<PAGE>
As filed with the Securities and Exchange Commission on July 30, 1999
Registration No. 333-82485
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PLANETRX.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
Delaware 5912 94-3227733
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
349 Oyster Point Blvd., Suite 201
South San Francisco, CA 94080
(650) 616-1500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------
William J. Razzouk, Chairman and Chief Executive Officer
PlanetRx.com, Inc.
349 Oyster Point Blvd., Suite 201
South San Francisco, CA 94080
(650) 616-1500
(Name, Address Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------
COPIES TO:
<TABLE>
<S> <C>
Robert V. Gunderson, Jr. Larry W. Sonsini
Jeffrey P. Higgins John T. Sheridan
Jonathan J. Noble Elizabeth A. Blomberg
David B. Davis Richard S. Au
GUNDERSON DETTMER STOUGH WILSON SONSINI GOODRICH & ROSATI
VILLENEUVE FRANKLIN & HACHIGIAN, LLP PROFESSIONAL CORPORATION
155 Constitution Drive 650 Page Mill Road
Menlo Park, CA 94025 Palo Alto, CA 94304
(650) 321-2400 (650) 493-9300
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
---------------
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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [_]
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<PAGE>
EXPLANATORY NOTE
This amendment No. 1 to the Form S-1 registration statement is being filed
for the sole purpose of filing additional exhibits.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by PlanetRx.com, Inc. in
connection with the sale of Common Stock being registered. All amounts are
estimates except the SEC registration fee and the NASD filing fee and the
Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
Amount
to be Paid
----------
<S> <C>
SEC registration fee................................................. $19,182
NASD filing fee...................................................... *
Nasdaq National Market listing fee................................... *
Printing and engraving expenses...................................... *
Legal fees and expenses.............................................. *
Accounting fees and expenses......................................... *
Blue Sky qualification fees and expenses............................. *
Transfer Agent and Registrar fees.................................... *
Miscellaneous fees and expenses...................................... *
-------
Total.............................................................. $ *
=======
</TABLE>
- --------
*to be filed by amendment
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Article VII of our
Certificate of Incorporation (Exhibit 3.2 hereto) and Article VI of
PlanetRx.com' Bylaws (Exhibit 3.3 hereto) provide for indemnification of our
directors, officers, employees and other agents to the maximum extent permitted
by Delaware law. In addition, we have entered into Indemnification Agreements
(Exhibit 10.1 hereto) with our officers and directors. The Underwriting
Agreement (Exhibit 1.1) also provides for cross-indemnification among
PlanetRx.com and the Underwriters with respect to certain matters, including
matters arising under the Securities Act.
Item 15. Recent Sales of Unregistered Securities
Since our incorporation in March 1995, the Company has issued and sold the
following securities (which numbers reflect the 500 for one recapitalization on
September 15, 1998 and the two for one stock split on November 6, 1998):
1. From inception through June 30, 1999, the Company granted options to
purchase 6,551,050 shares of common stock and granted 263,000 shares of
restricted common stock at exercise prices ranging from $0.025 to $2.00 per
share to employees, consultants, directors and other service providers pursuant
to its 1998 Stock Plan. The consultants and service providers provided
recruiting, financial or marketing services to the company and in return
received grants in respect of 263,000 shares of common stock. All of these
shares were issued and outstanding at June 30, 1999.
II-1
<PAGE>
2. On September 15, the Company issued and sold an aggregate of 10,100,000
shares of its Series A Preferred Stock for an aggregate purchase price of
$5,050,000 to investors including funds affiliated with Benchmark Capital and
Sequoia Capital.
3. On October 31, 1998, the Company issued three warrants for 100,000
shares of Series A Preferred Stock to Christos Cotsakos, Charles McCall and
Terrence Burke at an exercise price of $0.50 per share.
4. On January 15, 1999, the company issued and sold an aggregate of
5,200,000 shares of its Series A Preferred Stock for an aggregate purchase
price of $26,000,000 to investors including investors affiliated with the
E*TRADE Group, and funds affiliated with Benchmark Capital and Sequoia Capital.
5. On January 15, 1999, the Company issued warrants to purchase 16,000
shares of its Series B Preferred Stock to Comdisco, Inc. at an exercise price
of $5.00 per share.
6. On January 15, 1999, the Company issued to Comdisco, Inc. an option to
purchase up to 700,000 share of Series B Preferred Stock for $5.00 per share.
7. Between June 3 and June 18, 1999, the Company sold 6,776,364 shares of
its Series C Preferred Stock for an aggregate purchase price of $59.3 million
to investors including investors affiliated with the E*TRADE Group, and funds
affiliated with Benchmark Capital and Sequoia Capital.
The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as transactions by an issuer not involving any public offering.
In addition, certain issuances described in Item 9 were deemed exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and warrants issued
in such transactions. All recipients had adequate access, through their
relationships with us, to information about us.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1** Form of Underwriting Agreement (preliminary form).
3.1** Certificate of Incorporation of the Registrant, as amended to date.
3.2** Form of Restated Certificate of Incorporation to be filed upon the
closing of the offering made pursuant to this Registration Statement.
3.3** Bylaws of the Registrant.
3.4** Bylaws of the Registrant effective upon the closing of the offering
made pursuant to this Registration Statement.
4.1** Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.
4.2** Amended and Restated Investors' Rights Agreement.
4.3* Specimen Common Stock Certificate.
5.1* Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP.
10.1** Form of Indemnification Agreement.
10.2** 1999 Equity Incentive Plan.
10.3** Employee Stock Purchase Plan.
10.4** 1999 Director Stock Option Plan.
10.5** Employment Agreement between Registrant and William J. Razzouk, dated
November 11, 1998.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.6** Form of Warrant for the purchase of Preferred Stock.
10.7 Real Property Lease between Registrant and Belz Devco LP, dated
October 16, 1998.
10.8 Real Property Sublease between Registrant and Rader Companies, dated
May 5, 1999.
10.9 Real Property Sublease between Registrant and Cellegy Pharmaceuticals,
Inc., dated November 6, 1998.
10.10+ Supply Agreement between Registrant and McKesson U.S. Health Care,
dated January 14, 1999.
10.11 Asset Acquisition Agreement between Registrant and NetHealth.com, Inc.
10.12 Internet Domain and Trademark Assignment Agreement between Registrant
and Epicenter Communications, Inc.
23.1** Consent of Independent Accountants.
23.2** Consent of Counsel. Reference is made to Exhibit 5.1.
24.1** Power of Attorney (see page II-4).
27.1** Financial Data Schedule for EDGAR filing.
</TABLE>
- --------
* To be supplied by amendment.
** Previously filed.
+ Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commision pursuant to the application for
confidential treatment.
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities
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
Securities 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, 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 Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-3
<PAGE>
(2) For the purpose of determining any liability under the Securities Act
of 1933, 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment No.1 to the Form S-1 registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
city of San Francisco, State of California on July 30, 1999.
PLANETRX.COM, INC.
By: /s/ William J. Razzouk
-----------------------------------
William J. Razzouk
Chief Executive Officer and
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this amendment
No. 1 to the Form S-1 registration statement has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William J. Razzouk Chief Executive Officer and July 30, 1999
____________________________________ Chairman of the Board of
William J. Razzouk Directors
/s/ Steve Valenzuela Chief Financial Officer, July 30, 1999
____________________________________ Vice President, Finance
Steve Valenzuela and Secretary
Director July 30, 1999
____________________________________
David M. Beirne*
Director July 30, 1999
____________________________________
Terrence C. Burke*
Director July 30, 1999
____________________________________
Christos M. Cotsakos*
Director July 30, 1999
____________________________________
Michael Moritz*
*By: /s/ William J. Razzouk
____________________________________
William J. Razzouk
Attorney-in-Fact
*By: /s/ Steve Valenzuela
____________________________________
Steve Valenzuela
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT 10.7
INDUSTRIAL LEASE AGREEMENT
--------------------------
THIS LEASE is entered into this 16/th/ day of October, 1998, in
consideration of the covenants and undertakings of each of the parties hereto by
and between Belz Devco L.P., a Tennessee Limited Partnership, hereinafter
referred to as "Landlord", and Planet Rx, Inc., a Delaware Corporation,
hereinafter referred to as "Tenant";
WITNESSETH:
Landlord owns, operates or controls certain real property located in
the City of Memphis, County of Shelby and State of Tennessee located at 6399
Shelby View, Suite 111, within the Shelby Oaks Industrial Park (the "Property");
and
WHEREAS, Tenant desires to lease from Landlord space within the
development or building described above, which is more particularly shown on
Exhibit A hereto and is more particularly described in Part 1 below.
NOW, THEREFORE, Landlord and Tenant agree as follows:
PART 1
PREMISES
--------
In consideration of the rent and other agreements contained in this
Lease, Landlord leases to Tenant and Tenant rents from Landlord the premises
(hereinafter the "Premises") described as follows:
Located at 6399 Shelby View, Suite 111, Memphis, Tennessee. The
Premises contain approximately 25,000 square feet of area.
The Premises are designated on Exhibit A hereto for the purpose of
setting forth the configuration and approximate dimensions of the space and
shall be improved or otherwise prepared for occupancy by Tenant in accordance
with Exhibit C which sets out any work improvements to be implemented by
Landlord and the cost, if any, to Tenant.
PART 2
TERM
----
Subject to the terms and conditions contained herein, this Lease shall
be effective on the date of the complete execution hereof by Landlord and
Tenant, but the term of this Lease and the payment of Base Rental and other
assessments shall begin on the commencement date
<PAGE>
(the "Commencement Date") which shall be the earlier of (i) the date on which
Tenant occupies the Premises, or (ii) fifteen (15) days after Landlord tenders
delivery of the Premises to Tenant. Tender of delivery shall have occurred on
the date Landlord notifies Tenant that Landlord has substantially completed any
improvements to be implemented by Landlord pursuant to Exhibit C subject to
minor punchlist items.
If the Commencement Date occurs on the first day of a month, the term
shall expire without notice on the last day of the previous calendar month five
(5) years hence, and if the Commencement Date occurs on a day other than the
first day of a month, the term shall expire without notice on the last day of
the calendar month in which the Commencement Date occurs five (5) years hence.
In the event Landlord is unable to deliver the Premises to Tenant on
or prior to the Commencement Date, Tenant's sole right and remedy shall be to
delay the commencement of the term by the number of days that delivery of
possession is delayed. Tenant acknowledges that Landlord shall use diligent
efforts to deliver the premises as provided herein however actions of parties in
possession or delays in construction may effect Landlord's ability to deliver
the Premises to Tenant.
Any access by Tenant to the Premises prior to the Commencement Date
shall be upon all of the terms, covenants and conditions of this Lease, except
only the payment of Base Rental and Additional Charges. Tenant shall pay all
utility charges related to the premises which accrue from and after Landlord's
tender of possession.
Landlord and Tenant agree that, upon the demand of the other party,
each shall execute an amendment to this Lease, in recordable form, setting forth
the Commencement Date and the termination date of the Lease term.
PART 3
RENT, TAXES AND INSURANCE
-------------------------
Tenant covenants and agrees that without demand, notice or set off,
Tenant shall pay to Landlord minimum annual rental (hereinafter the "Base
Rental") in the amounts as follows:
Base Rental in the amount of ONE HUNDRED FORTY THOUSAND AND 04/100
DOLLARS ($140,000.04) per annum, payable in equal monthly installments of ELEVEN
THOUSAND SIX HUNDRED SIXTY SIX AND 67/100 DOLLARS ($11,666.67) per month in
advance on or before the first day of each month throughout the term of this
Lease.
2
<PAGE>
Additionally, Tenant shall pay to Landlord its Proportionate Share (as
defined in the General Lease Provisions) of Real Estate Taxes and Assessments
(as defined in the General Lease Provisions) and Tenant shall pay to Landlord
its Proportionate Share of Landlord's Annual insurance premiums which amounts
shall be paid as provided in Article 1 of the General Lease Provisions.
All rental payments and payments of Additional Charges hereunder shall
be sent to:
Belz Devco L.P.
Attn: Accounts Receivable Department
P.O. Box 3661
Memphis, Tennessee 38173-3661
or to such other addresses as Landlord may direct in writing from time
to time:
PART 4
USE AND OPERATION
-----------------
The Premises shall be used continuously only for the following use:
general offices, packaging, and distribution of pharmacy drugs.
PART 5
NOTICES
-------
All notices required or provided for under this Lease shall be given
in the manner as prescribed by the notice requirements of the General Lease
Provisions, addressed to the following addresses:
To Landlord: To Tenant:
Belz Devco L.P. Planet Rx, Inc.
c/o Belz Enterprises 6399 Shelby View, Suite 111
100 Peabody Place, Suite 1400 Memphis, TN 00000
Memphis, Tennessee 38103 ATTENTION: Bill Razzouk, President
ATTENTION: Ronald A. Belz
or to such other addresses as Landlord or Tenant may direct in writing from time
to time:
3
<PAGE>
PART 6
REAL ESTATE AGENT
-----------------
This Lease was negotiated by BELZ REALTY COMPANY, L.L.C.., represented
by, Larry Wood acting as agent for Landlord and Landlord agrees to pay said BELZ
REALTY COMPANY, L.L.C, a commission in accordance with the agreement between
Landlord and BELZ REALTY COMPANY, L.L.C..
PART 7
ENTIRE AGREEMENT
----------------
This Lease includes the Lease Agreement, Exhibit A (drawing or
description of the Property showing the general location of the Premises),
Exhibit B (General Lease Provisions), Exhibit C (which delineates the
construction requirements of the parties, if any). The foregoing constitute all
of the agreements and conditions made between the parties hereto and no
representations or statements claimed to have been made and not herein contained
shall modify this Lease in any way.
IN TESTIMONY WHEREOF the above named Landlord and the above named
Tenant have executed this and three (3) other original instruments of identical
year and date, on the day and year set forth on page 1 of this Lease.
LANDLORD: Belz Devco L.P.
BY: BELZ INVESTCO, L.P., Limited Partnership
BY: URCO, INC., Limited Partnership
By: _________________________________
Morris I. Thomas, Vice President
By: _________________________________
Ronald A. Belz, President
TENANT: Planet Rx, Inc.
By: _________________________________
Bill Razzouk, President
Exhibits: A. Site Plan and/or Floor Plan
B. General Lease Provisions
C. Construction Exhibit (if applicable)
4
<PAGE>
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me, a Notary Public of the State and County aforesaid,
personally appeared MORRIS I. THOMAS AND ROLAND A. BELZ, VICE PRESIDENT AND
PRESIDENT, respectively of URCO, INC., a Tennessee corporation, said corporation
is the general partner of BELZ INVESTCO L.P., a Tennessee limited partnership,
the general partner of BELZ DEVCO L.P., a Tennessee limited partnership, with
whom I am personally acquainted, and who, upon oath acknowledged that they are
the VICE PRESIDENT AND PRESIDENT, respectively of URCO, INC., General Partner of
BELZ INVESTCO L.P., the general partner of BELZ DEVCO L.P., and that they as
such VICE PRESIDENT AND PRESIDENT, respectively, executed the foregoing
instrument for the purpose therein contained by signing the name of such
partnerships by such corporation, by themselves as VICE PRESIDENT AND PRESIDENT,
respectively, of such corporation.
WITNESS my hand and Notarial Seal, at office in Memphis, Tennessee, this,
the 16/th/ day of October, 1998.
_________________________________________
Notary Public
My Commission Expires: _________________
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me, a Notary Public of the State and County aforesaid, personally
appeared BILL RAZZOUK, with whom I am personally acquainted, (or proved
to me on the basis of satisfactory evidence) and who, upon oath
acknowledged himself to be the PRESIDENT of PLANET RX, INC., the named
bargainor, a California corporation, and that he executed the foregoing
instrument for the purpose therein contained by signing the name of such
corporation by himself as such PRESIDENT.
Witness my hand, at office, this, the 11/th/ day of October, 1998.
_________________________________________
Notary Public
My Commission Expires: _________________
5
<PAGE>
EXHIBIT 10.8
SUBLEASE
--------
THIS SUBLEASE (this "Sublease") is made and entered into as of the 5th
day of May, 1999, by and between RADER COMPANIES, a Division of Beloit
Corporation, a Delaware corporation (hereinafter called "Sublandlord"), and
PLANET Rx, a Delaware corporation (hereinafter called "Subtenant");
WITNESSETH:
-----------
WHEREAS, by that certain Lease dated July 10, 1998, as amended by that
certain First Lease Amendment dated as of September 2, 1998 and as further
amended by that certain Second Amendment to Lease dated as of October 14, 1998,
copies of which are attached hereto as Exhibit A and by this reference made a
part hereof (hereinafter called the "Prime Lease"), Belz Devco, L.P., a
Tennessee limited partnership (hereinafter, together with its successors and
assigns, called "Landlord"), leased to Sublandlord approximately 10,000 square
feet on the ground floor (Suite 115) in the building located at 6399 Shelby View
Drive, in Memphis Tennessee (hereinafter called the "Building"), for a term
commencing on September 17,1998 and ending on September 30, 2003; and
WHEREAS, subject to the consent of Landlord, Subtenant desires to
sublease from Sublandlord, and Sublandlord desires to sublease to Subtenant,
that portion of the premises subject to the Prime Lease (hereinafter called the
"Premises") containing approximated 10,000 rentable square feet and depicted on
Exhibit B attached hereto and made a part hereof, all upon the terms and subject
to the conditions and provisions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, Sublandlord and Subtenant hereby agree as follows:
1. Demise; Use. Sublandlord hereby leases to Subtenant and
-----------
Subtenant hereby leases from Sublandlord the Premises for the term and rental
and upon the other terms and conditions hereinafter set forth, to be used and
occupied by Subtenant solely for the purpose of office space including, but not
limited to, a computer center, and for no other purpose.
2. Term. The term of this Sublease shall commence (the
----
"Commencement Date") on the later to occur of (a) May 3, 1999 and (b) the date
upon which Sublandlord delivers possession of the Premises to Subtenant (subject
to Paragraph 7) and, unless sooner terminated pursuant to the provision hereof,
shall terminate on the earlier of September 29, 2003 and the prior termination
of the term of the Prime Lease
3. Base Rental.
-----------
(a) Subtenant shall pay directly to Landlord base rental
(hereinafter called "Base Rental") for the Premises as follows:
<PAGE>
<TABLE>
<CAPTION>
Annual Base Annual Base Rental
Time Rental Rate Per (based on 10,000 Monthly
Period Rentable Square Foot Rentable Square Feet) Installments
- ------ -------------------- --------------------- ------------
<S> <C> <C> <C>
Commencement Date -- $7.71 $77,100.00 $6,425.00
September 29, 2003
</TABLE>
Annual Base Rental shall be due and payable in twelve (12) equal installments.
Each such installment shall be due and payable in advance on or before the first
day of each calendar month of the term hereof, and confirmation of payment she
be sent to Sublandlord. If the term of this Sublease commences on a day other
than the first day of a month or ends on a day other than the last day of a
month, Base Rental for such month shall be prorated; prorated Base Rental for
any such partial first month of the term hereof shall be paid on the date on
which the term commences.
(b) All Base Rental and Additional Charges (as defined in the Prime
Lease) shall be paid without setoff or deduction whatsoever and shall be sent to
Landlord at P.O. Box 3661, Memphis, Tennessee 38173-3661, Attn: Accounts
Receivable Department, or at such other place as Landlord may designate by
notice to Subtenant.
4. Additional Charges; Payments; Interest.
--------------------------------------
(a) Subtenant shall also pay to Landlord all other amounts payable by
Sublandlord under the Prime Lease including, without limitation, the Additional
Charges, which are attributable to the Premises or attributable to Subtenant,
its agents, employees, customers or invitees. By way of example and not by way
of limitation, charges by Landlord for furnishing air conditioning or heating to
the Premises at times in addition to those certain times specified in the Prime
Lease, costs incurred by Landlord in repairing damage to the Building caused by
an employee of Subtenant, increased insurance premiums due as a result of
Subtenant's use of the Premises, and amounts expended or incurred by Landlord on
account of any default by Subtenant which gives rise to a default under the
Prime Lease would be amounts payable by Subtenant pursuant to this Subsection
4(a). Sublandlord represents that it is currently paying $966.67 per month for
Sublandlord's Proportionate Share of Additional Charges (as such terms are
defined in the Prime Lease). Subtenant shall pay such Additional Charges to
Landlord as and when due under the Prime Lease.
(b) Each amount due to pursuant to Subsection 4(a) above and each
other amount payable by Subtenant hereunder, unless a date for payment of such
amount is provided for elsewhere in this Sublease, shall be due and payable on
the fifth day following the date on which Landlord or Sublandlord has given
notice to Subtenant of the amount thereof, but in no event later than the date
on which any such amount is due and payable under the Prime Lease.
(c) If Landlord assesses any late payment charges or other penalties
pursuant to the terms and provisions of the Prime Lease because of Subtenant's
failure to pay all amounts due to Landlord as and when due, Subtenant shall pay
Landlord for all such amounts.
2
<PAGE>
(d) If Sublandlord pays any amounts due under the Prime Lease to
Landlord on Subtenant's behalf, such amounts shall bear interest from the date
paid by Sublandlord until the date Sublandlord is reimbursed for such amounts by
Subtenant at the rate per annum equal to two percent (2%) in excess of the Prime
Rate (as hereinafter defined) in effect from time to time, which rate shall
change from time to time as of the effective date of each change in the Prime
Rate, unless a lesser rate shall then be the maximum rate permissible by law
with respect thereto, in which event said lesser rate shall be charged. For the
purposes of this Sublease, the term "Prime Rate" shall mean the rate of interest
announced from time to time by Citibank as its prime or corporate base rate.
(e) Subtenant shall pay Landlord on the due dates for services
requested by Subtenant which are billed by Landlord directly to Subtenant rather
than Sublandlord.
5. Condition of Premises and Construction of Improvements.
------------------------------------------------------
(a) Subtenant shall accept the Premises in its "as is" condition. No
promise of Sublandlord to alter, remodel or improve the Premises, except as may
be expressly provided herein, and no representation respecting the condition of
the Premises or the Building have been made by Sublandlord to Subtenant. Upon
the expiration of the term hereof, or upon any earlier termination of the term
hereof or of Subtenant's right to possession, Subtenant shall surrender the
Premises in at least as good condition as at the completion of the work which
Subtenant will perform pursuant to Section 5(b) below, ordinary wear and tear
excepted, and damage by casualty or condemnation excepted.
(b) Subtenant shall, at its sole cost and expense, cause the
completion of any improvements Subtenant deems necessary or desirable in the
Premises. All such work shall, to the extent required by the terms of the Prime
Lease, be done only upon the prior written consent of Landlord and in accordance
with and subject to the terms and provisions of the Prime Lease and any
additional requirements imposed by Landlord. Subtenant hereby agrees to name
Landlord and Sublandlord as additional named insureds on any insurance policies
Subtenant procures in connection with any work Subtenant desires to cause to be
performed within the Premises.
6. The Prime Lease.
---------------
(a) Sublandlord does hereby represent, warrant and agree to and with
Subtenant that:
(i) the Prime Lease is valid, subsisting, arid in full force
and effect;
(ii) rental payments under the Prime Lease have been paid in
full through and including April 30, 1999;
(iii) the Prime Lease has not been altered, amended or modified
in any manner or respect whatsoever, except as specified
in the Recitals herein;
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(iv) Sublandlord's interest in the Prime Lease is free and
clear of all liens, restrictions, security interest, and
other encumbrances of any kind or nature whatsoever,
(v) There are no claims or threatened claims outstanding
against Sublandlord that arose in connection with the use
of the Premises by Sublandlord, its employees, or agents
and neither Sublandlord nor any of its employees or agents
has taken any action or made any omission that would give
rise to any such claim; and
(vi) To the best of Subtenant's knowledge, no event has
occurred which, with the giving of notice or passage of
time, or both, would constitute a default or event of
default trader the Lease.
(b) This Sublease and all rights of Subtenant hereunder and with
respect to the Premises are subject to the terms, conditions and provisions of
the Prime Lease. Subtenant hereby assumes and agrees to perform faithfully and
be bound by, with respect to the Premises, all of Sublandlord's obligations,
covenants, agreements and liabilities under the Prime Lease and all terms,
conditions, provisions and restrictions contained in the Prime Lease except any
provisions in the Prime Lease alarming or purporting to allow Sublandlord any
rent concessions or abatements or construction allowances.
(c) Without limitation of the foregoing:
(i) Without Sublandlord's prior written consent which shall
not be unreasonably withheld or delayed, Subtenant shall
not make any changes, alterations or additions in or to
the Premises except as otherwise expressly provided
herein;
(ii) If Subtenant desires to take any other action and the
Prime Lease would require that Sublandlord obtain the
consent of Landlord before undertaking any action of the
same kind, Subtenant shall not undertake the same without
the prior written consent of Sublandlord, which consent
shall not be unreasonably withheld or delayed. Sublandlord
may condition its consent on the consent of Landlord being
obtained and may require Subtenant to contact Landlord
directly for such consent;
(iii) All rights given to Landlord and its agents and
representatives by the Prime Lease to enter the premises
covered by the Prime Lease shall inure to the benefit of
Sublandlord and their respective agents and
representatives with respect to the Premises;
(iv) Sublandlord shall also have all other rights, and all
privileged, options, reservations and remedies, granted or
allowed to, or held by, Landlord under the Prime Lease;
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(v) Subtenant shall maintain insurance of the kinds and in the
amounts required to be maintained by Sublandlord under the
Prime Lease. All policies of liability insurance shall
name as additional insureds the Landlord arid Sublandlord
and their respective offices, directors or partners, as
the case may be; and
(vi) Subtenant shall not do anything or suffer or permit
anything to be done which could result in a default under
the Prime Lease or permit the Prime Lease to be cancelled
or terminated.
(d) Notwithstanding anything contained herein or in the Prime Lease
which may appear to be to the contrary, Sublandlord and Subtenant hereby agree
as follows:
(i) Without Sublandlord's prior written consent, which consent
shall not be unreasonably withheld or delayed, Subtenant
shall not assign, mortgage, pledge, hypothecate or
otherwise transfer or permit the transfer of this Sublease
or any interest of Subtenant in this Sublease, by
operation of law or otherwise, or permit the use of the
Premises or any part thereof by any persons other than
Sublandlord and Sublandlord's employees (pursuant to
Paragraph 7 herein) and Subtenant and Subtenant's
employees, or sublet the Premises or any part thereof;
(ii) Base Rental, Additional Charges and other payments
hereunder shall not abate by reason of any damage to or
destruction of the Premises, the premises subject to the
Prime Lease, or the Building or any part thereof, unless,
and then only to the extent that, rental and such other
payments actually abate under the Prime Lease with respect
to the Premises on account of such event;
(iii) Subtenant shall not have any right to exercise or have
Sublandlord exercise any option under the Prime Lease
including, without limitation, any option to extend the
term of the Prime Lease or lease additional space; and
(iv) In the event of any conflict between the terms, conditions
and provisions of the Prime Lease and of this Sublease,
the terms, conditions and provisions of this Sublease
shall, in all instances, govern and control.
(e) It is expressly understood and agreed that Sublandlord does not
assume and shall not have any often obligates or liabilities of Landlord under
the Prime Lease and that Sublandlord is not making the representations or
warranties, if any, made by Landlord in the Prime Lease. With respect to work,
serve, repairs and restoration or the performance of other obligations required
of Landlord under the Prime Lease, Sublandlord's sole obligation with respect
thereto shall be to request the same, upon written request from Subtenant, and
to use reasonable efforts to obtain the same from Landlord. Sublandlord shall
not be liable in damages,
5
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nor she rent abate hereunder, for or on account of any failure by Landlord to
perform the obligations and duties imposed on it under the Prime Lease.
(f) Nothing contained in this Sublease shall be construed to create
privity of estate or contract between Subtenant and Landlord, except the
agreements of Subtenant in Sections 11 and 12 hereof in favor of Landlord, and
then only to the extent of the same.
7. Tenancy by Sublandlord. Sublandlord and Subtenant acknowledge that
----------------------
Sublandlord will remain in possession of a portion of the Premises for
approximately, but no more than, two (2) months. Sublandlord will surrender
possession no later than June 30, 1999. Subtenant hereby consents to this
occupancy and agrees that it shall not relieve Subtenant of any of its
obligations under this Sublease. Sublandlord and Subtenant agree that
Sublandlord is delivering possession of the Premises prior to completion to
Subtenant's remodel of the Premises to facilitate Subtenant's need for space and
to allow Sublandlord a transition period for consolidating its operations.
Sublandlord will surrender possession of portions of the Premises as work by
Subtenant progresses. Subtenant shall perform its work to the greatest extent
possible by starting in one portion of the Premises and moving to others as its
work is completed. Subtenant shall move Sublandlord's furniture, fixtures and
equipment into portions of the Premises as designed by Sublandlord in a careful
manner consistent with Sublandlord's reasonable requests as Subtenant's
construction progresses. Subtenant and Sublandlord shall coordinate in good
faith Subtenant's construction activities and Sublandlord's surrender to
accommodate Subtenant's construction schedule and the orderly move of
Sublandlord's furniture, fixtures and equipment from the Premises. Sublandlord
shall have the exclusive use of 12 offices for the period from Commencement Date
through June 30, 1999.
8. Default by Subtenant.
--------------------
(a) Upon the happening of any of the following:
(i) Subtenant fails to pay any Base Rent within five (5)
days after the date it is due;
(ii) Subtenant fails to pay any other amount due from
Subtenant hereunder and such failure continues for five
(5) days after notice thereof from Sublandlord to
Subtenant;
(iii) Subtenant fails to perform or observe any other
covenant or agreement set forth in this Sublease and
such failure continues for fifteen (15) days after
notice thereof from Sublandlord to Subtenant; or
(iv) any other event occurs which involves Subtenant or the
Premises and which would constitute a default under the
Prime Lease if it involved Sublandlord or the premises
covered by the Prime Lease;
shall be deemed to be in detach hereunder, and Sublandlord may exercise, without
limitation of any other rights and remedies available to it hereunder or at law
or in equity, any
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<PAGE>
and all rights and remedies of Landlord set forth in the Prime Lease in the
event of a default by Sublandlord thereunder.
(b) In the event Subtenant fails or refuses to make any payment or
perform any covenant or agreement to be performed hereunder by Subtenant,
Sublandlord may make such payment or undertake to perform such covenant or
agreement (but shall not have any obligation to Subtenant to do so). In such
event, amounts so paid and amounts expended in undertaking such performance,
together with all costs, expenses and attorneys' fees incurred by Sublandlord in
connection therewith, shall be additional rent hereunder.
9. Nonwaiver. Failure of Sublandlord to declare any default up or
---------
taking in taking any action in connection therewith shall not waive such
default. No receipt of moneys by Sublandlord from Subtenant after the
termination in any way of the term or of Subtenant's right of possession
hereunder or after the giving of any notice shall reinstate, continue or extend
the term or affect any notice given to Subtenant or any suit commenced or
judgment entered prior to receipt of such moneys.
10. Cumulative Rights and Remedies. All rights and remedies of
------------------------------
Sublandlord under this Sublease shall be cumulative and none shall exclude any
other rights or remedies allowed by law.
11. Waiver of Claims and Indemnity.
------------------------------
(a) Subtenant hereby releases and waives any and all claims against
Landlord and Sublandlord and each of their respective officers, directors,
partners, agents and employees for injury or damage to person, property or
business sustained in or about the Building, the premises subject to the Prime
Lease, or the Premises by Subtenant other than by reason of gross negligence or
willful misconduct and except in any case which would render this release and
waiver void under law.
(b) Except for the negligence or intentional misconduct of
Sublandlord, its agents or employees, Subtenant shall indemnify and save
Sublandlord free and harmless from and against all liability, claims, demands,
costs and expenses of every kind and nature, including attorneys' fees and
litigation expenses, for injury or damage by Subtenant to any person(s),
firm(s), corporation(s) or property occurring on or about the Premises or
arising from a breach of the Sublease, or arising out of any accident or any
other occurrence on the Premises or due directly or indirectly to the use of
said Premises or any part thereof by Subtenant, its agents, subtenants or
assignees. In case any such proceeding is brought against any of said
indemnified parties, Subtenant covenants, if requested by Sublandlord, to defend
such proceeding at its sole cost and expense by legal counsel reasonably
satisfactory to Sublandlord.
(c) Except for the negligence or intentional misconduct of Subtenant,
as agent or employees, Sublandlord shall indemnify and hold harmless Subtenant
from all liability for injury or damage to any person(s) or property occurring
on or about the Common Areas or arising out of any accident in the Common Areas
and from any loss, claim, liability or expense resulting from any breach of a
representation or warranty of Sublandlord (including all costs, expenses and
reasonable attorneys' fees incurred by Tenant in defense of any such claims).
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<PAGE>
12. Waiver of Subrogation. Anything in this Sublease to the contrary
---------------------
notwithstanding, Sublandlord and Subtenant each hereby waive any and all rights
of recovery, claims, actions or causes of action against the other and the
officers, directors, partners, agents and employees of each of them, for any
loss or damage that may occur to the Premises or the premises covered by the
Prime Lease, or any improvements thereto, or any personal property of any person
therein or in the Building, by reason of fire, the elements or any other cause
insured against under valid and collectible fire and extended coverage insurance
policies, regardless of cause or origin, including negligence, except in any
case which would render this waiver void under law.
13. Brokerage Commissions. Each party hereby represents and warrants to
---------------------
the other that it has had no dealings with any real estate broker or agent in
connection with this Sublease, and that it knows of no real estate broker or
agent who is or might be entitled to a commission in connection with this
Sublease. Each party agrees to protect, defend, indemnify and hold the other
harmless from and against any and all claims inconsistent with the foregoing
representations and warranties for any brokerage, finder's or similar fee or
commission in connection with this Sublease, if such claims are based on or
relate to any act of the indemnifying party which is contrary to the foregoing
representations and warranties.
14. Succession and Assigns. This Sublease shall be binding upon and
----------------------
inure to the benefit of the successors and assigns of Sublandlord and shall be
binding upon and inure to the benefit of the successors of Subtenant and, to the
extent any such assignment may be approved, Subtenant's assigns. The provisions
of Subsection 6(f) and Sections 11 and 12 hereof shall inure to the benefit of
the successors and assigns of Landlord.
15. Entire Agreement. This Sublease contains al the terms, covenants,
----------------
conditions and agreements between Sublandlord and Subtenant relating in any
manner to the rental, use and occupancy of the Premises. No prior agreement or
understanding pertaining to the same shall be valid or of any force or effect.
The terms, covenants and conditions of this Sublease cannot be altered, changed,
modified or added to except by a written instrument signed by Sublandlord and
Subtenant.
16. Notices.
-------
(a) In the event any notice from the Landlord or otherwise relating
to the Prime Lease is delivered to the Premises or is otherwise received by
Subtenant, Subtenant shall as soon thereafter as possible, but in any event
within twenty-four (24) hours, deliver such notice to Sublandlord if such notice
is written or advise Sublandlord thereof by telephone if such notice is oral.
(b) Notices and demands required or permitted to be given by either
party to the other with respect hereto or to the Premises shall be in writing
and shall not be effective for any purpose unless the same shall be served
either by personal delivery with a receipt requested, by overnight air courier
service or by United States certified or registered mail, return receipt
requested, postage prepaid; provided, however, that all notices of default shall
be served either by personal delivery with a receipt requested or by overnight
air courier service, addressed as follows:
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if to Sublandlord: Rader Companies
6005 N.E. 82nd
Portland, Oregon 97220
Attention: Garvin Phney
if to Subtenant: Planet Rx
6399 Shelby View Drive, Suite 111
Memphis, Tennessee 38134
Attention: John McAlpin
Notices and demands shall be deemed to have been given two (2) days after
mailing, if mailed, or, if made by personal delivery or by overnight air courier
service, then upon such delivery. Either party may change its address for
receipt of notices by giving notice to the other party.
17. Authority of Subtenant, etc. Subtenant represents and warrants to
---------------------------
Sublandlord that this Sublease has been duly authorized, executed and delivered
by and on behalf of Subtenant and constitutes the valid, enforceable and binding
agreement of Subtenant and of each party constituting Subtenant, each of whom
shall be jointly and severally liable hereunder in accordance with the terms
hereof.
18. Security Deposit. Subtenant has deposited with Sublandlord Six
----------------
Thousand Four Hundred Twenty-Five and no/100 Dollars ($6,425.00) as security for
the full and faithful performance of every provision of this Sublease to be
performed by Subtenant. If Subtenant defaults with respect to any provision of
this Sublease, including, but not limited to, the provisions relating to the
payment of rent, Sublandlord may use, apply or retain all or any part of said
security deposit for the payment of any rent and any other sum in default, or
for the payment of any other amount which Sublandlord may spend or become
obligated to spend by reason of Subtenant's default or to compensate Sublandlord
for any other loss or damage which Sublandlord may suffer by reason of
Subtenant's default. If any portion of said security deposit is so used or
applied, Subtenant shall, within five (5) days after written demand therefor,
deposit cash with Sublandlord in an amount sufficient to restore the security
deposit to its original amount, and Subtenant's failure to do so shall be a
material breach of this Sublease. Except to the extent required by law,
Sublandlord shall not be required to keep said security deposit separate from as
general funds, and Subtenant shall not be entitled to interest on any security
deposit. If Subtenant shall fully and faithfully perform every provision of this
Sublease to be performed by it, said security deposit or any balance thereof
shall be returned to Subtenant (or, at Sublandlord's option, to the last
assignee of Subtenant's interest hereunder) within thirty (30) days after the
expiration of the term and Subtenant's vacation of the Premises. Nothing herein
shall be construed to limit the amount of damages recoverable by Sublandlord or
any other remedy to the security deposit.
19. Consent of Landlord. The obligations of Sublandlord and Subtenant
-------------------
under this Sublease are conditioned and contingent upon the Landlord consenting
hereto by executing and delivering a counterpart of this Sublease. In the event
Landlord's consent is not obtained within ten (10) days after the date hereof,
as evidenced by its execution and delivery of this Sublease, this Sublease shall
automatically terminate and become null and void, and neither Sublandlord nor
Subtenant shall have any further obligations or liability hereunder or to each
other
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<PAGE>
with respect to the Premises. Landlord's consent hereto does not alter,
modify or amend in any way the terms of the Prime Lease. Sublandlord
acknowledges that this Sublease does not relieve Sublandlord of its obligations,
covenantsand duties under the Prime Lease.
20. Examination. Submission of this instrument for examination or
-----------
signature by Subtenant does not constitute a reservation of or option for the
Premises or in any manner bind Sublandlord, and no lease, sublease or obligation
on Sublandlord shall arise until this instrument is signed and delivered by
Sublandlord and Subtenant and the consent of Landlord is obtained as described
in Section 19 above; provided, however, that the execution and deliver, by
Subtenant of this Sublease to Sublandlord shall constitute an irrevocable offer
by Subtenant to sublease the Premises on the terms and conditions herein
contained, which offer may not be revoked for ten (10) days after such delivery.
IN WITNESS WHEREOF, Sublandlord and Subtenant hew executed this Sublease as
of the date aforesaid.
SUBLANDLORD:
RADER COMPANIES, a Division of Beloit
Corporation, a Delaware corporation
ATTEST:
By:___________________________ By:________________________________
Its:______________________ Its:__________________________
SUBTENANT:
PLANET Rx, a Delaware corporation
ATTEST:
By:___________________________ By:________________________________
Its:__________________________ Its:_______________________________
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<PAGE>
EXHIBIT 10.9
SUBLEASE
1. Parties. This agreement ("this Sublease") is made and entered into as
of November 6, 1998, by and between CELLEGY PHARMACEUTICALS, INC., a California
corporation ("Sublessor"), and PLANETRX, INC., a Delaware corporation
("Sublessee"), under the written agreement entitled "Lease" dated April 8, 1998
between TC NORTHERN CALIFORNIA, INC., a Delaware corporation ("Owner") as
landlord and Sublessor as tenant, as supplemented by the letter agreement dated
April 7, 1998 between said parties concerning landlord's work and upgrades. Said
agreement entitled "Lease" and said letter agreement are hereinafter
collectively called the "Master Lease". A copy of the Master Lease is attached
hereto as Attachment I. Any defined terms used in this Sublease without
independent definition herein shall have the meaning of the same defined terms
in the Master Lease. As used herein the term "Project" shall mean the entirely
of the premises governed by the Master Lease.
2. Provisions Constituting Sublease.
2.1 This Sublease is subject to all the provisions of the Master
Lease. Sublessee hereby assumes and agrees to perform all of the obligations of
Sublessor as tenant under the Master Lease to the extent said obligations apply
to the Subleased Premises. Any provision contained in this Section 2.1 or
elsewhere in this Sublease shall not prevent or prohibit Sublessor from
assigning or otherwise transferring Sublessor's interest in this Sublease to a
third party (including Owner), provided that Sublessor makes any such assignment
or transfer in compliance with applicable requirements of the Master Lease.
2.2 The provisions of the Master Lease are incorporated herein by
reference. Sublessor shall be responsible, as between Sublessor and Sublessee,
for the performance of the obligations of the tenant under the Master Lease
which are set forth in the following provisions of the Master Lease. Sublessee
shall only have the right to exercise or enforce the rights of Sublessor under
the Master Lease insofar as said rights pertain to the use and occupancy of the
Subleased Premises and Common Area, but in no event shall Sublessee have rights
under Section 37.D (right of first offer) or Section 37.E (right to extend term)
of the Master Lease.
3. Subleased Premises and Rent.
3.1 Subleased Premises. Sublessor leases to Sublessee and Sublessee
leases from Sublessor the Subleased Premises pursuant to the provisions of in
this Sublease. The Subleased Premises consist of approximately 15,821 rentable
square feet, which are located on the second floor of the freestanding building
commonly known as 349 Oyster Point Boulevard, South San Francisco, California
94080. Upon completion of installation of the demising walls which enclose the
Subleased Premises, Sublessor shall cause Sublessor's architect or construction
manager to measure the rentable area in the Subleased Premises.
3.2 Rent. Sublessee shall pay monthly rent to Sublessor in
consideration for the Subleased Premises in accordance with the following
schedule:
Months Sq. Ft.* Rental Rate
------ --------- -----------------------
12/18/98 to 2/17/99 9,254 $2.15 psf, Full Service
2/18/99 to 12/17/99 15,821 $2.15 psf, Full Service
<PAGE>
12/18/99 to 12/17/01 15,821 $2.15 psf, Full Service
Extension terms
12/18/01 to 6/17/02 15,821 2.29 psf, Full Service
6/18/02 to 12/18/02 15,821 2.29 psf, Full Service
* See Section 3.1 above concerning final determination of rentable area.
Sublessee shall pay the rent, and all other amounts which become due from
Sublessee to Sublessor under this Sublease, in lawful money of the United
States, without deduction, offset, prior notice or demand. Rent shall be payable
by Sublessee to Sublessor in consecutive monthly installments on or before the
seventeenth (17th) day of each calendar month during the Sublease Term. The rent
for any partial calendar month at the end of the Sublease Term, shall be
prorated on the basis of the number of days in such month.
3.3 Full Service Sublease. Subject to the limitations and conditions
set forth in this Section 3.3, Sublessor shall pay the amounts due under the
Master Lease on account of the Subleased Premises for utilities, janitorial
services (so long as Sublessee accepts service from janitorial contractor whom
Sublessor has hired to provide janitorial services for Sublessor), operating
expenses (including building and common area maintenance, costs of insurance,
repairs, and real property taxes and assessments)
Notwithstanding the foregoing, if Sublessor determines that Sublessee's
consumption of electricity exceeds normal usage. Sublessor may install a
submeter to measure Sublessee's actual consumption and may then charge
Sublessee, at the same rate at which the public utility providing electricity
charges Sublessor, for excess usage. Furthermore, if Sublessee shall use the
Subleased Premises outside normal working hours (which shall mean 7 am to 6 pm
Monday through Friday, 9 am to 1 pm on Saturdays, Sublessor will charge
Sublessee $30 per hour for use of heating or cooling outside of normal working
hours only upon notice to Sub-lessor by Sublessee in advance of anticipated
usage. In the event that Sublessee utilizes lighting and electricity, but does
not require any special heating or cooling outside of normal working hours there
shall be no said charge.
3.4 Payment of First Month's Rent. Concurrently with the execution of
this Sublease by Sublessee, Sublessee shall pay to Sublessor the amount of
$19,896 on account of rent due hereunder for the first month of the initial term
of this Sublease. Once the final rentable area of the Subleased Premises and the
duration of any early entry by Sublessee are determined, Sublessor shall notify
Sublessee of any resulting adjustment to the rent due for the first month.
3.5 Security Deposit. In addition to the monthly rent which this
Sublease requires Sublessee to pay, Sublessee shall pay to Sublessor the amount
of $68,030 (the "Security Deposit") as a deposit to secure the performance of
Sublessee's obligations, payment will be due at the earlier of 12/18/98 or the
Sublease start date. Sublessor shall have no obligation to pay interest or any
other return to Sublessee on account of the Security Deposit. Sublessor may draw
upon the Security Deposit to compensate Sublessor for any costs or damages
Sublessor incurs on account of the failure of Sublessee to perform the
obligations of Sublessee under this Sublease. Upon demand from Sublessor
following any such draw, Sublessee shall immediately deliver to Sublessor an
amount sufficient to restore the Security Deposit to its full original amount.
If, at the expiration or sooner termination of this Sublease,
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<PAGE>
Sublessee shall have performed all the obligations of Sublessee hereunder,
including, without limitation, the surrender of the Subleased Premises to
Sublessor in the condition which this Sublease requires, Sublessor shall return
to Sublessee, within ten days after Sublessee has fully vacated the Subleased
Premises and completed any repairs which removal from the Subleased Premises may
have occasioned, the Security Deposit less any sums due and owing to Sublessor.
The subleases will be permitted to substitute a valid letter of credit in the
amount of the security deposit payable to the Sublessor under conditions
described above in section 3.5.
4. Rights of Access and Use.
4.1 Use. Sublessee shall use the Subleased Premises only for
the purposes of general office use, software development and data processing and
for no other uses unless both Sublessor and Master Landlord consent in writing
to each such other use prior to the commencement thereof.
4.4 Parking. Sublessee shall have the right to use up to fifty-
five (55) parking spaces in the parking facilities which the Project includes,
on an undesignated, non-exclusive basis, throughout the initial term and any
extended term of this Sublease. Sublessee shall cooperate with Sublessor in
enabling Sublessor to comply with the provisions of the Master Lease concerning
parking.
4.5 Initial Condition of the Subleased Premises. Sublessor shall
make certain improvements to the Subleased Premises for Sublessee's, at the cost
of no more than $9,080.40 in accordance with the floor plan attached hereto as
Attachment II and deliver the Subleased Premises so improved, with the
- -------------
electrical and HVAC systems in good operating condition. Sublessee shall accept
the Subleased Premises in the aforesaid condition.
4.6 Alterations by Sublessee. Sublessee, at Sublessee's sole
cost and expense, may make additions, improvements and alterations (collectively
Alterations) to the Subleased Premises at any time and from time to time
provided that Sublessee first obtains Sublessor's prior written approval of the
Alterations, which approval Sublessor shall not unreasonably withhold or delay,
but which approval Sublessor may condition upon satisfaction of one or more of
the following requirements: (A) the Alterations do not result in any violation
of the Master Lease; (B) the Alterations receive the approval of Owner, if such
approval is a requirement under the Master Lease; (C) the Alterations are
described in plans and specifications prepared by a licensed architect (D)
Sublessee shall not commence any work on any Alterations without first obtaining
an permits necessary therefor, (E) the Alterations are installed by a licensed
general contractor, in accordance with the permits therefor and with all
applicable laws, regulations, ordinances, codes, orders, and rules of
governmental authorities with jurisdiction over the Subleased Premises; and (F)
Sublessee shall affirm in writing its obligation, if Sublessor shall so request,
to remove the Alterations at the end of the term of this Sublease and to restore
the Subleased Premises to their original condition as of the date of this
Sublease. Unless Sublessor shall have asked Sublessee to remove particular
Alterations, all Alterations installed in the Subleased Premises shall remain
therein and shall become the property of Sublessor at the end of the term of
this Sublease. Initial alterations by Sublessee are contained in Attachment
----------
111.
- ---
4.7 Upkeep and Surrender. Sublessee, at Sublessee's expense,
shall keep and maintain the Subleased Premises and all equipment and systems
located therein and
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<PAGE>
serving the Subleased Premises, together in good condition and repair throughout
the term of this Sublease. At the end of the term of this Sublease Sublessee
shall remove all Sublessee's furniture, trade fixtures, shelving and portable
equipment from the Subleased Premises and return the Subleased Premises to
Sublessor in broom-clean condition with all equipment, systems and utilities
services in the Subleased Premises in good condition and repair.
4.8 Hazardous Materials; Indemnification.
A. Use. Sublessee shall not bring any Hazardous Materials onto
the Subleased Premises or use any Hazardous Materials at the Subleased Premises
without first obtaining Sublessor's prior written approval, which Sublessor
shall not unreasonably withhold or delay, but which approval Sublessor may
condition upon the following requirements: (i) Sublessee shall identify the
nature and quantity of each Hazardous Material which Sublessee proposes to use
on the Subleased Premises and Sublessee's protocol for the use, storage and
disposition thereof; and (ii) Sublessee shall reasonably assure Sublessor that
Sublessee's use of each such Hazardous Material complies with the requirements
of the Master Lease and the requirements of applicable law concerning each such
Hazardous Material.
B. Indemnity. Sublessee shall indemnify, protect, defend and
hold Sublessor harmless from and against any and all claims, damages, losses and
liabilities which Sublessor may incur or suffer on account of the violation of
any provision of the Master Lease caused by Sublessee or resulting from the
introduction to the Project or use of any Hazardous Materials by Sublessee at
the Subleased Premises. The obligations Sublessee under this Section 48B shall
survive the expiration or sooner termination of this Sublease and shall be
enforceable against Sublessee thereafter.
4.9 Right of First Refusal. Sublessor may offer the space (the
"First Level Space") consisting of approximately 9,728 square feet on the
first level of Sublessor's Premises for sublease. If Sublessor decides to
offer the First Level Space for sublease, Sublessor shall notify Sublessee
in writing of the first bonafide offer received for the First Floor Space
for sublease and of the minimum terms and conditions offered to sublet the
First Level Space. If Sublessee, within three (3) calendar days after the
date of Sublessor's notice to Sublessee, shall submit an offer to sublet
the First Level Space which meets or betters the specified conditions,
Sublessor will then negotiate with Sublessee in good faith with a view to
concluding a mutually acceptable sublease of the First Level Space.
Sublessor shall have the right to terminate such negotiations at any time
if Sublessor concludes, in Sublessor's good faith judgment, that the
negotiations unlikely to result in an agreement. Sublessor has no future
obligation to offer the first floor space to the Sublessee after the first
offer.
4.10 Assigning and Subletting.
Sublessee shall have the right, so long as at least six (6)
months of the initial term of this Sublease remain unexpired at the time the
sublease (in either case, a "Transfer") takes effect, to assign or sublet all or
any portion of the Subleased Premises to an assignee or subtenant whom Sublessor
approves. Sublessor shall not unreasonably withhold or delay its approval, but
Sublessor may condition its approval upon the satisfaction of one or more of the
following requirements:
(A) At the time of the Transfer, Sublessee shall not be in
default in the performance and observance of any of Sublessee's
obligations under this
4
<PAGE>
Sublease or, if a default exists, the transferee shall have cured
such default prior to or concurrently wish the Transfer,
(B) The transferee shall expressly assume in writing all of
Sublessee's obligations hereunder;
(C) Owner shall approve the transferee;
(D) The proposed transferee shall provide Sublessor with reasonably
detailed historical and current financial information about the
transferee and that the transferee has a financial condition which is
satisfactory to Sublessor and Sublessor's lender.
(E) The use which the proposed transferee proposes does not conflict
with the uses permitted under the Master Lease or with the use
Sublessee is making of its own premises. The proposed transferee
undertakes, in favor of Owner and Sublessor, to comply, at the
transferee's sole expense, with any requirements under the Americans
With Disabilities Act of 1990 which may become applicable to the
Project or the Subleased Premises on account of the proposed
transferee's use thereof.
If Sublessee wishes to engage in a Transfer, Sublessee shall notify Sublessor by
delivering to Sublessor a written request for Sublessor's consent to the
Transfer at least thirty (30) days prior to the proposed effective date for the
Transfer and shall provide Sublessor, at the time Sublessee delivers the request
for consent to Sublessor, with the following:
(I) The full particulars of the proposed transaction,
including its nature, effective date, semis and conditions, the
name, address, telephone and facsimile numbers of the parties and
other documents pertaining to the proposed transaction;
(II) A description of the identity, net worth and previous
business experience of the proposed transferee, including,
without limitation, copies of financial statements for the
proposed transferee.
(III) A signed statement from Sublessee that Sublessee intends
to conclude the proposed Transfer if Sublessor consents thereto.
If Sublessee fails to make the aforesaid written request in accordance with the
foregoing requirements and seeks nonetheless to proceed with a Transfer,
Sublessee's said failure shall constitute a material breach of this Sublease on
the part of Sublessee.
In no event shall any request for consent submitted by Sublessee pursuant to
this Section 15 be deemed granted unless Sublessor has expressly granted such
consent in a writing signed by Sublessor.
No Transfer, notwithstanding that Sublessor shall have consented thereto, shall
relieve or release Sublessee from liability for payment of all rent and other
charges payable hereunder or from the performance of Sublessee's other
obligations under this Sublease.
5
<PAGE>
Within not more than thirty (30) days after the commencement of any Transfer to
which Sublessor shall have consented hereunder, Sublessee shall notify Sublessor
and Sublessor, in turn, shall notify Landlord in writing of the amount of (i)
Sublessee's direct out-of-pocket costs in connection with the Transfer and (ii)
the amount, if any, by which the revenue and other consideration Sublessee
receives under or on account of the Transfer exceeds the Rent which Sublessee
was paying Sublessee. The Sublessee shall pay to Sublessor, on a monthly basis,
fifty percent (50%) of all such further excess that Sublessee receives, after
deducting the Landlord's share of any excess rent agreed to in the master lease,
on account of the Transfer (provided that Sublessee, after recovery of
Sublessee's costs, shall immediately pay to Sublessor the portion remaining of
any such excess resulting from a lump sum payment to Sublessee, for example, key
money or a Transfer fee).
5. Sublease Term.
5.1 Sublease Term. The Sublease Term shall commence on December 18,
1998 and shall expire on December 17, 2001. In no event shall the Sublease Term
extend beyond the Term of the Master Lease.
5.2 Inability to Deliver Possession. If Sublessor is unable to
deliver possession of the Subleased Premises at the commencement of the term,
Sublessor shall not be liable for any damage caused thereby, nor shall this
Sublease be void or voidable but Sublessee shall not be liable for Rent until
such time as Sublessor offers to deliver possession of the Subleased Premises to
Sublessee. The term of this Sublease shall not be extended by such delay. If
Sublessor does not tender delivery of possession of the Subleased Premises to
Sublessor on or before January 31, 1999, Sublessee, at Sublessee's option, may
temperate this Sublease by delivering a written notice of termination to
Sublessor. If Sublessee, with Sublessor's consent, takes possession of the
Subleased Premises prior to December 17, 1998, Sublessee shall do so subject to
all the covenants and conditions hereof and shall pay Rent for the period
commencing on the date of Sublessee's entry into the Subleased Premises and
ending on December 16, 1998 at the same rental as that prescribed for the first
month of the term prorated at the rate of 1/30th thereof per day.
5.3 Right to Extend the Sublease Term. Sublessor hereby grants to
Sublessee the right to extend the term of this Sublease for six (6) months after
the expiration of the lease term (ending 6/17102). Sublessee may exercise this
right by delivering written notice of exercise to Sublessor on or before July
18, 2001. Sublessor will also grant Sublessee the right to extend the term of
this Sublease for an additional six (6) month period after the expiration of the
extended lease terms (second extension period ending 12/18/02). Sublessee's
aforesaid right to extend the term is subject, however, to the unilateral right
of Sublessor to cancel Sublessee's extension right if Sublessor determines, in
Sublessor's business judgment, that Sublessor will require the Subleased
Premises for Sublessor's own use. The rent for the extension term shall as
specified in Section 3.2 above.
6. Notices. All notices, demands, consents and approvals which may or
are required to be given by either party to the other hereunder shall be given
in the manner provided in the Master Lease, at the following addresses:
(enter addresses here)
6
<PAGE>
Sublessor shall notify Sublessee of any Event of Default under the Master Lease
or of any other event of which Sublessor has actual knowledge which may, in
Sublessor's reasonable business judgment, materially adversely affect
Sublessee's ability to conduct its normal business at the Subleased Premises, as
soon as reasonably practicable following Sublessor's receipt of notice from
Owner of an Event of Default or actual knowledge of such a material adverse
effect.
7. Brokerage Representation. Sublessor has dealt exclusively with Cornish
& Carey Commercial, a licensed real estate broker ("Sublessor's Brokers"), in
arranging this Sublease. Sublessor, pursuant to a separate written contract,
between Sublessor and Sublessor's Broker, shall pay the compensation which said
contract provides. Sublessee shall indemnify, protect, defend and hold Sublessor
harmless against the claims of any other finder or real estate licensee who may
claim compensation from Sublessor on account of the transaction evidenced by
this Sublease.
8. Compliance With Americans With Disabilities Act. Sublessee shall be
responsible for the installation and cost of any and all improvements,
alterations or other work required on or to the Subleased Premises or to any
other portion of the Project, which work is required or reasonably necessary
because of Sublessee's use of the Subleased Premises or any portion thereof,
including any improvements, alterations or other work required under the
Americans With Disabilities Act of 1990.
7
<PAGE>
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Sublease as of
the date first above written.
SUBLESSOR CELLEGY PHARMACEUTICALS, INC.
a California corporation
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
SUBLESSEE PLANETRX, INC.
a Delaware corporation
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT 10.10
SUPPLY AGREEMENT
----------------
This Supply Agreement dated this 14th day of January, 1999, between McKesson
U.S. Health Care, a division of McKesson Corporation ("McKesson") and Planet Rx,
Inc. ("Customer") shall be to establish a [+] year program for the supply of
prescription drugs and other health and beauty care products by McKesson to
Customer's centralized pharmacy (referred to herein as "Facility"). The parties
hereto agree as follows:
1. MERCHANDISE
For purposes hereof, "Merchandise" shall comprise all items normally
stocked or drop-shipped by McKesson Drug Distribution Centers servicing the
48 contiguous states, including prescription drugs, OTC drugs, home health
care products, DME, health and beauty aids and sundries. This Agreement
does not apply to merchandise sold to Customer by McKesson Corporation
divisions or subsidiaries other than McKesson Drug Company.
2. TERM
The term of this Agreement shall be for the [+] year period commencing on
January 1, 1999, and during such period Customer agrees to designate
McKesson as its primary wholesale supplier of Merchandise and to purchase
from McKesson substantially all of the requirements of its Facility(ies)
for Merchandise and other items covered hereunder.
3. ORDERING AND DELIVERY
Prescription products will be delivered to Customer's Facility up to [+]
times per week, on mutually agreed upon days. Orders transmitted by 9:30
p.m. local time Sunday through Thursday will be delivered the next day.
Additional deliveries will be available on a mutually agreed upon schedule.
4. PAYMENT TERMS
A. Except as provided in Section 4(J) regarding opening orders, the
payment terms options for the Merchandise covered by this Agreement
are as follows:
Standard Semi-Monthly Payment Terms
-----------------------------------
Payment for Merchandise delivered to Customer's Facility shall be paid
by Customer as follows: Invoices dated from the [+] to the [+] of the
month are due and payable on the [+] day of the [+] month. Invoices
dated from the [+] to the [+] are due and payable on the [+] of the
[+] month.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
<PAGE>
Weekly Payment Terms
--------------------
Invoices dated from Monday through Friday are due by [+] of the
following week. A [+]% reduction in the cost of goods markup shall
apply.
Prepayment Incentives
---------------------
Prepayment Terms (30 day, 15 day and 7 day): The prepayment is a one-
time payment equivalent to thirty (30) or fifteen (15) or seven (7)
days worth of purchases (based on the most recent three-month purchase
history) which is held as a deposit by McKesson. The amount of the
required deposit will be adjusted quarterly, and may be adjusted as
often as monthly, to cover increases or decreases in purchase volume.
Following such one-time payment, all purchases are payable under the
Standard Semi-Monthly Payment Terms as described above.
Customer shall be entitled to a reduction in the markup set forth in
the cost of goods schedule for prepayment if Customer elects this
prepayment option. The prepay incentive shall be as follows:
Prepay Incentive Markup Reduction
- ---------------------------------
30 Days [+]%
15 Days [+]%
7 Days [+]%
B. If any of the above-specified due dates falls on a weekend day or
holiday, payment is due on the [+].
C. McKesson encourages the use of Electronic Funds Transfer ("EFT"). If
EFT is used as the Customer's method of payment, a [+]% reduction in
the cost of goods markup shall apply.
D. Any payments made after the due date indicated herein shall result in
a [+] percent ([+]%) (or the maximum amount permissible under
applicable law, if lower) increase in the purchase price of the
Merchandise. A [+] percent ( [+] %) service charge (or the maximum
amount permissible under applicable law, if lower) will be imposed
semi-monthly on all balances delinquent more than [+] days.
E. Customer agrees to render payment in full to McKesson on the
applicable due date as specified in this Agreement without (i) making
any deductions, short payments, or other accounts payable adjustments
to such payment obligation except as specified herein in Section 8
(5); or (ii) seeking to condition such remittance on any demand for or
receipt of proofs of delivery. Any accounts payable adjustments
claimed by Customer shall require prior written authorization
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
2
<PAGE>
of McKesson and must be supported by accompanying detail documenting
the basis for any such requested adjustments.
F. Customer hereby grants to McKesson a purchase money security interest
for all Merchandise shipped to Customer to secure the price of the
Merchandise and all related charges. Customer agrees to execute from
time to time such financing statements as McKesson may request for the
purpose of perfecting McKesson's security interest.
G. This Agreement is conditioned upon Customer's maintaining a sound
financial condition throughout the term hereof and to that end,
Customer agrees to promptly substantiate in writing, at McKesson's
request, the existence of such condition with audited financial
statements and any other supporting information required by McKesson.
H. Each company doing business with McKesson is required to negotiate its
payment terms and credit line with McKesson individually, based upon
such company's individual financial and risk characteristics. Nothing
in this Agreement is intended to be, nor shall it be construed as, a
binding obligation or continuing commitment by McKesson to extend
credit or payment terms options and all such terms and conditions
shall be subject to the review and approval of McKesson's Financial
Services Department.
I. McKesson reserves the right, in its sole discretion, to change a
payment term (including imposing the requirement of cash payment upon
delivery) or limit total credit, if (i) McKesson concludes there has
been a material change in the Customer's financial condition or an
unsatisfactory payment performance; or (ii) Customer ceases to meet
McKesson's credit requirements or McKesson determines that the
Customer is likely to cease meeting such requirements. Upon the
occurrence of any of the above-specified events, McKesson further
shall be entitled to suspend or discontinue the shipment of any
additional orders to Customer's Facility.
J. Opening orders shall include any new Facility orders submitted to
McKesson up to the end of the second week after the Facility begins
filling prescriptions. For purposes hereof, the term "new Facilities"
shall not include (i) any existing Facility of Customer that changes
its address; or (ii) any Facility acquired through acquisition,
merger, partnership or other business combination by Customer.
Opening orders for new Facilities of Customer will be billed at the
normal cost for both Rx and OTC Merchandise as determined by the Cost
Plus Markup schedule set forth in Section 5 below. Opening order
invoices will receive [+] ([+]) month payment terms, subject to review
and approval by McKesson's Credit Department. Customer's opening
orders for its initial Facility shall be due and payable on [+].
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
3
<PAGE>
5. COST OF GOODS
A. In consideration for the Cost of Goods specified herein, Customer
expressly commits to purchase no less than [+]% of its total volume of
Merchandise purchased from wholesalers from McKesson during the term
of this Agreement ("Volume Purchase Commitment"). Due to the start-up
nature of the Customer's business, McKesson will bill Merchandise
purchased hereunder based on the $[+]-$[+] volume bracket amount
category specified in Section 5.C below until the Customer's purchases
surpass this purchase volume level. If after the first year of this
Agreement Customer has not achieved a monthly average purchase volume
amount of at least $[+] per Facility, McKesson, in addition to the
other rights and remedies available to it hereunder, reserves the
right in its sole discretion to redetermine the Cost of Goods pricing
specified below.
B. Subject to the terms and conditions of this Section, the Cost of Goods
for Merchandise delivered to Customer shall be Cost plus the
applicable markup as specified below. Except in the case of contract
items as discussed below, "Cost" for the purposes of this Agreement
shall mean the manufacturer's published acquisition cost (exclusive of
cash discounts) on the date of McKesson's invoice to Customer,
adjusted for selected bonus goods, manufacturers' off-invoice
allowances, and manufacturers' deal prices to be made available to
Customer in accordance with McKesson's established policies. For
purchases of Merchandise with respect to which Customer has entered
into a vendor contract with a manufacturer ("Contract Products")
loaded with McKesson, "Cost" shall mean the "bid price" of the product
as set forth in the vendor contract.
C. Subject to the terms and conditions herein, the Cost of Goods under
this Agreement shall be in accordance with the pricing schedule set
forth below. After the Customer achieves the maximum purchase volume
for the initial volume bracket category specified below, the
Customer's Cost of Goods shall thereafter be subject to monthly review
by McKesson and will be adjusted, if and to the extent necessary, to
reflect the Customer's actual monthly average purchase volume.
Cost Plus Markup
Chain-wide Monthly Average Based on Standard
Volume Per Facility Semi-Monthly Payment Terms
(net of returns, allowances and rebates) RxOTC
----------------------------------------------
[+]
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
4
<PAGE>
[+]
Net Billed Items: The purchase price for selected Merchandise,
----------------
including but not limited to the following product lines, will be net-
billed and not covered by the above-specified Cost of Goods pricing:
[+].
D. McKesson believes that the price, value, and quality of the
Merchandise delivered to Customer pursuant to this Agreement will be
market competitive at all times throughout the term of this Agreement.
In the event that at any time during the term of this Agreement there
is a material decline in the prevailing market price for comparable
products to similarly situated purchasers, Customer may so notify
McKesson and McKesson and Customer will meet and negotiate in good
faith an adjustment in the pricing with respect to future purchases as
appropriate to reflect such price decline. Nothing in this paragraph
is intended to restrict McKesson in its ability to meet individual
competitive situations.
6. SERVICE LEVEL
McKesson shall extend to Customer a service level guarantee on Rx
Merchandise purchased hereunder if McKesson acts as the primary supplier of
such pharmaceutical products to Customer. If such service level (based on
the definition below) falls below [+]% for [+] consecutive quarters,
McKesson shall pay Customer a sum equal to [+]% of net Rx Merchandise sales
to Customer's Facility(ies) for those quarters.
Service Level Guarantee - Definition
- ------------------------------------
"Service Level" shall mean a percentage amount calculated as follows:
[+] = Service Level
where,
A=[+]
B=[+]
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
5
<PAGE>
C=[+]
Any agreed upon Service Level Guarantee shall be subject to the following:
i) The Service Level Guarantee shall not apply within sixty
(60) days after the later of (i) the commencement date of
the term of the Supply Agreement entered into between
Customer and McKesson, or (ii) the date on which Customer
has furnished to McKesson reasonably accurate estimates of
its pharmaceutical products requirements.
ii) The Service Level Guarantee shall not apply for any month in
which Customer purchases exceed [+] percent [+] of its prior
month's purchases.
iii) Items that (i) are new to the market or (ii) have not been
previously ordered by Customer shall require a one-month
startup period.
7. MANUFACTURERS' PRICE CHANGE COMMUNICATIONS
Advance notice of prescription drug increases, when and if received from
the manufacturer, shall be submitted to Customer in the fastest manner
practicable. McKesson agrees to use fax communication to provide prompt
information related to open buy price increases, special deals, extended
dating or investment buy opportunities.
8. RETURNED GOODS
A. Credits for returned goods from McKesson "("Credits")" are divided
into four categories, depending on the reason for the claim. Credits
will be issued for any of the following reasons:
1) Non-merchandise problems, such as shortages and pricing errors;
2) McKesson merchandise received in error;
3) Recalls; and
4) Outdated merchandise (defined as items with less than 6 months
dating)
B. The amount of credit allowed by McKesson will vary as follows:
1) [+]% credit will be given for:
-----------
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
6
<PAGE>
a) Pricing errors, shipping errors and billing errors;
b) Shortages (required to be phoned into the Distribution
Center within 48 hours of receipt of Merchandise);
c) Ordering errors (must be returned within 30 days of
receipt);
d) Manufacturer recalls;
e) Items received by McKesson's customer with less than
six (6) months dating; and
f) Merchandise that had concealed damage.
Invoice number is required in each of the above-specified instances,
except recalls, for full credit.
2) [+]% credit will be given for:
-----------------------------
Clean, salable merchandise with at least nine (9) months dating
returned more than 30 days after store receipt.
3) [+]% credit will be given for:
-----------------------------
a) Unsalable merchandise which can be returned to
manufacturer;
b) Outdated items (subject to the approved vendor list);
and
c) Salable merchandise with price tickets not removed.
---
4) [+] will be given for:
---------------------
a) Merchandise damaged in Customer's Facility;
b) Merchandise from manufacturers not listed on the
approved vendor list; and
c) Merchandise not purchased from McKesson.
These items will be sent back to the Facility which initiated the return.
5) If McKesson has failed to provide Customer with Credits as
identified above within fifteen (15) business days of McKesson's
receipt of notice of such Credit, then Customer may defer payment
of an amount equal to such Credits until the earlier of
McKesson's issuance of a credit memorandum to Customer in such
amount or McKesson's written notice that it has
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
7
<PAGE>
determined that no credit or a lower credit was required in
accordance with the terms of this Agreement.
9. CUSTOMER SUPPORT
A. A National Account Executive will be assigned to Customer's
headquarters and will hold regular meetings and business review to
identify business opportunities and address Customer's needs.
B. The designated National Account Manager will become the first contact
for headquarters when Customer requires assistance for issue
resolution.
C. National Account Customer service personnel will be available at the
McKesson Premier Service Center from 8 a.m. EST to 8 p.m. EST Monday
through Friday. Technical and emergency support is available 24 hours
a day, seven (7) days a week.
D. Customer will be provided the names and telephone numbers of its key
contacts at McKesson as well as the names and telephone numbers of
McKesson's designated support personnel.
10. CONTRACT MANAGEMENT
A. McKesson agrees to service all manufacturers' contracts negotiated by
Customer, provided such manufacturers are approved suppliers of
McKesson. Merchandise will be supplied at Customer's negotiated bid
price plus McKesson's applicable markup as described above in the Cost
of Goods section.
B. Customer's eligibility for participation under a vendor contract must
be authorized by the vendor and Customer's group purchasing
organization, if applicable, before the contract is loaded by McKesson
for Customer. Customer shall be liable for unpaid chargebacks
resulting from eligibility issues.
C. In the event a vendor (i) makes an assignment for the benefit of
creditors, files a petition in bankruptcy, is adjudicated insolvent or
bankrupt, or if a receiver of trustee is appointed with respect to a
substantial part of the vendor's property or a proceeding is commenced
against it which will substantially impair its ability to pay on
chargebacks or (ii) otherwise defaults in the payment of chargebacks
to McKesson, Customer shall be invoiced and become liable for the
unpaid chargebacks allocable to its purchases from such vendor.
11. GENERIC PHARMACEUTICALS
Customer agrees to fully participate in McKesson's Select Generics Program
through its auto-substitution feature and to thereby designate this program
as Customer's primary source of generic pharmaceuticals. In consideration
for the above commitments, McKesson will extend to Customer McKesson Select
Generics contract pricing in
8
<PAGE>
accordance with the attached. This contract is based upon McKesson Select
Generics Program pricing less [+]%. Prices are subject to change; provided
however, the contract discount percentage made available under this
Agreement will remain the same. A quarterly rebate shall be paid to
Customer in accordance with the following schedule based on such above-
specified participation:
Quarterly McKesson Select
Generics Volume (net of Quarterly Rebate % on Net
returns, allowances and rebates)McKesson Select Generics Purchases
------------------------------------------------------------------
[+]
Customer shall be rebated at [+]% for the [+] ([+]) months of this
Agreement and thereafter rebated at the earned rate based on actual
quarterly purchases. The rebate check will be due to Customer no later than
the 30th of the month following the end of the quarter. A [+]% penalty will
be paid to Customer on rebate payments received after the applicable due
date as defined above.
12. REPACKAGED PHARMACEUTICALS
A competitive and comprehensive program will be made available to Customer
for repackaged pharmaceutical products. Such products shall be net-billed
with an additional volume rebate to be paid to Customer's headquarters on a
quarterly basis.
Quarterly RxPak
Volume (net of returns, Quarterly Rebate %
allowances and rebates)on Net RxPak Purchases
---------------------------------------------
[+]
Customer shall be rebated at [+]% for the [+] ([+]) months of this
Agreement and thereafter rebated at the earned rate based on actual
quarterly purchases. The rebate check will be due to Customer no later than
the 30th of the month following the end of the quarter. A [+]% penalty will
be paid to Customer on rebate payments received after the applicable due
date as defined above.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
9
<PAGE>
13. SYSTEM SERVICES AND EQUIPMENT
The following systems and services will be made available to Customer by
McKesson:
A. Telxon electronic order entry equipment (including shelf wand) [+].
B. Item price stickers, [+], with Customer custom pricing, where
required, and other features, to the extent applicable to Customer,
such as:
1) Department number
2) Invoice cost
3) Month and year ordered
4) Facility name
5) AWP or retail pricing
(Note: Each feature is available for both Rx and OTC.)
C. Bar-coded shelf labels, [+].
D. Consolidated Quarterly Purchase Reports for all of Customer's Facility
purchases, [+].
E. Monthly report of controlled substances purchased from McKesson Drug
for each Facility, [+].
F. A complete catalog or microfiche of items stocked by McKesson's
Distribution Centers, [+].
G. Electronic price update information will be provided weekly, [+].
H. [+] EconoLink systems shall be provided to Customer [+]. [+] will be
provided to its headquarters and [+] to its Memphis dispensing
Facility. EconoLink shall be subject to a separate license agreement
between the parties governing use and maintenance.
I. OmniLink: Terms and conditions for utilization of McKesson's OmniLink
program will be agreed to under separate contract.
14. TERMINATION
A. Failure to make any payment when due in accordance with the terms of
this Agreement shall constitute a default. Any other material breach
of this Agreement by either party shall constitute a default if not
cured within thirty (30) days after written notice of such breach is
given by the non-breaching party.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
10
<PAGE>
Upon default by either party, the other party may terminate this
Agreement on five (5) days' written notice.
B. Either party may terminate this Agreement without cause by providing
the other party with [+] days' prior written notice.
C. Either party may, on ten (10) days written notice, terminate this
Agreement:
1) If the other party shall file any petition under any bankruptcy,
reorganization, insolvency or moratorium laws, or any other law
or laws for the relief of or in relation to the relief of
debtors; or
2) If the other party shall file any involuntary petition under any
bankruptcy statute or a receiver or trustee shall be appointed to
take possession of all or substantial part of the assets of the
party which has not been dismissed or terminated within sixty
(60) days of the date of such filing or appointment; or
3) If the other party shall make a general assignment for the
benefit of creditors or shall become unable or admit in writing
its inability to meet its obligations as they mature; or
4) If the other party shall institute any proceedings for
liquidation or the winding up of its business other than for
purposes of reorganization, consolidation or merger; or
5) If the other party's financial condition shall become such as to
endanger completion of its performance in accordance with the
terms and conditions of this Agreement.
D. McKesson may, at its own discretion, terminate this Agreement on sixty
(60) days written notice to Customer upon or at any time following the
sale or transfer of the stock or assets of Customer or a controlling
interest therein, or a change in the effective control of the
management of Customer; provided however, this Section 14.C shall not
apply if the change of control is due to an Initial Public Offering
(IPO) of Customer.
E. In the event of a termination hereunder the following continuing
obligations and liabilities shall survive termination and remain in
full force and effect:
1) Liability for accounts receivable balances or any other payment
due hereunder to the other party at the date of or upon the
occurrence of such termination; and
2) Obligations imposed on each party under the Proprietary and
Confidentiality Information section set forth below.
[+] Confidential treatment has been requested for certain portions which have
been blacked out in the copy of the exhibit filed with the Securities and
Exchange Commission. The omitted information has been filed separately with
the Securities and Exchange Commission pursuant to the application for
confidential treatment.
11
<PAGE>
15. PROPRIETARY AND CONFIDENTIAL INFORMATION
A. Any and all accounts, records, books, files, and lists regarding any
transaction provided for or contemplated hereunder, shall be
confidential and proprietary to the party creating or generating such
information. This Agreement, and the terms and conditions hereof, are
confidential. The parties expressly agree to maintain such terms and
conditions in confidence, and shall take every precaution to disclose
the contents of this Agreement only to those employees of each of the
parties who have a reasonable need to know such information.
B. Customer and McKesson each acknowledge that, in connection with their
respective businesses, they have developed certain operating manuals,
symbols, trademarks, trade names, service marks, trade secrets,
customer lists, procedures, formulas, and other patented, copyrighted,
or legally protected materials which are confidential and proprietary
to each of them.
C. Neither party may disclose the terms of this Agreement during the term
hereof and for an additional period of thirty-six (36) months
following the effective date of expiration or other termination of
this Agreement. Furthermore, except upon the prior written consent of
the other party, neither party may divulge, disclose, communicate, or
use any of the other party confidential or proprietary information
generally described in Subsection A and B above, in any manner or for
any purpose, including, without limitation, use in advertising or for
promotional materials, except upon the prior written consent of the
other party. A party hereto may refuse consent to the use of its
confidential or proprietary information for any or no reason. In the
event that any such confidential or proprietary information is used
during the course of this Agreement it shall retain its confidential
and proprietary nature and shall be returned immediately to its owner
or destroyed upon termination of this Agreement. Notwithstanding
anything herein to the contrary, nothing in this subsection shall
require either party to maintain in confidence any information,
materials, or data which is in the public domain, enters the public
domain through no fault of such party, was in possession of the party
prior to being furnished to it by the other, was supplied to the party
by a third party or parties lawfully in possession thereof, or which
the party is required to divulge pursuant to process of any judicial
or governmental body of competent jurisdiction, provided that notice
of receipt of such process is given to the other.
16. ALTERNATE SERVICE
If service from any McKesson distribution center to any Facility of the
Customer is interrupted or delayed because of strike, lockout, labor
dispute, fire or other casualty, or any other reasons beyond the reasonable
control of McKesson, McKesson will take such action as may be reasonably
necessary, without additional cost or expense to Customer, to maintain
service as mutually agreed upon to the affected Facility from an alternate
McKesson Distribution Center.
12
<PAGE>
17. NOTICES
All notices pertaining to this Agreement shall be delivered in person, sent
by certified mail, delivered by air courier, or transmitted by facsimile
and confirmed in writing (sent by air courier or certified mail) to a party
at the address or facsimile number shown in this Section, or such other
address or facsimile number as a party may notify the other party from time
to time. Notices delivered in person, and notices dispatched by facsimile
prior to 4:00 p.m. and confirmed, shall be deemed to be received on the day
sent. All other facsimiles and notices shall be deemed to have been
received on the business day following receipt; provided, however, if such
day falls on a weekend or legal holiday, receipt shall be deemed to occur
on the next business day. Notices may also be transmitted electronically
between the parties, provided that proper arrangements are made in advance
to facilitate such communications and provide for their security and
verification.
If to McKesson:
McKesson Corporation
Central Regional Office
2001 Butterfield Road, Suite 1440
Downers Grove, IL 60515
Attention: Jim Devers
Senior Vice President, Group Sales Operations
Fax:(630) 434-4210
If Customer:
Planet Rx, Inc.
349 Oyster Point Blvd.
Suite 201
So. San Francisco, CA 94080
Attention: William J. Razzouk
Chief Executive Officer
Fax:(650) 616-1585 and (901) 767-2803
cc: H. Stephen Brown
1661 International Place
Suite 300
Memphis, TN 38120
Fax: (901) 767-2803
13
<PAGE>
18. MISCELLANEOUS
A. This Agreement embodies the entire agreement between the parties with
regard to the subject matter hereof and supersedes all prior
agreements, understandings and representations with the exception of
any promissory note, security agreement or other credit or financial
related document(s) executed by Customer or between Customer and
McKesson. This Agreement may not be modified, supplemented or extended
except by a writing signed by both parties.
B. This Agreement supersedes any and all prior McKesson agreements and
discount plans in which any Customer Facility may currently be
participating.
C. Except as provided above in the Alternate Service section, neither
party shall have any obligation hereunder for failure or delay of
performance due to fire, shortage of materials or transportation,
government acts, or any other cause beyond its control.
D. Neither party shall have the right to assign this Agreement or any
interest therein without the prior written consent of the other party,
and any such attempted assignment shall be without effect, except that
either party may, without the consent of the other, assign this
Agreement to an affiliate of such party and except that this provision
shall not be applicable to any corporate reorganization of McKesson,
including but not limited to any merger, reincorporation or sale of a
significant portion of McKesson's assets.
E. This Agreement shall be construed in accordance with the laws of the
State of California without regard to the provisions of Section 1654
of the California Civil Code or the rules regarding conflict of laws.
F. If any provision of this Agreement shall be held invalid under any
applicable law, such invalidity shall not affect any other provision
of this Agreement. The parties agree to replace any such invalid
provision with a new provision which has the most nearly similar
permissible economic effect.
G. The failure of either party to enforce at any time or for any period
of time any one or more of the provisions thereof shall not be
construed to be a waiver of such provisions or of the right of such
party thereafter to enforce each such provision.
H. If any federal, state, or local tax currently or in the future is
levied upon McKesson in a jurisdiction where either McKesson or
Customer does business and such tax relates or applies to the
Merchandise or any transactions covered by this Agreement (excluding
taxes imposed on McKesson's net income), the Cost of Goods to the
involved Facility will be increased a corresponding percentage amount.
14
<PAGE>
I. Customer represents and warrants that the above conditions, including
prices, rebates, terms and delivery, have been made available to its
Facility by wholesale drug competitors of McKesson in the areas
covered by this Agreement.
J. Customer agrees to comply fully with all federal, state and local laws
and regulations applicable to the purchase, handling, sale or
distribution of the Merchandise and to defend, indemnify and hold
McKesson harmless from any and all liability arising out of or due to
Customer's nonadherence with such legal or regulatory requirements.
K. If and to the extent any product discounts, rebates or other
purchasing incentives are earned by or granted to Customer and paid by
McKesson under this Agreement, then applicable provisions of the
Medicare/Medicaid and state health care fraud and abuse/antikickback
laws and regulations (collectively, "fraud and abuse laws") may
require disclosure of the applicable price reduction on customer's
claims or cost reports for reimbursement from governmental or other
third party health care programs or provider plans. Customer agrees to
comply with all applicable provisions of the fraud and abuse laws and
to defend, indemnify and hold McKesson harmless for any failure on its
part to do so.
L. Participation hereunder by Customer's Facility in McKesson's Preferred
Provider Network may be terminated by McKesson if such Facility fails
to comply with the terms and conditions of this Agreement or the
M.P.P.N. Agreement.
M. McKesson shall be entitled at all times to set off any amount owing at
any time from Customer to McKesson against any amount payable at any
time by McKesson to Customer whether arising under this Agreement or
otherwise. For purposes of this Section, Customer and McKesson in each
case shall include its subsidiaries and affiliates.
N. Whenever possible, each provision of this Agreement shall be
interpreted so as to be effective and valid under applicable law, but
if any provision of this Agreement should be prohibited or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the
other of such provision or the remaining provisions of this Agreement.
O. The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
P. This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed an original instrument, but
all such counterparts together shall constitute one agreement.
15
<PAGE>
IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed as
of the date and year written below and the persons signing warrant that they are
duly authorized to sign for and on behalf of the respective parties. This
Agreement shall be deemed accepted by McKesson only upon execution by a duly
authorized representative of McKesson.
PLANET RX, INC. McKESSON U.S. HEALTH CARE,
a division of McKesson Corporation
By: ____________________________ By: _______________________________________
Name: William J Razzouk Name: Mark T. Majeske
------------------------- ------------------------------------
(Print or Type) (Print or Type)
Title: Chief Executive Officer Title: Group President, Customer Operations
------------------------- ------------------------------------
Date: __________________________ Date: _____________________________________
<PAGE>
EXHIBIT 10.11
Asset Acquisition Agreement
This Agreement is to be made effective on June 30, 1999 (the
"Effective Date") between NetHealth.com, Inc., a California corporation
("Assignor") and PlanetRx.com, Inc., a Delaware corporation ("Assignee") with
respect to the following facts:
Recitals
A. Assignor is the beneficial owner of the Internet domains listed
on Exhibit A hereto (collectively "Domains"), with full legal rights to register
---------
same in its own name or that of its nominee (s).
B. Assignor is also the beneficial owner, with the same re-
registration rights, of certain trademark/service mark registrations (listed on
Exhibit A hereto) and certain common law trademark/service mark rights in the
- ---------
Domains (collectively "Trademarks").
C. Assignor owns the content and end user information (including
e-mail addresses) available at the Domains and also the content and end user
information (including e-mail addresses) available at the aids.com,
arthritis.com, birth.com, cancer.com, cholesterol.com, depression.com,
diabetes.com, obesity.com, nursing.com, pharmacist.com, physicians.com domains
(the "Content").
D. Assignor has agreed to assign the Domains, Trademarks (and
associated goodwill) and Content, on the terms set forth below.
E. The parties intend, by executing this Agreement, to cause the
assignment of the Domains, Trademarks and Content and to qualify as a
reorganization under the provisions of Sections 368 of the Internal Revenue Code
of 1986, as amended (the "Code"). By executing this Agreement, the parties
intend to adopt a plan of reorganization within the meaning of Section 368 of
the Code.
Agreement
1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee all
----------
right, title and interest in the Domains, the InterNic (or other relevant body)
registrations of the same, the Trademarks (including all associated goodwill)
and Content. Assignor further waives all claims it has to the Domains,
Trademarks, and Content and agrees to cease all use of the same, and to require
such waiver and cessation by Epicenter Communications.
2. Consideration. In consideration of the assignments set forth in section 1
-------------
hereof and Assignor's representations, warranties and covenants made hereunder:
a. Issuance of Stock. Assignee shall issue to Assignor 342,000 shares of
-----------------
Assignee's Common Stock (the "Shares").
<PAGE>
b. Revenue Participation. Subject to the final sentence in this Section 2
---------------------
(b), for a period of two years from the Effective Date, Assignee shall pay to
Assignor or its nominee an amount equal to fifty percent (50%) of any revenues
received by Assignee, directly from the use and/or exploitation of the
Alzheimers.com domain, including but not limited to sublicense fees or
royalties, domain sponsorship revenues, and advertising revenues (collectively,
the "Domain Revenues"). The Domain Revenues shall be due to Assignee on a
quarterly basis. Notwithstanding anything else herein, Assignee's maximum
payment due to Assignor hereunder for Assignor's share in the Domain Revenues
shall be limited to One Hundred Fifty Thousand Dollars ($150,000.00) per
calendar year, and upon payment of such $150,000 per year, Assignor or its
nominee, Assignee shall thereafter be entitled to retain all further Domain
Revenues for the relevant year and no further payments shall be due to Assignor
hereunder.
c. Records; Rights of Inspection. Assignee shall keep accurate records
-----------------------------
relating to the payments due to Assignor hereunder to the extent necessary and
useful in calculating the Domain Revenues due to Assignor. For two (2) years
after the Effective Date, upon not less than thirty (30) days' prior notice,
such records shall be open for inspection by a mutually agreed upon certified
public accountant in order to confirm Assignee's compliance with its payment
obligations described in Section 2(b) above. Such inspections shall be during
normal business hours and shall be at Assignor's expense, unless such inspection
discloses an underpayment of 5% or greater in which case Assignee shall be
responsible for such costs.
3. Further Assurances. Assignor shall assist Assignee in every proper way to
------------------
evidence, record and perfect the assignments described in Section 1 above and to
perfect, obtain, maintain, enforce, and defend the rights assigned. For example,
Assignor agrees that it will immediately cause the record owner of the Domains
(Epicenter Communications) to apply for and effect re-registration of the
Domains and Trademarks in Assignee's name according to InterNic's (or other
relevant body's) current policy.
4. Representations; Warranties. Assignor represents and warrants to the
---------------------------
Assignee that:
a. Assignor is the sole beneficial owner (other than the Assignee) of all
rights, title and interest in the Domains, Trademarks and Content,
subject only to the following:
(i) With respect to the Content that is available on alzheimers.com,
depression.com, diabetes.com and obesity.com domains as of the
Effective Date of this Agreement and which is contributed by
Michael Castleman, this right is subject to the limited license
granted to Michael Castleman, respecting such Content to
incorporate portions of such Content solely in certain printed
publications prepared by Michael Castleman, which use shall give
appropriate reference to PlanetRx as the owner of such Content;
and
(ii) With respect to the infertility.com and fertility.com Domains,
such right is subject to the restrictions specified in Exhibit
B.
b. After the Effective Date, Assignor will discontinue all further use of
the Domains, Trademarks and Content.
<PAGE>
c. Assignor has full power and authority to enter into this Agreement,
and this Agreement constitutes Assignor's valid and legally binding obligation,
enforceable in accordance with its terms.
d. This Agreement is made with Assignor in reliance upon Assignor's
representation to Assignee, which by Assignor's execution of this Agreement
Assignor hereby confirms, that the Shares to be received by Assignor will be
acquired for investment for Assignor's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and that
Assignor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, Assignor further
represents that Assignor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Shares.
e. Assignor believes it has received all the information it considers
necessary or appropriate for deciding whether to acquire the Shares. Assignor
further represents that it has had an opportunity to ask questions and receive
answers from Assignee regarding the terms and conditions of the offering of the
Shares and the business, properties, prospects and financial condition of
Assignee.
f. Assignor acknowledges that it has relied on its own tax advisors for
the advice regarding the tax consequences of the transactions contemplated by
this Agreement and has not received tax advice with respect thereto from the
Assignee or any of its officers, employees, or agents.
g. Assignor acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial, tax and business matters that it is capable of evaluating the merits
and risks of the assignments provided for herein and the investment in the
Shares. Assignor also represents it has not been organized for the purpose of
acquiring the Shares.
h. Assignor is an "accredited investor" within the meaning of Securities
and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in
effect.
i. Assignor understands that the Shares it is acquiring are characterized
as "restricted securities" under the federal securities laws inasmuch as they
are being acquired from Assignee in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act of 1933, as amended (the
"Act"), only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with Securities and Exchange Commission
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Act.
j. Without in any way limiting the representations set forth above,
Assignor further agrees not to make any disposition of all or any portion of the
Shares unless and until the
<PAGE>
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 4, provided and to the extent this Section are then applicable,
and:
A. There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
B. (i) Assignor shall have notified Assignee of the proposed
disposition and shall have furnished Assignee with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by Assignee, Assignor shall have furnished Assignee with an opinion of
counsel, reasonably satisfactory to Assignee, that such disposition will not
require registration of such shares under the Act. It is agreed that Assignee
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
k. It is understood that the certificates evidencing the Shares may bear
one or all of the following legends:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
l. Other than the Domains, Trademarks and Content, no assets or
liabilities of Assignor shall be transferred to Assignee, including, but not
limited to, any and all liabilities, direct or indirect, contingent or
otherwise, of Assignor. Assignor shall indemnify and hold harmless Assignee and
its transferees, successors and assigns for any liabilities, contingent or
otherwise, associated with the Domains, Trademarks and Content, or otherwise
associated with the business of Assignor.
5. "Market Stand-Off" Agreement. Assignor hereby agrees that it will not,
---------------------------
without the prior written consent of the managing underwriter, during the period
commencing on the date of the final prospectus relating to Assignee's initial
public offering and ending on the date specified by the Company and the managing
underwriter (such period not to exceed one hundred eighty (l80) days) (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock of Assignee or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are then owned by Assignor or are thereafter acquired), or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
underwriters in connection with the Company's initial public offering are
intended third party beneficiaries of this Section 5 and shall have the right,
power and authority to enforce the provisions hereof as though they were a party
hereto.
<PAGE>
6. Miscellaneous. This Agreement shall be construed pursuant to the laws of
-------------
the State of California without regard to conflicts of laws provisions thereof.
In the event of a dispute hereunder which the parties are not able themselves to
settle, either party may refer such dispute to binding arbitration before the
JAMS/ENDISPUTE tribunal in San Francisco, CA and the award issued in such
proceeding may be enforced in any court of competent jurisdiction. The
prevailing party in such arbitration or enforcement proceeding shall be awarded
its costs thereof, including reasonable attorneys' fees.
<PAGE>
NetHealth.com PlanetRx.com, Inc.
By: By:
Matthew Naythons, President William J. Razzouk, Chairman & CEO
Epicenter Communications
By:
Matthew Naythons, President
<PAGE>
Exhibit A
LIST OF DOMAINS
Acne .com
Alzheimers.com
Alzheimers.net
Anorexia.com
Epilepsy.com
Fertility.com
Hepatitis-B.net
Hepatitis-C.net
Hepatitis.com
Hypertension.com
Impotence.com
Infertility.com
Osteopathy.com
Parkinsons.com
Podiatry.com
Pollenwatch.com
Prenatal.com
Rxnet.com
Sportsdoc.com
Stroke.com
List of Trademark/Service Mark Registrations
Alzheimers.com, Reg. No. 2,076,603
<PAGE>
Exhibit B
---------
Until May 12, 2004, for the domain names "fertility.com" and "infertility.com"
listed above ("Restricted Domains"), (a) eToys, Inc. has a right of first
refusal with respect to any sale, transfer, license, lease, mortgage or other
disposition of the Restricted Domains; and (b) the Company is prevented from
selling, transferring, licensing, leasing, mortgaging, or otherwise disposing
in whole or in part the Restricted Property to Amazon.com, Toys-R-Us, iVillage,
Time-Warner, Lamaze, or any of their respective subsidiaries, affiliates, or
related parties or investors, or any other person or party that is engaged in
the business of advertising, marketing, promotion, publishing, distributing and
selling products, services, publications, information and content about or
related to babies, infants, toddlers, children, parents, and families through
the medium of the Internet and selling advertising and promotional opportunities
on its web sites.
<PAGE>
EXHIBIT 10.12
Internet Domain and Trademark Assignment Agreement
This Agreement is to be made effective on January 11, 1999 (the
"Effective Date") between Epicenter Communications, Inc., a Delaware corporation
("Assignor") and PlanetRx, Inc., a California corporation ("Assignee") with
respect to the following facts:
Recitals
A. Assignor is the registered owner of the Internet domains listed
on Exhibit "A" hereto (collectively "Domains").
B. Assignor is owns certain trademark/service mark registrations
(listed on Exhibit A) and certain common law trademark/service mark rights in
aids.com, arthritis.com, birth.com, cancer.com, cholesterol.com, depression.com,
diabetes.com, obesity.com, nursing.com, pharmacist.com, physicians.com
(collectively "Trademarks").
C. Assignor has agreed to assign the Domains, Trademark Rights, and
associated goodwill, on the terms set forth below:
Agreement
1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee all
----------
right, title and interest in the Domains and the InterNic registration thereto,
the Trademarks (including all associated goodwill). Assignor further waives all
claims it has to the Domains and Trademarks and agrees to cease all use of the
same.
2. Compensation.
------------
a. 1999 Revenue Participation. Subject to the final sentence in this
--------------------------
Section 2 (a), within ten (10) business days after the end of each calendar
quarter in the year 1999, Assignee shall pay to Assignor or its nominee an
amount equal to fifty percent (50%) of any revenues received by Assignee,
directly from the use and/or exploitation of the Domains, including but not
limited to sublicense fees or royalties, domain sponsorship revenues, and
advertising revenues (collectively, the "1999 Domain Revenues"). In the event
that any 1999 Domain Revenues are due to Assignee but are not paid to Assignee,
Assignor's share thereof, shall thereafter be remitted to Assignor or its
nominee within ten (10) days after Assignee's actual receipt thereof.
Notwithstanding anything else herein, Assignee's maximum payment due to Assignor
hereunder for Assignor's share in the 1999 Domain Revenues shall be limited to
One Hundred Thousand Dollars ($100,000.00),and upon payment of $100,000 to
Assignor or its nominee Assignee shall thereafter be entitled to retain all
further 1999 Domain Revenues and no further payments shall be due to Assignor
hereunder in the year 1999.
b. 2000 Revenue Participation. Subject to the final sentence in this
--------------------------
Section 2 (b), within ten (10) business days after the end of each calendar
quarter in the year 2000, Assignee shall pay to Assignor or its nominee an
amount equal to fifty percent (50%) of any revenues received by Assignee,
directly from the use and/or exploitation of the Domains, including but not
limited to sublicense fees or royalties, domain sponsorship revenues, and
advertising revenues
<PAGE>
(collectively, the "2000 Domain Revenues"). In the event that any 2000 Domain
Revenues are due to Assignee but are not paid to Assignee, Assignor's share
thereof, shall thereafter be remitted to Assignor or its nominee within ten (10)
days after Assignee's actual receipt thereof. Notwithstanding anything else
herein, Assignee's maximum payment due to Assignor hereunder for Assignor's
share in the 2000 Domain Revenues shall be limited to One Hundred Thousand
Dollars ($100,000.00), and upon payment of $100,000 to Assignor or its nominee
Assignee shall thereafter be entitled to retain all further 2000 Domain Revenues
and no further payments shall be due to Assignor hereunder in the year 2000, or
thereafter.
c. Records; Rights of Inspection. Assignee shall keep accurate records
-----------------------------
relating to the payments due to Assignor hereunder to the extent necessary or
useful in calculating the 1999 Domain Revenues due to Assignor in the year1999
and the 2000 Domain Revenues due to Assignor in the year 2000. Upon not less
than thirty (30) days' prior notice during the 1999 or 2000 calendar year, such
records shall be open for inspection by a mutually agreed upon certified public
accountant in order to confirm Assignee's compliance with its payment
obligations described in Section 2(a) above. Such inspections shall be during
normal business hours and shall be at Assignor's expense, unless such inspection
discloses an underpayment of 3% or greater in which case Assignee shall be
responsible for such costs.
3. Further Assurances. Assignor shall assist Assignee in every proper way to
------------------
evidence, record and perfect the assignments described in Section 1 above and to
perfect, obtain, maintain, enforce, and defend the rights assigned. For
example, Assignor agrees that it will immediately apply for and effect re-
registration of the Domains in Assignee's name according to InterNic's current
policy.
4. Representations; Warranties. Assignor represents and warrants to the
---------------------------
Assignee that: (a) Assignor is the sole owner (other than the Assignee) of all
rights, title and interest in the Domains and Trademarks and (b) Assignor will
discontinue all further use of the terms Aids.com, arthritis.com, birth.com,
cancer.com, cholesterol.com, depression.com, diabetes.com, obesity.com,
nursing.com, pharmacist.com, and physicians.com in association with any
internet or world wide web services.
5. Miscellaneous. This Agreement shall be construed pursuant to the laws of
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the State of California without regard to conflicts of laws provisions thereof.
In the event of a dispute hereunder which the parties are not able themselves to
settle, either party may refer such dispute to binding arbitration before the
JAMS/ENDISPUTE tribunal in San Francisco, CA and the award issued in such
proceeding may be enforced in any court of competent jurisdiction. The
prevailing party in such arbitration or enforcement proceeding shall be awarded
its costs thereof, including reasonable attorneys' fees.
NetHealth.com PlanetRx, Inc.
By: By:
Matthew Naythons, President William J. Razzouk, Chairman & CEO
<PAGE>
Exhibit A
LIST OF DOMAINS
aids.com
arthritis.com
birth.com
cancer.com
cholesterol.com
depression.com
diabetes.com
obesity.com
nursing.com
pharmacist.com
physicians.com
List of Trademark/Service Mark Registrations
Obesity.com, Reg. No. 2,082,641
Depression.com, Reg. No. 2,076,617
Cancer.com, Reg. No. 2,076,616
Arthritis.com, Reg. No. 2,076,595
