Nature of Nike relationship. From the S-1:
Agreement with Nike USA, Inc.
In September 1999, we entered into an agreement with Nike USA, Inc. pursuant to which we have the right to market on our web site the generally available Nike product lines, including Jordan, Bauer, Nike ACG, Nike Golf and Nike Team Sports. We will receive a discount on the products we purchase. Under the agreement, we also have advance product availability for selected, newly released products. The agreement prohibits us from selling any of these products to consumers with shipping addresses outside of the United States unless Nike.com is allowed to sell in those countries and the sales do not constitute a violation of any agreement with any third party. We also agreed to use Nike USA as the exclusive supplier of Nike brand products, and Nike USA agreed to not open any new "Internet only" accounts to sell Nike products through March 2000. Nike USA may terminate the agreement at any time without cause upon 90 days notice to us, but must pay us a termination fee if it exercises this right prior to December 31, 2001. We also issued Nike USA a warrant to purchase up to 6,171,524 shares of our Series C preferred stock at an exercise price of $1.03 per share. Upon the consummation of this offering, this warrant will automatically become exercisable for up to 6,171,524 shares of our common stock. Finally, Nike USA is entitled to a seat on our board of directors or, at its election, to have an observation right for one individual to have all of the rights and privileges of a board member, except the right to vote. Currently, Mr. Clarke has a seat on our board pursuant to this agreement. |
