EXHIBIT 10.16
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. Agreement
This Agreement, dated as of May 10, 2000 (this "Agreement"), is by and
between ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. ("Redtag"), a Minnesota corporation, and
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("Pawn"), a Nevada corporation.
1. Recitals. Redtag is in the business of (a) facilitating the purchase and sale
of opportunity merchandise and continuity merchandise by participants in its
▇▇▇▇▇▇▇▇▇.▇▇▇ Internet website, and (b) purchasing opportunity merchandise and
reselling it over its ▇▇▇▇▇▇▇▇▇.▇▇▇ website and its ▇▇▇▇▇▇.▇▇▇ Internet website
and by other means. Pawn is in the business of facilitating the sale of
opportunity merchandise by pawnbrokers over its ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Internet website.
Redtag desires to contract with Pawn to provide Redtag with a list of
pawnbrokers for whom it sells merchandise and to link its Internet website to
Redtag's website; and Pawn is willing to do the foregoing; all on the terms and
conditions set forth in this Agreement.
2. Website Linkup. Redtag and Pawn shall each take, at their own expense, all
actions necessary to link their two websites. Redtag shall provide on its
website, a Pawnbroker banner in the form and style mutually agreed upon, and
links to Pawnbroker's website under the icon "Home" on its ▇▇▇▇▇▇.▇▇▇ website,
and under the icon "Marketing Partners" on its ▇▇▇▇▇▇▇▇▇.▇▇▇ website. Pawn shall
provide on its website, a Redtag banner in the form and style mutually agreed
upon, and links to Redtag's website under the icons "Home" and "Marketing
Partners" currently on its website (or similar). All such work shall be
completed within 30 days of the date hereof.
3. Transaction Commissions. Redtag shall pay Pawn a commission equal to 5% of
the sales price of merchandise purchased by visitors from Pawn's website. Pawn
shall pay Redtag 50% of the net commissions received (net commissions received
defined as commissions earned less credit card fees). Commissions received will
range from 1% to 6% of the sales price of the merchandise, depending on the
category and price of the item sold (see Attachment A). The parties shall
endeavor to keep track of all referred customers by electronic or other means.
Pawn shall furnish to Redtag a list of all Pawn clients referred to Redtag with
respect to which commissions will be applicable. Except as provided in Section 7
and 8, no other compensation shall be payable by either party to the other with
respect to any relationship, business, transaction, or revenue derived by it as
a result of this Agreement, or the establishment and operation of the website
links. This section does not apply to retail transactions, but does apply to all
transactions proposed or consummated by Redtag's ▇▇▇▇▇▇▇▇.▇▇▇ division.
4. Non-solicitation and Non-circumvention. Redtag understands and agrees that
Pawn is concerned about the possibility that Pawn will provide Redtag with
access and opportunity to meet and get to know current and prospective
Participating Pawnbrokers and that Redtag may take such information and
opportunity, cease the relationship with Pawn, and use such
information and opportunity to the detriment of Pawn. Redtag therefore agrees
that for a period of two (2) years commencing at the time Redtag's relationship
with Pawn ceases for any reason:
(a) Redtag will not solicit or do business with any Participating
Pawnbroker, for which a commission would be due under Section 3,
unless Redtag pays to Pawn the applicable commission set forth in
Section 3; and
(b) Redtag will not, directly or indirectly, (i) offer, sell, install,
contract with or otherwise provide products or services of another
company, individual or other entity that are similar to the products
or services offered by Pawn to any Participating Pawnbroker introduced
to Redtag by Pawn; or (ii) circumvent Pawn or otherwise interfere with
the Pawn's business, by contracting with any third party that plans or
intends to undertake, or is investigating the feasibility of
undertaking, any production, development, selling or marketing of a
product or service related or similar to the Pawn's business, to any
Participating Pawnbroker introduced to Redtag by Pawn.
5. Other Pawn Undertakings. Pawn shall furnish to Redtag, and update from time
to time, a list of all pawn stores participating in Pawn's website. Redtag shall
keep the list confidential but may offer to sell consumer merchandise to such
pawn stores by means of its internet websites or auctions.
6. Other Redtag Undertakings. Redtag will use its best faith efforts to:
(a) explore what services offered by General Electric Capital Corporation
("GECC") can be offered to pawnbrokers which are participants in
Pawn's website and to Pawn's retail customers, and for this purpose
will introduce Pawn to Redtag's GECC contacts and arrange initial
meetings;
(b) explore and determine whether Value Vision Interactive, Inc. ("VVI")
would be willing to create a television program offering pawnbroker
merchandise or license the ▇▇▇▇▇▇▇▇▇▇.▇▇▇ name and show concept for
its own use, and/or incorporate the Pawn name, logo and merchandise
into Redtag's television show over the VVI network. Redtag will try to
secure an hour of programming each week for Pawn at a total cost to
Pawn of $8,000 per hour of airtime (the "Pawn Program"). Redtag and
Pawn will agree to the format of the programming for the Pawn Program
and shall determine the merchandise offered for sale on the Pawn
Program. Redtag and Pawn shall divide the net profits of the sale of
merchandise on Pawn Program equally. Net profits shall be determined
based on the selling price of the merchandise less (a) the actual cost
of the merchandise supplied by party providing such merchandise and
(b) the expenses related to selling such merchandise.
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(c) explore and determine whether BoomBuy, Inc. would like to purchase and
offer for sale, or offer for sale by Internet link to Pawn's website,
merchandise of the type offered for sale over Pawn's website.
7. Compensation to Pawn. As compensation for Pawn's undertakings in Section 2
and 5, upon entering into this Agreement, Pawn shall have the right to receive
warrants to purchase 36,000 shares of Redtag common stock for the price of
$10.73 per share for a period of three (3) years, in the form attached hereto as
Exhibit A, the warrants to vest and become exercisable as follows: (i) 12,000
upon the date hereof, and (ii) one twenty-fourth of 24,000 warrants for each
month during which this Agreement remains in effect.
8. Compensation to Redtag. As compensation for Redtag's undertakings in Sections
2 and 6, upon entering into this Agreement, Pawn shall have the right to receive
warrants to purchase 72,000 shares of Pawn common stock for the price of $6.75
per share for a period of three (3) years, in the form attached hereto as
Exhibit A, the warrants to become exercisable as follows: 24,000 upon the date
hereof, and one twenty-fourth of 48,000 warrants for each month during which
this Agreement remains in effect.
9. Termination of Agreement; Continuing Obligations. This Agreement shall be and
remain in effect until December 31, 2000 and thereafter until terminated by
either party. Either party may terminate this Agreement at any time for any
reason, upon 30 days written notice to the other party by registered mail. No
warrants shall vest or become exercisable after the date of termination.
In witness whereof the parties have caused this Agreement to be duly
authorized and to be executed by their officers as set forth below.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By: /s/ William Galine, Vice President By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chm & CEO
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William Galine, Vice President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman & CEO
And: /s/ ▇▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇ ▇▇▇, Executive V.P.
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Attachment A
General Category 9% Commission earned
Rolex Category 4% Commission earned
Loose Diamonds 4% Commission earned
Specialty Cars 4% Commission earned
High Value Art 4% Commission earned
o Net commission received = Commission earned less Credit Card Fees
General Category 9% (Credit card fees) = Net Commission received
Rolex Category 4% (Credit card fees) = Net Commission received
Loose Diamonds 4% (Credit card fees) = Net Commission received
Specialty Cars 4% (Credit card fees) = Net Commission received
High Value Art 4% (Credit card fees) = Net Commission received
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Special Category Pricing
o Rolex = 1% Plus Credit Card Fees
o Loose Diamonds = 1% Plus Credit Card Fees
o Gold Coins = 1% Plus Credit Card Fees
As additional categories are added, ▇▇▇▇▇▇▇▇▇▇.▇▇▇ will provide Redtag with a
detailed list of the categories and associated commission.
