EXHIBIT 10.2
SERVICES AGREEMENT
SERVICES AGREEMENT, dated as of ________, 1998 (this "Agreement") by and
between Creative Computers, Inc., a Delaware corporation ("CCI"), and uBid,
Inc., a Delaware corporation ("uBid").
WHEREAS, uBid is currently a wholly-owned subsidiary of CCI and obtains
administrative and other services from CCI;
WHEREAS, uBid is considering an initial public offering of its Common Stock
("IPO");
WHEREAS, after the IPO, CCI will own approximately 80.1% of the outstanding
shares of uBid's Common Stock (the "Retained Shares");
WHEREAS, subject to the conditions set forth in the Separation and
Distribution Agreement, dated as of _________________, 1998, by and between CCI
and uBid, CCI will distribute to its stockholders, not earlier than six months
following the IPO, all of the Retained Shares in a tax-free distribution (the
"Distribution"); and
WHEREAS, after the IPO, uBid desires to continue to obtain administrative
and other services from CCI and CCI desires to continue to provide such services
for a period of up to one year following the closing date of the IPO.
NOW, THEREFORE, in consideration of the premises and mutual promises and
representations contained herein, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto do mutually
covenant, stipulate and agree as follows:
Section 1. Services.
--------
(a) CCI shall render to uBid general accounting services, credit
services and payroll and benefits administration services all as more
particularly described in Exhibit 1 hereto (collectively, the "Services"), in
---------
conformity with good commercial practice, the terms and conditions of this
Agreement and the reasonable instructions of uBid in accordance with this
Agreement.
(b) uBid shall provide to CCI when required all funds necessary to
perform the Services, including, without limitation, all amounts required to pay
payroll expenses of employees of uBid and all amounts necessary to pay accounts
payable of uBid.
(c) CCI shall have no authority pursuant to this Agreement to
commit uBid in any manner whatsoever, to use uBid's name in any way or to enter
into any contracts on behalf of uBid.
(d) In the event that uBid requires services which exceed the scope
or extent of the Services provided for herein, and if CCI agrees to provide such
services, CCI and uBid shall negotiate in good faith an adjustment to the fee
payable hereunder; provided, however, that
-------- -------
the fee payable by uBid for such services shall be no less favorable to uBid
that the charges for comparable services from unaffiliated third parties.
Section 2. Compensation.
------------
(a) uBid shall pay to CCI a fee for each of the Services equal to
the amount listed in Exhibit 1 corresponding to such service, provided that in
---------
the event uBid terminates any Service in accordance with Section 3 hereof, the
fee for such Service shall no longer be payable following the effective date of
such termination.
(b) On the last day of each month CCI shall submit to uBid for
payment a billing invoice setting forth the amount of fees payable by uBid to
CCI for Services rendered. uBid shall pay the invoiced amount to CCI within
thirty (30) days after the date on which such invoice is received by uBid.
Section 3. Term.
----
The initial term of this Agreement shall commence on the date hereof
and shall continue for a period of one (1) year unless renewed or extended by
mutual agreement of the parties; provided, however, that the Agreement may be
-------- -------
terminated at any time at the option of either CCI or uBid upon ninety (90) days
prior written notice. Specific categories of Services may be cancelled as set
forth in Exhibit 1.
---------
Section 4. Records and Accounts.
--------------------
CCI shall maintain accurate records and accounts of all transactions
relating to the Services performed by it pursuant to this Agreement. Such
records and accounts shall be maintained separately from CCI's own records and
accounts and shall reflect such information as would normally be examined by an
independent accountant in performing a complete audit pursuant to United States
generally accepted auditing standards for the purpose of certifying financial
statements, and to permit verification thereof by governmental agencies. uBid
shall have the right to inspect and copy, upon reasonable notice and at
reasonable intervals during CCI's regular office hours, the separate records and
accounts maintained by CCI relating to the Services.
Section 5. Directors and Officers of uBid and CCI.
--------------------------------------
(a) Nothing contained in this Agreement shall be deemed to relieve
the officers and directors of uBid from the performance of their duties or limit
the exercise of their powers in accordance with uBid's Certificate of
Incorporation or the laws of the State of Delaware. The services of CCI's
officers and employees which are rendered to uBid under this Agreement shall at
all times be in accordance with the instructions of uBid's officers.
(b) Nothing in this Agreement shall limit or restrict the right of
any of CCI's directors, officers or employees to engage in any other business or
devote their time and attention in part to the management or other aspects of
any other business, whether of a similar nature, or
2
to limit or restrict the right of CCI to engage in any other business or to
render services of any kind to any corporation, firm, individual, trust or
association.
Section 6. Liability; Indemnification.
--------------------------
(a) CCI shall have no liability whatsoever to uBid for any error,
act or omission in connection with the services to be rendered by CCI to uBid
hereunder unless any such error, act or omission is attributable to CCI's
willful misconduct or gross negligence. The parties acknowledge that Article V
of the Separation and Distribution Agreement between the parties hereto dated
the date hereof provides for indemnification obligations relating to this
Agreement and confirm their agreement to be bound by the terms thereof.
(b) CCI is an independent contractor and when its employees act
under the terms of this Agreement, they shall be deemed at all times to be under
the supervision and responsibility of CCI; and no person employed by CCI and
acting under the terms of this Agreement shall be deemed to be acting as agent
or employee of uBid or any customer of uBid for any purpose whatsoever.
Section 7. Other Agreements.
----------------
From time to time, uBid may find it necessary or desirable either to
enter into agreements covering services of the type contemplated by this
Agreement to be provided by parties other than CCI or to enter into other
agreements covering functions to be performed by CCI hereunder. Nothing in this
Agreement shall be deemed to limit in any way the right of uBid to acquire such
services from others or to enter into such other agreements; provided that in no
such event shall the fees to be paid to CCI pursuant to Section 2 hereof be
reduced on account thereof unless this Agreement is terminated, or the
applicable categories of Services, are cancelled in accordance with Section 3
hereof.
Section 8. Confidentiality.
---------------
CCI agrees to hold in strict confidence, and to use reasonable
efforts to cause its employees and representatives to hold in strict confidence,
all confidential information concerning uBid furnished to or obtained by CCI in
the course of providing the Services (except to the extent that such information
has been (a) in the public domain through no fault of CCI or (b) lawfully
acquired by CCI from sources other than uBid); and CCI shall not disclose or
release any such confidential information to any person, except its employees,
representatives and agents who have a need to know such information in
connection with CCI's performance under this Agreement, unless (i) such
disclosure or release is compelled by the judicial or administrative process, or
(ii) in the opinion of counsel to CCI, such disclosure or release is necessary
pursuant to requirements of law or the requirements of any governmental entity
including, without limitation, disclosure requirements under the Securities
Exchange Act of 1934, as amended.
3
Section 9. Miscellaneous.
-------------
(a) This Agreement may not be transferred or assigned by either
party, whether voluntarily or by operation of law, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be
binding upon all permitted successors and assigns.
(b) This Agreement shall be governed by the laws of the State of
California (regardless of the laws that might otherwise govern under applicable
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect, performance and remedies.
(c) This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which together shall be deemed to be
one and the same instrument.
(d) All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or by facsimile transmission or mailed (certified or registered mail, postage
prepaid, return receipt requested):
If to CCI, to: Creative Computers, Inc.
0000 Xxxx 000xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
If to uBid: uBid, Inc.
0000 Xxxxx Xxxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which hand
delivered, upon transmission of the facsimile transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error, or
on the third business day following the date on which so mailed, except for a
notice of change of address, which shall be effective only upon receipt thereof.
In the case of a notice sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received. In no event shall the provision
of notice pursuant to this Section 9(d) constitute notice for service of
process.
4
(e) This Agreement contains the entire understanding of the parties
hereto with respect to its subject matter. This Agreement supersedes all prior
agreements and understandings, oral or written, with respect to its subject
matter.
(f) The provisions of Sections 6 and 8 hereof shall survive any
termination of this Agreement.
(g) In the event that any one or more of the provisions contained
herein is held invalid or unenforceable in any respect, the parties shall
negotiate in good faith with a view toward substituting therefor a suitable and
equitable solution in order to carry out the intent and purpose of such invalid
provision; provided, however, that the validity and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
(h) The Section headings contained in this Agreement are for
reference only and shall not affect the meaning or interpretation of this
Agreement.
Section 10. Arbitration.
-----------
Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or validity hereof, or any transaction
contemplated hereby shall be settled in accordance with the procedures set forth
in Article VIII of the Separation and Distribution Agreement, dated as of
___________, 1998, by and between CCI and uBid, as if such Article VIII were set
forth herein in its entirety.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
CREATIVE COMPUTERS, INC.
By:____________________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chairman of the Board,
President and Chief Executive Officer
uBID, INC.
By:____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
5
Exhibit 1
---------
Services to be Provided by CCI to uBid
General Accounting Services $cost-plus 10% basis
---------------------------
Accounts payable and general ledger services, similar to those currently
furnished by CCI to uBid, will be provided by CCI to uBid. Such Services will
consist of, among other things, the following: (a) receipt and opening of all
vendor mail; (b) maintenance of a vendor master file; (c) processing and
forwarding payment of all vendor invoices; (d) invoice exception reporting and
resolution; (e) monthly financial reporting; and (f) vendor relations.
This category of Services may be cancelled by either party on ninety (90) days
prior written notice and may be renewed by mutual agreement of the parties.
Credit Services $1.50 per order
---------------
Credit services, including full credit checking and analysis, will be provided
by CCI to uBid. CCI undertakes to use its best efforts to process each credit
check within twenty-four (24) hours of receipt of a request for a credit check
from uBid.
This category of Services may be cancelled by either party on ninety (90) days
prior written notice and may be renewed by mutual agreement of the parties.
Payroll and Benefit Administration $cost-plus 10% basis
---------------------------------- (monthly service fee)
$cost (payroll and benefits)
CCI will administer uBid's payroll and will continue to (i) include uBid's
employees under its group health insurance policies and (ii) permit uBid's
employees to participate in CCI's 401(k) plan until the earlier of the date uBid
establishes its own 401(k) plan for its employees or one (1) year following the
date of this Agreement. uBid will pay to CCI its pro rata portion of the
monthly cost of the health insurance currently provided under CCI's group health
plans for each covered employee listed in Annex A hereto. uBid will also pay
its pro rata portion of the monthly cost of participating in CCI's 401(k) plan
for each participating employee listed in Annex A hereto.
-------
This category of Services may be cancelled by either party on ninety (90) days
prior written notice and may be renewed by mutual agreement of the parties.
Exhibit 1
