<PAGE>
As filed with the Securities and Exchange Commission on November 17, 1999
Registration No. 333-89737
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BUY.COM INC.
(Exact Name of Registrant as Specified in Its Charter)
----------------
<TABLE>
<S> <C> <C>
Delaware 5734 33-0816584
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Number) Identification No.)
</TABLE>
21 Brookline
Aliso Viejo, California 92656
(949) 425-5200
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
----------------
Gregory J. Hawkins
Chief Executive Officer
BUY.COM INC.
21 Brookline
Aliso Viejo, California 92656
(949) 425-5200
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
<TABLE>
<S> <C>
Bruce R. Hallett, Esq. Larry W. Sonsini, Esq.
Ellen S. Bancroft, Esq. Steven L. Berson, Esq.
Brobeck, Phleger & Harrison LLP Michael S. Russell, Esq.
38 Technology Drive Thomas M. Dono, Jr., Esq.
Irvine, California 92618 Wilson Sonsini Goodrich & Rosati
(949) 790-6300 Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
(650) 493-9300
</TABLE>
----------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
----------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement 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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
Title of Each Class of Proposed Maximum Aggregate
Securities to be Registered Offering Price(1) Amount of Registration Fee(2)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.0001 par value............ $150,000,000 $41,700
====================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o).
(2) Previously paid by the Registrant in connection with the filing of the
Registration Statement on October 27, 1999.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
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 in connection with the sale and
distribution of the securities being registered. All amounts are estimated
except the SEC and NASD registration fees. All of the expenses below will be
paid by us.
<TABLE>
<CAPTION>
Item
----
<S> <C>
SEC Registration fee................................................ $41,700
NASD filing fee..................................................... 15,500
Nasdaq National Market listing fee.................................. 90,000
Blue sky fees and expenses.......................................... 5,000
Printing and engraving expenses..................................... *
Legal fees and expenses............................................. *
Accounting fees and expenses........................................ *
Transfer Agent and Registrar fees................................... *
Miscellaneous....................................................... *
-------
Total........................................................... $
=======
</TABLE>
--------
* To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, we can indemnify
our directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Our bylaws (Exhibit 3.4 to this registration statement)
provide that we will indemnify our directors and officers to the fullest extent
permitted by law and require us to advance litigation expenses upon our receipt
of an undertaking by the director or officer to repay such advances if it is
ultimately determined that the director or officer is not entitled to
indemnification. Our bylaws further provide that rights conferred under such
bylaws do not exclude any other right such persons may have or acquire under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
Our certificate of incorporation (Exhibit 3.2 to this registration
statement) provides that, pursuant to Delaware law, our directors shall not be
liable for monetary damages for breach of the directors' fiduciary duty of care
to us and our stockholders. This provision in the certificate of incorporation
does not eliminate the duty of care, and in appropriate circumstances equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to us or our
stockholders, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental
laws.
In addition, our certificate of incorporation provides that we shall
indemnify our directors and officers if such persons acted (1) in good faith,
(2) in a manner reasonably believed to be in or not opposed to our best
interests, and (3) with respect to any criminal action or proceeding, with
reasonable cause to believe such conduct was lawful. The certificate of
incorporation also provides that, pursuant to Delaware law, our directors shall
not be liable for monetary damages for breach of the directors' fiduciary duty
of care to us and our stockholders. This provision in the certificate of
incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as injunctive or other forms of non-
monetary relief will
II-1
<PAGE>
remain available under Delaware law. In addition, each director will continue
to be subject to liability for breach of the director's duty of loyalty to us
for acts or omissions not in good faith or involving intentional misconduct,
for knowing violations of law, for actions leading to improper personal benefit
to the director, and for payment of dividends or approval of stock repurchases
or redemptions that are unlawful under Delaware law. The provision also does
not affect a director's responsibilities under any other law, such as the
federal securities laws or state or federal environmental laws. The certificate
of incorporation further provides that we are authorized to indemnify our
directors and officers to the fullest extent permitted by law through the
bylaws, agreement, vote of stockholders or disinterested directors, or
otherwise. We intend to obtain directors' and officers' liability insurance in
connection with this offering.
In addition, we have entered or, concurrently with this offering, will
enter, into agreements to indemnify our directors and certain of our officers
in addition to the indemnification provided for in the certificate of
incorporation and bylaws. These agreements will, among other things, indemnify
our directors and some of our officers for certain expenses (including
attorneys fees), judgments, fines and settlement amounts incurred by such
person in any action or proceeding, including any action by or in our right, on
account of services by that person as a director or officer of BUY.COM or as a
director or officer of any of our subsidiaries, or as a director or officer of
any other company or enterprise that the person provides services to at our
request.
The purchase agreement (Exhibit 1.1 to this registration statement) provides
for indemnification by the underwriters of us and our officers and directors,
and by us of the underwriters, for certain liabilities arising under the
Securities Act or otherwise.
Item 15. Recent Sales of Unregistered Securities
The following is a summary of our transactions since our formation in June
1997, involving sales of our securities that were not registered under the
Securities Act of 1933, as amended:
(1) In June 1997, BuyComp, LLC issued 9,000,000 units to Scott and Audrey
Blum for $50,000.
(2) In August 1998, we sold 130,129,725 shares of common stock and 4,870,275
shares of Series A convertible participating preferred stock to The Scott A.
Blum Separate Property Trust u/t/d 8/2/95 in exchange for 9,000,000 units of
BuyComp, LLC.
(3) In August 1998, we sold an aggregate of 14,610,855 shares of Series A
convertible participating preferred stock to SOFTBANK Technology Ventures IV,
L.P. and SOFTBANK Technology Advisors Fund L.P. for $1.03 per share.
(4) In December 1998, a wholly-owned subsidiary of BUY.COM, BUY.COM
ENTERTAINMENT, Inc., acquired SpeedServe, Inc. in a stock-for-stock
transaction. As consideration for all 10,000 outstanding shares of SpeedServe,
Inc., we issued 8,847,315 shares of our common stock to the shareholders of
SpeedServe, Inc.
(5) In March 1999, we issued 180,000 shares of our common stock, valued at
$2.39 per share, to the Benson York Group, Inc. in exchange for certain domain
names.
(6) In March 1999, we issued an aggregate of 260,894 shares of common stock
to Ingram Entertainment Inc., SOFTBANK Technology Advisors Fund L.P. and
SOFTBANK Technology Ventures IV, L.P. for $2.39 per share.
(7) In April 1999, we issued an aggregate of 40,110 shares of common stock
to Ingram Entertainment Inc., SOFTBANK Technology Advisors Fund L.P. and
SOFTBANK Technology Ventures IV, L.P. for $2.12 per share.
(8) In April 1999, we issued 25,094 shares of common stock to Harrison Uhl
in exchange for a domain name.
II-2
<PAGE>
(9) In June 1999, we issued an aggregate of 206,670 shares of common stock
to Ingram Entertainment Inc., SOFTBANK Technology Advisors Fund L.P. and
SOFTBANK Technology Ventures IV, L.P. for $5.71 per share.
(10) In July 1999, we issued a warrant to purchase 2,000,000 shares of
common stock to United Airlines, Inc. for $10.00 per share. We also issued
another warrant for shares of common stock at an exercise price of
$ (determined by IPO price).
(11) In August 1999, we issued 65,000 shares of common stock to Raj Patel in
exchange for a domain name.
(12) In October 1999, we sold an aggregate of 15,877,249 shares of our
Series B convertible participating preferred stock to SOFTBANK Capital Partners
L.P., SOFTBANK Capital Advisors Fund L.P., SOFTBANK Technology Ventures IV
L.P., SOFTBANK Technology Advisors Fund L.P., SOFTBANK Technology Ventures V,
L.P., ePartners and Vivendi for $5.67 per share.
(13) In October 1999, we issued a warrant to purchase 1,000,000 shares of
common stock for $5.67 per share.
(14) In October 1999, we acquired BuyGolf.com, Inc. in a stock for stock
transaction. As consideration for all of the outstanding capital stock of
BuyGolf.com, we issued 4,142,927 shares of our common stock to the stockholders
of BuyGolf.com.
(15) In October 1999, we issued 1,800,000 shares of common stock to the PGA
TOUR, Inc. in exchange for a sponsorship agreement with them.
(16) Between July 1, 1997 and June 19, 1998, our predecessor entity,
BuyComp, LLC granted 12,187,500 options to employees, non-employee directors
and consultants to purchase units of BuyComp LLC at an exercise price of $0.14
per unit. All options were assumed under our 1998 Stock Option/Stock Issuance
Plan and currently represent options to purchase an aggregate of shares of our
common stock of BUY.COM.
(17) Between September 1, 1998 and September 14, 1998, we granted options to
purchase 1,837,500 shares of our common stock at an exercise price of $1.03 per
share to certain employees and consultants. Between October 6, 1998 and March
10, 1999, we granted options to purchase 19,251,105 shares of common stock at
an exercise price of $2.39 per share to employees, non-employee directors and
consultants. On November 23, 1998 and December 15, 1998 we granted options to
purchase an aggregate of 37,500 shares of common stock at an exercise price of
$2.50 per share to a consultant. From April 1, 1999 to April 29, 1999, we
granted options to purchase 237,000 shares of common stock at an exercise price
of $4.24 per share to certain employees and a consultant. On June 29, 1999, we
granted options to purchase 1,101,000 shares of common stock at an exercise
price of $5.71 per share to employees and consultants. On August 1, 1999, we
granted options to purchase 619,020 shares of common stock at an exercise price
of $5.71 per share to employees and consultants. Between September 2, 1999 and
October 11, 1999, we granted options to purchase 5,051,194 shares of common
stock at an exercise price per share of $5.71 to employees and consultants.
(18) Between January 1, 1999 and July 31, 1999, we issued and sold
45,787,500 shares of common stock upon the exercise of stock options for
aggregate consideration of $20,350.
The sale and issuance of securities in the above transactions were deemed to
be exempt from registration under the Securities Act by virtue of Section 4(2)
or Rule 701 thereof, or Regulation D, as transactions by an issuer not
involving a public offering. Appropriate legends are affixed to the stock
certificates issued in such transactions. Similar legends were imposed in
connection with any subsequent sales of any such securities. All recipients
either received adequate information about BUY.COM or had access, through
employment or other relationships, to such information.
II-3
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
The following Exhibits are attached hereto and incorporated herein by
reference.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
1.1* Form of Purchase Agreement.
2.1** Agreement and Plan of Merger and Reorganization dated October
26, 1998 by and among BUY.COM, Speedserve.com Inc., Ingram
Entertainment Inc., David C. Mason and Michael G. Mason.
2.2** Agreement and Plan of Merger and Reorganization dated October
25, 1999 by and among BUY.COM INC., BGLF Acquisition
Corporation, BuyGolf.com, Inc. and all of the stockholders
listed therein.
3.1** Amended and Restated Certificate of Incorporation of BUY.COM.
3.2* Proposed Amended and Restated Certificate of Incorporation of
BUY.COM.
3.3** Bylaws of BUY.COM INC.
3.4* Proposed Bylaws of BUY.COM.
4.1* See Exhibit 3.1, 3.2, 3.3 and 3.4 for provisions of the
BUY.COM's Certificate of Incorporation and Bylaws defining the
rights of holders of BUY.COM's common stock.
4.2* Specimen common stock certificates.
5.1* Opinion of Brobeck, Phleger and Harrison LLP.
9.1 Voting Trust Agreement dated June 7, 1999 by and between Scott
Blum, The Scott A. Blum Separate Property Trust, BUY.COM and
certain of BUY.COM's outside directors.
9.2 Amended and Restated Voting Trust Agreement dated October 26,
1999 by and between Scott Blum, The Scott A. Blum Separate
Property Trust, BUY.COM and certain of BUY.COM's outside
directors.
10.1** Third Amended and Restated Investors' Rights Agreement dated
September 2, 1999 by and among BUY.COM and the parties named
therein.
10.2** Voting Agreement dated December 3, 1998 by and among BUY.COM
and the Stockholders named therein.
10.3+ Supply Agreement dated December 3, 1998 by and between Ingram
Entertainment Inc. and BUY.COM's wholly-owned subsidiary.
10.4+ Order Fulfillment Agreement dated February 1, 1999 by and
between BUY.COM and i.FILL, a division of Valley Media, Inc.
10.5+ Merchandising and Supply Agreement dated April 19, 1999 by and
between BUY.COM and Nashville Computer Liquidators, L.P.
10.6+ Master Service Agreement dated October 1, 1998 by and between
BUY.COM and SOFTBANK Services Group.
10.7+ Resale Agreement dated March 10, 1999 by and between BUY.COM
and Ingram Micro, Inc.; Amendment dated August 11, 1999.
10.8* Employment Agreement dated March 1, 1999 by and between BUY.COM
and Gregory Hawkins; Amendment No. 1 to the Employment
Agreement dated July , 1999.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
10.9** 1998 Stock Option/Stock Issuance Plan.
10.12* 1999 Stock Incentive Plan.
10.13* 1999 Employee Stock Purchase Plan.
10.14** Deed of Trust dated December 23, 1998 by and between BUY.COM
and the Bank of Yorba Linda for the property located at 21
Brookline, Aliso Viejo, California 92656.
10.15** Loan Agreement and related documents dated December 23, 1998 by
and between BUY.COM and the Bank of Yorba Linda.
10.16** Industrial Lease dated May 12, 1999 by and between BUY.COM and
The Scott A. Blum Separate Property Trust u/d/t 8/2/95.
10.17** Summit Lease dated June 1999 by and between BUY.COM and
AEW/Parker II, LLC.
10.18** Operating Agreement of BUYTRAVEL.COM LLC dated July 19, 1999.
10.19** Marketing and Services Agreement dated July 19, 1999 by and
between BUY.COM and United Air Lines, Inc.
10.20** Common Stock Purchase Warrant dated July 19, 1999 by and
between BUY.COM and United Air Lines, Inc.
10.21** Credit Agreement dated July 20, 1999 by and between BUY.COM and
certain commercial lending institutions and The Bank of Nova
Scotia.
10.22** Promissory Note dated July 20, 1999 by and between BUY.COM and
The Bank of Nova Scotia.
10.23** Common Stock Purchase Warrant dated July 20, 1999 by and
between BUY.COM and The Bank of Nova Scotia.
10.24 Series A Convertible Participating Preferred Stock Agreement
dated August 18, 1998 by and between BUY.COM and certain
investors.
10.25** Promissory Note dated May 26, 1999 by and between BUY.COM and
The Scott A. Blum Separate Property Trust u/d/t 8/2/95.
10.26** Agreement dated May 26, 1999 by and between BUY.COM and The
Scott A. Blum Separate Property Trust u/d/t 8/2/95, Waiver of
Certain Rights, dated August 5, 1999.
10.27** Form of Option Agreement pursuant to 1998 Stock Option/Stock
Issuance Plan.
10.28** Non-Competition Agreement dated December 3, 1998 by and between
BUY.COM, BUY.COM's wholly-owned subsidiary, Ingram
Entertainment, Inc. and David Ingram.
10.29** Promissory Note dated August 16, 1999 by and between the Scott
A. Blum Separate Property Trust u/d/t 8/2/95.
10.30** Series B Convertible Participating Preferred Stock Purchase
Agreement dated September 2, 1999 by and between BUY.COM and
certain investors.
10.31** Common Stock Purchase Warrant dated October 8, 1999 by and
between BUY.COM and Harpeth Holdings Inc.
10.32** Non-Competition Agreement dated October 25, 1999 by and between
BUY.COM INC., BuyGolf.com, Inc. and Bradford W. Allen.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
10.33+ Letter of Intent dated September 2, 1999 by and between BUY.COM
INC. and SOFTBANK America, Inc.
10.34 Common Stock Issuance Agreement dated October 22, 1999 by and
between BUY.COM INC. and PGA TOUR, Inc.
10.35* Sponsorship Letter Agreement dated October 22, 1999 by and
between BUY.COM INC. and PGA TOUR, Inc.
21.1 Subsidiaries of BUY.COM.
23.1* Consent of Brobeck, Phleger & Harrison LLP (Included in Exhibit
5.1 hereto).
23.2** Consent of Arthur Andersen LLP.
24.1 Power of Attorney (Included on signature pages hereto).
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed by the Registrant with the Commission.
+ Confidential treatment is requested for certain confidential portions of
this exhibit pursuant to Rule 406 under the Securities Act. In accordance
with Rule 406, these confidential portions have been omitted from this
exhibit and filed separately with the Commission.
(b) Financial Statement Schedules
Schedules 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 Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Purchase Agreement 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
BUY.COM pursuant to the foregoing provisions, or otherwise, BUY.COM 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 BUY.COM of expenses
incurred or paid by a director, officer or controlling person of BUY.COM 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, BUY.COM 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 as filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by BUY.COM 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.
(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 this offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, BUY.COM has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Aliso
Viejo, State of California, on the 17th day of November, 1999.
BUY.COM INC.
/s/ Gregory J. Hawkins
By: _______________________________
Gregory J. Hawkins,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby constitute and
appoint Gregory J. Hawkins and Mitch C. Hill, and each of them, his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, or any related registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each of said attorneys-
in-fact and agents, or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gregory J. Hawkins Chief Executive Officer and November 17, 1999
_________________________________ Director (principal executive
Gregory J. Hawkins officer)
/s/ Mitch C. Hill Chief Financial Officer November 16, 1999
_________________________________ (principal financial officer)
Mitch C. Hill
/s/ William L. Burnham Director November 16, 1999
_________________________________
William L. Burnham
/s/ David B. Ingram Director November 16, 1999
_________________________________
David B. Ingram
/s/ Donald M. Kendall Director November 16, 1999
_________________________________
Donald M. Kendall
/s/ Charles W. Richion Director November 16, 1999
_________________________________
Charles W. Richion
/s/ James B. Roszak Director November 16, 1999
_________________________________
James B. Roszak
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Edward S. Russell Director November 16, 1999
_________________________________
Edward S. Russell
/s/ John Sculley Director November 16, 1999
_________________________________
John Sculley
/s/ Wayne T. Thorson Director November 16, 1999
_________________________________
Wayne T. Thorson
</TABLE>
II-8
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
1.1* Form of Purchase Agreement.
2.1** Agreement and Plan of Merger and Reorganization dated October
26, 1998 by and among BUY.COM, Speedserve.com Inc., Ingram
Entertainment Inc., David C. Mason and Michael G. Mason.
2.2** Agreement and Plan of Merger and Reorganization dated October
25, 1999 by and among BUY.COM INC., BGLF Acquisition
Corporation, BuyGolf.com, Inc. and all of the stockholders
listed therein.
3.1** Amended and Restated Certificate of Incorporation of BUY.COM.
3.2* Proposed Amended and Restated Certificate of Incorporation of
BUY.COM.
3.3** Bylaws of BUY.COM INC.
3.4* Proposed Bylaws of BUY.COM.
4.1* See Exhibit 3.1, 3.2, 3.3 and 3.4 for provisions of the
BUY.COM's Certificate of Incorporation and Bylaws defining the
rights of holders of BUY.COM's common stock.
4.2* Specimen common stock certificates.
5.1* Opinion of Brobeck, Phleger and Harrison LLP.
9.1 Voting Trust Agreement dated June 7, 1999 by and between Scott
Blum, The Scott A. Blum Separate Property Trust, BUY.COM and
certain of BUY.COM's outside directors.
9.2 Amended and Restated Voting Trust Agreement dated October ,
1999 by and between Scott Blum, The Scott A. Blum Separate
Property Trust, BUY.COM and certain of BUY.COM's outside
directors.
10.1** Third Amended and Restated Investors' Rights Agreement dated
September 2, 1999 by and among BUY.COM and the parties named
therein.
10.2** Voting Agreement dated December 3, 1998 by and among BUY.COM
and the Stockholders named therein.
10.3+ Supply Agreement dated December 3, 1998 by and between Ingram
Entertainment Inc. and BUY.COM's wholly-owned subsidiary.
10.4+ Order Fulfillment Agreement dated February 1, 1999 by and
between BUY.COM and i.FILL, a division of Valley Media, Inc.
10.5+ Merchandising and Supply Agreement dated April 19, 1999 by and
between BUY.COM and Nashville Computer Liquidators, L.P.
10.6+ Master Service Agreement dated October 1, 1998 by and between
BUY.COM and SOFTBANK Services Group.
10.7+ Resale Agreement dated March 10, 1999 by and between BUY.COM
and Ingram Micro, Inc.; Amendment dated August 11, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
10.8* Employment Agreement dated March 1, 1999 by and between BUY.COM
and Gregory Hawkins; Amendment No. 1 to the Employment
Agreement dated July , 1999.
10.9** 1998 Stock Option/Stock Issuance Plan.
10.12* Deed of Trust dated December 23, 1998 by and between BUY.COM
and the Bank of Yorba Linda for the property located at 21
Brookline, Aliso Viejo, California 92656.
10.13* Loan Agreement and related documents dated December 23, 1998 by
and between BUY.COM and the Bank of Yorba Linda.
10.14** Industrial Lease dated May 12, 1999 by and between BUY.COM and
The Scott A. Blum Separate Property Trust u/d/t 8/2/95.
10.15** Summit Lease dated June 1999 by and between BUY.COM and
AEW/Parker II, LLC.
10.16** Operating Agreement of BUYTRAVEL.COM LLC dated July 19, 1999.
10.17** Marketing and Services Agreement dated July 19, 1999 by and
between BUY.COM and United Air Lines, Inc.
10.18** Common Stock Purchase Warrant dated July 19, 1999 by and
between BUY.COM and United Air Lines, Inc.
10.19** Credit Agreement dated July 20, 1999 by and between BUY.COM and
certain commercial lending institutions and The Bank of Nova
Scotia.
10.20** Promissory Note dated July 20, 1999 by and between BUY.COM and
The Bank of Nova Scotia.
10.21** Common Stock Purchase Warrant dated July 20, 1999 by and
between BUY.COM and The Bank of Nova Scotia.
10.22** Series A Convertible Participating Preferred Stock Agreement
dated August 14, 1998 by and between BUY.COM and certain
investors.
10.23** Promissory Note dated May 26, 1999 by and between BUY.COM and
The Scott A. Blum Separate Property Trust u/d/t 8/2/95.
10.24 Agreement dated May 26, 1999 by and between BUY.COM and The
Scott A. Blum Separate Property Trust u/d/t 8/2/95, Waiver of
Certain Rights, dated August 5, 1999.
10.25** Form of Option Agreement pursuant to 1998 Stock Option/Stock
Issuance Plan.
10.26** Non-Competition Agreement dated December 3, 1998 by and between
BUY.COM, BUY.COM's wholly-owned subsidiary, Ingram
Entertainment, Inc. and David Ingram.
10.27** Promissory Note dated August 16, 1999 by and between the Scott
A. Blum Separate Property Trust u/d/t 8/2/95.
10.28** Series B Convertible Participating Preferred Stock Purchase
Agreement dated September 2, 1999 by and between BUY.COM and
certain investors.
10.29** Common Stock Purchase Warrant dated October 8, 1999 by and
between BUY.COM and Harpeth Holdings Inc.
10.30** Non-Competition Agreement dated October 25, 1999 by and between
BUY.COM INC., BuyGolf.com, Inc. and Bradford W. Allen.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
10.31** Common Stock Purchase Warrant dated October 8, 1999 by and
between BUY.COM and Harpeth Holdings Inc.
10.32** Non-Competition Agreement dated October 25, 1999 by and between
BUY.COM INC., BuyGolf.com, Inc. and Bradford W. Allen.
10.33+ Letter of Intent dated September 2, 1999 by and between BUY.COM
INC. and SOFTBANK America, Inc.
10.34 Common Stock Issuance Agreement dated October 22, 1999 by and
between BUY.COM INC. and PGA Tour, Inc.
10.35* Sponsorship Letter Agreement dated October 22, 1999 by and
between BUY.COM INC. and PGA Tour, Inc.
21.1 Subsidiaries of BUY.COM.
23.1* Consent of Brobeck, Phleger & Harrison LLP (Included in Exhibit
5.1 hereto).
23.2** Consent of Arthur Andersen LLP.
24.1 Power of Attorney (Included on signature pages hereto).
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed by the Registrant with the Commission.
+ Confidential treatment is requested for certain confidential portions of
this exhibit pursuant to Rule 406 under the Securities Act. In accordance
with Rule 406, these confidential portions have been ommitted from this
exhibit and filed separately with the Commission.
3
<PAGE>
EXHIBIT 9.1
VOTING TRUST AGREEMENT
----------------------
THIS VOTING TRUST AGREEMENT (the "Agreement"), dated as of June 7, 1999, by
and among Scott A. Blum ("Scott Blum"), The Scott A. Blum Separate Property
Trust ("Stockholder"), Buy.Com, Inc., a Delaware corporation (the "Company") and
the outside members of the Company's Board of Directors listed on Schedule A to
----------
this Agreement (together with any successor referred to herein individually as a
"Trustee" and collectively as the "Trustees").
RECITALS
A. The Stockholder owns 7,490,211 shares of Common Stock, $.0001 par value
("Common Stock"), of the Company (and no shares of Series A Preferred Stock),
with all such shares together with any shares of voting stock of the Company
which Stockholder, Scott Blum or any person or entity controlled by Scott Blum
(all such persons and entities being referred to collectively as the "Blum
Affiliates") may acquire in the future being referred to as the "Blum Shares."
Neither Scott Blum, nor any Blum Affiliate other than Stockholder, currently
owns any shares of the Company's Common Stock or Series A Preferred Stock.
B. There are currently 10,745,878 shares of outstanding voting Common
Stock of the Company outstanding (including the shares of Common Stock issuable
upon conversion of the Series A Preferred Stock), such that the Blum Shares
currently represent approximately seventy percent (70%) of the outstanding
voting stock of the Company.
C. Scott Blum and the Stockholder believe it is in his and its best
interests and in the best interests of the Company to transfer to the Trustees
in trust for the purpose of voting all of the Blum Shares, with the exception of
the number of shares of the outstanding voting stock of the Company representing
up to nineteen percent (19%) of the voting interest of the Company's capital
stock which may be held by Stockholder, Scott Blum or any Blum Affiliate outside
of this Voting Trust, so long as all such shares held outside of this Agreement
by Stockholder, Scott Blum and the Blum Affiliates does not exceed nineteen
percent (19%) of the voting interest of the Company's capital stock at any time
during the term of this Agreement.
D. Scott Blum and the Stockholder desire to empower the Trustees to vote
the Blum Shares that are deposited into this voting trust in accordance with the
terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the agreements
contained herein, it is hereby agreed:
1. Appointment of Trustees. The Stockholder hereby appoints the Trustees
-----------------------
to serve as Trustees of the Buy.Com, Inc. Voting Trust, the trust established by
this Agreement (the "Trust") and the Trustees hereby accept such appointment and
agree to act as Trustees of the Trust in accordance with the terms of this
Agreement. There must be at least two (2) outside members of the Company's
Board of Directors serving as Trustees under this Agreement, and if
1
<PAGE>
at any time less than two (2) such individuals are serving as Trustees, one or
more additional outside directors of the Company (or other individuals selected
in accordance with Section 5(b)) shall be appointed as a Trustee in accordance
with Section 5(b).
2. Deposit of Shares and Issuance of Voting Certificates.
-----------------------------------------------------
(a) Initial Deposit of Shares. The Stockholder shall forthwith
-------------------------
deliver to the Trustees certificates for 5,448,495 of the Blum Shares, such that
5,448,495 shares or approximately fifty-one percent (51%) of the voting interest
of the Company's outstanding capital stock is deposited into the Trust and
2,041,716 shares or nineteen percent (19%) of the voting interest of the
Company's outstanding capital stock is held by Stockholder outside of this
Agreement as of the date of this Agreement. All of the Blum Shares that are
deposited into the Trust shall be referred to as the "Voting Trust Shares."
(b) Additional Deposit of Shares. Scott Blum and Stockholder hereby
----------------------------
covenant and agree that they shall deliver to the Trustees certificates for all
Blum Shares hereafter acquired by him, it or any Blum Affiliate by any means
which are necessary to maintain the aggregate voting interest of Scott Blum,
Stockholder and all Blum Affiliates outside the Trust at or below nineteen
percent (19%) of the voting interest of the Company's outstanding capital stock,
immediately upon becoming the owner thereof, duly endorsed for transfer or
accompanied by duly executed instruments of transfer. Promptly upon receipt of
such certificates, the Trustees shall cause such shares to be deposited as
Voting Trust Shares to be transferred and registered in the stock records of the
Company in the name of "Trustees of the Buy.Com, Inc. Voting Trust" or a nominee
name designated by them, and shall cause the new share certificates to bear a
legend stating that the Voting Trust Shares evidenced thereby are subject to the
terms of this Agreement. Scott Blum hereby agrees to cause any Blum Affiliate
to become a party to this Agreement if necessary to deposit all or a portion of
the Blum Shares held by such Blum Affiliate into the Trust in accordance with
the terms of this Agreement. Such additional party shall be included within the
definition of "Stockholder" for purposes of this Agreement.
(c) Release of Shares from Trust. In the event during the term of
----------------------------
this Agreement, Scott Blum, Stockholder and all Blum Affiliates in the aggregate
own less than nineteen percent (19%) of the voting interest of the Company's
outstanding capital stock outside of the Trust, he or it, as the case may be,
may request that a number of the Blum Shares be released from the Trust so long
as after such release of Blum Shares from the Trust, Scott Blum, Stockholder and
all Blum Affiliates in the aggregate own less than nineteen percent (19%) of the
voting interest of the Company's outstanding capital stock outside the Trust.
Scott Blum and Stockholder hereby agree that if at any time the aggregate voting
interest of the Blum Shares held by Scott Blum, Stockholder and the Blum
Affiliates outside the Trust exceeds nineteen percent (19%), he or it, as the
case may be, shall immediately deposit into the Trust the number of Blum Shares
necessary to reduce such voting interest outside of the Trust to nineteen
percent (19%). In the event Stockholder sells or transfers any of the Voting
Trust Shares to a third party other than a Blum Affiliate, then upon the written
notice from Stockholder, the transferred Voting Trust Shares shall be released
from this Trust.
(d) Delivery of Voting Trust Certificate. The Trustees shall issue
------------------------------------
and deliver to the Stockholder ( or if applicable, Scott Blum or the Blum
Affiliate) a Voting Trust Certificate
2
<PAGE>
(a "Certificate") in respect of the number and type of Voting Trust Shares
transferred to and held of record by the Trustees for the benefit of such party
under this Agreement, in the form of Exhibit A hereto (except that the Trustees
---------
may affix to a Certificate any restrictive legend borne by the certificates for
Voting Trust Shares in respect of which Voting Trust Shares the Certificate is
issued). Such Certificates shall be signed by a majority of the Trustees.
3. Trustees' Powers and Duties.
---------------------------
(a) Voting Powers. Until the termination of this Agreement in
-------------
accordance with Section 7, the Trustees shall have the right, in person or by
proxy, to exercise all voting rights and powers in respect of the Voting Trust
Shares, and to take part in or consent to any corporate or stockholder's action
of any kind whatsoever. The right to vote shall include the right to vote for
the election of directors and in favor of or against any resolution or proposed
action of any kind or character which may be presented at any meeting of the
stockholders of the Company (whether at an annual or special meeting of
stockholders of the Company or by written consent action of the stockholders of
the Company) including without limitation the dissolution, consolidation,
merger, reorganization or recapitalization of the Company ("Stockholder
Proposal").
(b) Voting Procedures. With regard to any Stockholder Proposal, all
-----------------
of the Voting Trust Shares shall be voted for or against such Stockholder
Proposal as determined by a majority of the Trustees. In the event only two
individuals are serving as Trustees at the time of such Stockholder Proposal,
such vote by the Trustees must be unanimous.
(c) Sales. The Trustees shall have no authority to sell or otherwise
-----
dispose of or to pledge, encumber or hypothecate, any of the Voting Trust
Shares. Subject to compliance with applicable securities laws and any
contractual restrictions to which Stockholder or the Blum Shares may be subject
to, Stockholder shall have the right, in its sole discretion, to sell or
otherwise dispose of or to pledge, encumber or hypothecate, any of the Voting
Trust Shares, provided that any such transfers to a Blum Affiliate shall be
subject to the Blum Affiliate agreeing to be bound by this Agreement. Further,
Stockholder shall have the right, in its discretion, to designate whether any
sale or transfer of Blum Shares are Voting Trust Shares or shares outside this
Trust.
4. Dividends and Distributions. Upon the declaration of any dividends or
---------------------------
the payment of any other distribution of the Company with respect to Voting
Trust Shares held for the Stockholder other than pro rata distributions of
additional voting shares of the Company, the Trustees shall distribute or cause
all such dividends and distributions to be distributed by the Company to the
Stockholder. In the event of dissolution or liquidation of the Company during
the term of this Agreement in such manner as to entitle the holders of shares to
liquidating dividends in respect thereof, the Trustees shall distribute or cause
all such liquidating dividends with respect to the Voting Trust Shares to be
distributed by the Company to the Stockholder.
5. The Trustees.
------------
(a) Trustees as Stockholder or Affiliate. Any Trustee and any firm or
------------------------------------
corporation of which such Trustee may be a member, agent, partner or employee
and any corporation, trust, or association of which such Trustee may be a
trustee, stockholder, director,
3
<PAGE>
officer, agent, or employee may contract with or be or become pecuniarily
interested, directly or indirectly, in any matter or transaction to which the
Company or any subsidiary or controlled or affiliated corporation may be a party
or in which it may be concerned, as fully and freely as though such Trustee were
not a trustee hereunder. The Trustees may act as an agent, employee, director
and/or officer of the Company or of any such subsidiary or controlled or
affiliated corporation and, subject to the terms of this Agreement, may vote the
Voting Trust Shares in favor of matters in which the Trustees or their
affiliates are interested.
(b) Successor Trustees. The Trustees may resign by giving notice of
------------------
resignation to the Company and to the Stockholder. Any successor Trustees shall
enjoy all the rights, powers, interests, and immunities of the Trustees as
originally constituted, and the title to the Voting Trust Shares of any Trustees
who may resign or be removed or become incapacitated (by death, disability or
otherwise) to act shall, upon such resignation or removal or incapacity, vest in
the successor Trustees. In the event of the removal, resignation, or incapacity
to act of any of the Trustees, a successor outside director of the Company
(other than Scott Blum) shall be appointed by the Company's Board of Directors
(with Scott Blum abstaining from such vote). In the event an outside director
is unavailable to serve as Trustee, a successor (other than Scott Blum) shall be
appointed by the Company's Board of Directors (with Scott Blum abstaining from
such vote), which successor is reasonably acceptable to Scott Blum and the
outside accounting firm that is at the time engaged as the Company's primary
outside auditing firm. Notwithstanding any change in the Trustees, the
Certificates for Voting Trust Shares may be (i) voted and/or (ii) endorsed and
transferred, by any successor Trustees with the same effect as if voted,
endorsed and transferred by the former Trustees. The Trustees are authorized
and empowered to cause any further transfer of said shares to be made which may
be necessary through the occurrence of any change of person acting as Trustees
hereunder.
(c) Relationship of Parties. The Trust created by this Agreement is
-----------------------
not intended to be, and shall not be deemed to be, and shall not be treated as a
general partnership, limited partnership, joint venture, corporation, or joint
stock company or association. The relationship of the Stockholder to the
Trustees shall be solely that of Stockholder of the Trust created by this
Agreement and its rights shall be limited to those conferred upon it by this
Agreement.
(d) Consultation with Outside Advisors. The Trustees may consult with
----------------------------------
legal counsel, which may be counsel to the Company or any of its affiliates or
any of its or its affiliates' officers, directors or partners.
(e) Liability. In voting on all matters which may come before any
---------
meeting of stockholders of the Company the Trustees shall vote the Voting Trust
Shares in the manner prescribed by this Agreement, and it is understood that the
Trustees shall not incur responsibility by reason of any error of judgment or of
law or by any matter or thing done or omitted under this Agreement, except, with
respect to any individual Trustee, for his own individual gross negligence or
willful misconduct. No Trustee shall be liable in any event for acts or
defaults of any other Trustee or for acts or defaults of any employee, agent,
proxy, or attorney in fact of any other Trustee. The Trustees shall always be
protected and free from liability in acting upon any notice, request, consent,
instruction, certificate, declaration, telefax, guarantee, affidavit, or other
paper or document or signature reasonably believed by him to be genuine and to
have been
4
<PAGE>
signed by the proper party or parties or by the party or parties purporting to
have signed the same.
(f) Trustees' Indemnity. The Company shall indemnify, defend and hold
-------------------
harmless the Trustees against any and all losses, damages, liabilities,
obligations, claims, demands, judgments, settlements, governmental
investigations, costs and expenses of any nature whatsoever, including the
reasonable fees and expenses of attorneys, accountants and consultants
(collectively, "Damages"), incurred in connection with or arising from the
performance of their duties under this Agreement (except for his gross
negligence or willful misconduct). Such indemnification shall be paid as
incurred and on demand, subject to an undertaking by the Trustees to repay if it
is ultimately determined that he is not, or they are not, as the case may be,
entitled to such indemnification. In the event the Stockholder shall request
the Trustees to bring an action on its behalf, such party shall pay in advance
all the expense of prosecuting such action and shall indemnify, defend and hold
harmless the Trustees against all Damages incurred in connection with such
action; the Trustees shall have no obligation to commence or proceed with such
suit unless they are satisfied that all necessary monies have been paid in
advance or advanced to the Trustees for this purpose.
6. Restrictions on Transfer. The Certificates shall be transferable only
------------------------
as provided in said Certificates and this Agreement. The Stockholder shall be
at liberty to sell, transfer or otherwise dispose of its Certificates issued
hereunder; provided, that any transferee that is a Blum Affiliate shall have
--------
agreed in writing to be bound by this Agreement as though such transferee
originally executed this Agreement as a Stockholder. All sales or transfers
shall be recorded in the Certificate Book (defined in Section 9 below) and any
proper sale or transfer made of any Certificate shall vest in the purchaser or
transferee all rights of the transferror and shall subject the purchaser or
transferee to the same limitations as those imposed on the transferror by the
terms of the Certificate so transferred, and by this Agreement. Upon any such
transfer, following execution of an agreement to be bound by this Agreement by a
purchaser or transferee and upon surrender to the Trustees of any Certificate
sold or transferred, duly endorsed for transfer, the Trustees shall deliver a
Certificate or Certificates to the purchaser or transferee for the beneficial
interest in the number and type of Voting Trust Shares represented by the
Certificate so sold or transferred. The Trustees shall not be required to
recognize any sale or transfer of a Certificate not made in accordance with the
provisions hereof unless the person or persons claiming such ownership shall
have produced indicia of title satisfactory to the Trustees, and shall have
deposited with the Trustees indemnity satisfactory to him, and shall have
executed an agreement to be bound by this Agreement.
7. Continuance and Termination of Trust.
------------------------------------
(a) Term and Termination. This Agreement shall terminate on the
--------------------
earlier of (i) June 30, 2000 (subject to the extensions provided below); or (ii)
at such time as the aggregate Blum Shares held by Stockholder, Scott Blum and
all Blum Affiliates represent, in the aggregate, less than nineteen percent
(19%) of the voting interest of the Company's outstanding capital stock; or
(iii) one hundred eighty (180) days after the written request of Stockholder if
the Company has not consummated an initial public offering at the time of such
notice, provided that such notice may not be given prior to June 30, 2000, (iv)
one hundred eighty (180) days after the written request of Stockholder in the
event the closing price of the Company's Common Stock over a sixty (60)
consecutive trading day period is less than fifty percent (50%) of the per share
5
<PAGE>
price at which the Company's registration statement is declared effective by the
Securities Exchange Commission, provided that such notice may not be given prior
to June 30, 2000 or (v) June 30, 2009. Except as otherwise provided in this
Agreement, the Trust created by this Agreement is hereby expressly declared to
be irrevocable.
(b) Automatic Extensions. This Agreement shall automatically be
--------------------
renewed and the term of the Trust extended for successive one (1)-year terms
unless the Company's Board of Directors (with Scott Blum abstaining from such
vote) approve the termination of this Agreement and deliver a certified written
notice of such election to the Trustees within ten (10) days of the end of the
then current term of this Agreement.
(c) Consolidation, Exchange, Recapitalization. In the event of a
-----------------------------------------
consolidation, share-for-share exchange, recapitalization or other
reorganization involving the Company, this Agreement shall be effective and
shall remain in force for its full term, substituting, where appropriate, for
the Voting Trust Shares issued in such consolidation, exchange, recapitalization
or other reorganization.
(d) Actions Following Termination.
-----------------------------
(i) As soon as practicable after the termination of this
Agreement, the Trustees shall by formal assignment of the Voting Trust Shares
cause the Company to deliver to the Stockholder share certificates or securities
representing the number of shares together with any other property distributed
in respect of such shares and not yet delivered to the beneficial owner, upon
the surrender of such Certificates properly endorsed.
(ii) If the Stockholder cannot be located or fails or refuses to
surrender Certificates in exchange for shares and/or other property as
aforesaid, the Trustees may in their discretion deliver said shares and/or other
property to the Company for the benefit of the person or persons entitled
thereto. Upon any such delivery the Trustees shall be fully acquitted and
discharged with respect to the delivery of said shares and/or other property.
8. Record Date. The Trustees shall use, as the record date for the
-----------
determination of the Stockholder entitled to receive payment of any dividend or
other distribution, or any allotment of rights, or to exercise rights in respect
of any other lawful action, or to vote on any matter, the record date so fixed
by the Company with respect to the Voting Trust Shares. When a record date is
so fixed, the Stockholder of record on that date is entitled to receive the
dividend, distribution, or allotment of rights, or to vote, or to exercise of
the rights, as the case may be, notwithstanding any transfer of Certificates
after the record date. The record date for determining Stockholders for any
purpose other than set forth in this Section shall be at the close of business
on the day on which the Trustees adopts the resolution relating thereto, or the
sixtieth day prior to the date of such other action, whichever is later.
9. Inspection of Records. The Trustees shall keep at 21 Brookline, Aliso
---------------------
Viejo, California 92656, or such other address at which the Company's principal
executive office may be located (the "Executive Office"), correct books of
account of all his business and transactions, and a book to be known as the
"Certificate Book" containing the names of all persons who are subject to this
Agreement, showing their places of residence, the number and type of shares
represented by the Certificates held by them, and the date they became the
owners thereof. This
6
<PAGE>
Agreement shall be open for inspection by any stockholder of the Company, a
Stockholder, or the agent of either upon the same terms as the record of
stockholders of the Company is open to inspection by stockholders.
10. Lost or Stolen Certificates. If a Certificate shall be lost, stolen,
---------------------------
mutilated, or destroyed, the Trustees, in their discretion, may issue a
duplicate of such Certificate upon receipt of evidence of such fact satisfactory
to a majority of the Trustees, and upon receipt of an indemnity satisfactory to
a majority of the Trustees, and upon receipt of the existing Certificate, if
mutilated.
11. Miscellaneous.
-------------
(a) Filing of Agreement. The Trustees shall cause to be filed a copy
-------------------
of this Agreement, and every amendment (including the written consent of the
Trustees as required pursuant to Section 7(a) hereof) or supplement hereto, in
the registered office of the Company in the State of Delaware and at the
Executive Office, which Agreement shall be open to the inspection of any
stockholder of the Company or any Stockholder of this Agreement during business
hours of the Company.
(b) Successors and Assigns. This Agreement shall bind the Trustees,
----------------------
the Company, Scott Blum and the Stockholder hereunder and each and all of the
heirs, executors, administrators, personal representatives, successors, and
assigns thereof, and shall inure to the benefit of the Trustees, the Company,
their successors, the Stockholder and Scott Blum and its and his permitted
transferees.
(c) Notices. Unless otherwise expressly provided herein, all notices,
-------
requests, demands, instructions, documents and other communications to be given
hereunder by any party to another shall be in writing, shall be sent to the
address/fax number set forth below (provided that any party may at any time
change its address for notice or other such information by giving written notice
thereof in accordance with this Section), and shall be deemed to be duly given
upon the earliest of (i) hand delivery, (ii) the first business day after
sending by reputable overnight delivery service for next-day delivery, (iii) the
third business day after sending by first class United States mail, postage
prepaid, (iv) the time of successful facsimile transmission (or in the event the
time of receipt of the fax in the city where the fax is received is not during
regular business hours on a business day, then at the customary hour for the
opening of business on the next business day), or (v) the date actually received
by the other party:
If to Stockholder, to the address of the Stockholder appearing on
the records of the Trustees.
If to Trustees to: Donald Kendall
700 Anderson Hill
Purchase, New York 10577
If to the Company: 21 Brookline
Aliso Viejo, CA 92656
Attn: Chief Executive Officer
7
<PAGE>
If to Scott Blum: Scott A. Blum
3 Ritz Cove
Monarch Beach, CA 92629
(d) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one instrument.
(e) Enforceability. If in any judicial proceedings, a court shall
--------------
refuse to enforce any of the provisions of this Agreement, then such
unenforceable provision shall be deemed modified or limited so as to effectuate,
to the maximum extent possible, the parties' expressed intent, and if no such
modification or limitation could render it enforceable it shall be eliminated
from this Agreement, and in any event the remaining provisions of this Agreement
shall remain in full force and effect.
(f) Entire Agreement. This Agreement is the entire agreement of the
----------------
parties with respect to the subject matter hereof, and supersedes all prior and
contemporaneous negotiations, understandings, arrangements and agreements.
Scott Blum and the Stockholder each represent and warrant that this Agreement is
fully integrated and not in need of parol evidence in order to reflect the
intention of the parties. Moreover, Scott Blum and the Stockholder each
acknowledge (i) that he and it intend the literal words of the Agreement to
govern and for all prior and contemporaneous negotiations, drafts and other
extrinsic communications to have no significance or evidentiary effect and (ii)
that this Agreement has been fully negotiated by the parties and that
accordingly it shall be construed "evenly" and not for or against any party. By
signing this Agreement, Scott Blum and the Stockholder further acknowledge that
he and it have consulted with legal counsel about the effect of this Section
11(f) and understand its effect.
(g) Compensation of Trustees; Payment of Costs. The Trustees shall
------------------------------------------
not be entitled to any compensation for their services as Trustees. The
Trustees agree that Stockholder shall have no obligation to pay to the Trustees
any amount whatsoever as fees or in respect to the Trustees' costs or expenses
related to this Agreement, except as provided in Sections 5(f) and 11(k). The
Trustees will look solely to the Company for reimbursement of any amounts
incurred or expended by them in connection with their duties under this
Agreement, except as provided in Sections 5(f) and 11(k), and expressly waives
any rights which they might otherwise have to charge the trust corpus for any
costs, fees or expenses related to this Agreement, or to withhold any amounts
from or set off any amounts against the shares received by them in trust or any
distributions thereon.
(h) Amendment and Modification. This Agreement may not be amended,
--------------------------
modified or terminated, except with the written consent of the Company, a
majority of the Trustees, the holders of a majority of the Blum Shares, and the
outside accounting firm that is at the time engaged as the Company's primary
outside auditing firm; provided, however, that the addition of additional
-------- -------
parties or shares after the original date of execution of this Agreement shall
not be considered an amendment or modification.
(i) Governing Law. This Agreement shall be governed by the internal
-------------
laws of the State of Delaware without regard to principles of conflict of laws.
8
<PAGE>
(j) Section 218. This Agreement is intended to create a voting trust
-----------
pursuant to and subject to Section 218 of the Delaware General Corporation Law.
If for any reason such voting trust is determined to be invalid or
unenforceable, this Agreement and the relationship of the parties hereunder
shall be deemed to be and shall be reconstituted as a voting agreement under
Section 218(c), and all provisions of this Agreement shall apply to the maximum
extent possible to effectuate the intention of the parties that the substantive
provisions hereof shall govern the voting of Shares by or for the parties
hereto.
(k) Equitable Remedies. Each of the parties hereby acknowledges and
------------------
agrees that the legal remedies available, in the event the covenants and
agreements made in this Agreement are violated, would be inadequate and that any
party shall be entitled, without posting any bond or other security, to
temporary, preliminary and permanent injunctive relief, specific performance and
other equitable remedies in the event of such a violation, in addition to any
other remedies which such party may have at law or in equity.
(l) COUNSEL. SCOTT BLUM AND STOCKHOLDER HAVE HAD THE OPPORTUNITY TO
-------
CONSULT WITH HIS AND ITS OWN LEGAL ADVISORS. SCOTT BLUM AND STOCKHOLDER
ACKNOWLEDGE THAT THE LAW FIRM OF BROBECK, PHLEGER & HARRISON LLP REPRESENTS THE
COMPANY AND NOT SCOTT BLUM OR STOCKHOLDER.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Trust Agreement to
be duly executed and delivered by their proper and duly authorized
representatives as of the day and year first above written.
"TRUSTEES"
By:____________________________________
Name:__________________________________
By:____________________________________
Name:__________________________________
By:____________________________________
Name:__________________________________
"STOCKHOLDER"
Scott A. Blum Separate Property Trust
By:____________________________________
Title:_________________________________
"SCOTT BLUM"
_______________________________________
Scott A. Blum
AGREED TO:
"COMPANY"
BUY.COM, INC.
By:_________________________
Title:______________________
10
<PAGE>
Schedule A
----------
List of Trustees
----------------
Donald Kendall
James Rozak
Wayne Thorson
<PAGE>
Exhibit A
Voting Trust Certificate
------------------------
<PAGE>
BUY.COM, INC.
A Delaware Corporation
Voting Trust Certificate
Certificate
No. ________ [______] shares of Common Stock
This certifies that [____________] (or its predecessor in interest) has
deposited for transfer in trust to the Trustees of the Buy.Com, Inc. Voting
Trust [____________] shares of Common Stock, par value $___________ per share,
of Buy.Com, Inc., a Delaware corporation, under a Voting Trust Agreement, dated
as of ________, 1999 by and between [____________], a stockholder of Buy.Com,
Inc., and Buy.Com, Inc., as Trustees under said Voting Trust Agreement. This
certificate and the interest represented hereby may be transferred only if
permitted under the terms of said Voting Trust Agreement and is transferable
only on the books of the Trustees upon the execution of said Voting Trust
Agreement by such transferee and the presentation and surrender of this
certificate duly endorsed for transfer. The holder of this certificate takes
the same subject to all the terms and conditions of said Voting Trust Agreement,
is entitled to the rights and benefits thereof and is subject to the obligations
thereof. A copy of said Voting Trust Agreement may be obtained from the
undersigned Trustees.
IN WITNESS WHEREOF, a majority of the Trustees has caused this certificate
to be signed this ___ day of ________ 1999.
BUY.COM, INC., TRUSTEES
By:____________________________________
Title:_________________________________
By:____________________________________
Title:_________________________________
By:____________________________________
Title:_________________________________
<PAGE>
EXHIBIT 9.2
VOTING TRUST AGREEMENT
----------------------
THIS VOTING TRUST AGREEMENT (the "Agreement"), is dated as of October
---------
26, 1999, by and among Scott A. Blum ("Blum"), the trusts listed on Exhibit A
---- ---------
(individually a "Stockholder" and collectively the "Stockholders"), BUY.COM
----------- ------------
Inc., a Delaware corporation (the "Company") and the Outside Directors (as
-------
hereinafter defined) of the Company's Board of Directors listed on Exhibit B to
---------
this Agreement (the "Trustees").
--------
RECITALS
A. WHEREAS, the Company intends to make an initial public offering
(the "IPO") of its common stock, par value $.0001 per share (the "Common
--- ------
Stock"), through a group of underwriters lead managed by Merrill Lynch & Co.,
- -----
Merrill Lynch, Pierce, Fenner & Smith Incorporated; and
B. WHEREAS, the Stockholders currently own in the aggregate a total
of 99,372,465 shares of Common Stock (the "Initial Shares") and no other shares
--------------
of the Company's capital stock; and
C. WHEREAS, neither Blum nor any Blum Family Member (as hereinafter
defined) currently owns any shares of Common Stock or any other shares of the
Company's capital stock (other than as set forth on Exhibit D); and
---------
D. WHEREAS, the Initial Shares constitute approximately fifty-six
percent (56%) of the outstanding capital stock of the Company as of the date
hereof (assuming the conversion of all outstanding shares of the Company's
capital stock into shares of Common Stock); and
E. WHEREAS, in order to assist the Company in marketing and
completing the IPO and for other valuable consideration, the Company, the
Stockholders and Blum have agreed to enter into this Agreement to create the
BUY.COM Inc. Voting Trust (the "Trust"); and
-----
F. WHEREAS, in accordance with the provisions of this Agreement, the
Stockholders and Blum have agreed to deposit, or cause to be deposited, into the
Trust: (i) the Initial Shares; and (ii) any additional shares of the Company's
capital stock that hereafter are acquired by the Stockholders or Blum from the
Company or any other stockholder (including, without limitation, any shares of
capital stock of the Company that may be issued upon the exercise of rights,
warrants or options to purchase, or other securities convertible into or
exchangeable for, the Common Stock) (collectively, the "Additional Shares"); and
-----------------
G. WHEREAS, the Stockholders and Blum desire to empower the Trustees
to vote all of the shares of the Company's capital stock that become subject to
the terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
agreements contained herein, it is hereby agreed:
<PAGE>
1. Definitions. For all purposes of this Agreement, except as otherwise
-----------
expressly provided herein or unless the context otherwise requires:
(i) capitalized terms defined in the Recitals to this Agreement have
the meanings assigned to them there;
(ii) capitalized terms defined in other Sections of this Agreement
have the meanings assigned to them there;
(iii) all capitalized terms defined in this Agreement include the
plural as well as the singular and vice versa, when the context requires; and
(iv) where appropriate, all references to the masculine in this
Agreement include both the feminine and the neuter, and vice versa, when the
context requires.
"Excluded Shares" means: all shares of the Company's capital stock
---------------
acquired by all Blum Affiliates in the aggregate (other than shares of capital
stock or options to purchase shares of capital stock issued or granted to Blum
Affiliates pursuant to the Company's equity compensation plans or other
agreements approved by a majority of the disinterested members of the Board of
Directors) on or after the date hereof until the number of shares so acquired
equals one percent (1%) of the Company's issued and outstanding capital stock.
(Conversely, all shares of the Company's capital stock acquired by all Blum
Affiliates in the aggregate (including shares of capital stock or options to
purchase shares of capital stock issued or granted to Blum Affiliates pursuant
to the Company's equity compensation plans or other agreements approved by a
majority of the disinterested members of the Board of Directors) on or after the
date hereof that are in excess of one percent (1%) of the Company's issued and
outstanding capital stock shall not constitute Excluded Shares.)
"Blum Affiliate" means: (i) a Blum Family Member; (ii) an individual
--------------
that is supported, directly or indirectly, to a material extent by Blum or any
Blum Family Member; (iii) an individual that is (or has been during the past
three months) employed directly or indirectly by Blum, any of the Stockholders
or any Blum Family Member; (iv) an individual or entity that is (or has been
during the past three months) retained by Blum, any of the Stockholders or any
Blum Family Member as a consultant generally operating at the direction of Blum,
any of the Stockholders or such Blum Family Member; (v) an individual or entity
that has a Substantial Business Investment in any entity with Blum, any of the
Stockholders, or any Blum Family Member; (vi) an entity that controls, is
controlled by, or is under common control with, Blum, any of the Stockholders or
any Blum Family Member; or (vii) an individual who serves as an officer,
director, partner, member, executor, administrator, personal representative,
trustee, successor or assign (or in a similar capacity) with respect to any of
the foregoing. Notwithstanding the foregoing, the following shall not be deemed
to be a Blum Affiliate for purposes of Section 3(c) and, pursuant to such
Section 3(c), shall not be required to deposit shares of the Company into the
Trust: (a) officers, directors and employees of the Company who would not
otherwise meet the definition of a Blum Affiliate but for their position as an
officer, director or employee of the Company, any subsidiary of the Company,
including but not limited to BUYNOW INC., or any joint venture in which the
Company has an interest; and (b) the entities listed on Exhibit C hereto.
---------
<PAGE>
"Blum Family Member" means any former, existing or future spouse,
------------------
parent, child, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-
law, brother-in-law or sister-in-law of Blum.
"control" (including the terms "controlled by" and "under common
-------
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of any entity, whether
through the ownership of voting securities, by contract, or otherwise.
"Outside Director" means a member of the Board of Directors of the
----------------
Company who: (i) is not (and has not been during the past three months) employed
directly or indirectly by the Company; (ii) has not been during the past twelve
months involved in any transaction or series of transactions with the Company in
which the amount involved exceeded $60,000 and in which such person has or had a
direct or indirect material interest; and (iii) is not a Blum Affiliate.
Notwithstanding the foregoing, the sale of 209,145 shares of Common Stock to
each of Donald M. Kendall, Charles W. Richion, James B. Roszak, John Sculley and
Wayne T. Thorson in October 1998 through March 1999 at a purchase price of $2.39
per share shall not disqualify such individuals from otherwise satisfying the
definition of an Outside Director. Any successor Trustee who, although not a
member of the Board of Directors of the Company, is appointed by the Board of
Directors of the Company and approved by the remaining Trustees, if any, in
accordance with Section 7(b) hereof, shall be deemed to be an Outside Director
for all purposes under this Agreement.
"Substantial Business Investment" means any investment by a person or
-------------------------------
entity that comprises more than five percent (5%) of the equity or debt of a
corporation, partnership, limited liability company, joint venture or other
entity in which the Stockholders, Blum or any Blum Family Member is the record
or beneficial owner of five percent (5%) or more of the equity or debt of such
entity.
"Trust Beneficiary" means the Stockholders and any other beneficial
-----------------
owner of shares of the Company's capital stock that become subject to the terms
and conditions of this Agreement.
"Trust Shares" means the Initial Shares, the Additional Shares and any
------------
other shares of the Company's capital stock that become subject to the terms and
conditions of this Agreement (including, without limitation, any Initial Shares
or Additional Shares or other shares of the Company's capital stock that are
acquired by a Blum Affiliate on or after the date hereof). Notwithstanding the
foregoing, (i) all shares of capital stock or options to purchase shares of
capital stock issued or granted to Blum Affiliates pursuant to the Company's
equity compensation plans or other agreements approved by a majority of the
disinterested members of the Board of Directors; and (ii) all Excluded Shares
acquired on or after the date hereof shall not be included in the definition of
"Trust Shares" and will not be subject to the terms and conditions of this
Agreement. Further, and as a matter of clarity, all shares of the Company's
capital stock acquired by Blum Affiliates prior to the date hereof (and listed
on Exhibit D hereto) shall be excluded from the definition of "Trust Shares."
---------
2. Appointment of Trustees; Minimum Number of Trustees. The
---------------------------------------------------
Stockholders, Blum and the Company hereby appoint the Trustees to serve as
Trustees of the Trust, and the Trustees
<PAGE>
hereby accept such appointment and agree to act as Trustees of the Trust in
accordance with the terms and conditions of this Agreement. For so long as this
Agreement shall remain in effect, there shall be at least two Outside Directors
serving as Trustees under this Agreement and, if at any time there shall be less
than two Outside Directors serving as Trustees, then the Board of Directors of
the Company shall promptly appoint and the remaining Trustees, if any, shall
approve one or more Trustees in accordance with the procedures set forth in
Section 7(b) hereof.
3. Deposit of Shares and Issuance of Trust Certificates.
----------------------------------------------------
(a) Deposit of Initial Shares. Concurrent with the execution of this
-------------------------
Agreement, the Stockholders and Blum will endorse in blank and assign and
deliver to the Trustee all certificates for the Initial Shares and shall do all
things necessary for the transfer of the Initial Shares to the Trustees on the
books of the Company.
(b) Deposit of Additional Shares. For so long as this Agreement
----------------------------
remains in effect, the Stockholders and Blum agree to deliver to the Trustees
certificates for all Additional Shares hereafter acquired by the Stockholders,
Blum or any Blum Family Member immediately upon becoming the record or
beneficial owner thereof, duly endorsed for transfer or accompanied by duly
executed instruments of transfer.
(c) Deposit of Shares to be Acquired by a Blum Affiliate. For so long
----------------------------------------------------
as this Agreement remains in effect, the Stockholders and Blum agree to cause
any Blum Affiliate who intends to acquire any Trust Shares (hereinafter, a "Blum
----
Affiliate Stockholder"): (i) to become a party to this Agreement; and (ii) to
- ---------------------
consent to the registration, transfer and issuance of such shares in the names
of the Trustees (for the benefit of such Blum Affiliate Stockholder) and to the
registration, issuance and delivery by the Trustees to such Blum Affiliate
Stockholder of Trust Certificates (as hereinafter defined) in place of the stock
certificates for the Trust Shares being acquired by such Blum Affiliate
Stockholder, all in accordance with the terms and conditions of this Agreement.
Thereafter, such Blum Affiliate Stockholder shall be included within the
definition of "Trust Beneficiary" for all purposes of this Agreement.
(d) Delivery of Trust Certificates. Promptly upon receipt of any
------------------------------
Trust Shares, the Trustees shall: (i) cause such Trust Shares to be cancelled,
transferred and registered in the stock records of the Company in the name of
the Trustees (or a nominee name designated by them); (ii) shall cause the new
share certificates to bear a legend stating that the securities evidenced
thereby are subject to the terms of this Agreement; and (iii) shall issue and
deliver to the Trust Beneficiary a Voting Trust Certificate (a "Trust
-----
Certificate") in respect of the number and type of Trust Shares transferred to
- -----------
and held of record by the Trustees for the benefit of such Trust Beneficiary
under this Agreement, in the form of Exhibit E hereto (except that the Trustees
---------
shall affix to any such Trust Certificate any restrictive legend borne by the
certificate for the Trust Shares for which such Trust Certificate is exchanged).
All Trust Certificates shall be signed by a majority of the Trustees.
(e) Release of Shares from Trust. In the event that one of the
----------------------------
Stockholders, Blum or any Blum Affiliate Stockholder sells or transfers any of
the Trust Shares to a third party (other than to Blum, a Blum Family Member, a
Blum Affiliate or a Blum Affiliate Stockholder), then, upon the closing of such
transaction, the Trust Shares so transferred shall be released from this Trust.
<PAGE>
4. Trustees' Powers and Duties.
---------------------------
(a) Voting Powers. For so long as this Agreement remains in effect,
-------------
the Trustees shall have the right to exercise all voting rights and powers in
respect of the Trust Shares, and to take part in, consent to, or oppose, any
corporate or stockholders' action of any kind whatsoever. The Trustees' right
to exercise all voting rights and powers in respect of the Trust Shares, and to
take part in, consent to, or oppose, any corporate or stockholders' action of
any kind whatsoever shall be subject to the different terms and conditions
depending on whether the proposed action is characterized as a "Significant
Stockholder Action" or a "Routine Stockholder Action," as hereineafter defined.
(i) "Significant Stockholder Action" means (i) the election of
directors; (ii) the dissolution, consolidation, merger, reorganization or
recapitalization of the Company; (iii) the lease, sale or license of all or a
substantial portion of the assets of the Company; (iv) the issuance or sale of
securities by the Company or any "affiliate" of the Company (as defined in Rule
405 of Regulation C under the Securities Exchange Act of 1934, as amended); (v)
the amendment of this Agreement; or (vi) any combination of the foregoing; in
each case, to the extent a stockholder vote is otherwise required by law.
(ii) "Routine Stockholder Action" means any stockholder action
required by law other than a Significant Stockholder Action.
(b) Voting Procedure For Significant Stockholder Actions. The
----------------------------------------------------
Trustees must vote in respect of any Significant Stockholder Action as follows:
(i) if the matter concerned is the election of directors, then
the Trustees shall vote the whole number of Trust Shares for each director (or
nominee for director) for which such Trust Shares are eligible to vote by
multiplying the total number of votes held by the Trust by a fraction, the
numerator of which is the number of votes cast in respect of shares of the
Company other than the Trust Shares (the "Nonaffiliated Votes") for such person
-------------------
and the denominator of which is the total number of Nonaffiliated Votes
represented by all shares casting any votes in the election of such directors;
provided, however, that notwithstanding the foregoing, the Trustees shall vote
all of the Trust Shares against any proposal to elect Blum to the Board of
Directors of the Company; and
(ii) on all other matters, including without limitation, any
amendment of this Agreement for which a stockholder vote is required under
Section 14(h) hereof, the Trustees shall at all times vote all of the Trust
Shares for the matter, against the matter, or shall abstain or cause to have the
same effect as broker non-votes, in the same proportion in favor of, in
opposition to, or in abstention or as broker non-votes with respect to, such
matter as the Non-Affiliated Votes are cast for, against, or in abstention or
are broker non-votes with respect to, such matter.
(c) Voting Procedure For Routine Stockholder Actions. The Trustees
------------------------------------------------
may vote in respect of any Routine Stockholder Action in any manner as
determined by a majority of the Trustees who shall act in the best interests of
the Company. In the event that only two individuals
<PAGE>
are serving as Trustees at the time such Routine Stockholder Action is to be
voted upon, such vote by the Trustees must be unanimous.
(d) If any calculation of votes under Section 4(b) or 4(c) would
require a fractional vote, the Trustees shall vote the next lower number of
whole shares.
(e) The Trustees shall use all reasonable commercial efforts to
ensure, with respect to the Trust Shares, that all of the Trust Shares are
counted as being present for the purposes of any quorum required for any
stockholder action.
5. Sales of Trust Shares. The Trustees shall have no authority to sell
---------------------
or otherwise dispose of or to pledge, encumber or hypothecate, any of the Trust
Shares. Subject to compliance with applicable securities laws and any
contractual restrictions to which any Trust Beneficiary or the Trust Shares may
be subject, the Trust Beneficiaries shall have the right, in their sole
discretion, to sell or otherwise dispose of or to pledge, encumber or
hypothecate, any of the Trust Shares, provided that any such transfer to a Blum
Affiliate shall be subject to the condition precedent that such Blum Affiliate
agrees in writing to be bound by this Agreement.
6. Dividends and Distributions on the Trust Shares. Upon the declaration
-----------------------------------------------
of any dividends or the payment of any other distribution of the Company with
respect to Trust Shares held for the benefit of the Trust Beneficiaries (other
than pro rata distributions of additional voting shares of the Company, which
shall be deposited into the Trust), the Trustees shall distribute or cause all
such dividends and distributions to be distributed by the Company to the Trust
Beneficiaries. In the event of the dissolution, liquidation or winding up of
the Company during the term of this Agreement in such manner as to entitle the
Trust Beneficiaries to liquidating dividends in respect of the Trust Shares, the
Trustees shall distribute or cause all such liquidating dividends with respect
to the Trust Shares to be distributed by the Company to the Trust Beneficiaries.
7. The Trustees.
------------
(a) Trustees as Stockholder or Affiliate. Any Trustee and any entity
------------------------------------
of which such Trustee may be a trustee, stockholder, director, officer, agent,
partner, member, or employee may be an investor in the Company or any Blum
Affiliate and may have a business relationship with the Company or any Blum
Affiliate provided that the magnitude of such investment or business
relationship does not result in such Trustee being deemed to be a Blum
Affiliate. The determination as to whether a Trustee shall be deemed to be a
Blum Affiliate by virtue of any investments or business relationships shall be
determined in good faith by the other Trustees under this Agreement.
(b) Successor Trustees.
------------------
(i) The Trustees may resign by giving notice of resignation to
the Company and to the Trust Beneficiaries. Any successor Trustees shall enjoy
all the rights, powers, interests, and immunities of the Trustees as originally
constituted, and the title to the Trust Shares of any Trustees who may resign or
be removed or become incapacitated (by death, disability or otherwise) to act
shall, upon such resignation or removal or incapacity, vest in the successor
Trustees.
<PAGE>
(ii) In the event of the removal, resignation, or incapacity to
act of any of the Trustees (a "Trustee Vacancy"), an Outside Director shall be
---------------
appointed by the Board of Directors of the Company to serve as a successor
Trustee. The appointment of such successor Trustee shall be subject to the
approval of the remaining Trustee(s), if any, which approval shall not be
unreasonably withheld.
(iii) In the event that (A) there are not at least two Outside
Directors available and willing to serve as Trustees hereunder, or (B) the
Outside Director appointed by the Board of Directors to fill a Trustee Vacancy
pursuant to Section 7(b)(ii) hereof is not approved by the remaining Trustee(s)
in accordance with such Section 7(b)(ii), then one or more individuals who are
not members of the Board of Directors of the Company may be appointed by the
Board of Directors to serve as a successor Trustee. The appointment of such
successor Trustee shall be subject to the approval of the remaining Trustee(s),
if any, which approval shall not be unreasonably withheld. If, in accordance
with the preceding sentence, the remaining Trustee(s) fail to approve two
successive appointees by the Board of Directors to fill any one Trustee Vacancy,
the majority of the Board of Directors shall appoint the successor Trustee to
fill the Trustee Vacancy, which appointment shall not be subject to the approval
of the remaining Trustee(s).
(c) Notwithstanding any change in the Trustees, the Trust
Certificates may be: (i) voted; and/or (ii) endorsed and transferred, by any
successor Trustees with the same effect as if voted, endorsed and transferred by
the former Trustees. The Trustees are authorized and empowered to cause any
further transfer of said Trust Shares and Trust Certificates to be made which
may be necessary through the occurrence of any change of person acting as
Trustees hereunder.
(d) Relationship of Parties. The Trust created by this Agreement is
-----------------------
not intended to be, and shall not be deemed to be, and shall not be treated as a
general partnership, limited partnership, joint venture, corporation, or joint
stock company or association. The relationship of the Trust Beneficiaries to
the Trustees shall be solely that of stockholder and beneficiary of the Trust
created by this Agreement and their rights shall be limited to those conferred
upon it by this Agreement.
(e) Consultation with Outside Advisors. The Trustees may consult with
----------------------------------
legal counsel, which may be counsel to the Company or any of its affiliates or
any of its or its affiliates' officers, directors or partners.
(f) Liability of Trustees. In voting on all matters which may come
---------------------
before any meeting of stockholders of the Company, the Trustees shall vote the
Trust Shares in the manner prescribed by this Agreement, and it is understood
that the Trustees shall not incur responsibility by reason of any error of
judgment or of law or by any matter or thing done or omitted under this
Agreement, except, with respect to any individual Trustee, for his own
individual gross negligence or willful misconduct. No Trustee shall be liable
in any event for acts or defaults of any other Trustee or for acts or defaults
of any employee, agent, proxy, or attorney-in-fact of any other Trustee. The
Trustees shall always be protected and free from liability in acting upon any
notice, request, consent, instruction, certificate, declaration, telefax,
guarantee, affidavit, or other paper or document or signature reasonably
believed by them to be genuine and to have been signed by the proper party or
parties or by the party or parties purporting to have signed the same.
<PAGE>
(g) Trustees' Indemnity. The Company shall indemnify, defend and hold
-------------------
harmless the Trustees against any and all losses, damages, liabilities,
obligations, claims, demands, judgments, settlements, governmental
investigations, costs and expenses of any nature whatsoever, including the
reasonable fees and expenses of attorneys, accountants and consultants
(collectively, "Damages"), incurred in connection with or arising from the
-------
performance of their duties under this Agreement (except for any Trustee's gross
negligence or willful misconduct). Such indemnification shall be paid as
incurred and on demand, subject to an undertaking by the Trustees (individually
or as a group) to repay if it is ultimately determined that he is not, or they
are not, as the case may be, entitled to such indemnification. In the event any
Trust Beneficiary shall request the Trustees to bring an action on his behalf,
then such Trust Beneficiary shall pay in advance all the expense of prosecuting
such action and shall indemnify, defend and hold harmless the Trustees against
all Damages incurred in connection with such action. The Trustees shall have no
obligation to commence or proceed with such suit unless they are satisfied that
all necessary monies have been paid in advance for this purpose.
8. Restrictions on Transfer of Trust Certificates. The Trust
----------------------------------------------
Certificates shall be transferable only as provided in the Trust Certificates
and this Agreement. Each Trust Beneficiary shall be at liberty to sell, transfer
or otherwise dispose of his Trust Certificates issued hereunder; provided,
however, that any transferee that is a Blum Affiliate shall agree in writing,
prior to the closing of such transaction, to be bound by this Agreement as
though such Blum Affiliate were a signatory to this Agreement. All sales or
transfers shall be recorded in the Certificate Book (as hereinafter defined) and
any proper sale or transfer made of any Trust Certificate shall vest in the
purchaser or transferee all rights of the transferor and shall subject the
purchaser or transferee to the same limitations as those imposed on the
transferor by the terms of the Trust Certificate so transferred, and by this
Agreement. Upon any such transfer, following execution of an agreement to be
bound by this Agreement by a purchaser or transferee and upon surrender to the
Trustees of any Trust Certificate sold or transferred, duly endorsed for
transfer, the Trustees shall deliver a new Trust Certificate or Trust
Certificates to the purchaser or transferee for the beneficial interest in the
number and type of the Trust Shares represented by the Trust Certificate so sold
or transferred. The Trustees shall not be required to recognize any sale or
transfer of a Trust Certificate not made in accordance with the provisions
hereof unless the person or persons claiming such ownership shall have produced
indicia of title satisfactory to the Trustees, and shall have deposited with the
Trustees indemnity satisfactory to them, and shall have executed an agreement to
be bound by this Agreement. As a matter of clarity, this Section shall not
prohibit or otherwise limit a Stockholder's right to sell or transfer Trust
Shares to a third party in accordance with Section 5 of this Agreement.
9. Continuance and Termination of Trust.
------------------------------------
(a) Term and Termination. This Agreement shall become effective as of
--------------------
the date hereof and shall terminate on the earlier to occur of: (i) one hundred
eighty days (180) days after the date the registration statement for the
Company's IPO is withdrawn (in the event that the IPO is not consummated); or
(ii) the tenth (10/th/) anniversary of the closing date of the IPO; provided,
however, that notwithstanding the foregoing, this Agreement shall not terminate
if its continued existence is required by a third party regulatory authority
(e.g., if required as a condition to the continued listing of the Company's (or
any successor's) equity securities on the Nasdaq National Market or other
<PAGE>
principal trading market for such equity securities). Except as otherwise
provided in this Agreement, the Trust created by this Agreement is hereby
expressly declared to be irrevocable.
(b) Consolidation, Exchange, Recapitalization. In the event of a
-----------------------------------------
consolidation, share-for-share exchange, recapitalization or other
reorganization involving the Company, this Agreement shall be effective and
shall remain in force for its full term, substituting, where appropriate, for
the shares issued in such consolidation, exchange, recapitalization or other
reorganization, new Trust Shares and Trust Certificates.
(c) Actions Following Termination.
-----------------------------
(i) As soon as practicable after the termination of this
Agreement, the Trustees shall by formal assignment of the Trust Shares cause the
Company to deliver to the Trust Beneficiaries share certificates or securities
representing the number of Trust Shares (together with any other property
distributed in respect of such Trust Shares and not yet delivered to the
relevant Trust Beneficiary), upon the surrender of such Trust Certificates
properly endorsed.
(ii) If any Trust Beneficiary cannot be located or fails or
refuses to surrender Trust Certificates in exchange for Trust Shares and/or
other property as aforesaid, the Trustees may in their discretion deliver said
Trust Shares and/or other property to the Company for the benefit of the person
or persons entitled thereto. Upon any such delivery the Trustees shall be fully
acquitted and discharged with respect to the delivery of said Trust Shares
and/or other property.
10. Record Date. The Trustees shall use as the record date for the
-----------
determination of any person or entity entitled to receive payment of any
dividend or other distribution, or any allotment of rights, or to exercise
rights in respect of any other lawful action, or to vote on any matter, the
record date so fixed by the Company with respect to the Trust Shares. When a
record date is so fixed, the stockholder of record on that date is entitled to
receive the dividend, distribution, or allotment of rights, or to vote, or to
exercise of the rights, as the case may be, notwithstanding any transfer of the
Trust Certificates after the record date. The record date for determining Trust
Beneficiaries for any purpose other than as set forth in this Section shall be
at the close of business on the day on which the Trustees adopted the resolution
relating thereto, or the sixtieth (60/th/) day prior to the date of such other
action, whichever is later.
11. Inspection of Records. The Trustees shall keep at 21 Brookline, Aliso
---------------------
Viejo, California 92656, or such other address at which the Company's principal
executive office may be located (the "Executive Office"), correct books of
----------------
account of all business and transactions conducted hereunder, and a book to be
known as the "Certificate Book" containing the names of all persons who are
----------------
subject to this Agreement, showing their places of residence, the number and
type of shares represented by the Trust Certificates held by them, and the date
they became the owners thereof. This Agreement shall be open for inspection by
any Trust Beneficiary, any stockholder of the Company, or the agent of either,
upon the same terms as the record of stockholders of the Company is open to
inspection by stockholders.
12. Lost or Stolen Trust Certificates. If a Trust Certificate shall be
---------------------------------
lost, stolen, mutilated, or destroyed, the Trustees, in their discretion, may
issue a duplicate of such Trust Certificate upon
<PAGE>
receipt of evidence of such fact satisfactory to a majority of the Trustees, and
upon receipt of an indemnity satisfactory to a majority of the Trustees, and
upon receipt of the existing Trust Certificate, if mutilated.
13. Further Agreements and Covenants.
---------------------------------
(a) Blum agrees that, in connection with the execution of this
Agreement, he will: (i) resign from the Board of Directors of the Company; (ii)
terminate his employment relationship with the Company; and (iii) agree not to
serve as an employee, officer or director of the Company for so long as this
Agreement remains in effect.
(b) Blum agrees that, for so long as this Agreement remains in
effect, he will not: (i) participate in the determination of, or application of,
any revenue recognition policies of the Company; (ii) contact any personnel in
the accounting or finance staff of the Company (other than the Chief Financial
Officer); (iii) contact any personnel in the operations staff of the Company
(other than the Chief Executive Officer); (iv) become involved with, or assume
any responsibility for, advertising sales or product sales of the Company; (v)
have any contact with outside financial or equity analysts, including
participation on analyst calls or other conference calls or meetings with
outside financial or equity analysts regarding the Company; (vi) execute any
contracts on behalf of the Company; (vii) commit Company funds or resources in
any manner or area; (viii) have direct supervision of any officer or employee
of the Company (other than his secretary); (ix) maintain an office in the
Company's main building; or (x) receive any salary or wage from the Company.
14. Miscellaneous.
-------------
(a) Filing of Agreement. The Trustees shall cause to be filed a copy
-------------------
of this Agreement, and every amendment or supplement hereto, in the registered
office of the Company in the State of Delaware and at the Executive Office,
which Agreement shall be open to the inspection by any Trust Beneficiary or any
stockholder of the Company during business hours of the Company.
(b) Successors and Assigns. This Agreement shall bind the Trustees,
----------------------
the Company and the Trust Beneficiaries hereunder and each and all of the heirs,
executors, administrators, personal representatives, successors, assigns and
permitted transferees thereof, and shall inure to the benefit of the Trustees,
the Company and the Trust Beneficiaries and their respective heirs, executors,
administrators, personal representatives, successors, assigns and permitted
transferees.
(c) Notices. Unless otherwise expressly provided herein, all notices,
-------
requests, demands, instructions, documents and other communications to be given
hereunder by any party to another shall be in writing, shall be sent to the
address/fax number set forth below (provided that any party may at any time
change its address for notice or other such information by giving written notice
thereof in accordance with this Section), and shall be deemed to be duly given
upon the earliest of: (i) hand delivery; (ii) the first business day after
sending by reputable overnight delivery service for next-day delivery; (iii) the
third business day after sending by first class United States mail, postage
prepaid; (iv) the time of successful facsimile transmission (or in the event the
time of receipt of the fax in the city where the fax is received is not during
regular business hours on a
<PAGE>
business day, then at the customary hour for the opening of business on the next
business day); or (v) the date actually received by the other party:
If to Stockholders: To the address of the Stockholder appearing
on the records of the Trustees.
If to Trustees: c/o Donald Kendall
700 Anderson Hill
Purchase, New York 10577
Tel: (914) 253-2000
Fax: (914) 253-3003
If to the Company: BUY.COM Inc.
21 Brookline
Aliso Viejo, CA 92656
Attn: Chief Executive Officer
Tel: (949) 425-5220
Fax: (949) 425-5320
If to Blum: Scott A. Blum
3 Ritz Cove
Monarch Beach, CA 92629
Tel: (949) 443-1030
Fax:
(d) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one instrument.
(e) Enforceability. If in any judicial proceedings, a court shall
--------------
refuse to enforce any of the provisions of this Agreement, then such
unenforceable provision shall be deemed modified or limited so as to effectuate,
to the maximum extent possible, the parties' expressed intent, and, if no such
modification or limitation could render it enforceable, it shall be eliminated
from this Agreement, and, in any event, the remaining provisions of this
Agreement shall remain in full force and effect. Each of the parties hereto
shall take any and all actions necessary for the enforceability of this
Agreement under Delaware law, including without limitation any necessary filings
or actions required by Section 218 of the Delaware General Corporation Law.
(f) Entire Agreement. This Agreement is the entire agreement of the
----------------
parties with respect to the subject matter hereof, and supersedes all prior and
contemporaneous negotiations, understandings, arrangements and agreements. Blum
and the Stockholders each represent and warrant that this Agreement is fully
integrated and not in need of parol evidence in order to reflect the intention
of the parties. Moreover, Blum and each of the Stockholders acknowledge: (i)
that he and it intend the literal words of the Agreement to govern and for all
prior and contemporaneous negotiations, drafts and other extrinsic
communications to have no significance or evidentiary effect;
<PAGE>
and (ii) that this Agreement has been fully negotiated by the parties and that
accordingly it shall be construed "evenly" and not for or against any party. By
signing this Agreement, Blum and each of the Stockholders further acknowledge
that he and it have consulted with legal counsel about the effect of this
Section and understand its effect.
(g) Compensation of Trustees; Payment of Costs. The Trustees shall
------------------------------------------
not be entitled to any compensation for their services as Trustees. The Trustees
agree that the Trust Beneficiaries shall have no obligation to pay to the
Trustees any amount whatsoever as fees or in respect to the Trustees' costs or
expenses related to this Agreement, except as provided in Sections 7(f) and
14(k). The Trustees will look solely to the Company for reimbursement of any
amounts incurred or expended by them in connection with their duties under this
Agreement, except as provided in Sections 7(f) and 14(k), and expressly waive
any rights which they might otherwise have to charge the trust corpus for any
costs, fees or expenses related to this Agreement, or to withhold any amounts
from or set off any amounts against the shares received by them in trust or any
distributions thereon.
(h) Amendment and Modification. The Company and its stockholders are
--------------------------
expressly made third party beneficiaries of this Agreement and, accordingly, to
the fullest extent permitted by law, this Agreement may not be amended without:
(i) the prior written consent of the Company, acting by unanimous vote of its
Board of Directors of the Company; (ii) the approval of the Company's
stockholders, acting by affirmative vote of two-thirds (2/3) of the total voting
power of the capital stock of the Company generally entitled to vote on matters
submitted to a stockholder vote; (iii) the written approval of the independent
certified accounting firm that is at the time engaged as the Company's primary
outside auditors; and (iv) with respect to any proposed amendment to the
definition of "Trust Shares" in Section 1 hereof, or to Section 3(d), Section 5,
Section 6 or Section 8 hereof, only, a majority in interest of the Stockholders;
provided, however, that the parties hereto may enter into any amendment of this
Agreement, without regard to this Section, and each Trust Beneficiary hereby
agrees to enter into such amendment, if such amendment is in the opinion of
legal counsel to the Company necessary or appropriate to maintain compliance of
this Agreement with the laws of the State of Delaware. Notwithstanding the
foregoing, the substitution, addition or subtraction of one or more Trustees
hereunder, the substitution, addition or subtraction of one or more Trust
Beneficiaries hereunder, or the transfer or issuance of additional Trust Shares
hereunder after the original date of execution of this Agreement shall not be
considered an amendment or modification requiring the prior approval of the
Company's Board of Directors, stockholders and primary outside auditors.
(i) Governing Law. This Agreement shall be governed by the internal
-------------
laws of the State of Delaware without regard to its conflict of laws principles.
(j) Section 218. This Agreement is intended to create a voting trust
-----------
pursuant to and subject to Section 218 of the Delaware General Corporation Law.
If for any reason such voting trust is determined to be invalid or
unenforceable, this Agreement and the relationship of the parties hereunder
shall be deemed to be and shall be reconstituted as a voting agreement under
Section 218(c) of the Delaware General Corporation Law, and all provisions of
this Agreement shall apply to the maximum extent possible to effectuate the
intention of the parties that the substantive provisions hereof shall govern the
voting of Trust Shares by or for the parties hereto.
<PAGE>
(k) Equitable Remedies. Each of the parties hereby acknowledges and
------------------
agrees that the legal remedies available, in the event the covenants and
agreements made in this Agreement are violated, would be inadequate and that any
party shall be entitled, without posting any bond or other security, to
temporary, preliminary and permanent injunctive relief, specific performance and
other equitable remedies in the event of such a violation, in addition to any
other remedies which such party may have at law or in equity.
(l) COUNSEL. BLUM AND EACH OF THE STOCKHOLDERS HAVE HAD THE
-------
OPPORTUNITY TO CONSULT WITH HIS AND ITS OWN LEGAL ADVISORS. BLUM AND THE
STOCKHOLDERS ACKNOWLEDGE THAT THE LAW FIRM OF BROBECK, PHLEGER & HARRISON LLP
REPRESENTS THE COMPANY AND NOT BLUM OR THE STOCKHOLDERS.
(m) Restatement of Prior Voting Trust Agreement. Each of the parties
-------------------------------------------
hereto agrees that this Agreement supersedes and replaces that certain Voting
Trust Agreement by and among Blum, Scott A. Blum Separate Property Trust, the
Company and the Trustees dated June 7, 1999.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized representatives as of
the day and year first above written.
"TRUSTEES"
By: __________________________________
Name: ________________________________
By: __________________________________
Name: ________________________________
By: __________________________________
Name: ________________________________
"STOCKHOLDERS"
Scott A. Blum Separate Property Trust
By: __________________________________
Title: _______________________________
Will Scott Blum Trust
By: __________________________________
Title: _______________________________
<PAGE>
Emma Rose Blum Trust
By: __________________________________
Title: _______________________________
Scott Blum GRAT
By: __________________________________
Title: _______________________________
"BLUM"
______________________________________
Scott A. Blum
AGREED TO:
"COMPANY"
BUY.COM INC.
By: ______________________________
Title: ___________________________
<PAGE>
Exhibit A
---------
List of Trusts Controlled by Scott A. Blum Holding Shares of BUY.COM INC.
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Name Shares
---- ------
- ---------------------------------------------------------------------------------------------------
<S> <C>
Scott A. Blum Separate Property Trust 81,606,765
- ---------------------------------------------------------------------------------------------------
Will Scott Blum Trust 4,182,930
- ---------------------------------------------------------------------------------------------------
Emma Rose Blum Trust 4,182,930
- ---------------------------------------------------------------------------------------------------
Scott Blum GRAT 9,399,840
----------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total Shares: 99,372,465
------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit B
---------
List of Trustees
----------------
Donald Kendall
James Roszak
Wayne Thorson
<PAGE>
Exhibit C
---------
List of Enities Holding Shares of BUY.COM INC. Excluded from the Voting Trust
-----------------------------------------------------------------------------
ePartners Capital, Ltd.
Harpeth Holdings
Ingram Capital, Inc.
Ingram Entertainment Inc.
SOFTBANK America, Inc.
SOFTBANK Capital Partners L.P.
SOFTBANK Capital Partners Advisors Fund L.P
SOFTBANK Contents Fund
SOFTBANK Technology Advisors Fund L.P.
SOFTBANK Technology Ventures IV, L.P.
SOFTBANK Technology Ventures V, L.P.
SOFTBANK Technology Ventures Advisors Fund V
SOFTBANK Technology Ventures Entrepreneurs Fund V
SOFTBANK Ventures, Inc.
United Air Lines, Inc.
Vivendi, S.A.
<PAGE>
Exhibit D
---------
List of Blum Family Members Holding Shares of Buy.Com Inc. Excluded from the
----------------------------------------------------------------------------
Voting Trust
------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name Shares Options
---- ------ -------
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
William Blum 45,000 -
- ------------------------------------------------------------------------------------------------------
Perry Klebahn - 750,000
- ------------------------------------------------------------------------------------------------------
Annie Condon - 150,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit E
---------
BUY.COM INC.
A Delaware Corporation
Voting Trust Certificate
Certificate
No. ________ [______] shares of Common Stock
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER ENCUMBRANCE OF
THIS VOTING TRUST CERTIFICATE OR THE COMMON STOCK REFERRED TO HEREIN IS SUBJECT
TO THE RESTRICTIONS, TERMS AND CONDITIONS SET FORTH IN THE VOTING TRUST
AGREEMENT DESCRIBED IN THIS CERTIFICATE AND PURSUANT TO WHICH THIS CERTIFICATE
IS ISSUED. THIS CERTIFICATE AND SUCH COMMON STOCK ARE SUBJECT TO AND MAY BE
TRANSFERRED OR ENCUMBERED ONLY IN ACCORDANCE WITH SUCH AGREEMENT, A DUPLICATE OF
WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION.
This certifies that [____________] (or its predecessor in interest) has
deposited for transfer in trust to the Trustees of the BUY.COM Inc. Voting Trust
(the "Trust") [____________] shares (the "Trust Shares") of the Common Stock,
----- ------------
par value $___________ per share, of BUY.COM Inc., a Delaware corporation (the
"Company"), under a Voting Trust Agreement, dated as of September __, 1999 (the
-------
"Voting Trust Agreement"), by and among Scott A. Blum, The Scott A. Blum
----------------------
Separate Property Trust, the Company and the persons listed on Exhibit A to the
Voting Trust Agreement, as Trustees (the "Trustees," which term includes any
successors). This certificate and the interest represented hereby may be
transferred only if permitted under the terms of the Voting Trust Agreement and
is transferable only on the books of the Trustees upon the execution of the
Voting Trust Agreement by such transferee and the presentation and surrender of
this certificate duly endorsed for transfer. The holder of this certificate
takes the same subject to all the terms and conditions of the Voting Trust
Agreement, is entitled to the rights and benefits thereof and is subject to the
obligations thereof. A copy of the Voting Trust Agreement may be obtained from
the undersigned Trustees.
Prior to the termination of the Voting Trust Agreement, the Trustees
shall possess and be entitled to exercise, in the manner and to the extent
provided in the Voting Trust Agreement, all of the rights of every kind of the
holder of this certificate, including the right to vote and to take part in, or
to consent to, any corporate or stockholders' action, it being expressly
stipulated that no right to vote, or take part in, or to consent to, any
corporate or stockholders' action, shall pass to the registered holder by, or
under, this certificate.
<PAGE>
This certificate is not transferable except as permitted by the Voting
Trust Agreement, and is not valid unless signed by the Trustees. The holder
hereof, by accepting this certificate, manifests its consent that the
undersigned Trustees may treat the registered holder hereof as the true owner of
this certificate for all purposes.
IN WITNESS WHEREOF, a majority of the Trustees has caused this certificate
to be signed this ___ day of ________ 1999.
TRUSTEES OF THE BUY.COM INC.,
VOTING TRUST
By:______________________________________
Title:___________________________________
By:______________________________________
Title:___________________________________
By:______________________________________
Title:___________________________________
<PAGE>
EXHIBIT 10.3
INGRAM ENTERTAINMENT INC.
Two Ingram Blvd., La Vergne, TN 37089 Thomas H. Lunn
(615) 287-4144 * Fax (615) 287-4985 Vice Chairman
December 3, 1998
SPEEDSERVE.COM, INC.
Two Ingram Blvd.
La Vergne, TN 37089
Re: Supply Agreement
Ladies and Gentlemen:
The following is the supply agreement (the "Agreement") between SPEEDSERVE.COM,
INC. ("SpeedServe") and Ingram Entertainment Inc. ("Ingram"). It is intended by
Ingram and SpeedServe that the pricing and related terms and conditions
(including freight and advertising) between them for the products covered by
this Agreement be on a [***] basis; i.e. that SpeedServe receive from Ingram the
--- ---
[***] made available by Ingram to other retailer customers, which order product
---
[***], i.e. use of EDI, order size per shipment, quantity, return privileges,
--- ---
etc. Thus, the prices and related terms and conditions set out below will be
reviewed and modified to the extent necessary for SpeedServe to obtain such
[***] status.
---
1. Rental Pricing:
SpeedServe will receive Ingram gross cost plus [***] pricing on all rental
---
videocassette product (suggested retail price of [***] and higher).
---
SpeedServe will receive multi-pack pricing and discounts on single
purchases of multi-pack titles.
2. Sell-through Pricing:
SpeedServe will receive Ingram gross cost plus [***] pricing on catalog
---
sell-through videocassette product (i.e. product with suggested retail
----
price of [***] and lower purchased 30 days after its most recent street
---
date). Pricing on feature sell-through videocassette titles (i.e. titles
---
released or re-released to the home video sell-through market with studio
national goals of [***] million or more units) will be Ingram gross cost
---
plus [***].
---
3. Returns:
SpeedServe will receive a [***] return allowance on all unopened
---
videocassette product in mint, resalable condition, provided that, for each
title, Ingram and SpeedServe mutually agree on purchase quantities eligible
for the [***] return allowance (quantities purchased in excess of the
---
mutually agreed amount will be subject to a return allowance, if any, as
mutually agreed on a case-by-case basis). SpeedServe will also receive
return allowances
________________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
SPEEDSERVE.COM INC.
Page 2
December 3, 1998
for damaged product. Damaged returns are limited to [***], on a title-by-
---
title basis, of net units purchased, plus passthrough of any additional
damaged/defective return privileges granted by the studio for any
particular title. Returns of product, damaged or undamaged, must be
received by Ingram within [***] days of order shipment date. For all
---
returned product, credits will be applied to SpeedServe's account within
[***] business days of receipt by Ingram.
---
4. Video Games:
SpeedServe will receive Ingram gross cost plus [***] pricing on video game
---
rental and sell-through titles. SpeedServe will receive a [***] title-by-
---
title return allowance on all unopened video game sell-through product in
mint, resalable condition, provided Ingram and SpeedServe mutually agree on
purchase quantities eligible for returns. Returns must be received by
Ingram within [***] days after order shipment date.
---
5. DVD:
SpeedServe will receive Ingram gross cost plus [***] pricing on DVD
---
purchases and a [***] return allowance on all unopened DVD product in mint,
---
resalable condition. Returns must be received by Ingram within [***] days
---
after order shipment date.
6. Audio Books:
SpeedServe will receive a [***] discount off suggested retail price on
---
audio book rental product purchases. SpeedServe will receive a [***] return
---
allowance on all unopened product in mint, resalable condition. Returns
must be received by Ingram within [***] days after order shipment date.
---
7. Previously Viewed Video Product:
SpeedServe will receive Ingram gross cost plus [***] pricing on previously
---
viewed video product purchases. SpeedServe will be permitted to return all
previously viewed video product that is refused by customers or is returned
by customers for any reason. Returns must be received by Ingram within
[***] days after order shipment date.
---
8. Multimedia:
SpeedServe will receive Ingram gross cost plus [***] pricing on CD ROM
---
product and net pricing on 3DO and Jaguar product. SpeedServe will receive
a [***] return allowance on all unopened product in mint, resalable
---
condition. Returns must be received by Ingram within [***] days after order
---
shipment date.
9. Accessories:
SpeedServe will receive Ingram gross cost plus [***] pricing on all
---
accessories. SpeedServe will receive a [***] return allowance on all
---
unopened product in mint,
____________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
<PAGE>
SPEEDSERVE.COM INC.
Page 3
December 3, 1998
resalable condition. Returns must be received by Ingram within [***] days
---
after order shipment date.
10. Special Handling:
For special handling (e.g. inserts), SpeedServe and Ingram shall agree in
---
advance on the pricing to be offered to SpeedServe, which will be on a
"cost plus" basis.
11. Terms:
Payment terms will be net [***] days from invoice date for all product
---
purchases.
SpeedServe understands that its credit line with Ingram will be as
established or modified from time-to-time based upon Ingram's credit review
and credit policies. Any amounts not paid when due will be subject to a
late charge of [***] per month ([***] per annum) on the overdue balance
--- ---
(or, if less, the maximum amount permitted by applicable law). Payments
received from SpeedServe will be credited first to unpaid interest as set
out above.
12. Advertising:
Ingram earns co-op advertising dollars on purchases of certain product from
studios. Each title released has a different co-op program, with current
customary programs providing for [***]. Accrual is based on [***]. Whatever
--- ---
Ingram earns on purchases made by SpeedServe will be [***]. These amounts
---
will be [***] within 30 days after proof of performance (tear sheets,
---
printed samples, audited radio scripts, applicable Internet advertising
data, etc.) has been rendered and credit has been issued by the studio.
SpeedServe acknowledges its understanding that the studios will only [***].
---
Failure to comply with studio guidelines may result in reduction or
elimination of eligibility for co-op accruals.
Any MDF funding will be negotiated by SpeedServe and Ingram and will be
authorized by the studio for specific purposes. This funding will be
credited to SpeedServe after proof of performance has been rendered and
credit has been issued by the studio according to the studio's guidelines.
Failure to comply with studio guidelines may result in reduction or
elimination of eligibility for MDF accruals. Ingram agrees to assist
SpeedServe, during the three year period following the effective date of
this Agreement, on a reasonable efforts basis, in the sale of advertising
spaces on the BuyVideos.com (formerly VideoServe.com) web site (the
"Advertising Spaces"). Ingram's assistance shall include, but not be
limited to, introductions to marketing personnel within the various studios
and help in devising strategies for solicitation of the Advertising Spaces.
In the event that the sum of (a) advertising revenues generated from the
sale of the Advertising Spaces, (b) [***] for which SpeedServe would
---
qualify if it complied with studio guidelines (other than pricing
guidelines), and (c) [***] for which SpeedServe would qualify if it
---
complied with studio
___________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
<PAGE>
SPEEDSERVE.COM IN
Page 4
December 3, 1998
guidelines (other than pricing guidelines), in any month is less than [***]
---
of the gross cost to Ingram of its products sold to SpeedServe, [***]
---
Ingram of products returned by SpeedServe to Ingram in that month, Ingram
shall pay to SpeedServe an amount equal to [***]. The parties acknowledge
---
that the studios historically have not placed any world-wide web/Internet
advertising.
If Ingram does the design and printing on any advertising collateral
materials, SpeedServe will be liable to Ingram for Ingram's charges for
those services, currently film charges at [***] per plate and a standard
---
agency management mark-up on printing of [***].
---
13. Freight:
All freight will be paid by SpeedServe, or, if paid by Ingram, reimbursed
by SpeedServe at Ingram's cost (including discounts).
14. Term of Agreement:
The term of this Agreement will commence on the date hereof and terminate
on the day preceding the third anniversary of that date; provided, however,
-------- -------
that Ingram may terminate this Agreement immediately in the event
SpeedServe becomes more than 30 days past due or otherwise violates its
credit terms with Ingram.
15. Assignment:
SpeedServe may not assign this Agreement without the express written
consent of Ingram; provided, however, either party may assign this
-------- -------
Agreement without such consent to any person or entity that acquires its
business or substantially all of its assets, by merger, stock sale, or
other means.
Ingram Entertainment Inc. SPEEDSERVE.COM, INC.
By:___________________________ By:_________________________
Thomas H. Lunn Print Name:_________________
Vice Chairman Title:______________________
__________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
August 23, 1999
Mr. Vern Fross
Senior Vice President, Sales and Marketing
Ingram Entertainment INC.
Two Ingram Blvd.
La Vergne, TN 37089
Re: Amendment to Supply Agreement
Dear Vern:
This will amend the supply agreement between Ingram Entertainment Inc. and
SPEEDSERVE.COM, INC. dated December 3, 1998 (the "Supply Agreement"). BUY.COM,
INC. is the successor by merger to SPEEDSERVE.COM, INC., and all reference to
SPEEDSERVE.COM, INC., SpeedServe, or BUY.COM in the Supply Agreement will be
treated as references to BUY.COM, INC. When signed on behalf of Ingram
Entertainment Inc., Section 12 of the Supply Agreement will be replaced with the
following:
12. Advertising
Ingram agrees to assist BUY.COM through December 2, 2001 on a best
efforts basis, in the sale of advertising spaces on the BuyVideos and
BuyGames web sites (the "Advertising Spaces"). Ingram's assistance shall
include, but not be limited to, introductions to marketing personnel within
the various studios, help in devising strategies for solicitation of the
Advertising Spaces, participation in two annual BUY.COM vendor events, and
BUY.COM's participation as a featured retailer at Ingram's annual video
sales conference and key game retailer meetings. The term "Advertising
Sales Revenues," for any month, refers to the advertising revenues accrued
during that month by BUY.COM from the sale of the Advertising Spaces to
vendors (regardless of whether or not Ingram assisted with those sales) and
from any co-op, MDF, or other advertising amounts negotiated directly by
BUY.COM with any video or game vendor and accrued during that month.
Ingram earns co-op advertising dollars on purchases of certain
products from studios. Each title released has a different co-op program,
with current customary programs providing for [***]. Accrual of co-op
---
advertising dollars by Ingram is based on the price Ingram pays to the
studio for the product purchased, rather than on the price paid for the
products by the retailer to Ingram. Ingram will pass-through to BUY.COM
funds outlined below for use on advertising video and game products for
sale on the BUY.COM web sites. From [***], on a monthly basis, Ingram will
---
directly pass-through funds to BUY.COM in an amount equal to [***] of (a)
---
[***], on a monthly basis, Ingram will pass-through to BUY.COM an amount
----
equal to [***], less any Advertising Sales Revenues in that month, subject
---
to the right of BUY.COM to elect in writing at any time
___________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
Ingram Entertainment Inc.
Amendment to Supply Agreement
August 23, 1999
Page 2
- --------------------------------------------------------------------------------
to receive instead an amount equal to [***] of Ingram Net Product Cost in
---
any month. From [***], on a monthly basis, Ingram will pass-through to
---
BUY.COM an amount equal to [***].
---
BUY.COM will spend the amounts received from Ingram pursuant to the
preceding paragraph on advertising video and game products on the BUY.COM
web sites and/or other advertising programs involving video and game
products. Product selection and BUY.COM pricing will be determined by
BUY.COM and will not affect amounts paid by Ingram pursuant to the
preceding paragraph. By the 5th of each month, Ingram will provide BUY.COM
with a report showing the previous month's sales by Ingram to BUY.COM and a
breakdown by product category of accrued pass-through funds. BUY.COM will
bill Ingram by the 30th of each month for the BUY.COM advertising during
that preceding month. Included in the BUY.COM billing package will be
proof of performance such as screen shots and a detailed breakdown of
Advertising Sales Revenues in that month. All billing will be based on
BUY.COM's then current rate card. Amounts owed to BUY.COM by Ingram shall
be credited via credit memo against any amount owed to Ingram by BUY.COM
for products purchased by BUY.COM. These amounts will be credited to
BUY.COM within 30 days of the billing date. Amounts owed by BUY.COM to
Ingram for the purchase of products pursuant to this agreement shall be due
and payable irrespective of Ingram's payment of pass-through funds to
BUY.COM. Pass-through funds owed by Ingram to BUY.COM pursuant to this
agreement shall be due and payable irrespective of BUY.COM's payment for
product purchased under this agreement. Payments made pursuant to this
paragraph are considered by the parties to be material to this agreement.
Breach by a party of the payment terms of this paragraph shall entitle the
non-breaching party to terminate this agreement after providing the
breaching party with a 15 day notice to cure the breach.
From time to time, BUY.COM may receive marketing funds directly from
studios and other vendors. BUY.COM's receipt of such funds shall [***] by
---
Ingram to BUY.COM pursuant to this agreement. In addition, any MDF and/or
co-op funding negotiated by BUY.COM with any vendor [***] by Ingram to
---
BUY.COM pursuant to this agreement with the exception of the period of time
from [***].
---
A new Section 16 shall be added to the agreement as shall read as follows:
16. Fulfillment Services
BUY.COM will adopt the [***] based order delivery format to send
---
orders to Ingram Entertainment. Once this [***] format is operational (no
---
later than November 1, 1999, which date is referred to as the [***])
---
BUY.COM will send orders in continuous
____________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
Ingram Entertainment Inc.
Amendment to Supply Agreement
August 23, 1999
Page 3
- --------------------------------------------------------------------------------
serial transmissions and Ingram will guarantee a minimum fulfillment
service level for both priority and standard orders, as set out below.
From and after the [***], priority orders (orders shipped for
---
overnight or 2nd day airfreight delivery) received by Ingram on any
business day by [***] central time will be shipped on the same day. Orders
---
received after [***] central time will be shipped the following business
---
day.
From and after the [***], standard orders (all other orders) received
---
on any business day by [***] central time will be shipped on the same day.
---
Orders received after [***] central time will be shipped the following
---
business day.
Orders not sent in a continuous serial transmission will be filled
within [***] hours of receipt.
---
Each [***], Ingram will furnish a report to BUY.COM electronically
---
indicating orders shipped, orders rejected due to incomplete information,
and orders rejected due to unavailable product. In instances where Ingram
fails to make the service level outlined above, Ingram will pay [***] for
---
those orders.
Ingram acknowledges and consents to the assignment by SPEEDSERVE.COM INC. of its
rights and obligations under the Supply Agreement to BUY.COM INC. BUY.COM INC.,
by its signature below, agrees to be bound by all the terms and conditions of
the Supply Agreement as assigned. Except as amended by this letter agreement,
the Supply Agreement will remain in full force and effect between our companies.
Sincerely,
/s/ Greg Hawkins
Greg Hawkins
Chief Executive Officer
Accepted and Agreed this
24th day of August, 1999.
Ingram Entertainment Inc.
By: /s/ Vern Fross
--------------
______________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
Ingram Entertainment Inc.
Amendment to Supply Agreement
August 23, 1999
Page 4
- --------------------------------------------------------------------------------
Print Name: Vern Fross
----------
Title: Sr. VP. Sales & Mkt.
--------------------
Speedserve.Com Inc.
By: /s/ Murray Williams
-------------------
Print Name: Murray Williams
---------------
Title: CFO
---
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT 10.4
ORDER FULFILLMENT AGREEMENT
This Order Fulfillment Agreement ("Agreement") is entered into effective as of
the 1st day of February 1999, by and between Buy.com, Inc. ("Retailer") and
i.FILL, a division of Valley Media, Inc. ("Valley").
BACKGROUND
A. Valley is a distributor of pre-recorded music products ("Product")
B. Valley has created databases known as "audiofile" and audiotrax" containing
information regarding Product.
C. i.FILL provides to various retailers "direct-to-consumer" order fulfillment
services, pursuant to which i.FILL picks, packs and ships Product to the
retailer's customers.
D. Retailer intends to operate on the World Wide Web an "on-line retail store"
(the "Site") through which it intends to sell Product.
AGREEMENT
Subject to the terms and conditions set forth below, the parties agree as
follows:
1. BASIC AGREEMENT. Retailer and i.FILL agree to develop a computer and
customer service interface for the purposes of conducting small order
Product transactions via an on-line music store and other direct response
marketing efforts. Retailer will build and maintain a web site. Retailer
will also conduct all marketing and merchandising efforts, collect all
orders and send such orders to i.FILL via EDI. i.FILL will be responsible
for picking, packing and shipping the orders directly to Retailer's
customers.
2. EXCLUSIVITY. i.FILL will be the exclusive supplier of Product and related
Product order fulfillment services for Retailer.
3. TECHNICAL ASSISTANCE. i.FILL shall provide technical assistance to Retailer
for the testing of their EDI transmission of orders to Valley's Bulletin
Board System or FTP server.
4. AUDIOFILE DATABASE. i.FILL will license the audiofile License Agreement
attached hereto as Exhibit A for an annual license fee of [***]. The fee for
---
the first year of the initial term of this Agreement is due and payable on
the date of this Agreement. The fees for the subsequent years of the initial
term of this Agreement are due and payable upon the anniversary dates of
this Agreement.
5. AUDIOTRAX DATABASE. i.FILL will license the audiotrax database to Retailer
under terms and conditions set forth in the audiotrax License Agreement
attached hereto as Exhibit B for an annual license fee of [***]. The fee for
---
the first year
________________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
of the initial term of this Agreement is due and payable on the date of
this Agreement. The fees for the subsequent years of the initial term of
this Agreement are due and payable upon the anniversary dates of this
Agreement.
6. [***]. i.FILL will provide [***] to Retailer which includes [***].
--- --- ---
Retailer agrees to utilize Valley as its exclusive agency for procurement
of [***]. i.FILL will credit Retailer [***] procured less [***]. Should
--- --- ---
Retailer meet its minimum annual net Product sales goal ("Volume Goal") for
any given year as described in Section 7 herein and has adhered to and
obeyed all [***], i.FILL will guarantee the procurement of [***] to be
--- ---
[***] of Retailer's annual net Product sales for that year. If, in any year
---
as defined in Section 7, Retailer has met its Volume Goal and adhered to
[***], but i.FILL has not yet procured [***] of Retailer's annual net
--- ---
Product sales in [***], i.FILL will credit Retailer with the difference
---
between [***] received and [***] of Retailer's annual net Product sales.
--- ---
If, in any given year, Retailer dose not meet its Volume Goal or does not
adhere to all [***], i.FILL will guarantee only the [***] that have been
--- ---
procured to date for that year. [***] shall be paid on a quarterly basis.
---
7. PRODUCT PRICING. Except as otherwise set forth in this Agreement, for the
term of this Agreement, i.FILL will sell Product to Retailer [***], as
---
described in [***] attached hereto as Exhibit C, provided, however, that
---
Retailer meets the minimum annual Volume Goals during the term of the
agreement as set forth below:
Time Period Annual Net Product Sales Volume Goal
----------- ------------------------------------
[***] [***]
--- ---
[***] [***]
--- ---
If at the end of any given year defined above, Retailer has not met the
minimum Volume Goal, Retailer will be debited the equivalent of [***]
---
percent ([***]) of its gross Product sales of that year.
---
7.1 Average Cost. For purposes of this Agreement, "Average Cost" means the
------------
average price paid by Valley for each Product by Stock Keeping Unit
("SKU"). Average Cost is calculated as follows: as Product is
purchased by Valley, the costing system recalculates, at the time of
receipt processing, the average price for each SKU in Valley's
inventory. This costing system incorporates full case pack purchases
(i.e., "Box Lots") as well as purchases in less than Box Lot
quantities (i.e., "Loose Piece" purchases), each by SKU. The Average
Cost calculation includes Box Lot incentives, new release discounts,
ongoing and periodic catalog discounts, and one-time discounts. The
Average Cost calculation does not include cash discounts for timely
payment by Valley, return incentives, advertising incentives or volume
rebates. In addition, specially negotiated prices on purchases from
secondary, nontraditional sources (e.g., inventory purchased in
connection with corporate acquisitions, outsourcing contract, and
liquidation), shall not be included in the Average Cost calculation.
__________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Buy.com ___
i.FILL ____
2
<PAGE>
7.2 [***]. The Cost Plus Pricing for CD singles and cassette singles, (as
---
described in the audiofile documentation provided to Retailer from
time to time and referred to in section 16.3 below) will be [***]. A
---
copy of the current audiofile user documentation is attached hereto as
Exhibit D.
7.3 [***]. Retailer acknowledges that the price charged by i.FILL to its
---
customers for Product sold to such customers ("Product Pricing")
reflects the cost of Product to i.FILL, as well as the customer's
order volume, payment terms, fulfillment costs, exclusivity
requirements, the term of agreement with the customer, product mix
purchased by the customer, and the service standards offered to the
customer.
7.3.1 The Product Pricing offered to Retailer by i.FILL shall be
[***], meaning that the Product Pricing offered to Retailer
---
shall be [***] to [***] when taking into account all the
--- ---
factors set forth above, provided that [***]. The term [***]
--- ---
refers to i.FILL's direct-to-consumer customers who receive
Cost Plus Pricing.
7.3.2 In the event that i.FILL or Valley offers [***] to any other
---
similarly situated direct-to-consumer customer, Retailer shall
immediately be entitled to [***] provided that Retailer also
---
agrees to accept any other terms and conditions imposed upon
[***] including, without limitation, sales volume requirements,
---
payment terms, fulfillment fees, term of the agreement, product
categories purchased, and level of service offered [***].
---
8. CUSTOM INVOICE. i.FILL will create a custom invoice with Retailer's logo,
product return and customer service information printed on same. The usual
[***] one-time charge will be waived by i.FILL.
---
9. ORDER PLACEMENT. Retailer will collect orders and send such orders to i.FILL
via EDI.
9.1 Pre-orders. Retailer shall collect pre-orders until four days prior to
----------
the date that a new release title is first to be made available to
consumers (the "street date"), at which point such pre-orders will be
forwarded in a separate batch to i.FILL on the date and time of day
required by i.FILL. i.FILL shall ship all pre-orders no later than
street date minus one day, provided i.FILL has received the new release
title(s) from the label/distributor of such new release(s) in time for
processing. If a street date is delayed, Retailer will be responsible
for holding the pre-orders until four (4) days before the new street
date.
9.2 Back Orders. i.FILL shall ship the in-stock items of an order as set
-----------
forth in this Agreement and, except as set forth in this section, will
cancel the out of
____________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Buy.com ___
i.FILL ____
3
<PAGE>
stock items. Retailer may elect to have i.FILL hold an order that has
one or more items out of stock until it is completely fulfilled by
typing a "Y" in the "ship complete" field of the EDI inbound
specifications. Retailer will inform i.FILL of the number of days, up
to a maximum of 25 days (the "hold Period"), that i.FILL is to hold
the "ship complete" orders before shipping the available products and
canceling the out of stock products. In the event that all products
included in an order are out of stock, i.FILL will hold the order for
the Hold Period before canceling the order (subject to prior
cancellation of such order by Retailer).
10. ORDER FULFILLMENT. The following sets forth i.FILL's fulfillment
-----------------
practices:
10.1 Priority. Priority orders are defined as orders shipped domestically
--------
for overnight or second-day air freight delivery. Priority orders
received on any business day by [***] will be shipped on the same
---
day. Orders received after [***] will be shipped the following
---
business day.
10.2 Standard. Standard orders are defined as all orders shipped
--------
domestically or internationally for other than overnight or second-
day air freight delivery. On any business day that i.FILL receives
Standard orders by [***], it will ship the orders the following
---
business day. Standard orders received after [***] will be deemed
---
received the next business day and i.FILL will ship these orders the
business day after the day they are deemed to be received.
10.3 Peak Periods. The first day of a business week and any day on which
------------
order volume is greater than [***] above average (calculated on a
---
floating 30-day basis) is defined as a Peak Period. i.FILL shall use
best efforts to adhere to the fulfillment policies set forth above
during Peak Periods, but its failure to so adhere during Peak Periods
shall not be considered a default under this Agreement.
11. FULFILLMENT fees Unless otherwise provided in this Agreement, Retailer
agrees to pay i.FILL the following fees for each order fulfilled by i.
FILL.
11.1 Packing and Handling Fees i.FILL will pick, pack and prepare Product
-------------------------
for shipment to Retailer's customers for a fee of [***] per first
---
unit in a given order and [***] per subsequent unit in that same
---
order.
11.2 Surcharges Retailer agrees to pay to i.FILL the following surcharges
----------
as applicable:
11.2.1 International Shipment Surcharge. Surcharge of [***] per
-------------------------------- ---
order shipped internationally via integrated carrier.
______________________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Buy.com ___
i.FILL ____
4
<PAGE>
11.2.2 USPS Priority Mail Insured Surcharge. Surcharge of [***] per
------------------------------------ ---
order shipped USPS Priority Mail Insured.
11.2.3 Manual Processing Surcharge. In the event i.FILL receives
---------------------------
an order by any other means EDI transmission (i.e., by mail,
facsimile, etc.) a surcharge of [***] per order shall be
---
assessed.
12. Shipping
12.1 Risk of Loss. All shipments under this Agreement shall be F.O.B.
------------
Valley's shipping facility. Title and risk of loss wit respect to all
orders and products shipped by i.FILL or Valley under this Agreement
shall pass to Retailer or it's customers upon delivery of the
products to the carrier at the point of shipment. In the event of
shipping damage or orders lost in shipment, i.FILL will assist in
filing a claim on behalf of Retailer and will credit Retailer any
amounts received or credits to i.FILL in connection with each claim.
12.2 Choice of Carrier i.FILL will ship the order with the carrier
-----------------
requested by Retailer or its customer. i.FILL will cancel any order
with the carrier requested by Retailer or it's customer. i.FILL will
cancel any order for which the delivery address is not serviced by
the indicated carrier, and will promptly notify Retailer of the same.
Retailer shall have the option to retransmit the order to be shipped
via an alternate i.FILL supported carrier.
12.3 Shipping Costs. i.FILL will invoice Retailer's customers at such
--------------
rates as are requested by Retailer. Retailer will pay i.FILL shipping
costs per the shipping tables attached hereto as Exhibit E (as
mentioned from time to time by i.FILL). i.FILL will provide Retailer
written notice of shipping rate changes and the effective date of
such changes. i.FILL represents that the shipping costs charged to
Retailer are its actual shipping costs (not considering rebates).
13. PRODUCT RETURNS
13.1 Definitions.
-----------
13.1.1 Rejected Returns: Any of the following: accessories; blank
----------------
tape; counterfeit Product; imports; promos; limited editions;
Product identified in audofile as non-returnable; Product
sold by a record club; Product sold on an one-way basis;
Product with a last customer return date (as defined in the
audiofile license agreement) prior to the date the returned
product is received by i.FILL; Product without the original
artwork or liner notes; Schwann Guides; shopworn Product
(items that have damage to the artwork, have foreign
substance on the media or have been defaced); and vinyl
Product.
____________________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Buy.com ___
i.FILL ____
5
<PAGE>
13.1.2 Breached Product. Any Opened CDs from the following companies:
----------------
Intersound; Polygram Distribution ("PGD"); RYKO; Sony Music
Entertainment ("Sony"); Universal ("UNI"); and Warner, Electra
and Atlantic ("WEA"). Any Opened PGD cassettes are considered
Breached.
13.1.3 Opened Product: Any Product with the top spine label or
--------------
original manufacturer's shrink wrap or "dog bone" holographic
sticker removed or cut in any way.
13.1.4 Defective Product: Any Opened Product that is identified as
-----------------
defective when returned and which is actually defective.
13.1.5 Accepted Returns. Any Product which is neither Rejected Return
----------------
nor Breached Product.
13.2 Return Policy. Accepted Returns are returnable and eligible for
-------------
return credit to Retailer. Rejected Returns and Breached Product are
non-returnable and not eligible for return credit to Retailer.
13.3 Return Fees. In the event i.FILL receives Rejected Returns or
-----------
Breached Product from Retailer or its customers, the Product will be
returned to Retailer at [***] will be imposed. Retailer may elect to
---
have i.FILL keep the Product to avoid the [***] per unit processing
---
charge.
13.4 Refurbishing Fees. Retailer will pay a [***] per unit refurbishing
----------------- ---
fee on all Accepted Opened Product except for Defective Product.
13.5 Restocking Fees. Retailer will pay a [***] for processing all
--------------- ---
Accepted Returns except for Defective Product and Unopened Product
returned as incorrect items.
13.6 Reshipping. i.FILL will accept and reship orders returned by
----------
Retailer's customers at no Restocking or additional Fulfillment Charge
if the returned Product falls into any of the following categories:
(1) Unopened items returned as incorrect items shipped (items included
in the package that were not listed on the invoice); (2) items listed
on the invoice as fulfilled, but reported as missing by the consumer;
and (3) correct items returned as Defective, but not Breached.
13.7 Return Processing Information. Return processing information will be
-----------------------------
posted daily to i.FILL's Bulletin Board System or FTP server.
__________________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Buy.com ___
i.FILL ____
6
<PAGE>
13.8 Modifications. i.FILL reserves the right to modify its return
-------------
policies from time to time. Such modifications shall be effective upon
Receipt by Retailer of written notice thereof.
14. OPTIONAL SERVICES
14.1 Paper Inserts Retailer will pay a fee of [***] per Paper Insert
------------- ---
packed by i.FILL at the request of Retailer in product shipped under
this Agreement. Retailer shall supply the Paper Inserts at no cost to
i.FILL. For purposes of this paragraph, Paper Inserts are defined as
lightweight, paper-based, promotional items the same size or smaller
than a standard single CD, or pre-folded to such size.
14.2 Merchandise Inserts. At Retailer's request, i.FILL will pack
-------------------
Merchandise Inserts (promotional inserts other than the Paper Inserts
described in paragraph 14.1) in its orders at a cost to be negotiated
by the parties. Retailer shall supply Merchandise Inserts at no cost
to i.FILL.
14.3 Exclusive Merchandise. Upon request by Retailer, i.FILL will receive,
---------------------
warehouse and ship Exclusive Merchandise sold through Retailer for a
fee to be negotiated after a sample has been received and reviewed for
packing and shipping requirements. For merchandise that is standard
product (single CDs or cassettes and single VHS) a management fee of
[***] per unit will be applied.
---
14.4 Insert Bar Codes. A unique UPC bar-code is required for each Paper or
----------------
Merchandise Insert. Retailer should purchase and apply a proprietary
bar-code on all inserts. At Retailers request or if the bar-code does
not meet Valley's standards, i.FILL will create and apply a bar-code
for a fee of [***] per applied bar-code.
---
14.5 Custom Price Stickers. At Retailers request, i.FILL will apply
---------------------
customer price stickers for a fee of [***] per applied sticker.
---
15. BILLING AND PAYMENT Pending i.FILL's review and approval of Retailers
credit application, i.FILL will extend credit to Retailer under the
following terms and conditions:
15.1 Invoices and Account Reconciliation. i.FILL will provide Retailer
-----------------------------------
with an account reconciliation on a monthly basis. Invoices are due
and payable thirty (30) days after the invoice date.
15.2 Past Due Amounts. [***] Furthermore, all overdue balances not paid
---------------- ---
within [***] after the invoice date, will be assessed interest at the
---
lesser of [***] or the maximum interest rate allowable by law,
---
beginning on the due date.
______________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Buy.com ___
i.FILL ____
7
<PAGE>
i.FILL, in its sole discretion, may refer collection of any past due
amount to any agency or attorney, and Retailer will be liable for the
payment of all costs and expenses, including reasonable attorney's
fees, associated therewith.
16. PROPRIETARY RIGHTS.
16.1 Confidential Information. The term "Confidential Information" refers
------------------------
to this Agreement and the subject matter of this Agreement and to all
information which one party furnishes or makes available to the other
party and all information related to one party's business which the
other party and all information related to one party's business which
the other party acquires in the course of performing its obligations
under this Agreement. Disclosure of Confidential Information by a
party is forbidden except in the following circumstances: (i) to
employees and outside parties, but only to the extent necessary to
fulfill its obligations under the Agreement; (ii) if the Information
disclosed is already publicly known through no fault of the
disclosing party; (iii) if the information is required to be
disclosed by law or legal process, provided that the party, from whom
disclosure is promptly required, gives the other party notice and
agrees to cooperate with the non-disclosing party as that party may
reasonably request to oppose disclosure; and (iv) in connection with
a party's initial public offering; provided, however, that the
disclosing party shall take reasonable measures to keep Confidential
Information confidential, including requesting confidential treatment
of this Agreement by any governmental authority and/or any other
person or third party reviewing the Agreement in connection with the
public offering. Under no circumstances may Retailer disclose
Confidential Information including, but not limited to, any
information obtained during Retailer's i.FILL site visit, to any of
Retailer's outside directors; provided, however, that Retailer may
disclose general financial information (i.e., sales of Product) to
its outside directors to the extent required by law. i.FILL
(including its principals or affiliates) agrees not to use Retailer's
customers' data for any commercial or improper purposes.
16.2 Transaction Information. Both parties shall use best efforts to
-----------------------
ensure maximum security of transaction information maintained on each
party's computer system including, but not limited to, the names,
addresses and products ordered by Retailer's customers.
16.3 audiofile Database. User documentation for the audiofile database is
------------------
attached hereto as Exhibit D. The rights to intellectual property
related to the audiofile database are governed by the audiofile
License, attached hereto as Exhibit A. Any termination of this
Agreement will automatically terminate the audiofile License, and any
termination of the audiofile License will automatically terminate
this Agreement.
16.4 audiotrax Database. User documentation for the audiotrax database is
------------------
attached hereto as Exhibit F. The rights to intellectual property
related to the audiotrax database are governed by the audiotrax
License, attached hereto as
Buy.com ____
i.FILL _____
8
<PAGE>
Exhibit B. Any termination of this Agreement will automatically
terminate the audiotrax License, and any termination of the audiotrax
License will automatically terminate this Agreement.
16.5 No Rights to Marks. Each party is hereby granted no rights in or to
------------------
the other party's Marks. "Marks" means the trademarks, service marks,
trade names or other marks, registered or otherwise, used by either
i.FILL or Retailer, as applicable.
17. TERM
17.1 Term. The term of this Agreement begins on the date of this
----
Agreement and ends two (2) years thereafter (the "Initial Term").
Unless and until i.FILL provides at least six (6) month's prior
written notice of its intention not to extend the term of this
Agreement or Retailer provides at least ninety (90) days prior
written notice of its intention not to extend the term of this
Agreement, this Agreement shall automatically renew for additional
one (1) year terms (each a "Renewal Term", the Initial Term and all
Renewal Terms to be collectively referred to as the "Term")
17.2 Early Termination. Either party may terminate this Agreement upon
-----------------
thirty (30) days' written notice under the following conditions:
17.2.1 Either party may terminate this Agreement, absent a material
breach, if i.FILL discontinues fulfillment services to on-
line customers or Retailer discontinues the on-line sale of
Product.
17.2.2 i.FILL or Retailer delivers to the other party a 30-day
written notice of termination for a material breach of this
Agreement, and the other party fails to cure such a breach
within thirty (30) days.
18. LIMITATION OF REMEDIES AND EXCLUSION OF WARRANTIES. IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT OR CONSEQUENTIAL DAMAGES,
WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES AND REGARDLESS OF THE FORM OF ACTION. ALL PRODUCT SOLD HEREUNDER IS
SOLD "AS-IS" AND i.FILL EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO PRODUCT SOLD UNDER THIS AGREEMENT, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR PURPOSE.
19. REPRESENTATIONS AND WARRANTIES.
19.1 i.FILL's Representations and Warranties.
---------------------------------------
19.1.1 i.FILL has the right and authority to enter into this
Agreement.
Buy.com ___
i.FILL ____
9
<PAGE>
19.1.2 The Products delivered by i.FILL to Retailer's customers in
substantially the same condition as they were in when they
were received by Valley in Valley's distribution facility.
19.2 Retailers Representations and Warranties.
-----------------------------------------
19.2.1 Retailer has the right and authority to enter into this
Agreement
19.2.2 Retailer will not include any content on its website that
infringes on the intellectual property rights, including
copyright and trademark rights, of any third party.
19.2.3 Retailer will abide by its terms of service and privacy
policies.
20. INDEMNIFICATION. Both parties will, at all times, indemnify and hold the
other party harmless from any third and all third-party claims, damages,
liabilities, costs and expenses (including reasonable attorney's fees)
arising out of any breach or alleged breach by such party of any warranty
or representation made by such party in this Agreement. Both parties will
further indemnify and hold the other party harmless for any and all third-
party claims, damages, liabilities, costs and expenses (including
reasonable attorney's fees) arising out of (i) any infringement or alleged
infringement of intellectual property belonging to a third-party; or (ii)
any violation of any applicable Federal or State law, rule, regulation, or
ordinance.
21. FORCE MAJEURE. Neither party will be liable for failure to perform, or
the delay in performance of, any of its obligations under this Agreement
if, and to the extent, that such failure or delay is caused by events
substantially beyond its control, including, but not limited to, acts of
God, acts of the public enemy or governmental body in its sovereign or
contractual capacity, war, fire, floods, strikes, epidemics, quarantine
restrictions, civil unrest or riots, freight embargoes and/or unusually
severe weather. Lack of funds by either party shall not excuse timely
performance. The party so affected shall use commercially reasonable
efforts to avoid or remove such causes of non-performance or delay, and
shall continue performance hereunder with reasonable dispatch whenever such
causes are removed. If any such non-performance or delay continues for more
than sixty (60) days, the unaffected party may elect to terminate this
Agreement without liability or any liquidated or other damages upon written
notice to the other party.
22. GENERAL.
22.1 Notice. All notices, including those related to product pricing,
------
ordering and fulfillment policies that will have a material impact on
the other party's business, shall be in writing and delivered by
certified mail, postage prepaid and return receipt requested, or
transmitted either by facsimile or electronic mail if confirmed
contemporaneously by such mailing, to the addresses provided in
writing, from time to time by the parties.
Buy.com ____
i.FILL _____
10
<PAGE>
22.2 Entire Agreement; Amendments. This Agreement constitutes the entire
----------------------------
agreement of the parties concerning the subject matter hereof,
superseding all prior proposals, negotiations and agreements
concerning the subject matter of this Agreement. No representation or
promise relating to and no amendment of this Agreement will be
binding unless it is in writing and signed by authorized
representatives of both parties.
22.3 Assignment. This Agreement may not be assigned by either party
----------
without first obtaining the other party's written consent, which
shall not be unreasonably withheld. Subject to the foregoing, this
Agreement will be binding upon and inure to the benefit of successors
and permitted assigns of the parties hereto.
22.4 Captions; Waiver; Severability. The captions appearing n this
------------------------------
Agreement are inserted only as a matter of convenience and in no way
define, limit, construe or describe the scope or interpretation of
this Agreement. No waiver by a party of any breach of any provision
of this Agreement will constitute a waiver of any other provision of
this Agreement. If any provision of this Agreement shall be held
invalid, void or unenforceable, the remaining provisions hereof shall
in no way be affected or impaired, and such remaining provisions
shall remain in full force and effect.
22.5 Governing Law and Arbitration. This Agreement shall be construed and
-----------------------------
enforced pursuant to the laws of the State of California. If the
parties are unable to settle any disagreements regarding this
Agreement or the project contemplated by this Agreement, such
disagreements shall be submitted to binding arbitration within the
State of California under the rules of the American Arbitration
Association as then in effect.
22.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which will be considered one and the same
agreement, and will become a binding agreement when one or more
counterparts have been signed by each party and delivered to the
other party. Facsimile signatures shall be considered original in all
respects.
In witness whereof, the parties hereto have executed this Agreement effective as
of the date first above written.
i.FILL, a division of BUY.COM
VALLEY MEDIA, INC.
By:____________________________ By:_________________________
Its:___________________________ Its:________________________
Buy.com ___
i.FILL ____
11
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT A audiofile License
EXHIBIT B audiotrax License
EXHIBIT C Average Cost Movement Worksheet
EXHIBIT D audiofile User Documentation
EXHIBIT E Shipping Tables
EXHIBIT F audiotrax User Documentation
Buy.com ___
i.FILL ____
12
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT 10.5
NASHVILLE COMPUTER LIQUIDATORS L.P.
121 16th Avenue, North
Nashville, Tennessee 37203
Telephone: (615) 329-0090
Fax: (615) 329-0190
April 19, 1999
BUY COM, INC.
21 Brookline
Aliso Viejo, CA 92656
Attn: Brent Rusick
Re: Merchandising and Supply Agreement
Ladies and Gentlemen:
The following is the merchandising and supply agreement (the "Agreement")
between BUY.COM, INC. ("BC") and Nashville Computer Liquidators L.P. ("NCL").
1. Products:
NCL will merchandise and supply Products (defined below) to BC, on the
terms and conditions of this Agreement. The term "Products" in this
Agreement refers to "refurbished," "open box" and "end of life" computer
hardware, electronics, and exceptional value household products, "clone,"
or "white box" computer hardware products and similar merchandise. BC
acknowledges its understanding that NCL is in the liquidation business with
respect to the Products. NCL is not the manufacturer of the Products. WITH
THE EXCEPTION OF POSSIBLE WARRANTIES FROM MANUFACTURERS OF THE PRODUCTS
(WHICH MAY OR MAY NOT BE AVAILABLE), NCL IS FURNISHING THE PRODUCTS TO BC
AND ITS CUSTOMERS "AS IS," WITHOUT ANY WARRANTY BY NCL WHATSOEVER,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR ANY WARRANTY OF MERCHANTABILITY. NCL will provide all
manufacturer's warranty information to the extent available.
2. Marketing of Products:
At any one time, NCL will offer BC a limited amount of stock keeping units
("SKUs") of Products selected by NCL based on consultations with BC. The
Products will be described on pre-built HTML pages developed by BC on the
BC web site presently expected to be named BUYSPECIALS.COM (the "Site").
The Site may have another name selected by BC. Those HTML pages are to
include technical specifications and pictures of the Products (each to be
provided by NCL), together with Pricing and other information BC determines
to be in its best interest.
<PAGE>
3. Merchandising Procedures:
NCL will notify BC electronically or on paper as each [***] from NCL's
---
liquidation sources (the "Availability Notice"). The Availability Notice
will include [***]. NCL makes no representation or warranty as to
---
suggested sales prices by BC, such sales prices being totally within the
discretion of BC based upon all of its market information, including
information furnished by NCL as part of the Availability Notice. [***], BC
---
will notify NCL [***] if any, it intends to place on the Site and, of the
---
[***] available, the [***] to treat as [***] to this Agreement. With the
--- --- ---
[***], BC will be deemed to have accepted the price to BC set [***], and
--- ---
those SKUs will be subject to the terms and conditions of this Agreement.
4. Fulfillment Services:
NCL will be responsible, directly or through Ingram Entertainment Inc.
("IEI') or one or more other contractors, for fulfilling on behalf of BC
orders for the Products from BC Internet consumer customers who visit the
Site. These services are comprised of packing and shipping those orders
direct to the Internet consumer in accordance with Exhibit A to this
Agreement (collectively the "Fulfillment Services").
5. [***] and Referral:
---
During the term of this Agreement, NCL will [***] the Products and the
---
Fulfillment Services [***] and BC will [***] to its Internet consumer
--- ---
customers the Products utilizing fulfillment or other services of a party
[***]. In the event BC does not provide the Acceptance Notice, or in the
---
event BC removes an SKU from the Site for any reason or is required to
remove an SKU from (or not place an SKU on) the Site pursuant to notice
from NCL pursuant to this Agreement, NCL may offer and sell that SKU and
may directly or indirectly provide related fulfillment services [***] to
---
BC. Nothing in this Agreement shall prohibit NCL [***] (i.e., units not
---
included in the Acceptance Notice) [***] at any time, provided NCL does not
---
[***]. During the term of this Agreement, in the event BC is offered the
---
[***], other than [***] to be obtained [***]. BC will refer that inquiry to
--- --- ---
[***] and will [***] pursuant to this Agreement.
--- ---
6. SKU Removal from Site:
NCL shall have the right in its sole discretion to request, electronically
or on paper, upon no less than 24 hours prior written notice, that BC remove
a particular SKU from the Site (or, if the particular SKU is not on the
Site, that BC not place the SKU on the Site). Upon receipt of that request,
BC shall be required to remove the SKU from the Site on or before the time
specified in the request (or, if the SKU is not on the Site, BC shall not
place it on the Site). Circumstances in which NCL would make such a request
would include failure to place the SKU on the Site promptly following
selection by BC, significant sales slowdowns or shortfalls of the SKU from
the Site, or anticipated price reductions for the SKU in the liquidation or
other market.
7. Returns:
Due to the liquidation/close-out nature of the Products, BC and NCL have
agreed to the
_____________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
return rights set out in this paragraph. The Site will notify BC customers
that Products may only be returned if materially inoperable upon receipt
(i.e. "dead on arrival"). BC customers are to receive a return authorization
from BC prior to return of any of the Products. After receipt of the return
authorization, BC will direct the customer to return the item directly to
NCL's Fulfillment Services contractor (or, if no such contractor, to NCL),
provided that, in order for BC to receive credit for the return, the item
must be received by the contractor (or NCL) within 14 days of the date the
defective item was received by the customer (with all Products sent by U.S.
mail deemed received by the customer within four mail delivery days of
deposit in the mail). In order for BC to receive credit for the returned
item, the contractor (or NCL) must receive the item within the above 14 day
period, together with (from BC) the BC return authorization and the related
order information. The contractor (or NCL) shall, each NCL business day,
furnish BC a report of all returns received since the last such business
day.
8. Special Handling:
For special handling (i.e., inserts), NCL and BC shall agree in advance on
the pricing to BC.
9. Terms:
Payment terms will be net 14 days from shipment date for all Products
shipped by NCL to BC customers pursuant to the Fulfillment Services, plus
related freight charges, with a seven day grace period. On the first
business day of each week, NCL will furnish BC with a report of all Products
shipped and related freight and other charges during the preceding week. On
or before Friday of the week following the week in which NCL issues that
report, BC will pay NCL, by wire transfer, the amount indicated on that
report. The report will be delivered electronically or on paper as mutually
agreed by NCL and BC. Absent mutual agreement, the report shall be issued on
paper by facsimile transmission with a hard copy to follow by recognized
overnight courier.
BC understands that its credit line with NCL will be as established or
modified from time-to-time based upon NCL's credit review and credit
policies. Any amounts not paid when due will be subject to a late charge of
[***] on the overdue balance (or, if less, the maximum amount permitted by
---
applicable law). Payments received from BC will be credited first to unpaid
interest as set out above.
10. Advertising:
BC will not [***] of any kind in connection with this Agreement or the
---
transactions contemplated by it. BC and NCL will agree in advance [***] to
---
be received by NCL in the event [***].
---
11. Freight:
The Products will be warehoused in Memphis, Tennessee, or such other
location as NCL deems advisable. The price to be paid NCL by BC for the
Products shall include shipping into such warehouse by the supplier to NCL.
For shipments by NCL to the BC
__________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
customers as part of the Fulfillment Services, [***] at the same time and
---
on the same basis as [***] pursuant to the terms of this Agreement.
---
12. Term of Agreement:
The term of this Agreement will commence on the date hereof and terminate
on the day preceding the second anniversary of that date. If not terminated
sooner in accordance with its terms, this Agreement shall automatically
renew for successive one year terms, subject to the right of either party
to terminate the Agreement during any renewal term on not less than 30 days
prior written notice to the other. Notwithstanding the foregoing, NCL may
terminate this Agreement immediately in the event BC becomes more than 15
days past due or otherwise violates its credit terms with NCL.
13. Assignment:
Neither BC nor NCL may assign this Agreement without the express written
consent of the other.
14. Confidentiality:
BC and NCL agree to keep the terms and conditions of this Agreement
strictly confidential during the term of this Agreement and for the three
year period following its termination. BC and NCL agree not to disclose
those terms and conditions in whole or in part to any party other than
disclosure on a "need to know" basis to their respective employees,
contractors, advisors, or affiliates whose duties reasonably justify the
need for such knowledge. The following information shall be exempt from the
provisions of this paragraph: (a) information required by law to be
disclosed; and (b) information in the public domain through no act of BC or
NCL.
15. Limitation of Damages:
NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER HEREUNDER FOR SPECIAL
OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, DUE TO THE BREACH OR AN
INTENDED BREACH OF THIS AGREEMENT, EVEN IF THE BREACHING PARTY HAS BEEN
ADVISED THAT SUCH DAMAGES MAY RESULT FROM A BREACH.
16. Tax Indemnification:
BC is the seller of the Products to its customers and shall be responsible
for any and all sales and similar taxes arising from such sales. BC SHALL
FOREVER DEFEND, INDEMNIFY, AND HOLD HARMLESS NCL AND ITS PARTNERS, AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND AFFILIATES, FROM ANY
AND ALL SALES AND SIMILAR TAX LIABILITY ARISING FROM THE SALE OF PRODUCTS
TO BC CUSTOMERS, INCLUDING INTEREST, PENALTIES, AND RELATED CHARGES, EXCEPT
TO THE EXTENT SUCH TAX IS NOT A SALES OR SIMILAR TAX FOR WHICH NCL IS
LIABLE BY OPERATION OF LAW OR EXCEPT TO THE EXTENT LEVIED ON THE INCOME NCL
DERIVES FROM THOSE SALES.
_____________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
17. Ingram Entertainment Inc.:
BC acknowledges that IEI is an owner of NCL. BC acknowledges, for the
benefit of IEI and NCL, that this Agreement does not in any way affect or
limit the rights of IEI and, indirectly, NCL, under the Non-Competition
Agreement among SPEEDSERVE.COM INC., BUY CORP., IEI, and David B. Ingram,
dated as of December 3, 1998. NCL may furnish some or all of the Products
or the Fulfillment Services, through IEI as agent or as consignee of NCL,
or as both agent and consignee. BC will make all payments to IEI as agent
of NCL until the later of the date BC has the systems capability to treat
NCL as a separate vendor and the date BC is notified by NCL to make
payments directly to NCL. During the time BC is to make payment to IEI as
agent of NCL, all shipments containing both the Products and items supplied
by IEI to BC pursuant to the supply agreement between them will be subject
to the terms of this Agreement, i.e., payment will be made pursuant to item
----
9 above. Any amounts due and owing between NCL and BC shall be separate
from and not subject to offset against any amounts due and owing between
IEI and BC.
18. Notices:
Notices under this Agreement shall, except as otherwise specifically
provided in this Agreement, be sent to NCL at the letterhead address first
appearing above, Attn: President, with a copy to Ingram Entertainment Inc.,
Two Ingram Blvd , La Vergne, Tennessee 37089, Attn: General Counsel , and
to BC at the address first set out above, Attn: Brent Rusick, with a copy
to the attention of General Counsel at the same address, Notices shall be
deemed received when delivered or, if mailed, five days after the date of
mailing, properly addressed with proper postage.
19. Miscellaneous:
The headings of this Agreement are included for purposes of convenience
only, and do not affect the construction or interpretation of any of its
provisions. This Agreement constitutes the entire agreement between the
parties pertaining to its subject matter. Any modification of this
Agreement must be in writing signed by the parties. This Agreement shall be
binding on, and shall benefit, the parties and their respective successors
and assigns. This Agreement shall be governed by and construed in
accordance with Tennessee law. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
If the terms and conditions set out in this Agreement are accepted and agreed to
by BC, please execute and return to me the attached Counterpart of this letter
to indicate that acceptance and
<PAGE>
agreement, and keep the other counterpart in your files. We took forward to a
mutually prosperous relationship.
Sincerely,
NASHVILLE COMPUTER LIQUIDATORS
L.P
By:_____________________________
Peter Marcum, President
ACCEPTED AND AGREED THIS
_____ DAY OF APRIL. 1999.
BUY.COM, INC.
By:_______________________________________
Print Name: Brent Rusick
-------------------------------
Title: VP Sales & Operations
-----------------------------------
<PAGE>
Exhibit A
---------
Fulfillment Services
1. Order Transmission. BC and NCL will agree on a means for electronic
------------------
transmission to NCL of orders from BC customers visiting the Site. Orders
will be transmitted to NCL or its contractor not more than four hours after
their receipt by BC. Orders may be transmitted in batches, subject to the
preceding four hour interval. BC and NCL, will agree on order content.
Orders will be complete and NCL will have no obligation for any order
containing incomplete Information.
2. Processing. Orders received by Noon (Central Time) on an NCL business day
----------
will be processed and shipped by NCL that same business day. Orders received
after that time will be processed the next NCL business day.
3. Safety Stock Units and Lack of Availability. The Acceptance Notice shall
-------------------------------------------
specify the number of "Safety Stock Units" of each SKU. When the number of
units of that SKU on hand and designated for BC is less than the number of
Safety Stock Units, NCL or its contractor will use reasonable efforts to
notify BC. BC will then have sole responsibility for notifying visitors to
the Site either that the SKU is no longer available or that quantities and
availability are extremely limited. Further, if any Product is not available
for any reason, NCL will notify BC electronically no later than the NCL
business day following receipt of the order. Due to the close out or
liquidation nature of the Products, NCL cannot and will not be responsible
for lack of availability or backorders.
4. Reports. Each NCL business day, NCL will furnish a report to BC
-------
electronically indicating orders shipped, orders rejected due to incomplete
information, and orders rejected due to unavailable Product.
5. Service. NCL will render all services in a commercially reasonable,
--------
professional manner, but will have no liability to BC except to the extent
due to NCL's gross negligence or willful misconduct.
6. Title to Products. Title to the Products shall remain with NCL until
-----------------
delivered to the common carrier addressed to the BC customer according to
the order, at which time it shall pass to BC until delivered to the BC
customer.
<PAGE>
EXHIBIT 10.6
SOFTBANK
MASTER SERVICE AGREEMENT
================================================================================
CONFIDENTIAL
================================================================================
This Master Service Agreement is made this 1st day of October, 1998, between
BuyComp, L.L.C., a California Corporation, with offices located at 21 Brookline,
Aliso Viejo, California 92656 (hereinafter referred to as "CLIENT") and Upgrade
Corporation of America d/b/a SOFTBANK Services Group, a Delaware Corporation,
with offices located at 699 Hertel Avenue, Buffalo, New York 14207-2398
(hereinafter referred to as "SOFTBANK").
Recitals
WHEREAS, CLIENT has developed and owns or acquired all rights to a list of
the registered or prospective users of its products; and
WHEREAS, CLIENT intends to market and sell its product or services to its
registered or prospective user base; and supporting such a user base; and
WHEREAS, SOFTBANK has certain experience and capabilities in handling the
tasks involved in selling to and supporting such a user base; and
WHEREAS, CLIENT wishes to obtain the benefit of such experience and
capabilities by utilizing certain services of SOFTBANK in CLIENT's marketing
effort to sell it product or services; and
WHEREAS, SOFTBANK agrees to supply CLIENT with the services of its staff to
perform the services described in this Agreement and CLIENT agrees to use such
services of SOFTBANK's staff for such purposes;
NOW, THEREFORE, in consideration of the covenants derived hereunder the
parties agree as follows:
1. SOFTBANK Scope of Services
--------------------------
SOFTBANK agrees to use its best efforts to provide one or more of the
following services, as mutually agreed upon and further set forth in the Service
Fee & Responsibilities Attachment and detailed Specifications Form prepared by
SOFTBANK at the direction of CLIENT.
2. SOFTBANK Responsibilities
-------------------------
SOFTBANK will provide to CLIENT its services in a good and workmanlike
manner and as set forth in the Service Fee & Responsibilities Attachment.
3. CLIENT Responsibilities
-----------------------
In order for SOFTBANK to fulfill its obligations under this Agreement, it
is necessary that CLIENT fully cooperate and assist SOFTBANK in SOFTBANK's
performance of its obligations under this Agreement. Therefore, CLIENT agrees
to perform in a timely fashion as applicable, its responsibilities set forth in
the Service Fee & Responsibilities Attachment.
In the event CLIENT fails to perform its Client Responsibilities in a
timely manner and such failure causes SOFTBANK to incur additional cost, CLIENT
shall reimburse SOFTBANK for such additional costs, provided they are reasonable
and documented by SOFTBANK and provided there has been notice by SOFTBANK of a
failure that will cause such costs to incurred.
4. Dedicated Representatives
-------------------------
SOFTBANK shall appoint one qualified staff member ("SOFTBANK Account
Service Representative"), who will (i) have authority to act for SOFTBANK and to
make binding decisions with respect to this Agreement, unless otherwise limited
herein; (ii) submit material and information requests to CLIENT; (iii) provide
access to SOFTBANK's staff to answer questions; and (iv) provide schedules and
plans to CLIENT for CLIENT's review and/or approval.
CONFIDENTIAL & PROPRIETARY
<PAGE>
CLIENT shall appoint one qualified staff member ("CLIENT Account Service
Representative"), who will (i) have authority to act for CLIENT and to make
binding decisions with respect to this Agreement; (ii) to execute any Addendums,
Attachments or documents incorporated as a part of this Agreement on behalf of
CLIENT; (iii) review promptly information supplied by SOFTBANK; (iv) provided
and assume responsibilities for accuracy of CLIENT's information and data
required by this Agreement; and (v) provide access to CLIENT staff to answer
questions, and provide training to SOFTBANK.
5. CLIENT Product/Literature
-------------------------
(This section intentionally removed.)
6. Confidentiality
---------------
Both parties acknowledge that each party will be disclosing to the other
confidential and proprietary information relating to their past, present and
future activities, products services, customer lists, customer profiles,
business plans, business practices and other information designated as
confidential ("Confidential Information"). The Confidential Information may be
disclosed orally or in writing, and all information, unless otherwise indicated,
shall be deemed to be confidential and proprietary. Confidential Information,
however, does not include information that: (i) is now or subsequently becomes
generally available to the public through no fault or breach on the part of
recipient; (ii) recipient can demonstrate to have had Confidential Information
rightfully in its possession prior to disclosure; (iii) is independently
developed by recipient without the use of any Confidential Information; or (iv)
is information intended to be shared with CLIENT's customers or other third
party; or (v) recipient rightfully obtains from a third party who has the right
to transfer or disclose it.
Both parties agree to hold the Confidential Information confidential and
will not disclose it, and will prevent dissemination to any person who is not an
employee of CLIENT or SOFTBANK without the prior written consent of the other
party.
SOFTBANK acknowledges that it has all employees enter into an agreement
whereby they agree not to disclose or use the Confidential Information.
SOFTBANK agrees that as a result of SOFTBANK's performance of the services,
SOFTBANK enhances or improves the CLIENT's customer lists, such enhancements or
improvements will be the property of CLIENT.
All Confidential Information remains the property of the disclosing party
and no license or other rights in the Confidential Information are granted
hereby. Further, both parties agree to return all Confidential Information
regardless of the media in which it is stored, including, but not limited to,
records release to either party for marketing and distribution services,
immediately upon either party's written request and in the case of termination
or expiration of this Agreement, within thirty (30) days of such event.
Both parties acknowledge that unauthorized disclosure or us of Confidential
Information could cause irreparable harm and significant injury which may be
difficult to ascertain. Accordingly, both parties agree that the aggrieved
party will have the right to seek immediate injunctive relief from breaches of
this Agreement, in addition to any other rights and remedies it may have.
7. Proprietary Rights
------------------
SOFTBANK shall be the sole and exclusive owner of any technology and works
of authorship created by SOFTBANK and any modifications or derivative works that
are created by SOFTBANK in connection with its performance of this Agreement.
CLIENT acquires no right to use, transfer, assign, license or otherwise exploit
in any manner any portion thereof for any purpose whatsoever, unless CLIENT
shall have first negotiated and obtained on terms acceptable to SOFTBANK and
CLIENT an agreement stating otherwise to be incorporated herein.
8. Warranty Disclaimers
--------------------
THIS IS A SERVICE AGREEMENT, THEREFORE EXCEPT AS EXPRESSLY PROVIDED FOR
HEREIN, NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND,
INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS OR
EITHER PARTY'S WORK OR PRODUCT FOR ANY PARTICULAR PURPOSE.
CONFIDENTIAL & PROPRIETARY
Page 2
<PAGE>
THE END-USER WILL RECEIVE THE BENEFITS AND WARRANTIES CONTAINED IN THE
CLIENT SOFTWARE LICENSE AGREEMENT THAT ACCOMPANIES EACH AND EVERY COPY OF THE
PRODUCT.
9. Limitation on Liability
-----------------------
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY, OR TO ANY THIRD PARTY,
FOR ANY CONSEQUENTIAL, INCIDENTAL, OR SPECIAL DAMAGES (INCLUDING WITHOUT
LIMITATION LOST PROFITS) INCURRED BY EITHER PARTY AS A RESULT OF ANY BREACH BY
EITHER PARTY ARISING FROM OR RELATED TO THIS AGREEMENT, EXCEPT AS PROVIDED IN
SECTION 10 (INDEMNIFICATIONS) HEREOF. UNDER NO CIRCUMSTANCES SHALL SOFTBANK BE
LIABLE FOR ANY LOSSES INCURRED BY CLIENT ATTRIBUTABLE TO ANY ELECTRONIC DATA
TRANSFERS BY SOFTBANK.
10. Indemnifications
----------------
Notwithstanding any of the following, CLIENT will not be liable to
indemnify SOFTBANK under the terms of any provision to the extent SOFTBANK's
liability is in any way the result of SOFTBANK's error.
a) CLIENT shall indemnify and hold SOFTBANK harmless from any
demands, claims or suits from third parties for damages or expenses, including
attorney's fees, arising out of the use or sale of CLIENT's products or
SOFTBANK's use of CLIENT provided resources or information including, but not
limited to, suits or proceedings, based upon (i) a claim of infringement or
wrongful use of any patent, copyright, trade secret or other right of any third
party; or (ii) a claim of product defect or failure to conform to published
specification; or (iii) SOFTBANK's authorized use of CLIENT's Confidential
Information, in SOFTBANK's performance of this Agreement as provided herein; or
(iv) a claim of an unfair or deceptive act and practice of the CLIENT; or (v)
any acts, which do not comply with applicable State or Federal law and were
performed by SOFTBANK at the direction of the CLIENT.
(Section (b) below applies only when SOFTBANK will collect or compute sales or
us tax.)
(This section intentionally removed.)
(Section (c) below applies only when CLIENT has agreed to have SOFTBANK ship
product internationally from the United States.)
(This section intentionally removed.)
Section (d) below applies only when CLIENT has agreed to have SOFTBANK process
payments and/or fulfill order.)
(This section intentionally removed.)
In the event of a claim for indemnification arising out of the terms of or
services provided under this Agreement, each party to this Agreement agrees to
allow the other to audit applicable direct or indirect evidence in their
possession that may be probative in determining the validity of the claim.
11. Remittance Processing
---------------------
(This section applies only when CLIENT has agreed to have SOFTBANK process
payments and provide fulfillment services.)
(This section intentionally removed.)
12. SOFTBANK Fees
-------------
CLIENT agrees to SOFTBANK for the performance of it services in accordance
with the Service Fee & Responsibilities Attachment.
CONFIDENTIAL & PROPRIETARY
Page 3
<PAGE>
Within [***] from the end of each calendar month, SOFTBANK will submit an
---
invoice to CLIENT for such services. SOFTBANK reserves the right to adjust
monthly invoicing to weekly invoicing upon notification to CLIENT. SOFTBANK
invoices to CLIENT are payable within [***] of receipt. All SOFTBANK invoices
---
are immediately due and payable upon termination of this Agreement.
SOFTBANK reserves the right, without further notice, to assess a [***]
---
finance charge ([***] per annum) on any unpaid balances not paid within thirty
---
(30) days. In the event of a dispute between CLIENT and SOFTBANK concerning
fees, CLIENT agrees to make payment on the balance of fees that are not in
dispute in accordance with other terms of this section. If CLIENT does not pay
its invoice in full, reasonable justification for the unpaid amounts must be
presented to SOFTBANK within ten (10) days from the date that the invoice amount
is due or the CLIENT shall be deemed in default for non-payment. CLIENT must
provide a reasonable justification for any invoice disputes on previously paid
invoices within one hundred twenty (120) days from the date of invoice or shall
waive it right to dispute the fees.
All amounts payable to SOFTBANK by CLIENT or to CLIENT by SOFTBANK shall be
in United States currency, unless otherwise specifically provided in accordance
with this Agreement.
Set-up Fees and deposits must be paid prior to SOFTBANK's services being
provided. [***], as set forth in the Service Fee & Responsibilities Attachment,
---
[***]. Deposits may be applied towards any outstanding amounts due and owing
---
and are refundable upon payment of all outstanding invoices.
13. Commencement of Services
------------------------
SOFTBANK will use its best efforts to provide services to CLIENT at the
earliest possible date or by the start date set forth in the Specifications
Form. It is understood by the parties that if SOFTBANK assigns CLIENT a toll
free number, toll number, P.O. box or fax number prior to the commencement of
SOFTBANK services (for use in mailers, ads or other announcements) such numbers
will only be activated upon SOFTBANK's receipt of a fully executed contract and
applicable set-up fees and deposits.
14. Modifications
-------------
Definitions: "Material Change" is defined as any addition or alteration of
the terms of this Agreement that
(i) alters the original intent of the parties as expressed
in this Agreement; or
(ii) is inconsistent with any provision or this Agreement;
or
(iii) adds services or fees not included in this Agreement;
or
(iv) alters services or fees included in this Agreement.
"Non-Material Change" is defined as a change that
(i) initiates or curtails services and appropriate fees as
included in this Agreement; or
(ii) affects product additions or deletions; or
(iii) affects product price, weight, shipping and handling
or product release date to SOFTBANK; or
(iv) other change which does not constitute a material
change as defined above.
Modification: A material change shall be executed in writing and signed by
a duly authorized representative of each party. A non-material change shall be
agreed to by the CLIENT's Account Representative. Such Representative will have
the authority and will execute a Specifications Form or Set-Up Billing Form.
Any of the above executed documents shall be incorporated as part of this
Agreement and shall be binding upon both parties. Any changes will be
implemented as per CLIENT's request, upon SOFTBANK's receipt of an executed
addendum or appropriate form and at a time mutually agree upon by both parties.
15. Term of Agreement
-----------------
The term of this Agreement shall be for four (4) years from the date of
this Agreement. At such time the parties shall have the opportunity to renew
and /or renegotiate this Agreement. However, [***], but no more frequently than
---
once in any twelve (12) month period by giving written notice of the intent to
[***]. At the time of
---
__________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL & PROPRIETARY
Page 4
<PAGE>
such negotiations SOFTBANK guarantees that it will offer [***] offered to other
---
SOFTBANK clients that maintain programs/campaigns of like volume and similar
service metrics to those of CLIENT. If the parties cannot agree upon [***] of
---
notification, either party may terminate this Agreement in accordance with the
default remedy (a), set forth below. If no new Agreement is made, this Agreement
shall remain in force and renew on an annual basis thereafter.
Notwithstanding the above, either party by written notice can terminate
this Agreement as follows:
a) for default if such party has previously given written notice including a
detailed description of the default by the other party and the other party
has not cured such default within sixty (60) days of receipt of written
notice; or
b) for default due to non-payment of fees under this Agreement, ten (10) days
after written notice is provided to recipient; or
c) without cause on thirty (30) days written notice of termination subject to
the following:
If either this Agreement or a new campaign/program is terminated by [***]:
---
(i) the highest [***] forecast during the [***] preceding the
--- ---
termination date of the Agreement or campaign/program; or
(ii) [***] during the [***] preceding the termination of this
--- ---
Agreement or campaign/program.
The remedies provided above in Section (c) are intended to reimburse
SOFTBANK for its investment in people and equipment relating to this Agreement,
plus all SOFTBANK Fees earned prior to the termination date. CLIENT
acknowledges that the actual amount of SOFTBANK's investment would be difficult
to calculate and agrees that such calculation shall not be required. In the
event of default, the parties shall have all remedies provided in this Agreement
or otherwise available under law.
Upon termination, each party shall return any Confidential Information of
the other party. Upon request and at the direction of the CLIENT, SOFTBANK
agrees to transfer toll free number phone lines accordingly, provided that all
amounts due SOFTBANK are paid and CLIENT has met all obligations pursuant to
this Agreement.
16. General Provisions
------------------
a) CLIENT grants SOFTBANK permission to install CLIENT's product on
SOFTBANK's internal network for SOFTBANK internal purposes only, including
training.
b) CLIENT acknowledges that SOFTBANK will retain a copy of the customer
order database as support for all transactions processed by SOFTBANK. CLIENT
agrees to cooperate and comply with any applicable laws or regulations which
otherwise require SOFTBANK to retain copies of CLIENT's records and to cooperate
and provide access to any documentation which may be requested of SOFTBANK by
governmental authorities.
c) SOFTBANK reserves the right to pass on any unanticipated price
increases from its suppliers that directly affect the pricing of this Agreement
and are effective during the term of this Agreement. This includes, but is not
limited to, freight, telephone, credit card fees and postal rates. Said price
increases shall be effective upon implementation of the price change by the
supplier.
d) CLIENT agrees that for quality control purposes SOFTBANK, at its
sole discretion, may contact CLIENT's customers previously serviced by SOFTBANK
to gather statistical information relating to customer satisfaction and
SOFTBANK's performance under this Agreement. Such contact may include
_________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL & PROPRIETARY
Page 5
<PAGE>
a variety of methods including, but not limited to, telephone, postal and email
surveys, in box questionnaires and focus groups.
e) This Agreement is not intended to create any relationship other than
CLIENT as consignor and SOFTBANK as consignee of the product covered by this
Agreement and SOFTBANK as independent contractor performing services covered by
this Agreement. Neither party is a partner or legal representative of the other
for any purpose whatsoever. It is understood between the parties that SOFTBANK
is not authorized to make any contract, agreement or warranty on behalf of the
CLIENT.
f) This Agreement contains the entire agreement between the parties with
the exception of the Attachments, Addendums or forms provided for in this
Agreement, which are incorporated herein. This Agreement shall supersede all
prior agreements and understandings between the parties with respect to the
subject matter hereof. To the extent that any provision contained in any other
document incorporated as part of this Agreement is inconsistent or conflicts
with this Agreement, the provisions of this Agreement shall control. This
Agreement may be amended only in writing signed by both parties or as otherwise
provided for in this Agreement.
g) Both parties agree to comply with all federal, state, local laws and
regulations that are applicable to the services to be provided herein.
h) This Agreement shall be governed by the laws of the State of New York
and the venue shall be Buffalo, New York.
i) Failure of either party to exercise it rights under this Agreement
shall not be construed as a waiver thereof and shall not prevent said party from
thereafter enforcing strict compliance with any of the terms thereof.
j) Any notice which may be or is required to be given under this
Agreement shall be written. Any written notices shall be sent by registered mail
or certified mail, postage prepaid, return receipt requested or by other prepaid
delivery method which is traceable. A fax notice does not constitute receipt of
written notice and must be followed by written notice. All such notices shall be
deemed to have been given when received and properly addressed as set forth
below. Either party may change its address by giving notice to the other party
pursuant to this Section.
All notices must be sent to:
SOFTBANK: CLIENT:
Upgrade Corporations of America BuyComp, LLC
d/b/a SOFTBANK Services Group 21 Brookline
699 Hertel Avenue Aliso Viejo, CA 92656
Buffalo, New York 14207 Attn: Brent Rusick
Attention: President V.P. Sales & Operations
Fax Number (716) 871-6668
cc: Contract Administrator
k) Neither party shall be liable for a failure or delay in the
performance of any of its obligations under this Agreement, except obligations
for the payment of money, if such delay or failure is caused by circumstances
beyond the reasonable control of the party affected. Strikes and other labor
difficulties which are not capable of being terminated on terms acceptable to
the party affected shall not be considered circumstances within the control of
such party.
l) No Assignment of this Agreement shall release CLIENT or change
CLIENT's primary responsibility to make payments under this Agreement. Upon
occurrence of any default under this Agreement, SOFTBANK may proceed directly
against CLIENT without the necessity of exhausting any remedies against any
assignee.
CONFIDENTIAL & PROPRIETARY
Page 6
<PAGE>
m) The terms and conditions of Sections 5, 6, 7, 8, 10, 12, 15 and
16(b)(d)(h) will survive any termination or expiration of this Agreement.
Acceptance:
BuyCorp.
By: _________________________________________ Date _______________________
Name & Title: Brent Rusick, VP Sales & Operations
Acceptance:
Upgrade Corporation of America d/b/a SOFTBANK Services Group:
By: _________________________________________ Date _______________________
Name & Title: Gary M. Crosby, Executive Vice President and CFO
CONFIDENTIAL & PROPRIETARY
Page 7
<PAGE>
SOFTBANK
MASTER SERVICE AGREEMENT
SERVICE FEE & RESPONSIBILITIES ATTACHMENT
BUYCOMP, L.L.C.
Fees Effective upon Commencement of Services
All services performed by SOFTBANK shall be rendered in accordance with
the fees defined herein:
<TABLE>
<CAPTION>
Service/SOFTBANK Responsibilities SOFTBANK Fee CLIENT Responsibilities
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A. Set-Up Fees & Deposits
Payable Upon Execution of Contract
Set-Up Fee Quoted based on specific needs and
set forth in the [***]
---
(30000) Deposits (Refundable upon termination WAIVED
of the contract, provided outstanding
invoices have been paid.)
B. Campaign/Program Management:
(20400) Monthly Campaign/Program Management fee $[***] per month Provide campaign or program specific
---
To be reviewed by the parties quarterly information as requested by the
and adjusted as required and mutually SOFTBANK Account Service
agreed upon to meet program needs. Representative and as requested in
the Specifications Form.
Participate in development of
Telemarketing Call Guides, providing
information including but not limited
to:
Product capabilities & technical
requirements
Marketing research questions (if
required)
Sales and technical objections
Help desk issues
"End of Call" coding
</TABLE>
_____________________
[***] Confidential treatment has been requested for the bracketed portions. The
---
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL & PROPRIETARY
<PAGE>
<TABLE>
<S> <C> <C>
C. Inbound Service:
Customer Care (Note: SOFTBANK does not accept
purchase orders, check orders or tax
exempt orders via telephone.)
( ) Inbound service - (Monday-Friday, [***] Provide customer service and pre-sales
---
7:00 am - 10:00 pm ET) information necessary associates
working on CLIENT's behalf.
Upon attainment of an average agent
Includes questions concerning order count of [***] SOFTBANK will provide CLIENT must provide SOFTBANK with a
---
entry, shipment returns, refunds, a one time credit to CLIENT of [***] ninety (90) day rolling forecast to
---
inventory levels, customer inquiries that may be applied prospectively be submitted to SOFTBANK on the
and call back, add new records, toward future invoices at the rate CLIENT Forecast Form, attached hereto.
database edits, marketing/demographic of [***] so long as the average
---
surveys, after call work (ACW) when monthly agent count for the month
applicable to which the credit is being
applied is at or above the rate of
[***] seats.
---
A "seat" equates to [***] agent minutes
---
per month.
(25950) Minimum Quarterly Volume Commitment 01/01/99 - 03/31/99 [***] seat minimum In the event CLIENT's actual volume
---
04/01/99 - 06/30/99 [***] seat minimum does not meet the minimum forecasted
---
07/01/99 - 09/30/99 [***] seat minimum volume commitments. CLIENT is
---
10/01/99 - 12/31/99 [***] seat minimum responsible for payment of fees as set
---
01/01/00 - 09/30/02 [***] seat minimum forth under the "SOFTBANK Fee" column.
---
CLIENT shall make monthly payments
A "seat" equates to [***] agent minutes based on the foregoing commitments
---
per month, or [***] agent minutes per and said payments shall be reflected
---
quarter. in CLIENT's invoice.
Dividing a quarter's actual inbound agent
minutes by [***] will determine whether
---
the minimum quarterly volume commitment
has been met.
If the minimum quarterly volume commitment
minutes [***] exceed actual billed agent
---
minutes for the quarter, CLIENT shall be
obligated for the shortfall minutes,
and will be billed the difference at the
prevailing per minute rate for inbound
service.
(3310) Electronic E-Mail Support [***] CLIENT must provide documentation,
---
(pricing subject to review and support specialist education, agent
re-negotiation after thirty (30) days certification requirement, web page
of operation.) access and design requirements for web
page if applicable, and provide all
other information necessary to
complete electronic support
specifications, as needed.
</TABLE>
_____________________
[***] Confidential treatment has been requested for the bracketed portions. The
---
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL & PROPRIETARY
Page 9
<PAGE>
<TABLE>
<S> <C> <C>
D. IVR (Interactive Voice Response) Services:
Inbound call fee: PER CAMPAIGN Provide first draft of script.
------------
(3300) Call Routing Minutes per Month Fee per Minute Provide sign-off for script and call-
----------------- --------------
flow in timely manner before SOFTBANK
begins to program.
(3230) Automated Technical Tips [***] [***]
--- ---
Automated Dealer Locator Provide Closed and Holiday Schedule.
(3210) Automated Order Inquiry [***]
---
(3210) Automated Registration + phone charges (See Telecommunications) If applicable:
(3328) Tel-Address(SM) (CLIENT . Provide first draft of "tech tips"
provided Database) (Q&As) and symptom based logic in
script format.
. Provide dealer database in
acceptable SOFTBANK format that
includes telephone numbers with area
codes (no Toll Free numbers).
. Provide Business Rules for how
dealers will be found.
. Provide campaign or program
specific information including, but
not limited to: Production
description, customer pricing
information, survey data, acceptable
payment options and applicable
customer S&H charges.
. Provide registered or prospective
user database (with unique numeric
identifier), on acceptable media and
in an applicable format readable by
SOFTBANK.
(?) Custom voice talent (Quote based on specific needs)
E. Telecommunications
(9311) T-1 Voice Interface Set-Up [***] CLIENT is responsible for operational
---
ability to interface with [***]
---
located at SOFTBANK's facility.
T-1 Voice maintenance fee
Telecom Maintenance Fee
(Notwithstanding Section 16(k) of the
Agreement, CLIENT shall be required to
reimburse SOFTBANK [***] per agent hour
---
in the event CLIENT provided telephone
lines are rendered inoperable, regardless
of the cause.)
Inbound switched access for
CLIENT T1 overflow. $[***]
---
(includes access fee & taxes)
(8100) Additional Toll Free lines
(if applicable) $[***]
---
</TABLE>
_____________________
[***] Confidential treatment has been requested for the bracketed portions. The
---
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL & PROPRIETARY
Page 10
<PAGE>
<TABLE>
<S> <C>
(beyond three (3) on sales programs and/or one (1)
on automated technology or technical support
programs)
Phone charges: (if applicable)
(9001) Toll Free inbound - SOFTBANK lines Carrier rates
(includes line/access charges + taxes)
(N/A) Toll inbound CUSTOMER pays toll charges
(9210) Toll outbound calls and call backs Carrier rates
(includes toll charges + taxes)
F. Administrative:
(19500) Custom reporting/additional data imports/specialized $[***]
data transfers ---
billed in [***] increments,
---
1 hour minimum
+ fee transfer, if applicable
(19510) Campaign/program modifications beyond initial $[***]
set-up (e.g. CLIENT requested changes or additions, ---
call guide updates, telecommunications programming, billed in [***] minute increments,
prompt changes, custom fax cover pages (CLIENT ---
to supply artwork), additional fax documents, etc.) 1 hour minimum
(14510) Training (includes client/product training provided Provide training to SOFTBANK Associates or
by CLIENT or by SOFTBANK and includes agent and/or appropriate training information or
trainer time) documentation covering specifics of the
product and details of the campaign/
Training $[***] program for SOFTBANK to provide
---
Overtime training $[***] training to its employees.
---
Provide additional training as needed on
an ongoing basis to support any additions
or modifications to existing programs.
All related training expenses, such as
travel, shall be the responsibility of
the CLIENT.
G. End of Campaign/Program:
(19495) Reporting/analysis (Quote based on specific needs)
(20230) Data transfer (Quote based on specific needs)
</TABLE>
______________________________
[***] Confidential treatment has been requested for the bracketed portions. The
---
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
CONFIDENTIAL & PROPRIETARY
Page 11
<PAGE>
*Pricing negotiable on a quarterly basis during the first year of online
services.
CONFIDENTIAL & PROPRIETARY
Page 12
<PAGE>
CLIENT FORECAST FORM
--------------------
CLIENT must provide SOFTBANK with a ninety (90) day rolling forecast to be
submitted to SOFTBANK on this CLIENT Forecast Form. In the event SOFTBANK does
not receive an ongoing forecast, it shall be entitled to rely upon the previous
forecast for ongoing personnel planning.
<TABLE>
<S> <C>
Client ID Number: Client Name: BuyComp, L.L.C.
------------------------ -----------------------------
Campaign Number: Campaign Start Date:
------------------------- -----------------------------
--------------------------------------------------------------------------------------------------------
90 DAY FORECAST
1st Period 2nd Period 3rd Period
(Period must be equivalent to a billing/reporting period.)
----------------------------------------------------------------------
Forecast Period Date
--------------------------------------------------------------------------------------------------------
Inbound Talk Minutes
----------------------------------------------------------------------
ACW Minutes
--------------------------------------------------------------------------------------------------------
Outbound Agent Hours
--------------------------------------------------------------------------------------------------------
MFRP Mail Orders
----------------------------------------------------------------------
Fax Orders
--------------------------------------------------------------------------------------------------------
ETS Cases
--------------------------------------------------------------------------------------------------------
</TABLE>
The foregoing is the undersigned's forecast of volume under the services
agreement between CLIENT and SOFTBANK Services Group.
<TABLE>
<CAPTION>
SOFTBANK Services Group BuyComp, L.L.C.
<S> <C>
- ----------------------------------------------------------- -------------------------------------------------
Signature Signature
- ----------------------------------------------------------- -------------------------------------------------
Signator's Printer Name Signator's Printer Name
General Manager
- ----------------------------------------------------------- -------------------------------------------------
Signator's Title Signator's Title
- ----------------------------------------------------------- -------------------------------------------------
Date Date
</TABLE>
CONFIDENTIAL & PROPRIETARY
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL & PROPRIETARY
<PAGE>
EXHIBIT 10.7
RESALE AGREEMENT
This Agreement ("Agreement") is by and between Buy.com Inc. ("Buy.com"), with
its principal place of business at 21 Brookline, Aliso Viejo, California 92656,
and Ingram Micro Inc. ("Ingram") excluding its subsidiaries, with its principal
place of business at 1600 East St. Andrew Place, Santa Ana, California 92705.
This Agreement will include shipments to Buy.com's locations in the United
States only.
1. Purpose
The purpose of this Agreement is to provide the terms and conditions for
the purchase and resale by Buy.com and the sale by Ingram to Buy.com of
various computer products including both hardware and software offered by
Ingram to its customers ("Product"), excluding electronic software
distribution (ESD) product.
2. Terms of Sale
A. Buy.com will source all of its Product requirements from Ingram during
the term of this Agreement, provided that the Product is available at the
time Buy.com places its order. In the even the Product is not available or
is not offered to Buy.com by Ingram, Buy.com shall have the right to source
such Product from another source.
B. If authorization for resale is required by the vendor of any Product,
then Ingram will not be obligated to sell such Product to Buy.com unless
Ingram has received such required authorization. If any vendor prohibits
Ingram from selling a specific Product to Buy.com, then Ingram reserves the
right not to sell said Product to Buy.com.
C. Ingram and Buy.com will work towards the implementation of Inside Line
which provides pricing and on-line availability.
3. Ordering
A. Buy.com will compile, update, and provide Ingram with Product order
information. The Product order information will include the (i) Product
type(s), (ii) unit quantity, (iii) Ingram SKU number and/or vendor part
number, (iv) Buy.com purchase price from Ingram, and (v) correct shipping
address. For government orders, Buy.com will compile the above Product
order information as well as (i) end user name and zip code and (ii)
government contract number. Buy.com personnel will identify, for each
Product order, the ship-to destination as either Buy.com, Buy.com's
customer, or to some other specified third party. Ingram will, subject to
Product availability, use its best efforts to fill and ship all Product
orders placed by Buy.com within one (1) business day of order receipt.
B. Ingram will accept orders over telephone, via facsimile, and via
Ingram approved electronic ordering methods as defined in Ingram's Catalog
only from those who identify themselves as Buy.com personnel and provide
the Ingram customer number prior to placing the order. Ingram will have no
obligation to confirm the validity of any order
________________________________________________________________________________
Buy.com Page 1 3/9/99
Account #23/10/086930 Confidential
<PAGE>
placed or the authority of the person placing an order in this manner. Buy.com
will disclose its Ingram customer number only to its personnel with a need to
know.
C. Ingram will [***] for all of Buy.com's Product orders.
---
4. Volume Commitment
Buy.com agrees that its annual Ingram purchases will meet or exceed [***]
---
for the term of this Agreement. This annual purchase goal may be reviewed
and adjusted quarterly. If Buy.com fails to achieve this run rate within
six (6) months from the effective date of this Agreement, Ingram reserves
the right to review and adjust the pricing as stated in Section 5.
5. Pricing
A. Buy.com's prices for Product purchases, excluding those listed in
Exhibit A, [***]. Exhibit A provides a list of vendors for which the
---
pricing is adjusted individually and separately from the pricing listed
below.
---------------------------------------------------
Product Type Cost Plus %
---------------------------------------------------
Software [***]
---
---------------------------------------------------
Hardware [***]
---
---------------------------------------------------
Accessory [***]
---
---------------------------------------------------
Technical [***]
---
---------------------------------------------------
NOTE: Certain Product purchases, including but not limited to [***], may
---
not be included in the above pricing.
B. As Ingram's costs change, prices to Buy.com may be adjusted to reflect
those changes.
C. Ingram represents to Buy.com that it believes that the [***] being
---
offered to Buy.com pursuant to this Agreement, when considered in the
aggregate, [***]. On a quarterly basis during the term of this Agreement,
---
Ingram and Buy.com will meet to review current market prices and terms for
the Products and services being offered by Ingram to Buy.com pursuant to
this Agreement. At such meetings, the parties will discuss in good faith
amendments to such prices and terms, if necessary, in order to render the
[***] provided by Ingram to Buy.com, when considered in the aggregate
---
[***].
---
________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
________________________________________________________________________________
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<PAGE>
6. Payment Terms
A. Buy.com shall furnish to Ingram all financial information reasonably
requested by Ingram from time to time for the purpose of establishing or
continuing Buy.com's credit limit, it being understood that Ingram shall
have the right to decline to extend credit to Buy.com and to require that
the applicable purchase price be paid prior to shipment. Ingram shall have
the right from time to time, without notice, to change or revoke Buy.com's
credit limit on the basis of changes in Ingram's credit policies or
Buy.com's financial condition and/or payment record.
B. Ingram will invoice Buy.com upon Product shipment, and all invoices
will be due and payable net [***] ([***]) days from the invoice date.
--- ---
Ingram will provide an Early Pay Discount of [***] ([***]) on all invoices
--- ---
for which payment is received by wire transfer within three (3) days of
invoice date. A service charge of the lesser of [***] ([***]) per month or
--- ---
the maximum amount allowed by law will be charged on all past due balances
to defray Ingram's costs of carrying such balance. Credit cards
(MasterCard, VISA and Discover Card) will only be accepted at the time of
order or purchase. Payment for all other orders must be made in accordance
with the terms in effect at the time the order was placed.
C. In the event Buy.com fails to make timely payment of any amount
invoiced hereunder, Ingram shall have the right, in addition to any and all
other rights and remedies available to Ingram, at law or in equity, to
immediately revoke any or all credit extended, to delay or cancel future
deliveries and/or to reduce or cancel any or all quantity discounts
extended to Buy.com. Buy.com shall pay all costs of collection, including
reasonable attorneys' fees.
D. Any obligation of Ingram under these terms and conditions to deliver
Products on credit terms shall terminate without notice if Buy.com files a
voluntary petition under a bankruptcy statute, or makes an assignment for
the benefit of creditors, or if an involuntary petition under a bankruptcy
statute is filed against Buy.com, or if a receiver or trustee is appointed
to take possession of the assets of Buy.com.
7. Shipping
A. All orders will be shipped F.O.B. origin, Ingram's carrier of choice,
with all ground freight charges paid by Ingram for shippable Product orders
over [***] ([***]). In the event an authorized Buy.com representative
--- ---
requests a priority shipping method, Buy.com agrees to use an Ingram
authorized carrier and to pay all such freight costs.
B. For fulfillment orders all Product shipped directly to Buy.com's
customers will be packaged with no reference to Ingram. Specifically, the
packaging will not display any Ingram trademark, service mark, logo, or
trade name. If the carrier requires a return
____________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE>
address, Ingram may use its warehouse address, without its company name on
such shipment.
C. Buy.com or its customer shall examine all Products promptly upon
receipt thereof. No later than thirty (30) days after receipt, Buy.com
shall notify Ingram of all claimed shortages or damaged Products or if
rejection is intended, shall specify all grounds therefor. Failure to give
such notice shall be deemed an acceptance of the Products as of the date of
shipment.
8. Returns
A. Buy.com agrees to make separate requests for stock balance and
defective returns. All returns must be accompanied by a valid Ingram Return
Material Authorization ("RMA") number. Each return must be packaged
separately for each RMA and contain only Product specified on that RMA. All
RMA's are valid for thirty (30) days from the date of issuance.
B. Stock Balancing
1. For systems vendor returns, Ingram will allow Buy.com stock
balance returns for up to [***] ([***]) days from the date of invoice,
--- ---
subject to vendor requirements or restrictions. Buy.com will have
Product return privileges on overstocked resalable Products purchased
from Ingram of up to [***] ([***]) of its previous [***] ([***]) days
--- --- --- ---
purchases, less any stock balance returns. Credit for returns is
calculated at the last purchase price or the current price, whichever
is lower.
2. For non-systems vendor returns, Ingram will allow Buy.com stock
balance returns for up to [***] ([***]) days from the date of invoice,
--- ---
subject to vendor requirements or restrictions. Buy.com will have
Product return privileges on overstocked Product purchased from Ingram
of up to [***], less any stock balance returns. Credit for returns is
---
calculated at the last purchase price or the current price, whichever
is lower.
3. Ingram reserves the right not to accept Products which are (a) no
longer in production or (b) are being produced or published by a
manufacturer which is insolvent or which has declared bankruptcy or
(c) subject to more restrictive stock balancing policies issued by the
Product's manufacturer or publisher. Buy.com shall pay all costs and
bear all risks of loss when returning Products to Ingram. Configured
Products may not be stock balanced.
_________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
________________________________________________________________________________
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<PAGE>
C. Defective Returns
1. Buy.com may return to Ingram for replacement or credit any
Products (other than Configured Products) found to be defective within
ninety (90) days of purchase or any Configured Products which are
found to be defective within thirty (30) days of purchase. Buy.com
must obtain Ingram's approval prior to returning the Products. Ingram
reserves the right to require Buy.com to return defective Products
directly to the Products' manufacturer for replacement according to
the manufacturer's defective Products return policy.
2. Ingram shall not be obligated to repair or replace Products
rendered defective, in whole or in part, by causes external to the
Products, such as, but not limited to catastrophe, power failure or
transients, overvoltage on interface, environment extremes, improper
use, maintenance and application of the Products or use of
unauthorized parts.
9. Marketing Funds
[***].
---
10. Confidentiality
A. For a period of two (2) years from the date of disclosure to the other
party, both parties agree that they will not disclose to third parties the
Confidential Information, as hereafter defined, of the other without the
other party's prior written permission. Confidential Information shall mean
all proprietary information and/or trade secrets (including but not limited
to Buy.com customer information) regardless of the form in which it is
transmitted, which (a) if disclosed in tangible form bears a legend
indicating that it is confidential or proprietary; or (b) if disclosed
orally or visually only, is identified as confidential or proprietary at
the time of disclosure and is documented as such in writing and a non-
confidential written summary of the disclosure is provided to the other
party within thirty (30) days of the date of disclosure. Confidential
Information will only be used by the parties in furtherance of this
business relationship. Ingram agrees not to use Buy.com's Confidential
Information to solicit or develop business directly with Buy.com's
customers.
B. The foregoing obligations not to disclose Confidential Information
shall not apply with respect to a party's Confidential Information that:
(i) was in the possession of or known by the other party without an
obligation of confidentiality prior to receipt from the disclosing party;
(ii) is or becomes general public knowledge through no fault or acts of the
other party; (iii) is or becomes lawfully available to the other party from
a third party which, to the other party's knowledge, is not subject to an
obligation of confidentiality; (iv) in independently developed by the other
party without use of any Confidential Information; or (v) the other party
is advised by counsel is required to be disclosed by
______________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
________________________________________________________________________________
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<PAGE>
any governmental agency or pursuant to any law, code or regulation,
provided the disclosing party notifies the other party in writing as soon
as it becomes aware of the disclosure requirement so as to afford the other
party every opportunity to take whatever steps it deems necessary to
protect the confidentiality of the information. In the event that Buy.com
determines that it must file this Agreement as an exhibit to any
registration statement it files with the U.S. Securities and Exchange
Commission (the "SEC"), confidential treatment for the filing will permit
Ingram to review and approve the portions of this Agreement for which
confidential treatment is requested at least seventy-two (72) hours prior
to the filing, and will permit Ingram to participate in any discussions it
or its representatives may have with the SEC with respect to such request.
11. Taxes
Buy.com shall bear applicable federal, state, municipal, and other
government taxes (such as sales, use, etc.). Unless otherwise specified,
list prices do not include such expenses, and they will appear, if
applicable, as separate, additional items on the invoice. Exemption
certificates, valid in the place of delivery, must be presented to Ingram
prior to shipment if they are to be honored.
12. Warranty
Product warranties, if any, are provided by the manufacturer/publisher of
the Products. Ingram makes no warranties whatsoever. Ingram's sole
obligation (and Buy.com's sole remedy) in the event of breach of any
warranty shall be the repair or replacement of defective Products. IN NO
EVENT SHALL INGRAM BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES OR DAMAGES OF
ANY KIND OR NATURE ALLEGED TO HAVE RESULTED FROM ANY BREACH OF WARRANTY.
INGRAM DOES NOT WARRANT THE MERCHANTABILITY OF THE PRODUCTS OR THEIR
FITNESS FOR ANY PARTICULAR PURPOSE. INGRAM MAKES NO WARRANTY, EXPRESS OR
IMPLIED, OTHER THAN THOSE SPECIFICALLY SET FORTH HEREIN.
13. Patent and Trademark Indemnity
INGRAM SHALL HAVE NO DUTY TO DEFEND, INDEMNIFY, AND HOLD HARMLESS BUY.COM
FROM AND AGAINST ANY OR ALL DAMAGES AND COST INCURRED BY BUY.COM ARISING
FROM THE INFRINGEMENT OF PATENTS OR TRADEMARKS OR THE VIOLATION OF
COPYRIGHTS BY PRODUCTS. NOTWITHSTANDING ANY OTHER TERMS OR CONDITIONS TO
THE CONTRARY, INGRAM'S LIABILITY UNDER THIS SECTION SHALL NOT EXCEED THE
PURCHASE PRICE OF THE INFRINGING PRODUCT.
14. Limitation of Liability
INGRAM SHALL NOT BE LIABLE TO BUY.COM, BUY.COM'S CUSTOMERS, OR OTHER PARTY
FOR ANY LOSS, DAMAGE, OR INJURY WHICH RESULTS FROM THE USE OR APPLICATION
BY BUY.COM, BUY.COM'S CUSTOMER, OR
________________________________________________________________________________
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<PAGE>
ANY OTHER PARTY OF PRODUCTS DELIVERED TO BUY.COM, UNLESS THE LOSS OR DAMAGE
RESULTS DIRECTLY FROM THE INTENTIONALLY TORTIOUS OR FRAUDULENT ACTS OR
OMISSIONS OF INGRAM. IN NO EVENT SHALL INGRAM BE LIABLE TO BUY.COM OR ANY
THIRD PARTY FOR LOSS, DAMAGE, OR INJURY OF ANY KIND OR NATURE ARISING OUT
OF OR IN CONNECTION WITH THESE TERMS AND CONDITIONS, OR ANY AGREEMENT INTO
WHICH THEY ARE INCORPORATED, OR ANY PERFORMANCE OR NONPERFORMANCE UNDER
THESE TERMS AND CONDITIONS BY INGRAM, ITS EMPLOYEES, AGENTS OR
SUBCONTRACTORS, IN EXCESS OF THE NET PURCHASE PRICE OF THE PRODUCTS
ACTUALLY DELIVERED TO BUY.COM HEREUNDER. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO LOSS OF GOOD WILL,
LOSS OF ANTICIPATED PROFITS, OR OTHER ECONOMIC LOSS ARISING OUT OF OR IN
CONNECTION WITH EITHER PARTY'S BREACH OF, OR FAILURE TO PERFORM IN
ACCORDANCE WITH ANY OF THESE TERMS AND CONDITIONS, OR THE FURNISHING,
INSTALLATION, SERVICING, USE OR PERFORMANCE OF ANY PRODUCTS PROVIDED
HEREUNDER, EVEN IF NOTIFICATION HAS BEEN GIVEN AS TO THE POSSIBILITY OF
SUCH DAMAGES. BOTH PARTIES HEREBY EXPRESSLY WAIVE ANY AND ALL CLAIMS FOR
SUCH DAMAGES. IN NO EVENT SHALL INGRAM HAVE ANY LIABILITY FOR ANY PRODUCTS
USED FOR AVIATION, MEDICAL, LIFESAVING, LIFE SUSTAINING OR NUCLEAR
APPLICATIONS.
15. Compliance with U.S. Export Laws
The Products are sold to Buy.com for resale in the United States only. In
the event Buy.com delivers the Products to a customer who may use the
Products outside the United States, Buy.com acknowledges and shall advise
its customers that the Products are controlled for export by the U.S.
Department of Commerce and that the Products may require authorization
prior to export from the United States or re-export. Buy.com agrees that
it will not export, re-export, or otherwise distribute Products, or direct
products thereof, in violation of any export control laws or regulations of
the United States. Buy.com warrants that it will not export or re-export
any Products with knowledge that will be used in the design, development,
production, or use of chemical, biological, nuclear, or ballistic weapons,
or in a facility engaged in such activities, unless Buy.com has obtained
prior approval from the Department of Commerce. Buy.com further warrants
that it will not export or re-export, directly or indirectly, any Products
to embargoed countries, including, but not limited to, Cuba, Libya, North
Korea, Iran, Iraq, Sudan and Syria. Diversion of Products contrary to U.S.
law is prohibited.
16. Manufacturer/Publisher Restrictions
All Products delivered by Buy.com hereunder may have additional
restrictions on their use required by manufacturer/publisher. Buy.com is
solely responsible for ensuring its adherence to any and all such
restrictions or requirements.
________________________________________________________________________________
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<PAGE>
17. Severability
A judicial determination that any provision hereunder is invalid in whole
or in part shall not affect the enforceability of those provisions not
found to be invalid.
18. Reconciliation
Both parties mutually agree to reconcile Buy.com's account every ninety
(90) days from the effective date of this Agreement. In order to allow
appropriate credits to be applied, Buy.com agrees to provide appropriate
documentation as listed in Exhibit C to Ingram and wait thirty (30) days
from the date of the disputed claim before debiting Ingram for any reason.
19. Notices
All notices and other communications relating to this Agreement or its
terms will be in writing and mailed via first class United States Postal
Service, certified or registered with return receipt requested or via
facsimile. All notices so mailed will be deemed received two (2) days
after postmark date and facsimile will be deemed received upon notification
of successful transmission.
20. Choice of Law/Choice of Forum
This Agreement shall be deemed to have been executed and delivered in Santa
Ana, California, and shall be construed, interpreted and enforced under and
in accordance with the internal laws of the State of California, excluding
its conflicts or choice of law rule or principles which might refer to the
law of another jurisdiction. The parties agree to exercise any right or
remedy in connection with this Agreement exclusively in, and hereby submit
to the jurisdiction of the State of California, Courts of Orange County,
California, or the United States District Court at Santa Ana, California.
The state and federal courts situated in Orange County, California will
have non-exclusive jurisdiction and venue over any dispute or controversy,
which arises out of this Agreement.
21. Binding Effect/Assignment
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective representatives, successors and
permitted assigns. Neither party may assign its rights and/or duties under
this Agreement without prior written consent of the other party given at
the other party's sole option; except that Ingram may assign this Agreement
to a subsidiary or affiliate upon notice to Buy.com. Any such attempted
assignment shall be void.
22. Headings
This Agreement may be executed in any number of original counterparts, each
of which when executed and delivered will be deemed to be an original and
all of which taken together will constitute but one and the same
instrument. Headings in this Agreement are
________________________________________________________________________________
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<PAGE>
included for convenience of reference only and will not constitute a part
of this Agreement for any other purpose.
23. Attorneys Fees
In the event there is any dispute concerning the terms of this Agreement or
the performance of any party hereto pursuant to the terms of this
Agreement, and any party hereto retains counsel for the purpose of
enforcing any of the provisions of this Agreement or asserting the terms of
this Agreement in defense of any suit filed against said party, each party
shall be solely responsible for its own costs and attorney's fees incurred
in connection with the dispute irrespective of whether or not a lawsuit is
actually commenced or prosecuted to conclusion.
24. Term and Termination
This Agreement will commence on the date of the last signature set forth
below an will continue for one (1) year. Either party may terminate this
Agreement without cause by giving one hundred twenty (120) days advance
written notice to the other party. The termination provisions in Exhibit B
shall apply only to Exhibit B and Clause 9 of this Agreement. Ingram may
terminate this Agreement immediately for cause upon written notice, which
notice will include a ten (10) day opportunity to cure.
25. Entire Agreement
This Agreement (including any Exhibits and Addenda) constitutes the entire
Agreement between the parties pertaining to the subject matter hereof, and
will cancel, terminate, and supersede any and all previous agreements,
proposals, representations, or statements, whether oral or written. The
terms of this Agreement will supersede the terms of any invoice or purchase
order issued by either party. Any modifications of this Agreement must be
in writing and signed by an authorized representative of each party.
This Agreement will become effective as of the last date of signature by the
authorized parties below.
"Buy.com" "Ingram"
By:_____________________________ By:___________________________________
(Officer of the Company) (Officer of the Company)
Name:___________________________ Name:_________________________________
(Please print or type) (Please print or type)
Title:__________________________ Title:________________________________
Date:___________________________ Date:_________________________________
________________________________________________________________________________
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<PAGE>
August 11, 1999
Debbie Tibey
Senior Vice President of Sales
Ingram Micro, Inc.
1600 East St. Andrew Place
Santa Ana, CA 92705
Re: Amendment to Resale Agreement
Dear Debbie:
This will amend the Resale Agreement between Ingram Micro, Inc. and BUY.COM Inc.
dated March 10, 1999 (the "Resale Agreement"). When signed on behalf of Ingram
Micro Inc., Section 24 of the Resale Agreement will be replaced with the
following:
24. Term and Termination
This Agreement will commence on the date of the last signature set forth below
and will continue for one (1) year, Either party may terminate this Agreement
without cause by giving one hundred twenty (120) days advance written notice to
the other party. The termination provisions in Exhibit B shall apply only to
Exhibit B and Clause 9 of this Agreement. Ingram may terminate this Agreement
immediately for cause upon written notice, which notice will include a ten (10)
day opportunity to cure. Unless and until either party provides at least 120
days prior written notice of its intention not to extend the term of this
Agreement, this Agreement shall automatically renew for additional one (1) year
term.
Except as amended by this letter agreement, the Resale Agreement will remain in
full force and effect between our companies.
Sincerely,
Greg Hawkins
Chief Executive Officer
Accepted and Agreed this
______ day of ______, 1999.
Ingram Micro, Inc.
By:_____________________________
Debbie Tibey
Senior V.P. of Sales
________________________________________________________________________________
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<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
________________________________________________________________________________
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<PAGE>
EXHIBIT 10.24
Execution Copy
BUY CORP.
SERIES A CONVERTIBLE PARTICIPATING
PREFERRED STOCK PURCHASE AGREEMENT
AUGUST 18, 1998
<PAGE>
Index of Exhibits
-----------------
Schedule of Purchasers Exhibit A
Certificate of Amendment to
Certificate of Incorporation Exhibit B
Investors' Rights Agreement Exhibit C
Stockholders' Agreement Exhibit D
Employee NonDisclosure and Exhibit E
Developments Agreement and
Non-Competition Agreement
Form of Legal Opinion Exhibit F
<PAGE>
BUY CORP.
SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK
PURCHASE AGREEMENT
This Series A Convertible Participating Preferred Stock Purchase Agreement
(the "Agreement") is entered into as of this 18th day of August, 1998, by and
among BUY CORP., a Delaware corporation (the "Company"), and each of those
entities, severally and not jointly, whose names are set forth on the Schedule
of Purchasers attached hereto as Exhibit A (which entities are hereinafter
---------
collectively referred to as "Purchasers" and each individually as a
"Purchaser").
Recitals
Whereas, the Company has authorized the sale and issuance of an aggregate
of one million two hundred ninety eight thousand seven hundred forty two
(1,298,742) shares of its Series A Convertible Participating Preferred Stock
(the "Shares");
Whereas, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
Whereas, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
Section 1. Agreement to Sell and Purchase
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares and (ii) the issuance of such shares of common stock of
the Company, $.0001 par value (the "Common Stock"), to be issued upon conversion
of the Shares (the "Conversion Shares"). The Shares and the Conversion Shares
shall have the rights, preferences, privileges and restrictions set forth in the
Certificate of Amendment to the Certificate of Incorporation of the Company, in
the form attached hereto as Exhibit B (the "Certificate").
---------
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing (as hereinafter defined), the Company hereby agrees to issue and
sell to each Purchaser, severally and not jointly, and each Purchaser agrees to
purchase from the Company, severally and not jointly, the number of Shares set
forth opposite such Purchaser's name on Exhibit A at a purchase price of
---------
$15.3995 per share.
Section 2. Closing, Delivery and Payment
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place on the date hereof, at the
offices of Testa, Hurwitz & Thibeault,
-1-
<PAGE>
LLP, High Street Tower, 125 High Street, Boston, Massachusetts 02110 or at such
other time or place as the Company and Purchasers may mutually agree (such date
is hereinafter referred to as a "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions hereof,
the Company will deliver to the Purchasers certificates representing the number
of Shares to be purchased at the Closing by each Purchaser, against payment of
the purchase price therefor, by check or wire transfer made payable to the order
of the Company.
Section 3. Representations and Warranties of the Company
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers, the Company and Scott A. Blum hereby represent and warrant to each
Purchaser as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Investors' Rights Agreement, in the form attached hereto as
Exhibit C (the "Investors' Rights Agreement"), and the Stockholders' Agreement,
- ---------
in the form attached hereto as Exhibit D (the "Stockholders' Agreement"), to
---------
issue and sell the Shares and the Conversion Shares and to carry out the
provisions of this Agreement, the Investors' Rights Agreement, the Stockholders'
Agreement and the Certificate and to carry on its business as presently
conducted and as presently proposed to be conducted. The Company is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) make such qualifications necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Company or its business. The Company owns no
equity securities of any other corporation, limited partnership or similar
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement. The Company has made available to the Purchasers true,
correct and complete copies of the Company's Certificate of Incorporation and
Bylaws, each as amended to date.
3.2 Capitalization; Voting Rights. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (a) twelve million
six hundred sixty six thousand five hundred forty two (12,666,542) shares of
Common Stock, eight million six hundred seventy five thousand three hundred
fifteen (8,675,315) shares of which are issued and outstanding, one million one
hundred seventy two thousand five hundred (1,172,500) shares of which are
currently reserved for issuance pursuant to outstanding option agreements, and
one million five hundred nineteen thousand nine hundred eighty five (1,519,985)
shares of which will be reserved in the future for issuance to key employees,
consultants and others affiliated with the Company pursuant to stock grant,
stock purchase and/or option plans or any other stock incentive program,
arrangement or agreement approved by the Company's Board of Directors and (b)
one million two hundred ninety eight thousand seven hundred forty two
(1,298,742) shares of Preferred Stock, all of which are designated Series A
Convertible Participating Preferred Stock, none of which are issued and
outstanding. All issued and outstanding shares of
-2-
<PAGE>
the Company's Common Stock (i) have been duly authorized and validly issued,
(ii) are fully paid and nonassessable and (iii) were issued in compliance with
all applicable state and federal laws concerning the issuance of securities. The
rights, preferences, privileges and restrictions of the Shares are as stated in
the Certificate. The Conversion Shares have been duly and validly reserved for
issuance. Except as may be granted pursuant to this Agreement and except as set
forth above, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. The Shares and the
Conversion Shares have been duly authorized and, when issued in compliance with
the provisions of this Agreement and the Certificate, will be validly issued
(including, without limitation, issued in compliance with applicable state and
federal securities laws), fully paid and nonassessable and will be free of any
liens or encumbrances; provided, however, that the Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time transfer is proposed.
3.3 Authorization; Binding Obligations. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the Investors' Rights Agreement and the
Stockholders' Agreement, the performance of all obligations of the Company
hereunder and thereunder at the Closing and the authorization, sale, issuance
and delivery of the Shares pursuant hereto and the Conversion Shares pursuant to
the Certificate has been taken or will be taken prior to the Closing. The
Agreement, the Investors' Rights Agreement and the Stockholders' Agreement, when
executed and delivered, will be valid and binding obligations of the Company
enforceable against the Company, in accordance with their terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights;
(ii) as limited by general principles of equity that restrict the availability
of specific performance, injunctive relief or other equitable remedies; and
(iii) to the extent that the enforceability of the indemnification provisions of
the Investors' Rights Agreement may be limited by applicable federal and state
securities laws. The sale of the Shares and the subsequent conversion of the
Shares into Conversion Shares are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.
3.4 Financial Statements; Subsidiaries. The Company's un-audited balance
sheet as of December 31, 1997 and un-audited statements of operations and cash
flows of the Company for the 12-month period ended December 31, 1997 and the
Company's unaudited balance sheet as of June 30, 1998 (the "Latest Balance
Sheet") and unaudited statements of operations and cash flows of the Company for
the six month period ending June 30, 1998 (the "Financial Statements") delivered
to the Purchasers in connection with the investment contemplated hereby have
been prepared in accordance with generally accepted accounting principles
consistently applied (subject to normal year-end adjustments and the absence of
footnote disclosures) and fairly present in all material respects the financial
position and the results of operations of the Company for the period covered
thereby, and the Company has no material liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise) that are not either
reflected or fully reserved against on the Latest Balance Sheet or incurred in
the ordinary course of the business of the Company subsequent to the date
thereof. Since the date of the Latest Balance Sheet, there has not been any
material adverse change in the business, operations, financial
-3-
<PAGE>
condition or business as presently proposed to be conducted by the Company. The
Company has no subsidiaries.
3.5 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby, there are
no agreements, understandings or proposed transactions between the Company and
any of its officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company (other
than obligations of, or payments to, the Company arising in the ordinary course
of business), or (ii) the license of any patent, copyright, trade secret or
other proprietary right to or from the Company (other than licenses arising from
the purchase of "off the shelf" or other standard products), or (iii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to dividend obligations,
distributions, indebtedness and other obligations incurred in the ordinary
course of business or as disclosed in the Financial Statements), (iii) made any
loans or advances to any person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.
3.6 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). No officer, director or, to the best of the
Company's knowledge, stockholder, or any member of their immediate families, are
indebted to the Company or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company, except that officers, directors and/or stockholders of the
Company may own stock in publicly traded companies which may compete with the
Company. No such officer, director or stockholder, or any member of their
immediate families is, directly or indirectly, interested in any material
contract with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the Company). The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.7 Title to Properties and Assets; Liens, Etc. The Company has good
and marketable title to its properties and assets, and good title to its
leasehold estates, in each case
-4-
<PAGE>
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(i) those resulting from taxes which have not yet become delinquent, (ii) minor
liens and encumbrances which do not materially detract from the value of the
property subject thereto or materially impair the operations of the Company and
(iii) those that have otherwise arisen in the ordinary course of business. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.
3.8 Patents and Trademarks. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information and other proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted, without any
known infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments or any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
3.9 Compliance with Other Instruments. The Company is not in violation
or default of any term of its Certificate of Incorporation or Bylaws, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company. The execution, delivery, and performance of and compliance with
this Agreement and the related agreements, and the issuance and sale of the
Shares pursuant hereto and of the Conversion Shares pursuant to the Restated
Certificate, will not, with or without the passage of time or giving of notice,
result in any such material violation, or be in conflict with or constitute a
default under any such term, or result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company
or the suspension, revocation, impairment, forfeiture or nonrenewal of any
permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
-5-
<PAGE>
3.10 Litigation. There is no action, suit, proceeding or investigation
pending or to the Company's knowledge currently threatened against the Company
that questions the validity of this Agreement, the Investors' Rights Agreement
or the Stockholders' Agreement or the right of the Company to enter into any of
such agreements, or to consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in the aggregate, in any
material adverse change in the assets, condition, affairs or prospects of the
Company, financially or otherwise, or any change in the current equity ownership
of the Company, nor is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.11 Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.12 Employees. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company's knowledge, threatened with respect to the Company. No employee has
any agreement or contract, written or verbal, regarding his employment. To the
Company's knowledge, no employee of the Company, nor any consultant with whom
the Company has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating to
the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company;
and to the Company's knowledge the continued employment by the Company of its
present employees, and the performance of the Company's contracts with its
independent contractors, will not result in any such violation. The Company has
not received any notice alleging that any such violation has occurred. No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company. The Company is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees.
3.13 NonDisclosure and Developments Agreements. Each current employee,
officer and consultant of the Company has executed, or will execute prior to or
at Closing, an Employee
-6-
<PAGE>
NonDisclosure and Developments Agreement and Non-Competition Agreement, in the
forms attached hereto as Exhibit E. No current employee, officer or consultant
---------
of the Company has excluded works or inventions made prior to his or her
employment with the Company from his or her assignment of inventions pursuant to
such employee, officer or consultant's agreement. The Company, after reasonable
investigation, is not aware that any of its employees, officers or consultants
is in violation thereof and the Company will use its best efforts to prevent any
such violation.
3.14 Obligations of Management. Each officer of the Company is currently
devoting one hundred percent (100%) of his business time to the conduct of the
business of the Company. The Company is not aware of any officer or key employee
of the Company planning to work less than full time at the Company in the
future.
3.15 Registration Rights. Except as required pursuant to the Investors'
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1 of the Investors'
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.16 Compliance with Laws; Permits. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of the Shares or
the Conversion Shares, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects or financial condition of the Company
and believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
3.17 Environmental and Safety Laws. The Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation.
3.18 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.
-7-
<PAGE>
3.19 Minute Books. The minute books of the Company provided to counsel for
the Purchasers contain a complete summary of all meetings of, and any actions
taken by, the directors and stockholders of the Company since the date of the
Company's incorporation.
A. 3.20 Disclosure. The Company has fully provided the Purchasers with
all the information the Purchasers have requested for deciding whether to
acquire the Shares and the Conversion Shares and all the information that the
Company believes is reasonably necessary to enable the Purchasers to make such a
decision. The Certificate of Incorporation and Bylaws of the Company are in the
form provided to counsel for the Purchasers.
3.21 Year 2000 Compliance. The Company has reviewed the areas within its
business and operations which could be adversely affected by Year 2000 issues
and evaluated the costs associated with modifying and testing its systems for
the Year 2000. The Company does not believe that the cost of Year 2000
compliance for its internal information systems will be material to the Company
or that it will have a material adverse effect on the Company's business,
financial condition or results of operations.
3.22 Qualified Small Business. The Company qualifies as a "Qualified Small
Business" as defined in Section 1202(d) of the Code and covenants that so long
as its shares are held by the Purchasers (or a transferee in whose hands the
shares are eligible to qualify as Qualified Small Business Stock as defined in
Section 1202(c) of the Code), it will use its best efforts to cause the shares
to qualify as Qualified Small Business Stock.
Section 4. Representations and Warranties of the Purchasers
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement, the Investors' Rights Agreement and the Stockholders' Agreement and
to carry out their provisions. All actions on the part of the Purchaser required
for the lawful execution and delivery of this Agreement, the Investors' Rights
Agreement and the Stockholders' Agreement have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement, the
Investors' Rights Agreement and the Stockholders' Agreement will be valid and
binding obligations of Purchaser, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, (ii) as limited by general principles of equity that restrict
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable laws.
4.2 Investment Representations. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained
-8-
<PAGE>
in the Securities Act based in part upon Purchaser's representations contained
in the Agreement. Purchaser hereby represents and warrants as follows:
(a) Purchaser Bears Economic Risk. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
(b) Acquisition for Own Account. Purchaser is acquiring the Shares
and the Conversion Shares for Purchaser's own account for investment only, and
not with a view towards their distribution.
(c) Purchaser Can Protect Its Interest. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(d) Accredited Investor. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Rule 144. Purchaser acknowledges and agrees that the Shares, and,
if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(f) Company Information. Such Purchaser has had an opportunity to
-------------------
discuss the Company's business, management and financial affairs with directors,
officers and management of the Company and believes that such Purchaser has
received all of the information such Purchaser considers necessary or
appropriate for deciding whether to purchase the Shares. Such Purchaser has
also had the opportunity to ask questions of, and receive answers from, the
Company and its management regarding the terms and conditions of this
investment.
-9-
<PAGE>
(g) Legends. It is understood that the certificates evidencing the
-------
Preferred Stock (and the Conversion Stock) may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
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 AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION BEING
AVAILABLE UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS."
Section 5. Conditions to Closing; Covenants
5.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at each Closing are subject to the
satisfaction, at or prior to each Closing, of the following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing
Date.
(b) Performance of Obligations. The Company shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by the Company on or before the Closing.
(c) Legal Investment. On the Closing Date, the sale and issuance of
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
(d) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement, the Investors'
Rights Agreement and the Stockholders' Agreement (except for such as may be
properly obtained subsequent to the Closing).
(e) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
(f) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
---------
and delivered by the parties thereto.
(g) Stockholders' Agreement. A Stockholders' Agreement,
substantially in the form attached hereto as Exhibit D, shall have been executed
---------
and delivered by the parties thereto.
(h) Employee NonDisclosure and Developments Agreement and Non-
Competition Agreement. An Employee NonDisclosure and Developments Agreement and
Non-Competition Agreement, substantially in the forms attached hereto as
Exhibit E, shall have
- ---------
-10-
<PAGE>
been executed and delivered by each officers or employee of the Company.
(i) Board of Directors. Upon the Closing, the authorized size of
the Board of Directors of the Company shall be eight (8) members and the Board
shall consist of a representative of SOFTBANK Technology Ventures IV L.P. and
__________ and __________. The Company agrees to pay all reasonable travel
expenses associated with the attendance by members of the Board of Directors at
all meetings of the Board or committee thereof.
(j) Legal Opinion. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit F.
---------
(k) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby, all
documents and instruments incident to such transactions and all documents,
instruments and proceedings related to the Purchasers' business, technical and
legal due diligence shall be reasonably satisfactory in substance and form to
the Purchasers and their counsel, and the Purchasers and their counsel shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
5.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Shares at each Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material respects at the date of each Closing, with the same force and
effect as if they had been made on and as of said date.
(b) Performance of Obligations. Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Purchasers on or before the Closing.
(c) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
(d) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
---------
and delivered by the Purchasers.
(e) Stockholders' Agreement. A Stockholders' Agreement,
substantially in the form attached hereto as Exhibit D, shall have been executed
---------
and delivered by the parties thereto.
(f) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement, the Investors'
Rights Agreement and the
-11-
<PAGE>
Stockholders' Agreement (except for such as may be properly obtained subsequent
to the Closing).
5.3 Covenants of the Company.
(a) Insurance. The Company, within 30 days after the Closing Date,
shall obtain from financially sound and reputable insurers a key person life
insurance policy on Scott Blum in the amount of $5,000,000, which policy shall
name the Company as the beneficiary and be satisfactory in form and substance to
the Purchasers.
(b) Proceeds. The proceeds from the sale by the Company of the
Shares shall be used for the working capital needs of the Company.
Section 6. Miscellaneous
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware without regard to principles of conflict of
laws.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive for a period of four (4) years any investigation made
by any Purchaser and the closing of the transactions contemplated hereby. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
including the Investors' Rights Agreement and the Stockholders' Agreement, and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
6.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
-12-
<PAGE>
(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
6.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investors'
Rights Agreement, the Stockholders' Agreement or the Certificate, shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind of character on
any Purchaser's part of any breach, default or noncompliance under this
Agreement, the Investors' Rights Agreement, the Stockholders' Agreement or under
the Certificate or any waiver on such party's part of any provisions or
conditions of the Agreement, the Investors' Rights Agreement, the Stockholders'
Agreement, or the Certificate must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, the Investors' Rights Agreement, the Stockholders' Agreement,
the Certificate, by law, or otherwise afforded to any party, shall be cumulative
and not alternative.
6.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
---------
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
6.9 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.11 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.11 being untrue.
6.12 Expenses. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement. The Company shall reimburse the reasonable fees and expenses of
counsel to the Purchasers, not to exceed
-13-
<PAGE>
$20,000 in the aggregate, incurred in connection with the negotiation,
execution, delivery and performance of this Agreement.
6.13 Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
6.14 Specific Enforcement. Any Purchaser shall be entitled to specific
enforcement of its rights under this Agreement. Then Company acknowledges that
money damages would be an inadequate remedy for its breach of this Agreement and
consents to an action for specific performance or other injunctive relief in the
event of any such breach.
6.15 Attorney's Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
In Witness Whereof, the parties hereto have executed the Series A
Convertible Participating Preferred Stock Purchase Agreement as of the date set
forth in the first paragraph hereof.
COMPANY:
BUY CORP.
Address: ____________________
____________________
____________________
By:______________________________________
Name:
Title:
_________________________________________
Scott A. Blum
PURCHASERS:
SOFTBANK Technology Ventures IV L.P.
By: STV IV LLC
Its General Partner
By:______________________________________
Name:
Title:
SOFTBANK Technology Advisors Fund L.P.
By: STV IV LLC
Its General Partner
By:______________________________________
Name:
Title:
CLASS A PREFERRED STOCK PURCHASE AGREEMENT
<PAGE>
Exhibit A
Series A Convertible Participating Preferred Stock Purchase Agreement
<TABLE>
<CAPTION>
Aggregate
Name and Address Shares Purchase Price
- --------------------------------------- ---------- --------------
<S> <C> <C>
SOFTBANK Technology Ventures IV L.P 955,745 $14,717,995.13
c/o STV IV LLC
333 W. San Carlos
San Jose, CA 95110
SOFTBANK Technology Advisors Fund L.P. 18,312 $ 281,995.64
c/o STV IV LLC
333 W. San Carlos
San Jose, CA 95110
---------- --------------
Total: 974,057 $14,999,990.77
====== ========== ==============
</TABLE>
<PAGE>
Exhibit B
Certificate of Amendment of Certificate of Incorporation
<PAGE>
Exhibit C
Investors' Rights Agreement
<PAGE>
Exhibit D
Stockholders' Agreement
<PAGE>
Exhibit E
Employee Nondisclosure and Developments Agreement and
Non-Competition Agreement
<PAGE>
Exhibit F
Legal Opinion
<PAGE>
EXHIBIT 10.33
BUY.COM INC.
21 Brookline
Aliso Viejo, CA 92656
September 2, 1999
SOFTBANK America Inc.
300 Delaware Ave.
Suite 909
Wilmington, DE 19801
Attention: Steve Murray
Dear Gentlemen:
This letter agreement (the "Agreement") sets forth the principal terms
upon which Buy.Com Inc., a Delaware corporation ("Buy.Com"), on the one hand,
and SOFTBANK America Inc. and/or one or more of its affiliated entities
referenced in this Agreement (all such entities collectively referred to as
"SoftBank"), on the other hand, will form three separate joint ventures. The
principal terms of each of the joint ventures are set forth in Exhibit A,
---------
Exhibit B and Exhibit C (each a "Term Sheet" and collectively, the "Term
- --------- ---------
Sheets"). This Agreement is being entered into contemporaneously with the
execution and delivery of that certain Series B Participating Convertible
Preferred Stock Purchase Agreement (the "Series B Agreement") of even date
herewith (the "Series B Preferred Stock Financing").
1. Buy.Com Europe. Buy.Com and SoftBank America Inc. will form a joint
--------------
venture according to the principal terms set forth in the Term Sheet attached
hereto as Exhibit A. The provisions set forth in the Term Sheet attached hereto
---------
as Exhibit A are intended to be binding on Buy.Com and SoftBank, subject to the
---------
Closing of the Series B Preferred Stock Financing.
2. Buy.Com UK. Buy.Com and eVentures will form a joint venture according
----------
to the principal terms set forth in the Term Sheet attached hereto as Exhibit B.
---------
The provisions set forth in the Term Sheet attached hereto as Exhibit B are
---------
intended to be binding on Buy.Com and eVentures, subject to the Closing of the
Series B Preferred Stock Financing.
3. Buy.Com Japan. Buy.Com and SoftBank America Inc. will form a joint
-------------
venture according to the principal terms set forth in the Term Sheet attached
hereto as Exhibit C. The provisions set forth in the Term Sheet attached hereto
---------
as Exhibit C are intended to be binding on Buy.Com and SoftBank, subject to the
---------
Closing of the Series B Preferred Stock Financing.
4. Exclusive Negotiations. Each of the parties shall negotiate in good
----------------------
faith and cooperate fully with each other in the negotiation and execution of
the definitive joint venture documents for each of the three joint ventures.
Between the date that is 90 days from the date hereof or such earlier date as
the parties hereto mutually agree, SoftBank and Buy.Com will not (and it will
assure that its officers, directors, employees, affiliates and legal, accounting
and financial advisors do not on its behalf) take any action to solicit,
initiate, seek, encourage, support or entertain any inquiry, proposal or offer
from, furnish any information to, or participate in any negotiations with, any
corporation, partnership, person or other entity or group (other than
<PAGE>
SOFTBANK
September 2, 1999
Page 2
negotiations with each other) regarding any international e-commerce joint
venture in the territories referenced in the Term Sheets.
5. No Public Announcement; No Disclosure. The parties shall make no
-------------------------------------
public announcement concerning this Agreement or the matters contemplated
herein, their discussions or any other memoranda, letters or agreements between
the parties relating to the matters contemplated herein without the prior
consent of the other party; provided, that either of the parties may at any time
make disclosure if it is advised by independent legal counsel that such
disclosure is required under applicable law or regulatory authority. Except as
permitted by the preceding proviso, under no circumstances will the parties (or
any of their respective officers, directors, employees or affiliates) discuss or
disclose the existence or terms of this Agreement (or that the parties are
holding discussions) with or to any third party other than such legal,
accounting and financial advisors of such parties who have a need to know such
information solely for purposes of assisting the parties in evaluating and
negotiating the matters contemplated herein.
6. Conditions to Close. The closing of the Series B Preferred Stock
-------------------
Financing and the sale of shares by The Scott A. Blum Separate Property Trust
(the "Blum Sales") and the receipt of the purchase price for such shares shall
be a condition to Buy.Com's obligation to close the joint venture transactions
referenced in this Agreement.
7. Termination and Break Up Fee. This Agreement shall terminate upon the
----------------------------
occurrence of either of the following:
(a) At the election of Buy.Com, in the event the Series B Preferred Stock
Financing and the Blum Sales have not closed prior to September 30, 1999,
provided that if the sole reason for the failure to close the Series B Preferred
Stock Financing and Blum Sales is due to the requirement to comply with the Hart
Scott Rodino Antitrust Improvements Act of 1976, such closing date deadline
shall be extended until the waiting period has expired or been terminated, or
(b) At the election of Buy.Com or SoftBank if such other party has failed
to comply with the terms of this Agreement, and has failed to cure such default
within thirty (30) days notice of such default by the non-breaching party.
(c) At the election of either party with respect to any of the three joint
ventures for which the parties have not executed and delivered definitive joint
venture documents within six (6) months of the date hereof with respect to the
Buy.Com Europe and Buy.Com UK and nine (9) months of the date hereof with
respect to Buy.Com Japan.
In the event this Agreement is terminated (i) pursuant to Section 7(b)
above as a result of a breach of this Agreement by a party or (ii) pursuant to
Section 7(c) above as a result of the bad faith actions of a party (in either
event such party at fault shall be a "breaching party"), such breaching
<PAGE>
SOFTBANK
September 2, 1999
Page 3
party shall pay to the non-breaching party a termination fee of [***]. Sections
---
5, 9 and 11 will survive the termination of this Agreement.
8. Effect of Agreement. This Agreement is intended to be a binding
-------------------
agreement of the parties hereto, effective and enforceable by the parties. By
SoftBank's signature hereto, SoftBank represents it has the authority to bind
itself and the SoftBank affiliates referenced in this Agreement. The Term
Sheets are incorporated into this Agreement and set forth the parties' intent
for the structure, terms and conditions of the respective joint ventures. The
definitive joint venture documents for each joint venture will contain
additional terms and conditions customary for transactions of this type.
9. Expenses. Each party will bear all fees and expenses incurred by it or
--------
on its behalf in connection with the matters set forth herein (including,
without limitation, the fees and expenses of attorneys, accountants,
consultants, lenders and other advisors).
10. Notices. All notices and other communications hereunder will be in
-------
writing and will be furnished by hand delivery (including recognized overnight
courier) or facsimile to the parties at the addresses set forth below. Any such
notice will be deemed duly given upon the date it is delivered to the address
shown below, addressed as follows:
If to Buy.Com:
Buy.Com Inc.
21 Brookline
Aliso Viejo, California 92656
Attention: Chief Executive Officer
Facsimile: (949) 425-5320
With a copy to:
Brobeck, Phleger & Harrison LLP
38 Technology Drive
Irvine, California 92618-6301
Attention: Keven F. Baxter, Esq.
Facsimile: (949) 790-6301
___________________________
[***] Confidential treatment has been requested for the bracketed portions.
---
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
SOFTBANK
September 2, 1999
Page 4
If to SoftBank:
SOFTBANK America Inc.
300 Delaware Ave.
Suite 909
Wilmington, DE 19801
Attention: Francis B. Jacobs II
Facsimile: (302) 552-3128
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Suite 2100
Los Angeles, CA 90067
Attention: John L. Savva, Esq.
Facsimile: (310) 712-8800
The addresses set forth above may be changed by any party upon furnishing to the
other parties a notice of change of address in accordance with the terms of this
paragraph.
11. Miscellaneous. This Agreement is governed by California law, without
-------------
regard to its choice of law rules. The parties expressly waive the application
of the United Nations Convention on Contracts for the International Sale of
Goods to the terms of this Agreement. The sole jurisdiction and venue for
actions related to the subject matter hereof shall be the state and federal
courts in Orange County County, California. The official language for purposes
of this Agreement, the definitive joint venture documents and all notices and
communications hereunder and thereunder shall be English. This Agreement
constitutes the complete and exclusive agreement between the parties with
respect to the subject matter hereof, superseding and replacing any and all
prior or contemporaneous agreements, communications, and understanding (whether
written or oral) regarding such subject matter. This Agreement may only be
modified, or any rights under it waived, by a written document executed by all
of the parties, provided that the terms of each of the joint ventures may be
amended by the written consent of Buy.Com and the particular SoftBank entity
participating in such joint venture. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which the party may be
entitled.
<PAGE>
SOFTBANK
September 2, 1999
Page 5
If you are in agreement with the foregoing, please sign in the space
provided below and return a copy of this letter to the undersigned.
Very truly yours,
BUY.COM INC.
By:___________________________________
Gregory J. Hawkins
Chief Executive Officer
<PAGE>
SOFTBANK
September 2, 1999
Page 6
ACCEPTED and AGREED:
SOFTBANK AMERICA, INC.
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
EXHIBIT A
---------
TERM SHEET
for
BUY.COM EUROPE
<PAGE>
EXHIBIT B
---------
TERM SHEET
for
BUY.COM UK
<PAGE>
EXHIBIT C
---------
TERM SHEET
for
BUY.COM JAPAN
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
TERM SHEET
FOR
BUY.COM EUROPE JOINT VENTURE
Purpose of Joint Venture: BUY.COM INC. ("Buy.Com") and SOFTBANK America
Inc. ("SoftBank") will form a joint venture
("Buy.Com Europe") to launch and operate an
Internet superstore in the countries and
territories listed below.
Territory Covered: The countries comprising the European Union,
Switzerland, all European countries east to the
Russian border (exclusive of Russia), all
European countries south to Greece (inclusive of
Greece), but excluding the United Kingdom,
Ireland, the Middle East and Africa (the
"Territory").
Launch Priority: It is anticipated that Buy.Com Europe will
prioritize the countries in which it launches
the Buy.Com Internet superstore concept as
follows:
First Stage: Germany, France
Second Stage: Benelux, Scandinavia
Third Stage: Italy, Spain
Future Stages: To be determined by the
Buy.Com Europe Board
Ownership and Structure: Buy.Com Europe will be owned as follows:
50% Buy.Com
50% SOFTBANK America Inc.
The legal and tax structure of Buy.Com Europe
will be determined by Buy.Com and SoftBank in
consultation with their tax, legal and
accounting advisors. It is understood that the
objective is [***].
Buy.Com Europe will establish an employee equity
incentive [***] of the initial capitalization
for issuance to employees and officers of
Buy.Com Europe. The stock and option grants will
be subject to customary [***]. Any modifications
to such vesting schedule shall be at the
discretion of the Buy.Com Europe Board on a case
by case basis.
____________
[***] Confidential treatment has been requested for the bracketed
portions. The confidential redacted portion has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE>
Initial Funding of The initial funding of U.S. $[***] which is
Buy.Com Europe: intended to provide adequate working capital
through June 2000, will be provided entirely by
SoftBank as follows:
$[***] equity contribution from SoftBank
$[***] working capital cash loan from
SoftBank to Buy.Com Europe.
$[***] equity contribution from Buy.Com
(which amount will be funded by SoftBank
as a loan to Buy.Com such that Buy.Com
receives credit for such capital
contribution on the books of Buy.Com
Europe.
The loan from SoftBank to Buy.Com will accrue
interest [***].
The loan from Softbank to Buy.Com Europe will
accrue interest [***].
Ongoing Funding of On an annual basis, management of Buy.Com
Buy.Com Europe: Europe will prepare a Business Plan and Budget
for Buy.Com Europe for review and approval by
the Buy.Com Europe Board. Ongoing funding will
be obtained by additional pro rata investments
by Buy.Com and SoftBank or new third party
investments on terms approved by the Buy.Com
Europe Board. Any new third party investments
will dilute all shareholders pro-rata based on
their respective percentage ownership interests
on the date of such investment.
Preemptive Right: Buy.Com and SoftBank will have a right to
participate in any future financing to maintain
their pro rata ownership in Buy.Com Europe
subject to certain customary exceptions to be
included in the definitive joint venture
documents. This right will terminate upon an IPO
of Buy.Com Europe.
Governance: Buy.Com Europe will have a Board of Directors of
[***] members initially with Buy.Com designating
[***] members [***] and SoftBank designating
[***] members. The parties will enter into a
voting agreement to maintain the Board
composition which agreement will terminate upon
an IPO of Buy.Com Europe.
Buy.Com's CEO, Greg Hawkins, will serve as
Chairman of Buy.Com Europe. The CEO or Managing
Director of Buy.Com Europe will serve as one of
the [***] designees of Buy.Com on the Board of
Buy.Com Europe and such individual will report
to
____________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
2
<PAGE>
Mr. Hawkins.
Buy.Com and SoftBank will mutually recruit and
select a CEO and other senior management for
Buy.Com Europe.
Intellectual Property: Buy.Com will license its e-commerce technology
to Buy.Com Europe on a royalty free basis for
use in the Territory. Buy.Com will retain
ownership of its trade name, brand and all
trademark and service marks and other
intellectual property rights relating thereto
and will license its name and its other
intellectual property rights necessary and
applicable to the business of Buy.Com Europe on
a royalty free basis and on such other terms to
be established in the definitive joint venture
documents. These licenses will be perpetual
subject to certain limitations to be provided
for in the definitive joint venture documents.
Buy.Com will receive a royalty free, perpetual
grant back license to all technology developed
by Buy.Com Europe.
Service Fees: If either Buy.Com or SoftBank provides services
to Buy.Com Europe, Buy.Com Europe shall
reimburse such costs on an allocated basis and
pay a service fee to such party, provided that
the party providing such services will submit a
written proposal of such services and fees for
approval by a majority of the disinterested
Buy.Com Europe Board.
Co-Promotion and Cross Buy.Com and SoftBank will discuss and negotiate
Marketing Opportunities: co-promotion and cross marketing opportunities
to include within the definitive joint venture
documents.
Admission of Additional Buy.Com Europe will not issue ownership interest
Partners: to a competitor of Buy.Com without the prior
written consent of Buy.Com.
Co-Sale and Right of First Each of Buy.Com and SoftBank will have a
Refusal Provisions: co-sale right and right of first refusal over
the other partner's shares or other ownership
interest in Buy.Com Europe, excluding transfers
to affiliates. This agreement will terminate
upon an IPO of Buy.Com Europe.
3
<PAGE>
Expenses: Each party will pay its own costs incurred in
connection with the preparation and negotiation
of the joint venture documents.
BUY.COM INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SOFTBANK America Inc.
By:___________________________________
Name:_________________________________
Title:________________________________
4
<PAGE>
TERM SHEET
FOR
BUY.COM JAPAN JOINT VENTURE
Purpose of Joint BUY.COM INC. ("Buy.Com") and SOFTBANK America, Inc.
Venture: ("Softbank") will form a joint venture ("Buy.Com
Japan") to launch and operate an Internet superstore
in Japan.
Territory Covered: The countries include Japan (the "Territory").
Launch Priority: It is anticipated that Buy.Com Japan will prioritize
the countries in which it launches the Buy.Com
Internet superstore concept as follows:
First Stage: Japan
Ownership and Structure: Buy.Com Japan will be owned as follows:
50% Buy.Com
50% Softbank
The legal and tax structure of Buy.Com Japan will be
determined by Buy.Com and Softbank in consultation
with their tax, legal and accounting advisors. It is
understood that the objective is for [***].
Buy.Com Japan will establish an employee equity
incentive [***] of the initial capitalization for
issuance to employees and officers of Buy.Com Japan.
The stock and option grants will be subject to
customary [***]. Any modifications to such vesting
schedule shall be at the discretion of the Buy.Com
Japan Board on a case by case basis.
Initial Funding of The initial funding of U.S. $[***] which is
Buy.Com Europe: intended to provide adequate working capital through
June 2000, will be provided entirely by Softbank as
follows:
$[***] equity contribution from Softbank
$[***] working capital cash loan from Softbank
to Buy.Com Japan.
$[***] equity contribution from Buy.Com (which
amount will be funded by Softbank as a loan
to Buy.Com such that Buy.Com receives credit
for such capital contribution on the books of
Buy.Com Japan).
_____________________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
<PAGE>
The loan from Softbank to Buy.Com will accrue interest
at the [***].
The loan from Softbank to Buy.Com Japan will accrue
interest at the [***].
Ongoing Funding of On an annual basis, management of Buy.Com Japan will
Buy.Com Europe: prepare a Business Plan and Budget for Buy.Com Japan
for review and approval by the Buy.Com Japan Board.
Ongoing funding will be obtained by additional pro
rata investments by Buy.Com and Softbank or new third
party investments on terms approved by the Buy.Com
Japan Board. Any new third party investments will
dilute all shareholders pro-rata based on their
respective percentage ownership interests on the date
of such investment.
Preemptive Right: Buy.Com and Softbank will have a right to participate
in any future financing to maintain their pro rata
ownership in Buy.Com Japan subject to certain
customary exceptions to be included in the definitive
joint venture documents. This right will terminate
upon an IPO of Buy.Com Japan.
Governance: Buy.Com Japan will have a Board of Directors of [***]
members initially with Buy.Com designating [***]
members (one of which will be the CEO or Managing
Director of Buy.Com Japan) and Softbank designating
[***] members. The parties will enter into a voting
agreement to maintain the Board composition which
agreement will terminate upon an IPO of Buy.Com Japan.
Buy.Com's CEO, Greg Hawkins, will serve as Chairman of
Buy.Com Japan. The CEO or Managing Director of Buy.Com
Japan will serve as one of the [***] designees of
Buy.Com on the Board of Buy.Com Japan and such
individual will report to Mr. Hawkins.
Buy.Com and Softbank will mutually recruit and select
a CEO and other senior management for Buy.Com Japan.
Intellectual Buy.Com will license its e-commerce technology to
Property Buy.Com Japan on a royalty free basis for use in the
Territory. Buy.Com will retain ownership of its trade
name, brand, and all trademark and service marks and
other intellectual property rights relating thereto
and will license its name and its other intellectual
property rights necessary and applicable to the
business of Buy.Com Japan on a royalty free basis and
on such other terms to be established in the
definitive joint venture documents. These licenses
will be perpetual subject to certain limitations to be
provided for in the definitive joint venture
_____________________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
2
<PAGE>
documents.
Buy.Com will receive a royalty free, perpetual grant
back license to all technology developed by Buy.Com
Japan.
Service Fees: If either Buy.Com or Softbank provides services to
Buy.Com Japan, Buy.Com Japan shall reimburse such
costs on an allocated basis and pay a service fee to
such party, provided that the party providing such
services will submit a written proposal of such
services and fees for approval by a majority of the
disinterested Buy.Com Japan Board.
Co-Promotion and Cross Buy.Com and Softbank will discuss and negotiate
Marketing Opportunities: co-promotion and cross marketing opportunities to
include within the definitive joint venture
documents.
Admission of Additional Buy.Com Japan will not issue ownership interest to
Partners: a competitor of Buy.Com without the prior written
consent of Buy.Com.
Co-Sale and Right of Each of Buy.Com and Softbank will have a co-sale
First Refusal Provisions right and right of first refusal over the other
partner's shares or other ownership interest in
Buy.Com Japan, excluding transfers to affiliates.
This agreement will terminate upon an IPO of
Buy.Com Japan.
Expenses: Each party will pay its own costs incurred in
connection with the preparation and negotiation of
the joint venture documents.
BUY.COM INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SOFTBANK AMERICA, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
3
<PAGE>
TERM SHEET
FOR
BUY.COM UK JOINT VENTURE
Purpose of Joint Venture: BUY.COM INC. ("Buy.Com") and eVentures, a joint
venture between SOFTBANK and ePartners Capital Ltd.
(collectively, "eVentures") will form a joint
venture ("Buy.Com UK") to launch and operate an
Internet superstore in the countries and
territories listed below.
Territory Covered: The countries include the United Kingdom,
Australia, New Zealand and India (the "Territory").
Launch Priority: It is anticipated that Buy.Com UK will prioritize
the countries in which it launches the Buy.Com
Internet superstore concept as follows:
First Stage: United Kingdom
Second Stage: Australia
Third Stage: New Zealand
Future Stages: To be determined by the Buy.Com UK
Board
Ownership and Structure: Buy.Com UK will be owned as follows:
50% Buy.Com
50% eVentures
The legal and tax structure of Buy.Com UK will be
determined by Buy.Com and eVentures in consultation
with their tax, legal and accounting advisors. It
is understood that the objective is for [***].
Buy.Com UK will establish an employee equity
incentive [***] of the initial capitalization for
issuance to employees and officers of Buy.Com UK.
The stock and option grants will be subject to
customary [***]. Any modifications to such vesting
schedule shall be at the discretion of the Buy.Com
UK Board on a case by case basis.
Initial Funding of The initial funding of U.S. $[***] which is
Buy.Com UK: intended to provide adequate working capital
through June 2000, will be provided entirely by
Softbank and/or eVentures as follows:
$[***] equity contribution from
Softbank/eVentures
$[***] working capital cash loan from Softbank to
Buy.Com UK.
____________________________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE>
$[***] equity contribution from Buy.Com (which
amount will be funded by Softbank as a loan to
Buy.Com such that Buy.Com receives credit for
such capital contribution on the books of Buy.Com
UK).
The loan from Softbank to Buy.Com will accrue
interest [***].
The loan from Softbank to Buy.Com UK will accrue
[***].
Ongoing Funding of On an annual basis, management of Buy.Com UK will
Buy.Com UK: prepare a Business Plan and Budget for Buy.Com UK
for review and approval bythe Buy.Com UK Board.
Ongoing funding will be obtained by additional pro
rata investments by Buy.Com and eVentures or new
third party investments on terms approved by the
Buy.Com UK Board. Any new third party investments
will dilute all shareholders pro-rata based on
their respective percentage ownership interests on
the date of such investment.
Preemptive Right: Buy.Com and eVentures will have a right to
participate in any future financing to maintain
their pro rata ownership in Buy.Com UK subject to
certain customary exceptions to be included in the
definitive joint venture documents. This right will
terminate upon an IPO of Buy.Com UK.
Governance: Buy.Com UK will have a Board of Directors of [***]
members initially with Buy.Com designating [***]
members (one of which will be the CEO or Managing
Director of Buy.Com UK) and eVentures designating
[***] members. The parties will enter into a voting
agreement to maintain the Board composition which
agreement will terminate upon an IPO of Buy.Com UK.
Buy.Com's CEO, Greg Hawkins, will serve as Chairman
of Buy.Com UK. The CEO or Managing Director of
Buy.Com UK will serve as one of the [***] designees
of Buy.Com on the Board of Buy.Com UK and such
individual will report to Mr. Hawkins.
Buy.Com and eVentures will mutually recruit and
select a CEO and other senior management for
Buy.Com UK.
Intellectual Property: Buy.Com will license its e-commerce technology to
Buy.Com UK on a royalty free basis for use in the
Territory. Buy.Com will retain ownership of its
trade name, brand and all trademark and service
marks and other intellectual property rights
relating thereto and will license its name and its
other intellectual property rights necessary and
applicable to the business of Buy.Com UK on a
royalty free
____________________________
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
2
<PAGE>
basis and on such other terms to be established in
the definitive joint venture documents. These
licenses will be perpetual subject to certain
limitations to be provided for in the definitive
joint venture documents.
Buy.Com will receive a royalty free, perpetual
grant back license to all technology developed by
Buy.Com UK.
Service Fees: If either Buy.Com or eVentures provides services to
Buy.Com UK, Buy.Com UK shall reimburse such costs
on an allocated basis and pay a service fee to such
party, provided that the party providing such
services will submit a written proposal of such
services and fees for approval by a majority of the
disinterested Buy.Com UK Board.
Co-Promotion and Buy.Com and eVentures shall discuss and negotiate
Cross Marketing co-promotion and cross marketing opportunities to
Opportunities: include within the definitive joint venture
documents.
Admission of Additional Buy.Com UK will not issue ownership interest to a
Partners: competitor of Buy.Com without the prior written
consent of Buy.Com.
Co-Sale and Right of Each of Buy.Com and eVentures will have a co-sale
First Refusal right and right of first refusal over the other
Provisions: partner's shares or other ownership interest in
Buy.Com UK, excluding transfers to affiliates.
This agreement will terminate upon an IPO of
Buy.Com UK.
Expenses: Each party will pay its own costs incurred in
connection with the preparation and negotiation of
the joint venture documents.
BUY.COM INC.
By:
__________________________________
Name:
________________________________
Title:
_______________________________
eVentures
By:
__________________________________
Name:
________________________________
Title:
_______________________________
3
<PAGE>
EXHIBIT 10.34
COMMON STOCK ISSUANCE AGREEMENT
THIS COMMON STOCK ISSUANCE AGREEMENT (this "Agreement") is made on the
22nd day of October, 1999, by and between BUY.COM INC., a Delaware corporation
(the "Company") and the PGA TOUR, INC., a Maryland corporation (the "Investor").
WHEREAS, concurrently with the execution of this Agreement, the
Company and the Investor will enter into a Sponsorship Agreement, a form of
which is attached hereto as Exhibit A, setting forth the terms and conditions of
the Company's sponsorship of the Investor's series of golf tournaments,
currently known as the NIKE TOUR, which agreement will ultimately be superseded
by a more definitive agreement (the "Sponsorship Agreement");
WHEREAS, in consideration for the rights granted under the Sponsorship
Agreement, the Company desires to issue, and the Investor desires to acquire, an
aggregate of 1,800,000 shares (subject to adjustment for stock splits,
combinations and the like subsequent to the date of this Agreement and prior to
the Closing) of the Company's Common Stock (the "Common Stock") in accordance
with the terms and conditions set forth herein; and
NOW, THEREFORE, the parties hereby agree as follows:
I. ISSUANCE OF STOCK.
A. Issuance of Common Stock. Subject to the terms and conditions of this
Agreement, the Investor agrees to acquire at the Closing and the Company agrees
to issue the Common Stock to the Investor at the Closing, in consideration of
the grant of the rights set forth in the Sponsorship Agreement whereby the
Company will become exclusive umbrella sponsor of the Investor's circuit of golf
tournaments, currently known as the NIKE TOUR. The parties agree that the value
of the Common Stock being issued under this Agreement is $5.67 per share.
B. Closing. The issuance of the Common Stock shall take place at the
offices of Brobeck, Phleger & Harrison LLP, 38 Technology Drive, Irvine,
California, at 9:00 a.m., on October __, 1999, or at such other time and place
as the Company and the Investor mutually agree (which time and place are
designated as the "Closing"). At the Closing, the Company shall deliver to the
Investor a certificate representing the Common Stock, free and clear of all
liens and encumbrances other than restrictions on transfer described herein.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that:
A. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties.
1
<PAGE>
B. Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the Sponsorship Agreement, the performance of
all obligations of the Company hereunder and thereunder, and the authorization,
issuance, sale and delivery of the Common Stock being sold hereunder has been
taken. This Agreement and the Sponsorship Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
C. Valid Issuance of Common Stock. The Common Stock to be issued to the
Investor in accordance with this Agreement, will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on transfer, other
than restrictions on transfer under this Agreement and under applicable state
and federal securities laws.
D. California Securities Law. The issuance of the Common Stock to the
Investor under the circumstances set forth herein is exempt from the
qualification or registration requirements of the California Corporations Code.
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants that:
A. Authorization. The Investor has full power and authority to enter into
this Agreement and the Sponsorship Agreement and each such agreement constitutes
its valid and legally binding obligation, enforceable in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally and, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
B. Issuance Entirely for Own Account. This Agreement is made with the
Investor in reliance upon the Investor's representation to the Company, which by
the Investor's execution of this Agreement the Investor hereby confirms, that
the Common Stock to be received by the Investor will be acquired for investment
for the Investor'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 the Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. By executing this Agreement, the Investor further
represents that the Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to the
person or to any third person, with respect to any of the Common Stock other
than the possible reconveyance to the Company pursuant to the Repurchase Option
(defined below).
C. Disclosure of Information. The Investor believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Common Stock. The Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Common Stock and the business,
properties, prospects and financial condition of the Company.
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D. Investment Experience. The Investor 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 or business matters that it is capable of
evaluating the merits and risks of the investment in the Common Stock. The
Investor also represents it has not been organized for the purpose of acquiring
the Common Stock.
E. Accredited Investor. The Investor is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
F. Restricted Securities. The Investor understands that the Common Stock
it is purchasing is characterized as "restricted securities" under the federal
securities laws inasmuch as it is being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Common Stock may be resold without registration
under the Securities Act of 1933, as amended (the "Act") only in certain limited
circumstances. In the absence of an effective registration statement covering
the Common Stock or an available exemption from registration under the Act, the
Common Stock must be held indefinitely. In this regard, the Investor represents
that it is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
G. Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Investor further agrees not to make any
disposition, other than pursuant to Rule 144 under the Securities Act of 1933,
as amended, of all or any portion of the Common Stock unless the Company
consents in writing to such transfer or disposition, and:
1. 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
2. The Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if requested by the
Company, the Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
H. Legends. It is understood that the certificates evidencing the shares
of Common Stock will bear the following legends:
1. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND
MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (A) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER
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APPLICABLE STATE SECURITIES LAWS, OR (B) THE COMPANY RECEIVES AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED OR (C) SOLD
PURSUANT TO RULE 144 UNDER THE ACT.
2. Any legend required under applicable state securities
laws.
3. The foregoing legend will be removed from the
certificates evidencing the shares of Common Stock promptly
following the Investor's written request accompanied by an
opinion of counsel satisfactory to the Company to the effect that
such legend is no longer required under the Act.
IV. CALIFORNIA COMMISSIONER OF CORPORATIONS.
A. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION
25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL
PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
V. "MARKET STAND-OFF" AGREEMENT. In accordance with the Sponsorship Agreement,
the Investor hereby agrees that, during the period of duration specified by the
Company and an underwriter of Common Stock or other securities of the Company,
it shall not, to the extent requested by the Company and such underwriter,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any Common
Stock of the Company acquired by the Investor hereunder at any time during such
period except Common Stock included in such registration; provided, however,
that:
a. such market stand-off time period shall not exceed 180 days with
respect to the initial registered public offering and 90 days with respect to
any subsequent registered public offering;
b. all officers and directors of the Company enter into similar
agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to any securities of the Company held by
the Investor until the end of such period. If requested to do so by the Company,
each Investor shall execute an underwriter's letter in the customary form prior
to such registration.
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Notwithstanding the foregoing, the obligations described in this
Section 5 shall not apply to a registration relating solely to employee benefit
plans on Form S-l or Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to a Commission Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future.
VI. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of the
Investor under Section 1 of this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions:
A. Representations and Warranties. The representations and warranties of
the Company contained in Section 2 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
B. Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement and the
Sponsorship Agreement that are required to be performed or complied with by it
on or before the Closing.
C. Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
D. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
VII. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the
Company to the Investor under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by the Investor:
A. Representations and Warranties. The representations and warranties of
the Investor contained in Section 3 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing.
B. Execution of the Sponsorship Agreement. The Investor and the Company
shall have executed the Sponsorship Agreement dated as of the date hereof, by
and between the Company and the Investor.
C. Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
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VIII. ADDITIONAL AGREEMENTS OF THE PARTIES.
A. Repurchase Option. In addition to any other limitation on transfer
created by applicable securities laws, Investor shall not assign, encumber or
dispose of any interest in the Common Stock while the Common Stock is subject to
the Company's Repurchase Option (as defined below). The Repurchase Option shall
be exercisable in any of the following events and shall terminate thirty (30)
days after the completion of the Company's initial public offering of common
stock on Form S-1 (the "IPO") (except for the Repurchase Option in the event of
a material breach described in subsection 8(A)(4) below which shall survive the
IPO):
1. In the event the Company has not completed its IPO on or before
July 1, 2000 and the Investor requests in writing to shorten the term of the
Sponsorship Agreement to two (2) years, the Company shall upon the date of
receipt of such request (the "First Request Date") have an irrevocable,
exclusive option (the "Repurchase Option") for a period of 60 days from such
date to repurchase all of the Common Stock held by Investor as of the First
Request Date. The balance of the Secured Account (as defined in the Sponsorship
Agreement) shall be transferred to the Investor upon the exercise of such
Repurchase Option as consideration for the Common Stock.
2. In the event the Company has not completed its IPO on or before
June 30, 2001 and the Investor requests in writing to shorten the term of the
Sponsorship Agreement to two (2) years, the Company shall upon the date of
receipt of such request (the "Second Request Date") have a Repurchase Option for
a period of sixty (60) days from such date to repurchase all of the Common Stock
held by Investor as of the Second Request Date. The balance of the Secured
Account (as defined in the Sponsorship Agreement) upon the date of such request
shall be transferred to the Investor upon the exercise of such Repurchase Option
as consideration for the Common Stock.
3. In the event the Company fails to pay the Initial Payment (as
defined in the Sponsorship Agreement) and the Investor requests in writing to
terminate the Sponsorship Agreement, the Company shall upon the date of receipt
of such request (the "Third Request Date") have a Repurchase Option for a period
of sixty (60) days from such date to repurchase all of the Common Stock held by
Investor as of the Third Request Date. The balance of the Secured Account (as
defined in the Sponsorship Agreement) upon the date of such request shall be
transferred to the Investor upon the exercise of such Repurchase Option as
consideration for the Common Stock.
4. In the event of a material breach by the Investor of this
Agreement or the Sponsorship Agreement (following written notice thereof and a
period of not less than thirty (30) days for the Investor to cure such breach),
the Company shall have a Repurchase Option to repurchase all of the Common Stock
held by Investor.
5. The Repurchase Option shall be exercised by the Company by
written notice to Investor. The repurchase price for the Company's Repurchase
Option shall be $0.01 per share of Common Stock and Buy.com shall be entitled to
apply the then outstanding balance of the Secured Account against such
repurchase price. Upon delivery of such notice, the payment of the repurchase
price and the transfer of the balance of the Secured Account to
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Investor, the Company shall become the legal and beneficial holder of the Common
Stock being repurchased and all rights and interest therein or related thereto,
and the Company shall have the right to transfer to its own name the number of
shares Common Stock being repurchased by the Company, without further action by
Investor.
B. Rule 144. After the completion of the IPO and during any period in
which the Investor shall have satisfied the holding period requirements of Rule
144, the Company shall fully and promptly observe and perform all SEC reporting
requirements referenced in subsection (c) of Rule 144.
IX. MISCELLANEOUS.
A. Survival. The warranties, representations and covenants of the Company
and the Investor contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the Investor or the Company.
B. Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
C. Governing Law. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
D. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
E. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the address
as set forth on the signature page hereof or at such other address as such party
may designate by written notice to the other party.
F. Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees or representatives is responsible. The Company agrees to indemnify and
hold harmless the Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses
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<PAGE>
of defending against such liability or asserted liability) for which the Company
or any of its officers, employees or representatives is responsible.
G. Expenses. Irrespective of whether the Closing is effected, each party
to this Agreement shall bear and pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement; provided, however, that the Company shall bear the expense of any
opinion of counsel contemplated by Section III(H) above. If any action at law or
in equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
H. Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor.
I. Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
J. Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing the facsimile signature
of a party hereto shall constitute a valid and binding execution and delivery of
this Agreement by such party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BUY.COM INC.
By:___________________________________
Name:
Title:
Address: 21 Brookline
Aliso Viejo, California 92656
Attention: Murray Williams
Facsimile No.: (949) 425-5257
PGA TOUR, INC.
By:___________________________________
Name:
Title:
Address:
Attention:____________________________
Facsimile No.:________________________
[Signature page to Common Stock Issuance Agreement]
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Exhibit A
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TABLE OF CONTENTS
<TABLE>
<S> <C>
I. ISSUANCE of Stock.......................................................... 1
A. Issuance of Common Stock............................................... 1
B. Closing................................................................ 1
II. Representations and Warranties of the Company.............................. 1
A. Organization, Good Standing and Qualification.......................... 1
B. Authorization.......................................................... 2
C. Valid Issuance of Common Stock......................................... 2
D. California Securities Law.............................................. 2
III. Representations and Warranties of the Investor............................. 2
A. Authorization.......................................................... 2
B. Issuance Entirely for Own Account...................................... 2
C. Disclosure of Information.............................................. 2
D. Investment Experience.................................................. 3
E. Accredited Investor.................................................... 3
F. Restricted Securities.................................................. 3
G. Further Limitations on Disposition..................................... 3
H. Legends................................................................ 3
IV. California Commissioner of Corporations.................................... 4
A. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION......................................................... 4
A. BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT........ 4
V. "Market Stand-Off" Agreement................................................ 4
VI. Conditions of Investor's Obligations at Closing............................. 5
A. Representations and Warranties.......................................... 5
B. Performance............................................................. 5
C. Qualifications.......................................................... 5
D. Proceedings and Documents............................................... 5
VII. Conditions of the Company's Obligations at Closing.......................... 5
A. Representations and Warranties.......................................... 5
B. Execution of the Sponsorship Agreement.................................. 5
C. Qualifications.......................................................... 5
VIII. ADDITIONAL AGREEMENTS OF THE PARTIES........................................ 6
A. Repurchase Option....................................................... 6
B. Rule 144................................................................ 7
IX. Miscellaneous............................................................... 7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
A. Survival................................................................ 7
B. Successors and Assigns.................................................. 7
C. Governing Law........................................................... 7
D. Titles and Subtitles.................................................... 7
E. Notices................................................................. 7
F. Finder's Fee............................................................ 7
G. Expenses................................................................ 8
H. Amendments and Waivers.................................................. 8
I. Severability............................................................ 8
J. Entire Agreement........................................................ 8
K. Counterparts............................................................ 8
</TABLE>
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Exhibit 21.1
LIST OF BUY.COM INC. SUBSIDIARIES
1. BuyGolf.com, Inc., a Delaware corporation (wholly-owned subsidiary)
2. BUY CORP EUROPE, INC., a California corporation (wholly-owned subsidiary)
3. BUY.COM ENTERTAINMENT INC., a Delaware corporation (wholly-owned subsidiary)
4. COMPUTERSTORE.COM INC., a Wyoming corporation (wholly-owned subsidiary)
5. BuyNow Inc., a Delaware corporation (Buy.com owns 25% of this subsidiary)
6. Buytravel.com LLC, a Delaware limited liability company (Buy.com owns 50% of
this LLC)
7. INTERNET COMPUTERSTORE.COM INC., a California corporation (wholly-owned
subsidiary of COMPUTERSTORE.COM INC.)
