Supply Agreement - Odimo Inc. and SDG Marketing Inc.
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (the "Agreement") is entered into as of this 30th
day of March 2004 by and between Odimo Incorporated, a Delaware corporation (the
"Company"), and SDG Marketing, Inc. ("SDG").
RECITALS
WHEREAS, SDG is engaged in the business of cutting, manufacturing and
trading diamonds and jewelry; and
WHEREAS, the Company is, among other things, engaged in the retail sale
of diamonds and jewelry via the Internet; and
WHEREAS, the Company and SDG wish to establish the terms and conditions
upon which SDG will sell diamonds and jewelry to the Company.
NOW THEREFORE, in consideration of the mutual promises and undertakings
set forth in this Agreement, the parties, intending to be legally bound, agree
as follows:
1. DEFINITIONS
1.1 "AFFILIATE" means, with respect to either party to this Agreement,
a business entity controlling, controlled by or under common control with such
party, directly or indirectly.
1.2 "GEMSTONES" mean diamonds, emeralds, rubies and sapphires meeting
the quality and dimensional standards required by the Company.
1.3 "INVENTORY" shall mean collectively all Loose Diamonds and Jewelry
supplied to the Company by SDG.
1.4 "JEWELRY" shall mean jewelry consisting of Gemstones and/or
Precious Metals and manufactured by SDG or its Affiliate.
1.5 "LOOSE DIAMONDS" shall mean loose stone diamonds accompanied by a
GIA certificate and supplied by SDG.
1.6 "PRECIOUS METALS" mean gold and platinum.
2. SDG'S SUPPLY OBLIGATIONS
2.1 MINIMUM SUPPLY REQUIREMENTS FOR LOOSE DIAMONDS. SDG will supply the
Company with Loose Diamonds, based on the information contained in the Company's
Projected Needs Report (as defined in Section 5.1(b) below), as follows:
(a) Within a reasonable period of time following the date
hereof, SDG will supply the Company with that amount of Loose Diamonds such that
the Company maintains through November 2004 Loose Diamonds with a minimum
aggregate value (based on cash market pricing) of at least Four Million Dollars
($4,000,000);
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(b) Within a reasonable period of time following January 1,
2005, SDG will supply the Company with that amount of Loose Diamonds such that
the Company maintains through November 2005 Loose Diamonds with a minimum
aggregate value (based on cash market pricing) of at least Five Million Dollars
($5,000,000); and
(c) Within a reasonable period of time following January 1,
2006, SDG will supply the Company with that amount of Loose Diamonds such that
the Company maintains through November 2006 Loose Diamonds with a minimum
aggregate value (based on cash market pricing) of at least Six Million Dollars
($6,000,000).
2.2 INSPECTION AND APPROVAL. The Inventory will be inspected and
approved by the Company.
2.3 STOCK BALANCING AND RETURNS. SDG shall comply with reasonable
Inventory stock balancing requests from the Company based on changes in market
conditions and consumer needs. The Company will be permitted to return to SDG
any Loose Stone.
3. PRICES AND COSTS; PAYMENT TERMS
3.1 PRICES AND COSTS. Prices for all Inventory items purchased from SDG
will be cash market prices in effect at the time the order is placed. The
Company shall be responsible for all costs associated with customs, clearance,
duties or similar taxes.
3.2 PAYMENT TERMS. Payment for Inventory shall be due from the Company
within 180 days of delivery.
3.3 RISK OF LOSS. Unless otherwise agreed, risk of loss to the
Inventory shall pass to the Company upon delivery of the Inventory to the
Company, except such loss or damage resulting from any negligent act of SDG or
its agents. If requested by the Company, SDG shall provide the Company with a
certificate of insurance naming the Company as loss payee on any insurance
policy covering the Inventory whereby any losses shall be paid to the Company
and the insured as their interest may appear.
4. RIGHT OF FIRST REFUSAL
In addition to the Minimum Supply Requirements set forth in Section 1.1
above, the Company hereby grants to SDG the right of first refusal to supply to
the Company additional diamonds and jewelry.
5. INFORMATION FROM THE COMPANY AND SDG RESPONSE TIME.
5.1 WEEKLY INFORMATION. On a weekly basis, the Company shall provide to
SDG information that is readily ascertainable by the Company regarding the
Company's sales of: (i) the Inventory; and (ii) diamonds and jewelry supplied by
parties other than SDG.
5.2 QUARTERLY INFORMATION. The Company and representatives from SDG
shall meet once each quarter (the "Quarterly Meeting") and at such meeting the
Company shall provide to SDG information regarding the Company's projected needs
for diamonds and jewelry with respect to quantity, competitive market pricing,
quality and delivery requirements by category (the "Projected Needs Report").
The Projected Needs Report shall be based on the Company's historical and future
expectations of sales by the Company of diamonds and diamond jewelry.
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(1) SDG RESPONSE TO PROJECTED NEEDS REPORT. SDG shall have a reasonable
period of time after each Quarterly Meeting, based on industry
standards, to inform the Company of its intention to provide the
Company with diamonds and diamond jewelry based on the Projected Needs
Report. The Company shall provide to SDG purchase orders for all items
from the Projected Needs Report which SDG agrees to provide (the
"Purchase Orders"). The Company acknowledges that delivery times for
diamonds and jewelry may range between 3 and 10 weeks from the date SDG
receives the Purchase Orders, depending on upcoming SDG sites, cutting
and certification requirements and manufacturing requirements, as the
case may be, unless SDG notifies the Company that such Inventory item
is "in production."
5.3 REPLENISHMENT. If the Company deems it desirable to replenish any
Inventory which has been sold ("Replenished Products") prior to the Quarterly
Meeting, the Company shall offer the right of first refusal to SDG to provide
the Replenished Products at competitive market pricing and on such other terms
as mutually agreed upon by the parties.
6. SEARCH CRITERIA FOR DIAMONDS OFFERED BY THE COMPANY.
Through the Company's websites, the Company offers its users the
opportunity to search for loose stone diamonds based on color, cut, clarity,
approximate carat weight and retail price (collectively, the "Search Criteria").
The Company has and will continue to use its best efforts to ensure that persons
who use the Search Criteria will first be shown offerings of those certain loose
stone diamonds provided to the Company by SDG pursuant to Section 1 of this
Agreement or otherwise, and which are in the possession of the Company (the "SDG
Offerings"). The Company intends to work with SDG to increase the amount of
loose stone diamond offerings that are SDG Offerings. However, if a customer on
the Company's websites chooses to purchase a particular loose stone diamond that
is not a SDG Offering, then the Company shall be free to sell this selection to
such customer.
7. LOOSE STONE DIAMONDS NOT OFFERED ON THE COMPANY'S WEBSITES.
Within 24 hours of the Company receiving a request from a customer for
a loose stone diamond which is not offered on the Company's websites (a
"Non-Website Diamond"), the Company shall provide SDG with the information
regarding its need for the Non-Website Diamond, which information shall include
cut, clarity, color and approximate carat weight and delivery needs. SDG shall
have 24 hours to inform the Company of its intent to provide the Company with
the Non-Website Diamond or a similar diamond, provided howeer, that such diamond
will be provided by SDG at cash market pricing. The Company and SDG acknowledge
that time is of the essence when fulfilling a customer request for a Non-Website
Diamond.
8. AUDIT RIGHTS
Each of the parties hereto shall have the right, upon reasonable notice
to the other, to review the books and records of each party to ensure their
compliance with the terms of this Agreement.
9. MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of New York without regard to principles of conflict of
laws.
9.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the rights and obligations hereunder may not be assigned or delegated by
the SDG or the Company without the prior written consent of the other; provided,
however, that SDG may assign its rights and delegate its
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obligations hereunder, in whole or in part; provided, further, that any such
assignee agrees to be bound by the provisions of this Agreement. The provisions
hereof shall inure to the benefit of, and be binding upon, the successors and
permitted assigns of the parties hereto.
9.3 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, including the Amended Registration Rights Agreement and the Amended
Stockholders' Agreement, and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof.
9.4 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
9.5 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the written consent of the parties hereto. The obligations and rights
of the parties may be waived only by a writing signed by such party.
9.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent or approval of any kind of character on any
party's part of any breach, default or noncompliance under this Agreement, or
any waiver on such party's part of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
9.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
parties at the address set forth on the signature page hereto or at such other
address as the parties may designate.
9.8 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.10 EXPENSES. The Company and the SDG shall each pay its respective
costs and expenses that they incur with respect to the negotiation, execution,
delivery and performance of this Agreement and all of the transactions
contemplated herein.
9.11 SPECIFIC ENFORCEMENT. Any party shall be entitled to specific
enforcement of its rights under this Agreement. Each party acknowledges that
money damages would be an inadequate remedy for its breach of this Agreement and
consents to an action for specific performance or other injunctive relief in the
event of any such breach.
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9.12 ATTORNEY'S FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
ODIMO INCORPORATED, SDG MARKETING, INC.
a Delaware corporation
By: /s/ Alan Lipton By: /s/ Pavlo Protopapa
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Name: Alan Lipton Name: Pavlo Protopapa
Title: President Title: Attorney in Fact
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