-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ur2tuw83cVsmrxsmUtazHeqiQN7FPG1mAb2T1+Z7FnDUvTAEJM10rNXtb+n7eE8s tGsuHH51Ggo98swoD5tGeg== 0001036050-99-002399.txt : 19991117 0001036050-99-002399.hdr.sgml : 19991117 ACCESSION NUMBER: 0001036050-99-002399 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL SPORTS INC CENTRAL INDEX KEY: 0000828750 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 042958132 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16611 FILM NUMBER: 99756400 BUSINESS ADDRESS: STREET 1: 555 S HENDERSON ROAD SUITE B STREET 2: RTE 3 INDUSTRIAL PARK CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6107680900 MAIL ADDRESS: STREET 1: 555 S HENDERSON RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 FORM 10-Q FOR GLOBAL SPORTS, INC. ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ================================================================================ FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended SEPTEMBER 30, 1999. or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from _______to _______. Commission File Number 0-16611 ------- GLOBAL SPORTS, INC. ------------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2958132 -------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 555 S. HENDERSON ROAD, KING OF PRUSSIA, PA 19406 ------------------------------------------ ----- (Address of principal executive offices) (Zip Code) 610-768-0900 ------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 12, 1999: Common Stock, $.01 par value 18,445,813 ---------------------------- ------------------ (Title of each class) (Number of Shares) - -------------------------------------------------------------------------------- GLOBAL SPORTS, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE PART I -- FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998 3 Condensed Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 1999 and 1998 4 Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 1999 and 1998 5 Notes to Condensed Consolidated Financial Statements 6 - 10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 11 - 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 PART II -- OTHER INFORMATION Item 1. Legal Proceedings 16 Item 2. Changes in Securities and Use of Proceeds 16 Item 3. Defaults upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 18
-2- PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS GLOBAL SPORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents........................................ $ 39,467,680 $ 83,169 Inventory........................................................ 4,669,217 -- Prepaid expenses and other current assets........................ 621,442 599,224 Refundable income taxes.......................................... 2,220,878 -- Net assets of discontinued operations............................ 43,012,442 38,718,921 ------------- ----------- Total current assets............................................ 89,991,659 39,401,314 Property and equipment, net of accumulated depreciation and amortization................................................ 16,219,279 2,988,714 Other assets..................................................... 219,511 253,626 ------------- ----------- Total assets.................................................... $106,430,449 $42,643,654 ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion - notes payable, bank............................ $ 3,699,207 $ -- Current portion - capital lease obligation, related party........ 136,524 127,966 Accounts payable and accrued expenses............................ 15,487,521 3,652,024 Income taxes payable............................................. -- 1,378,820 Subordinated notes payable, related party........................ -- 1,805,841 ------------- ----------- Total current liabilities....................................... 19,323,252 6,964,651 Notes payable, bank.............................................. -- 18,812,156 Capital lease obligation, related party.......................... 2,077,906 2,181,265 Mandatorily redeemable preferred stock........................... 100 100 Commitments and contingencies.................................... Stockholders' equity: Preferred stock, $0.01 par value, 1,000,000 shares authorized; 10,000 shares issued as mandatorily redeemable preferred stock................................................ -- -- Common stock, $0.01 par value, 60,000,000 and 20,000,000 shares authorized in 1999 and 1998, 19,476,265 and 12,994,464 shares issued in 1999 and 1998; 18,407,179 and 11,925,378 shares outstanding in 1999 and 1998................................... 194,766 129,947 Additional paid in capital....................................... 98,693,234 14,624,541 Accumulated other comprehensive income........................... -- (47,431) Retained earnings (deficit)...................................... (13,644,992) 192,242 ------------- ----------- 85,243,008 14,899,299 Less: Treasury stock, at cost.................................... 213,817 213,817 ------------- ----------- Total stockholders' equity...................................... 85,029,191 14,685,482 ------------- ----------- Total liabilities and stockholders' equity...................... $106,430,449 $42,643,654 ============ =========== The accompanying notes are an integral part of these condensed financial statements.
-3- GLOBAL SPORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------- ------------------------------ 1999 1998 1999 1998 ------------------------------- ------------------------------ Costs and expenses: General and administrative................ $ 1,800,699 $ 1,134,169 $ 2,923,252 $ 2,502,532 Equity compensation....................... 1,071,620 -- 2,725,486 -- Web-site development...................... 5,360,956 -- 7,979,889 -- Interest expense (income), net............ (302,809) 57,938 (145,966) 176,349 ----------- ----------- ------------ ----------- Total costs and expenses................ 7,930,466 1,192,107 13,482,661 2,678,881 ----------- ----------- ------------ ----------- Loss from continuing operations before income taxes..................... (7,930,466) (1,192,107) (13,482,661) (2,678,881) Benefit from income taxes.................... -- (316,109) (2,220,878) (910,819) ----------- ----------- ------------ ----------- Loss from continuing operations.............. (7,930,466) (875,998) (11,261,783) (1,768,062) Discontinued operations (Note 3): Income from discontinued operations (less income taxes in 1999: $ -- 1998: $1,156,127 1999: $(582,804) 1998: $2,793,763 for the three- and nine-month periods, respectively)................... -- 3,345,711 586,101 6,591,266 Gain (loss) on disposition of discontinued operations (less income taxes of $1,390,289 and $830,775 for the three- and nine-month periods, respectively)................... 97,951 -- (3,161,552) -- ----------- ----------- ------------ ----------- Net income (loss)............................ $(7,832,515) $ 2,469,713 $(13,837,234) $ 4,823,204 =========== =========== ============ =========== Earnings (losses) per share-- basic and diluted: Loss from continuing operations........... $ (.47) $ (.07) $ (.93) $ (.16) Income from discontinued operations............................. -- .28 .05 .59 Gain (loss) on disposition of discontinued operations................ .01 -- (.26) -- ----------- ----------- ------------ ----------- Net income (loss)......................... $ (.46) $ .21 $ (1.14) $ .43 =========== =========== ============ =========== The accompanying notes are an integral part of these condensed financial statements.
-4- GLOBAL SPORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ----------------------------------- 1999 1998 --------------- -------------- Cash Flows from Operating Activities: Net income (loss)......................................................... $(13,837,234) $ 4,823,204 Deduct: Income from discontinued operations......................... 586,101 6,591,266 Loss on disposal of discontinued operations................. (3,161,552) -- --------------- -------------- Net loss from continuing operations....................................... (11,261,783) (1,768,062) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization...................................... 530,533 444,800 Equity compensation................................................ 2,791,636 -- Changes in operating assets and liabilities: Inventory....................................................... (4,669,217) -- Prepaid expenses and other current assets....................... (22,218) (179,114) Deferred income taxes........................................... (2,220,878) -- Other assets.................................................... 64,115 256,333 Accounts payable and accrued expenses........................... 11,880,929 1,326,178 Income taxes payable............................................ (1,378,820) 1,636,068 --------------- -------------- Net cash provided by (used in) continuing operations............ (4,285,703) 1,716,203 Net cash used in discontinued operations........................ (6,868,972) (3,971,287) --------------- -------------- Net cash used in operating activities........................... (11,154,675) (2,255,084) --------------- -------------- Cash Flows from Investing Activities: Capital expenditures................................................... (13,761,098) (443,922) --------------- -------------- Net cash used in investing activities........................... (13,761,098) (443,922) --------------- -------------- Cash Flows from Financing Activities: Net borrowings (repayments) under lines of credit...................... (15,112,949) 3,260,711 Repayments of capital lease obligation................................. (94,801) (86,027) Repayments of subordinated note payable................................ (1,805,841) (250,000) Proceeds from SOFTBANK transaction..................................... 80,000,050 -- Proceeds from exercise of common stock options and warrants............ 1,341,826 23,253 Sale of minority interest in subsidiary................................ 1,999 -- Costs of debt issuance................................................. (30,000) -- --------------- -------------- Net cash provided by financing activities.......................... 64,300,284 2,947,937 --------------- -------------- Effect of exchange rate on cash and cash equivalents...................... -- (11,910) --------------- -------------- Net increase in cash and cash equivalents................................. 39,384,511 237,021 Cash and cash equivalents, beginning of period............................ 83,169 98,881 --------------- -------------- Cash and cash equivalents, end of period.................................. $ 39,467,680 $ 335,902 =============== ============== The accompanying notes are an integral part of these condensed financial statements.
-5- GLOBAL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1 - BASIS OF PRESENTATION Global Sports, Inc. ("Global" or the "Company"), a Delaware corporation, is an e-Commerce company that is in the process of developing the internet businesses of several sporting goods retailers through its Global Sports Interactive subsidiary. On April 20, 1999, the Company formalized a plan to sell its other two businesses, the Branded division and the Off-Price and Action Sports division, in order to focus exclusively on its e-Commerce business. See Note 3. The accompanying condensed financial statements of Global have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying financial information is unaudited; however, in the opinion of the Company's management, all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation of the operating results of the periods reported have been included. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year. This quarterly report should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements as of December 31, 1998 as presented in the Company's Annual Report on Form 10-K. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents: At September 30, 1999, the Company had $39,455,852 of excess cash invested in a money market fund with a major financial institution, which is included in cash and cash equivalents. The Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Interest income for the three- and nine-month periods ended September 30, 1999 includes $403,938 related to this investment. New Accounting Pronouncements Derivative Instruments: SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for fiscal years beginning after June 15, 2000, although early adoption is encouraged. The Company has not yet assessed what the impact of this statement will be on the Company's future earnings or financial position. Computer Costs: In March 1998, the AICPA Accounting Standards Executive Committee issued Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use ("SOP 98-1"). This statement provides guidance on accounting for the costs of computer software developed or obtained for internal use and identifies the characteristics of internal-use software. The statement was adopted on January 1, 1999 and did not have a material effect on the Company's results of operations, cash flows or financial position. Start-Up Costs: In April 1998, the AICPA Accounting Standards Executive Committee issued Statement of Position 98-5, Reporting of Costs of Start-Up Activities, ("SOP 98-5"). The statement requires that costs of start-up activities, including organization costs, be expensed as incurred. This statement was adopted on January 1, 1999 and did not have a material effect on the Company's results of operations, cash flows or financial position. NOTE 3 - DISCONTINUED OPERATIONS On April 20, 1999, the Company formalized a plan to sell two of its businesses, the Branded division and the Off-Price and Action Sports division, in order to focus exclusively on its e-Commerce business. The Branded division designs and markets the RYKA and Yukon footwear brands. The Off-Price and Action Sports division is a third-party distributor and make-to-order marketer of off-price footwear, apparel and sporting goods. Accordingly, for financial statement purposes, the assets, liabilities, results of operations and cash flows of these divisions have been segregated from that of continuing operations and are presented in the Company's consolidated financial statements as discontinued operations. Prior year financial statements have been -6- GLOBAL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- reclassified to reflect these discontinued operations. Net interest expense related to the lines of credit and debt to be assumed by the successor businesses of $933,365 for the nine-month period ended September 30, 1999 has been allocated to the pre-measurement date loss from discontinued operations. Net interest expense of $101,129 and $257,972 for the three- and nine-month periods ended September 30, 1999, respectively, has been allocated to the post- measurement date gain (loss) from the disposition of discontinued operations. On September 24, 1999, the Company and a management group led by James J. Salter and Kenneth J. Finkelstein entered into an acquisition agreement for the sale of all of the issued and outstanding capital stock of the Company's wholly-owned subsidiaries Gen-X Holdings Inc. and Gen-X Equipment Inc. (the "Gen-X Companies"), through which the Company operates its Off-Price and Action Sports Division. The aggregate purchase price for the sale is approximately $20 million, of which approximately $6 million is to be paid at closing, approximately $4 million is the assumption of contingent notes payable, and $10 million is to be paid over a seven and one half year period pursuant to the terms of two notes to be delivered at closing. The closing of this sale is subject to customary closing conditions, including approval by the Company's shareholders and expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Upon closing, the gain on this sale, if any, will be deferred and recognized on an installment-sale basis over the term of the two notes. The discontinued operations components of amounts reflected in the income statements and balance sheets are as follows:
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------------- ------------------------------ 1999 1998 1999 1998 --------------- --------------- -------------- ------------- Income Statement Data: Net sales..................................... $38,411,650 $43,626,641 $92,461,398 $100,095,476 =============== =============== ============== ============
SEPTEMBER 30, 1999 DECEMBER 31, 1998 ---------------------- --------------------- BALANCE SHEET DATA: Cash $ 231,328 $ 772,916 Accounts receivable............................ 37,763,325 36,782,732 Inventory...................................... 15,227,482 20,954,168 Other current assets........................... 1,677,104 836,520 ---------------------- --------------------- Total current assets........................ 54,899,239 59,346,336 Property and equipment......................... 1,304,772 1,397,189 Goodwill and intangibles....................... 14,295,421 14,176,531 Other assets................................... 26,439 21,397 ---------------------- --------------------- Total assets................................ 70,525,871 74,941,453 ---------------------- --------------------- Accounts payable and accrued expenses.......... 12,581,475 16,192,954 Current portion - notes payable, banks......... 12,124,878 14,529,576 Current portion - notes payable, other......... 782,613 712,815 Subordinated notes payable..................... -- 1,999,065 ---------------------- --------------------- Total current liabilities................... 25,488,966 33,434,410 Notes payable, banks........................... 277,855 294,379 Notes payable, other........................... 1,746,608 2,493,743 ---------------------- --------------------- Total liabilities............................ 27,513,429 36,222,532 ---------------------- --------------------- Net assets of discontinued operations............. $43,012,442 $38,718,921 ====================== =====================
-7- GLOBAL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Notes Payable of Discontinued Operations Included in Notes Payable, Banks of discontinued operations are amounts outstanding under a line of credit of approximately $20,000,000 for use by the Gen-X Companies, which is available for either direct borrowing or for import letters of credit. The loan bears interest at prime plus one half percent and is secured by a general security agreement covering substantially all of the Gen-X Companies' assets. At September 30, 1999, draws of $12,100,000 were committed under this line and, based on a net cash position and available collateral and outstanding import letters of credit commitments, an additional $3,200,000 was available for borrowing. For the three- and nine-month periods ending September 30, 1999, interest expense of discontinued operations included $148,338 and $556,736, respectively, related to this line of credit. Notes Payable, Banks also includes a mortgage note secured by land and building in Ontario, Canada of $302,733, of which $24,878 is classified as current. The mortgage note bears interest at the bank's cost of funds plus 2.5% and matures on August 15, 2009. For the three- and nine-month periods ending September 30, 1999, interest expense of discontinued operations included $2,652 and $16,645, respectively, related to this mortgage. Notes Payable, Other includes an outstanding loan payable for $1,300,000, of which $400,000 is classified as current. The original loan of $2,000,000 is payable in equal quarterly installments of $100,000, which commenced on March 31, 1998, and bears interest at the prime lending rate. For the three- and nine- month periods ending September 30, 1999, interest expense of discontinued operations included $28,518 and $87,967, respectively, related to this loan. Notes Payable, Other also includes $1,000,000 of promissory notes payable to the former shareholders of Lamar. The notes are payable in five equal annual installments and bear interest at 6% per annum, the first payment of which was made in July 1999. At September 30, 1999, $726,500 remains outstanding related to these notes, of which $270,680 is classified as current. For the three- and nine-month periods ending September 30, 1999, interest expense of discontinued operations included $14,020 and $97,558, respectively, related to these notes. At the time of the acquisition, Lamar also executed a note payable in the principal amount of $553,447, plus $74,954 in accrued interest, for amounts owed to a shareholder. This note, which was assumed by the Company in the acquisition of Lamar, is payable in five equal annual installments and bears interest at 6% per annum. The amount currently outstanding on this note is $502,721, of which $111,933 is classified as current. For the three- and nine- month periods ending September 30, 1999, interest expense of discontinued operations included $8,426 and $27,278, respectively, related to this note. Upon closing the acquisition of the Gen-X Companies, the Company executed several subordinated notes payable with the former shareholders of the Gen-X Companies for in the aggregate principal amount of $1,999,065 which is payable in four equal consecutive quarterly payments beginning March 31, 1999 or earlier. This amount has been repaid in full as of September 30, 1999. These notes bear interest at 7% until December 31, 1998 and the prime lending rate thereafter. For the nine-month period ending September 30, 1999, interest expense of discontinued operations included $68,257 related to these notes. Employment Agreements of Discontinued Operations The Company has employment agreements with several of its officers of discontinued operations for an aggregate annual base salary of $925,000 plus bonuses and increases in accordance with the terms of the agreements. Terms of the agreements range from three to five years and are subject to automatic annual extensions. Purchase Commitments of Discontinued Operations As of September 30, 1999, outstanding purchase commitments of discontinued operations existed totaling $8,775,760, for which commercial import letters of credit have been issued. NOTE 4 - SOFTBANK TRANSACTION On June 10, 1999, the Company and SOFTBANK America Inc. ("SOFTBANK") entered into a stock purchase agreement and related agreements for the sale of 6,153,850 shares of the Company's common stock to SOFTBANK at a price of $13.00 per share (the closing price on May 26, 1999, the day prior to the day the Company and SOFTBANK agreed in principle to the -8- GLOBAL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- transaction) for an aggregate purchase price of $80,000,050. In order to provide capital to the Company until closing, which occurred on July 23, 1999, the Company and SOFTBANK entered into an interim subordinated loan agreement on June 10, 1999 pursuant to which SOFTBANK loaned the Company $15,000,000. The note bore interest at 4.98% per annum. At the July 23, 1999 closing, this loan amount was converted into shares of the Company's common stock. Accrued and unpaid interest as of July 23, 1999 of $89,225 was offset against the cash proceeds of the sale at closing. For the three- and nine-month periods ending September 30, 1999, interest expense included $45,650 and $89,225, respectively, related to this interim loan. NOTE 5 - DEBT NOTES PAYABLE, BANK Under its primary loan agreement, as subsequently amended (the "Loan Agreement"), the Company has access to a combined credit facility of $40,000,000, which is comprised of KPR Sports International, Inc.'s ("KPR") credit facility of $35,000,000 and RYKA Inc.'s credit facility of $5,000,000. The term of the Loan Agreement is five years expiring on November 19, 2002. The KPR and RYKA facilities have an interest rate choice of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points. Under the Loan Agreement, both KPR and RYKA may borrow up to the amount of their revolving line based upon 85% of their eligible accounts receivable and 65% of their eligible inventory, as those terms are defined in the Loan Agreement. The Loan Agreement also includes 50% of outstanding import letters of credit as collateral for borrowing. Among other things, the Loan Agreement, as amended, requires KPR and RYKA to achieve annual earnings before interest, taxes, depreciation and amortization ("EBITDA") of $5,000,000 and it limits the Company's ability to incur additional indebtedness, make payments on subordinated indebtedness, make capital expenditures, sell assets, and pay dividends. At September 30, 1999, the Company was not in compliance with the EBITDA covenant. The Company obtained a waiver from the bank with respect to this covenant. Because there can be no assurance that the Company will be in compliance with this covenant for any period subsequent to September 30, 1999, the Company has classified the amounts outstanding under this line as a current liability. The Company is currently in negotiations with its lender to modify the terms of the Loan Agreement to return itself to compliance and more closely reflect its new e-commerce business structure. At September 30, 1999, the aggregate amount outstanding under this line was $3,699,207. At September 30, 1999, based on available collateral and outstanding import letters of credit commitments, an additional $1,671,828 was available on this line for borrowing. For the three- and nine-month periods ending September 30, 1999, interest expense included $124,583 and $958,841, respectively, related to this line of credit. SUBORDINATED NOTES PAYABLE Prior to July 27, 1999, the Company had $1,805,841 in outstanding subordinated notes payable held by its Chairman and Chief Executive Officer. This debt consisted primarily of a note representing undistributed Subchapter S corporation retained earnings previously taxed to him as the sole shareholder of KPR Sports International, Inc., Apex Sports International, Inc. and MR Management, Inc. (collectively the "KPR Companies") prior to the Company's reorganization in December 1997. Interest accrues on such notes at the Company's choice of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points. Based on its Loan Agreement, the Company is permitted to make continued regular payments of interest on the subordinated debt and to further reduce principal on a quarterly basis, commencing subsequent to the first quarter of 1998, in an amount up to 50% of the cumulative consolidated net income of the Company. During 1998, aggregate principal payments of $250,000 were made. On July 27, 1999, the principal balance of $1,805,841 plus interest accrued to date of $58,987 was repaid in full to the Chairman and Chief Executive Officer, for which a waiver was obtained from the Company's primary lender. For the three- and nine-month periods ending September 30, 1999, interest expense included $11,020 and $82,661, respectively, related to these notes. NOTE 6 - EARNINGS (LOSSES) PER SHARE Earnings (losses) per share for all periods have been computed in accordance with SFAS No. 128, Earnings Per Share. Basic earnings (losses) per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (losses) per share is computed by dividing the net income by the weighted average -9- GLOBAL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- number of shares outstanding during the year, assuming dilution by outstanding common stock options and warrants. The amounts used in calculating earnings (losses) per share data are as follows:
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------- ---------------------------------- 1999 1998 1999 1998 --------------- --------------- ----------------- ---------------- Loss from continuing operations............. $(7,930,466) $ (875,998) $(11,261,783) $(1,768,062) Income from discontinued operations......... -- 3,345,711 586,101 6,591,266 Gain (loss) on disposition of discontinued operations................ 97,951 -- (3,161,552) -- --------------- --------------- ----------------- ---------------- Net income (loss)........................... $(7,832,515) $ 2,469,713 $(13,837,234) $ 4,823,204 =============== =============== ================= ================ Weighted average shares outstanding - basic and diluted....... 16,824,139 11,922,515 12,118,980 11,194,549 =============== =============== ================= ================ Weighted average common stock options and warrants outstanding having no dilutive effect............ 2,183,588 595,504 1,625,188 540,164 =============== =============== ================= ================
NOTE 7 - COMMITMENTS AND CONTINGENCIES Employment Agreements The Company has employment agreements with several of its officers for an aggregate annual base salary of $1,187,500 plus bonuses and increases in accordance with the terms of the agreements. Terms of the agreements range from three to five years and are subject to automatic annual extensions. E-Commerce As of September 30, 1999, the Company had contractually committed to developing the internet businesses of several sporting goods retailers. The Company's failure to meet these commitments could result in a forfeiture of the contracts and the exclusive rights to certain future internet business and could have a material adverse affect on the future results of operations and financial condition of the Company. Yahoo! Advertising and Promotion Agreement On October 4, 1999, the Company announced the execution of an advertising and promotion agreement with Yahoo! Inc., a global Internet media company (the "Yahoo! Agreement"). Under the Yahoo! Agreement, the web-sites operated by the Company will be featured in certain sections of Yahoo!'s network of Internet properties and will allow Yahoo! users to easily access these web-sites. The Yahoo! Agreement requires the Company to pay various fees, which are substantial in the aggregate, to Yahoo! over the twelve-month period following execution of the Agreement. These fees are payable at various intervals and certain are contingent upon certain performance criteria of Yahoo!. NOTE 8 - COMPREHENSIVE INCOME Comprehensive income for the three- and nine-month periods ended September 30, 1999 and 1998 were as follows:
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 --------------- ------------- ------------- --------------- Net income (loss)........................ $(7,832,515) $2,469,713 $(13,837,234) $4,823,204 Foreign currency translation adjustment.. -- (13,626) 47,431 (11,910) --------------- ------------- ------------- --------------- Comprehensive income (loss).............. $(7,832,515) $2,456,087 $(13,789,803) $4,811,294 =============== ============= ============= ===============
-10- GLOBAL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 9 - BUSINESS SEGMENTS As a result of the discontinued operations described in Note 3 to the financial statements, the Company considers itself to have one operating segment which is the development of the internet businesses of several sporting goods retailers. NOTE 10 - EQUITY TRANSACTIONS The Company granted options and warrants to purchase 447,300 and 1,142,782 shares of the Company's common stock to employees and consultants of the Company during the three- and nine-month periods ended September 30, 1999, respectively. The Company also issued warrants to purchase 303,320 shares of the Company's common stock during June 1999 to several retailers in connection with the Company's developing e-Commerce business. The range of exercise prices for all options and warrants granted was from $15.00 to $24.69 for the three-month period ended September 30, 1999 and $0.01 to $24.69 for the nine-month period ended September 30, 1999. Upon granting these options and warrants, the Company recorded equity compensation expense of $1,071,620 and $2,791,636 for the three- and nine-month periods ended September 30, 1999, respectively, primarily as a result of non-employee grants. For the nine-month period ended September 30,1999, $66,150 was included in the net loss from discontinued operations during the second quarter of 1999. Options and warrants to purchase 73,804 and 331,037 shares of the Company's common stock were exercised during the three-and nine-month periods ended September 30, 1999, respectively. The range of exercise prices was from $3.20 to $13.00 for the three-month period ended September 30, 1999 and $0.01 to $13.20 for the nine-month period ended September 30, 1999. These exercises resulted in cash proceeds to the Company of $93,343 and $1,341,826 for the three- and nine-month periods ended September 30, 1999, respectively. On June 10, 1999, the Company and SOFTBANK America Inc. ("SOFTBANK") entered into a stock purchase agreement and related agreements for the sale of 6,153,850 shares of the Company's common stock to SOFTBANK at a price of $13.00 per share for an aggregate purchase price of $80,000,050. See Note 4. On July 13, 1999, the shareholders approved an amendment to the Company's Certificate of Incorporation that increased the maximum number of authorized shares of common stock by 40,000,000 to 60,000,000. -11- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FORWARD LOOKING STATEMENTS Certain information contained in this quarterly report on Form 10-Q contains forward looking statements (as such term is defined in the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder), including without limitation, statements as to the Company's financial condition, results of operations and liquidity and capital resources and statements as to management's beliefs, expectations or options. Such forward looking statements are subject to risks and uncertainties and may be affected by various factors which may cause actual results to differ materially from those in the forward looking statements. Certain of these risks, uncertainties and other factors, as and when applicable, are discussed in the Company's filings with the Securities and Exchange Commission, including its most recent Form 10-K, a copy of which may be obtained from the Company upon request and without charge (except for the exhibits thereto). STRATEGIC BUSINESS DEVELOPMENTS This discussion summarizes the significant factors that affected Global's consolidated operating results and financial condition during the nine months ended September 30, 1999. Over this period, the Company has undergone a significant transformation. Discontinued Operations On April 20, 1999, the Company formalized a plan to sell two of its businesses, the Branded division and the Off-Price and Action Sports division, in order to focus exclusively on the development of new businesses. The Branded division designs and markets the RYKA and Yukon footwear brands. The Off-Price and Action Sports division is a third-party distributor and make-to-order marketer of off-price footwear, apparel and sporting goods. Accordingly, for financial statement purposes, the assets, liabilities, results of operations and cash flows of these divisions have been segregated from that of continuing operations and are presented in the Company's consolidated financial statements as discontinued operations. Prior year financial statements have been reclassified to reflect discontinued operations. Global Sports Interactive On May 10, 1999, the Company announced the formation of a new subsidiary, Global Sports Interactive. Global Sports Interactive is an e-Commerce company that has entered into exclusive agreements to operate the internet businesses of multiple sporting goods retailers. The Company's failure to meet these commitments could result in a forfeiture of the contracts and the exclusive rights to certain future internet business and have a material adverse affect on the future results of operations and financial condition of the Company. Due to the fact that the Company had not, as of September 30, 1999, launched its initial five e-tailing web sites, results from continuing operations for the three- and nine-month periods ended September 30, 1999 consist only of the operating expenses incurred during the period related to the e-commerce business. Acquisition of the Gen-X Companies Effective May 12, 1998, the Company acquired all of the outstanding and issued common stock of the Gen-X Companies in a purchase transaction. The Company's reported results of operations for 1998 include those of the Gen-X Companies only from the date of acquisition through the end of the year. -12- RESULTS OF CONTINUING OPERATIONS THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 The following table sets forth, for the periods indicated, the results of continuing operations:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------------- 1999 1998 1999 1998 -------------- ------------ ------------- ---------------- Costs and expenses: General and administrative............. $ 1,800,699 $ 1,134,169 $ 2,923,252 $ 2,502,532 Equity compensation.................... 1,071,620 -- 2,725,486 -- Web-site development................... 5,360,956 -- 7,979,889 -- Interest expense (income), net......... (302,809) 57,938 (145,966) 176,349 -------------- ------------ ------------- ---------------- Total costs and expenses........... 7,930,466 1,192,107 13,482,661 2,678,881 -------------- ------------ ------------- ---------------- Loss from continuing operations before income taxes...... (7,930,466) (1,192,107) (13,482,661) (2,678,881) Benefit from income taxes............. -- (316,109) (2,220,878) (910,819) -------------- ------------ ------------- ---------------- Loss from continuing operations.......................... (7,930,466) (875,998) (11,261,783) (1,768,062) Income from discontinued operations.......................... -- 3,345,711 586,101 6,591,266 Loss on disposition of discontinued operations............................. 97,951 -- (3,161,552) -- -------------- ------------ ------------- ---------------- Net income (loss)...................... $(7,832,515) $ 2,469,713 $(13,837,234) $ 4,823,204 ============== ============ ============= ================
COSTS AND EXPENSES Costs and expenses of continuing operations for the three- and nine-month periods ending September 30, 1999 were $7,930,466 and $13,482,661, respectively. Operating expenses from continuing operations consisted of expenditures associated with the production of the Company's initial five e-Commerce web- sites and general and administrative expenses related to the day-to-day development and operating activities of the Company. Costs and expenses of continuing operations also includes charges for equity compensation of $1,071,620 and $2,725,486 for the three- and nine-month periods ended September 30, 1999, respectively, primarily as a result of non-employee stock option grants. FINANCIAL CONDITION CASH FLOWS Historically, the operations of the Company have been financed by a combination of internally generated resources, equity transactions, subordinated borrowings, annual increases in the size of its bank credit facility and seasonal over- advances. Increases in the bank credit facilities were required to fund the Company's increased investment in accounts receivable and inventory necessary to support the increases in revenue. On June 10, 1999, the Company and SOFTBANK America Inc. ("SOFTBANK") entered into a stock purchase agreement and related agreements for the sale of 6,153,850 shares of the Company's common stock to SOFTBANK at a price of $13.00 per share (the closing price on May 26, 1999, the day prior to the day the Company and SOFTBANK agreed in principle to the transaction) for an aggregate purchase price of $80,000,050. In order to provide capital to the Company until closing, which occurred on July 23, 1999, the Company and SOFTBANK entered into an interim convertible subordinated loan agreement on June 10, 1999 pursuant to which SOFTBANK loaned the Company $15,000,000. This loan amount was converted into shares of the Company's common stock at closing. On July 23, 1999, the Company received the remaining $65,000,050. The Company intends to use the proceeds to repay the balance on one of its lines of credit, to reduce trade payables and to provide working capital for the new e-Commerce business. As of September 30, 1999, the Company had net working capital of $70,668,407 which includes $43,012,442 of net assets of discontinued operations. The Company used $11,154,675 in cash flows from operating activities of continuing operations for the nine months ended September 30, 1999, whereas in the same period of the prior year the Company used $2,255,084 in cash flows from operating activities of continuing operations. -13- LIQUIDITY On June 10, 1999, the Company and SOFTBANK entered into a stock purchase agreement and related agreements for the sale of 6,153,850 shares of the Company's common stock to SOFTBANK at a price of $13.00 per share for an aggregate purchase price of $80,000,050. In order to provide capital to the Company until closing, which occurred on July 23, 1999, the Company and SOFTBANK entered into an interim loan agreement on June 10, 1999 pursuant to which SOFTBANK loaned the Company $15,000,000. This loan amount was converted into shares of the Company's common stock at closing. On April 20, 1999, the Company formalized a plan to sell two of its businesses, the Branded division and the Off-Price and Action Sports division, in order to focus exclusively on its e-Commerce business. Management expects that these sales will result in substantial proceeds to the Company. Under its current loan agreement, as subsequently amended (the "Loan Agreement"), the Company has access to a combined credit facility of $40,000,000. The term of the Loan Agreement is five years. The loans have an interest rate choice of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points. Under this credit facility, both KPR Sports International, Inc. ("KPR") and RYKA Inc. may borrow up to the amount of their revolving line based upon 85% of their eligible accounts receivable and 65% of their eligible inventory, as those terms are defined in the Loan Agreement. The Loan Agreement also includes 50% of outstanding import letters of credit as collateral for borrowing. Among other things, the Loan Agreement, as amended, requires KPR and RYKA to achieve annual earnings before interest, taxes, depreciation and amortization ("EBITDA") of $5,000,000 and it limits the Company's ability to incur additional indebtedness, make payments on subordinated indebtedness, make capital expenditures, sell assets, and pay dividends. At September 30, 1999, the Company was not in compliance with the EBITDA covenant. The Company obtained a waiver from the bank with respect to this covenant. Because there can be no assurance that the Company will be in compliance with this covenant for any period subsequent to September 30, 1999, the Company has classified the amounts outstanding under this line as a current liability. The Company is currently in negotiations with its lender to modify the terms of the Loan Agreement to return itself to compliance and more closely reflect its new e-commerce business structure. At September 30, 1999, the aggregate amount outstanding under this line was $3,699,207. At September 30, 1999, based on available collateral and outstanding import letters of credit commitments, an additional $1,671,828 was available on this line for borrowing. As of the closing of the Loan Agreement, KPR Sports International, Inc., Apex Sports International, Inc. and MR Management, Inc. (collectively the "KPR Companies") owed Michael Rubin, its Chairman and CEO, subordinated debt of $3,055,841 which is comprised of (i) a loan from Mr. Rubin to the KPR Companies in the principal amount of $851,440, plus accrued and unpaid interest on such loan of $180,517 through October 31, 1997 and (ii) a note in the principal amount of $2,204,401 representing undistributed Subchapter S corporation retained earnings previously taxed to him as the sole shareholder of the KPR Companies. No interest accrued on the note representing Subchapter S corporation earnings until December 15, 1997 at which time the interest began to accrue on such note at a choice of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points. The Loan Agreement and the related Subordination Agreement allowed the Company to repay Mr. Rubin $1,000,000 of the subordinated debt principal and the accrued interest of $180,517 at the time of the closing of the Loan Agreement or within five days thereafter, subject to there being $2,000,000 of availability under the KPR Companies' credit line after taking into account such payments. Such payments were made to Mr. Rubin on November 26, 1997. In addition, the Loan Agreement and the Subordination Agreement permit the KPR Companies to make continued regular payments of interest on the subordinated debt and to further reduce principal on a quarterly basis, commencing with the first quarter of 1998, in an amount up to 50% of the cumulative consolidated net income of both borrowers, reduced by net losses of the borrowers during such period. During 1998, aggregate principal payments of $250,000 were made. On July 27, 1999, the principal balance of $1,805,841 plus interest accrued to date of $58,987 was repaid in full to Mr. Rubin. The Company has made certain commitments with respect to developing the internet businesses of several sporting goods retailers. Management expects that the proceeds from the SOFTBANK transactions and the sale of the Branded division and the Off-Price and Action Sports division will result in adequate financing to allow the Company to continue the development of its e-Commerce business and meet its obligations as they mature during the foreseeable future. -14- YEAR 2000 The Company recognizes the importance of advanced computerization in maintaining and improving its level of service, internal and external communication and overall competitive position. The Company maintains a management information system that provides, among other things, comprehensive customer order processing, inventory, production, accounting and management information for the marketing, selling, manufacturing and distribution functions of the Company's business. The Company has created a Year 2000 project team which is coordinating efforts to evaluate, identify, correct or reprogram, and test the Company's existing systems Year 2000 compliance. The Company enhanced its key information systems to improve their functionality and increase performance during the first quarter of 1999. These upgrades also made these applications Year 2000 compliant. The final step of the Company's Year 2000 plan is to update its office networking system software which it expects to finish shortly after the end of the third quarter of 1999. The Company does not expect the costs of this step to have a material impact on the Company's results of operations, financial position, liquidity or capital resources. The Company is in the process of developing a contingency plan in the event that the above modifications do not result in Year 2000 compliance. In addition to making its own systems Year 2000 compliant, the Company is in the process of contacting its key suppliers and customers to determine the extent to which the systems of such suppliers and customers are Year 2000 compliant and the extent to which the Company could be effected by the failure of such third parties to become Year 2000 compliant. The Company cannot presently estimate the impact of the failure of such third parties to become Year 2000 Compliant. See "Risk Factors - Risks Relating to Year 2000 Compliance" in the Company's most recent Form 10-K. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no significant changes in market risk for the nine months ended September 30, 1999. See the information set forth in Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 1998. -15- PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Effective July 23, 1999, the Company issued 6,153,850 shares of common stock (par value $.01 per share) to SOFTBANK America Inc. ("SOFTBANK") for an aggregate purchase price of $80,000,050. The issuance of the common stock was exempt from registration pursuant to section 4(2) of the Securities Act. The Company granted SOFTBANK certain "demand" and "piggy-back" registration rights with respect to these shares. The Company intends to use the proceeds to repay the balance on one of its lines of credit, to reduce trade payables and to provide working capital for its new e-Commerce business. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On July 13, 1999, the Company held its Annual Meeting of Shareholders (the "Annual Meeting"). Proxies were solicited for the Annual Meeting pursuant to Regulation 14 of the Securities Exchange Act of 1934. At the Annual Meeting the following matters were voted on: (i) Michael G. Rubin, Kenneth J. Adelberg, Harvey Lamm and Jeffrey F. Rayport were elected to serve on the Board of Directors of the Company for one-year terms and until their respective successors are duly elected and qualified. Michael G. Rubin and Kenneth J. Adelberg received 8,040,459 votes for their election with 311 votes withheld. Harvey Lamm and Jeffrey F. Rayport received 8,040,449 votes for their election with 321 votes withheld. (ii) An amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of Common Stock by 40,000,000 shares from 20,000,000 shares to 60,000,000 shares was approved by a vote of 8,038,886 for the amendment and 1,550 votes against the amendment (with 334 broker non-votes and abstentions). (iii) An amendment to the Company's 1996 Equity Incentive Plan (the "Plan") to increase the number of shares of Common Stock issuable pursuant to the Plan from 1,000,000 shares to 3,000,000 was approved by a vote of 8,038,017 for the amendment and 2,466 votes against the amendment (with 287 broker non-votes and abstentions). (iv) The issuance of approximately 30% of the Company's issued and outstanding shares of Common Stock to SOFTBANK America Inc., a Delaware corporation ("SOFTBANK"), in a private placement was approved by a vote of 8,039,091 for the issuance and 657 votes against the issuance (with 1,022 broker non-votes and abstentions). ITEM 5. OTHER INFORMATION Not applicable. -16- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS 10.1* Employment Agreement dated August 9, 1999 by and between the Registrant and Arthur Miller. 10.2+ Omnibus Services Agreement dated April 1, 1999 by and between the Registrant and Organic, Inc. 10.3+ Amendment No. 1 to the Omnibus Services Agreement dated April 1, 1999 by and between the Registrant and Organic, Inc. 10.4 Independent Contractor Services Agreement dated June 29, 1999 by and between the Registrant and Foundry, Inc. 10.5 Addendum No. 1 to the Independent Contractor Services Agreement dated June 29, 1999 by and between the Registrant and Foundry, Inc. 10.6 Agreement of Sale dated July 27, 1999 by and between the Registrant and IL First Avenue Associates L.P. for acquisition of property at 1075 First Avenue, King of Prussia, PA. 10.7+ Advertising and Promotion Agreement dated October 3, 1999 by and between the Registrant and Yahoo! Inc. 10.8 Transaction Management Services Agreement dated June 10, 1999 by and between the Registrant and Priority Fulfillment Services, Inc. 27.1 Financial data schedule for the nine-month period ended September 30, 1999 (electronic filing only). * Management contract or compensatory plan or arrangement. + Confidential treatment has been requested as to certain portions of this exhibit. The omitted portions have been separately filed with the Securities and Exchange Commission. (B) REPORTS ON FORM 8-K None. -17- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized. GLOBAL SPORTS, INC. DATE: November 15, 1999 By: /s/ Michael G. Rubin ------------------------------- Michael G. Rubin Chairman of the Board & Chief Executive Officer DATE: November 15, 1999 By: /s/ Steven A. Wolf ------------------------------- Steven A. Wolf Vice President & Chief Financial Officer -18- EX-10.1 2 EMPLOYMENT AGREEMENT DATED 8/9/1999 EXHIBIT 10.1 EMPLOYMENT AGREEMENT Parties: GLOBAL SPORTS, INC., a Delaware corporation ("Employer") 555 South Henderson Road King of Prussia, PA 19406 ARTHUR H. MILLER ("Executive") 305 W. Highland Avenue Philadelphia, PA 19118 Date: August 9, 1999 Background: Employer and its subsidiaries are in the business of selling sporting goods over the Internet (the "Business"). Employer desires to employ Executive, and Executive desires to accept such employment, on the terms and conditions stated below. INTENDING TO BE LEGALLY BOUND, and in consideration of the mutual agreements stated below, Executive and Employer agree as follows: 1. Employment and Term. Employer hereby employs Executive, and Executive accepts such employment, subject to all of the terms and conditions of this Agreement, for a term of five (5) years beginning on September 20, 1999 and ending on December 31, 2004, unless sooner terminated in accordance with other provisions hereof. 2. Position and Duties. Executive shall serve as Executive Vice President and General Counsel and in such capacity shall have supervision and control over, and responsibility for, the legal affairs of Employer. Executive shall report to, and be subject to the direction of, Employer's Chief Executive Officer (the "CEO"), as well as Employer's Board of Directors (the "Board"). Executive shall also have such other responsibilities and duties consistent with his present duties and current position with Employer, as may from time to time be prescribed by the CEO or the Board. Executive shall devote all of his working time, energy, skill and best efforts to the performance of his duties hereunder in a manner which will faithfully and diligently further the business and interests of Employer. 3. Place of Employment. Executive's principal place of employment will be at the Employer's principal executive office located at 555 South Henderson Road, King of Prussia, PA, or at such other location as the Employer shall specify, provided that Executive's principal place of employment shall at all times during the term hereof be located within 25 miles of the border of the City of Philadelphia, PA. 4. Compensation, Benefits and Expenses. 4.1 Compensation. Employer shall pay to Executive an annual base salary ("Base Salary") in the amounts (or a pro rata amount thereof with respect to the period from September 20, 1999 through December 31, 1999) set forth below: Period Base Salary ------ ----------- September 20, 1999 - December 31, 1999 $175,000 January 1, 2000 - December 31, 2000 $200,000 January 1, 2001 - December 31, 2001 $225,000 January 1, 2002 - December 31, 2002 $250,000 January 1, 2003 - December 31, 2003 $275,000 January 1, 2004 - December 31, 2004 $300,000 Executive's Base Salary shall be payable no less frequently than twice monthly. 4.2 Bonuses. In addition to his Base Salary, for each year of this Agreement, Employer shall pay Executive an incentive bonus in an amount up to $100,000 (or up to a pro rata amount thereof with respect to the period from September 20, 1999 through December 31, 1999), as determined by the CEO. Employer shall pay such incentive bonuses to Executive on or before January 31 of the calendar year immediately following the year (or part thereof) for which such bonus was payable. 4.3 Benefits. Executive shall be entitled to participate and shall be included in all equity incentive, stock option, stock purchase, profit sharing, savings, bonus, health insurance, life insurance, group insurance, disability insurance, pension, retirement and other benefit plans or programs of Employer now existing, or established hereafter, and offered to its executive officers, subject to the terms and provisions thereof. Employer and Executive acknowledge that the employee benefit plans and programs provided by Employer at the commencement date of this Agreement will consist of: (i) fully paid health and dental insurance benefits for Executive and his family members; (ii) long-term disability insurance providing for a monthly benefit equal to 60% of Executive's monthly Base Salary up to a maximum monthly benefit of $10,000 until the earlier of Executive's death or attainment of age 65; (iii) term life insurance providing a death benefit equal to 1 1/2 times Base Salary up to a maximum death benefit of $250,000; and (iv) Employer's 401K Plan providing for a matching contribution by Employer equal to 25% of the amount of Executive's contribution up to a maximum contribution by Executive equal to 6% of Executive's Base Salary. During the first year of Executive's employment, Employer shall pay for Executive to continue the health insurance, life insurance and long term disability insurance that Executive had with his prior employer at the commencement of Executive's employment with Employer (or make alternative comparable arrangements) if such benefits are better than those provided by Employer. 2 4.4 Automobile. Employer shall pay to Executive an automobile allowance of $1,000 per month, which will include the cost of leasing or purchasing an automobile, insurance, operation and maintenance. 4.5 Vacation. Executive shall be entitled to four (4) weeks of vacation during each year, in addition to such paid holidays, personal days and days of paid sick leave as are generally permitted to employees of Employer. 4.6 Expenses. Employer shall reimburse Executive for all actual, ordinary, necessary and reasonable expenses incurred by Executive in the course of his performance of services hereunder. Executive shall properly account for all such expenses. 4.7 Relocation. If, during the term of his employment with Employer, Executive relocates his principal residence outside the City of Philadelphia, Employer will reimburse Executive for such relocation, including moving expenses, real estate commissions, and transfer taxes, up to a maximum reimbursement of $25,000. 4.8 Other. Employer shall pay for on behalf of Executive, or provide to Executive at Employer's expense, the following: (i) professional organizations, conferences and publications related to Executive's profession or responsibilities; (ii) professional liability insurance; (iii) cell phone and cell phone account; and (iv) lap top computer. 5. Termination. 5.1 Termination by Death. If Executive dies, then this Agreement shall terminate immediately, and Executive's rights to compensation and benefits hereunder shall terminate as of the date of death, except that Executive's heirs, personal representatives or estate shall be entitled to any unpaid portion of Executive's salary, a pro rata amount of Executive's incentive bonus for the year in which such termination occurred, accrued benefits up to the date of termination and any benefits which are to be continued or paid after the date of termination in accordance with the terms of the corresponding benefit plans or programs. 5.2 Termination by Disability. If Executive becomes totally disabled, Executive shall continue to receive all of his compensation and benefits in accordance with Section 3 for a period of six (6) months following the Onset of Disability (as defined in this Section 5.2). Any amounts due to Executive under this Section 5.2 shall be reduced, dollar-for-dollar, by any amounts received by Executive under any disability insurance policy or plan provided to Executive by Employer. "Onset of Disability" means the first day on which Executive shall be unable to attend to the regular affairs of Employer on a full time basis by reason of physical or mental incapacity, sickness or infirmity. If Executive's disability continues for more than six (6) consecutive months after the Onset of Disability or for periods aggregating more than six (6) months during any twenty-four (24) month period, then Employer may, upon thirty (30) days prior written notice, terminate Executive's employment, and Executive's rights to compensation and benefits hereunder, except that 3 Executive shall be entitled to any unpaid portion of his salary, a pro rata amount of Executive's incentive bonus for the year in which such termination occurred, accrued benefits up to the date of termination and any benefits which are to be continued or paid after the date of termination in accordance with the terms of the corresponding benefit plans or programs. 5.3 Termination for Cause. Employer may, upon thirty (30) days prior written notice to Executive, terminate Executive's employment, and Executive's rights to compensation and benefits hereunder, for Cause (as defined in this Section 5.3), except that Executive shall be entitled to any unpaid portion of his salary, a pro rata amount of Executive's incentive bonus for the year in which such termination occurred, accrued benefits up to the date of termination and any benefits which are to be continued or paid after the date of termination in accordance with the terms of the corresponding benefit plans or programs. "Cause" shall exist if (i) Executive is grossly negligent or engages in willful misconduct in the performance of his duties under this Agreement, (ii) Executive is convicted of a crime constituting a felony under the laws of the United States or any state thereof, or (iii) Executive willfully breaches this Agreement in a material respect; but only if, in the case of clause (i) or (iii), Executive is given written notice specifying, in reasonable detail, the nature of the alleged neglect, misconduct, or breach and either (A) Executive had a reasonable opportunity to take remedial action but failed or refused to do so, or (B) an opportunity to take remedial action would not have been meaningful or appropriate under the circumstances. 5.4 Termination Without Cause. Employer may, upon thirty (30) days prior written notice to Executive, terminate Executive's employment, and Executive's rights to compensation and benefits hereunder, for any reason Employer deems appropriate, in which case Employer shall pay Executive upon such termination a lump sum payment in an amount equal to the sum of (i) Executive's annual Base Salary for the year in which such termination occurred, plus (ii) Executive's maximum annual incentive bonus for the year in which such termination occurred, and, for one year after such termination, Employer shall provide Executive with all benefits (or substantially equivalent benefits) under any benefit plans or programs of Employer applicable to Executive immediately prior to the termination of his employment under this Section 5.4. 5.5 Termination for Good Reason. Executive may, upon thirty (30) days prior written notice to Employer, resign his employment for Good Reason (as defined in this Section 5.5), in which case Employer shall pay Executive upon such termination a lump sum payment in an amount equal to the sum of (i) Executive's annual Base Salary for the year in which such termination occurred, plus (ii) Executive's maximum annual incentive bonus for the year in which such termination occurred, and, for one year after such termination, Employer shall provide Executive with all benefits (or substantially equivalent benefits) under any benefit plans or programs of Employer applicable to Executive immediately prior to the termination of Executive's employment under this Section 5.5. "Good Reason" shall exist if (i) Executive is demoted, removed or not re-elected to any of his positions or offices, or there is a material diminishment of Executive's title, position, responsibilities, or authorities, (ii) there is a reduction in Executive's Base Salary or a material reduction in Executive's benefits, (iii) Employer materially breaches this Agreement, (iv) Executive is relocated to more than twenty-five (25) miles beyond the border of the City of 4 Philadelphia without Executive's consent, (v) any failure by Employer to obtain the assumption of this Agreement by any successor to the business or substantially all of the assets of Employer, (vi) any purported termination of Executive for Cause which is not effected pursuant to the method described in Section 5.3, or (vii) any other reason agreed to in writing by Executive and the CEO. 5.6 Procedure Upon Termination. Upon termination of his employment, Executive shall promptly return to Employer all documents (including copies) and other materials and property of Employer, or pertaining to its business, including without limitation customer and prospect lists, contracts, files, manuals, letters, reports and records in his possession or control, no matter from whom or in what manner acquired. 6. Discoveries. Executive shall communicate to Employer, in writing when requested, and preserve as confidential information of Employer, all inventions, marketing concepts, software ideas and other ideas or designs relating to the business of the Employer which are conceived, developed or made by Executive, whether alone or jointly with others, at any time during the term of Executive's employment with Employer, which relate to the business or operations of Employer or which relate to methods, designs, products or systems sold, leased, licensed or under development by Employer (such concepts, ideas and designs are referred to as "Executive's Discoveries"). All of Executive's Discoveries shall be Employer's exclusive property, and Executive shall, at Employer's expense, sign all documents and take such other actions as Employer may reasonably request to confirm its ownership thereof. 7. Nondisclosure. At all times after the date of this Agreement, except with Employer's express prior written consent or in connection with the proper performance of services under this Agreement, Executive shall not, directly or indirectly, communicate, disclose or divulge to any Person, or use for the benefit of any Person, any confidential or proprietary knowledge or information, no matter when or how acquired, concerning the conduct or details of the business of Employer, including, but not limited to, (i) marketing methods and strategies, pricing policies, product strategies and methods of operation, (ii) software source code, software design concepts (including visual expressions and system architecture), technical documentation and technical know-how, (iii) budget and other non-public financial information, and (iv) expansion plans, management policies and other business strategies and policies. For purposes of this Section 7, confidential information shall not include any information which is now known by the general public, which becomes known by the general public other than as a result of a breach of this Agreement by Executive or which is independently acquired by Executive. 8. Non-Competition. Executive acknowledges that Employer's business is highly competitive. Accordingly, for a period of one (1) year after the date of such termination, except with Employer's express prior written consent, Executive shall not, directly or indirectly, in any capacity, for the benefit of any Person: 5 (a) Communicate with or solicit any Person who is or during such period becomes an employee of Employer or its subsidiaries in an effort to obtain such Person as an employee of any Person the principal business of which competes with the Business. (b) Establish, own, manage, operate or control, or participate in the establishment, ownership, management, operation or control of, any Person the principal business of which competes with the Business. Notwithstanding anything in this Section 8 to the contrary, but subject to Section 7 hereof, Executive shall not be prohibited from being an officer, director, employee, partner, member or otherwise having an ownership interest in or being affiliated with any law firm, accounting firm, investment banking firm, venture capital firm, leveraged buyout firm or other similar firm that provides services and/or financing to any Person which competes with the Business. 9. Consideration and Enforcement of Covenants. Executive expressly acknowledges that the covenants contained in Sections 6, 7 and 8 of this Agreement ("Covenants") are a material part of the consideration bargained for by Employer and, without the agreement of Executive to be bound by the Covenants, Employer would not have agreed to enter into this Agreement. Executive acknowledges that any breach by Executive of any of the Covenants will result in irreparable injury to Employer for which money damages could not adequately compensate. If there is such a breach, Employer shall be entitled, in addition to all other rights and remedies which Employer may have at law or in equity, to have an injunction issued by any competent court enjoining and restraining Executive and all other Persons involved therein from continuing such breach. The existence of any claim or cause of action which Executive or any such other Person may have against Employer shall not constitute a defense or bar to the enforcement of any of the Covenants. If Employer must resort to litigation to enforce any of the Covenants which has a fixed term, then such term shall be extended for a period of time equal to the period during which a breach of such Covenant was occurring, beginning on the date of a final court order (without further right of appeal) holding that such a material breach occurred or, if later, the last day of the original fixed term of such Covenant. If any portion of any Covenant or its application is construed to be invalid, illegal or unenforceable, then the other portions and their application shall not be affected thereby and shall be enforceable without regard thereto. If any of the Covenants is determined to be unenforceable because of its scope, duration, geographical area or similar factor, then the court making such determination shall have the power to reduce or limit such scope, duration, area or other factor, and such Covenant shall then be enforceable in its reduced or limited form. The provisions of Sections 6, 7 and 8 shall survive the termination of this Agreement. 10. Indemnification. Executive shall be indemnified by Employer, to the maximum extent permitted under applicable law and the certificate of incorporation and bylaws of Employer, for all acts of Executive as an officer and/or director of Employer and/or any other company which Executive serves as an officer and/or director at the request of Employer. 6 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the substantive laws (and not the choice of laws rules) of the Commonwealth of Pennsylvania applicable to contracts made and to be performed entirely therein. Each of the parties irrevocably consents to service of process by certified mail, return receipt requested, postage prepaid, to the address at which such party is to receive notice in accordance herewith. Each of the parties irrevocably consents to the jurisdiction of the state courts in Montgomery County, Pennsylvania and the federal courts in the Eastern District of Pennsylvania in any and all actions between the parties arising hereunder. 12. Legal Fees. Employer shall pay all legal fees and expenses which Executive may incur in enforcing any of his rights or remedies, or obtaining any benefit, under this Agreement. 13. Notices. All notices, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered personally, (ii) three business days after being mailed by first class certified mail, return receipt requested, postage prepaid, or (iii) one business day after being sent by a nationally recognized express courier service, postage or delivery charges prepaid, to the parties at their respective addresses stated on the first page of this Agreement. Notices may also be given by prepaid telegram or facsimile and shall be effective on the date transmitted if confirmed within 24 hours thereafter by a signed original sent in the manner provided in the preceding sentence. Either party may change its address for notice and the address to which copies must be sent by giving notice of the new addresses to the other party in accordance with this Section 13, provided that any such change of address notice shall not be effective unless and until received. 14. Prior Agreements. Executive represents to Employer (i) that there are no restrictions, agreements or understandings whatsoever to which Executive is a party which would prevent or make unlawful his execution of this Agreement or his employment hereunder, (ii) that Executive's execution of this Agreement and Executive's employment hereunder do not constitute a breach of any contract, agreement or understanding, oral or written, to which Executive is a party or which Executive is bound, and (iii) that Executive has full legal right and capacity to execute this Agreement and to enter into employment by Employer. All prior employment agreements between Executive and Employer are hereby terminated as of the date hereof as fully performed on both sides. 15. Parties in Interest. This Agreement is for the personal services of Executive and shall not be assignable by either party without the express prior written consent of the other party; provided, however, Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Employer to assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform if no such succession had taken place; provided, further, that no such assumption or agreement to such successor shall relieve Employer of any of its obligations under this Agreement. Subject to the provisions of Section 5 and this Section 15, this Agreement shall inure to the benefit of and bind each of the parties hereto and the successors and assigns of Employer and the personal representatives, estate and heirs of Executive. 7 16. Entire Understanding. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous, oral or written, express or implied, agreements and understandings. 17. Amendment and Waiver. This Agreement shall not be amended, modified or terminated unless in writing and signed by Executive and a duly authorized representative of Employer other than Executive. No waiver with respect to this Agreement shall be enforceable unless in writing and signed by the parties against which enforcement is sought (which, in the case of the Employer, must be a duly authorized representative of Employer other than Executive). Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence by construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. 18. Section Headings. Any headings preceding the text of any of the Sections or Subsections of this Agreement are inserted for convenience of reference only, and shall neither constitute a part of this Agreement nor affect its construction, meaning, or effect. 19. Definitions. As used herein, the term "Person" means any individual, sole proprietorship, joint venture, partnership, corporation, association, cooperative, trust, estate, government body, administrative agency, regulatory authority or other entity of any nature. IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date first stated above. GLOBAL SPORTS, INC. By: /s/ Michael G. Rubin /s/ Arthur H. Miller --------------------------- ------------------------ Name: Michael G. Rubin Arthur H. Miller Title: President 8 EX-10.2 3 OMNIBUS SERVICES AGREEMENT DATED 4/1/1999 EXHIBIT 10.2 Confidential Treatment has been requested with respect to portions of the agreement indicated with an asterisk [*]. A complete copy of this agreement, including the redacted terms, has been separately filed with the Securities and Exchange Commission. OMNIBUS SERVICES AGREEMENT THIS OMNIBUS SERVICES AGREEMENT ("Agreement") is entered into as of April 1, 1999 ("Effective Date") by and between ORGANIC, INC., with principal offices located at 510 Third Street, Suite 540, San Francisco, CA 94107 ("ORGANIC") and Global Sports Interactive, Inc., with principal offices located at 555 South Henderson Road, King of Prussia, PA 19054 ("CUSTOMER"). WHEREAS, ORGANIC provides assistance to companies in developing interactive software and content for use on the Internet public computer network or an intranet network; and WHEREAS, CUSTOMER desires to retain ORGANIC to provide such assistance to CUSTOMER in accordance with the terms and conditions set forth in this Agreement. NOW, THEREFORE, intending to be legally bound, the parties set forth above hereby agree as follows: 1. DEFINITIONS. 1.1 "Customer Content" shall mean marketing collateral, data, text, audio files, video files, graphics and other materials: (i) provided by CUSTOMER; (ii) developed by or on behalf of ORGANIC for use with the Web Site pursuant to the mutually-agreed specifications set forth in any Authoring Services Statement of Work (as defined in Section 1.10.1); or (iii) any other such material used or posted by CUSTOMER on, or otherwise incorporated in, the Web Site. Customer Content expressly does not include Organic Pre-existing Software, Customer Software, or Other Organic Material. 1.2 "Deliverable" shall mean elements of the Web Site to be delivered by ORGANIC to CUSTOMER hereunder as specified in any Authoring Services Statement of Work. 1.3 "Functional Specifications" shall mean the mutually agreed upon specifications for functionality of the Web Site as set forth in any Authoring Services Statement of Work. 1.4"HTML Files" shall mean files in Hyper Text Markup Language which contain Customer Content. 1.5"Launch Date" shall mean the date the Web Site becomes accessible to CUSTOMER's end-users. 1.6 "Organic Pre-existing Software" shall mean the [*] Organic Pre-existing Software expressly does not include any Third Party Software or HTML Files. 1.6.1 "Customer Software" shall mean [*]. 1 Customer Software expressly does not include any Third Party Software, Organic Pre-existing Software, or HTML Files. 1.7 "Other Organic Material" shall mean material (other than the Organic Pre-existing Software, Customer Software, and Customer Content) developed by ORGANIC and supplied to CUSTOMER hereunder in order to support the Organic Pre-existing Software, Customer Software, or other ORGANIC products and service offerings (e.g., http configurations), which will be listed in Schedule F. 1.8 "Production Specifications" shall mean the specification of the digitized format in which Customer Content is to be delivered to or formatted by ORGANIC, as applicable, as set forth in any Authoring Services Statement of Work. 1.9 "Server Usage Data" shall mean server usage data and statistics related to the Web Site generated by the Organic Pre-existing Software and Customer Software in form and substance to be mutually-agreed upon by the parties. 1.10 "Services" shall mean the services to be provided by ORGANIC pursuant to this Agreement as set forth in Schedule A. 1.10.1 "Authoring Services" shall mean design, authoring, programming and set up services as necessary to: (i) [*] and (ii) create Deliverables as set forth in Schedule A-1 or any other document in substantially the same format which is attached hereto upon the written mutual agreement of the parties (each, an "Authoring Services Statement of Work"). 1.11 "Third Party Content" shall mean any data, text, audio files, video files, graphics or other materials posted to or incorporated into the Web Site other than by CUSTOMER or ORGANIC. 1.12 "Third Party Software" shall mean the object code form of computer software programs proprietary to third parties (other than CUSTOMER or ORGANIC) which may be used in conjunction with the Organic Pre-existing Software and Customer Software to achieve the desired functionality of the Web Site. 1.13 "Web Site" shall mean the site on the World Wide Web identified in Schedule C. 2. SERVICES. 2.1 Authoring Services. 2.1.1 Schedule for Provision of Authoring Services. ORGANIC shall provide Authoring Services and Deliverables in accordance with the schedule(s) set forth in the Authoring Services Statement(s) of Work. In connection with Authoring Services, CUSTOMER shall deliver to ORGANIC all Customer Content selected by CUSTOMER for incorporation into the Web Site on or before the dates specified in the Authoring Services Statement(s) of Work. In 2. the event CUSTOMER fails to deliver such Customer Content in accordance with the schedule, or to timely take any material action required of CUSTOMER by any Authoring Services Statement of Work, the parties shall negotiate in good faith a new delivery and fee schedule for provision of the corresponding Authoring Services by ORGANIC. 2.1.2 Formatting of Customer Content. Customer shall use reasonable commercial efforts to deliver the Customer Content to ORGANIC in accordance with the Production Specifications. In the event CUSTOMER does not deliver to ORGANIC Customer Content that complies with the Production Specifications on or before the applicable delivery date, ORGANIC shall notify CUSTOMER that the Customer Content is non-complying and shall convert the non-complying Customer Content to comply with the Production Specifications at a price to be agreed upon. 2.1.3 Acceptance of Deliverables. ORGANIC shall notify CUSTOMER when a Deliverable has been completed and sent to CUSTOMER for acceptance. Notification by e-mail shall constitute sufficient notice for this Section 2.1.3. Within fifteen (15) days from the receipt by CUSTOMER of any Deliverable pursuant to any Authoring Services Statement of Work, CUSTOMER shall provide ORGANIC with written notice of any failure of such Deliverable to conform to the specifications applicable to such Deliverable. ORGANIC and CUSTOMER shall review the objections, and ORGANIC will use commercially reasonable efforts to correct any non-conformities with the specifications and provide CUSTOMER with a revised Deliverable within fifteen (15) days. CUSTOMER shall be deemed to have accepted a Deliverable if ORGANIC does not receive written notice of CUSTOMER's objections within fifteen (15) days of CUSTOMER's receipt of such Deliverable. 2.2 Change Orders. In the event that CUSTOMER wishes to request a material change to any of the Services set forth in Schedule A, CUSTOMER shall submit a "Change Order" to ORGANIC substantially in the form set forth in Schedule B. Within five (5) business days of receipt of the Change Order, ORGANIC will submit to CUSTOMER the revised fees, delivery schedules and other information reflecting the impact of the additional or different Services ("Change Order Response"); provided, however, if the requested change in Services is so substantial that, in the reasonable judgment of ORGANIC, a complete Change Order Response is impossible to formulate within five (5) business days, ORGANIC will provide to Customer a schedule for formulating the Change Order Response. Customer shall accept or reject the Change Order Response within five (5) business days of receipt, and shall be deemed to have rejected the Change Order Response unless CUSTOMER notifies ORGANIC of acceptance of the Change Order Response within such five (5) business day period. ORGANIC will continue work pursuant to the existing Schedule A, and will not be bound by any Change Order, until the applicable Change Order is accepted in accordance with this Section 2.2. ORGANIC will use commercially reasonable efforts to meet rush orders outside the original scope of work and delivery schedules in Schedule A, but such rush orders shall be billed at higher rates than ORGANIC's standard hourly rates, which higher rates will be indicated in the Change Order Response. 3. PROPRIETARY RIGHTS; LICENSE GRANTS. 3. 3.1 License to Customer. ORGANIC hereby grants CUSTOMER a non-exclusive, perpetual, royalty free, fully paid, non-transferable (except in accordance with this Agreement) license throughout the universe to use, copy, modify, adapt, translate, create derivative works based upon the licensed materials, reproduce, distribute, publicly perform, publicly display, and digitally perform [*]. 3.2 License to Organic. CUSTOMER grants to ORGANIC a perpetual, non-exclusive, royalty free, fully paid license throughout the universe to use, copy, modify, adapt, translate, sub-license through multiple tiers, create derivative works based upon the licensed materials, reproduce, distribute, publicly perform, publicly display, and digitally perform [*]. 3.3 Property Rights and Ownership. The Web Site shall consist of, and shall operate in conjunction with, multiple elements, all of which are subject to certain intellectual property rights. The parties' respective rights with respect to such elements shall be as set forth below. For purposes of this Agreement, the term "ownership" shall refer to ownership of all right including, without limitation, "Intellectual Property Rights" (defined below), title and interest in and to the respective elements, including, but not limited to, all patent, copyright, trade secret, trademark and any other similar intellectual property rights therein, as applicable. "Intellectual Property Rights" shall mean all intellectual property rights and industrial property rights (throughout the universe, in all media, now existing or created in the future, for all versions and elements, in all languages, and for the entire duration of such rights) arising under statutory or common law, contract, or otherwise, and whether or not perfected, including without limitation, all (a) patents, reissues of and reexamined patents, and patent applications, whenever filed and wherever issued, including without limitation, continuations, continuations-in-part, substitutes, and divisions of such applications and all priority rights resulting from such applications; (b) rights associated with works of authorship including without limitation copyrights, moral rights, copyright applications, copyright registrations, synchronization rights, mask work rights, mask work applications, mask work registrations; (c) rights associated with trademarks, service marks, trade names, logos, trade dress, and the applications for registration and registrations thereof; (d) rights relating to the protection of trade secrets and confidential information; (e) rights analogous to those set forth in this Section 3.3 and any and all other proprietary rights relating to intangible property; and (f) divisions, continuations, renewals, reissues and extensions of the foregoing (as and to the extent applicable) now existing, hereafter filed, issued, or acquired. ================================================================================ Elements Ownership/Rights - -------------------------------------------------------------------------------- 4. ================================================================================ Elements Ownership/Rights - -------------------------------------------------------------------------------- Customer Content unmodified by [*] ORGANIC. - -------------------------------------------------------------------------------- Customer Content created for [*] CUSTOMER by ORGANIC and paid for by CUSTOMER. - -------------------------------------------------------------------------------- Modifications to Customer Content [*] by ORGANIC, or by CUSTOMER using self-authoring tools ("Modified Content"). - -------------------------------------------------------------------------------- Domain name for Web Site. [*] - -------------------------------------------------------------------------------- HTML Files. [*] - -------------------------------------------------------------------------------- Commissioned artwork or musical [*] pieces authored or composed by - -------------------------------------------------------------------------------- Third Party Software. [*] - -------------------------------------------------------------------------------- Organic Pre-existing Software. [*] - -------------------------------------------------------------------------------- Server Usage Data. [*] 5. ================================================================================ Elements Ownership/Rights - -------------------------------------------------------------------------------- Other Organic Material. [*] - -------------------------------------------------------------------------------- Customer Software. [*] ================================================================================ 3.3.1 Assignment of Intellectual Property Rights. To the extent that some or all rights, including without limitation, Intellectual Property Rights, title, and interest in and to an element do not lie, upon creation, exclusively with respective party, the other party irrevocably sells, assigns, transfers, and sets over exclusively to the respective party all rights, including without limitation, Intellectual Property Rights, title, and interest in and to the element or any component of the element, whether completed or not, and the other party reserves no rights in such element. If the other party has any such rights that cannot be assigned to the respective party, the other party waives the enforcement of such rights, and if the other party has any rights that cannot be assigned or waived, the other party hereby grants to the respective party an exclusive, royalty-free, perpetual, irrevocable, transferable (including without limitation, sublicensing), unlimited, license, throughout the universe, in all media, now existing or created in the future, for all versions and elements, and in all languages, to use, copy, distribute, create derivative works of, publicly perform, publicly display, digitally perform, make, have made, offer for sale and import, and sell, such rights for the entire duration of such rights. 3.4 Supporting Documents. Each party agrees to execute any additional documents reasonably necessary to effect and evidence the other party's rights (at such other party's request and sole expense) with respect to the elements set forth above. 3.5 Proprietary Notices. All copies of the Organic Pre-existing Software and Other Organic Materials made by CUSTOMER shall contain copyright and other proprietary notices in the same manner in which ORGANIC incorporates such notices in the Organic Pre-existing Software and Other Organic Material or in any other manner reasonably requested by ORGANIC for the purpose of preserving ORGANIC's proprietary rights. CUSTOMER agrees not to remove, cover or obliterate any copyright notice, trademark or other proprietary rights notices placed by ORGANIC on or in the Organic Pre-existing Software or the Other Organic Material. 4. PAYMENT. 4.1 Services. CUSTOMER shall pay to ORGANIC the amounts set forth in the applicable provisions of Schedule A at the times set forth therein. 6. 4.1.1 Authoring Services. Except for the Common Engine Development and Retailer Front End Statements of Work described below, all future Authoring Services will be provided on a time and materials basis or as otherwise agreed to between the parties and specified in the applicable Authoring Services Statement of Work. ORGANIC's current standard hourly rates are shown on Schedule E. ORGANIC's standard hourly rates are revised annually, effective January 1 of each year; provided, however, that any increase in such rates shall only apply to CUSTOMER to the extent that ORGANIC has provided CUSTOMER with at least thirty (30) days prior written notice of such increase. In any event, the new rates will not apply to any Statement of Work which has already been signed or performance of which has already begun. CUSTOMER acknowledges and agrees that the Projected Cost is simply an estimate based on the facts and circumstances known to CUSTOMER and ORGANIC at the time the estimate is made. Certain factors, including without limitation, changes in functionality and delivery schedules, delays in obtaining materials from CUSTOMER, delays in obtaining approvals from CUSTOMER, or delivery by CUSTOMER of materials that do not meet the Production Specifications, may result in the Projected Cost being exceeded; provided, however, that ORGANIC will notify CUSTOMER as soon as reasonably practicable when ORGANIC expects that the Projected Cost will be exceeded. However, ORGANIC shall have no obligation to deliver the final Deliverable or launch the Web Site prior to full payment of all outstanding invoices. For the GSI Common Engine Development and Retailer Front End Initiative, ORGANIC will invoice CUSTOMER a total fixed monthly fee of [*] on the first of each month from May 1, 1999 through September 1, 1999. All payments are due [*] except for the final Common Engine Development payment, which is due [*]. The monthly fixed fee will be broken down into 7 separate monthly invoices; one for the Common Engine Development, and 6 for each Retailer Front End, as follows: GSI Common Engine Development [*]/month. 6 Retailer Front Ends ([*]/per x 6) [*]/month. 4.2 Taxes. In addition to the fees due as specified above, CUSTOMER shall pay any and all federal, state and local sales, use, value added, excise, duty and any other taxes which may be incurred in connection with performance of this Agreement, except that taxes on ORGANIC's income shall be the sole responsibility of ORGANIC. 4.3 Payments. Amounts are due [*]. All payments made pursuant to this Agreement shall be made in U.S. dollars. 5. LIMITED WARRANTY. 7. 5.1 Software Warranty. ORGANIC represents and warrants to CUSTOMER that [*]. ORGANIC's warranty shall extend for a period of [*] from the Launch Date ("Warranty Period"). ORGANIC's sole obligation, and CUSTOMER's sole remedy, for a breach of the warranty set forth in this Section 5.1 shall be [*]. All warranty claims shall be made in writing to ORGANIC within the Warranty Period. CUSTOMER agrees to reimburse ORGANIC for the expense of investigating any warranty claim made by CUSTOMER whereby the investigation reveals that the cause of the non-performance is not covered under this Section 5.1 warranty provision. ORGANIC's warranty obligations are solely for the benefit of CUSTOMER, who has no authority to extend or transfer this warranty to any other person or entity. 5.2 Disclaimer of Other Warranties. THE EXPRESS WARRANTY SET FORTH IN SECTION 5.1 IS THE SOLE AND EXCLUSIVE WARRANTY MADE BY ORGANIC TO CUSTOMER PURSUANT TO THIS AGREEMENT, AND ORGANIC EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. 5.3 Encryption and Security. Unless expressly incorporated in the Functional Specifications, ORGANIC makes no warranties and shall have no liability in connection with the effectiveness of any encryption or security system used by or for the Web Site. 5.4 Discontinuance or Regulation of the Internet. CUSTOMER acknowledges and agrees that the Internet (including without limitation the World Wide Web) is a network of private and public networks, that ORGANIC has no control over the Internet, and that ORGANIC is therefore not liable for the discontinuance of operation of any portion of the Internet or possible regulation of the Internet which might restrict or prohibit the operation of the Web Site. 6. INTELLECTUAL PROPERTY INDEMNIFICATION. 6.1 Organic. 6.1.1 Except as provided in Section 6.1.2, ORGANIC, at its own cost and expense, shall defend, indemnify and hold harmless CUSTOMER and any of its officers, directors, employees or agents, from and against all damages, expenses, liabilities and other costs (including reasonable attorneys' fees) arising from or relating to [*] 8. ; provided that: (i) CUSTOMER notifies ORGANIC promptly in writing of any such claim; (ii) ORGANIC has the sole control of the defense and all related settlement negotiations; and (iii) CUSTOMER provides ORGANIC with all reasonably requested assistance, information, and authority to perform the foregoing at ORGANIC's expense. 6.1.2 ORGANIC shall have no liability for [*]. 6.1.3 ORGANIC shall NOT indemnify CUSTOMER against [*]. This Section 6.1 sets forth CUSTOMER's sole and exclusive remedy for intellectual property infringement by ORGANIC. 6.2 Customer. 9. 6.2.1 CUSTOMER, at its own cost and expense, shall defend, indemnify and hold harmless ORGANIC and any of its officers, directors, employees or agents, from and against all damages, expenses, liabilities and other costs (including reasonable attorneys' fees) to the extent arising from or relating to a claim that: [*]; provided that: (i) ORGANIC notifies CUSTOMER promptly in writing of any such claim; (ii) CUSTOMER has the sole control of the defense and all related settlement negotiations; and (iii) ORGANIC provides CUSTOMER with all reasonably requested assistance, information, and authority to perform the foregoing at CUSTOMER's expense. 7. LIMITATIONS ON LIABILITY. 7.1 Total Damage Limitation. EXCEPT FOR THE INTELLECTUAL PROPERTY INDEMNIFICATIONS SET FORTH IN SECTIONS 6.1.1 AND 6.2.1 HEREINABOVE, AND THE CONFIDENTIALITY PROVISIONS IN SECTION 9 BELOW, IN NO EVENT SHALL EITHER PARTY'S LIABILITY TO THE OTHER ARISING FROM OR RELATING TO THIS AGREEMENT EXCEED [*], REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE. 7.2 No Consequential Damages. EXCEPT FOR THE INTELLECTUAL PROPERTY INDEMNIFICATIONS SET FORTH IN SECTIONS 6.1.1 AND 6.2.1 HEREINABOVE, AND THE CONFIDENTIALITY PROVISIONS IN SECTION 9 BELOW, NEITHER PARTY SHALL BE LIABLE FOR ANY LOST DATA OR CONTENT, LOST PROFITS, BUSINESS INTERRUPTION OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING TO THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 8. TERM AND TERMINATION. 8.1 Term. The term of this Agreement shall commence on the Effective Date and continue until terminated by either party pursuant to this Section 8. 8.2 Termination for Cause. This Agreement may be terminated by either party in the event of any material breach of any of the terms or conditions of this Agreement by the other party, which breach continues in effect after the breaching party has been provided with written notice of breach and thirty (30) days to cure such breach. 8.3 Termination At Will. This Agreement may be terminated by either party upon ninety (90) days written notice. Authoring Services which are in progress at the time of such 10. notice will continue, and CUSTOMER shall make all applicable payments in accordance with the schedule set forth in any applicable Authoring Services Statement of Work until the effective date of termination pursuant to this Section 8.3. 8.4 Effect of Termination. In the event that this Agreement is terminated either by CUSTOMER under Section 8.3 or by ORGANIC pursuant to Section 8.2, while ORGANIC is in the course of providing Authoring Services to CUSTOMER, ORGANIC shall be entitled to retain the Retainer(s) in addition to all fees paid to ORGANIC in connection with all Services performed hereunder, except to the extent that the sum of fees collected and the Retainer(s) exceed the Projected Cost(s) (as adjusted by mutual written agreement of the parties previous to the effective date of termination). In the event that this Agreement is terminated either by CUSTOMER pursuant to Section 8.2 or by ORGANIC under Section 8.3, ORGANIC shall be entitled to a prorated portion of fees equivalent to the Services performed up until the date of termination. 8.5 Survival. Sections 3, 5, 6, 7, 8, 9 and 10 shall survive any termination or expiration of this Agreement; provided, however, that if ORGANIC terminates this Agreement pursuant to Section 8.2, Section 3.1 will not survive such termination. 9. CONFIDENTIALITY. 9.1 Confidential Information. Each party acknowledges that, in connection with the performance of this Agreement, it may receive Confidential Information of the other party. For the purpose of this Agreement, "Confidential Information" shall mean information or materials that the party receiving the information (the "Receiving Party") knows or has reason to know is the confidential or proprietary information of the party disclosing the information (the "Disclosing Party"), either because such information is marked or otherwise identified by the Disclosing Party as confidential or proprietary, has commercial value, or is not generally known in the Disclosing Party's trade or industry. Confidential Information shall include, without limitation: (a) concepts and ideas relating to the development and distribution of content in any medium; (b) trade secrets, drawings, inventions, know-how, software programs, and software source documents; (c) information regarding plans for research, development, new service offerings or products, marketing and selling, business plans, business forecasts, budgets and unpublished financial statements, licenses and distribution arrangements, prices and costs, suppliers and customers; and (d) existence of any business discussions, negotiations or agreements between the parties. 9.2 Confidentiality. The Receiving Party hereby agrees: (i) to hold and maintain in strict confidence all Confidential Information of the Disclosing Party and not to disclose it to any third party; and (ii) not to use any Confidential Information of the Disclosing Party except as permitted by this Agreement or as may be necessary for the Receiving Party to perform its obligations under this Agreement. The obligations and restrictions imposed by this Section 9 shall terminate two (2) years after the expiration or termination of this Agreement. 9.3 Exceptions. Notwithstanding the foregoing, the parties agree that Confidential Information will not include any information that: (i) was in the public domain at the time it was 11. communicated to the Receiving Party by the Disclosing Party; (ii) entered the public domain subsequent to the time it was communicated to the Recipient by the Disclosing Party through no fault of the Receiving Party; (iii) was in the Receiving Party's possession free of any obligation of confidence at the time it was communicated to the Receiving Party by the Disclosing Party; (iv) was rightfully communicated to the Receiving Party by a third party, free of any obligation of confidence, subsequent to the time it was communicated to the Receiving Party by the Disclosing Party; or (v) was developed by employees or agents of the Receiving Party independently of and without reference to any information communicated to the Receiving Party by the Disclosing Party. In addition, the Receiving Party may disclose the Disclosing Party's Confidential Information in response to a valid order by a court or other governmental body, as otherwise required by law, or as necessary to establish the rights of either party under this Agreement; provided, that the Receiving Party gives reasonable and timely notice to the Disclosing Party. 10. GENERAL PROVISIONS. 10.1 Force Majeure. In the event that either party is unable to perform any of its obligations under this Agreement or to enjoy any of its benefits because of any event beyond the reasonable control of the affected party including, but not limited to, natural disaster, acts of God, actions or decrees of governmental bodies or failure of communications lines or networks (a "Force Majeure Event"), the party who has been so affected shall promptly give written notice to the other party and shall use its best efforts to resume performance. Upon receipt of such notice, all obligations under this Agreement shall be immediately suspended for the duration of such Force Majeure Event. 10.2 Notice. All notices permitted or required under this Agreement shall be in writing and shall be given by personal delivery, facsimile transmission or by certified or registered mail, return receipt requested, and shall be deemed given upon the earlier of actual receipt, five (5) days after deposit in the mail, or receipt by sender of confirmation of facsimile transmission. Notices shall be sent to the following addresses (or such other address as either party may specify in writing): If to ORGANIC, INC.: ORGANIC 71 West 23rd Street, 14th Floor New York, NY 10010 Attention: Jeanette McClennan Telephone: [*] Facsimile: [*] E-mail: [*] and 510 Third Street, Suite 540 San Francisco, California 94107 Attention: Jeffrey Lazarto 12. Telephone: [*] Facsimile: [*] E-mail: [*] If to CUSTOMER: Global Sports Interactive, Inc. 555 South Henderson Road King of Prussia, PA 19054 Attention: Michael Golden Telephone: [*] Facsimile: E-mail: [*] 10.3 Waiver. No delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing and signed by the party against whom enforcement of such waiver is sought and then only to the extent expressly specified therein. 10.4 Partial Invalidity. In the event any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable, the remaining provisions of this Agreement shall be unimpaired and the invalid, illegal or unenforceable provision shall be construed to be amended in order to avoid such invalidity, illegality or unenforceability while preserving as closely as possible the economic intent and effect of the parties. 10.5 Governing Law. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes thereto, shall be governed by and construed in accordance with the laws of the State of New York (excluding the choice of law rules thereof). 10.6 Assignment. Neither party shall have the right to assign this Agreement or licenses granted under this Agreement without the prior written consent, which consent shall not be unreasonably withheld, of the other party; provided, that either party shall have the right to assign this Agreement or licenses granted under this Agreement to any person or entity that acquires or succeeds to all or substantially all of such party's business or assets upon written notice to the other party. 10.7 Publicity. Within a time frame mutually agreed upon by the parties, the parties shall mutually agree on a joint press release announcing the existence of this Agreement. Neither party will use the other party's name, domain name, logo, trademark or service mark in advertising or publicity without obtaining the other party's prior written consent. CUSTOMER 13. shall allow ORGANIC to place screen shots and links to the Web Site on ORGANIC's external web site at www.organic.com (or such alternative URL as ORGANIC may designate from time to time). 10.8 Entire Agreement; Amendment. This Agreement, together with the attached schedules hereto and made a part hereof, all of which are incorporated herein by reference, constitute the entire agreement between the parties hereto with respect to the transactions contemplated herein, and supersede all prior or contemporaneous oral and written agreements, commitments or understandings with respect to the matters provided for herein. This Agreement will govern all schedules attached hereto; provided, however, that in the event of any conflict between the terms and conditions of this Agreement and any schedule, the terms and conditions of such schedule shall govern, but only to the extent of such conflict and only in connection with interpretation of the applicable schedule. No amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed and delivered by the party against whom enforcement of the amendment, modification, or discharge is sought. 10.9 Headings. Section headings contained in this Agreement are inserted for convenience or reference only, shall not be deemed to be a part of this Agreement for any other purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof. 10.10 Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same instrument. 10.11 Independent Contractors. The relationship of the parties hereunder shall be that of independent contractors. Nothing herein shall be construed to constitute a partnership between or joint venture of the parties, nor shall either party be deemed the agent of the other or have the right to bind the other in any way without the prior written consent of the other. 10.12 Jurisdiction. All disputes arising out of or relating to this Agreement shall be submitted to the exclusive jurisdiction of the state and federal courts in the County and State of New York, and each party irrevocably consents to such personal jurisdiction and waives all objections thereto. IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to enter into this Agreement to be effective on the Effective Date set forth above. ORGANIC, INC. GLOBAL SPORTS INTERACTIVE, INC. By: /s/ Jeanette McClennan By: /s/ John Moerman -------------------------------- ------------------------------- Title: VP Managing Director Title: VP Finance ----------------------------- ---------------------------- Date: 9/17/99 Date: 9/17/99 ----------------------------- ---------------------------- 14. EX-10.3 4 AMENDMENT #1 TO OMNIBUS AGREEMENT EXHIBIT 10.3 Confidential Treatment has been requested with respect to portions of the agreement indicated with an asterisk [*]. A complete copy of this agreement, including the redacted terms, has been separately filed with the Securities and Exchange Commission. Amendment to Omnibus Services Agreement Between Organic, Inc. and Global Sports Interactive, Inc. Organic, Inc. ("ORGANIC") and Global Sports Interactive, Inc. ("CUSTOMER") hereby mutually agree to amend the Omnibus Services Agreement ("OSA") dated April 1, 1999, and all attached Statements of Work and Change Orders. WHEREAS, ORGANIC and CUSTOMER have mutually agreed to cease work on both the GSI Common Engine Development and the Retailer Front End Initiative effective September 13, 1999. ORGANIC will deliver to CUSTOMER all work product "as is," in its current state of development, including all source code and object code of Organic Pre-existing Software and Customer Software currently in development. WHEREAS, CUSTOMER has informed ORGANIC of CUSTOMER's intent to build the GSI Common Engine internally, and will therefore be taking the work product developed by ORGANIC "as is" and making extensive modifications to the ORGANIC work product in order to complete the GSI Common Engine Development. Additionally, since completion of the Retailer Front End Initiative is contingent upon the final specifications of the GSI Common Engine, CUSTOMER will be making extensive modifications to the ORGANIC work product for the Retailer Front End Initiative as well. NOW, THEREFORE, ORGANIC and CUSTOMER hereby mutually agree to the following modifications and amendments to the OSA and all attached Statements of Work and Change Orders: Warranties. The parties hereby agree that all GSI Common Engine Development and Retailer Front End Initiative work product is being provided by ORGANIC to CUSTOMER "as is" and without any performance warranties of any kind; and that the warranty provision in Section 5.1 of the OSA is hereby revoked and not applicable to any and all ORGANIC work product for the GSI Common Engine Development and the Retailer Front End Initiative. However, ORGANIC and CUSTOMER hereby mutually agree to add the following Warranty of Title provision to the OSA, which warranty shall be the only warranty of any kind, either express or implied, that is applicable to any and all ORGANIC work product for the GSI Common Engine Development and Retailer Front End Initiative. Warranty of Title. ORGANIC hereby represents and warrants to CUSTOMER that [*] Payment. All invoices billed through August 31, 1999 shall remain valid and are now immediately due. For the month of September 1999, CUSTOMER hereby agrees to pay ORGANIC as follows: (i) [*] representing 50% of the compensation for the GSI Common Engine Development Team for services performed; (ii) [*] representing payment for the Front End Initiative Team for services performed; and (iii) [*] representing unsigned change orders and payment for GSI Common Engine Team resources that could not be re-assigned to other projects. Services. ORGANIC hereby agrees to provide the following resources to perform transition services to CUSTOMER beginning September 16, 1999 and continuing through October 1, 1999: (i) a Senior Producer; (ii) 6 Content Engineers; and (iii) 6 Interactive Production Artists. The above resources will work no more than 100 hours each throughout the duration stated above. If any of these resources are unavailable, the parties hereby agree to a reduction in the fees stated above, which reduction shall be based on the hourly rate for each resource according to the rate card. It is also understood that CUSTOMER may prefer to have some or all of these resources to be on site at CUSTOMER's facilities. Therefore, if CUSTOMER elects to have any or all of these resources on site at CUSTOMER's facilities, CUSTOMER hereby agrees to pay for any and all reasonable expenses associated with relocating these resources to CUSTOMER's facilities, including, but not limited to, travel, lodging, and meals. Any and all other resources or services that are required beyond the end of September, or that are in addition to those stated above, will be billed on a time and materials basis upon prior written approval from CUSTOMER. Termination. The parties hereby mutually agree to amend the termination provision of the OSA by adding the following sentence to the end of Section 8.3: Termination at Will. This Agreement may be terminated by mutual agreement immediately, at any time, with the effective date of termination to be mutually agreed upon by the parties in writing. NOW, THEREFORE, the parties hereby mutually agree to terminate the OSA dated April 1, 1999, and all attached Statements of Work and Change Orders, as of the Effective Date of September 13, 1999. All other provisions of the OSA, Statements of Work, and Change Orders that do not contradict the above terms of this Amendment shall remain in full force and effect. AGREED AND ACCEPTED ORGANIC, INC. GLOBAL SPORTS INTERACTIVE, INC. By: /s/ Jeanette McClenuan By: /s/ John Moerman ______________________________ __________________________________ Title: VP Managing Director Title: VP Finance ____________________________ _______________________________ Date: 9/17/99 Date: 9/17/99 ____________________________ ________________________________ EX-10.4 5 INDEPENDENT CONTRACTOR SERVICES AGREEMENT EXHIBIT 10.4 INDEPENDENT CONTRACTOR SERVICES AGREEMENT No. 0699-FDY Contractor: Foundry, Inc. Date: June 29, 1999 THIS AGREEMENT is entered into on the date set forth above between Global Sports Interactive located at 2012 Renaissance Boulevard, King of Prussia, PA 19406 ("Client") and Foundry, Inc. located at 7600 Colshire Drive, Suite 141, McLean, Virginia 22102 ("Contractor"). 1. ENGAGEMENT OF SERVICES. 1.1 Engagement. Contractor will render the services described in any Engagement that may be mutually agreed and executed by the parties (the "Engagement") in accordance with the terms and schedule set forth in each such Engagement. 1.2 Performance of Services. Contractor shall have the right and responsibility of controlling the manner and means of the completion of the Engagement. 2. COMPENSATION. 2.1 Fees and Approved Expenses. Client will pay Contractor the fee for services rendered under this Agreement set forth in the Engagement. Contractor will not be reimbursed for any expenses incurred, unless they are expressly provided for in the Engagement or are approved in advance and in writing by Client. 2.2 Timing. Unless otherwise provided in the Engagement, Client will pay Contractor for services and will reimburse Contractor for previously approved expenses within thirty (30) days of the date of the Contractor's invoice, provided Contractor has furnished documentation satisfactory to Client to verify Contractor's services and expenses. Client will pay Contractor in U.S. dollars. 3. INTELLECTUAL PROPERTY RIGHTS AND CONFIDENTIAL INFORMATION 3.1 Confidential and Proprietary Information. Client understands that software developed under this agreement may be similar to software developed by Contractor outside of this agreement. To the maximum extent possible Client wishes to utilize software developed outside of this agreement to speed the development of its own software systems. In exchange for Contractor using software developed outside of this agreement Client agrees to grant Contractor a paid-up, nonexclusive, perpetual license to use the software developed by Contractor under this agreement and that for the purposes of this agreement this software is not considered Confidential or Proprietary. 3.2 Confidentiality. Paragraph 3.1 notwithstanding and except as Contractor's duties as an independent contractor to Client may require, Contractor agree never to disclose or to use, either during or after Contractor's relationship with Client, any confidential or proprietary information of Client, including without limitation any such information conceived or developed by Contractor in rendering the services described in the Engagement and information and materials received by Client in confidence from third parties ("Confidential Information"). Upon termination of Contractor's relationship with Client or at any other time upon Client's request, Contractor will promptly deliver to Client, without retaining any copies, all documents and materials (including summaries, charts, reports, computer print-outs, electronically stored data, or other data or things) containing any Confidential Information. Furthermore, Contractor agree to not disclose any aspect of this contract or its engagements for up to one full year following termination. 3.3 Confidential Information of Others. Contractor will not disclose to Client, or use in connection with Contractor's work for Client, any confidential or proprietary information or material belonging to any third party. 3.4 Injunctive Relief. A breach of any of the promises contained in this Agreement will result in irreparable and continuing damage to Client for which there will be no adequate remedy at law, and Client will be entitled to injunctive relief and/or a decree for specific performance, as well as any other relief as may be proper. 4. WARRANTIES AND INDEMNITY. 4.1 Warranties. Contractor represents and warrants: (a) that entering into this Agreement to provide the services described in the Engagement will not violate any obligation or cause any default under or breach of any other agreement; and (b) that the Services Contractor renders under this Agreement, and the sale, manufacture, reproduction and use of the products of those services will not infringe the proprietary rights of any third party; provided that such representation and warranty shall not apply to any information, code, documentation or other material provided by Client to Contractor under this Agreement. 4.2 Indemnity. Contractor agree to indemnify and hold Client harmless from and against any liability, loss, claim, demand and damage, including costs and attorneys' fees, resulting from or based upon any infringement or violation, default or breach of this Agreement, including without limitation the representations and warranties contained in this Section 4. Client agrees to indemnify and hold Contractor harmless from and against any liability, loss, claim, demand and damage, including costs and attorney's fees, resulting from or based upon any infringement claims made against Contractor on account of any information, code, documentation or other material provided by Client to Contractor under this Agreement. 5. INDEPENDENT CONTRACTOR RELATIONSHIP. 5.1 Nature of Relationship. Contractor's relationship with Client will be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship. Contractor is not the agent of Client and is not authorized to make any representation, contract, or commitment on behalf of Client unless specifically requested to do so, by Client, in writing. 5.2 Contractor Responsible for Taxes and Records. Contractor will be solely responsible for and will file, on a timely basis, all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to Contractor's performance of services and receipt of fees under this Agreement. Contractor will be solely responsible for and must maintain adequate records of expenses incurred in the course of performing services under this Agreement. 6. TERM. This Agreement is effective as of the date set forth above and continues for the term set forth in the Engagement (including such additional Engagements, if any, as the parties may enter into from time to time), unless earlier terminated in accordance with Section 7 below. The term of this Agreement may be extended by mutual agreement of the parties and by addendum to the original or any additional Engagements. 7. TERMINATION. 7.1 Termination by Client. If payment for Contractor's services described in the Engagement is based upon a fixed price, Client may terminate this Agreement in the event of a material breach or default by Contractor upon fifteen (15) days' prior written notice to Contractor. If payment for Contractor's services described in the Engagement is other than a fixed price, Client may terminate this Agreement as to such Engagement for any reason, with or without cause, upon fifteen (15) days' prior written notice to Contractor. 7.2 Rights Upon Termination. Upon termination of this Agreement, for any reason, Contractor will not be entitled to any further payments under the Agreement other than for Services rendered up to the effective date of termination. Termination shall be without prejudice to any rights or remedies Contractor or Client may have by reason of any breach of this Agreement. The provisions of Section 3, 4 and 5 shall survive termination of this Agreement and continue in effect indefinitely. 8. NO SOLICITATION FOR EMPLOYMENT. 8.1 Solicitation of Client's Employees. During the Term of this Agreement, and for one (1) year thereafter, Contractor shall not (a) offer employment to or employ any Client employee either full-time or part-time, or (b) hire or offer to hire any Client employee as a consultant, intern, trainee, or the equivalent of Contractor, to provide services or products having the same general nature as those provided by Client to it's customers under this Agreement; Contractor shall not request, cause, or induce the Client employees to breach any agreement between the employee and Client; and Contractor shall not request, cause, or induce the employee to leave the employ of Client. 8.2 Solicitation of Contractor's Employees. During the Term of this Agreement, and for one (1) year thereafter, Client shall not (a) offer employment to or employ any Contractor employee either full-time or part-time, or (b) hire or offer to hire any Contractor employee as a consultant, intern, trainee, or the equivalent of Client, to provide services or products having the same general nature as those provided by Contractor to its customers under this Agreement; Client shall not request, cause, or induce the Contractor employees to breach any agreement between the employee and Contractor; and Client shall not request, cause, or induce the employee to leave the employ of Contractor. 9. GENERAL PROVISIONS. 9.1 Governing Law. This Agreement will be governed and construed in accordance with the laws of Delaware. 9.2 Notices. Any notices permitted or required by this Agreement shall be in writing and shall be delivered personally or mailed to address set forth below. Global Sports Interactive Foundry, Inc 2012 Renaissance Boulevard 7600 Colshire Drive, Suite 141 King of Prussia, PA 19406 McLean, Virginia 22102 Attn: Joe Romello Attn: Anthony Rennier 9.3 Severability; Waiver; Assignment. If any provision of this Agreement is held to be invalid or unenforceable for any reason, the remaining provisions will continue in full force without being impaired or invalidated in any way. The waiver of a breach of any provision of this Agreement by Contractor will not operate or be interpreted as a waiver of any other or subsequent breach. This Agreement will be for the benefit of Client's successors and assigns, and will be binding on Contractor's heirs, successors and legal representatives. 9.4 Time of the Essence. The parties acknowledge that time is of the essence in the performance of their obligations under this Agreement. 9.5 No Export. Contractor hereby agree and assure Client that Contractor will not export or re-export, directly or indirectly, any products, information or technical data of Client without (i) the prior written consent of Client and (ii) any license, certification or other approval required by the United States Government for such export or re-export. 9.6 Entire Agreement. This Agreement sets forth the entire understanding and agreement of the parties as to the subject matter of this Agreement. It may only be changed by a writing signed by both parties. The terms of this Agreement shall govern over any inconsistent terms set forth in the Engagement and any additional Engagements entered into by the parties, or in any purchase order, order acknowledgment or invoice used to extend, modify or include additional work or to invoice payments under this Agreement. Moreover, this Agreement supersedes all prior understandings, agreements, representations, and warranties, if any, with respect to such subject matter. 9.7 Interpretation. Whenever the context so requires, all words used in the singular shall be construed to have been used in the plural (and vice versa), each gender shall be construed to include any other genders, and the word "party" shall be construed to include a natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate, or any other entity. Agreement Acceptance To execute this agreement the following authorizations are required. ACCEPTED __________________________ ACCEPTED by Foundry, Inc. ___________________________________ Anthony D. Rennier ___________________________________ President __________________________________ ___________________________________ Signature Date Signature Date ENGAGEMENT NO. 0699-FDY In accordance with the terms of Independent Contractor Services Agreement number 0699-FDY, Global Sports Interactive ("Client") and Foundry ("Contractor") agree to engage the services of Contractor as identified below. Scope: Contractor will provide consulting services to perform tasking as specified by Client. Term: Provide all services as requested between the period of June 1, 1999 through October 1, 1999. This engagement may be extended under the same terms and conditions, upon mutual agreement by both parties. This engagement may also be terminated at any time with 30 days advance written notice by either party. Fees: Services provided will be billed to Client monthly at the fees specified here not including travel expenses. Client will reimburse travel costs in keeping with Client's travel policy.
Task Fee ---- --- 1.0 Catalog Management Systems Development - See Attach. 1 $85k 2.0 Prototype Development (DHTML, Athlete's Foot, TSA for Nike) - See Attach. 2 $35k 3.0 Marketing Partner Object Library Development - See Attach. 3 $100k 4.0 Affiliate Custom Development - See Attach. 4 $55k 5.0 Database Consult - See Attach. 5 $25k
Invoicing: Contractor shall invoice Client within 30 days following the end of each calendar month for all services and expenses incurred in the previous calendar month. Invoices in connection with this engagement shall clearly reference the following: Project Name Dates of service Fees for services and actual expenses shall be identified separately. Terms shall be Net 30. NOTE: This Engagement is governed by the terms of an Independent Contractor Services Agreement in effect between Contractor and Client. In the event a conflict exists between the terms of this engagement and the Independent Contract Agreement, the Agreement shall take precedence. This engagement supercedes and replaces any previous engagement over the same period. Engagement Acceptance To execute this Engagement the following authorizations are required. ACCEPTED by Global Sports Interactive ACCEPTED by Foundry, Inc. ________________________________ Anthony D. Rennier ________________________________ President ____________________ ___________ ______________________ _____________ Signature Date Signature Date EX-10.5 6 ADDENDUM #1 TO INDEPENDENT CONTRACTOR SERVICES AGM EXHIBIT 10.5 GLOBAL SPORTS INTERACTIVE, INC. ---------------------- ADDENDUM NO. 1 TO THE INDEPENDENT CONTRACTOR SERVICES AGREEMENT BETWEEN FOUNDRY, INC., AND GLOBAL SPORTS INTERACTIVE, INC. Page 1 of 16 ADDENDUM NO. 1 The following additions and revisions are made to the Independent Contractor Services Agreement between Global Sports Interactive, Inc., (identified in the Agreement as Global Sports Interactive) and Foundry, Inc., dated June 29, 1999 and Engagement No. 0699-FDY. Terms defined in the Agreement have the same meaning in this Addendum No. 1. RECITALS 1 Contractor and Client wish to amend the Agreement and amend and extend the term of Engagement No. 0699-FDY entered into by the parties under the Agreement. AGREEMENT Global Sports Interactive and Foundry, Inc., in consideration of the mutual promises contained herein, and intending to be legally bound, agree that the Agreement and Engagement No. 0699-FDY are modified and revised, which modifications and revisions are retroactive to the beginning of the term of the Agreement and Engagement No. 0699-FDY, as follows. 1 Definitions. The following section is added after first sentence of the Agreement. Definitions (a) Agreement means the Independent Contractor Services Agreement between Global Sports Interactive, Inc., and Foundry, Inc., dated June 29, 1999. (b) Foundry Framework means Contractor's proprietary software, as it existed on June 2, 1999 and further modified by development outside of this agreement, described on Schedule 1 to this Addendum No. 1. (c) Intellectual Property Rights means all intellectual property rights and industrial property rights (throughout the universe, in all media, now existing or created in the future, for all versions and elements, in all languages, and for the entire duration of such rights) arising under statutory or common law, contract, or otherwise, and whether or not perfected, including without limitation, all (a) patents, reissues of and Page 2 of 16 reexamined patents, and patent applications, whenever filed and wherever issued, including without limitation, continuations, continuations-in-part, substitutes, and divisions of such applications and all priority rights resulting from such applications; (b) rights associated with works of authorship including without limitation copyrights, moral rights, copyright applications, copyright registrations, synchronization rights, mask work rights, mask work applications, mask work registrations; (c) rights associated with trademarks, service marks, trade names, logos, trade dress, and the applications for registration and registrations thereof; (d) rights relating to the protection of trade secrets and confidential information; (e) rights analogous to those set forth in this Section and any and all other proprietary rights relating to intangible property; and (f) divisions, continuations, renewals, reissues and extensions of the foregoing (as and to the extent applicable) now existing, hereafter filed, issued, or acquired. (d) Work Product means all software other than Foundry Framework, inventions, reports, designs, charts, plans, specifications, schedules, and estimates prepared or conceived by Contractor and delivered, or for delivery, to Client pursuant to this Agreement and all components thereof comprised by the Work Product, including without limitation, all masks, databases, written materials, and other reductions of expression into tangible mediums, whether completed or not. 2 Section 3.1, Confidentiality and Proprietary Information. The following sections replace in their entirety Sections 3.1 and 3.2 of the Agreement. 3.1 Confidentiality (a) Confidential Information. The term "Confidential Information" means Work Product and any and all technical and non-technical information including without limitation, patent, copyright, trade secret, and proprietary information, techniques, sketches, drawings, models, inventions, know-how, processes, apparatus, equipment, algorithms, software programs, software source documents, and formulae related to the current, future, and proposed products and services of Client, and includes, without limitation, Client's information concerning research, development, design details and specifications, engineering, financial information, procurement requirements, purchasing, manufacturing, key personnel, suppliers, customers, prospective customers, policies or operational methods, plans for future developments, business forecasts, Page 3 of 16 sales and merchandising, and marketing plans and information. Confidential Information does not include items that were (i) possessed by Contractor prior to receipt or access pursuant to this Agreement other than through prior disclosure by Client as evidenced by Contractor's written records; (ii) independently developed by Contractor without the benefit of disclosure by Client as evidenced by Contractor's written records; (iii) published or available to the general public other than through a breach of this Agreement; (iv) obtained by Contractor from a third party with a valid right to disclose such Confidential Information, provided that such third party is not under a confidentiality obligation to Client; or (v) required to be disclosed by governmental agencies, regulatory authorities, or pursuant to court order to the extent such disclosure is required by law and provided that Contractor provides reasonable prior notice to Client of the disclosure. Any combination of features or disclosures shall not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the rightful possession of Contractor unless the combination is published or is available to the general public or in the rightful possession of Contractor. (b) Obligation of Confidentiality. Contractor shall permanently hold, and cause its personnel to hold, Confidential Information in strict confidence. Except as specifically permitted by this Agreement, Contractor shall not duplicate or use, or permit the duplication or use of, Confidential Information or disclose or permit the disclosure of Confidential Information to any person or entity. Contractor shall limit the duplication and use of Confidential Information to the performance of its obligations under this Agreement and shall limit access to and possession of Confidential Information only to those of its personnel whose responsibilities under this Agreement reasonably require such access or possession. Contractor shall advise all such persons before they receive access to or Page 4 of 16 possession of Confidential Information of the confidential nature of the Confidential Information and require them to abide by the terms of this Agreement. Any duplication, use, disclosure, or other act or omission by any person that obtains access to or possession of Confidential Information through Contractor that would be a breach of this Agreement if committed by Contractor is deemed a breach of this Agreement by Contractor for which Contractor shall be responsible. (c) Ownership of Confidential Information and Other Materials. All Confidential Information, and any Derivatives (as defined below) thereof whether the Derivative was created by Client or Contractor, shall remain the property of Client and no license or other rights to such Confidential Information or Derivatives is granted or implied by this Agreement. For purposes of this Agreement, "Derivatives" shall mean (a) for copyrightable or copyrighted material, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (b) for patentable or patented material, any improvement thereon; and (c) for material which is protected by trade secret, any new material derived from such existing trade secret material, including new material which may be protected by copyright, patent, or trade secret law. (d) Return of Confidential Information. Contractor shall deliver, or at Client's option destroy, all Confidential Information and deliver, or at Client's option destroy, all copies to Client upon the expiration or termination of this Agreement or at Client's request. (e) Remedy. Contractor acknowledges that Client will be irreparably harmed if Contractor's obligations under this Section 3.2 are not performed, and that Client would not have an adequate remedy at law in the event of a violation by Contractor of such obligations. Contractor agrees and consents that Client shall be entitled, in addition to all other rights and remedies to which Client may be entitled, to have a decree of specific performance or an injunction issued requiring any such violation to be cured and enjoining all persons involved from continuing the violation. The existence of any claim or cause of action that Contractor or any other person may have against Client shall not constitute a defense or bar the enforcement of this Section 3.1. Contractor acknowledges that the restrictions in this Section 3.1 are reasonable and necessary to protect legitimate business interests of Client. Page 5 of 16 3 Section 3.4, Injunctive Relief. Section 3.4 of the Agreement is deleted in its entirety. 4 Section 3A, Ownership of Work Product. The following section is added as Section 3A of the Agreement. 3A Ownership of Work Product. 3A.1 Ownership. All rights, including without limitation, Intellectual Property Rights, title, and interest in and to the Work Product, whether completed or not, shall lie exclusively in Client. All works and all components thereof comprised by the Work Product, including, but not limited to, all masks, databases, written materials, and other reductions of expression into tangible mediums, whether completed or not, were and are works made for hire and all rights, including without limitation, Intellectual Property Rights, title, and interest in such works lie, upon creation, exclusively with Client, and Contractor reserves no rights in such works. 3A.2 Assignment of Intellectual Property Rights. To the extent that some or all rights, including without limitation, Intellectual Property Rights, title, and interest in and to the Work Product do not lie, upon creation, exclusively with Client, Contractor irrevocably sells, assigns, transfers, and sets over exclusively to Client all rights, including without limitation, Intellectual Property Rights, title, and interest in and to the Work Product or any component of the Work Product, whether completed or not, and Contractor reserves no rights in such Work Product. If Contractor has any such rights that cannot be assigned to Client, Contractor waives the enforcement of such rights, and if Contractor has any rights that cannot be assigned or waived, Contractor hereby grants to Client an exclusive, royalty-free, perpetual, irrevocable, transferable (including without limitation, sublicensing), unlimited, license, throughout the universe, in all media, now existing or created in the future, for all versions and elements, and in all languages, to use, copy, distribute, create derivative works of, publicly perform, publicly display, digitally perform, make, have made, offer for sale and import, and sell, such rights for the entire duration of such rights. 3A.3 Further Assurances. Contractor shall, at Client's expense, cooperate and take all steps reasonably requested by Client to perfect, confirm, and protect Client's rights, including without limitation, Intellectual Property Rights, title, and interest in and to the Work Product including without limitation, executing and delivering all documents, filing registration and assignment documents, and giving testimony. Notwithstanding anything in this Agreement to the contrary, the ownership Page 6 of 16 rights conferred in this Section 3A shall survive any termination of this Agreement. 5 Section 3B, License to Foundry Framework. The following section is added as Section 3B of the Agreement. 3B License to Foundry Framework. Contractor grants to Client a nonexclusive, perpetual, irrevocable, fully-paid, royalty-free, transferable and sublicensable, license throughout the universe to use, copy, modify, adapt, translate, create derivative works based upon Foundry Framework, reproduce, distribute, publicly perform, publicly display, and digitally perform Foundry Framework. 6 Section 4, Warranties and Indemnity. The following sections are added at the end of Section 4.1 of the Agreement. (c) Contractor represents, warrants and covenants that the Work Product and Foundry Framework, as delivered and as upgraded, revised or modified and used in accordance with this Agreement, is Year 2000 Compliant. Year 2000 Compliant, as used in this Agreement, means that the software accurately processes date and time data (including without limitation, calculating, comparing, and sequencing) in, from, into, and between the twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year calculations. This warranty does not apply to errors or malfunctions to the extent caused by (i) malfunction of Client's equipment; (ii) software not provided pursuant to this Agreement. If Client believes that the software is not substantially performing in accordance with the terms of this Agreement, Client will immediately notify Contractor in writing regarding any such non-performance and will provide a listing of output and such other data as may be required by Contractor to reproduce operating conditions as existed when the non-performance occurred. The warranties set forth in this section 4(c) are null and void to the extent caused by Client or any third party modifying or changing the software in any way beyond the scope of the customization options contained in the software. In order to receive and maintain this warranty, Global Sports Interactive must (i) use the software in accordance with this Agreement or Contractor's instructions; (ii) use the software on the hardware and with the operating system for which it was designed. Except as otherwise required under this agreement, Contractor will not be required to maintain compatibility between the software and third party software not specified in this Agreement. Contractor does not warrant that the functions contained in the software will meet Client's requirements or that the operation of the software will be uninterrupted or error-free or that all defects will be corrected. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, CONTRACTOR MAKES NO WARRANTIES, Page 7 of 16 EXPRESSED OR IMPLIED, IN CONNECTION WITH THE SOFTWARE, AND ALL OTHER WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY AND SPECIFICALLY DISCLAIMED. (d) Contractor represents, warrants, and covenants that for the software, as delivered and as upgraded, revised, or modified in accordance with this Agreement, Contractor shall not include, and, shall take all commercially reasonable steps (a) to prevent the introduction of; (b) to give prompt notice to Client of; (c) to detect; and (d) to remove computer instructions or other technological means the purpose of which is to access, modify, disrupt, damage, delete, or interfere, with Client's use of its computer or telecommunications equipment or facilities. Contractor expressly waives and disclaims any and all rights or remedies it may have at law or in equity to de-install, disable, or repossess any deliverables by any means. (e) Contractor represents, warrants, and covenants that all services performed under this Agreement shall be performed by qualified personnel with the proper skill, training, and experience so as to be able to perform competently and in a manner consistent with good practice in the information technology services industry and that all work shall be performed in accordance with this Agreement. (f) Contractor represents, warrants, and covenants that it is and shall remain sufficiently staffed and equipped to fulfill its obligations under this Agreement. (g) Contractor represents, warrants, and covenants that the source code delivered to Client pursuant to this Agreement is in a form suitable for reproduction by computer, and consists of a full source language statement of the program or programs that constitute the software delivered to Client pursuant to this Agreement, complete program maintenance documents, master tapes or diskettes, duplicating instructions, and all other materials necessary to allow a reasonably skilled person to maintain the such software without the assistance of any other person or reference to any other materials. Contractor further represents, warrants, and covenants that the source code delivered to Client pursuant to this Agreement allows and shall allow Client to build, without the use of any other software or materials other than Client's operating system and compiler, a fully functional, executable version of the such software. Page 8 of 16 7 Section 9, General Provisions. The following section is added to Section 9 of the Agreement. 9.8 Survival. Sections 3, 4 (except for Sections 4.1(e) and 4.1 (f)), and 8 of this Agreement survive any expiration or termination of this Agreement. 8 Engagement No. 0699-FDY. The following additions and revisions are made to Engagement No. 0699-FDY. Scope. The following sentence is added to the Scope section of Engagement No. 0699-FDY. Contractor shall provide the source code, including without limitation, the names, last known addresses, and last known telephone numbers of the persons who developed the related software, of all software, including without limitation, the Foundry Framework, delivered pursuant to this Agreement. Page 9 of 16 9 Controlling Documents. Any ambiguities or inconsistencies between this Addendum No. 1 and the Agreement or an Engagement shall be resolved by giving precedence to this Addendum No. 1 over the other documents. IN WITNESS WHEREOF, the parties have caused this Addendum No.1 to be executed and do each hereby warrant and represent that their respective signatory whose signature appears below has been and is on the date of this Addendum No.1 duly authorized by all necessary and appropriate corporate action to execute this Addendum No.1. Foundry, Inc. Global Sports Interactive, Inc. By: __________________________ By: __________________________ Name: __________________________ Name: __________________________ Title:__________________________ Title:__________________________ Date: __________________________ Date: __________________________ Page 10 of 16 ADDENDUM NO. 1 TO THE INDEPENDENT CONTRACTOR SERVICES AGREEMENT BETWEEN FOUNDRY, INC., AND GLOBAL SPORTS INTERACTIVE, INC. Schedule 1 - -------------------------------------------------------------------------------- BTv0_0_0mod.jar app_QTv0_8_1.jar BusinessInterfaceClasses.jar app_QTv0_8_10.jar DBTestv0_x_x.jar app_QTv0_8_11.jar DataPipeClasses.jar app_QTv0_8_12.jar DataPipeConfig.jar app_QTv0_8_2.jar DummyClassv0_0_0mod.jar app_QTv0_8_3.jar ImageTestv0_x_x.jar app_QTv0_8_3mod.jar JNDIDemov1_0_0.jar app_QTv0_8_4.jar Stylepadv0_0_0mod.jar app_QTv0_8_4mod.jar app_DocumentCenterv1_0_0.jar app_QTv0_8_5.jar app_QTModelerv0_0_0mod.jar app_QTv0_8_6.jar app_QTWebPublisherv0_1_0.jar app_QTv0_8_7.jar app_QTWebPublisherv0_2_0.jar app_QTv0_8_8.jar app_QTv0_3_0.jar app_QTv0_8_9.jar app_QTv0_4_0.jar app_QTv0_8_9mod.jar app_QTv0_5_0.jar app_Querysmithv2_3_3.jar app_QTv0_6_0.jar app_ServletUIv0_0_0mod.jar app_QTv0_7_0.jar bbmr_app_Alexv1_0_0.jar app_QTv0_7_1.jar bbmr_app_Alexv1_0_1.jar app_QTv0_7_1mod.jar bbmr_app_Alexv1_0_2.jar app_QTv0_8_0.jar bbmr_app_BPFSv3_1_0.jar app_QTv0_8_0mod.jar bbmr_app_BPFSv3_1_1.jar bbmr_app_BPFSv3_1_1mod.jar bbmr_app_BPFSv3_1_2.jar bbmr_app_BPFSv3_1_3.jar - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 11 of 16 - -------------------------------------------------------------------------------- bbmr_app_ClassificationEditorv1_0_0.jar bbmr_app_salaryProjectionsv1_0_0.jar bbmr_app_ClassificationEditorv1_0_1.jar bbmr_fra_alexv1_0_0.jar bbmr_app_GrantLoadsv0_1_0.jar bbmr_fra_alexv1_0_1.jar bbmr_app_GrantLoadsv0_1_1.jar bbmr_fra_alexv1_0_2.jar bbmr_app_GrantLoadsv0_1_2.jar bbmr_fra_budgetv1_0_0.jar bbmr_app_GrantLoadsv0_1_3.jar bbmr_fra_budgetv1_1_0.jar bbmr_app_GrantLoadsv0_1_4.jar bbmr_fra_budgetv1_2_0.jar bbmr_app_GrantLoadsv0_1_5.jar bbmr_fra_budgetv1_3_0.jar bbmr_app_GrantLoadsv0_1_6.jar bbmr_fra_budgetv1_3_0mod.jar bbmr_app_GrantLoadsv0_x_x.jar bbmr_fra_budgetv1_4_0.jar bbmr_app_JNDIDemov0_1_0.jar bbmr_fra_budgetv1_5_0.jar bbmr_app_JNDIGeneralv0_x_x.jar bbmr_fra_budgetv1_5_1.jar bbmr_app_RevenueEditorv0_1_0.jar bbmr_fra_grantLoadsv0_1_0.jar bbmr_app_RevenueEditorv0_1_1.jar bbmr_fra_grantLoadsv0_x_x.jar bbmr_app_RevenueEditorv0_2_1.jar bbmr_fra_revenuev0_1_0.jar bbmr_app_RevenueEditorv0_2_10.jar bbmr_fra_revenuev0_1_1.jar bbmr_app_RevenueEditorv0_2_2.jar bbmr_fra_revenuev0_2_1.jar bbmr_app_RevenueEditorv0_2_3.jar bbmr_fra_revenuev0_2_2.jar bbmr_app_RevenueEditorv0_2_5.jar bbmr_fra_revenuev0_2_3.jar bbmr_app_RevenueEditorv0_2_6.jar bbmr_fra_revenuev0_2_4.jar bbmr_app_RevenueEditorv0_2_8.jar bbmr_fra_revenuev0_2_5.jar bbmr_app_RevenueEditorv0_2_9.jar bbmr_fra_revenuev0_x_x.jar bbmr_app_RevenueEditorv0_x_x.jar bbmr_fra_salaryProjectionsv0_1_0.jar bbmr_app_ThreeYearAlexv1_0_0.jar bbmr_fra_salaryProjectionsv1_0_0.jar bbmr_app_ThreeYearAlexv1_1_0.jar bbmr_uti_budgetv1_0_0.jar bbmr_app_ThreeYearAlexv1_1_1.jar bs_app_Querysmithv0_0_BS.jar bbmr_app_ThreeYearAlexv1_1_2.jar bs_app_Querysmithv0_1_BS.jar bbmr_app_ThreeYearAlexv1_1_3.jar bs_fra_Notificationv0_0_BS.jar bbmr_app_ThreeYearAlexv1_1_3mod.jar bbmr_app_salaryProjectionsv0_1_0.j - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 12 of 16 - -------------------------------------------------------------------------------- bs_fra_TreeKitUIv0_0_BS.jar cosmo_fra_couponsv0_1_0.jar bs_fra_TreeKitUIv0_1_BS.jar cosmo_fra_couponsv1_1_0.jar bs_fra_TreeKitv0_0_BS.jar cosmo_fra_couponsv1_1_1.jar bs_fra_TreeKitv0_1_BS.jar cosmo_fra_couponsv1_1_2.jar bs_fra_paginationv0_0_BS.jar cosmo_ser_menuv0_x_x.jar bs_fra_polv0_0_BS.jar dor_app_PrototypeDemov0_0_0mod.jar bs_fra_polv0_1_BS.jar dor_fra_customerCareEnginev0_0_0mod.jar bs_fra_qslv0_0_BS.jar dor_fra_customerCareEnginev0_1_0.jar bs_fra_qslv0_1_BS.jar dor_fra_customerCareEnginev1_0_0_RHI20.jar bs_fra_qualifierv0_0_BS.jar dor_uti_netDynamicsv0_0_0mod.jar bs_fra_qualifierv0_1_BS.jar fra_Notificationv1_0_0.jar bs_uti_KeyValueCodingv0_0_BS.jar fra_TreeKitUIv1_0_0.jar bs_uti_KeyValueCodingv0_1_BS.jar fra_TreeKitv1_0_0.jar bs_uti_containerv0_0_BS.jar fra_appfeaturesv0_1_0.jar bs_uti_exceptionv0_0_BS.jar fra_appfeaturesv0_2_0.jar bs_uti_iov0_0_BS.jar fra_appfeaturesv0_3_0.jar bs_uti_jdbcv0_0_BS.jar fra_appfeaturesv0_3_1.jar bs_uti_jdbcv0_1_BS.jar fra_appfeaturesv0_4_0.jar bs_uti_netscapev0_0_BS.jar fra_appfeaturesv0_5_0.jar bs_uti_netscapev0_1_BS.jar fra_appfeaturesv0_6_0.jar bs_uti_propertyListParserv0_0_BS.jar fra_appfeaturesv0_7_0.jar bs_uti_propertyListParserv0_1_BS.jar fra_appfeaturesv0_7_0mod.jar bs_uti_treesv0_0_BS.jar fra_appfeaturesv0_7_1.jar bs_uti_treesv0_1_BS.jar fra_appfeaturesv0_7_1mod.jar bs_uti_treesv0_2_BS.jar fra_appfeaturesv0_7_2.jar bs_uti_userDefaultsv0_0_BS.jar fra_appfeaturesv0_7_2mod.jar bs_uti_userDefaultsv0_1_BS.jar fra_classTransformingv1_0_0.jar cosmo_fra_couponsPublishingv0_1_0.jar fra_documentv1_0_0.jar cosmo_fra_couponsPublishingv0_1_1.jar fra_htmlPagev0_0_0mod.jar cosmo_fra_couponsPublishingv0_1_2.jar fra_htmlv0_x_x.jar cosmo_fra_couponsPublishingv0_1_2mod fra_pageparserv0_x_x.jar .jar fra_paginationv1_0_0.jar fra_paginationv2_0_0.jar fra_paginationv2_0_0mod.jar - -------------------------------------------------------------------------------- Page 13 of 16 - -------------------------------------------------------------------------------- fra_polv1_0_0.jar fra_polv1_1_0.jar ibm_xml4jv1_1_9.jar fra_polv1_1_1.jar ibm_xml4jv2_0_0.jar fra_polv1_2_0.jar ibm_xml4jv2_0_13.jar fra_polv1_2_0mod.jar ibm_xml4jv2_0_9.jar fra_polv1_rmi_0.jar indius_ijcv1_1_f.jar fra_qslv1_0_0.jar more fra_qslv1_0_1.jar nd_serverv4_1_x.jar fra_qslv1_0_2.jar nd_serverv5_0_x.jar fra_qslv1_0_3.jar netscape_ifcv1_1_2.jar fra_qslv1_0_4.jar objectspace_jglv2_0_0.jar fra_qslv1_1_0.jar objectspace_jglv2_0_0.jar.OLD fra_qslv1_2_0.jar oracle_jdbcv7_3_4.jar fra_qslv1_3_0.jar oracle_jdbcv8_0_4_0_6.jar fra_qslv1_3_1.jar oracle_jdbcv8_1_6.jar fra_qslv1_3_2.jar fra_qslv1_3_2mod.jar qds_oraclev0_1_0.jar fra_qslv1_3_3.jar qds_oraclev0_1_1.jar fra_qslv1_3_3mod.jar qds_oraclev0_1_1mod.jar fra_qslv1_3_4.jar fra_qslv1_3_5.jar fra_qslv1_3_5mod.jar fra_qualifierv1_0_0.jar fra_qualifierv1_1_0.jar fra_qualifierv1_2_0.jar fra_qualifierv1_2_1.jar fra_qualifierv1_3_0.jar fra_sfwv1_0_0.jar gifUtils.jar gifencoder.jar gsi_app_CatalogEditorv0_0_0mod.jar - -------------------------------------------------------------------------------- Page 14 of 16 - -------------------------------------------------------------------------------- qds_oraclev0_1_2.jar sun_motifv1_0_2.jar qds_oraclev0_1_2mod.jar sun_motifv1_0_3.jar qds_oraclev0_x_x.jar sun_multiv1_0_0.jar qds_sybasev0_0_0mod.jar sun_multiv1_0_1.jar signed sun_multiv1_0_2.jar srv_BioBuilderProtov0_0_0mod.jar sun_multiv1_0_3.jar srv_QTWebv0_1_0.jar sun_providerutilv1_1_0.jar srv_QueryServletv0_0_0mod.jar sun_swingallv1_0_0.jar srv_qtdownloadv0_1_0.jar sun_swingallv1_0_1.jar srv_qtdownloadv0_1_1.jar sun_swingallv1_0_2.jar sun_activationv1_0_0.jar sun_swingallv1_0_3.jar sun_beaninfov1_0_0.jar sun_swingallv1_1_0.jar sun_beaninfov1_0_1.jar sun_swingv0_7_0.jar sun_beaninfov1_0_2.jar sun_swingv0_7_0patched.jar sun_beaninfov1_0_3.jar sun_swingv1_0_0.jar sun_collectionsv1_1_0.jar sun_swingv1_0_1.jar sun_collectionsv1_1_1.jar sun_swingv1_0_2.jar sun_ejbv1_0_0.jar sun_swingv1_0_3.jar sun_jlfv0_7_0.jar sun_swingv1_1_0.jar sun_jndiv1_1_0.jar sun_windowsv0_7_0.jar sun_jsdkv2_0_0.jar sun_windowsv1_0_0.jar sun_jsdkv2_1_0.jar sun_windowsv1_0_1.jar sun_jspv1_0_0.jar sun_windowsv1_0_2.jar sun_jtsv1_0_0.jar sun_xml.jar sun_ldapv1_1_0.jar sun_xml_ea2.jar sun_mailv1_1_0.jar sun_xml_tr1.jar sun_motifv0_7_0.jar sybase_jdbcv11_0_3.jar sun_motifv1_0_0.jar twz1jdbcForMysql.jar sun_motifv1_0_1.jar - -------------------------------------------------------------------------------- Page 15 of 16 - -------------------------------------------------------------------------------- uti_KeyValueCodingv1_0_0.jar uti_propertyListParserv1_0_0.jar uti_KeyValueCodingv1_1_0.jar uti_propertyListParserv1_1_1.jar uti_KeyValueCodingv1_1_1.jar uti_propertyListParserv1_2_0.jar uti_KeyValueCodingv1_2_0.jar uti_reportingv1_0_0.jar uti_beansv0_1_0.jar uti_reportingv2_0_0.jar uti_beansv0_x_x.jar uti_reportingv2_1_0.jar uti_collectionsv0_0_0mod.jar uti_reportingv2_1_1.jar uti_collectionsv1_0_0.jar uti_reportingv2_1_1mod.jar uti_collectionsv1_0_0mod.jar uti_saxv0_0_0mod.jar uti_containerv1_0_0.jar uti_saxv1_0_0.jar uti_containerv1_0_0mod.jar uti_saxv1_0_0mod.jar uti_containerv1_1_0.jar uti_servletv0_1_0mod.jar uti_domv0_0_0mod.jar uti_servletv0_x_x.jar uti_domv1_0_0.jar uti_swingv1_0_0.jar uti_domv1_0_0mod.jar uti_swingv1_0_1.jar uti_exceptionv1_0_0.jar uti_swingv1_0_2.jar uti_graphicsv0_1_0.jar uti_swingv1_1_0.jar uti_graphicsv0_1_1.jar uti_swingv1_2_0.jar uti_gridv1_0_0.jar uti_swingv1_3_0.jar uti_iov1_0_0.jar uti_swingv1_3_1.jar uti_iov1_1_0.jar uti_swingv1_3_2.jar uti_iov1_1_0mod.jar uti_swingv1_4_0.jar uti_iov1_2_0.jar uti_swingv1_5_0.jar uti_iov1_2_1.jar uti_swingv1_5_0mod.jar uti_jdbcv1_0_0.jar uti_totalsv1_0_0.jar uti_jdbcv1_1_0.jar uti_treesv1_0_0.jar uti_jdbcv1_2_0.jar uti_userDefaultsv1_0_0.jar uti_memdebugv0_1_0.jar uti_userDefaultsv1_1_0.jar uti_netscapev1_0_0.jar uti_userDefaultsv1_2_0.jar uti_netv0_0_0mod.jar uti_userDefaultsv1_2_2.jar w3c_domv1_0_0.jar w3c_jigsawv2_0_b2.jar weblogic_jdbcv2_4_0.jar xml_saxv1_0_0.jar ~uti_graphicsv0_1_0.jar - -------------------------------------------------------------------------------- Page 16 of 16 EX-10.6 7 AGREEMENT OF SALE DATED 7/27/1999 EXHIBIT 10.6 AGREEMENT OF SALE THIS AGREEMENT OF SALE (this "Agreement"), is made this 27th day of July, 1999, by and between IL First Avenue Associates L.P. (hereinafter called "Seller"), and Global Sports, Inc., a Delaware corporation, or its assignee or nominee (hereinafter called "Buyer"). W I T N E S S E T H: Seller hereby agrees to sell and convey to Buyer who agrees to purchase, all that certain lot, piece or parcel of ground (the "Land") containing 4.1881 acres, more or less, together with the improvements located thereon (the "Improvements") including an office facility containing approximately 55,000 square feet of office space, more or less, and together with the appurtenances thereto (including, without limitation, all easements, rights of way, privileges, licenses, and other rights and benefits belonging to, the owner of, running with or in any way relating to the aforesaid Land, known as 1075 First Avenue, (Parcel No. 58-00- 06838-00-7) said lot, piece or parcel being more particularly described on Exhibit "A" attached hereto and made a part hereof (the Land, Improvements and the aforesaid appurtenances are collectively referred to as the "Property"). 1. Purchase Price. The total consideration and purchase price (the "Purchase Price"), which Buyer agrees to pay to Seller and which Seller agrees to accept for the Property is Four Million Nine Hundred Fifty Thousand Dollars ($4,950,000.00), payable as follows: Check at signing of this Agreement (the "Deposit") $ 250,000.00 Cash, certified check or federally wired funds at Settlement $4,700,000.00 TOTAL: $4,950,000.00 ============= The Deposit shall be held, pending Settlement (as hereinafter defined), by Dennis Talty, Esquire and David S. Mandel, Esquire, (collectively, "Escrow Agents") in an interest bearing account, such interest to be credited to Buyer at Settlement. Seller and Buyer warrant and represent that Seller and Buyer have completely filled out the W-9 forms attached hereto as Exhibit "B" and Exhibit "B-1" and made a part hereof and Seller and Buyer understand that the Deposit cannot be deposited in such escrow account unless and until such W-9 forms are completed and delivered to escrow Agents. All interest accrued on the Deposit will be paid to Buyer at Settlement or upon the earlier termination of this Agreement, unless such termination shall be as a result of Buyer's default, in which event all accrued interest shall be paid to Seller. Buyer's Federal Tax I.D. Number: 04 - 2958132 Seller's Federal Tax I.D. Number: 23 - 2852596 2. Title. (a) At Settlement Seller will convey to Buyer the Property free and clear of all liens, encumbrances, security - 2 - interests, leases, licenses in favor of others, excepting, however, the "Permitted Exceptions" as defined and described on Paragraphs 2(c) and 2(d) hereof. Otherwise, title to the Property shall be good, indefeasible and marketable, and such as will be insured as such by any reputable title insurance company insuring titles in the Philadelphia area which is chosen by Buyer (the "Title Insurance Company") at the regular rates to the extent of the full Purchase Price for the Property. (b) Within two (2) business days following execution of this Agreement, Buyer shall order a title commitment (the "Title Commitment") with respect to the Property from the Title Insurance Company (or agent therefor) who will commit to issue to Buyer or Buyer's nominee a policy of title insurance in the amount referred to in Paragraph 2(a) above. Buyer shall deliver a copy of the Title Commitment to Seller within five (5) business days following receipt by Buyer of the Title Commitment, but in no event later than August 6, 1999, which shall be accompanied by Buyer's notice, if any, with respect to those items disclosed by Schedule B-II of the Title Commitment to be exceptions to title insurance which are unacceptable to Buyer. Those exceptions shown on Schedule B-II of the Title Commitment which are not indicated in Buyer's notice as being unacceptable shall be deemed to be the Permitted Exceptions for purposes of this Agreement (subject to the provisions of Paragraph 2(d) below. Within five (5) business days following receipt of Buyer's notice, Seller shall give notice - 3 - to Buyer of those exceptions to title noted on Schedule B-II of the Title Commitment, if any, which the Buyer has indicated by its notice as being unacceptable and which Seller is unwilling or unable to cure. Seller shall have no obligation to cure or cause to be removed any exceptions that do not materially affect the use of the Property as an office building or exceptions #2, 3 and 10 through 12 and 16 on Seller's title report attached hereto as Exhibit "C" (which shall be Permitted Exceptions) which Seller is unwilling or unable to cure shall be added to and become a part of the Permitted Exceptions, except as provided in Paragraph 2(d) below, unless the Buyer, within five (5) business days following receipt of Seller's notice, sends notice of termination of this Agreement to Seller, in which event all monies paid on account of the Purchase Price, together with all interest earned thereon, shall be paid immediately to Buyer, and all parties shall be released from all liability or obligation to the other, and this Agreement shall then and thereafter be null and void. If Buyer fails to provide the notice as required herein of exceptions being unacceptable, Buyer's rights shall be waived. Notwithstanding and without limiting the above, exceptions on Exhibit C and exceptions - 4 - on Schedule B II of Buyer's Title Report which do not materially affect the use of the Property as an office building shall be Permitted Exceptions. (d) The foregoing notwithstanding, under no circumstance shall (1) a mortgage, judgment or other monetary lien against the Property, or (2) a title exception created by Seller after the date of this Agreement, be included as a Permitted Exception, nor may Seller indicate in any notice that it is unwilling or unable to cure the foregoing exceptions contained in (d) (1) or (2). Provided however, Seller shall not enter into any agreements, easements, or restrictions prior to Settlement without Buyer's consent. (e) At Buyer's option, Buyer shall, within five (5) business days following the date of this Agreement order the preparation of a survey of the Property showing not only the perimeter of the Property but also the placement of all buildings and other material improvements thereon as are commonly shown on an "as-built" survey prepared in accordance with the requirements of the Title Insurance Company as a condition to the removal of the survey exception from the standard printed exceptions in the title insurance policy. Without limitation of the foregoing, the survey shall state whether the Property is located in an area designated by an agency of the United States as being subject to flood hazards or flood risks. Within five (5) business days following receipt of the survey, but no later than August 13, - 5 - 1999, Buyer shall send a copy thereof to Seller, together with a notice, if any, of Buyer's objections to encroachments or easements which materially affect the use of the Property as an office building (excluding Permitted Exceptions). Unless Seller is able to satisfy such objections to Buyer's sole satisfaction within five (5) business days after receipt of Buyer's notice, Buyer shall have the right to terminate this Agreement, in which event, all deposits and other sums paid on account of the purchase price, together with all interest earned thereon shall be paid immediately to Buyer, and Buyer and Seller shall be released from all liability or obligation to the other, and this Agreement shall then and thereafter be null and void. Notwithstanding whether or not the Property is in a flood zone, Buyer shall not have the right to terminate this Agreement as a result thereof if flood insurance is available at commercially reasonable rates and Seller shall have no obligation in regard to the flood zone. (f) If Seller is unable to deliver the title at Settlement as required by this Agreement, and provided that such inability is not the result of any action or inaction of Seller occurring on or after the date of this Agreement, Buyer shall have the option of either (i) taking such title as Seller can give, without abatement of the Purchase Price, or (ii) of being repaid the Deposit (together with accrued interest, if any), and upon such repayment there shall be no further liability or obligation - 6 - by either of the parties hereunder and this Agreement shall become null and void and of no force or effect, and all copies of this Agreement shall be returned to Seller for cancellation. 3. Violations; Assessments. To the best of Seller's knowledge without investigation, at the time of the execution of this Agreement: a) Seller has not received notice of any violation of the building, safety or fire ordinances. b) Seller has not received any notice of assessments for public improvements against the said Property which remain unpaid. 4. Representations and Warranties. Seller warrants and represents to Buyer as follows, such representations and warranties to be true and correct as of the date of this Agreement and as of Settlement and shall expire at Settlement: (a) Seller has full power, in accordance with law, and is duly authorized to enter into this Agreement and to perform the covenants and transactions set forth herein. Neither the execution of this Agreement by Seller nor the performance of its terms nor Settlement hereunder shall constitute a violation or breach by Seller under any agreement by which it or the Property is bound or shall result in the violation by Seller of any judgement, order, decree or ruling of any court, governmental or administrative body having jurisdiction over the Seller, the Property, or its business or shall result in a violation of any - 7 - applicable law, rule, order or regulation of any governmental authority; (b) No management commissions or other compensation (other than a sales commission as described in Paragraph 21 hereof) of any kind are or will be due or payable to any person, firm, corporation or other entity with respect to on account of the Property. (c) No written notices have been received by Seller from the holder of any mortgage or by any insurance company which has issued a policy with respect to the Property or by any Board of Fire Underwriters (or other body exercising similar functions) claiming any defects or deficiencies or requesting the performance of any repairs, alterations or other work to the Property which have not been complied with by Seller. (d) To the best of Seller's knowledge, there is no pending condemnation, expropriation, or similar proceeding affecting the Property, and Seller has not received any notices thereof. (e) There is no management, employment, union, service, equipment, supply, maintenance and concession agreements, oral or written, with respect to or affecting the Property and its operation. (f) To the best of Seller's knowledge, there is no action, suit or proceeding (collectively, "Litigation") pending, or threatened against Seller or the Property or any portion - 8 - thereof or relating to or arising out of the ownership, management or operation of the Property in any court or before any federal, state, county or other municipal department, commission, board, bureau, or agency or other governmental instrumentality. If any such matters arise prior to Settlement, Seller shall immediately notify Buyer in writing and provide Buyer with copies of all relevant documents pertaining to the matter at issue. If such Litigation would affect Buyer's use of the Property in a material way, including Litigation involving a violation of applicable laws concerning Hazardous Substances, Buyer shall have a period of five (5) business days after receipt of such notice and delivery of such documents to elect whether to terminate this Agreement. Notwithstanding, Buyer shall have no right to terminate this Agreement if Seller satisfactorily resolves said Litigation prior to Settlement or said Litigation is covered by insurance in an amount sufficient to cover the potential liability. In the event Buyer elects to terminate this Agreement, written notice of such election shall be given to Seller whereupon this Agreement shall be deemed null and void, all deposits on account of the purchase price plus interest accrued thereon shall be refunded to Buyer and neither Buyer or Seller shall have any further interest herein. (g) To the best of Seller's knowledge, except as disclosed in the Phase I environmental assessment dated July 5, 1996 prepared by EMG, the Property is free of any and all hazardous, solid or toxic wastes or substances as defined in the - 9 - Comprehensive Environmental Response Compensation and Liability Act, as amended, The Pennsylvania Clean Streams Law, as amended, and any regulations or orders promulgated thereunder (collectively, Hazardous Substances"). 5. "AS IS" Condition of Property. BUYER ACKNOWLEDGES THAT BUYER IS ACQUIRING THE PROPERTY BASED UPON BUYER'S OWN INVESTIGATION AND INSPECTION THEREOF. SELLER AND BUYER AGREE THAT THE PROPERTY SHALL BE SOLD AND BUYER SHALL ACCEPT POSSESSION OF THE PROPERTY ON THE SETTLEMENT DATE "AS IS", WHERE IS, WITH ALL FAULTS WITH NO RIGHT OF SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF INCOME POTENTIAL OR OPERATING EXPENSES, USES, MERCHANTABILITY (EXCLUDING THE SPECIAL WARRANTY OF TITLE CONTAINED IN THE DEED) OR FITNESS FOR A PARTICULAR PURPOSE, AND SELLER DOES HEREBY DISCLAIM AND RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY. BUYER SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, AGENT, AGENTS OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY, INCLUDING WITHOUT LIMITATION THE CONDITION OR SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS THEREON. BUYER AGREES THAT THERE IS NO OBLIGATION ON THE PART OF THE SELLER TO MAKE ANY CHANGES. ALTERATIONS OR REPAIR TO THE PROPERTY. 6. Conditions of Settlement. The obligation of Buyer - 10 - under this Agreement to purchase the Property from the Seller is subject to the satisfaction at the time of settlement of each of the following conditions (any one of which may be waived in whole or in part by the Buyer by written waiver at or prior to the Settlement): (a) All of the representations and warranties by Seller set forth in paragraph 4 of this Agreement shall be true. (b) Seller shall have performed, observed, and complied with all covenants, agreements and conditions required by this Agreement to be performed, observed and complied with on its part prior to or as of the Settlement. (c) Title to the Property shall be as required by paragraph 2 above. (d) All instruments and documents required on the Seller's part to effectuate this Agreement and the transactions contemplated herein, shall be delivered and shall be reasonably satisfactory to Buyer and its attorneys. In the event of the failure of any of the foregoing conditions of Settlement which is not waived in writing by Buyer, (1) upon Buyer's demand, which Buyer may exercise in it sole discretion, all deposits and other sums paid on account of the purchase price, together will all interest earned thereon shall be paid immediately to Buyer, and the Seller and the Buyer shall be released from all liability or obligation to the other, and this Agreement shall then and thereafter be null and void. In - 11 - addition, if condition (b) above has not been met by the date of Settlement, Seller or Buyer shall have the right, to delay Settlement for a period of ten (10) days to allow Seller time to satisfy said conditions. If at the expiration of ten days Seller has not satisfied any section 6(b) condition, Buyer may terminate this Agreement and receive a return of its Deposit plus all interest accrued thereon, or waive Seller's performance and proceed to Settlement. 7. Delivery of Documents by Seller. Within forty eight hours of the execution of this Agreement by Seller, Seller shall deliver to Buyer a copy of a Phase I environmental site assessment prepared by EMG, Baltimore, Maryland, and dated July 5, 1996. 8. Apportionments. (a) Real estate taxes and other state and local taxes, charges and current assessments shall be apportioned based upon the taxing authority's fiscal year. (b) Water, gas, utility, trash, electric and sewer charges, shall be apportioned based upon actual usage. 9. Transfer Taxes. State and Local Realty Transfer Taxes, if any, applicable to the sale set forth in this Agreement shall be equally divided and half of each paid by Seller and Buyer. 10. Fixtures and Personalty. The sale set forth in this Agreement shall include all electric, heating, air conditioning and plumbing systems, Seller's equipment and fixtures, attached to and appurtenant to the Improvements situated on the Land. Seller - 12 - represents and warrants that it has and at Settlement will have good legal title to the foregoing items, free and clear of all liens, encumbrances and security interests, such warranty to survive Settlement hereunder. 11. Settlement. Settlement shall be made on August 20, 1999, unless Seller and Buyer agree in writing to a different time and place ("Settlement"). The date and time of Settlement is hereby agreed to be of the essence of this Agreement. Settlement shall be held at 10:00 A.M. at the Law Offices of Astor Weiss Kaplan & Rossenblum, LLP, The Bellevue, Sixth Floor, Broad & Walnut Streets, Philadelphia, Pennsylvania, 19102. 12. Seller's Default. If Seller shall take any action between now and Settlement which prevents Seller from conveying the title which Seller has agreed to give hereunder or if Seller otherwise breaches this Agreement and Buyer, therefore, does not complete Settlement, Buyer shall have the right to terminate this Agreement in which event the Deposit and all interest accrued thereon shall be returned to Buyer and neither party shall have any further liability hereunder. In no event shall Seller be liable for damages or specific performance. If Buyer is not in default of its obligations hereunder and is unable to complete Settlement hereunder because of Seller's breach and Buyer terminates this Agreement, Seller shall reimburse Buyer for out of pocket expenses actually incurred by Buyer for survey, environmental and engineering studies and title work. - 13 - 13. Buyer's Default. In the event the Buyer fails to make settlement hereunder in breach of this Agreement, then and in that case, all deposits and other sums paid by the Buyer on account of the Purchase Price, together with all interest earned thereof, shall be retained by the Seller as liquidated damages for such breach as Seller's sole and exclusive remedy, and the Seller and the Buyer shall be released from all liability or obligation to the other, and this Agreement shall then and thereafter be null and void. 14. Operation of the Property Between Now and Settlement. Between the date of execution of this Agreement and the date of Settlement, Seller shall operate and maintain the Property in its present order and condition, being a vacant property, but without obligation to replace, and will comply with all applicable ordinances, laws and regulations. Seller's obligation shall be only to deliver the Property in its present condition, reasonable wear and tear excepted. 15. Loss or Damage. In the event of any loss or damage to all or any material portion of the Property caused by fire or any other casualty between the date of this Agreement and the date of Settlement hereunder, Seller shall have the option of either a) terminating the Agreement without further liability; or b) returning the property to its pre casualty condition and proceeding to Settlement; or c) assigning to the Buyer any claim to insurance proceeds and proceeding to Settlement. Seller shall - 14 - make such election within fifteen days of the occurrence of the casualty. If Seller elects to repair, then Seller shall have the right to delay Settlement for up to ninety days. In the event Seller fails to make such election, then Buyer shall thereafter have the right to notify Seller that it will either i) close with Seller assigning its rights to any insurance proceeds or ii) terminate the Agreement, in which event the Deposit and all interest accrued thereon shall be returned to Buyer and neither party shall have any further liability hereunder. Notwithstanding anything contained herein to the contrary, if the cost to repair the damage as reasonably determined by the Seller's insurance adjuster or contractor exceeds $500,000.00, Buyer may terminate this Agreement without further liability. Seller represents and warrants to Buyer that Seller presently maintains insurance coverage on the Property as described in the Certificate of Insurance attached hereto as Exhibit "D". Seller covenants and agrees to continue to maintain such insurance and to pay all premiums therefore up until the date of Settlement. 16. Condemnation. In the event of any taking or condemnation for any public or quasi-public purposes or use by a competent authority in appropriate proceedings or by any right of eminent domain of all or a substantial part of the Property between the date of this Agreement and the time of Settlement hereunder, and such taking would materially interfere with Buyer's ability to use the Property as an office building, Buyer shall - 15 - have the right to terminate this Agreement. If the Buyer elects to terminate this Agreement, then all deposits and other sums paid on account of the Purchase Price, together with all interest earned thereon, shall be immediately paid to Buyer, and the parties hereto shall be released from all liability or obligation to the other and this Agreement shall then and thereafter be null and void. If Buyer does not terminate this Agreement, Seller shall be relieved of its duty to convey title to the portion so taken or condemned, but Buyer shall be entitled to receive all proceeds from such taking or condemnation, provided Buyer takes title hereunder, and in that event, Seller will take at Settlement all action necessary to assign its entire interest in any such award to Buyer. 17. Recording. This Agreement shall not be recorded in the Office for Recording of Deeds or in any other office or place of public record. 18. Tender. Formal Tender of Deed and Formal Tender of Monies is hereby waived. 19. Possession. Possession of the Property, which shall be vacant at Settlement and free of all tenants, occupants, leases and rights to possession, is to be delivered by executed special warranty Deed and keys at the time of Settlement. Said Deed shall be prepared by Buyer's attorney and the acknowledgement and recording fees paid by Buyer. A survey, if required or desired, is to be obtained by, and at the sole expense of, Buyer. - 16 - 20. Escrow Agent. (a) It is expressly understood, covenanted and agreed that: (i) Escrow Agents are acting as escrow agents only, and will in no event whatsoever be held liable to either party for the performance of any term or covenant of this Agreement, or for damages for non-performance thereof; (ii) The duties of Escrow Agents are only as herein specifically provided, and, except for the provisions of Paragraph 20(b) hereof, are purely ministerial nature, and Escrow Agents shall incur no liability whatever except for willful misconduct or gross negligence, as long as Agent has acted in good faith; (iii) In the performance of their duties hereunder, Escrow Agent shall be entitled to rely upon any document, instrument or signatures believed by it to be genuine and signed by either of the other parties or their successors; (iv) Seller and Buyer each hereby release and indemnify Escrow Agents from and against any act done or omitted to be done by Escrow Agents in good faith in the performance of their duties hereunder; (b) Escrow Agents are acting as stakeholders only with respect to the Deposit. If there is any dispute as to whether Escrow Agents are obligated to deliver the Deposit or as to whom the Deposit is to be delivered, Escrow Agents shall not be required to make any delivery, but in such event Escrow Agents may hold the same until receipt by Escrow Agents of an authorization - 17 - in writing, signed by all of the parties having any interest in such dispute, directing the disposition of the Deposit and any interest accrued thereon or until the final determination of the rights of the parties in an appropriate proceeding. If such written authorization is not given, or proceedings for such determination are not begun until thirty (30) days after the Settlement was to have occurred, Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Deposit in court pending such determination. Escrow Agents shall be reimbursed for all costs and expenses of such action or proceeding by Seller and Buyer including, without limitation, reasonable attorney's fees and disbursements. Upon making delivery of the Deposit in the manner provided in this Agreement, Escrow Agents shall have no further liability hereunder or to Buyer or Seller. 21. Zoning; Certifications. Seller represents and warrants that based upon a letter from the Upper Merion Board of Supervisors dated June 20, 1996. a copy of which is attached hereto as Exhibit "E", the Property is zoned SM Suburban Metropolitan. 22. Commissions. Seller and Buyer acknowledge that Smith Mack & Company is the listing agent and The Flynn Company ("Flynn") is the Buyer's agent and in consideration of their services in making this sale Seller shall pay to each of Agent and Flynn, at the time of Settlement hereunder, a brokerage commission - 18 - equal to two per cent of the Purchase Price (a total of four per cent of the Purchase Price). Said commissions are to be paid in full and final satisfaction of any claims against Seller based on this sale. As a condition precedent to Seller's obligation to settle, Smith Mack & Company and The Flynn Company shall provide written notices to Seller accepting the commission structure set forth herein. 22. Notices. All notices to be given to Agent, Seller and/or to Buyer shall be mailed by registered or certified mail, return receipt requested or delivered through an overnight service with receipt as follows: Seller: IL First Avenue Associates, LP c/o IL Management The Belgravia 1811 Chestnut Street Philadelphia, PA, 19103 Attention: Ira Lubert w/copy to: Dennis P. Talty, Esquire 101 W. Main Street Moorestown, NJ, 08057 Buyer: Global Sports, Inc 555 S. Henderson Road King of Prussia, Pennsylvania, 19406 Attention: Michael G. Rubin, CEO w/copy to: David S. Mandel, Esquire Astor Weiss Kaplan & Rosenblum, LLP The Bellevue Sixth Floor Philadelphia, Pennsylvania, 19102 - 19 - 23. Approval of Seller. It is understood that this Agreement is made subject to the written approval of Seller, which approval must be obtained within two (2) days from the date signed by Buyer. The date of this Agreement shall be deemed to be the date upon this Agreement has been executed by Seller and a facsimile copy delivered to Buyer. Seller agrees that in the event such approval is not obtained as herein provided, the Deposit and any other monies paid hereunder by Buyer to Seller or to Agent shall be returned to Buyer and all originals and copies of this Agreement shall be canceled. Pending such approval, Escrow Agent may deposit in its bank account any sum which may have been received from Buyer hereunder and neither such act nor the endorsement of any check received from Buyer shall be taken as making this Agreement effective without the execution by Seller. 24. Entire Agreement. This Agreement sets forth all the agreements, promises, warranties, representations, understandings and promises between the parties hereto, and the parties are not bound by any agreements, undertakings or conditions except as expressly set forth herein. All additions, variations or modifications to this Agreement shall be void and ineffective unless in writing and signed by the parties. 25. Successors and Assigns. This Agreement shall extend to, be binding upon, and inure to the benefit of the heirs, executors, administrators and successors of the parties hereto. This agreement may not be assigned by Buyer. Notwithstanding, - 20 - Buyer may take title to the Property in the name of an entity so long as the principals of the Buyer are the Buyer or the same principals of Buyer. 26. Applicable Law. This Agreement shall be construed and interpreted in accordance with the laws of the Commonwealth of Pennsylvania. 27. Disclosures. Pursuant to the provisions of the Pennsylvania Real Estate Licensing and Registration Act, 63 Pa. Stat. Ann. Sections 455.101 et seq., as amended (the "Act"), Smith Mack & Company hereby makes the following disclosures to Buyer: (a) Smith Mack & Company is the agent of Seller, not Buyer; (b) Section 801 of the Act establishes a Real Estate Recovery Fund. The basic purpose of the Real Estate Recovery Fund is to compensate an aggrieved person for the unpaid portion of a judgment, based on a claim against a person licensed under the Act, for fraud, misrepresentation or deceit in any transaction for which a license is required under the Act. For further information concerning the Real Estate Recovery Fund, Buyer should contact the Pennsylvania Real Estate Commission at (717) 783-3658; 28. FIRPTA. Under Section 1445 of the Internal Revenue Code of 1986 as amended, and the regulations issued thereunder, Buyer is required to withhold up to ten percent (10%) of the Purchase Price of the Property unless the Seller provides Buyer with a "non-foreign certificate" indicating that Seller is not a - 21 - foreign person for purposes of the Internal Revenue Code. Agent may be subject to liability if Seller issues a false "non-foreign certificate." Seller hereby agrees to indemnify and hold harmless Agent from liability for any tax, penalty, interest or other charge imposed upon Agent under Seller resulting from the actions of Seller or Seller's agents. 29. Inspection Contingency. Seller shall permit Buyer ingress and egress to go in, on or over the Property for the purpose of conducting environmental testing, inspection of the structure, roof, and mechanical systems as Buyer may desire; provided, however, that Buyer shall repair any and all damage by reason of any such activities and shall indemnify, defend and save Seller harmless for any liability, costs or expenses caused by Buyer's negligence or failure to make such repairs of all damage by reason of such activities; and provided, further, that in the exercise of its rights pursuant to this Paragraph 29, Buyer shall not materially interfere with the conduct of Seller's operations being conducted on the Property and shall give Seller one (1) day advance notice of any such activities Buyer plans to conduct on the Property. If Buyer's examinations, in Buyer's sole and absolute discretion, reveal unacceptable conditions, Buyer may, no later than August 13, 1999, terminate this Agreement by giving Seller written notification of such election whereupon all deposits and interest accrued thereof shall be paid to Buyer and then and thereafter this Agreement shall be null and void. If - 22 - Buyer does not give Seller such notice within such period, this condition shall be deemed to be and shall be waived and Seller and Buyer shall proceed to Settlement as set forth in this Agreement. 30. Due Diligence. Between the execution of this Agreement and Settlement, Seller shall permit Buyer and Buyer's representatives to inspect all books and records of Seller with respect to the physical condition of the Property. In addition, Buyer shall be permitted to conduct due diligence with respect to Seller's compliance with building, safety and fire ordinances. If Buyer's examinations, in Buyer's sole and absolute discretion, reveal unacceptable conditions, Buyer may, no later than August 13, 1999, terminate this Agreement by giving Seller written notification of such election whereupon the Deposit and interest accrued thereon shall be paid to Buyer and thereafter this Agreement shall be null and void. If Buyer does not give Seller such notice within such period, this condition shall be deemed to be and shall be waived and Seller and Buyer shall proceed to settlement as set forth in this Agreement. 31. Items to be Delivered at Settlement. (a) By Seller . At Settlement, Seller shall deliver to Buyer the following: (i) A special warranty deed to the Property, duly executed and acknowledged by Seller and in proper form for recording ("Deed") conveying such title as required by the terms of this Agreement. - 23 - (ii) A Nonforeign Person Certification in the form attached hereto as Exhibit "F", as required under Section 1445 of the Internal Revenue Code. (iii) An assignment in form and substance mutually satisfactory to Seller and Buyer, duly executed by Seller, assigning to Buyer all of Seller's right, title and interest, if any, in and to (A) any and all guaranties and warranties, if any, pertaining to the Property; (B) any permits, licenses, plans, authorizations and approvals relating to ownership, operation or occupancy of the Property, and (C) the other items included in the definition of the Property in Section 1 above, if any. (iv) Originals of the following instruments (or copies if so specified below or if originals are unavailable), all certified by Seller as true and complete to the best knowledge of Seller: (A) copies of all of Seller's certificates of occupancy, licenses, plans, permits, authorization and approvals, if any, required by law and issued by all governmental authorities having jurisdiction over the Property or Seller; (B) copies of all building records in Seller's possession or control with respect to the Property with the understanding that Seller has limited records; (C) each bill of current real estate - 24 - taxes, sewer charges and assessments, water charges and other utilities, together with proof of payment thereof (to the extent same have been paid); and (D) all assigned guaranties and warranties. (v) All keys and combinations to locks at the Property, all plans, specifications, as-built drawings, surveys, site plans, equipment manuals, technical data and other documentation relating to the building systems, equipment and any other personal property forming part of the Property or any portion thereof in the possession of Seller or any property manager(s); (vi) A seller's affidavit of title in favor of Buyer and Buyer's title insurer in reasonable and customary form as used by such title insurance company; (vii) Copies of the following documents certified to be true and correct by the general partner of the Seller: (a) Seller's Partnership Agreement; and (b) Certificate of Incorporation of Seller's general partner; and (c) Resolution of the Board of Directors of Seller's general partner authorizing the officers of the general partner to enter into this Agreement and to complete Settlement. - 25 - (viii) Such other documents as may reasonably be required by Buyer's title insurance agency. (ix) A certification of Seller that, subject to the information disclosed or discovered during due diligence, the representations and warranties contained in this Agreement remain true and correct. (b) By Buyer. At Settlement, Buyer shall deliver to Seller the following: (i) The Purchase Price, by wire transfer or title company check. (ii) A resolution of the Board of Directors authorizing Buyer to enter into this transaction and to complete Settlement hereunder. (iii) Other Documents. Any other documents required to be delivered by Buyer pursuant to any other provisions of this Agreement. 32. Indemnification From and after the date of Settlement, Seller shall indemnify, save and hold harmless Buyer, its officers, directors and shareholders, from any liability that may arise as a result of any claims arising out of paragraph 4(b) or 4(e). Buyer shall indemnify Seller from claims arising out of paragraph 4(b) as to sales commissions. 33. Possible Tax Free Exchange Buyer hereby acknowledges that it is the intent of the Seller to effect an IRC Section 1031 - 26 - tax deferred exchange which will not delay Settlement or cause additional expense to buyer. The Seller's rights and obligations under this Agreement may be assigned to a Qualified Intermediary of the Seller's choice for the purpose of completing such an exchange. Buyer agrees to cooperate with the Seller and the Qualified Intermediary in a manner necessary to complete the exchange. 34. Counterparts; Facsimile This Agreement may be executed in counterparts. Facsimile signatures shall be considered original signatures for the purpose of this Agreement. (SIGNATURES CONTAINED ON THE FOLLOWING PAGE) IN WITNESS WHEREOF, Seller and Buyer have caused these presents to be duly executed and their corporate seal to be duly attached by their proper officers thereunto duly authorized, the day and year first above written. SELLER: IL First Avenue Associates L.P. BY:IL 1075 First Avenue, Inc. BY: /s/ [ILLEGIBLE] ------------------------------- name: [ILLEGIBLE] ------------------------- title: PRES ------------------------- July 27, 1999 - ------------- Date - 27 - 7/27/99 - ------------------ DATE BUYER: Global Sports, Inc. BY: /s/ Michael Rubin ------------------------------- name: Michael Rubin ------------------------- title: Chairman & CEO ------------------------- 7/27/99 - ------------------ DATE ESCROW AGENTS: /s/ Dennis P. Talty ------------------------------------ DENNIS P. TALTY /s/ David S. Mandel ------------------------------------ DAVID S. MANDEL - 28 - FIDELITY NATIONAL TITLE INSURANCE COMPANY OF PENNSYLVANIA SCHEDULE C File No. LA96-20893-"A" ALL THAT CERTAIN 4.1881 acre parcel of land, situate in Upper Merion Township, Montgomery County, Pennsylvania, bounded and described in accordance with and as shown on a certain Plan #332-1, - entitled "Plan of 4.1881 Acre Tract Proposed to be Conveyed to The Upjohn Company in the King of Prussia Park, Upper Merion Township, Montgomery County, Pennsylvania, prepared by A. W. Martin Associates, Inc., Consulting Engineers, King of Prussia, Pennsylvania. dated April 13, 1961, as follows, to wit: BEGINNING at a point on the center line of First Avenue (60 feet wide), said First Avenue being as established on a certain Plan #301-2, made by Valley Forge Engineers, Inc., King of Prussia, Pennsylvania, dated 11/4/1958 and recorded in the Office of the Recorder of Deeds of Montgomery County, Pennsylvania in Plan Book A-4 page 102, on 12/23/1958, said point being the following three courses and distances from the point marking the intersection of the said center line of First Avenue and the center line of Second Avenue (60 feet wide), said Second Avenue being as established on a certain Plan #311-1, made by A. W. Martin Associates, Inc., dated 11/6/1959 and recorded in the Office of the Recorder of Deeds of Montgomery County, Pennsylvania, in Plan Book B-5 page 84, on 12/14/1959: (1) South 78 degrees 28 minutes 04 seconds West 965.70 feet to a point of curvature; (2) on the arc of a circle curving to the right with a radius of 2,864.79 feet, an arc distance of 577.72 feet and (3) North 89 degrees 58 minutes 40 seconds West 925.75 feet to the point of beginning; thence from said point of beginning crossing the Southern half of said First Avenue and by land now or late of Cabot, Cabot and Forbes Pennsylvania Park, South 00 degrees 01 minute 20 seconds West 600 feet to a point: thence from said point further by said land now or late of Cabot. Cabot and Forbes Pennsylvania Park. North 89 degrees 58 minutes 40 seconds West 327.47 feet to a point on the Eastern Right-of-Way line of Moore Road (33 feet wide); thence from said point along said Eastern Right-of-Way line of Moore Road, the two following courses and distances: (1) North 00 degrees 23 minutes 40 seconds East 106.35 feet to a point and (2) North 06 degrees 25 minutes 30 seconds East crossing the Southern half of First Avenue 496.75 feet to a point on the said center line of First Avenue: thence from said point along said center line South 89 degrees 58 minutes 40 seconds East 271.38 feet to a point being the first mentioned point and place of beginning. UNDER AND SUBJECT to certain Restrictions, Reservations, Easements, Covenants and Conditions as of record. CONTAINING 4.1881 acres of land. BEING Known As #1075 First Avenue. BEING ASSESSMENT PARCEL #58-00-06838-00-7. BEING the same premises which First Avenue Associates, a Pennsylvania Limited Partnership, by Deed dated 6/26/1996 and recorded 7/15/1999 in Montgomery County in Deed Book 5154 page 907, conveyed unto IL First Avenue Associates, L.P., a PA Limited Partnership, in fee. EXHIBIT ("A") PNC Bank, National Association [ILLEGIBLE] - -------------------------------------------------------------------------------- Date: TIN Product Type Account No. Branch No. 07/03/1999 23-2852596 - -------------------------------------------------------------------------------- Owner Joint Owner (if any) IL FIRST AVENUE ASSOCIATES, L.P. - -------------------------------------------------------------------------------- Address Alternate/Mailing Address (if any) c/o IL MANAGEMENT 101 WEST MAIN ST. MOORESTOWN, NJ - -------------------------------------------------------------------------------- Substitute Form W-9 Taxpayer Identification Number and Certification Certification of Owner: Under penalties of perjury, I certify that (1) The number shown on this form is my correct taxpayer identification number and (2) I am not subject to backup withholding because (a) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup withholding. If the "Exempt" box below is checked, I am an exempt recipient who is exempt from backup withholding and information reporting. IL 1075 FIRST AVENUE, INC., ITS GENERAL PARTNER - -------------------------------------------------------------------------------- By Signature of Owner x /s/ [ILLEGIBLE] - -------------------------------------------------------------------------------- PRESIDENT |_| Exempt * * Status does not apply to individuals; See instructions on back of form Certification of Joint Owner (if any): Under penalties of perjury, I certify that (1) The number shown on this form is my correct taxpayer identification number and (2)1 am not subject to backup withholding because (a) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup withholding. - -------------------------------------------------------------------------------- Signature of Joint Owner (if any) - -------------------------------------------------------------------------------- If you have been notified by the IRS that you are currently subject to backup withholding, you must cross out item (2) in your certification. ================================================================================ Substitute Form W-8 Certification of Foreign Status NOTE: Your Permanent Foreign Address Must Be Printed Above - -------------------------------------------------------------------------------- Owner's country of Tax Residency - -------------------------------------------------------------------------------- Certification of Owner: Under penalties of perjury, I certify that (1) for interest payments, I am not a U.S. citizen or resident (or I am filing for a foreign corporation, foreign partnership, foreign estate or foreign trust) and (2) for broker transactions, I am an exempt foreign person as defined in the instructions on the back of this form (you must cross out item (2) of this certification if it does not apply) - -------------------------------------------------------------------------------- Signature of Owner - -------------------------------------------------------------------------------- Notice of Change of Status - |_| To notify the payer that you no longer qualify for exemption, check here. If you check this box, reporting will begin on the account(s) listed above. - -------------------------------------------------------------------------------- Joint Owner's (if any) Country of Tax Residency - -------------------------------------------------------------------------------- Certification of Joint Owner (if any): Under penalties of perjury, I certify that (1) for interest payments, I am not a U.S. citizen or resident (or I am filing for a foreign corporation, foreign partnership, foreign estate or foreign trust) and (2) for broker transactions, I am an exempt foreign person as defined in the instructions on the back of this form (you must cross out item (2) of this certification if it does not apply) - -------------------------------------------------------------------------------- Signature of Joint Owner (if any) - -------------------------------------------------------------------------------- Notice of Change of Status - |_| To notify the payer that you no longer qualify for exemption, check here. If you check this box, reporting will begin on the account(s) listed above. ================================================================================ An account will not be opened unless either the Substitute Form W-9 or the Substitute Form W-8 is completed and signed by the Owner and the Joint Owner (if any). An Owner or a Joint Owner who completes the Substitute Form W-8 is not required to also complete the Substitute Form W-9 and is not required to provide a Taxpayer Identification Number. ================================================================================ I acknowledge that I have received and read a copy of the PNC Bank account agreement for this account and hereby agree to be bound thereby and any amendments thereto. Exhibit "B" - -------------------------------------------------------------------------------- Signature of Owner - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature of Joint Owner - -------------------------------------------------------------------------------- Owner: Global Sports, Inc. - 04-2958132 Joint Owner (if any): Address: 555 S. Henderson Road King of Prussia, PA, 19406 SUBSTITUTE FORM W-9 TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION ================================================================================ Certification of Owner: Under penalties of perjury, I certify that (1) The number shown on this form is my correct taxpayer identification number and (2) I am not subject to backup withholding because (a) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup withholding, or (a) if the "Exempt" area below is checked, I am an exempt recipient who is exempt from backup withholding and information reporting. Global Sports, Inc. /s/ [ILLEGIBLE] - ----------------------------- ---------- Signature of Owner Exempt* * Status does not apply to individuals; See instructions on back of form Certification of Joint Owner (if any): Under penalties of perjury, I certify that (1) The number shown on this form is my correct taxpayer identification number and (2)1 am not subject to backup withholding because (a) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup withholding. ___________________________________________ Signature of Joint Owner (if any) If you have been notified by the IRS that you are currently subject to backup withholding, you must cross out item (2) in your certification. - -------------------------------------------------------------------------------- SUBSTITUTE FORM W-8 CERTIFICATION OF FOREIGN STATUS NOTE: Your Permanent Foreign Address Must Be Printed Above __________________________________ _________________________________________ Owners country of Tax Residency Joint Owners (if any) Country of Tax Residency Certification of Owner: Under penalties of perjury, I certify that, (1) I am not a U.S. citizen or resident (or I am filing for a foreign corporation, foreign partnership, foreign estate or foreign trust) and (2) I am an exempt foreign person as defined in the instructions on the back of this form (you must cross out item (2) of this certification if it does not apply). ______________________________________ Signature of Owner Notice of Change of Status - To notify the payer that you no longer qualify for exemption, Check here |_| If you check this box, reporting will begin on the account(s) listed above. Certification of Joint Owner (if any): Under penalties of perjury, I certify that (1) I am not a U.S. citizen or resident (or I am filing for a foreign corporation, foreign partnership, foreign estate or foreign trust) and (2) I am an exempt foreign person as defined in the instructions on the back of this form (you must cross out item (2) of this certification if it does not apply). _________________________________________ Signature of Joint Owner (if any) Notice of Change of Status - To notify the payer that you no longer qualify for exemption, Check here |_| If you check this box, reporting will begin on the account(s) listed above. - -------------------------------------------------------------------------------- An account will not be opened unless either the Substitute Form W-9 or the Substitute Form W-8 is completed and signed by the Owner and the Joint Owner (if any). An Owner or a Joint Owner who completes the Substitute Form W-8 is not required to also complete the Substitute Form W-9 and is not required to provide a Taxpayer Identification Number. - -------------------------------------------------------------------------------- I acknowledge that I have received and read a copy of the PNC Bank account agreement for this account and hereby agree to be bound thereby and any amendments thereto. Exhibit "B-1" FIDELITY NATIONAL TITLE INSURANCE COMPANY OF PENNSYLVANIA SCHEDULE B - SECTION II File No. LA96-20893-"A" Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company. 1. Defects, liens, encumbrances, adverse claims or other matters, if any, created first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date of the proposed Insured acquired for value of record the estate or interest or mortgage thereon covered by the commitment. 2. Discrepancies or conflicts in boundary lines, unrecorded easements, encroachments or area content which a complete and accurate current survey would disclose. 3. Easements, or claims of easements, not shown by the public records. 4. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records. 5. Rights or claims of parties in possession not shown by the public records. 6. Taxes or special assessments which are not shown as existing liens or charges by the public records. 7. LENDER: Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws. 8. OWNER: Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws. 9. ALTA ENDORSEMENT - Form 8.1: Will not insure against liens arising pursuant to the Land and Water Conservation and Reclamation Act (32 P.S. Section 5101 et seq.) subsequent to the effective date of this policy. 10. Rights granted to The Philadelphia Electric Company as in Deed Books 3122 page 251 and 3154 page 188. 11. Title to that portion of the premises in the bed of First Avenue is subject to public and private rights therein. 12. Rights granted to The Bell Telephone Company as in Deed Book 3076 page 197. 13. Declaration of Protective Restrictions, dated 12/15/58 and recorded 12/23/58 as in Deed Book 2933 page 513 modified by Agreement, dated 12/16/60 and recorded 1/31/61 in Deed Book 3135 page 439. EXHIBIT ("C") FIDELITY NATIONAL TITLE INSURANCE COMPANY OF PENNSYLVANIA SCHEDULE B - SECTION II CONTINUED 14. Reservations, Exceptions, Covenants, Restrictions and Conditions in Deed Book 3177 page 138. 15. Subject to items as they appear on Plan prepared by A. W. Martin Associates, Inc., Consulting Engineers, dated 4.13.61 on Plan or Record in Plan Book 332 page 1 including but not limited to the following: (A) 30 feet wide utility easement over the Westerly side of premises. 16. Assignment of Tenant Lease as in Deed Book 4895 page 512. 17. Assignment of Rents and Leases as in Deed Book 4895 pages 502 and 507. - -------------------------------------------------------------------------------- CERTIFICATE OF INSURANCE ---------------------------------------- PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO Hugh Wood Inc. RIGHTS UPON THE CERTIFICATE HOLDER. THIS The Bellevue, 9th Floor CERTIFICATE DOES NOT AMEND, EXTEND OR 200 South Broad Street ALTER THE COVERAGE AFFORDED BY THE Philadelphia, PA 19102 POLICIES BELOW. ---------------------------------------- (215) 732-0500 COMPANIES AFFORDING COVERAGE ---------------------------------------- COMPANY A Royal Indemnity Company - -------------------------------------------------------------------------------- INSURED COMPANY IL First Avenue Associates, L.P. &/or B Zurich Insurance Company &/or Lubert & Adler, Partners, L.P. ---------------------------------------- 1811 Chestnut Street, 8th Floor COMPANY Philadelphia, PA 19103 C See Reverse ---------------------------------------- COMPANY D ================================================================================ COVERAGES THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ CO POLICY EFFECTIVE POLICY EXPIRATION LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS - ------------------------------------------------------------------------------------------------------------------------------------ GENERAL LIABILITY GENERAL AGGREGATE $2,000,000 * ----------------------------------- |X| COMMERCIAL GENERAL LIABILITY GLO 2871475-01 06/30/98 06/30/2000 PRODUCTS - COMP/OP AGG $2,000,000 B |_||_|CLAIMS MADE |X| OCCUR ----------------------------------- |X| OWNER'S & CONTRACTOR'S PROT PERSONAL & ADV INJURY $1,000,000 |_| ----------------------------------- ---------------------------------- EACH OCCURRENCE $1,000,000 |_| ----------------------------------- FIRE DAMAGE (Any one fire) $1,000,000 ----------------------------------- MED EXP (Any one person) $5,000 ==================================================================================================================================== AUTOMOBILE LIABILITY COMBINED SIGNLE LIMIT $1,000,000 ----------------------------------- B |_| ANY AUTO BODILY INJURY |_| ALL OWNED AUTOS GLO 2871475-01 06/30/99 06/30/2000 (Per person) |_| SCHEDULED AUTOS ----------------------------------- |X| HIRED AUTOS BODILY INJURY |X| NON-OWNED AUTOS (Per accident) |_| ----------------------------------- ---------------------------------- PROPERTY DAMAGE |_| ==================================================================================================================================== GARAGE LIABILITY AUTO ONLY - EA ACCIDENT |_| ANY AUTO ----------------------------------- |_| OTHER THAN AUTO ONLY ---------------------------------- ----------------------------------- |_| EACH ACCIDENT ----------------------------------- AGGREGATE ==================================================================================================================================== EXCESS LIABILITY EACH OCCURRENCE $150,000,000 ----------------------------------- C |X| UMBRELLA FORM See Reverse 06/30/99 06/30/2000 AGGREGATE $150,000,000 * |_| OTHER THAN UMBRELLA FORM ----------------------------------- ==================================================================================================================================== WORKER'S COMPENSATION AND WC STATU- OTH- EMPLOYERS' LIABILITY |_|TORY LIMITS |_|ER ----------------------------------- THE PROPRIETOR/ |_| INCL EL EACH ACCIDENT PARTNERS/EXECUTIVE |_| EXCL ----------------------------------- OFFICERS ARE: EL DISEASE - POLICY LIMIT ----------------------------------- EL DISEASE - EA EMPLOYEE ==================================================================================================================================== OTHER A "Special Causes of Loss" See Reverse 06/30/99 06/30/2002 SEE REVERSE SIDE incl. Boiler & Machinery ====================================================================================================================================
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS *PER LOCATION LIMITS As respects the property known as 1075 First Avenue, King of Prussia, PA. The Certificate Holder is included as Mortgagee/Loss Payee and Additional Insured as their interest may appear. ================================================================================ CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED Crusader Bank POLICIES BE CANCELLED BEFORE THE 1334 Walnut Street EXPIRATION DATE THEREOF, THE ISSUING Philadelphia, PA 19102 COMPANY WILL MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT. ---------------------------------------- AUTHORIZED REPRESENTATIVE DATE /s/ [ILLEGIBLE] 6/24/99 ================================================================================ EXHIBIT ("D") [LETTERHEAD OF UPPER MERION TOWNSHIP BOARD OF SUPERVISORS] June 20, 1996 Dennis P. Talty, P.C. 101 West Main Street Second Floor Moorestown, NJ 08057 RE: 1075 FIRST AVENUE, KING OF PRUSSIA, PA. PARCEL 580006838007/BLOCK 27/UNIT 35 UPPER MERION TOWNSHIP/MONTGOMERY COUNTY Dear Mr. Talty: This letter is to inform you that the above referenced property is located in an SM Suburban Metropolitan Zoning District and is in compliance with the Zoning, Building and Fire Code Regulations of Upper Merion Township. No outstanding violations are on record with Upper Merion Township for this property. Sincerely, /s/ Francis A. Mckernan FRANCIS A. MCKERNAN CHIEF BUILDING OFFICIAL UPPER MERION TOWNSHIP FMC:cd cc: Carol N. Dube EXHIBIT ("E") EX-10.7 8 ADVERTISING & PROMOTION AGREEMENT DATED 10/3/1999 EXHIBIT 10.7 EXECUTION COPY Confidential Treatment has been requested with respect to portions of the agreement indicated with an asterisk [*]. A complete copy of this agreement, including the redacted terms, has been separately filed with the Securities and Exchange Commission. ADVERTISING AND PROMOTION AGREEMENT This Advertising and Promotion Agreement (this "Agreement") is entered into as of October 3, 1999 (the "Effective Date") between Yahoo! Inc., a Delaware corporation with offices at 3420 Central Expressway, Santa Clara, CA 95051 ("Yahoo") and Global Sports Interactive, Inc., a Pennsylvania corporation with offices at 555 South Henderson Road, King of Prussia, PA 19406 ("Global Sports"). WHEREAS, Yahoo is a global Internet media company that offers a network of branded programming; and WHEREAS, Global Sports facilitates the online sale of sports related merchandise on behalf of the sporting goods retailers set forth on Exhibit F (the "Global Sports Retailers"); and WHEREAS, Global Sports and the Global Sports Retailers will participate in Yahoo's Remote Merchant Integration Program (as defined below); and WHEREAS, the parties wish to enter into this Agreement where, subject to the terms contained herein, Yahoo will provide certain marketing services to promote the online sale of sports merchandise by Global Sports and the Global Sports Retailers. NOW THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows: 1. Definitions. The following terms are used in this Agreement with the respective meanings set forth below: "Barter Media" shall mean Yahoo's participation in certain mutually agreed upon point of purchase and traditional advertising conducted by or on behalf of Global Sports and/or the Global Sports Retailers, as specified in Exhibit L attached hereto. [*] "FTC Order" shall mean that certain "Decision and Consent Order" issued by the U.S. Federal Trade Commission on February 5, 1999 against GeoCities, Inc., a California corporation acquired by Yahoo, attached hereto as Exhibit J and any and all subsequent or related official materials, regulations, laws judgements or orders. "Games" shall mean those sports contests between two Major League Baseball teams. EXECUTION COPY "Global Sports [*] Sponsorship" shall mean an advertising promotion conducted in accordance with Yahoo's standard [*] Sponsorship terms and conditions, including those set forth in Exhibit I. "Global Sports Banner" shall mean an advertising promotion substantially similar in form as that set forth on Exhibit B that: (a) promotes the online sale of Sports Merchandise, (b) has dimensions no larger than 468 pixels wide by 60 pixels high, (c) does not have "looped" animation, (d) does not have any animation longer than six seconds, (e) has a file size of no greater than 15K, and (f) will permit users to navigate directly to a Page on a Global Sports Site dedicated to Sports Merchandise. "Global Sports Banner Category Pages" shall mean those Pages within the Global Sports Banner Categories identified on Exhibit A. "Global Sports Banner Keywords" shall mean those keywords identified as such on Exhibit A; provided that, Global Sports shall be permitted to substitute any such keyword for a comparable keyword subject to availability and Yahoo's approval; and provided further that, Yahoo may substitute any Global Sports Banner Keyword for a comparable keyword (based on projected Page Views) in the event that it determines, in its sole discretion, that such substitution is necessary to avoid liability for third-party claims relating to a Global Sports Banner Keyword's use. "Global Sports Banner Pages" shall mean the Global Sports Banner Category Pages and Global Sports Banner Search Results Pages. "Global Sports Banner Search Results Pages" shall mean those Pages displayed upon a user's search of the Yahoo Main Site for a Global Sports Banner Keyword. For clarity, a search conducted within other Yahoo Properties that include special subject matter based search engines (e.g., Yahoo Auctions, Yahoo Classifieds, Yahoo Clubs, Yahoo News, Yahoo Shopping, Yahoo Yellow Pages) shall not be considered a search of the Yahoo Main Site for purposes of this definition. "Global Sports Brand Features" shall mean the trademarks, service marks, logos and other distinctive brand features of Global Sports and/or the Global Sports Retailers. "Global Sports Button" shall mean a link substantially similar in form as that set forth on Exhibit B that: (a) contains a Global Sports Brand Feature (the brand to be one of the Global Sports Retailers chosen by Global Sports in its sole discretion) and has dimensions no larger than 88 pixels wide by 31 pixels high, (b) does not contain animation, (c) has a file size of no greater than 2K, and (d) will permit users to navigate directly to a Page on a Global Sports Site dedicated to Sports Merchandise. "Global Sports Button Category Pages" shall mean those Pages within the Global Sports Button Categories identified on Exhibit A. "Global Sports Button Keywords" shall mean those keywords identified as such on Exhibit A; provided that, Global Sports shall be permitted to substitute any such keyword for a comparable keyword subject to availability and Yahoo's approval; and provided further that, Yahoo may substitute any Global Sports Button Keywords for a comparable keyword (based on 2 CONFIDENTIAL YAHOO! INC. EXECUTION COPY projected Page Views) in the event that it determines, in its sole discretion, that such substitution is necessary to avoid liability for third-party claims relating to a Global Sports Button Keyword's use. "Global Sports Button Pages" shall mean the Global Sports Button Category Pages and the Global Sports Button Search Results Pages. "Global Sports Button Search Results Pages" shall mean those Pages displayed upon a user's search of the Yahoo Main Site for a Global Sports Button Keyword. For clarity, a search conducted within other Yahoo Properties that include special subject matter based search engines (e.g., Yahoo Auctions, Yahoo Classifieds, Yahoo Clubs, Yahoo News, Yahoo Shopping, Yahoo Yellow Pages) shall not be considered a search of the Yahoo Main Site for purposes of this definition. "Global Sports Category Text Link" shall mean a text link substantially similar in form to that set forth in Exhibit B, that: (i) complies with Yahoo's standard specifications for such links and contains two (2) lines of text, (ii) will permit users to navigate directly to a Page on the Global Sports Site dedicated to Sports Merchandise, and (iii) contains up to sixty five (65) characters per text line (including spaces). "Global Sports Category Text Link Pages" shall mean those pages within the Sports and Recreation category of the Yahoo Main Site directory. "Global Sports [*] Sponsorship" shall mean a multi-faceted promotion comprised of the following three elements [*]: (1) [*]; (2) [*]; and (3) [*]. With respect to the advertising units described in clauses (2) and (3) above, Global Sports shall: (i) provide new creative no less frequently than once every two weeks of the Term, and (ii) ensure that the same creative does not appear on the same Page in more than one Global Sports [*] Sponsorship advertising unit. Further, Global Sports shall ensure that each of the Global Sports [*] Sponsorship advertising units conform to the Yahoo [*] attached as Exhibit N. An illustration of the manner in which the above advertising units could appear is set forth on Exhibit B. "Global Sports Chat Athletes" shall mean the following athletes: [*]; provided that, in the event that any such athlete is either unable or unwilling to conduct a chat event, a comparable athlete shall be substituted upon the mutual agreement of the parties. "Global Sports [*] Module" shall mean a link similar in form as that set forth on Exhibit B that: (a) promotes the on-line sale of Sports Merchandise, (b) has dimensions no larger than 120 pixels wide by 120 pixels high, (c) does not have "looped" animation, (d) does not have any animation longer than six seconds, (e) has a file size of no greater than 10K, and (f) will permit users to navigate directly to a Page on the Global Sports Site dedicated to Sports Merchandise. [*] "Global Sports Deliverables Due Date" shall mean (i) for purposes of the Global Sports Deliverables relating to the Global Sports Banner, Global Sports Button and Global Sports [*] Sponsorship October 15, 1999; and (ii) for purposes of all other Global Sports Deliverables, 3 CONFIDENTIAL YAHOO! INC. EXECUTION COPY October 20, 1999. The parties acknowledge that notwithstanding the foregoing, Global Sports shall have a continuing obligation to deliver Global Sports Deliverables pursuant to the terms of this Agreement during the Term (e.g., updated product information and creative). "Global Sports E-Mail" shall mean an e-mail message offering exclusive offers to Yahoo! Delivers members that: (a) is in HTML format (or text format if sent to email addresses outside of the Yahoo Mail service), (b) has a file size no greater than 30K, (c) has a width not to exceed 425 pixels, (d) does not have "looped" animation, (e) does not have any animation longer than six seconds, (f) does not contain Java, JavaScript, frames, ActiveX, dynamic HTML or background colors, (g) is free from technical errors and passes the "weblint validation checker" (or similar tool utilized by Yahoo), (h) addresses users as Yahoo! Delivers Members (e.g. An exclusive offer for Yahoo! Delivers members.), and (i) contain the following subject line: "Yahoo! Delivers: A Special Offer from Global Sports." This offer shall be an exclusive offer to Yahoo! Delivers Members. In addition, the Global Sports E-Mail shall comply in all respects with Yahoo's standard guidelines for such promotions as set forth in Exhibit_O which, together with the Global Sports E-Mail specifications set forth above, may be modified by Yahoo at its sole discretion. "Global Sports [*] Module" shall mean an advertising promotion substantially similar in form as that set forth on Exhibit B that: (a) has dimensions no larger than 100 pixels wide by 67 pixels high, (b) does not contain animation, (c) has a file size of no greater than 2K, (d) is a JPEG formatted file, (e) describes an offer directly related to the sport referenced on the Page on which the Global Sports [*] Module appears, and (f) will permit users to navigate directly to a Page on the Global Sports Site dedicated to Sports Merchandise. "Global Sports [*] Promotion" shall mean a promotion that will include the Global Sports [*] Promotion Banner and in all cases comply with Yahoo's current [*] promotion guidelines set forth at: [*] (for promotions hosted by Global Sports) or [*] (for promotions hosted by Yahoo). "Global Sports [*] Promotion Banner" shall mean a promotion substantially similar in form as that set forth on Exhibit B that complies with Yahoo's current [*] promotion banner specifications as detailed in the applicable urls set forth in the definition of Global Sports [*] Promotion. "Global Sports [*] Sponsorship" shall mean an advertising promotion substantially similar in form as that set forth on Exhibit B offered in connection with specific Games that is comprised of the following elements: (a) [*], (ii) has a file size no greater that 2K, (iii) contains no animation, and (iv) links to a Page on the Global Sports Site dedicated to Sports Merchandise; and (b) a GIF or JPEG integrated into the user experience that is (i) 300 pixels wide and 150 pixels tall, (ii) no larger than 12K in file size, (iii) contains no more than six seconds of animation (with no looping), and links to a Page on the Global Sports Site dedicated to Sports Merchandise. The elements referenced in clauses (a) and (c) above shall appear on each Page devoted to coverage of the applicable Game. 4 CONFIDENTIAL YAHOO! INC. EXECUTION COPY "Global Sports [*] Module" shall mean an advertising promotion substantially similar in form as that set forth on Exhibit B that contains one of the following elements, as mutually agreed by the parties: (a) a graphical image that (i) has dimensions no larger than 88 pixels wide by 31 pixels high, (ii) is no greater in file size than 2K, (iii) contains no animation, and (iv) has three text links below the image, each of which will consist of no more than 15 characters (including spaces). The image and the text links will permit users to navigate directly to a Page on a Global Sports Site dedicated to Sports Merchandise. (b) a graphical image that (i) has dimensions no larger than 120 pixels wide by 90 pixels high, (ii) is no greater in file size than 4K, (iii) contains no animation, and (iv) has one text link below the image which will consist of no more than 15 characters (including spaces). The image and the text links will permit users to navigate directly to a Page on a Global Sports Site dedicated to Sports Merchandise. "Global Sports Link" shall mean any Link to the Global Sports Site or Global Sports RMI Site placed by Yahoo under and in accordance with this Agreement. "Global Sports [*]" shall mean an advertising promotion substantially similar in form as that set forth on Exhibit B that: (a) has dimensions no larger than 60 pixels wide by 60 pixels high, (b) does not contain animation, (c) has a file size of no greater than 2.5K, (d) is a JPEG formatted file, (e) contains not more than 40 characters of text description (including spaces) and (f) will permit users to navigate directly to a Page on a Global Sports Site dedicated to the on-line purchase of Sports Merchandise. "Global Sports [*] Module" shall mean a link similar in form as that set forth on Exhibit B that: (a) promotes the on-line sale of Sports Merchandise, (b) has dimensions no larger than 120 pixels wide by 120 pixels high, (c) does not have "looped" animation, (d) does not have any animation longer than six seconds, (e) has a file size of no greater than 12K, and (f) will permit users to navigate directly to a Page on a Global Sports Site dedicated to Sports Merchandise. "Global Sports News Banner" shall mean the Global Sports Banner delivered on certain Pages throughout Yahoo News. "Global Sports [*] Module" shall mean a custom designed advertising unit mutually agreed upon by the parties; provided that, such advertising unit shall in all respects comply with Yahoo's standard advertising specifications and the "look and feel" of Yahoo News. "Global Sports [*] Sponsorship" shall mean an advertising promotion offered in connection with Yahoo! [*] that: (a) promotes the on-line sale of Sports Merchandise, (b) has dimensions no larger than 120 pixels wide by 90 pixels high, (c) does not have any animation, (d) has a file size of no greater than 4K, (e) has a single text links below the image, which will consist of no more than 26 characters (including spaces), and (f) will permit users to navigate directly to a Page on a Global Sports Site relating to the Global Sports [*] Sponsorship content. 5 CONFIDENTIAL YAHOO! INC. EXECUTION COPY "Global Sports [*] Sponsorship" shall mean an advertising promotion substantially similar in form as that set forth on Exhibit B offered in connection with specific Sports Events that is comprised of the following elements: (a) a [*] that (i) is 170 pixels in width by 40 pixels in height, (ii) has a file size no greater that 2K, (iii) contains no animation, and (iv) links to the Global Sports Site; (b) a [*] that is (i) 150 pixels wide and 15 pixels tall, (ii) no larger than 1.5K in file size, (iii) contains no animation, and links to the Global Sports Site; and (c) a Global Sports Banner. The elements referenced in clauses (a) and (c) above shall appear on each Page devoted to coverage of the applicable Sports Event. "Global Sports Retailer" shall mean the branded merchandisers of sports merchandise with whom Global Sports has entered into online marketing relationships as set forth and subject to the qualifications on Exhibit F. Global Sports will have the right to add other branded merchandisers of sports merchandise with whom Global Sports enters into online marketing relationships to Exhibit F during the Term subject to Yahoo's prior written approval which shall not be unreasonably withheld. For clarity, only those merchandisers set forth on Exhibit F will be promoted under this Agreement unless and until Yahoo approves the addition of new merchandisers and such merchandisers are included in Yahoo's Remote Merchant Integration Program. "Global Sports Revenue" shall mean the sum of the aggregate revenue received by or on behalf of Global Sports from the sale of Sports Merchandise to a user who arrived on the Merchant Pages (as defined in the Yahoo! Remote Merchant Integration Agreement attached hereto as Exhibit G) through a Global Sports Link during the same on-line session, less shipping and handling, shipping insurance charges, amounts collected for sales or use or other applicable taxes or duties, credit card processing fees, and refunds, rebates paid, and chargebacks for returned or canceled goods or services. For clarity, it is understood that Global Sports Revenue does not include revenue from sales made through the Global Sports Site (as opposed to the Merchant Pages, which are displayed by Yahoo through a proxy server). "Global Sports RMI Site" shall mean any web site that is operated by Global Sports on behalf of Global Sports or a Global Sports Retailer and has been included in Yahoo's Remote Merchant Integration Program and is primarily dedicated to the on-line purchase of Sports Merchandise. "Global Sports Shopping Banner" shall mean an advertising promotion substantially similar in form as the Global Sports Banner that: (a) promotes the online sale of the Sports Merchandise featured on the Global Sports Shopping Search Results Pages on which the Global Sports Banner appears, (b) has dimensions no larger than 468 pixels wide by 60 pixels high, (c) does not have "looped" animation, (d) does not have any animation longer than six seconds, (e) has a file size of no greater than 15K, and (f) will permit users to navigate directly to a Page on a Global Sports RMI Site relevant to the Global Sports Shopping Banner's content. "Global Sports Shopping Keywords" shall mean those keywords identified as such on Exhibit A; provided that, Global Sports shall be permitted to substitute any such keyword for a comparable keyword subject to availability and Yahoo's approval; and provided further that, Yahoo may substitute any Global Sports Shopping Keyword for a comparable keyword (based 6 CONFIDENTIAL YAHOO! INC. EXECUTION COPY on projected Page Views) in the event that it determines, in its sole discretion, that such substitution is necessary to avoid liability for third-party claims relating to a Global Sports Shopping Keyword's use. "Global Sports Shopping Search Results Pages" shall mean those Pages displayed upon a user's search of Yahoo Shopping for a Global Sports Shopping Keyword. "Global Sports Site" shall mean any web site that is operated by Global Sports on behalf of Global Sports or a Global Sports Retailer and is primarily dedicated to the on-line purchase of Sports Merchandise. "Independent, Industry-Recognized Third Party" shall mean a three person panel chosen as follows: each party shall choose one individual and the two individuals so chosen shall together choose a third individual, with the three chosen individuals serving together as the Independent, Industry-Recognized Third Party. "Launch Date" shall mean the first date on which Yahoo: (i) activates a Global Sports Button and fixed advertising unit of the Global Sports [*] Sponsorship; and (ii) inserts the Global Sports Banner into Yahoo's advertising rotation system. "Link" or "link" means a visible graphic or textual indication located within a Page which, when selected by a user, directs the user's internet browser connection onward to a specified Page on the same or any other web site via a uniform resource locator (whether perceptible or not) and which establishes a direct connection between the browser and the new Page. "Page" means any World Wide Web page (or, for online media other than Web sites, the equivalent unit of the relevant protocol). "Page View" shall mean a user's request for a Page as measured by Yahoo's advertising reporting system. "Paid Advertising" shall mean third-party promotions for which Yahoo receives compensation (either in the form of cash or barter) from the party being promoted (or a third-party acting on behalf of such promoted party). "Quarter" means a three-month period beginning on the Launch Date or any date that is a multiple of three months after the Launch Date (e.g., if the Launch Date is November 1, any three month period beginning on November 1, February 1, May 1, or August 1). "Sports Events" shall mean those sports-related events set forth on Exhibit E. "Sports Memorabilia" shall mean Sports Merchandise that is unique and worthy of remembrance. 7 CONFIDENTIAL YAHOO! INC. EXECUTION COPY "Sports Merchandise" shall mean sports-related equipment (e.g., bats, balls, exercise equipment, team sports equipment, golf equipment), sports related clothing (e.g., team jerseys, footwear and exercise clothing) and other sports related products typically available in sporting goods stores. Sports Merchandise shall not be deemed to include any: (i) books (in print, electronic, or audio form), (ii) videos, (iii) compact discs, (iv) computer software, (v) items not typically found in a sporting goods store, or (vi) Sports Memorabilia. Notwithstanding the foregoing and anything else to the contrary in this Agreement, "Sports Merchandise" shall be deemed to include Sports Memorabilia for the purpose of permitting Global Sports to: (a) sell Sports Memorabilia on the Global Sports Site and the Global Sports RMI Site, and (b) promote Sports Memorabilia through the Global Sports Links. Further, subject to the criteria set forth elsewhere in this Agreement (for example, that certain Global Sports Links must link directly to a Page dedicated to Sports Merchandise) the parties agree that nothing in this Agreement is intended to limit or restrict in any manner the products that Global Sports and the Global Sports Retailers may offer for sale and sell through the Global Sports Site. "Sports Merchandise Merchant" shall mean an entity, [*] that derives at least fifty percent (50%) of its revenue through the sale of Sports Merchandise. "Sports Merchandise Merchant Program" shall mean Yahoo's program consisting of certain sports-related marketing, advertising and promotional activities as further described in this Agreement. "Term" shall mean the period beginning on the Effective Date and continuing for a period of fifteen (15) months following the Launch Date (e.g., if the Launch Date is November 3, 1999, the Term shall extend through February 3, 2001), or until this Agreement is otherwise terminated pursuant to Section 14. "Yahoo Alerts" shall mean that Yahoo service whereby Yahoo registered users may choose to be automatically notified via e-mail messages about certain topics, products or services. "Yahoo Brand Features" shall mean the trademarks, service marks, logos and other distinctive brand features of Yahoo. "Yahoo Clubs" shall mean Yahoo's U.S. targeted clubs property currently located at http://clubs.yahoo.com. "Yahoo GeoCities" shall mean Yahoo's U.S. targeted community based website currently located at http://geocities.yahoo.com. "Yahoo GeoCities Affiliate Program" shall mean that program where homesteaders on Yahoo GeoCities have an opportunity to place a link on their homestead to participating merchants web sites in return for payments from such participating merchants. "Yahoo Get Local" shall mean Yahoo's U.S. targeted localized community directory property. 8 CONFIDENTIAL YAHOO! INC. EXECUTION COPY "Yahoo Main Site" shall mean Yahoo's principal U.S. targeted directory to the World Wide Web currently located at http://www.yahoo.com and does not include any: (i) international targeted web sites within the yahoo.com domain (e.g., http://espanol.yahoo.com), (ii) any Yahoo Properties not within the yahoo.com domain (e.g., http://www.broadcast.com), or (iii) any web sites not currently within the yahoo.com domain that Yahoo may add during the Term. "Yahoo Message Boards" shall mean Yahoo's U.S. targeted message board property currently located at http://messages.yahoo.com. "Yahoo News" shall mean Yahoo's principal U.S. targeted news property currently located at http://dailynews.yahoo.com. "Yahoo Outdoors" shall mean Yahoo's U.S. targeted outdoors property that Yahoo intends to develop locate at http://outdoors.yahoo.com. "Yahoo Points" shall mean that promotional program that Yahoo intends to develop whereby Yahoo users earn points that can be redeemed for merchandise contributed by participating merchants. "Yahoo Properties" shall mean any Yahoo branded or co-branded media properties, including, without limitation, Internet guides, that are developed in whole or in part by Yahoo or its affiliates. "Yahoo's Remote Merchant Integration Program" shall mean that program through which Yahoo integrates the web sites of remote on-line merchants into Yahoo Shopping. "Yahoo's Remote Merchant Integration Program Agreement" shall mean the agreement set forth on Exhibit G. "Yahoo Shopping" shall mean Yahoo's U.S. targeted shopping property currently located at http://shopping.yahoo.com. "Yahoo Shopping Front Page Anchor Position" shall mean an advertising placement comprised of the following element which will not contain animation: a rotating advertising unit no larger than 120 pixels wide by 30 pixels high, with a file size no more than 2K, and a Global Sports Brand Feature that will permit users to navigate directly to a Page in the Global Sports RMI Site. "Yahoo Shopping Outdoors Text Link" shall mean a text link substantially similar in form to that set forth in Exhibit B, that: (i) is displayed on Yahoo Outdoors and promotes, on a rotating basis, individual Global Sports Retailers; and (ii) links to a Page within Yahoo Shopping's sports category. "Yahoo Shopping Sports Text Link" shall mean a text link substantially similar in form to that set forth in Exhibit B, that: (i) Yahoo will use commercially reasonable efforts to ensure is 9 CONFIDENTIAL YAHOO! INC. EXECUTION COPY always displayed on Yahoo Sports (except Yahoo fantasy sports registration Pages and game channel application Pages) and promotes, on a rotating basis, individual Global Sports Retailers (and only Global Sports Retailers); and (ii) links directly to a Page within Yahoo Shopping's sports and recreation category. "Yahoo Sports" shall mean Yahoo's U.S. targeted sports property currently located at http://sports.yahoo.com. "Yahoo U.S. Targeted Property" shall mean the Yahoo Main Site and Yahoo GeoCities. 2. Global Sports Banner, News Banner and [*] Promotion. 2.1 Yahoo will provide the Global Sports Banner, on a rotating basis until its Page View obligations are met, in the North banner position on the Global Sports Banner Pages. 2.2 Yahoo will provide the Global Sports News Banner on a rotating basis until its Page View obligations are met. 2.3 Yahoo shall provide one Global Sports [*] Promotion per Quarter of the Term. 3. Global Sports Button. Yahoo will provide the Global Sports Button on the Global Sports Button Pages until its Page View obligations are met. The parties acknowledge and agree that the Global Sports Button's placement on the Global Sports Button Pages shall [*] with the buttons of any other merchants displayed on such Pages (subject to Section 11). Yahoo shall provide up to three (3) text links to accompany the Global Sports Button on the Global Sports Button Pages. In no case shall any Global Sports Button text link exceed sixteen (16) characters (including spaces). Further, each Global Sports Button text link shall promote Sports Merchandise and permit users to navigate via a link directly to a Page on a Global Sports Site relating to the Sports Merchandise relevant to the Global Sports Button Page on which such text link appears. 4. Global Sports [*] Sponsorship and Related Opportunities. 4.1 Yahoo shall provide the Global Sports [*] Sponsorship within the [*] (or similarly named) category of Yahoo Shopping throughout the Term. Within such Yahoo Shopping category search results Pages, Yahoo shall provide those Global Sports Retailers' products that match directly user's search queries, listing prominence over all other Sports Merchandise Merchants products. 10 CONFIDENTIAL YAHOO! INC. EXECUTION COPY 4.2 [*] charge beyond that set forth in this Agreement, pursuant to Yahoo's standard applicable terms and conditions (i) Yahoo shall provide Global Sports the opportunity to participate, in Yahoo Alerts, Yahoo Points, and in the Yahoo Shopping Front Page Anchor Position on a rotating basis; and (ii) Global Sports shall participate in the Yahoo GeoCities Affiliate Program. 5. Global Sports Category Text Link, Yahoo Shopping Sports Text Link and Yahoo Shopping Outdoors Text Link. 5.1 Yahoo will provide the Global Sports Category Text Link, on a rotating basis until its Page View obligations are met, on the Global Sports Category Text Link Pages. 5.2 Yahoo will provide the Yahoo Shopping Sports Text Link throughout the Term. 5.3 Yahoo will provide the Yahoo Shopping Outdoors Text Link throughout the Term. 6. Global Sports [*] Module, [*] Module, [*] Module, [*] Module and [*] Module. 6.1 Yahoo will provide the Global Sports [*] Module, on a rotating basis until its Page View obligations are met, in the East module position on Pages within Yahoo Sports that comprise Yahoo's [*]. 6.2 Yahoo will provide the Global Sports [*] Module, on a rotating basis until its Page View obligations are met, in the East module position throughout Pages in Yahoo Get Local. 6.3 Yahoo will provide the Global Sports [*] Module, on a rotating basis until its Page View obligations are met, in the West module position throughout Pages in Yahoo Clubs. 6.4 Yahoo will provide the Global Sports [*] Module, on a rotating basis until its Page View obligations are met, in the East module position throughout Pages in Yahoo Message Boards. 6.5 Yahoo will provide the Global Sports [*] Module, on a rotating basis until its Page View obligations are met, within Yahoo News. 7. Global Sports [*] and Global Sports Shopping Banner. 11 CONFIDENTIAL YAHOO! INC. EXECUTION COPY 7.1 Yahoo will provide the Global Sports [*], on a rotating basis until its Page View obligations are met, on the index pages of each of the sports included in Yahoo Sports (e.g. the index page for the NFL, http://sports.yahoo.com/nfl/). 7.2 Yahoo shall provide the Global Sports Shopping Banner on the Global Sports Shopping Search Results Pages throughout the Term. 8. Global Sports [*] Sponsorship, [*] Sponsorship, [*] Sponsorship and [*] Sponsorship. 8.1 Yahoo shall provide the Global Sports [*] Sponsorship throughout the Term. 8.2 Yahoo shall provide the Global Sports [*] Sponsorship on a rotating basis within coverage in Yahoo Sports for the Sports Events until its Page View obligations are met. 8.3 Yahoo shall provide the Global Sports [*] Sponsorship throughout the Term. 8.4 During the Term, Yahoo will provide the Global Sports [*] Sponsorship in connection with two (2) chat events per each of the Global Sports Chat Athletes (for a total of 12 chat events during the Term). 9. Global Sports E-Mail. During the Term, Yahoo will deliver [*] Global Sports E-Mails through the Yahoo! Delivers program. In all cases, Global Sports E-Mails shall be delivered only (x) to those registered users of Yahoo's U.S. targeted e-mail service that have indicated during the registration process for such service a willingness to receive promotional solicitations via Yahoo Mail; and (y) in accordance with Yahoo's privacy policy. The text of the Global Sports E-Mail shall be provided by Global Sports, consistent with Yahoo's standard policies and guidelines for such messages as set forth in Exhibit O, and shall be subject to Yahoo's prior approval (which shall not be unreasonably withheld). Yahoo will provide Global Sports with three agreed-upon attributes (e.g., age, gender, occupation) that may be used to target to registered users who receive the Global Sports E-Mails. 10. Implementation. 10.1 Subject to the provisions of this Agreement, Yahoo will be solely responsible for the user interface and serving of the Global Sports Links and Global Sports E-Mail, and Global Sports shall be solely responsible for and shall provide Yahoo with all artwork and design elements of the Global Sports Links and Global Sports E-Mail. Prior to the Launch Date, Yahoo shall designate an account manager (which shall be subject to change at Yahoo's discretion) to manage the 12 CONFIDENTIAL YAHOO! INC. EXECUTION COPY implementation of the Global Sports Links and serve as a liaison between Global Sports and Yahoo during the Term. 10.2 Yahoo reserves the right, at any time, to redesign or modify the organization, structure, specifications, "look and feel," navigation, guidelines and other elements of the Global Sports Links and/or any Yahoo Property on which the Global Sports Links are displayed or otherwise. In the event such a modification materially and adversely affects any specific Global Sports Link, Yahoo will provide Global Sports, as its sole remedy, a comparable promotional placement on the Yahoo Properties mutually agreed upon by the parties. In the event that the parties are unable to reach agreement with respect to the implementation of this Section 10.2, the parties shall appoint an Independent, Industry-Recognized Third Party to resolve the matter. All fees and expenses of an Independent, Industry-Recognized Third Party appointed pursuant to this Section 14.1 shall be shared equally be both parties. 10.3 Global Sports shall execute the Remote Merchant Integration Program Agreement in its own name on behalf of itself and the Global Sports Retailers as of the Effective Date. During the Term, Global Sports shall adhere to the terms set forth therein, and shall ensure that the Global Sports Retailers adhere to the terms set forth therein and in this Agreement. Global Sports represents and warrants that it has the right to enter into the Remote Merchant Integration Program Agreement and this Agreement in its own name on behalf of itself and the Global Sports Retailers. 10.4 Global Sports shall provide Yahoo all URLs, URL formats (as applicable), content, and other materials necessary for Yahoo to provide the Global Sports Links and Global Sports E-Mail (the "Global Sports Deliverables") on or before the Global Sports Deliverables Due Date. All content and material contained in the Global Sports Links and Global Sports E-Mail shall be subject to Yahoo's approval, which shall not be unreasonably withheld, and must comply with all applicable federal, state and local laws, rules and regulations, including, without limitation, consumer protection laws and rules and regulations governing product claims, truth in labeling, and false advertising. Yahoo shall activate the Global Sports Links within twenty (20) days of its receipt of the Global Sports Deliverables. It is understood and agreed that as between Yahoo and Global Sports, Global Sports will determine, in its sole discretion, which of the Global Sports Retailers are promoted by means of those Global Sports Links that link to the Global Sports Site. Furthermore, subject to the criteria set forth elsewhere in this Agreement (for example, that certain Global Sports Links must link directly to a Page dedicated to Sports Merchandise), Global Sports will determine which Page within the Global Sports Site is linked to directly from each Global Sports Link. It is understood and agreed that: (i) Global Sports shall make available no less than the following four (4) Global Sports Retailers for promotion through the Global Sports [*] Sponsorship: The Athletes Foot, Michigan Sporting Goods Distributors, Inc., Sport Chalet, and The Sports Authority; and (ii) all of the 13 CONFIDENTIAL YAHOO! INC. EXECUTION COPY Global Sports Retailers shall participate in the Yahoo Remote Merchant Integration Program. 10.5 (a) Global Sports hereby grants to Yahoo a non-exclusive, worldwide, fully paid, revocable license during the Term to use, reproduce and display the Global Sports Brand Features (i) to indicate the location of the Global Sports Links as set forth herein and (ii) in connection with the marketing and promotion of Global Sports and/or the Global Sports Retailers in the Yahoo Properties. All use of the Global Sports Brand Features by Yahoo hereunder will inure solely to the benefit of Global Sports and the Global Sports Retailers. Except for the limited license granted above, Global Sports and the Global Sports Retailers retain all right, title, and interest in and to the Global Sports Brand Features, and Yahoo agrees that it will do nothing inconsistent with their ownership of the Global Sports Brand Features. Without limiting the generality of the foregoing, Yahoo agrees that it will not use any Global Sports Brand Features other than in accordance with the terms of this Agreement. (b) Yahoo hereby grants to Global Sports a non-exclusive, worldwide, fully paid, revocable license during the Term to use, reproduce and display the Yahoo Brand Features (i) pursuant to Section 10.7 and (ii) in connection with Global Sports' furnishing of the Barter Media. All use of the Yahoo Brand Features by Global Sports hereunder will inure solely to the benefit of Yahoo. Except for the limited license granted above, Yahoo retains all right, title, and interest in and to the Yahoo Brand Features, and Global Sports agrees that it will do nothing inconsistent with Yahoo's ownership of the Yahoo Brand Features. Without limiting the generality of the foregoing, Global Sports agrees that it will not use any Yahoo Brand Feature other than in accordance with the terms of this Agreement. 10.6 [*] 10.7 Global Sports shall place a Yahoo graphic link on those Pages of the Global Sports Sites to which users click-through from any link Global Sports Link. Such Yahoo graphic link shall (a) be placed in a manner determined by Global Sports that is acceptable to Yahoo, (b) contain the Yahoo name and logo as provided by Yahoo, (c) directly link the user back to a Page designated by Yahoo on the Yahoo Properties, and (d) not necessarily appear to users who do not arrive at the Global Sports Site directly through a Global Sports Link. 10.8 Global Sports shall design and operate the Global Sports Site to (i) handle [*] simultaneous requests, (ii) have a minimum [*] uptime and maximum [*] downtime per Quarter (except for planned downtime which may be required for system enhancements, upgrades and preventative maintenance), and (iii) ensure that the Global Sports Site's data transfers to the Yahoo Main Site initiate within fewer than eight (8) seconds, on average, of request. 14 CONFIDENTIAL YAHOO! INC. EXECUTION COPY 11. [*] 11.1 [*] 11.2 [*] 11.3 [*] 11.4 [*] 12. Page Views. 12.1 With respect to the Global Sports Links, Yahoo shall deliver a minimum of [*] Page Views (for clarity, such total shall not include Page Views of the Global Sports [*] Sponsorship, Global Sports [*] Sponsorship, Global Sports [*] Sponsorship, Global Sports [*] Sponsorship). Yahoo will use commercially reasonable efforts to deliver such Page Views evenly throughout the Term provided that Yahoo has the ability to influence and control the delivery of such Page View (e.g., Yahoo does not have the ability to influence and control the allocation of Page Views in connection with seasonal sporting events or front page promotions). 12.2 Yahoo will deliver such Page Views as follows: o [*] Page Views of the Global Sports [*] Module, Global Sports [*] Promotion, and/or Global Sports [*] Module; provided that, Yahoo agrees to use commercially reasonable efforts to deliver the Page Views as follows: [*] Page Views of the Global Sports [*] Module, [*] Page Views of the Global Sports [*] Promotion, and [*] Page Views of the Global Sports [*] Module; o [*] Page Views of the Global Sports Button and/or Global Sports Banner; provided that, Yahoo agrees to use commercially reasonable efforts to deliver the Page Views as follows: [*] Page Views of the Global Sports Button and [*] Page Views of the Global Sports Banner; o [*] Page Views of the Global Sports [*] and/or Global Sports [*] Sponsorship; provided that, Yahoo agrees to use commercially reasonable efforts to deliver the Page Views as follows: [*] Page Views of the Global Sports [*], and [*] Page Views of the Global Sports [*] Sponsorship; o [*] Page Views of the Global Sports [*] Module; o [*] Page Views of the Global Sports [*] Promotion Banner; o [*] Page Views of the Global Sports Category Text Link; o [*] Page Views of the Global Sports [*] Module and/or Global Sports News Banner provided that, Yahoo agrees to use commercially reasonable efforts to 15 CONFIDENTIAL YAHOO! INC. EXECUTION COPY deliver the Page Views as follows: [*] Page Views of the Global Sports [*] Module and [*] Page Views of the Global Sports News Banner; and o [*] Page Views of the Yahoo Shopping Sports Text Link and/or Yahoo Shopping Outdoors Text Link; provided that, Yahoo agrees to use commercially reasonable efforts to deliver the Page Views as follows: [*] Page Views of the Yahoo Shopping Sports Text Link and [*] Page Views of the Yahoo Shopping Outdoors Text Link. 12.3 In the event that Yahoo fails to deliver the minimum number of Page Views as set forth above at the expiration of the Term, Yahoo will "make good" the shortfall within [*] after the end of the Term until such Page View obligation is satisfied. If Yahoo is unable to fulfill its Page View obligations through the original promotion during this additional period, Yahoo will then have an additional [*] to deliver the required number of Page Views through a comparable promotion acceptable to Global Sports (such three month period, together with the six month period described in the preceding sentence, being referred to collectively as the "Make Good Period"). The provisions set forth in this Section 12.3 set forth the entire liability of Yahoo, and Global Sports' sole remedy, for Yahoo's breach of its Page View obligations set forth in Sections 12.1 and 12.2 during the Term. [*] 12.4 In the event that Global Sports desires to substitute portions of the promotions set forth in this Agreement (the "Swap Inventory") for alternative promotions in the Yahoo Main Site, Yahoo shall use commercially reasonable efforts to accommodate such request (a "Change Request") based on inventory availability; provided that, Global Sports agrees that (i) it shall make no Change Requests prior to the date that is [*] after the Launch Date; (ii) it shall make no more than [*] Change Request per each Quarter of the Term; (iii) no Change Request shall involve altering more than [*] of any Swap Inventory scheduled for a given Quarter (e.g., if Yahoo has scheduled delivery of [*] Page Views of the Global Sports Banner for a given Quarter of the Term, a Change Request may involve the substitution of no more than [*] Page Views of the Global Sports Banner for such Quarter); (iv) Global Sports shall provide Yahoo no less than [*] written notice prior to the date it desires any Change Request to take effect; and (v) any substitute inventory delivered by Yahoo pursuant to a Change Request shall be scheduled for delivery (x) within [*] of the month in which such inventory was originally scheduled, and (y) within the Term. 12.5 For purposes of determining the amount of inventory, specifications and placement that may be substituted for Swap Inventory pursuant to a Change Request, the Swap Inventory shall be valued, on a pro-rata basis, in a manner mutually agreed upon by the parties. The substitute inventory shall be valued in a manner mutually agreed upon by the parties. In the event that the parties cannot mutually agree on valuations to be determined pursuant to this Section 12.5, then the Change Request relating to such valuations shall be deemed withdrawn. 16 CONFIDENTIAL YAHOO! INC. EXECUTION COPY 12.6 During the Term, Yahoo will provide Global Sports access to an electronic database that tracks the delivery of Page Views under this Agreement. Such database will be updated in accordance with Yahoo's standard updating procedures at least once per Quarter. 13. Compensation. 13.1 In consideration of Yahoo's performance and obligations as set forth herein, Global Sports will compensate Yahoo in an amount equal to [*) as set forth below. Solely for the purpose of Global Sports calculating costs associated with the Global Sports Retailers' cooperative marketing fund, the parties agree that the cpm associated with the Global Sports Links promoted in this Agreement is [*]; provided that, under no circumstances shall such figure (i) have any bearing on the relationship between Yahoo on the one hand and Global Sports or the Global Sports Retailers on the other hand (whether in case of a breach or termination of this Agreement, or otherwise), or (ii) be used for any other purpose (e.g., reselling inventory, which is not permitted under this Agreement). 13.2 Set Up Fee. In consideration of Yahoo's design, consultation and development of the Global Sports Links, Global Sports shall pay to Yahoo a non-refundable, non-creditable fee of [*] (the "Set-Up Fee"). The Set-Up Fee shall be due and paid by Global Sports on the Effective Date. 13.3 [*] Fee. In consideration of Yahoo's performance and obligations as set forth in Section 11, Global Sports will pay Yahoo a non-refundable, non-creditable fee equal to [*]. Such fee shall be due and paid to Yahoo as follows: (i) [*] on October 15, 1999; (ii) [*] on January 15, 2000; (iii) [*] on April 15, 2000; (iv) [*] on July 15, 2000; and (v) [*] on October 15, 2000. 13.4 Slotting Fee. In consideration of Yahoo's performance and obligations as set forth in Sections 2 through 9, Global Sports will pay Yahoo a non-refundable, non-creditable fee equal to [*]. Such fee shall be due and paid to Yahoo as follows: (i) [*] on October 15, 1999; (ii) [*] on January 15, 2000; (iii) [*] on April 15, 2000; (iv) [*] on July 15, 2000; and (v) [*] on October 15, 2000. 13.5 Revenue Share. In addition to the fees set forth in Sections 13.2 through 13.4 above, Global Sports shall pay to Yahoo a non-refundable, non-creditable fee equal to [*] percent of any Global Sports Revenue earned during the Term (the "Revenue Share Fee"). In accordance with the definition of Global Sports Revenue, it is understood that Global Sports Revenue does not include revenue from sales made through the Global Sports Site (as opposed to the Merchant Pages, which are displayed by Yahoo through a proxy server). The Revenue Share Fee shall be paid by Global Sports to Yahoo on a quarterly basis within thirty (30) days following the last day of each calendar quarter of the Term. The Revenue Share Fee payments will be accompanied by a written report that 17 CONFIDENTIAL YAHOO! INC. EXECUTION COPY includes: (i) the total dollar amount of Global Sports Revenue earned during the applicable period, and (ii) a calculation of the Revenue Share Fee. 13.6 Payment Information. All payments herein are non-refundable and non-creditable and shall be made by Global Sports via wire transfer into Yahoo's main account pursuant to the wire transfer instructions set forth on Exhibit C. 13.7 Late Payments. Any portion of the above payments which has not been paid to Yahoo within fifteen (15) days of the dates set forth above shall bear interest at the lesser of (i) one percent (1%) per month or (ii) the maximum amount allowed by law. Notwithstanding the foregoing, any failure by Global Sports to make the payments specified in Sections 13.2 through 13.5 on the dates set forth therein shall constitute a material breach of this Agreement. 13.8 Audit Rights. Global Sports shall maintain records of all activities relating to the Revenue Share Fee. Global Sports shall permit a reputable independent certified public accounting firm designated by Yahoo and reasonably acceptable to Global Sports to have access, at a mutually agreed upon time during normal business hours, to its records and books of account that relate to the Revenue Share Fee. Such audits shall not be required more often than once every twelve (12) month period of the Term, provided, however, that Yahoo may audit Global Sports within three (3) months of any audit in which a discrepancy of ten percent (10%) or greater is discovered. If such a discrepancy is discovered, Global Sports shall pay the amount of the error to Yahoo within ten (10) days of such error's discovery. Yahoo will pay the cost of any audit conducted pursuant to this Section 13.8, provided, however, that if a discrepancy of ten percent (10%) or greater is discovered through any such audit, Global Sports shall pay such audit's costs. At Global Sports' request, Yahoo will require the accounting firm to sign a standard confidentiality agreement acceptable in form and substance to Global Sports, and the results of any such audit will be considered confidential information of both parties subject to the Mutual Nondisclosure Agreement Terms attached hereto as Exhibit D. 13.9 Barter Media. During the Term, Global Sports shall provide Yahoo no less than [*] of Barter Media. The Barter Media's delivery and value shall be mutually agreed upon by the parties in accordance with the terms attached as Exhibit L. In the event that Global Sports terminates this Agreement pursuant to Section 14.4, Global Sports agrees to continue to provide the Barter Media until the value of Barter Media delivered before and after such termination equals or exceeds the Square-Up Amount. The "Square-Up Amount" will be an amount equal to the pro-rata value of cash due to Yahoo pursuant to Sections 13.3 and 13.4 as of the date of such termination (e.g., if the Section 14.4(a) Termination Date (as defined in Section 14,4(a)) is May 15, 2000, Yahoo shall be due [*] of Barter Media). If the parties are unable to reach agreement on the value of the Barter Media delivered, such value shall be determined by an Independent, Industry-Recognized Third Party, the cost for which will be shared equally by the parties. 18 CONFIDENTIAL YAHOO! INC. EXECUTION COPY 14. Termination. 14.1 Term. This Agreement shall commence upon the Effective Date and, unless terminated as provided herein, shall remain in effect for the Term. 14.2 Termination by Either Party with Cause. This Agreement may be terminated at any time by either party: (i) immediately upon written notice if the other party: (a) becomes insolvent; (b) files a petition in bankruptcy; or (c) makes an assignment for the benefit of its creditors; or (ii) thirty (30) days after written notice to the other party of such other party's breach of any of its obligations under this Agreement in any material respect (ten (10) days in the case of a failure to pay), which breach is not remedied within such notice period. In the event that Yahoo provides a notice of termination under clause (ii) above, Yahoo shall have the right to suspend performance under Sections 2 - 8 of this Agreement for the notice period unless and until the breach is fully remedied by Global Sports prior to the expiration of the notice period. 14.3 Termination by Yahoo. In addition to its termination rights under Section 14.2, Yahoo may terminate this Agreement upon forty five (45) days written notice to Global Sports if at any time during the Term an Independent, Industry-Recognized Third Party appointed at the request of Yahoo determines that the Global Sports Site (for this purpose, taking all of the sites that constitute the Global Sports Site as one site) is no longer one of the top five (5) sites for the on-line sale of Sports Merchandise in the United States over a reasonable period of time based on an evaluation of the following criteria: (i) the number of brick-and-mortar sporting goods stores whose products are marketed and sold through the site, (ii) the annual sales of such stores in the United States, (iii) the amount of online sales conducted through the site, and (iv) the quality and selection of the sporting goods products offered for sale by such stores on the site. Notwithstanding anything to the contrary herein, Yahoo will pay all fees and expenses of the Independent, Industry-Recognized Third Party appointed at Yahoo's request for this purpose. The Independent, Industry-Recognized Third Party shall submit its determination in writing to both Yahoo and Global Sports at the same time and shall provide a description of the reasons for its conclusion and references to the sources of all underlying data. Each party agrees to provide to the Independent, Industry-Recognized Third Party all available information and assistance necessary for the Independent, Industry-Recognized Third Party to undertake the above described analysis. 14.4 Termination by Global Sports. In addition to its termination rights under Section 14.2, Global Sports shall have the following termination rights: (a) Upon at least ninety (90) days prior written notice to Yahoo, Global Sports shall have the right to terminate this Agreement at any time after the date that is [*] days after the Launch Date (i.e., Global Sports shall have no right to give a termination notice pursuant to this Section 14.4 19 CONFIDENTIAL YAHOO! INC. EXECUTION COPY before the date that is ninety (90) days after the Launch Date). In the event that Global Sports exercises its right to terminate this Agreement pursuant to this Section 14.4, Global Sports agrees that for the remainder of the original Term Global Sports shall continue to participate in the Yahoo Remote Merchant Integration Program and the Global Sports [*] Sponsorship on behalf of itself and the Global Sports Retailers unless Yahoo, in its sole discretion, elects, at any time, to terminate the participation of Global Sports or any Global Sports Retailer in such program. Global Sports is responsible for and shall ensure that all required materials (including updated creative, merchandising and data feeds) with respect to any Global Sports Retailer that Yahoo chooses to retain in the Yahoo Remote Merchant Integration Program are provided to Yahoo in accordance with the standard Yahoo Remote Merchant Integration Program specifications, and Global Sports shall retain the obligation to pay to Yahoo the Revenue Share Fee set forth in Section 13.5. Upon any termination by Global Sports under this Section 14.4(a), the parties agree that: (i) [*]; and (ii) any payments due to Yahoo under Sections 13.3 or 13.4 prior to the effective date of termination shall remain due and payable on the dates set forth therein, albeit the amounts shall be pro-rated to the effective date of such a termination (the " Section 14.4(a) Termination Date") (i.e., if the Section 14.4(a) Termination Date is May 15, 2000, Global Sports' payment due on April 15, 2000 shall be [*] (not including any other payments due under this Agreement)); and (iii) in the event that as of the Section 14.4(a) Termination Date, Yahoo has not delivered, on a pro-rata basis, the number of Page Views specified in Section 12.2, it shall continue to deliver such Page Views beyond the Section 14.4(a) Termination Date until such pro-rata threshold is reached, provided that, in such case, except with respect to Sections 11, 13.3, and 13.4, the terms of this Agreement shall remain in full force and effect. For clarity, in the event of a termination of this Agreement under Section 14.4(a), the parties agree that Global Sports shall have no additional payment obligations beyond those set forth in this Agreement as a result of any extra Page Views delivered over and above the pro-rata amount of Page Views specified in Section 12.2 as of the Section 14.4(a) Termination Date. (b) At any time during the Term, upon forty five (45) days prior written notice to Yahoo, Global Sports shall have the right to terminate its participation (and the participation of the Global Sports Retailers) in the Yahoo Remote Merchant Integration Program if an Independent, Industry-Recognized Third Party appointed at the request of Global Sports has determined that the Yahoo Remote Merchant Integration Program does not permit a user to seamlessly navigate between and conduct transactions through Yahoo Shopping and the Global Sports RMI Site (for this purpose, taking all of the sites that constitute the Global Sports Site as one site) over a reasonable period of time. Global Sports will pay all fees and expenses of the Independent, Industry-Recognized Third Party appointed at Global Sport's request for this purpose. The Independent, Industry-Recognized Third Party shall submit its determination in writing to both Yahoo and Global Sports at the same time and shall provide 20 CONFIDENTIAL YAHOO! INC. EXECUTION COPY a description of the reasons for its conclusion and references to the sources of all underlying data. Each party agrees to provide to the Independent, Industry-Recognized Third Party all available information and assistance necessary for the Independent, Industry-Recognized Third Party to undertake the above described analysis. Any termination of Global Sports' (or a Global Sports Retailer's) participation in the Yahoo Remote Merchant Integration Program shall have no effect on the remaining provisions of this Agreement and each party's obligations with respect thereto (including, but not limited to, Global Sports' payment obligations under Section 13 and Yahoo's obligations under Section 11); provided that, in the event of any such termination, Global Sports shall continue to provide Yahoo all data related to transactions conducted through Global Sports Links on Yahoo Shopping that would have been collected without a termination pursuant to this Section 14.4(b). 14.5 Right of First Presentation. Yahoo will provide written notice to Global Sports (a "Presentment Notice") in the event that: (i) during the Term, Yahoo intends to create, acquire, develop or otherwise make available a promotional merchant opportunity on a "Yahoo" branded web site where Yahoo controls the serving and hosting of advertising and that targets an audience in the United States substantially similar in scope and nature to the Sports Merchandise Merchant Program described in this Agreement, or (ii) during the Term, Yahoo is willing to renew this Sports Merchandise Merchant Program on identical terms to those described in this Agreement immediately upon expiration of the Term. Any Presentment Notice shall describe Yahoo's reasonable business requirements for the noticed opportunity. [*] If Global Sports [*] with Yahoo regarding an opportunity described in a Presentment Notice within [*] following its receipt thereof, or if the parties [*] within [*] following the commencement of [*] (or such later date as is agreed by the parties), Yahoo may [*] (subject to Section 11). Global Sports acknowledges that under no circumstances shall anything in this Section 14.4 be deemed to restrict Yahoo's ability to extend other merchant positions for any opportunity presented pursuant to this Section 14.4 to third parties. 14.6 Survival. The provisions of Sections 1, 12.3, 13, 14.4(a), 15 through 19, and this Section 14.6 shall survive expiration or termination of this Agreement. 15. Confidential Information and Publicity. 15.1 Terms and Conditions. The terms and conditions of this Agreement shall be considered confidential and shall not be disclosed to any third parties except to such party's accountants, attorneys, or except as otherwise required by law. Neither party shall make any public announcement regarding the existence of this Agreement without the other party's prior written approval and consent. If this 21 CONFIDENTIAL YAHOO! INC. EXECUTION COPY Agreement or any of its terms must be disclosed under any law, rule or regulation (other than an order issued by a court of competent jurisdiction (e.g., a subpoena)), the disclosing party shall (i) give written notice of the intended disclosure to the other party at least five (5) days in advance of the date of disclosure, (ii) redact portions of this Agreement to the fullest extent permitted under any applicable laws, rules and regulations, and (iii) submit a request, to be agreed upon by the other party, that such portions and other provisions of this Agreement requested by the other party receive confidential treatment under the laws, rules and regulations of the body or tribunal to which disclosure is being made or otherwise be held in the strictest confidence to the fullest extent permitted under the laws, rules or regulations of any other applicable governing body. 15.2 Publicity. Any and all publicity relating to this Agreement and subsequent transactions between Yahoo and Global Sports and the method of its release shall be approved in advance of the release in writing by both Yahoo and Global Sports. The parties agree that the press release attached hereto as Exhibit M may be issued upon the Effective Date. 15.3 Nondisclosure Agreement. Yahoo and Global Sports acknowledge and agree to the Mutual Nondisclosure Agreement Terms attached hereto as Exhibit D with respect to the use and disclosure of all confidential information and all discussions pertaining to or leading to this Agreement. For clarity, the parties expressly agree that the terms of this Agreement (including, but not limited to, the terms set forth in Sections 11, 12, 13, and 14) shall be considered confidential information subject to the terms set forth in Exhibit D (including, but not limited to, paragraph 3). 15.4 User Data. All information and data provided to Yahoo by users of the Yahoo Properties or otherwise collected by Yahoo relating to user activity on the Yahoo Properties shall be retained by and owned solely by Yahoo ("Yahoo User Data"). All information and data provided to Global Sports through a Global Sports Site or otherwise collected by Global Sports relating to user activity on a Global Sports Site shall be retained by and owned solely by Global Sports ("Global Sports User Data" and, collectively with Yahoo User Data, "User Data"). Each party agrees to either: (a)(i) use User Data only as affirmatively authorized by the user, (ii) not disclose, sell, license or otherwise transfer any such User Data to any third party and (iii) not use any User Data for the transmission of any e-mailed document or documents consisting of advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit that meet both of the following requirements: (1) the documents are addressed to a recipient with whom the initiator does not have an existing business or personal relationship; and (2) the documents are not sent at the request of, or with the express consent of, the recipient; or (b) become TRUSTe licensed and to use User Data only in strict accordance with TRUSTe's established policies and procedures and subject to TRUSTe's oversight. If any user requests, 22 CONFIDENTIAL YAHOO! INC. EXECUTION COPY or if Yahoo requests at the specific direction of any user, that Global Sports remove all personally identifiable information relating to such user from Global Sports' database and other records, then Global Sports shall promptly remove such personally identifiable information from its database and other records. For the purposes of this Section 15.4, "User Data" shall not be deemed to include aggregate, non-personally identifiable information. 15.5 Privacy of User Information. Global Sports shall ensure that all information provided by users of a Global Sports Site or Global Sports RMI Site is maintained, accessed and transmitted in a secure environment and in compliance with industry standard security specifications. Global Sports shall provide a link to its policy regarding the protection of user data on those pages of a Global Sports Site or Global Sports RMI Site where the user is requested to provide personal or financial information. Global Sports represents and warrants that it has reviewed the FTC Order and will not knowingly engage in any conduct that would cause Yahoo to violate the FTC Order. Global Sports agrees to follow and comply with all reasonable instructions and directions of Yahoo to help ensure Yahoo's compliance with the FTC Order. 16. Indemnification. 16.1 By Global Sports. Global Sports, at its own expense, will indemnify and hold harmless Yahoo and its employees, representatives, agents and affiliates, against any claim, suit, action, or other proceeding brought by a third party against Yahoo (and any resulting liability or damages incurred by or awarded against Yahoo) based on or arising from a claim that any Global Sports Brand Feature, any material, product or service produced, distributed, offered or provided by Global Sports, or any material presented on the Global Sports Site, (a) infringes in any manner any copyright, patent, trademark, trade secret or any other intellectual property right of any third party, (b) is or contains any material or information that is obscene, defamatory, libelous, slanderous, or that violates any law or regulation, (c) is subject to any fees, royalties, licenses or any other payments to any parties, (d) violates any rights of any person or entity, including, without limitation, rights of publicity, privacy or personality, (e) breaches any obligation of Global Sports under this Agreement, or (f) has resulted in any consumer fraud, product liability, tort, breach of contract, injury, damage or harm of any kind to any third party; provided, however, that in any such case: (x) Yahoo provides Global Sports with prompt notice of any such claim; (y) Yahoo permits Global Sports to assume and control the defense of such action upon Global Sports's written notice to Yahoo of its intention to indemnify; and (z) upon Global Sports' written request, and at no expense to Yahoo, Yahoo will provide to Global Sports all available information and assistance necessary for Global Sports to defend such claim. Global Sports will not enter into any settlement or compromise of any such claim, which settlement or compromise would result in any liability to Yahoo, without Yahoo's prior written consent. Global Sports will pay any and all 23 CONFIDENTIAL YAHOO! INC. EXECUTION COPY costs and expenses, including, but not limited to, reasonable attorneys' fees, incurred by Yahoo in connection with or arising from any such claim, suit, action or proceeding if Global Sports elects not to assume and control the defense of such claim, suit or proceeding at its own expense; if Global Sports does assume and control the defense of such claim, suit or proceeding at its own expense, Yahoo will have the right to participate in such defense at its own expense and with counsel of its own choice, subject to Global Sports' control of such defense. 16.2 By Yahoo. Yahoo, at its own expense, will indemnify and hold harmless Global Sports and its employees, representatives, agents and affiliates, against any claim, suit, action, or other proceeding brought by a third party against Global Sports or a Global Sports Retailer (and any resulting liability or damages incurred by or awarded against Global Sports or a Global Sports Retailer) based on or arising from a claim that any Yahoo Brand Feature (a) infringes in any manner any copyright, patent, trademark, trade secret or any other intellectual property right of any third party, (b) is or contains any material or information that is obscene, defamatory, libelous, slanderous, or that violates any law or regulation, (c) is subject to any fees, royalties, licenses or any other payments to any parties, (d) violates any rights of any person or entity, including, without limitation, rights of publicity, privacy or personality, (e) breaches any obligation of Yahoo under this Agreement, or (f) has resulted in any consumer fraud, product liability, tort, breach of contract, injury, damage or harm of any kind to any third party; provided, however, that in any such case: (x) Global Sports provides Yahoo with prompt notice of any such claim; (y) Global Sports permits Yahoo to assume and control the defense of such action upon Yahoo's written notice to Global Sports of its intention to indemnify; and (z) upon Yahoo's written request, and at no expense to Global Sports, Global Sports will provide to Yahoo all available information and assistance necessary for Yahoo to defend such claim. Yahoo will not enter into any settlement or compromise of any such claim, which settlement or compromise would result in any liability to Global Sports, without Global Sports' prior written consent. Yahoo will pay any and all costs and expenses, including, but not limited to, reasonable attorneys' fees, incurred by Global Sports in connection with or arising from any such claim, suit, action or proceeding if Yahoo elects not to assume and control the defense of such claim, suit or proceeding at its own expense; if Yahoo does assume and control the defense of such claim, suit or proceeding at its own expense, Global Sports will have the right to participate in such defense at its own expense and with counsel of its own choice, subject to Yahoo's control of such defense. 17. Limitation of Liability. EXCEPT WITH RESPECT TO EACH PARTY'S OBLIGATIONS UNDER SECTION 16, UNDER NO CIRCUMSTANCES SHALL GLOBAL SPORTS OR YAHOO BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING FROM THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE 24 CONFIDENTIAL YAHOO! INC. EXECUTION COPY POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. 18. Insurance. Global Sports agrees that it will obtain by November 1, 1999 or the Launch Date (whichever occurs first), and maintain during the remainder of the Term, insurance with coverage with a reputable carrier for commercial general liability and errors and omissions of at least [*] dollars per occurrence. Global Sports will name Yahoo as an additional insured on such insurance and will provide evidence of such insurance to Yahoo within ten (10) days of the Effective Date. Such insurance policy shall not be cancelled or modified without Yahoo's prior written consent, which shall not be unreasonably withheld. 19. General Provisions. 19.1 Independent Contractors. It is the intention of Yahoo and Global Sports that Yahoo and Global Sports are, and shall be deemed to be, independent contractors with respect to the subject matter of this Agreement, and nothing contained in this Agreement shall be deemed or construed in any manner whatsoever as creating any partnership, joint venture, employment, agency, fiduciary or other similar relationship between Yahoo and Global Sports. 19.2 Entire Agreement. This Agreement, together with all Exhibits, represents the entire agreement between Yahoo and Global Sports with respect to the subject matter hereof and thereof and shall supersede all prior agreements and communications of the parties, oral or written. 19.3 Amendment and Waiver. No amendment to, or waiver of, any provision of this Agreement shall be effective unless in writing and signed by both parties. The waiver by any party of any breach or default shall not constitute a waiver of any different or subsequent breach or default. 19.4 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California without regard to the conflicts of laws principles thereof. 19.5 Successors and Assigns. Neither party shall assign its rights or obligations under this Agreement without the prior written consent of the other party, which shall not unreasonably be withheld or delayed. Notwithstanding the foregoing, either party may assign this Agreement to an entity who acquires substantially all of the stock or assets of a party to this Agreement; provided that, consent will be required in the event that the non assigning party reasonably determines that the assignee will not have sufficient capital or assets to perform its obligations hereunder, or that the assignee is a Competitor of the non-assigning party. All terms and provisions of this Agreement shall be binding upon and inure to the 25 CONFIDENTIAL YAHOO! INC. EXECUTION COPY benefit of the parties hereto and their respective permitted transferees, successors and assigns. 19.6 Force Majeure. Neither party shall be liable for failure to perform or delay in performing any obligation (other than the payment of money) under this Agreement if such failure or delay is due to fire, flood, earthquake, strike, war (declared or undeclared), embargo, blockade, legal prohibition, governmental action, riot, insurrection, damage, destruction or any other similar cause beyond the control of such party. 19.7 Notices. All notices, requests and other communications called for by this agreement shall be deemed to have been given immediately if made by facsimile or Electronic mail (confirmed by concurrent written notice sent via overnight courier for delivery by the next business day), if to Yahoo at 3420 Central Expressway, Santa Clara, CA 95051, Fax: (408) 731-3301 Attention: Vice President (e-mail: [*]), with a copy to its General Counsel (e-mail: [*]), and if to Global Sports at the physical or electronic mail address set forth on the signature page of this Agreement, or to such other addresses as either party shall specify to the other. Notice by any other means shall be deemed made when actually received by the party to which notice is provided. 19.8 Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable for any reason, such invalidity, illegality or unenforceability shall not effect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 19.9 Sole Responsibility. Global Sports will remain solely responsible for the operation of the Global Sports Site, and Yahoo will remain solely responsible for the operation of the Yahoo Properties. Each party: (a) acknowledges that the Global Sports Site and the Yahoo Properties may be subject to temporary shutdowns due to causes beyond the operating party's reasonable control; and (b) subject to the terms of this Agreement, retains sole right and control over the programming, content and conduct of transactions over its respective Internet-based service. 19.10 Counterparts. This Agreement may be executed in two counterparts, both of which taken together shall constitute a single instrument. Execution and delivery of this Agreement may be evidenced by facsimile transmission. 19.11 Authority. Each of Yahoo and Global Sports represents and warrants that the negotiation and entry of this Agreement will not violate, conflict with, interfere with, result in a breach of, or constitute a default under any other agreement to which they are a party. 19.12 Attorneys Fees. The prevailing party in any action to enforce this Agreement shall be entitled to reimbursement of its expenses, including reasonable attorneys' fees. 26 CONFIDENTIAL YAHOO! INC. EXECUTION COPY [signature page follows] 27 CONFIDENTIAL YAHOO! INC. EXECUTION COPY This Advertising and Promotion Agreement has been executed by the duly authorized representatives of the parties, effective as of the Effective Date. YAHOO! INC. GLOBAL SPORTS, INC. By: _____________________ By: ________________________ Name: ___________________ Name: ______________________ Title: ___________________ Title: _______________________ Attn: Chief Sales and Marketing Officer Attn: Chief Executive Officer 3420 Central Expressway 555 South Henderson Road, Santa Clara, CA 95051 King of Prussia, PA 19406 Tel.: (408) 731-3300 Tel: (610) 878-8650 Fax: (408) 731-3301 Fax: (610) 768-0753 e-mail: [*] e-mail: [*] 28 CONFIDENTIAL YAHOO! INC. EX-10.8 9 TRANSACTION MANAGEMENT SERVICES AGREEMENT EXHIBIT 10.8 TRANSACTION MANAGEMENT SERVICES AGREEMENT THIS AGREEMENT is dated as of June 10, 1999 and is by and between PRIORITY FULFILLMENT SERVICES, INC., a Delaware corporation ("PFS") having an address at 500 North Central Expressway, Plano, Texas 75074, and GLOBAL SPORTS INTERACTIVE, INC., a Delaware corporation ("GSI") having an address at 555 South Henderson Road, Suite B, King of Prussia, PA 19406. PFS provides various transaction management services, including Web order processing, inbound call handling, order entry, warehousing and distribution, credit management and collection and information management, to manufacturers, resellers and marketers of products. GSI wishes to retain PFS to provide the transaction management services described herein. IN CONSIDERATION of the mutual covenants contained herein, the parties intend to be legally bound as follows: 1. Statement of Work; Products. During the term of this Agreement, and subject to the terms and conditions set forth herein, PFS will provide the transaction management services described herein and in the attached Statement of Work (the "Statement of Work"). PFS will provide its services with respect to various products designated by GSI (the "Products"), provided, however, that the list of Products shall be subject to the mutual agreement of the parties and shall be set forth on a Schedule to be attached to the Statement of Work. Upon mutual agreement, the list of Products may be increased, decreased or otherwise modified during the term of this Agreement. GSI will provide PFS with all necessary information regarding the Products (including part numbers, descriptions, cost, etc.) as PFS may reasonably require in order to perform its services hereunder. 2. Services. PFS represents, warrants, and covenants that all services performed pursuant to this Agreement shall be performed by qualified personnel with the proper skill, training, and experience so as to be able to perform competently and in a manner consistent best industry practice and that all work shall be performed in accordance with this Agreement. 3. Staffing. PFS represents, warrants, and covenants that it is and shall remain sufficiently staffed and equipped to fulfill its obligations under this Agreement. 4. No Imputed Employees. PFS represents, warrants, and covenants that neither PFS, PFS personnel, nor any other employee or subcontractor of PFS shall be, or shall be deemed to be, an employee of GSI for any purpose whatsoever. In conformance with and without limitation on any application of the foregoing sentence, PFS shall be solely responsible for payment of compensation and any other costs attendant to employment of employees of PFS and its subcontractors, including any amounts that may be due as prevailing wages under law applicable to any such employees assigned to perform services pursuant to this Agreement, and for payment of all workers compensation, disability benefits, and unemployment, social security, and other payroll taxes and any other costs on those of its employees and its subcontractors' employees who are engaged in the performance of the services provided pursuant to this Agreement. None of the forgoing provisions apply to GSI employees. 5. Distribution Center. During the term of this Agreement, and as more fully set forth in the Statement of Work, Products will be shipped to, and stored at, the PFS distribution center (the "Distribution Center"). GSI is responsible for all freight, handling and importation costs in delivering the Products to the Distribution Center. GSI is responsible for administering and managing the shipment and delivery of Products to the Distribution Center and will provide PFS with rolling monthly projections of Product shipments and deliveries. PFS will unpack and store all Products delivered to the Distribution Center in accordance with the terms of the Statement of Work. 6. Sales and Marketing. GSI is responsible for all sales and marketing of Products and will provide PFS with all necessary information regarding sales and marketing, including pricing, documentary requirements, etc., as PFS may reasonably require in order to perform its services hereunder other than providing the services set forth in this agreement. Upon mutual agreement, PFS will assist and cooperate with GSI in implementing sales and marketing programs which may be established by GSI from time to time. 7. Order Entry and Processing. PFS will provide order entry transaction management services and an inbound call center for incoming sales orders, using the PFS call center operations in accordance with the statement of work. To the extent Product is available in the PFS Distribution Center, PFS will pick, pack and ship the Products in accordance with the Statement of Work and GSI's shipping instructions. PFS will have no liability except as otherwise noted in this agreement for freight and shipping costs. GSI will provide PFS with all necessary Product information (including pricing, technical information, etc.), call center scripts and similar information, including Product personnel training, as PFS may reasonably require to perform its services hereunder. 8. Transaction Management. GSI will provide PFS with all necessary transaction management information, including customer and credit guidelines and limits and returns criteria, as PFS may reasonably require in order to perform its services hereunder. PFS has no responsibility with respect to the adequacy of such guidelines, limits or criteria. Payments for all Products shall be in accordance with the collection and remittance procedures set forth in the Statement of Work. Except for the limited purpose of performing its services hereunder, PFS shall not be deemed an agent or representative of GSI, nor shall PFS have any authority to make any representation or commitment on the part of GSI. For all purposes, GSI, and not PFS, shall be deemed the seller of all Products to customers. GSI shall retain title to all Products and PFS shall not pledge, encumber or grant any security interest in or to the Products at any time. 2 9. Exceptions. In performing its fulfillment services hereunder, PFS shall act in accordance with, and shall be entitled to rely upon, the GSI authorized instructions and authorizations received from GSI, including all customer, credit, shipping, allocation, pricing and other information and instruction as shall be provided to PFS hereunder. 10. Sales Tax. Except as set forth in the Statement of Work, PFS shall have no liability for the payment, collection or remittance to the proper authorities, of any sales tax, use tax or other tax arising from the sale of Products to customers, and GSI shall indemnify and hold PFS harmless in respect thereof. 11. Insurance. PFS shall provide adequate insurance (presently as set forth on the attached certificate of insurance) for all Products stored in the Distribution Center. Such insurance (which may include self-insurance) shall cover damage, destruction, theft and other risks normally insured against by PFS. GSI shall provide PFS with all information necessary for such insurance. 12. Exchange of Information and Reports. The parties shall generate and exchange the information set forth in the Statement of Work. PFS will also provide the transaction management reports set forth in the Statement of Work. 13. Returns. All sales of Products shall be subject to the then prevailing return policies of GSI. GSI shall at all times be solely responsible for any credits or other amounts payable to customers, and PFS shall have no responsibility to return, rebate or refund any portion of any fee received by it hereunder in respect thereof. All returns shall be administered in accordance with the terms set forth in the Statement of Work. In the event any return is the result of a misshipment or error on the part of PFS, PFS shall, as its sole liability, be responsible for all return freight for such Product. 14. Service Fees; Pricing Modification. GSI shall pay to PFS the service fees and other amounts described in the Statement of Work. All fees and other amounts shall be payable in accordance with the terms set forth in the Statement of Work and, except as otherwise set forth therein, all PFS invoices shall be payable upon receipt and if not paid within seven days shall bear interest on the unpaid balance at 1-1/2% per month until paid. The service fees payable hereunder are based upon the assumptions regarding the scope of work set forth in the Statement of Work. In the event there shall be any material change in any of these assumptions or GSI changes the scope of work, the parties shall negotiate a mutually agreeable modification to the pricing structure set forth herein to reflect such material change. In the event the parties are unable to agree upon a pricing modification, either party may terminate this Agreement upon 90 days prior notice. 15. Transaction Services. PFS shall perform its services and accept for delivery, store, pick, pack and ship all Products in the Distribution Center in accordance with the industry best practices it provides for its customers. PFS shall have no liability for any loss or damage to any Products unless the same arises from the failure to exercise 3 such level of care, in which event the liability of PFS hereunder shall be limited to the actual GSI fully delivered cost of such Products. PFS shall not be responsible for any special handling such as bar coding, price stickering or any labeling unless the parties shall mutually agree upon a modification to the pricing structure set forth herein to reflect such handling services. 16. Quarterly Review. PFS shall schedule quarterly meetings of the appropriate personnel to review the implementation and performance of this Agreement. 17. Trademark. GSI represents that it has a valid and effective license and right to use all trademarks, tradenames and logos which appear on the Products and shall continue to have such right during the term of this Agreement, free of any claim of infringement or unlawful use and GSI shall indemnify and hold PFS harmless in respect of all matters arising in connection therewith. 18. Confidentiality. Each party acknowledges that in implementing and performing this Agreement each party shall disclose and make available to the other certain confidential and proprietary information, including without limitation, customer and Product information. The receiving party agrees to utilize such information solely for the purpose of this Agreement and to keep and maintain all such information as confidential which shall not be disclosed to any other party. The provisions of this Section shall survive any termination or non-renewal of this Agreement. This Section shall not apply to any information (i) which (without violation of this Section) is or becomes generally known in the industry or (ii) which is provided by a third party without violation by such third party of any obligation of non-disclosure (iii) that was possessed by the receiving party prior to receipt or access pursuant to this Agreement, other than through prior disclosure by disclosing party, as evidenced by the receiving party's written records; or (iv) that is required to be disclosed by governmental agencies, regulatory authorities, or pursuant to court order to the extent such disclosure is required by law and provided that the receiving party provides reasonable prior notice to the disclosing party of the disclosure. Any combination of features or disclosures shall not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the rightful possession of the receiving party unless the combination is published or is available to the general public or in the rightful possession of the receiving party. Each party may disclose the existence of this Agreement (but not its terms), the identity of the parties hereto and the general nature of the Products. 19. Term. This Agreement shall have an initial term of two years and shall be automatically renewed for successive one year periods thereafter unless either party shall give notice in writing of non-renewal not less than 180 days prior to any termination date. In the event either party shall materially breach any of the terms or provisions of this Agreement, and such breach shall not be cured within 30 days after notice, the non-breaching party shall have the right to terminate this Agreement upon 4 ten days written notice. In addition, either party may terminate this Agreement at any time upon 180 days prior written notice. Any termination of this Agreement shall not affect any obligations of any party incurred or arising prior to such termination. Upon termination (or non-renewal) of this Agreement (other than termination for cause), the parties shall agree upon a not to exceed 180 day winding down period in order to effect an orderly transition. During such winding down period, all of the terms and provisions of this Agreement shall remain in full force and effect. 20. Indemnification; Limitation of Liability. Each party agrees to indemnify, defend and hold the other harmless from and against and in respect of any and all costs, expenses (including without limitation, attorneys fees and litigation and investigation costs), losses, damages and claims arising from, in connection with or relating to (i) any actual or alleged infringement or misappropriation by the indemnifying party of any patent, copyright, trademark, service mark, tradename, trade secret or any other intellectual property right of any other party (whether domestic or foreign), (ii) any failure by the indemnifying party to comply with or breach of any governmental, regulatory, judicial or municipal law, rule, regulation, decision, order, directive, ordinance or ruling of any kind or (iii) any product liability, personal injury or property damage claim of any kind or any negligence or misconduct on the part of the indemnifying party; provided, however, that, notwithstanding anything contained herein, no party shall be liable for consequential damages of any kind (even if advised of the possibility or likelihood thereof) or any punitive damages in connection with any claim or matter arising under or in connection with this Agreement. Except as expressly set forth herein or in the Statement of Work, no party makes any representation or warranty of any kind. The provisions of this Section shall survive any termination or non-renewal of this Agreement. 21. Status of PFS Personnel. PFS shall indemnify, defend, and hold GSI and GSI's directors, officers, employees, and agents harmless from and against and in respect of any and all costs, and expenses (including without limitation, attorney's fees and litigation and investigation costs), losses, damages, and claims arising from, in connection with, or relating to any and all claims, actions, suits, or other proceedings alleging (a) that the personnel provided by PFS, any subcontractor, or any other assignee of PFS are employees of GSI for any purpose; (b) that PFS or any subcontractor has failed to compensate its employees, including the payment of prevailing wages, in accordance with applicable law, (c) that PFS or any subcontractor has failed to comply with the immigration laws of the United States, including the Immigration & Nationality Act, as amended, or (d) that PFS or any subcontractor has not complied with any wage and hour or employment laws, rules, regulations or common law or any claim by or accommodation for personnel provided by PFS related to the Americans with Disabilities Act, Pennsylvania Human Relations Act, or any other similar federal, state, or local law or regulation. 5 22. Indemnitor's Rights and Notice. The indemnitor shall have the right to control the defense and settlement of any claims or actions for which the indemnitor is obligated to defend, but the indemnitee shall have the right to participate in such claims or actions at its own cost and expense. The indemnitor shall have no liability under this Section unless the indemnitee gives notice to the indemnitor promptly after the indemnitee learns of such claim so as to not prejudice Vendor. 23. Miscellaneous. This Agreement does not create a joint venture or partnership of any kind, nor shall this Agreement give rise to any fiduciary duty on the part of any party to any other party. Except as contemplated herein, neither party shall have the authority to represent, warrant or bind the other party. This Agreement, and the rights, powers and duties set forth herein, shall bind and inure to the benefit of the parties hereto and their respected successors and assigns. This Agreement may not be assigned or delegated to any unaffiliated third party. This Agreement may only be amended, modified or waived by an instrument in writing duly executed and delivered by each of the parties hereto to be bound by such amendment, modification or waiver. This agreement (and the Statement of Work hereto) sets forth the entire understanding and agreement of the parties and supersedes any prior agreement. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver thereof, and any waiver of any term or provision hereof shall not be construed as a waiver of any other term or provision. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall be deemed one and same instrument. In the event that any one or more of the provisions of this Agreement shall be determined to be void or unenforceable by a court of competent jurisdiction or by law, such determination shall not render this Agreement invalid or unenforceable and the remaining provisions hereof shall remain in full force and effect. All notices hereunder shall be in writing and shall be effective upon receipt at each party's address for notice set forth herein. Each party waives trial by jury. 24. Arbitration. Any and all disputes arising hereunder shall, upon the request of either party, be submitted to binding arbitration in the State of Texas in accordance with the rules and regulations of the American Arbitration Association and each party agrees that (i) all notices and service of process in respect thereof may be delivered or served at the address for notice set forth herein, (ii) each party consents and submits to the jurisdiction of said arbitration and to the federal and state courts of the State of Texas for the purpose of enforcing the provisions of this Agreement and entering and judgment in respect thereof and (iii) the foregoing shall not preclude the joinder of any party in respect of any third party claim or the pursuit of equitable remedies. 6 IN WITNESS WHEREOF, the parties hereto, being duly authorized, have executed and delivered this Agreement as of the day and year above written. PRIORITY FULFILLMENT SERVICES, INC. 500 North Central Expressway Plano, Texas 75074 By: /s/ Cliff Defee ------------------------------------ Name: CLIFF DEFEE Title: VICE PRESIDENT, OPERATIONS GLOBAL SPORTS INTERACTIVE, INC. 555 South Henderson Road, Suite B King of Prussia, PA 19406 By: /s/ Michael Golden ------------------------------------ Name: Michael Golden Title: EVP. E-Commerce 7 EX-27.1 10 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1999 AND THE RELATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 39,467,680 0 0 0 4,669,217 89,991,659 17,921,113 1,701,834 106,430,449 19,323,252 0 100 0 194,766 84,834,425 106,430,449 0 0 0 13,628,627 0 440,860 (145,966) (13,482,661) (2,220,878) (11,261,783) (2,575,451) 0 0 (13,837,234) (1.14) (1.14)
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