written rules and regulations applicable to Contractor and all other persons in
similar relationships to PPI relating to the manner of use of the Network, the
marketing of the subscriptions to the Network, its name and trademarks and
servicemarks, and its other intellectual property, which Contractor, shall
immediately upon receipt, adhere to in its operations hereunder. Provided,
however, such rules and regulations shall not unreasonably interfere with
Contractor's own marketing strategies.
a. Contractor shall at all times employ competent and qualified
personnel as shall be necessary to fulfill the purposes and intent of this
Agreement and to allow Contractor to actively market the Network pursuant to
this Agreement. Contractor shall require all of its marketing and customer
support personnel to complete such training sessions as may be required by PPI.
The training sessions shall conducted at PPI's offices in Las Vegas, Nevada, at
no cost to Contractor, except that Contractor shall pay all travel expenses for
its personnel to attend the training sessions, and shall pay any compensation to
its personnel for the time spent in training. In lieu of training at PPI's
offices, at Contractor's request, PPI agrees to provide an instructor for
training sessions to held at Contractor's offices provided that Contractor pays
all travel, food and lodging expenses for the instructor. Contractor agrees to
submit its personnel for training updates within not more than sixty (60) days
after Network software updates or other enhancements in the Network as PPI may
reasonably require.
a. PPI shall administer the Network and provide Network access to
the subscribers obtained by Contractor, but Contractor shall pay all of its own
operating expenses, including without limitation, office, sales and other
personnel, and marketing expenses. Contractor and PPI shall communicate
regarding Contractor's suggestions for improvement and development of the
Network and the business of PPI, and Contractor shall be entitled to appoint one
member to PPI's software development advisory committee.
a. PPI shall collect all revenue (including without limitation
subscription fees, web hosting fees, and any transaction fees) from
subscriptions and other Network services sold by Contractor. Within ten (10)
days of the end of each calendar month, PPI shall remit to Contractor
Page 2
<PAGE>
the following percentage of the revenue collected by PPI from subscribers
obtained by Contractor (net of all taxes and costs of collection paid to third
parties, such as EFT draft fees), provided this Agreement is still then in
effect:
Year 1 - Sixty-five percent (65%)
Year 2 and all years thereafter - Fifty percent (50%)
Provided, however, Contractor shall not be entitled to any net revenue
sharing or distributions for any period this Agreement is in effect during which
the amount of net revenue to be retained by PPI as its share of net revenue
based on the above formula does not equal or exceed the total subscription
revenue received by PPI during such period from subscribers on the Network as of
the date of this Agreement (the "Existing Subscribers") which are now hereby
considered subscribers obtained by and to be serviced by Contractor hereunder.
In such case, PPI shall retain all net revenue from all subscribers obtained by
Contractor up to the amount of revenue for such period from Existing Subscribers
and Contractor shall be entitled to the balance of the net revenue received
during such period, if any. Provided, further, however, Contractor shall retain,
and PPI shall not be entitled to share in, any sums paid by subscribers to
Contractor to solely reimburse Contractor for costs incurred in establishing
private networks for groups of Network Subscribers, provided the amounts of such
payments and the nature thereof are disclosed in writing to PPI by Contractor
and provided that such payments are not based on usage of the Network or
represent payments for Network services of any kind.
a. Provided, however, to the extent the revenue collected in the
first, second or third three month period represents payment in advance for
subsequent periods, the percentage payable by PPI to Contractor shall be at the
rate applicable to the period during which the subscription revenue shall be
earned. For example, Contractors share of the net revenue from a paid in full
one year subscription sold in the first three month period would be sixty-five
percent percent, which is equal to the percentage of the revenue that would be
due if the subscription was paid monthly over the full year.
a. The rights granted to Contractor hereunder are granted for a term
of one (1) year from the date hereof, but such rights and this Agreement shall
be automatically renewed for consecutive one (1) year terms, provided that in
each year the total net revenue from subscriptions and other Network services
obtained by Contractor in each twelve month period this agreement remains in
effect exceeds the following amounts:
Year 1: 250 multiplied by (subscription price for prepaid
annual subscriptions approved by PPI for the Territory as
of the beginning of the year) (the "ASP")
Year 2: 750 x ASP
Year 3: 1250 x ASP
Year 4: 1750 x ASP
Year 5: 2250 x ASP
Year 6: 2750 x ASP
Year 7: 3250 x ASP
Year 8: 3750 x ASP
Year 9: 4250 x ASP
Year 10 and all years thereafter: 4750 x ASP
Page 3
<PAGE>
If Contractor fails to sell a sufficient number of subscriptions and other
Network Services to generate such revenue, the exclusivity of the marketing
rights granted to Contractor hereunder shall automatically terminate at the end
of the one (1) year period during which such failure occurred, but this
Agreement shall otherwise continue in effect. Provided, further, however, if
Contractor fails to sell a sufficient number of subscriptions and other Network
services to generate not less than fifty percent (50%) of the revenue minimums
set forth above, this Agreement and all of Contractor's rights hereunder may, at
the option of the Company at any time thereafter, be terminated due to such
failure, and if terminated by PPI solely for this reason, PPI shall pay
Contractor a sum equal to five (5) times the revenues payable to Contractor
under the terms of this Agreement during the one (1) year period immediately
preceding the effective date of termination (subject to set-off of any money due
from Contractor to PPI at such time). Contractor's share of net revenue from Ex-
Territory Subscriptions and Support Only Subscriptions shall be included in the
net revenue attributable to Contractor for purposes of these minimum revenue
requirements. To the extent Contractor or any of its affiliates own marketing
rights for areas in addition to the Territory, Contractor or such affiliates
must identify the particular marketing rights agreement under which each
subscription is sold, which designation may not be changed by Contractor.
a. Notwithstanding that this Agreement is renewable under certain
circumstances, Contractor agrees and acknowledges that PPI has established
prestige and goodwill in connection with the name "Purchase Pro" and the
Network. Contractor agrees that it shall at all time conduct its business
relating to this Agreement and the Network in an ethical manner and in
compliance with all federal, state and local laws, rules and regulations, and
that Contractor shall exercise its best efforts throughout its operations under
this Agreement to safeguard the prestige and goodwill of PPI. Contractor will
not, at any time, do or suffer to be done any act or thing which may, in any
way, impair the rights of PPI in and to any of its intellectual property rights
or the Network, or which may depreciate the value of any such intellectual
property or the Network.
a. For each new one-year subscription to the Network sold by
Contractor and paid for by the subscriber while this Agreement is in effect, up
to a maximum of five thousand (5000) one-year subscriptions to the Network, PPI
shall grant to Contractor an option to purchase twenty (20) shares of the common
stock of PPI for the striking price equal to the last asking price for PPI's
common stock on such date if such stock is traded on a national market, or if
not so traded, the fair market value of PPI's common stock as of the date of the
grant as determined by PPI's outside accountants. Upon exercise of the options,
payment for the shares must be made in cash, and the options shall expire five
(5) years from the date each option is granted. The options shall be granted at
the end of each year this Agreement is in effect after the actual subscriber
revenue and fair market value of the stock at year end can be determined. For
purposes of measuring the number of subscribers for purpose of the grant of
options, a one-year subscription means twelve months of subscription revenue
cash receipts by PPI from a subscriber or subscribers. For example, if at the
end of the first year Contractor has sold 2000 subscriptions, but due to
cancellations, non-payment or other factors PPI has collected the revenue
equivalent of only 800 one-year subscriptions, then Contractor shall only be
entitled to options to purchase 16,000 shares of PPI. Options shall not be
granted with respect to renewal subscription revenues, only new subscribers. For
purposes of this Agreement and the number of shares that may be purchased by
Contractor pursuant to the options, such number of shares shall be hereafter
adjusted for any stock splits, reverse splits, or other similar events. PPI
hereby agrees to cause any shares purchased by Contractor pursuant to its
options to be registered for resale at the same
Page 4
<PAGE>
time and upon the same terms as shares purchased by employees of PPI pursuant to
employee stock options.
a. Contractor shall prepare, and at all times maintain at its principal
executive offices, true, correct and complete separate books of account and
records reflecting all transactions and operations within the scope of this
Agreement, in accordance with generally accepted accounting principles
consistently applied. Contractor shall prepare and furnish to PPI a statement of
operations, in form and scope satisfactory to PPI and certified as accurate by a
senior financial officer of Contractor, for each quarterly period ended the last
day of March, June, September and December in each year this Agreement is in
effect, which shall be furnished to PPI within thirty (30) days after the end of
each such period.
a. Provided there does not exist any default under this Agreement by
Contractor, Contractor retains exclusive rights to the Territory, and that this
Agreement is still in effect, PPI hereby grants Contractor the right of first
refusal to acquire rights similar to those granted herein for all states
contiguous to the Territory (exclusive of the state of Illinois), in the event
PPI proposes to grant same to a third party. Contractor shall have ten (10) days
from written notice from PPI of the terms on which PPI proposes to grant such
rights to a third party in which Contractor may exercise its right of first
refusal by written notification to PPI, in which case Contractor shall be deemed
to have contracted with PPI upon the terms contained in the notice from PPI.
This right of first refusal shall automatically terminate at such time as Brad
Redmon does not own a majority of the equity interests in, and exercise
managerial control over, Contractor. This right of first refusal shall also not
apply to any activities of PPI in any of the areas to which the right of first
refusal otherwise applies.
a. In the event PPI fails to have the Network operable for a
consecutive period of two (2) weeks, PPI shall involve Contractor in the efforts
to restore the operability of the Network and Contractor shall have the right to
expend its own resources in the effort to restore the Network, but PPI shall not
have any liability whatsoever to Contractor for any such sums expended, nor
shall PPI have any liability whatsoever for the failure of the Network.
a. PPI and Contractor hereby agree to take whatever further action
that may be necessary to implement the terms and conditions of this Agreement.
1. Restrictions on Transfer; Right of First Refusal.
------------------------------------------------
a. The rights granted herein are strictly personal to Contractor. Neither
this Agreement nor any of the rights granted to or obligations undertaken by
Contractor hereunder may be transferred, assigned, pledged, sold, mortgaged,
sublicensed or otherwise hypothecated or disposed of, either directly or
indirectly, in whole or in part, by operation of law or otherwise (collectively,
"transfer"), to any Person without the express prior written consent of PPI,
such consent to not be unreasonably withheld as long as Brad Redmon controls a
majority of the voting equity interests in, and has managerial control of,
Contractor. Any attempted transfer without such consent shall be null, void, and
of no force or effect. As used herein, the term "Contractor" shall include any
assignee, licensee or subcontractor of Contractor approved by PPI in writing as
hereinabove provided.
a. In addition to the requirement that PPI consent to any transfer of
rights of Contractor under this Agreement, Contractor hereby grants PPI the
right of first refusal to purchase or otherwise acquire any rights sought to be
assigned or transferred by Contractor on
Page 5
<PAGE>
the same terms as may be offered by a third party and accepted by Contractor.
Contractor shall notify PPI in writing of the terms of the proposed transfer to
a third party, in which case PPI shall have ten (10) business days within which
to exercise its right of first refusal by providing Contractor with written
notice of same. if such right is exercised, PPI shall acquire the rights from
the Contractor upon the same terms and schedule as contained in the third
party's offer.
1. Events of Default: Termination.
-------------------------------
a. Each of the following shall constitute an event of default under
this Agreement:
i. If Contractor shall fail to pay any funds owing to PPI
pursuant to this Agreement as and when due, provided that with respect to the
first such failure by Contractor PPI shall not be entitled to call a default
under this section until it shall have given Contractor notice thereof and
Contractor shall have failed to cure such default within thirty (30) days of
such notice;
i. If Contractor shall institute proceedings to be adjudicated
a voluntary bankrupt or insolvent, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer seeking
reorganization or arrangement under any bankruptcy act or any other similar
applicable law of any country, or shall consent to the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or insolvency for itself, or
any of its property, or shall make an assignment for the benefit of creditors,
or shall be unable to pay its debts generally as they become due, or shall cease
doing business as a going concern, or action shall be taken by it in furtherance
of any of the foregoing purposes; or
i. If an order, judgment or decree of a court having
jurisdiction shall have been entered adjudicating the Contractor a bankrupt or
insolvent, or approving, as properly filed, a petition seeking reorganization of
Contractor or of all or a substantial part of its properties or assets under any
bankruptcy act or other similar applicable law, as from time to time amended, or
appointing a receiver, trustee or liquidator of Contractor, and such order,
judgment or decree shall remain in force, undischarged and unstayed for a period
of thirty (30) days, or a judgement or lien for the payment of money in excess
of $250,000 shall be rendered or entered against it and the same shall remain
undischarged or unbonded for a period of thirty (30) days or any writ or warrant
or attachment shall be issued or levied against a substantial part of its
property and the same shall not be released, vacated or bonded within thirty
(30) days after issue or levy; or
i. If Contractor shall, without the prior written consent of
PPI first had and obtained, sell (regardless of how designated) all or
substantially all of its assets, or shall merge or consolidate with or into
another corporation or entity, or if there shall be a change in control of
Contractor, in each case whether in a single transaction or as the aggregate
result of a series of transactions, and whether the transaction or transactions
involve an affiliated or unaffiliated person or entity; or
i. If any representation or warranty of Contractor contained
herein shall be or become false or misleading in any material respect, or if
Contractor shall fail to perform or observe any term, condition, agreement or
covenant in this Agreement on its part to be performed or observed, and such
default is not remedied within thirty (30) days after written notice thereof
from PPI.
Page 6
<PAGE>
a. If any event of default shall occur and be continuing, PPI may,
by written notice to Contractor, immediately terminate this Agreement, in which
case PPI shall have no further obligations to Contractor and Contractor shall
have no further rights under this Agreement. In addition, all rights of
Contractor hereunder shall terminate and revert automatically to PPI, and
neither Contractor nor any of its receivers, representatives, trustees, agents,
successors or assigns (by operation of law or otherwise) shall have any rights
hereunder. Upon termination, Contractor shall deliver to PPI all information and
documents of any kind whatsoever relating to Contractor's performance of this
Agreement, the Network, and all subscribers, and shall thereafter cease and
desist from using the Network, the name "Purchase Pro" or any of PPI's
intellectual or other property in any manner.
a. Notwithstanding any termination or expiration of this Agreement
(whether by reason of the expiration of the stated term of this Agreement, by
earlier termination of this Agreement or otherwise), PPI shall have, and hereby
reserves, all the rights and remedies which it may have, at law or in equity,
with respect to the collection of funds payable by Contractor pursuant to this
Agreement, the enforcement of all rights relating to the establishment,
maintenance and protection of PPI's property, and damages for breach of
Agreement on the part of Contractor. PPI may recover its costs and expenses,
including reasonable attorneys' fees, incurred in enforcing this Agreement
against Contractor.
a. Contractor acknowledges that PPI will suffer great and
irreparable harm as a result of the breach by Contractor of any covenant or
agreement to be performed or observed by Contractor under this Agreement other
than the covenants to make monetary payments, and, whether such breach occurs
before or after the termination of this Agreement, Contractor acknowledges that
PPI shall be entitled to apply for and receive from any court of competent
jurisdiction a temporary restraining order, preliminary injunction and permanent
injunction, without any necessity of proving damages or any requirement for the
posting of a bond or other security, enjoining Contractor from further breach of
this Agreement or further infringement or impairment of PPI's rights. Such
relief shall be in addition to and not to substitution of any other remedies
available to PPI pursuant to this Agreement or otherwise.
1. Confidentiality.
---------------
a. Each party acknowledges that all information of a business or
technical nature imparted to the other party during the course of this Agreement
with respect to the business of the disclosing party, and certain affiliates,
were acquired, designed and/or developed by them at great expense, are secret,
confidential and unique, and constitute the trade secrets and exclusive property
of the disclosing party and its affiliates, and that any use by the other party
of any such trade secrets and property other than for the sole purpose of
implementing the terms of this Agreement would be wrongful and would cause
irreparable injury to the disclosing party and its affiliates.
a. Neither party will at any time disclose or divulge to any person,
firm or corporation or use or suffer the use by any third party, for any purpose
other than solely as required for the implementation of this Agreement, directly
or indirectly, for its own use or the benefit of any person, firm or
corporation, any property, any trade secrets or confidential information of the
other party or any of its affiliates, obtained from or through them, or any
confidential information belonging to any subscribers to the Network.
Page 7
<PAGE>
a. Contractor agrees that it shall cause each of its employees,
agents and subcontractors to execute a confidentiality and non-disclosure
agreement in form and substance satisfactory to PPI at all times this Agreement
is in effect.
1. Indemnity: Insurance.
--------------------
a. Contractor does hereby indemnify and agrees to save and hold PPI and
its officers, directors, agents, representatives and controlling persons
(collectively, for purposes of this section, "PPI"), individually, harmless of
and from any and all liability, claims, causes of action, suits, damages and
expenses (including reasonable attorneys' fees and expenses) which any such
entity or Person may become liable for, or may incur, or be compelled to pay, by
reason of any acts, whether of omission or commission, by Contractor and any of
its employees or agents, that may arise under or in connection with this
Agreement, in connection with the performance thereof on behalf of Contractor or
otherwise in connection with Contractor's business or by virtue of any
misrepresentation or breach of warranty or failure to perform or observe any
covenant on its part to be performed or observed hereunder.
a. PPI does hereby indemnify and agrees to save and hold Contractor
and its officers, directors, agents, representatives and controlling persons
(collectively, for purposes of this section, "Contractor"), individually,
harmless of and from any and all liability, claims, causes of action, suits,
damages and expenses (including reasonable attorneys' fees and expenses) which
any such entity or Person may become liable for, or may incur, or be compelled
to pay, by reason of any acts, whether of omission or commission, by PPI and any
of its employees or agents, that may arise under or in connection with this
Agreement, in connection with the performance thereof on behalf of PPI or
otherwise in connection with PPI's business or by virtue of any
misrepresentation or breach of warranty or failure to perform or observe any
covenant on its part to be performed or observed hereunder.
a. An indemnified party shall immediately give notice to the
indemnifying party of any claim, action or suit that may give rise to liability
under this section, provided that the failure of any indemnified party to
provide such notice shall not relieve the indemnifying party of its obligations
hereunder. The indemnifying party hall have the option to defend any such claim
action or suit, including, but not limited to, the right to select counsel
control the defense, assert counterclaims and crossclaims, bond any lien or
judgment, take any appeal and to settle on such terms as it, in its discretion,
reasonably deems advisable, provided prior notice of any settlement is given to
the indemnified party and such party provides its express prior consent thereto.
No settlement of any claim may be effected without the prior written consent of
the indemnifying party.
a. Contractor shall maintain at its own expense in full force and
effect at all times during which this Agreement is in effect, with a recognized
and responsible insurance carrier licensed to do business in the state of
Contractor's domicile, and acceptable to PPI, a liability insurance policy with
limits of liability of at least $1,000,000 per Person and per accident or
occurrence. Such insurance shall be for the benefit of and shall name as co-
insured PPI and its respective officers, directors, agents, representatives and
controlling persons, and shall provide for at least thirty (30) days' prior
written notice by the carrier thereof (each an "Insurance Notice") to PPI and
Contractor of the cancellation or modification thereof. Contractor shall, as
promptly as practicable, but in any event within thirty (30) days after the
signing of this Agreement, and from time to time thereafter upon PPI's written
request, deliver to PPI (i) a true, correct and complete copy of its liability
insurance policy (including all endorsements), as then in effect, and (ii ) a
Page 8
<PAGE>
certificate of such insurance from the insurance carrier which sets forth the
scope of coverage and the limits of liability. Contractor's maintenance of the
insurance coverage as provided herein shall not limit, excuse or replace any of
Contractor's obligations under the provisions hereof, which shall remain
absolute.
a. The provisions of this section shall survive any termination or
expiration of this Agreement.
1. Representations and Warranties. Contractor hereby represents and
------------------------------
warrants to PPI as follows:
a. Contractor is a limited liability company, duly organized,
validly existing and in good standing under the laws of Kentucky, and is duly
qualified and authorized to do business and in good standing in all
jurisdictions in which the nature of its business requires such qualifications.
a. Neither the execution, delivery nor performance of this Agreement
by Contractor will, with or without the giving of notice or passage of time, or
both, conflict with, or result in a default or loss of rights under, any
provision of any other agreement or understanding to which Contractor is a party
or by which it or any of its properties may be bound.
a. Contractor has full power and authority to enter into this
Agreement and to carry out the transactions contemplated thereby in accordance
with its terms; the execution, delivery, and performance of this Agreement by
Contractor have been duly and properly authorized by all necessary actions; and
this Agreement constitutes the valid and binding obligation of Contractor
enforceable in accordance with its terms.
1. Notices. All reports, communications, requests, demands or notices
-------
required by or permitted under this Agreement shall be in writing and shall be
deemed to be duly given on the date same is sent and acknowledged via hand
delivery, facsimile or reputable overnight delivery service (with a copy
simultaneously sent by registered mail), or, if mailed, five (5) days after
mailing by certified or registered mail, return receipt requested, to the party
concerned at the address on page 1 hereof. Any party may change the address to
which such notices and communications shall be sent by written notice to the
other parties, provided that any notice of change of address shall be effective
only upon receipt.
1. Integration. This Agreement sets forth the entire agreement and
-----------
understanding between the parties relating in any way to the Network, or to the
subject matter hereof and supersedes and merges all prior discussions,
arrangements and agreements between them.
1. Amendments. This Agreement may not be amended or modified except by
----------
written instrument signed by each of the parties hereto.
1. Relationship of Parties. Nothing herein contained shall be construed
-----------------------
to constitute the parties hereto as partners or as joint venturers, or as
franchisor/franchisee, or either as agent of the other. Neither party hereto by
virtue hereof shall have the right or authority to act for or to bind the other
in any way or to sign the name of the other or to represent that the other is in
any way responsible for the acts or omissions of the other.
Page 9
<PAGE>
1. Mandatory Arbitration and Locale. Any controversy or claim arising
--------------------------------
out of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Lexington, Kentucky, before one (1) arbitrator administered by
the American Arbitration Association under its Commercial Arbitration Rules, and
judgment on the award rendered by the arbitrator may be entered in (any court
having jurisdiction thereof). Provided, however, either party shall be entitled
to seek injunctive relief to the extent entitled thereto. To the extent such
injunctive relief is sought, PPI and Contractor hereby (i) agree that the State
and Federal courts sitting in the State of Nevada, Clark County, City of Las
Vegas, shall have exclusive jurisdiction in any such injunctive action connected
in any way with this Agreement; (ii) each consent to personal jurisdiction of
and venue in such courts in any such matter; and (iii) further agree that the
service of process or of any other papers with respect to such proceedings upon
them by mail shall be deemed to have been duly given to and received by them
five (5) days after the date of certified mailing and shall constitute good,
proper and effective service.
1. Severability. In the event that any one or more provisions of this
------------
Agreement shall be held invalid, illegal or unenforceable in any respect, the
validity, legality or enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
1. Waiver. No failure or delay on the part of either party in
------
exercising any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. No waiver by either party of any provision of this Agreement, or
of any breach or default, shall be effective unless in writing and signed by the
party against whom such waiver is to be enforced. All rights and remedies
provided for herein shall be cumulative and in addition to any other rights or
remedies such parties may have at law or in equity.
1. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall be deemed an original.
1. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereto and thereto shall be governed by and construed and enforced in
accordance with the substantive law of the state of Nevada.
1. Benefit and Binding Effect of Agreement. This Agreement shall be
---------------------------------------
binding upon and inure to the benefit of PPI and Contractor and their respective
successors and assigns.
PURCHASE PRO INTERNATIONAL,
INC.
By: /S/ CHRIS CARTON
-------------------------------------
Title: President and Secretary
----------------------------------
E-MARKETPRO, LLC
Page 10
<PAGE>
/S/ BRAD REDMON
- --------------------------------------
Title: Sole Member
---------------------------
Page 11
