Document:

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                                                    EXHIBIT 10.1

[buy.com logo]      SUPPLY AND FULFILLMENT AGREEMENT

     This Supply and Fulfillment Agreement ("Agreement") is effective as of
March 6, 2001 ("Effective Date") by and between Buy.Com Inc., a Delaware
corporation, ("Buy.Com"), and Direct Source Distributing, Inc. a Texas
corporation, ("Distributor").

                                R E C I T A L S

     A. Buy.Com is in the business of operating an Internet superstore through
an e-commerce enabled Web site offering a comprehensive selection of goods
through several specialty stores within its Web site.

     B. Distributor is in the business of distributing and fulfilling products
in the electronics and clearance product categories.

     C. Buy.Com and Distributor desire to enter into this Agreement to provide
the terms upon which Distributor will provide distribution and fulfillment
services to Buy.Com in the electronics and clearance product categories.

                               A G R E E M E N T

     NOW THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

     1.   Development and Operation of the Web Site.  Buy.Com shall create,
          -----------------------------------------
operate and maintain a web site that allows shoppers to browse, select and
purchase electronics and clearance products online (the "Web Site").  Buy.Com
shall be responsible for maintaining the Web Site's front-end and user interface
during the Term.  Buy.Com shall also be responsible for receiving, validating
and executing the purchase transaction associated with product orders placed by
customers of the Web Site.

     2.   Distributor's General Fulfillment Obligations.  Distributor agrees to
          ---------------------------------------------
fulfill and distribute Buy.Com's requirements of all electronics and clearance
products carried in

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       1
<PAGE>

Distributor's inventory that are ordered by Buy.Com on behalf of its customers
(the "Products"). Such distribution and fulfillment shall be performed in
accordance with the terms and conditions of this Agreement and the Buy.Com
Distributor's Operation Manual, attached hereto as Exhibit A (the "Operations
Manual"). Distributor also agrees to provide buying, inventory management,
merchandise planning, fulfillment, shipping, storage and returns services for
the Products as described in this Agreement and in the Operations Manual.

     3.   Products.
          --------

          a.   Product Inventory.  Distributor shall make available to Buy.Com
               -----------------
all of the products that it carries in its inventory from time to time during
the Term.  Upon the Effective Date of this Agreement, Distributor shall maintain
an aggregate of approximately 100 unique SKUs in the product categories listed
on Exhibit B attached hereto.  Distributor shall maintain a SKU selection of
comparable brand quality and breadth within such product categories during the
Term.  In addition, Distributor will use its commercially reasonable best
efforts to expand the current SKU selection within existing product categories
and expand into new product categories of electronics and clearance products
during the Term.  Distributor also agrees to use its commercially reasonable
best efforts to maintain its ability to distribute, and Buy.Com's ability to
resell, products from manufacturers that are currently authorized for resale
over the Internet.  Further, Distributor shall endeavor to cause other vendors
and manufacturers to allow Distributor to distribute, and Buy.Com to resell,
products that are currently unauthorized for resale over the Internet.

          b.  Reserve and Segregated Inventory.  From time to time Buy.Com may
              --------------------------------
identify certain Products to be reserved for Buy.Com subject to the terms and
conditions of the Operations Manual, upon receipt of a buy.com Purchase Order
committing to purchase the Products. Distributor shall reserve such Products for
Buy.Com [***]. In the event it becomes commercially unfeasible to reserve
products, Distributor shall not be obligated to reserve products for Buy.com.

          c.  Priority/Constrained Product.  Distributor shall reserve
              ----------------------------
constrained products for Buy.Com on terms that are [***] in accordance with the
terms of the Operations Manual.  In addition, Distributor shall support any
allocation of inventory designated by particular manufacturers to be received by
Buy.Com.  Buy.Com shall not be limited with respect to the quantity of advanced
orders that it places with Distributor for such constrained products.

          d.  Markdowns.  Distributor shall offer Buy.Com various products
              ---------
during the Term at prices [***].

          e.  Product Information.  Distributor shall provide timely, accurate
              -------------------
and properly formatted Product pictures, images, literature, descriptions,
vendor links, price information, product reviews and all other content that
Distributor has, or receives from time to time during the Term, for the Products
to allow for "live" posting on the Buy.Com site (the "Product Information").
The Product Information, including updated Production Information, shall be free
of charge to Buy.Com.  Such materials shall be updated regularly as provided in
the Operations Manual.  All Product information shall be maintained and updated
by Distributor on

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       2
<PAGE>

an individual SKU basis. Where available, Distributor will provide Buy.Com with
the manufacturer's suggested retail price, along with any product information
and marketing materials that Distributor has received. Distributor has all
rights and licenses necessary to permit Buy.Com to use and display such Product
Information and materials on the Web Site and to market, resell and distribute
such Products to its customers, including without limitation, all rights and
licenses necessary with respect to the use and display of the Product
Information and brand names, logos and trademarks of the applicable
manufacturers and suppliers of the Products.

          f.   Product Database.  Distributor shall provide to Buy.Com a
               ----------------
database, maintained and updated by Distributor, in accordance with the
specifications of the Operations Manual (the "Product Database").  The Product
Database shall contain information regarding all of the products that
Distributor carries in its inventory from time to time during the Term.  Such
information shall include, without limitation, SKU numbers, product
availability, catalog product descriptions, pricing and such other information
as Buy.com shall reasonably request.  Distributor shall update this information
in accordance with the terms of the Operations Manual.  Such updates shall
include, without limitation, the addition of SKU numbers and other information
for added SKUs, the removal of SKU numbers and other information for unavailable
SKUs (including predictive measurements for availability), revised SKU
availability, updated product descriptions, pricing and other information that
is reasonably required by Buy.Com.

          g.   SKU Management.  Distributor shall provide SKU management for SKU
               --------------
bundling, promotional SKUs and SKU substitution in accordance with the terms of
the Operating Manual.

          h.   Distributor/Dealer Status.  In discussions with manufacturers and
               -------------------------
vendors, the parties will cooperate to establish distributor status for
Distributor and Authorized Dealer status for Buy.Com.

     4.   License.
          -------

          a.   License to Product Information and Product Database.  Distributor
               ---------------------------------------------------
grants to Buy.Com, a fully-paid, nontransferable, nonexclusive license for the
Term of this Agreement to use and distribute or display the Product Information
and the Product Database in connection with the promotion and sale of Products.

     5.   Order Processing.
          ----------------

          a.   Order Submittal.  Buy.Com's purchase orders for Products shall be
               ---------------
submitted to Distributor electronically via EDI, or otherwise in accordance with
the procedures set forth in the Operations Manual. Distributor shall maintain
EDI capability in accordance with the Operations Manual in order to receive,
process, confirm and record product orders in the time frame established in the
Operations Manual. All purchase orders issued under this Agreement shall be
subject to the terms and conditions of the Operations Manual.

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       3
<PAGE>

          b.   Distributor's Order Confirmation.  Distributor  shall confirm its
               --------------------------------
receipt of Product orders and provide such other information as is required by
the Operations Manual.

          c.   Distributor's Technical Standards.  Distributor shall maintain
               ---------------------------------
EDI capability during the Term and process transactions according to the
specifications set forth in the Operations Manual.  Distributor shall also
maintain the other technical standards set forth in the Operations Manual.

     6.   Order Fulfillment.  In addition to the general terms of this
          -----------------
Section 6, service level requirements for order fulfillment shall also be
governed by the terms of the Operations Manual.

          a.   Fulfillment Undertaking.  Distributor shall provide order
               -----------------------
fulfillment (picking, packing and shipping) for Buy.Com customers who purchase
Products from the Web Site.  Distributor  shall assemble, package and ship all
orders in accordance with the specifications of the Operations Manual.  Orders
will be packaged with no reference to Distributor  and, whenever practicable,
Distributor will package and ship SKUs in a single order together.

          b.   Common Carriers. All shipments will be made using Distributor-
               ---------------
approved carriers, among which includes, without limitation, UPS, USPS and
Federal Express.  Distributor shall specify by written notice to Buy.Com the
carriers that are approved and the types of service to be offered.  Distributor
shall ship in accordance with the type of delivery specified in each customer's
order, or as otherwise specified in the Operations Manual.  Any upgrades in
shipment from that specified by the customer will be without any additional
charge to Buy.Com or the customer.  Distributor will also negotiate with each
carrier to receive the latest pull times available in order to provide same day
shipment on the maximum number of orders.

          c.   Risk of Loss.  All Shipments under this Agreement shall be F.O.B.
               ------------
Distributor's shipping facility.  Title and risk of loss shall pass to Buy.Com
upon Distributor's delivery of the Product to the common carrier at the point of
shipment.  Buy.Com and/or the shipper shall be responsible for damage and loss
of the Product during shipment to the Customers. In the event of shipping damage
or orders lost during shipment, Distributor will use commercially reasonable
efforts to process, on Buy.com's behalf, freight claims associated with lost or
damaged Products.

          d.   Shipping.  Distributor shall ship orders with Buy.Com packing
               --------
slips, invoices and labels and with no reference to Distributor, and otherwise
in accordance with the Operations Manual.  Unless otherwise specified, Products
shall be prepared for shipment and shipped in a manner which is:  (1) in
accordance with good commercial practice, (2) acceptable to the customer's
specified shipper, and (3) adequate to insure safe arrival of the Product at the
destination.  Other Distributor requirements for shipping are described in the
Operations Manual.

          e.   Inventory Warehouse.  Distributor's inventory shall be maintained
               -------------------
at facilities owned or controlled by Distributor.  Distributor shall be
responsible for warehousing, at its own expense, all products sold through the
Web Site.

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       4
<PAGE>

          f.   Communications and Reports.  All Product orders transmitted by
               --------------------------
Buy.Com to Distributor and all confirmations of Product orders, shipments and
reports transmitted by Distributor shall be provided in a form reasonably
acceptable to Buy.Com and shall be communicated electronically via EDI in
accordance with the Operations Manual.  Both parties will endeavor to maximize
their communication link up with the joint goal of attaining "real time" and
positive operational efficiencies.  This includes, but is not limited to,
inventory availability, order processing, order status, shipment tracking,
pricing and accounting, and such other communications as may be expanded per the
Operations Manual.  Distributor shall transmit to Buy.Com, via EDI, the reports
required pursuant to the Operations Manual.

          g.   Operations Manual.  The Operations Manual for Buy.Com's
               -----------------
Distributors is subject to change at Buy.Com's sole discretion, provided that no
such change shall materially increase the operational or economic obligations of
Distributor hereunder without Distributor's consent; changes will be
incorporated with prior notification and discussion with Distributor.  Changes
will be oriented to improve operational efficiencies and to obtain "real time"
communication.

          h.   Customer Service/Account Support.  Buy.Com shall be responsible
               --------------------------------
for providing customer support to customers of the Web Site.  Subject to the
terms of the Operation Manual, Distributor shall provide to Buy.Com Product
inventory levels and availability, order and shipping confirmation, order
tracking information as made available to Distributor by the common carrier, and
such other Product and order information that is commercially reasonably
available to Distributor.

          Distributor shall designate an account manager that is responsible for
the oversight of the business relationship between Buy.Com and Distributor, the
management of the dedicated customer service representatives and any performance
and service issues that may arise during the Term as set forth in the Operations
Manual.

     7.   Returns.  The product return policy and process is set forth in the
          -------
Operations Manual.

     8.   Customer Data.  All information and other data collected from
          -------------
customers' use of the Web Site and the placement of orders shall be the
exclusive property of Buy.Com and Confidential Information of Buy.Com under
Section 20 of this Agreement.  Such information and data shall not be provided
or disclosed to Distributor except as reasonably necessary to perform its
obligations under this Agreement and may be used by Distributor only as
reasonably necessary to perform its obligations under this Agreement.

     9.   Export of Products.  The distribution and fulfillment of
          ------------------
Distributor's product inventory shall take place within the United States and
may include other international territories that the parties shall mutually
agree during the Term.  Distributor shall grant Buy.Com the necessary export
rights and provide the necessary capability to fulfill international orders
during the Term in accordance with the Operations Manual.

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       5
<PAGE>

     10.   Prices and Payment.
           ------------------

           a.   Product Prices.
                --------------

                (i)   The prices at which Buy.Com purchases Product from
Distributor is, and shall continue to be, [***].

                (ii)  Distributor shall credit to Buy.Com any funds received by
Distributor from their product vendors upon the satisfaction of vendor rebate
programs; provided however, that Buy.Com shall only be entitled to receive a
percentage of such vendor rebates equal to [***].

                (iii) All prices are in U.S. dollars and do not include
applicable U.S. federal or state sales or use taxes, which shall be included in
Customer invoices and shall be the responsibility of Buy.Com for the applicable
Product shipment.

           b.   Shipping Costs.  Shipping rates for Buy.Com shall be as [***],
                --------------
and will include detail on an order by order basis.  Buy.Com will set shipping
prices to be charged to customers.  Buy.Com will be credited with any rebates
received by Distributor for volume discounts, claim refunds and time in transit
refunds.

           c.   Payment.  Distributor will invoice Buy.Com for the Products and
                -------
all shipping costs incurred each day.   Invoices and credits received during
dated from the 1st to the 15th of each month will accumulated by Buy.com and the
aggregate total will be due and payable net on the 1st day of the month
following the invoice date.  Invoices and credits received during dated from the
16th  to the end of each month will accumulated by Buy.com and the aggregate
total will be due and payable net on the 15th day of the month following the
invoice date.  All payments shall be by check or wire transfer to Distributor's
account at [***] Distributor may designate.  All payments by check shall be
deemed to have been paid on the postmark date upon which such payment was sent
to Distributor.

           d.   Records/Audit Rights.  Distributor shall keep and maintain
                --------------------
detailed and accurate books and records with regard to shipping costs and the
Operations Manual at such address(es) as it shall notify Buy.Com of in writing
from time to time.  Buy.Com or its representatives shall be entitled to review
and audit such books and records and/or compliance with the terms of this
Agreement during normal business hours upon reasonable notice to Distributor, as
applicable, and copy pertinent materials from such books and records relating to
the audit.

     11.   Distributor Representations and Warranties.  Distributor represents
           ------------------------------------------
and warrants to Buy.Com:

           a. that it has the rights and licenses (including without limitation
appropriate sublicense rights) necessary to permit Buy.Com to market, resell,
and distribute the Products via the Web Site, and to use, display and distribute
the Product Information and Product

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       6
<PAGE>

Database and such other product materials, images, and information and related
logos, product and brand names and trademarks of the applicable Product
manufacturers and suppliers;

           b.   that the manufacturers and vendors of the Products do not
prohibit Buy.Com from allowing the resale of such Products via the Internet;

           c.   that the Product Information and the Product Database as
delivered to Buy.Com shall not (i) infringe any intellectual property rights of
any person or any rights of publicity, personality, or privacy of any person;
(ii) violate any law, statute, ordinance, or regulation (including without
limitation, the laws and regulations governing export control, unfair
competition, anti-discrimination, consumer protection, or false advertising);
(iii) be defamatory, libelous or trade libelous, unlawfully threatening, or
unlawfully harassing; (iv) be obscene, pornographic, or indecent; (v) violate
any community or Internet standard; or (vi) contain any inaccuracies with regard
to the descriptions, prices and availability of the Products.

           d.   that (i) it has the full authority and legal right to carry out
the terms of this Agreement; (ii) it has taken all action necessary to authorize
the execution and delivery of this Agreement; (iii) this Agreement is a legal,
valid, and binding obligation of Distributor and Buy.Com as the case may be,
enforceable in accordance with its terms, except as limited by bankruptcy and
other laws of general application relating to or affecting the enforcement of
creditors' rights; and (iv) it has not entered into and is not currently a party
to any agreement that conflicts with the terms of this Agreement;

           e.   that the Products (i) shall be free and clear of all liens and
encumbrances, (ii) shall be free from defects (including without limitation in
workmanship, material, manufacture and design), and (iii) will comply with the
requirements of the orders placed by customers of the Web Site.

     12.   Buy.Com Representations and Warranties.  Buy.Com represents and
           --------------------------------------
warrants that (i) it has the full authority and legal right to carry out the
terms of this Agreement; (ii) it has taken all action necessary to authorize the
execution and delivery of this Agreement; (iii) this Agreement is a legal,
valid, and binding obligation of Distributor and Buy.Com as the case may be,
enforceable in accordance with its terms, except as limited by bankruptcy and
other laws of general application relating to or affecting the enforcement of
creditors' rights; and (iv) it has not entered into and is not currently a party
to any agreement that conflicts with the terms of this Agreement

     13.   Year 2000 Compliance.  Each party represents and warrants that its
           --------------------
data and information systems used in the performance of its obligations
hereunder are Year 2000 Compliant. For purposes of this Agreement, "Year 2000
Compliant" shall mean that a party's data and information systems have not been
materially affected by any inability to, individually and in combination,
completely and accurately address, present, produce, store and calculate data
involving dates before, on or after January 1, 2000.

     14.   Indemnification.  Distributor agrees to indemnify and defend Buy.Com
           ---------------
and its customers against, and hold Buy.Com and its customers free and harmless
from, any and

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       7
<PAGE>

all loss, damage, settlement or expense (including legal expenses), as incurred,
resulting from or arising out of any breach of any of Distributor's
representations and warranties in Section 11 or otherwise with respect to the
distribution and sale of any of the Products, the use thereof or any Product
defects; provided that Buy.Com immediately notifies Distributor, in writing, of
any notice or claim of such loss, damage or expense involving the Products of
which it becomes aware, and permits Distributor to control, in a manner not
adverse to Buy.Com, the defense, settlement, adjustment or compromise of any
such claim using counsel reasonably acceptable to Buy.Com. Distributor may
employ counsel, at its own expense to assist it with respect to any such claim.
Distributor shall carry and maintain insurance coverage satisfactory to Buy.Com
to cover the above.

     15.   Mutual Liability Limitation.  UNDER NO CIRCUMSTANCES WILL EITHER
           ---------------------------
PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, PUNITIVE, INCIDENTAL OR
CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT.

     16.   Quarterly Review.  The parties agree to meet in person or by
           ----------------
teleconference at the beginning of every quarter to discuss (i) market trends,
(ii) new products, (iii) revisions of existing products, (iv) special
promotions, as well as (v) Buy.Com's evaluation of the quality and timeliness of
Distributor's performance.  Distributor's performance with respect to the
following criteria:  headcount support for customer service, inventory planning,
merchandising, the Product Information and Product Database, technology
upgrades, manufacturer relationships, data quality, fulfillment rate and order
turnaround time.  Additional meetings and/or discussions will be conducted as
necessary to achieve the incentive goals.

     17.   Term and Termination.
           --------------------

           a.   Unless terminated earlier as provided herein, this Agreement
shall have a term of one (1) year from the Effective Date, and shall be
automatically renewed for up to five (5) additional one (1) year periods after
the initial term, unless either party is otherwise notified by the other in
writing at least thirty (30) days prior to the applicable anniversary date of
the Effective Date of this Agreement.  If the parties continue to do business
with each other after such termination or after the expiration of the above term
without full documentation, the relevant terms hereof will continue to govern
the relationship unless otherwise expressly agreed in writing and except that
the relationship may be terminated unilaterally by either party upon thirty (30)
days written notice to the other.

           b.   Termination for Cause.  This Agreement may be terminated by a
                ---------------------
party for cause immediately by written notice upon the occurrence of any of the
following events:

                (i) If the other ceases to do business, or otherwise
terminates its business operations; or

                (ii) If the other shall fail to promptly secure or renew any
license, registration, permit, authorization or approval for the conduct of its
business in the manner contemplated by this Agreement or if any such license,
registration, permit, authorization or

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       8
<PAGE>

approval is revoked or suspended and not reinstated within sixty (60) days and
the foregoing has a material adverse effect on either party's ability to perform
its obligations hereunder on the other party; or

                (iii) If the other materially breaches any material provision of
this Agreement and fails to cure such breach within thirty (30) days of written
notice describing the breach; or

                (iv)  If the other becomes insolvent or seeks protection under
any bankruptcy, receivership, trust deed, creditors arrangement, composition or
comparable proceeding, or if any such proceeding is instituted against the other
(and not dismissed within 90 days).

           c.   Each party understands that the rights of termination hereunder
are absolute.  Neither party shall incur any liability whatsoever for any
damage, loss or expenses of any kind suffered or incurred by the other (or for
any compensation to the other) arising from or incident to any termination or
expiration of this Agreement by such party which complies with the terms of the
Agreement whether or not such party is aware of any such damage, loss or
expenses.

           d.   In the event of any termination or expiration, (i) Distributor
shall continue to fulfill any orders then pending and (ii) Distributor shall
continue to handle and process any returns of Products it receives from
customers for a period of ninety (90) days after the effective date of such
termination.

           e.   Termination is not the sole remedy under this Agreement and,
whether or not termination is effected, all other remedies will remain
available.

           f.   In addition to any provisions that survive termination or
expiration according to their terms and payment obligations, the following
sections shall survive termination or expiration of this Agreement:  Sections 7,
8, 10, 11, 12, 14, 15, 17, 20-31.

     18.   Insurance. Distributor agrees to maintain insurance, of at least $2
           ---------
million, at its sole cost and expense, against loss or damage by fire or other
casualty to the Product inventory or other assets in the possession at any time
of Distributor, against any loss arising from any business interruption or other
Distributor outages, and against any claims and liability growing out of either
product liability, advertising liability or trademark or service mark, patent or
copyright infringement with respect to such Product inventory, the Product
Information or the Product Database or other assets. Distributor, at Buy.Com's
request, shall provide a Certificate of Insurance for the Distributor reflecting
such coverage. Distributor agrees to maintain at all times during the Term
insurance coverage on its distribution facilities at reasonable levels.
Distributor shall name Buy.com as an additional Insured under its applicable
insurance policies.

     19.   Assignment.  This Agreement may not be assigned by either party
           ----------
without the prior written consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, (a) either party may
assign this Agreement, upon notice to, and without the consent of the other
party, to any person or entity that acquires the assignor's business or
substantially all of the assignor's assets by merger, stock sale, or other means
provided that the assignee is capable of performing assignor's obligations under
this Agreement,

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       9
<PAGE>

provided that any assignee of Distributor cannot be reasonably deemed a
competitor of Buy.Com. Any attempted assignment in violation of this Section 20
shall be void.

     20.   Confidentiality.  Buy.Com and Distributor acknowledge that, in the
           ---------------
acquire information, identified as confidential, about the other party, its
business activities and operations, its technical information and trade secrets,
of a highly confidential and proprietary nature, including without limitation,
marketing records and plans, forecasts and strategies, merchandising records,
customer records and mailing lists, cost structures, allocation and pass through
procedures, staffing levels, systems information, technology, technical
information, know-how, computer programs, and general financing and business
plans and information (all such information relating to Buy.Com or Distributor
being "Confidential Information" and the party to whom such Confidential
Information relates being the "Proprietary Party").  Each party will hold the
other party's Confidential Information in strict confidence and will use
reasonable precautions to prevent the unauthorized disclosure or access to the
other party's Confidential Information.  Each party shall employ at least those
precautions that such party employs to protect its own confidential or
proprietary information.  Distributor and Buy.Com agree that each will not,
during the Term hereof or thereafter and unless otherwise instructed by the
Proprietary Party in writing, (i) divulge, furnish, disclose, or make accessible
to any third party (other than directors, officers, employees, agents, advisors
and potential investors of either party thereto) any of the other's Confidential
Information; provided however, that each party may disclose Confidential
Information or other information regarding this Agreement for which disclosure
is required by the Securities and Exchange Commission; or (ii) make use of any
of the other's Confidential Information, other than as reasonably necessary for
performance under this Agreement; provided however, that Confidential
Information shall not include any information which (i) at the time of
disclosure by the other party or thereafter is generally available to and known
by the public other than through any action or inaction of such party, (ii) was
available to the other party on a non-confidential basis from a source other
than the Proprietary Party, provided that such source is not bound by a
confidentiality agreement, or contractual or fiduciary obligation with the
Proprietary Party, or (iii) has been independently acquired or developed by the
other party by persons without access to such information and without use of any
Confidential Information of the Proprietary Party, and without violating any
obligations under this Agreement, or of any other agreement between Buy.Com and
Distributor.  Each party, with prior written notice to the Proprietary Party,
may disclose such Confidential Information to the minimum extent possible that
is required to be disclosed to a governmental entity or agency in connection
with seeking any governmental or regulatory approval, or pursuant to the lawful
requirement or request of a governmental entity or agency, provided that
reasonable measures are taken to guard against further disclosure, including
without limitation, seeking appropriate confidential treatment or a protective
order, or assisting the other party to do so.

     21.   Notices.  Any notice or other communication required or permitted
           -------
to be made or given to either party under this Agreement shall be deemed
sufficiently made or given on the date of delivery if delivered in person, by
facsimile, or by overnight commercial courier service with tracking capabilities
with costs prepaid, or three (3) days after the date of mailing if sent by
certified first class U.S. mail, return receipt requested and postage prepaid,
at the address

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       10
<PAGE>

of the parties set forth below or such other address as may be given from time
to time under the terms of this notice provision.

          If to Distributor:

              Direct Source Distributing, Inc.
              1800 Waters Ridge Drive
              Suite 400
              Lewisville, TX  75057
              Attn: Paul Grout
              Fax Number (214) 488-3196

          With a copy to:

              Direct Source Distributing, Inc.
              1800 Waters Ridge Drive
              Suite 400
              Lewisville, TX  75057
              Attn: General Counsel
              Fax Number (214) 488-3196
              General Counsel

          If to Buy.Com:

              Buy.Com Inc.
              85 Enterprise
              Aliso Viejo, CA  92656
              Fax: (949) 389-2840
              Attn:  Brent Rusick

          With a copy to:

              Buy.Com Inc.
              85 Enterprise
              Aliso Viejo, CA  92656
              Fax: (949) 389-2840
              Attn:  General Counsel

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       11
<PAGE>

     22.   Controlling Law and Jurisdiction.  This Agreement shall be governed,
           --------------------------------
of California and the United States, without regard to the conflicts of laws
provisions thereof. Unless waived by Buy.Com (which it may do in its sole
discretion) the exclusive jurisdiction and venue of any action with respect to
the subject matter of this Agreement shall be the Superior Court of California
for the County of Orange or the United States District Court for the Central
District of California and each of the parties hereto submits itself to the
exclusive jurisdiction and venue of such courts for the purpose of any such
action. Service of process in any such action may be effected in the manner
provided in Section 21 for delivery of notices.

     23.   Waivers and Amendments.  Except as otherwise expressly provided
           ----------------------
herein, any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or any particular
instance and either retroactively or prospectively) only with the written
consent of the parties.  However, it is the intention of the parties that this
Agreement be controlling over additional or different terms of any order,
confirmation, invoice or similar document, even if accepted in writing by both
parties, and that waivers and amendments shall be effective only if made by non-
pre-printed agreements clearly understood by both parties to be an amendment or
waiver.

     24.   Severability.  In the event that any provision of this Agreement
           ------------
shall be unenforceable or invalid under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity shall only apply
to such provision and shall not render this Agreement unenforceable or invalid
as a whole; and, in such event, such provision shall be modified or interpreted
so as to best accomplish the objective of such unenforceable or invalid
provision within the limits of applicable law or applicable court decision and
the manifest intent of the parties hereto.

     25.   Relationship of the Parties.  The parties hereto expressly
           ---------------------------
understand and agree that the other is an independent contractor in the
performance of each and every part of this Agreement, is solely responsible for
all of its employees and agents and its labor costs and expenses arising in
connection therewith.  This Agreement does not make either party the employee,
agent or legal representative of the other.

     26.   Complete Agreement.  This Agreement (and all Exhibits hereto)
           ------------------
constitutes the entire understanding and agreement with respect to the subject
matter hereof and supersedes all proposals, oral or written, all negotiations,
conversations, or discussions between or among the parties relating to the
subject matter of this Agreement and all past dealing or industry custom.

     27.   No Third-Party Beneficiaries.  The parties do not intend, nor shall
           ----------------------------
any clause be interpreted, to create under this Agreement any obligations or
benefits to, or rights in, any third party from either Buy.Com of Distributor.

     28.   Publicity.  Neither party shall issue any press release
           ---------
regarding this Agreement or otherwise disclose the existence or terms of this
Agreement without the prior

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       12
<PAGE>

written consent of the other party except to the extent such disclosure is
required by law and only if the disclosing party provides reasonable prior
notice to the other party of the disclosure.

     29.   Headings.  Section headings are for reference only and shall not
           --------
affect the interpretation of this Agreement.

     30.   Successors in Interest.  This Agreement and all of the provisions
           ----------------------
the successors in interest and assigns of the parties.

     31.   Counterparts.  This Agreement may be executed in any number of
           ------------
separate counterparts each of which when executed by and delivered to the other
party shall be an original as against the party whose signature appears thereon,
but all such counterparts shall together constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons duly authorized as of the date and year first above written.

                                    BUY.COM INC.

                                    By  /s/ Brent Rusick
                                       -----------------------------------------

                                    Name  Brent Rusick
                                         ---------------------------------------

                                    Title  SVP Operations and Technology
                                          --------------------------------------

                                    DISTRIBUTOR

                                    By  /s/ Paul Grout
                                       -----------------------------------------

                                    Name  Paul Grout
                                         ---------------------------------------

                                    Title  President, Direct Source Distributing
                                          --------------------------------------

[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       13<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                                                    EXHIBIT 10.2

                   Technology and Trademark License Agreement

          This Technology and Trademark License Agreement ("Agreement") is
entered into as of March 7, 2001 ("Effective Date") by and among Buy.Com Inc.,
a Delaware corporation ("Buy.Com"), Buy.Com UK Limited, a company registered
under the laws of England and Wales ("Licensee"), and John Lewis plc, a company
registered under the laws of England and Wales, as the guarantor of Licensee's
and each Sublicensee's payment obligations hereunder ("Guarantor").

          WHEREAS, Buy.Com owns and operates an Internet superstore and, in
connection therewith, Buy.Com has developed and uses the Licensed Technology,
and Buy.Com is the owner of the Buy.Com Marks; and

          WHEREAS, Licensee desires to obtain, and Buy.Com desires to grant to
Licensee a license to use the Licensed Technology and Buy.Com Marks, on the
terms and conditions specified herein.

          WHEREAS, in order to induce Buy.Com to grant the aforementioned
license to Licensee, and in consideration thereof, Guarantor has agreed to
guaranty the payment obligations of Licensee and all Sublicensees.

          NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and intending to be legally bound, the Parties
hereto mutually agree as follows:

1.   DEFINITIONS.

     1.1   "Acquisition Agreement" means that certain Acquisition Agreement
entered into by and between Buy.Com and JLP Victoria Limited, dated concurrent
herewith.

     1.2   "Affiliate" means any company or other entity that controls, is
controlled by or is under common control with the applicable company or other
entity.

     1.3   "Best Efforts" means that Licensee must in continuing fashion during
regular business hours focus a substantial material amount of its energy,
attention and resources on efforts to achieve the referenced result as
expeditiously as possible.  Notwithstanding the foregoing, Licensee shall not be
obligated to expend such energy, attention and resources in an amount equal to
or in excess of that which would materially adversely effect the business
operations of Licensee.

     1.4   "Buy.Com Marks" means the trademarks, service marks, trade names,
logos, brands, domain names and other marks of Buy.Com listed in Exhibit B, and
                                                                 ---------
all variants and derivatives thereof including, but not limited to, foreign
language equivalents, transliterations, visual and phonetic equivalents and
truncated forms, as used in connection with Licensee Business.

<PAGE>

     1.5   "Change in Control" means with respect to the referenced Primary
Party, a transaction or series of related transactions that results in (a) a
sale of all or substantially all of the assets of the Primary Party or (b) the
sale or transfer of fifty percent (50%) or more of the outstanding voting power
of the Primary Party to a single buyer or group of persons or other entities
acting in concert.

     1.6   "Confidential Information" means (i) information presented in
printed, written, graphic or photographic or other tangible form and marked as
"proprietary," "confidential" or similar words, and (ii) information presented
in oral form and identified as confidential at the time disclosed and confirmed
in a written summary of such information marked as confidential within thirty
(30) days of such oral disclosure.  Confidential Information does not include
information that (i) is in or enters the public domain without breach of this
Agreement, (ii) the receiving Primary Party lawfully receives from a third party
without restriction on disclosure and without breach of a nondisclosure
obligation or (iii) the receiving Primary Party can demonstrate that it knew
without restriction prior to receiving such information from the disclosing
Primary Party, or that it developed independently without reference to such
information.

     1.7   "Exclusivity Period" means the period of time during which the
Technology License is an exclusive license under the terms and conditions of
this Agreement.

     1.8   "Gross Revenue" means the total gross receipts generated from all
orders for products and/or services placed directly by customers through any and
all Licensee Sites.  All customer orders placed through any other means,
including, without limitation, through offline voice communications via the
telephone, shall not be deemed Gross Revenue under this Agreement.

     1.9   "Independent Contractor" has the meaning set forth in Section 6.2.
                                                                 -----------

     1.10  "Licensee Business" means with respect to the referenced entity
(whether Licensee or a Sublicensee), the business owned by the entity for the
purchase and sale of goods and related services to customers who take delivery
within the Territory using interfaces that are solely in the English language,
and the associated marketing and related business programs conducted by the
entity in the English language within the Territory, and related business
transactions performed by and between the entity and its respective vendors,
suppliers, distributors and other agents.  Notwithstanding the foregoing, no
Licensee Business shall include any activities involving the operation of life
support machines, weapons systems, aircraft navigation or communication systems,
air traffic control, nuclear facilities or any other environment requiring fail-
safe performance in which any failure or delay in performance could lead to
death, personal injury or severe physical or environmental damage.

     1.11  "Licensed Technology" means (i) the software and other technology (in
object code and Source Code) listed on Exhibit A-1 and any other related
                                       -----------
technology provided by Buy.Com to Licensee prior to the Effective Date, (ii) any
related specifications, manuals and documentation, in any medium, and (iii) all
Upgrades that Buy.Com provides to Licensee under this Agreement.

                                       2
<PAGE>

     1.12   "Licensee Modification" means any Modification or series of
Modifications of the Licensed Technology that (i) has been/have been/is/are
developed by Licensee and/or any Sublicensee or by any third party (other than
Buy.Com) on behalf of Licensee and/or any Sublicensee based in whole or in part
on the Licensed Technology and/or on other Modifications thereto, (ii)
constitute(s) a new version of a component of the Licensed Technology and (iii)
offer(s) enhancements in or corrections to the functionality or features of that
component; together with any related documentation.

     1.13   "Licensee Sites" means each and every Licensee and Sublicensee
Website through which customer orders of products and/or services are processed
using software and technology that includes:  (i) the E-Commerce Engine and
Database Technology components of the Licensed Technology, as identified in

Exhibit A-1, and/or any Modifications thereof; and/or (ii) the Order Processing
-----------
component of the Licensed Technology, as identified in Exhibit A-1, and/or any
                                                       -----------
Modifications thereof.

     1.14   "Licensee Technology" means (i) all software that is owned, acquired
or licensed by Licensee and/or any Sublicensee during the term of this Agreement
from parties other than Buy.Com, (ii) the related specifications, manuals and
documentation made available by Licensee and/or any Sublicensee, in any medium,
and (iii) all Modifications thereto.

     1.15   "Modification" means, with respect to the referenced software or
technology, a modification, change, enhancement, conversion, revision, update,
upgrade, extension or improvement thereto or derivative work thereof.

     1.16   "Net Revenue" means the total Gross Revenue, less only the
following: (i) applicable Value Added Taxes; (ii) verifiable and documented
credits for any such products that are returned to Licensee or any Sublicensee
or charged back to Licensee or any Sublicensee, provided such credits are given
only in the ordinary course of business; and (iii)  administrative costs
incurred by Licensee and Sublicensees in processing such credits.

     1.17   "Party" means Licensee, Buy.Com or Guarantor and "Parties" means
Licensee, Buy.Com and Guarantor.

     1.18   "Personal" means, with respect to and as one of the limitations on
the Technology License and Trademark License granted to the referenced entity,
the entity may use the Licensed Technology and Buy.Com Marks licensed thereunder
only for its own business purposes and not those of any third party.

     1.19   "Primary Party" means Licensee or Buy.Com only and "Primary Parties"
means Licensee and Buy.Com only.

     1.20   "Proprietary Rights" means all patent rights, copyright rights,
trademark rights, trade secret rights, sui generis database rights, rights of
publicity, rights of privacy, moral rights and other intellectual property or
proprietary rights anywhere in the world.

                                       3
<PAGE>

     1.21   "Royalty Period" means the period of time that commences [***]
unless terminated earlier in accordance with Section 2.8.
                                             -----------
     1.22   "Service Agreement" means that certain Service Agreement entered
into by and between Buy.Com and Licensee, dated concurrent herewith.

     1.23   "Source Code" means with respect to the referenced software, the
source code for that software.

     1.24   "Sublicensee" means (i) Guarantor upon its execution of a Sublicense
Agreement with Licensee in accordance with Section 2.9 or (ii) any Subsidiary
                                           -----------
who has executed a Sublicense Agreement in accordance with Section 2.9.
                                                           -----------

     1.25   "Subsidiary"  means any subsidiary that is directly or indirectly
wholly-owned by Guarantor.

     1.26   "Supply Partner" has the meaning set forth in Section 6.1.
                                                          -----------

     1.27   "Technology License" has the meaning set forth in Section 2.1.
                                                              -----------

     1.28   "Territory" means the United Kingdom and the Republic of Ireland.

     1.29   "Third Party Software" has the meaning set forth in Section 2.4.
                                                                -----------

     1.30   "Trademark License" has the meaning set forth in Section 4.1.
                                                             -----------

     1.31   "Upgrade" means any Modification or series of Modifications of the
Licensed Technology that (i) is/are developed by Buy.Com after the Effective
Date based in whole or in part on the Licensed Technology and/or on Licensee
Modifications, (ii) constitute(s) a new version of a component of the Licensed
Technology, (iii) offer(s) enhancements in or corrections to the functionality
or features of that component; together with any related documentation, and (iv)
is/are not developed at the specific direction and expense of Licensee under the
Service Agreement or otherwise.

     1.32   "Upgrade Contact" has the meaning set forth in Section 2.6.
                                                           -----------

2.   TECHNOLOGY LICENSE.

     2.1   License Grant.  Subject to the terms and conditions of this
           -------------
Agreement, during the term of this Agreement, Buy.Com hereby grants Licensee a
Personal, non-transferable (subject to Section 14.3) license solely within the
                                       ------------
Territory to (i) install, use, reproduce (subject to Section 2.7), publicly
                                                     -----------
display, publicly perform, digitally perform and create derivative works of the
Licensed Technology, and integrate the Licensed Technology with the Licensee

---------------------------
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       4
<PAGE>

Technology, solely for the purpose of conducting its Licensee Business, (ii)
develop and integrate into the Licensed Technology any Licensee Modifications
that are made in accordance with the requirements of Section 3, solely for the
                                                     ---------
purpose of conducting its Licensee Business, and (iii) support and maintain the
Licensed Technology, as integrated with the Licensee Technology, solely for the
purpose of conducting its Licensee Business  ("Technology License").  Licensee's
rights under the Technology License may not be sublicensed without the prior
written approval of Buy.Com, except as otherwise expressly permitted under
Sections 2.9, 6.1 and 6.2.
-----------------     ---

     2.2   Limited Exclusivity.  The Technology License shall be exclusive
           -------------------
(including with regard to Buy.Com) for a period of ten (10) years following the
Effective Date (subject to Sections 2.8 and 6.6) and thereafter non-exclusive.
                           -------------    ---

     2.3   Scope of License.  To the extent that the Licensed Technology is
           ----------------
based on, or incorporates, or is an improvement or derivative of, or cannot be
reasonably installed, used, modified, maintained, supported, reproduced or
displayed without using or violating other technology or Proprietary Rights
owned by Buy.Com and not expressly included in the definition of Licensed
Technology, subject to Section 2.6, such rights and technology shall nonetheless
                       -----------
be deemed part of the Licensed Technology and subject to the Technology License.

     2.4   No Third Party License.  The Technology License does not include the
           ----------------------
right to use any third party software, firmware, operating platform, tools or
other product, or the Proprietary Rights of any third party.  Licensee is solely
responsible for its selection, purchase, license, installation and use of any
third party products required in connection with Licensee's use of the Licensed
Technology, at Licensee's sole cost.  The third party software and other
products that the Licensed Technology is intended to function with are listed on
Exhibit A-2, as such schedule is amended from time to time by Buy.Com in its
-----------
discretion ("Third Party Software").  Buy.Com agrees to provide Licensee
reasonable assistance in securing licenses for Licensee to use the Third Party
Software in connection  with the Licensee Business owned by Licensee.

     2.5   Licensee Business.  Subject to the right to sublicense granted in
           -----------------
Section 2.9, Licensee may use the Licensed Technology only for its own business
-----------
purposes (and not those of any other Affiliate or other third party) and only
for conducting its Licensee Business within the Territory, except for such
incidental use that is permitted under Section 6.6.  Except as otherwise
                                       -----------
expressly provided herein, the Technology License does not permit Licensee to
distribute or otherwise transfer to any third party or use on behalf of any
third party, on a temporary or any other basis, any portion of the Licensed
Technology or any derivative work thereof.

     2.6   Upgrades.  For no additional charge, Buy.Com will provide to Licensee
           --------
a single Upgrade Contact designated in accordance with this Section 2.6,
                                                            -----------
promptly upon its deployment by Buy.Com, a copy of each available Upgrade (in
Source Code and object code) developed and deployed at any time during the
Exclusivity Period, subject to any applicable third party limitations and
restrictions.  Buy.Com will provide all such Upgrades to the Upgrade Contact
without any adaptation to Licensee's Business.  Licensee is responsible for
adapting the Upgrades to its Licensee Business and for otherwise integrating the
Upgrades with the Licensee Technology.  Buy.Com may provide Licensee support
services concerning the integration of the

                                       5
<PAGE>

Upgrades with the Licensee Technology only pursuant to the terms and conditions
of the Service Agreement. For the avoidance of doubt, the parties acknowledge
and agree that in no event will a Change in Control of Buy.Com expand the scope
of the license or rights granted Licensee hereunder. If there is a Change in
Control of Buy.Com, no part of the software or other technology of that
acquiring entity existing as of immediately prior to the Change in Control of
Buy.Com will be considered to be Licensed Technology and no part of any
technology that the acquiring entity develops after the Change in Control will
be considered to be Licensed Technology unless such technology constitutes an
Upgrade as defined in Section 1.31. Notwithstanding the foregoing, in no event
                      ------------
shall Buy.Com be under any obligation to develop any Upgrades. Except as
expressly set forth in this Section 2.6 and the Service Agreement, in no event
                            -----------
shall Buy.Com be under any obligation to maintain or support the Licensed
Technology in any way. The initial "Upgrade Contact" is Simon Palethorpe
(Address: Buy.Com UK Limited, 14 Flood Walk, London SW3 5RR, United Kingdom,
Telephone: (011-44) 207-881-2986, Fax: (011-44) 207-881-2701, and Email:
simonp@buy.com). The Upgrade Contact may be changed by Licensee at any time by
giving written notice to Buy.Com.

     2.7   Copies and Notices.  Licensee's right to make copies of the Licensed
           ------------------
Technology, extends only to reproductions reasonably required for Licensee's
internal business purposes, for back-up or archival purposes, and as necessary
to make Licensee Modifications to the Licensed Technology (subject to the
security requirements and other restrictions and limitations in this Agreement).
Licensee will not delete, alter, add or fail to reproduce any proper copyright,
trade secret or other proprietary notice specified by Buy.Com at any time for
the Licensed Technology (including proper notices required on documentation,
magnetic media containers, printed listings and programming code).  Licensee
shall create and maintain a written log of the physical location of each copy of
the Licensed Technology in Licensee's and/or Sublicensee's possession and,
promptly upon Buy.Com's written request, provide Buy.Com a copy of such log.
Licensee shall permit the inspection of any copies of the Licensed Technology by
Buy.Com or its designee up to twice annually, provided (a) Buy.Com gives
Licensee at least fifteen (15) days written notice and (b) the inspection occurs
during normal business hours in a manner designed to minimize disruption to
Licensee and its business.

     2.8   Election of Additional License Terms.  Notwithstanding anything else
           ------------------------------------
in the Agreement, upon Buy.com providing Licensee six (6) months written notice,
all of the following terms and conditions shall apply:   (i) The Exclusivity
Period shall end and the Technology License shall become a non-exclusive
license; (ii) Buy.Com shall have no obligation under Section 2.6 (or any other
                                                     -----------
provision of this Agreement) to provide Licensee any Upgrades that may be
developed and deployed at any time after the fourth anniversary of the
Agreement; (iii) upon the fourth anniversary of this Agreement, the royalties
set forth in Section 6.3 shall no longer accrue; and (iv) for the avoidance of
             -----------
doubt, all other terms and conditions of this Agreement shall continue in effect
to the extent they are consistent with this Section 2.8, and this Section 2.8
                                            -----------           -----------
shall not modify or terminate the non-compete provisions set forth in Schedule 4
of the Acquisition Agreement.

     2.9   Sublicense Rights.   Licensee may sublicense its license rights under
           -----------------
the Technology License and Trademark License to any Sublicensee.  Licensee may
not otherwise sublicense its license rights without the prior written consent of
Buy.Com, which, may be

                                       6
<PAGE>

withheld by Buy.Com in its sole discretion, except that, in the case of any
requested sublicense to any direct or indirect partially-owned subsidiary of
Guarantor, such consent may not be unreasonably withheld (but may be subject to
additional terms and conditions of sublicense). It shall be a condition to the
effectiveness of any sublicense by Licensee to any Sublicensee that Licensee
enter into a Sublicense Agreement in the same form attached hereto as Exhibit C
                                                                      ---------
with each Sublicensee. Licensee will keep on file and promptly provide Buy.Com
upon full execution all such Sublicense Agreements. Any purported sublicense
made in violation of this Section 2.9 shall be null and void.
                          -----------

3.   LICENSEE MODIFICATIONS AND COOPERATION

     3.1   General.  The parties each hereby acknowledge that the Licensed
           -------
Technology (other than any Upgrades) has been delivered to and accepted by
Licensee.  Except as expressly stated herein or in the Service Agreement,
Licensee is solely responsible for (i) the installation and use of the Licensed
Technology, (ii) integration of the Licensed Technology with any Licensee
Technology, (iii) any error corrections, updates, new releases and other
Modifications to the Licensed Technology that may from time to time be required,
and (iv) all facilities, equipment and hardware required to host, use and
support the Licensed Technology.

     3.2   Buy.Com's Use of Licensee Modifications.
           ---------------------------------------

           3.2.1   Delivery of Licensee Modifications.  Subject to this Section
                   ----------------------------------                   -------
3.2 and for no additional charge, Licensee will provide to Buy.Com, promptly
---
upon its deployment by Licensee, a copy of each Licensee Modification (in Source
Code and object code) developed and deployed at any time during the period in
which Buy.Com is obligated to provide Licensee any developed and deployed
Upgrade under this Agreement, subject to any applicable third party limitations
and restrictions.  Promptly after the Effective Date, Licensee shall also
provide to Buy.Com a copy of each Licensee Modification (in Source Code and
object code) developed and deployed at any time prior to the Effective Date.
Licensee shall promptly provide reasonable cooperation, support and information
that Buy.Com reasonably requests in connection with each Licensee Modification
provided to Buy.Com and, upon any reasonable request of Buy.Com, meet with
Buy.Com (via telephone or in-person) to discuss and review each such Licensee
Modification. Licensee will make all such Licensee Modifications available to
Buy.Com without any adaptation to Buy.Com's business. Buy.Com is responsible for
adapting the Licensee Modification to Buy.Com's business and for otherwise
integrating the Licensee Modification with any of its existing software or other
technology. Notwithstanding the foregoing, in no event shall Licensee be under
any obligation to develop any Licensee Modifications.

           3.2.2   License Grant.  During the term of this Agreement, Licensee
                   -------------
grants Buy.Com a non-exclusive, sublicensable (subject to  Section 3.2.4)
                                                           -------------
license solely outside the Territory (subject to Section 6.6) to install, use,
                                                 -----------
reproduce, publicly display, publicly perform, digitally perform and create
Modifications of each Licensee Modification provided to Buy.Com.  Except as
expressly set forth in this Section 3.2, in no event shall Licensee be under any
                            -----------
obligation to develop, maintain or support the Licensee Modifications in any
way.

                                       7
<PAGE>

           3.2.3   Copies and Notices.  Buy.Com will not delete, alter, add or
                   ------------------
fail to reproduce any proper copyright, trade secret or other proprietary notice
specified by Licensee at any time for the Licensee Modifications (including
proper notices required documentation, magnetic media containers, printed
listings and programming code).  Buy.Com shall permit the inspection of any
copies of the Licensee Modifications in Buy.Com's possession by Licensee or its
designee up to twice annually, provided (a) Licensee gives Buy.Com at least
fifteen (15) days written notice and (b) the inspection occurs during normal
business hours in a manner designed to minimize disruption to Buy.Com and its
business.

           3.2.4   Sublicensing.  Buy.Com may, in its own discretion, sublicense
                   ------------
for use outside of the Territory any or all of the rights granted to Buy.Com in
this Section 3.2 to any person or entity.  Buy.Com may not sublicense for use
     -----------
inside the Territory any of the rights granted to Buy.Com in this Section 3.2
                                                                  -----------
without the prior written approval of Licensee, which may be withheld by
Licensee in its sole discretion.

     3.3   Source Code Security.  Licensee agrees to take all reasonable steps
           --------------------
required to maintain the confidentiality of the Licensed Technology (including
all Upgrades provided to Licensee) and Modifications thereof, which steps shall
in any event include all of security measures set forth in this Section 3.3.
                                                                -----------
Buy.Com agrees to take all reasonable steps required to maintain the
confidentiality of the Licensee Modifications, which steps shall in any event
include all of security measures set forth in this Section 3.3.  Each Primary
                                                   -----------
Party shall have the right, upon fifteen (15) days written notice to inspect the
facilities and records of the other Primary Party (including those containing
any relevant Source Code) to ensure compliance with the requirements of this
Section 3.3.  Buy.Com, with respect to the Licensee Modifications, and Licensee,
-----------
with respect to the Licensed Technology (including all Upgrades provided to
Licensee) and Modifications thereof, shall:

           3.3.1   Disclose the Source Code to its employees and independent
contractors only in compliance with its confidentiality obligations under
Section 7 with respect to such Source Code; keep all Source Code under password
---------
protection; limit access to the Source Code to those of its employees or
approved Independent Contractors who require access in order to make
Modifications to the Licensee Modifications or the Licensed Technology and/or
integrate the Licensed Technology or Licensee Modifications with such Primary
Party's other software or technology; only make such number of copies of the
Source Code as are required in connection with the Party's authorized use
thereof; only install the Source Code on such computers and for such periods of
time as are required for its authorized use of and access to the Source Code,
which computers are located in an environment that reasonably prevents
unauthorized use or access of the Source Code; and ensure that each paper copy
of the Source Code for any part of the Licensee Modifications or Licensed
Technology, as the case may be, is marked as the confidential and proprietary
property of the applicable owner to which access is restricted.

           3.3.2   Create and maintain a list of each person who is authorized
to have access to or use of the Source Code and promptly forward to the other
Primary Party such log upon reasonable request.

                                       8
<PAGE>

           3.3.3   Not move the Source Code to any location not approved in
advance and in writing by the other Primary Party, nor permit the Source Code to
be accessed or accessible by third parties from terminals that are located
outside of such approved location, without in each instance the prior written
consent of the other Primary Party.

           3.3.4   Promptly notify the other Primary Party if it learns of any
circumstance indicating that the security of the Source Code, or any part
thereof or trade secrets embodied therein, may have been compromised and, upon
request of the other Primary Party, take all reasonable steps necessary to
recover any Source Code or trade secrets that may have been compromised, and
prevent the unauthorized use or further disclosure of such Source Code or trade
secrets, at its sole cost.

4.   TRADEMARK LICENSE.

     4.1   License Grant.  Subject to the terms and conditions of this
           -------------
Agreement, during the term of this Agreement, Buy.Com grants Licensee a
Personal, non-transferable (subject to Section 13.3), sublicensable (subject to
                                       ------------
Section 2.9) license to use and display the Buy.Com Marks, only in connection
------------
with the advertising and operation of its Licensee Business within the Territory
and for use on the Internet in connection with its Licensee Business ("Trademark
License").  Except as expressly permitted herein, all use is subject to
Buy.Com's written approval.  The Buy.Com Marks will remain the exclusive
property of Buy.Com and the use of the Buy.Com Marks by Licensee will inure
solely to the benefit of Buy.Com.  At any time after the date one (1) year
following the Effective Date, either Primary Party may terminate the Trademark
License with or without cause by providing the other Primary Party thirty (30)
days prior written notice of that termination.

     4.2   Limited Exclusivity.  The Trademark License shall be exclusive for a
           -------------------
period of one (1) year following the Effective Date (subject to Sections 6.6)
                                                                ------------
and thereafter non-exclusive.

     4.3   Site Redirection.  Buy.Com shall maintain in the same manner as
           ----------------
maintained immediately prior to the Effective Date the interstitial Web page
located at the URL (http://www.buy.com) in the form existing as of the Effective
Date and the software used in connection therewith that is designed to
automatically redirect Internet users who visit the URL (http://www.buy.com) to
the Licensee Site that is currently located at the URL (http://www.gb.buy.com).
Licensee may change the URL for such Licensee Site by providing Buy.Com thirty
(30) days written notice thereof. At any time following the first anniversary of
the term of this Agreement, Buy.Com may terminate its obligation under this
Section 4.3 without cause by providing Licensee ninety (90) days prior written
notice of termination.

     4.4   No Variation.  Licensee will use the Buy.Com Marks in the manner
           ------------
specified in Exhibit B, in accordance with the orientation, legends and markings
             ---------
that are from time to time specified by Buy.Com.  Licensee will not alter,
modify or change any Buy.Com Mark in any manner, or use it in combination with
any other words or symbols, without Buy.Com's prior written approval of the
proposed variation.  In no event shall Licensee use or display (or allow others
to use or display) any Buy.Com Mark, or any mark confusingly similar thereto,
except as expressly authorized in this Agreement.

                                       9
<PAGE>

     4.5   Quality Standards.  Licensee shall adhere to all reasonable
           -----------------
operating, merchandising and advertising policies, standards and requirements,
and such other reasonable quality standards that are established from time to
time by Buy.Com in its discretion, applicable to use of the Buy.Com Marks.
Buy.Com may amend such policies, standards and requirements at any time upon
written notice to Licensee.

     4.6   Supervision/Control.  Licensee shall supervise, manage and control
           -------------------
its use of the Buy.Com Marks to ensure compliance with this Agreement and shall
take commercially reasonable steps to preserve the value of the Buy.Com Marks
and the goodwill associated therewith.  Licensee shall be solely responsible for
all costs associated with such supervision and control.  Licensee shall
establish and implement appropriate operating methods and procedures, so far as
it is able to do so to prevent misuse or unauthorized use of the Buy.Com Marks
in the Territory, and shall provide a copy of same to Buy.Com upon request.

     4.7   Covenant and Representations.  Except as unambiguously permitted
           ----------------------------
herein, and as conditions of the Trademark License, for so long as the Trademark
License remains in effect, Licensee represents and agrees to each of the
following:

           4.7.1   Licensee shall use best commercial efforts to conduct its
Licensee Business in a professional manner that reflects favorably at all times
on the reputation of Buy.Com, and the goodwill associated with the Buy.Com
Marks.

           4.7.2   Licensee shall not engage in any deceptive, misleading or
unethical practices, or any other business practices that are detrimental to
Buy.Com to the goodwill associated with the Buy.Com Marks, or the public,
including, without limitation, any disparagement of Buy.Com or any products or
services of Buy.Com.

           4.7.3   Licensee shall make no false or misleading statements about
its Licensee Business, or about any product or service provided under its
Licensee Business, and Licensee shall not publish or employ any misleading or
deceptive advertising material respecting such services and products.

           4.7.4   The Licensee Site shall not contain any content or
information that is disparaging, obscene, defamatory, libelous, slanderous or
discriminatory, or that is materially false or misleading, or that refers in an
offensive manner to the gender, race or ethnicity of any person or group.

           4.7.5   Licensee shall use commercially reasonable efforts not to use
any trademark, word, symbol, letter, design or layout in combination with any
Buy.Com Mark that violates any third party copyright, trademark, service mark,
trade dress or other rights.

5.   PROPRIETARY RIGHTS

     5.1   Ownership of Licensed Technology and Buy.Com Marks.  Subject to the
           --------------------------------------------------
license herein granted to Licensee, as between the parties, Buy.Com is the sole
owner of all right, title and interest in (i) the Licensed Technology and all
related documentation and materials, and

                                       10
<PAGE>

all copies thereof, (ii) the Buy.Com Marks, and (iii) all Proprietary Rights in
the foregoing. Buy.Com reserves to itself all rights in the Licensed Technology
and the Buy.Com Marks not expressly licensed to Licensee.

     5.2   Ownership of Licensee Technology.  Subject to the license herein
           --------------------------------
granted to Buy.Com, as between the parties, Licensee is the sole owner of all
right, title and interest in (i) all Licensee Modifications (subject to
Buy.Com's rights in the underlying Licensed Technology) and the Licensee
Technology and all related documentation and materials and all copies thereof
and (ii) all Proprietary Rights in the foregoing.

     5.3   Buy.Com and Licensee Data.  All right, title and interest in and to
           -------------------------
any data relating to the business of Buy.Com is and shall remain the exclusive
property of Buy.Com.  Subject to the foregoing, all right, title and interest in
and to any data relating to any Licensee Business is and shall remain the
exclusive property of Licensee and/or its Sublicensees.

     5.4   Validity of Marks.  Licensee hereby acknowledges the validity of
           -----------------
Buy.Com's rights in the Buy.Com Marks.  Licensee shall not, at any time during
or after the term of this Agreement, register or apply to register any trade
mark, service mark, trade name, logo, brand, domain name or other mark identical
to any of the Buy.Com Marks, or any trade mark, service mark, trade name, logo,
brand, domain name or other mark confusingly similar thereto, to the extent it
is not required to do so by law.

     5.5   Cooperation.  Licensee agrees to perform, at Buy.Com's expense,
           -----------
during and after the term of this Agreement, all reasonable acts deemed
necessary or desirable by Buy.Com to permit and assist Buy.Com in evidencing,
perfecting, obtaining, maintaining, defending and enforcing its Proprietary
Rights in the Licensed Technology and the Buy.Com Marks in any and all
countries.  Such acts may include, but are not limited to, execution of
assignments and documents acknowledging Buy.Com's ownership and rights, and
cooperation with Buy.Com in the prosecution or defense of any infringement
action. Buy.Com agrees to perform, at Licensee's expense, during and after the
term of this Agreement, all reasonable acts deemed necessary or desirable by
Licensee to permit and assist Licensee in evidencing, perfecting, obtaining,
maintaining, defending and enforcing its Proprietary Rights in the Licensee
Modifications in any and all countries.  Such acts may include, but are not
limited to, execution of assignments and documents acknowledging Licensee's
ownership and rights, and cooperation with Licensee in the prosecution or
defense of any infringement action.

6.   FURTHER COVENANTS

     6.1   Supply Partners.  Licensee may contract with one or more third
           ---------------
parties to supply products to be sold and/or distribute products sold through
the Licensee Business of Licensee and/or provide other product fulfillment
services to support Licensee in its operation of its Licensee Business (each a
"Supply Partner").  With respect to each Supply Partner, Licensee may only
sublicense those rights under Section 2 as are necessary for the Supply Partner
to perform the express support obligations to Licensee set forth above and
Licensee shall ensure that such rights are appropriately limited and restricted.
In no event shall Licensee sublicense a Supply Partner to use the Licensed
Technology for any business purpose not directly related to

                                       11
<PAGE>

the Supply Partner's support obligations to Licensee. In no event shall any
Supply Partner be permitted to access or use any Licensed Technology without
entering into a written agreement with Licensee that, at a minimum, is
sufficient to protect Buy.Com's rights in the Licensed Technology and contains
confidentiality provisions at least as restrictive as those set forth in Section
7 with respect to Confidential Information of Buy.Com. Any purported sublicense
to a Supply Partner made in violation of this Section 6.1 shall be null and
void.

     6.2   Independent Contractors.
           -----------------------

           6.2.1   Licensee may contract with one or more third parties to
develop any Licensee Modifications and/or integrate the Licensed Technology with
the Licensee Technology (each a "Independent Contractor").  In no event shall
any Independent Contractor be permitted to access or use any Licensed Technology
or Modifications thereof without entering into a written professional services
agreement with Licensee that, at a minimum, (i) is at least as protective of
Buy.Com's rights in the Licensed Technology as this Agreement, (ii) contains
terms at least as restrictive as those applicable to Licensee under this
Agreement, including, without limitation, those set forth in Section 7; (iii)
                                                             ---------
acknowledges Buy.Com as the exclusive owner of the Licensed Technology and
Licensee as the exclusive owner of all Licensee Modifications, and provide
assignments necessary to confirm and effectuate such ownership, and (iv)
precludes any sub-contracting or use of a third party to exercise any such
rights.  Licensee shall promptly provide Buy.Com a written list of the names and
addresses of all Independent Contractors, upon any written request made by
Buy.Com for such a list.  With respect to each Independent Contractor, Licensee
may only sublicense those rights under Section 2 as are necessary for the
                                       ---------
Independent Contractor to develop any Licensee Modifications and/or integrate
the Licensed Technology with the Licensee Technology and Licensee shall ensure
that such rights are appropriately limited and restricted.  In no event shall
Licensee sublicense an Independent Contractor the rights to use the Licensed
Technology for any business purpose not directly related to the development and
integration work for Licensee set forth above.  Any purported sublicense to an
Independent Contractor made in violation of this Section 6.1 shall be null and
                                                 -----------
void.

           6.2.2   In no event shall Buy.Com provide any third party under
contract with Buy.Com with access to or use any Licensee Modification without
entering into a written agreement with such third party that, at a minimum, is
at least as protective of Licensee's rights in the Licensee Modifications as
this Agreement and contains confidentiality provisions at least as restrictive
as those set forth in Section 7 with respect to Confidential Information of
                      ---------
Licensee.  Buy.Com shall promptly provide Licensee a written list of the names
and addresses of all such third parties, upon any written request made by
Licensee for such a list.

     6.3  Royalty.  Licensee will pay Buy.Com a royalty of [***] of Licensee's
          -------
[***] generated during [***] Royalty payments are due from Licensee on the [***]
following the end of each [***] or part thereof of [***], based on the [***] of
Licensee generated for such quarter or part thereof.  Each royalty payment will
be accompanied by a report showing in reasonable detail calculation of the
amount due by Licensee.
____________________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

                                       12
<PAGE>

     6.4   Payments; Finance Charges.  Except as otherwise expressly set forth
           -------------------------
herein, all payments required hereunder shall be made in U.S. dollars to Buy.Com
at the address stated in Section 14.6, or such other address that is from time
                         ------------
to time designated by Buy.Com in writing. Subject to this Section 6.4, Licensee
                                                          -----------
will pay all charges, including without limitation, transportation charges and
insurance premiums and shall be responsible for all taxes, duties and
governmental assessments (except taxes based on Buy.Com's net income) in
connection with the subject matter of this Agreement; provided, that Buy.Com
shall cooperate with Licensee to minimize or eliminate Licensee tax liability.
Any payment that is not paid when due shall, in addition to all other remedies
available to Buy.Com, bear interest at a rate of one and one-half percent (1.5%)
per month, or the maximum rate permitted by law (whichever is less), for the
number of days such payment is delinquent. All royalty payments made under this
Agreement will be paid by Licensee subject to deduction or withholding of United
Kingdom tax at the appropriate rate (currently the basic rate of United Kingdom
tax) unless (i) Licensee has previously been directed by the United Kingdom
Inland Revenue to make such payments to Buy.Com free of United Kingdom deduction
or withholding or subject to a reduced rate of United Kingdom deduction or
withholding pursuant to an applicable double taxation treaty, or (ii) Buy.Com
otherwise establishes pursuant to applicable United Kingdom tax law (including,
without limitation, the United Kingdom-United States income tax treaty) its
entitlement to a reduction or elimination of any such deduction or withholding.
Licensee agrees to cooperate with Buy.Com in establishing that the royalty
payments are either exempt from, or eligible for a reduced rate of, any such
deduction or withholding under applicable United Kingdom tax law. Licensee shall
timely remit any amount deducted or withheld from a royalty payment to the
United Kingdom Inland Revenue. In the event Licensee is required to make a
royalty payment to Buy.com net of a deduction or withholding required by United
Kingdom tax law, upon timely payment to the United Kingdom Inland Revenue of any
amount so deducted or withheld, Licensee will be treated as having paid the
entire royalty payment, unreduced by any such deduction or withholding, to
Buy.com and shall not be obliged to pay to Buy.Com any additional amount in
respect of any such deduction or withholding.

     6.5   Records; Audit.  Licensee will create such records as are necessary
           --------------
to verify compliance with its obligations under this Agreement, and Licensee
will retain such records in the ordinary course of its business for a period of
at least three (3) years after they are created.  During the term of this
Agreement and for a period of eighteen (18) months thereafter, Buy.Com will have
the right, at its expense, on reasonable notice to Licensee and during normal
business hours, (i) to observe the operations of Licensee and/or any
Sublicensees (subject to Licensee's and/or any Sublicensees reasonable security
and confidentiality requirements) from time to time and (ii) acting through a
mutually acceptable independent certified public accountant, to examine and
audit Licensee's and/or any Sublicensees records two (2) times per calendar
year.  If any such audit reveals an underpayment then License shall remit
immediately the full amount due, and if the amount of underpayment is five
percent (5%) or more of the amount due for the period audited, then Licensee
shall also bear the full cost of the audit.

     6.6   Territory and Sales.  The Primary Parties acknowledge that it is not
           -------------------
possible to limit all Internet based inquiries and promotion from or to a
geographical territory.  Accordingly, each Primary Party's and any third party's
incidental promotion of its respective business through the Internet and/or
incidental conduct of its respective business with third parties located

                                       13
<PAGE>

outside the Territory, in the case of Licensee, and inside the Territory, in the
case of Buy.Com and any third party, will not constitute a breach of the
Agreement or any other agreement between the parties. Incidental conduct shall
include, by example, (a) general purpose advertising that Buy.Com targets to
person's located outside the Territory, but that reaches a de minimis percentage
of persons located inside the Territory, and (b) general purpose advertising
that Licensee targets to person's located inside the Territory, but that reaches
a de minimis percentage of persons located outside the Territory. The Primary
Parties intend that, notwithstanding any variance in the application of laws
between different territories, the foregoing will be construed to allow
incidental promotion and business conduct within the Territory to the same or an
equivalent extent as Licensee is permitted to engage in the promotion and
conduct of its Licensee Business outside of the Territory.

     6.7   Virus Screening.  Buy.Com, with respect to each Upgrade, and
           ---------------
Licensee, with respect to each Licensee Modification, shall, prior to providing
the other Primary Party with the software, conduct tests reasonable under the
circumstances to ascertain whether the software contains any virus, worm,
cancelbot, Trojan horse or other similar harmful programs or subroutines and
shall not deliver any such software to the other that it, at the time of the
delivery, has reason to know based on the results of such tests contains any
such harmful program or subroutine.

7.   CONFIDENTIALITY

     7.1   Confidential Information.  Each Primary Party may from time to time
           ------------------------
furnish the other Primary Party with Confidential Information. The Licensed
Technology (including its computer programs, features, mode of operation, and
all related trade secrets, know-how, algorithms, ideas or inventions) is the
Confidential Information of Buy.Com.  Subject to the foregoing, the Licensee
Modifications (including its computer programs, features, mode of operation, and
all related trade secrets, know-how, algorithms, ideas or inventions) are the
Confidential Information of Licensee.

     7.2   Non-Disclosure and Non-Use.  Each Primary Party agrees that (i) that
           --------------------------
it will not disclose to any third party or use any of the other Primary Party's
Confidential Information except as expressly permitted in this Agreement, and
(ii) it will take all reasonable measures to maintain the confidentiality of all
Confidential Information of the other Primary Party in its possession or
control, which will in no event be less than the measures it uses to maintain
the confidentiality of its own information of similar importance.  Each Primary
Party will only disclose the Confidential Information of the other Primary Party
to those of its employees and contractors who have a legitimate need to know,
and who have entered into written confidentiality agreements containing
nondisclosure provisions at least as restrictive as those stated in this
Section 7.
---------

     7.3   Confidential Treatment of Agreement.  No Party may disclose the terms
           -----------------------------------
of this Agreement to any third party; provided, however, that any Party may
disclose the terms of this Agreement to its Affiliates, attorneys and
accountants, or to any potential investor or acquirer of a substantial part of
such Party's business (whether by merger, sale of assets, sale of stock or

                                       14
<PAGE>

otherwise) that is bound by a written agreement to keep such terms confidential,
or as may be required by law.

     7.4   Court-Ordered Disclosure.  Either Primary Party may disclose
           ------------------------
Confidential Information to the extent required by a court of competent
jurisdiction or other governmental authority, or otherwise as required by law;
provided, that (i) prompt written notice of such requirement is given to the
other Primary Party, and (ii) the disclosing Primary Party employs reasonable
efforts to obtain a protective order.

     7.5   Equitable Remedies.  In addition to any other remedies available to
           ------------------
it at law or in equity, each Primary Party will be entitled to seek injunctive
relief (without the requirement of posting a bond or other form of security) to
enforce the provisions of this Section 7.
                               ---------

     7.6   Press Release.  The Parties will work in good faith to jointly
           -------------
develop and release a joint press release announcing this Agreement and the
relationship contemplated hereunder within thirty (30) calendar days of the
Effective Date of this Agreement.  Each Party may not otherwise disclose the
existence or terms of this Agreement to any third party (i) without entering
into a written non-disclosure agreement with such third party that contains
provisions at least as restrictive as those set forth in this Section 7 with
                                                              ---------
respect to Confidential Information of the non-disclosing Primary Party or (ii)
unless the disclosure is required by any law or regulation.

8.   WARRANTY AND DISCLAIMER

     8.1   Mutual Warranties.  Each Primary Party represents, warrants and
           -----------------
agrees to the other as conditions to the licenses granted hereunder that (i) it
has full corporate authorization to enter into this Agreement, to carry out its
obligations under this Agreement, and to grant the rights granted by it herein,
and that this Agreement is valid, binding and enforceable against it (subject to
applicable principles of equity and bankruptcy and insolvency laws), (ii) it
will not disclose to any third party the Source Code owned by the other Primary
Party, except under the conditions set forth in the Agreement or with the other
Primary Party's prior written approval, (iii) it will not grant or purport to
grant any right, title, interest, lien or option in any portion of the other
Primary Party's technology or Proprietary Rights therein, (iv) it will not
violate in any material respect any applicable laws, rules, regulations
(including export regulations) pertaining to the conduct of its business or use
of the Licensed Technology or Licensee Modifications, (v) its employees and
independent contractors, as applicable, have at all times executed written non-
disclosure, assignment of rights and other appropriate agreements sufficient to
protect the confidentiality of the Licensed Technology and Licensee
Modifications, and sufficient to allow it to grant the assignments and licenses
to the other that are herein provided, and (vi) it will monitor the compliance
of its employees and independent contractors with any such agreements and will
promptly report any violations to the other Primary Party.

     8.2   No Conflict.  Each Party represents and warrants to the other that
           -----------
the execution of this Agreement, and the granting of the rights and licenses
provided by it herein, does not (i) violate the Articles of Incorporation or By-
laws of such Party; (ii) violate any judgment, order,

                                       15
<PAGE>

writ, injunction or decree of any court applicable to such Party entered on the
Effective Date; or (iii) conflict with or violate any other agreement into which
such Party has entered.

9.   DISCLAIMER AND LIMITATION OF LIABILITY

     9.1   Disclaimer of Warranties.  THE LICENSED TECHNOLOGY (INCLUDING ANY
           ------------------------
UPGRADES IF PROVIDED BY BUY.COM), ANY SERVICES IF PROVIDED BY BUY.COM, AND THE
BUY.COM MARKS ARE PROVIDED "AS IS" WITHOUT ANY WARRANTY OF ANY KIND, WHETHER
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BUY.COM DOES NOT WARRANT THAT THE
LICENSED TECHNOLOGY WILL CORRECTLY PROCESS TIME AND DATE INFORMATION.  TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BUY.COM DOES NOT PROVIDE ANY
WARRANTY REGARDING THE USE OR THE RESULTS OF THE USE OF THE LICENSED TECHNOLOGY.
THE LICENSEE MODIFICATIONS ARE PROVIDED "AS IS" WITHOUT ANY WARRANTY OF ANY
KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.  TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LICENSEE DOES NOT WARRANT THAT THE
LICENSEE MODIFICATIONS WILL CORRECTLY PROCESS TIME AND DATE INFORMATION. TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LICENSEE DOES NOT PROVIDE ANY
WARRANTY REGARDING THE USE OR THE RESULTS OF THE USE OF THE LICENSEE
MODIFICATIONS.  To the extent that a Primary Party may not, as a matter of
applicable law, disclaim any implied warranty, the scope and duration of such
warranty will be the minimum permitted pursuant to such law.

     9.2   Limitations of Liability.
           ------------------------

           9.2.1   TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT
FOR LIABILITY ARISING FROM A BREACH OF SECTION 7 OR ANY OF THE LICENSES GRANTED
                                       ---------
UNDER THIS AGREEMENT BY EITHER PRIMARY PARTY OR LIABILITY ARISING UNDER EITHER
PRIMARY PARTY'S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 10.2 OR 10.3, NEITHER
                                                  --------------   ----
PRIMARY PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY THEORY OF LIABILITY, INCLUDING BREACH OF CONTRACT OR
WARRANTY, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHER LEGAL OR
EQUITABLE THEORY FOR ANY LOST DATA OR OTHER SPECIAL, PUNITIVE, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER, INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF GOODWILL, WORK STOPPAGE, COMPUTER FAILURE OR
MALFUNCTION, LOSS OF DATA, OR ANY AND ALL OTHER COMMERCIAL DAMAGES OR LOSSES
(OTHER THAN DIRECT DAMAGES), EVEN IF THE OTHER PRIMARY PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, OR THE COST OF PROCURING SUBSTITUTE GOODS,
SERVICES OR TECHNOLOGY.

                                       16
<PAGE>

           9.2.2   TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT
FOR LIABILITY ARISING FROM A BREACH OF SECTION 7 OR ANY OF THE LICENSES GRANTED
                                       ---------
UNDER THIS AGREEMENT BY EITHER PRIMARY PARTY OR LIABILITY ARISING UNDER EITHER
PRIMARY PARTY'S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 10.2 OR 10.3, EACH
                                                  ---------------------
PRIMARY PARTY'S AGGREGATE LIABILITY FOR EACH CAUSE OF ACTION IN CONNECTION WITH
THIS AGREEMENT THAT ARISES PRIOR TO THE THIRD ANNIVERSARY OF THE EFFECTIVE DATE,
REGARDLESS OF THE FORM OF ACTION GIVING RISE TO SUCH LIABILITY (WHETHER IN
CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE), WILL NOT EXCEED ONE MILLION
DOLLARS ($1,000,000).  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND
EXCEPT FOR LIABILITY ARISING FROM A BREACH OF SECTION 7 OR ANY OF THE LICENSES
                                              ---------
GRANTED UNDER THIS AGREEMENT BY EITHER PRIMARY PARTY OR LIABILITY ARISING UNDER
EITHER PRIMARY PARTY'S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 10.2 OR 10.3,
                                                         -------------    ----
EACH PRIMARY PARTY'S AGGREGATE LIABILITY FOR EACH CAUSE OF ACTION IN CONNECTION
WITH THIS AGREEMENT THAT ARISES ON OR AFTER THE THIRD ANNIVERSARY OF THE
EFFECTIVE DATE, REGARDLESS OF THE FORM OF ACTION GIVING RISE TO SUCH LIABILITY
(WHETHER IN CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE), WILL NOT EXCEED
THE AGGREGATE OF THE AMOUNTS PAID OR PAYABLE TO BUY.COM DURING THE TWELVE (12)
MONTH PERIOD IMMEDIATELY PRECEDING THE DATE ON WHICH THE CAUSE OF ACTION AROSE.

          9.2.3   THE LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION 9.2
                                                                 -----------
SHALL NOT LIMIT THE LIABILITY OF ANY PARTY FOR PERSONAL INJURY OR DEATH ARISING
OUT OF ITS NEGLIGENCE.

10.  INDEMNIFICATION

     10.1  Third Party Infringement.  Each Primary Party shall promptly give
           ------------------------
the other Primary Party written notice in the event that it knows or has reason
to believe that the Licensed Technology or any Buy.Com Mark is being infringed
in the Territory, either directly or indirectly, by any third party, and the
Primary Parties shall consult with each other with a view to determine the
course of action, if any, to be taken.  In said event, Buy.Com, at its sole cost
(including attorneys fees and expenses) shall have the first right, but not the
obligation, to take action against such infringement including, without
limitation, the prosecution of a lawsuit.  Should Buy.Com elect not to take any
action against the infringement within sixty (60) days of written notice thereof
by Licensee, then Licensee may take such action as it deems appropriate at its
sole cost and expense.  Both Licensee and Buy.Com will provide such non-
financial assistance as reasonably requested by the other in prosecuting the
infringement including, but not limited to, appearing as a nominal plaintiff.
Upon receipt of appropriate written vouchers or receipts, the Primary Party
taking action shall reimburse the other Primary Party for its reasonable out-of-
pocket expenses incurred in providing such assistance.  The Primary Parties
agree that all recoveries and awards that may be obtained as a result of any
such action shall be

                                       17
<PAGE>

applied first to reimburse the costs (including attorneys fees and expenses) of
taking such action against the infringing third party, and the remainder shall
be paid to Buy.Com.

     10.2  Business Indemnification.  Subject to Section 10.3, each Primary
           ------------------------              ------------
Party will indemnify, defend and hold the other Primary Party (and its
respective officers, directors, agents, employees, subsidiaries and Affiliates)
harmless from and against any and all losses, claims, damages, suits,
proceedings, liabilities, costs and expenses (including attorneys' fees)
resulting from or arising out of any third party claim to the extent that such
claim results from or arises out of the operation of the business of the other,
including, but not limited to, all consumer claims of any kind.

     10.3  Infringement Indemnification.
           ----------------------------

           10.3.1   Buy.Com will indemnify, defend and hold Licensee (and its
officers, directors, agents, employees subsidiaries and Affiliates) harmless
from and against any and all losses, claims, damages, suits, proceedings,
liabilities, costs and expenses (including attorneys' fees) to the extent
resulting from or arising out of any claim that the Licensed Technology as
provided by Buy.Com to Licensee or any Upgrade as provided by Buy.Com to
Licensee infringes any third party copyright or misappropriates any third party
trade secret.

           10.3.2   Licensee will indemnify, defend and hold Buy.Com (and its
officers, directors, agents, employees, subsidiaries and Affiliates) harmless
from and against any and all losses, claims, damages, suits, proceedings,
liabilities, costs and expenses (including attorneys' fees) to the extent
resulting from or arising out of any allegation that Licensee's and/or any
Sublicensee's installation and/or use of the Licensed Technology or any Upgrade
(subject to Buy.Com's indemnification obligations set forth in Section 10.3.1),
                                                               --------------
including, without limitation, Licensee's and/or any Sublicensee's integration
of the Licensed Technology with any Modification thereof or Licensee Technology
or combination of the Licensed Technology with any software, technology,
hardware, processes, product or other property not provided by Buy.Com, or any
Licensee Modification as provided by Licensee to Buy.Com infringes any third
party copyright or misappropriates any third party trade secret.

     10.4  Exclusions.  The obligations of the Primary Parties set forth in
           ----------
Section 10.3 do not apply to any alleged infringement or misappropriation to the
------------
extent based on continued use by the other Primary Party of the allegedly
infringing Licensed Technology, Update or Licensee Modification, as applicable,
after the Indemnifying Party (as defined in Section 10.5 below) has informed the
                                            ------------
Indemnified Party (as defined in Section 10.5 below) of the alleged infringement
                                 ------------
or misappropriation and, where Buy.Com is the Indemnifying Party, also has done
any one of the following: (i) made available for Licensee the right to continue
using the allegedly infringing Licensed Technology or Upgrade on substantially
similar terms to those contained in this Agreement, (ii) replaced or modified
the allegedly infringing Licensed Technology or Upgrade so that the replacement
technology or modified Licensed Technology or Upgrade is non-infringing, or
(iii) paid Licensee as liquidated damages (and not as a penalty) the amount of
one million dollars ($1,000,000).

     10.5  Indemnification Procedures.  A Primary Party's right to
           --------------------------
indemnification under the Agreement ("Indemnified Party") is conditioned upon
the following:  Prompt written notice

                                       18
<PAGE>

to the Primary Party obligated to provide indemnification ("Indemnifying Party")
of any claim, action or demand for which indemnity is sought; control of the
investigation, preparation, defense and settlement thereof by the Indemnifying
Party; and such reasonable cooperation by the Indemnified Party, at the
Indemnifying Party's request and expense, in the defense of the claim. The
Indemnified Party shall have the right to participate in the defense of a claim
by the Indemnifying Party with counsel of the Indemnified Party's choice at the
Indemnified Party's expense. The Indemnifying Party shall not, without the prior
written consent of the Indemnified Party, settle, compromise or consent to the
entry of any judgment that imposes any liability upon the Indemnified Party.

11.  TERM AND TERMINATION

     11.1  Term.  The term of this Agreement will commence on the Effective
           ----
Date and continue until terminated in accordance with this Section 11.
                                                           ----------

     11.2  Termination.
           -----------

           11.2.1   Abandonment of Licensed Technology.  Upon making a
                    ----------------------------------
determination by Licensee that it and its Sublicensees will abandon all use of
the Licensed Technology and each Modification thereof (only to the extent that
such Modification is a derivative work of any Licensed Technology or otherwise
incorporates any Licensed Technology), Licensee may terminate this Agreement by
providing Buy.Com sixty (60) days written notice of its plan to abandon such
use.  In the event that the Net Revenue for any two (2) consecutive quarters is
zero, Buy.Com may terminate the Agreement by providing Licensee thirty (30) days
written notice of termination.

           11.2.2   Breach.  Subject to Sections 11.2.3 and 11.2.4, in the event
                    ------              ---------------     ------
that either Primary Party materially or repeatedly defaults in the performance
of any of its obligations under this Agreement (each a "Breach") and fails to
cure such Breach within sixty (60) days (thirty (30) days in the case of
nonpayment) after being given written notice (pursuant to Section 14.6) of the
                                                          ------------
Breach ("Breach Notice"), then the Primary Party not in Breach may terminate
this Agreement by providing the other party sixty (60) days written notice of
termination.  Each Breach Notice shall specify the Breach and the Sections of
the Agreement the non-breaching Primary Party claims are the subject of the
Breach.

           11.2.3   Migration Election.  If Licensee commits a non-willful
                    ------------------
Breach other than nonpayment and is unable using its Best Efforts to cure that
Breach within sixty (60) days after being given the Breach Notice ("Migration
Breach"), Licensee may, subject to its full compliance with this Section 11.2.3,
                                                                 --------------
invoke the provisions of Section 11.2.4. Immediately upon Licensee receiving any
                         --------------
Breach Notice, Licensee shall use its Best Efforts to ascertain whether such
Breach is a Migration Breach and, if so, the period of time during which such
Migration Breach can be cured using Licensee's Best Efforts to cure (the
"Required Cure Period"). Promptly upon ascertaining the Required Cure Period
and, in any event, no later than forty five (45) days following the date of the
Breach Notice, Licensee shall provide Buy.Com written notice of its election to
invoke the provisions of Section 11.2.4. Licensee may invoke the provisions of
                         --------------
Section 11.2.4 only once. To the extent that Licensee does not cure the
--------------
Migration

                                       19
<PAGE>

Breach within sixty (60) days following the date of the Breach Notice, Licensee
will indemnify, defend and hold Buy.Com (and its respective officers, directors,
agents, employees, subsidiaries and Affiliates) harmless from and against any
and all losses, claims, damages, suits, proceedings, liabilities, costs and
expenses (including attorneys' fees) resulting from or arising out of any
Migration Breach, provided that Buy.Com complies with the obligations of an
Indemnified Party under Section 10.5.
                        ------------

           11.2.4   Migration Rights.  Subject to Licensee affirmatively
                    ----------------
invoking the provisions under this Section 11.2.4 in accordance with Section
                                   --------------                    -------
11.2.3 and its full compliance with this Section 11.2.4, in the event of a
------                                   --------------
Migration Breach, Licensee may continue to use the Licensed Technology and/or
Buy.Com Marks in accordance with the terms and conditions of this Agreement (to
the fullest extent they can be complied with given the Migration Breach) up
until the end of the Required Cure Period set forth in any Final Migration Plan
(as defined below). Licensee shall use its Best Efforts to prepare and provide
Buy.Com as soon as possible and, in any event, within forty five (45) days of
the Breach Notice, a written migration plan that specifies in detail the
circumstances material to the Migration Breach, including, without limitation,
the nature and extent of the Migration Breach, the entities and persons involved
in the Migration Breach and the causes of the Migration Breach, as well as
Licensee's best estimate of the Required Cure Period (the "Draft Migration
Plan"). Licensee shall also promptly provide Buy.Com with such information,
materials and cooperation as Buy.Com reasonably requests in connection with such
Migration Breach and Draft Migration Plan.  After receiving the Draft Migration
Plan, Buy.Com shall have the option of either accepting or rejecting that Draft
Migration Plan, in its sole discretion.  If Buy.Com accepts the Draft Migration
Plan it shall inform Licensee of that acceptance through written notice and upon
such written notice of acceptance, the Draft Migration Plan shall become
effective and binding on the Primary Parties as the "Final Migration Plan."  If
Buy.Com should reject the Draft Migration Plan it shall inform Licensee of that
rejection through written notice and upon such written notice of rejection,
Licensee and Buy.Com shall negotiate in good faith to agree upon a Final
Migration Plan.  If the Principal Parties are unable to agree upon a Final
Migration Plan within ten (10) days of such rejection notice provided by
Buy.Com, the Principal Parties hereby submit for resolution in accordance with
the procedures set forth in Section 12.2 whether the Breach at issue is a
                            ------------
Migration Breach (if in dispute) and the period of time that shall constitute
the Required Cure Period under a Final Migration Plan.  Notwithstanding anything
to the contrary, the Principal Parties hereby agree and stipulate, and hereby
waive all rights to assert or argue to the contrary, that the Required Cure
Period for the Migration Breach (whether agreed upon by the parties or
established through the procedures set forth in Section 12.2) shall be shorter
                                                ------------
than eight (8) months from the date of the Breach Notice.  Immediately upon the
expiration of the Required Cure Period, the Agreement will terminate
automatically.

           11.2.5   Insolvency.  A Primary Party may terminate this Agreement if
                    ----------
the other Primary Party ceases to conduct its business or becomes insolvent,
makes an assignment for the benefit of its creditors, fails to pay its
obligations when they become due, or in the event of the institution under any
applicable law of any voluntary or involuntary insolvency proceedings against
the other Primary Party (including bankruptcy, consent to a receivership,
adoption of an arrangement with creditors, dissolution or liquidation, or
similar action), which proceedings, consent, adoption or arrangement is not
vacated within thirty (30) days after inception.

                                       20
<PAGE>

           11.2.6   Rights in Bankruptcy.  All rights and licenses granted under
                    --------------------
or pursuant to this Agreement except for the Trademark License are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section 101
of the U.S. Bankruptcy Code.  The Primary Parties agree that Licensee, as a
licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code, however
nothing herein shall be deemed to constitute a present exercise of such rights
and elections.  The Primary Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against Buy.Com under the U.S.
Bankruptcy Code and Buy.Com's obligation to provide Licensee Upgrades under
Section 2.6 being in effect immediately prior to the commencement of the
-----------
bankruptcy proceeding, Licensee shall, subject to its full compliance with the
Agreement, be entitled to a duplicate of (or access to, as appropriate) any
partially-completed Upgrade being developed by Buy.Com immediately prior to the
commencement of the bankruptcy proceeding, where available and in Buy.Com's
possession, custody or control ("Partial Upgrade"), and such Partial Upgrades,
if not already in Licensee's possession, shall be promptly delivered to Licensee
(a) upon any such commencement of a bankruptcy proceeding upon Licensee's
written request therefore, unless Buy.Com elects to continue to perform all of
its obligations under this Agreement, or (b) if not delivered under (a) above,
upon rejection of this Agreement by or on behalf of Buy.Com upon written request
therefor by Licensee.

     11.3  Effect of Termination.
           ---------------------

           11.3.1   Expiration of Licenses.  Upon any termination of the
                    ----------------------
Trademark License or any termination of this Agreement for any reason, Licensee
shall (and ensure that each Sublicensee shall) immediately (i) discontinue all
use of the Buy.Com Marks or variations thereof, (ii) remove all references to or
variations of any Buy.Com Marks from any signage, letterhead, business cards,
place of business and of Licensee and/or any Authorized Sublicensee, (iv)
refrain from making any subsequent representation, advertisement or published
statement or product sales using or in reference to any Buy.Com Mark or
variation thereof, and (iv) take such action as shall be necessary to change any
corporate name, assumed name or equivalent registration which mentions or refers
to any Buy.Com Mark, or any variation thereof.  Upon termination of this
Agreement for any reason, the Technology License and Trademark License shall
immediately terminate, and Licensee shall (and ensure that each Sublicensee
shall) immediately (a) discontinue all use of the Licensed Technology and
Modifications thereof in any form, (b) remove the Licensed Technology and
Modifications thereof (only to the extent that such Modification is a derivative
work of any Licensed Technology or otherwise incorporates any Licensed
Technology) from all computers in its possession, custody or control and the
Licensee Sites, and (c) return to Buy.Com the Licensed Technology (including all
documents, software, data and other materials relating thereto) or, in Buy.Com's
discretion, destroy same and provide Buy.Com certification of such destruction.

           11.3.2   Software Audit.  Licensee shall provide Buy.Com in
                    --------------
conjunction with any notice of termination by Licensee under Section 11.2.1 or
                                                             --------------
within thirty (30) days of any notice of termination by Buy.Com under Section
                                                                      -------
11.2.1, a written "Development Plan" for any and all software and other
------
technology that Licensee and/or its Affiliates contemplate using as a

                                       21
<PAGE>

substitute for the Licensed Technology and Modifications thereof at any time
after termination of the Agreement ("Substitute Technology"). The Development
Plan shall specify to the reasonable satisfaction of Buy.Com (i) Licensee's
reasonable best estimate of the total costs and expenses incurred by Licensee
and its Sublicensees in developing and implementing the Substitute Technology,
(ii) the identity and location of any independent contractors retained to
develop the Substitute Technology, and (iii) the software architecture and
platform for each major software module included in the Substitute Technology
(including, without limitation, the order fulfillment, product management,
Website management, customer support and security software modules) and the
identity of all material third-party software each such module will operate
with. Licensee represents and agrees that no person or entity (whether an
employee of Licensee or any Sublicensee, an independent contractor or any other
third party) who assists in the development or implementation of any part of the
Substitute Technology will, at any time after commencing such assistance, have
access to, refer to or use any of the Source Code of the Licensed Technology or
any Modification thereof. Licensee shall notify Buy.Com in writing upon
completion of development of the Substitute Technology and for a period of six
(6) months thereafter, Buy.Com will have the right, at its expense, on fifteen
(15) days written notice to Licensee and during normal business hours, acting
through an independent software auditor designated by Buy.Com and approved of by
Licensee (such approval not to be unreasonably withheld), to examine and audit,
in a manner reasonably designed to minimize the disruption to Licensee's
business, all of the object code and Source Code and all documentation relevant
to the Substitute Technology, and Licensee shall ensure that the auditor is
provided full access to such materials to conduct the examination and audit.
Prior to such examination and audit, Licensee may require on reasonable notice
to the auditor and Buy.Com that the auditor enter into a written confidentiality
agreement containing nondisclosure provisions at least as restrictive as those
stated in Section 7.
          ---------

           11.3.3  Cooperation; Title.  Upon any termination of this Agreement
                   -----------
for any reason, Licensee shall take all necessary action to revest in or
transfer to Buy.Com (or its designee) all rights in the Buy.Com Marks and
Licensed Technology granted to Licensee by this Agreement, or otherwise acquired
by Licensee.  Licensee shall execute such documents and take such action as
Buy.Com may deem reasonably necessary or desirable to evidence the fact that
Licensee no longer has the right to use the Buy.Com Marks and Licensed
Technology. Buy.Com shall take all necessary action to revest in or transfer to
Licensee (or its designee) all rights in the Licensee Modifications granted to
Buy.Com by this Agreement, or otherwise acquired by Buy.Com. Buy.Com shall
execute such documents and take such action as Licensee may deem reasonably
necessary or desirable to evidence the fact that Buy.Com no longer has the right
to use the Licensee Modifications.

           11.3.4  Confidential Information.  Upon any termination of this
                   ------------------------
Agreement for any reason, each Primary Party shall deliver to the other (or its
designee) within thirty (30) days after the effective date of termination all of
the Confidential Information of the other Primary Party furnished to it
hereunder, including all copies documents, product, data and other materials
which embody such Confidential Information.

           11.3.5  Accrued Obligations.  Neither Primary Party shall be relieved
                   -------------------
of any obligation existing under this Agreement immediately prior to its
termination.

                                       22
<PAGE>

           11.3.6  Equitable Relief.  The Primary Parties acknowledge that any
                   ----------------
unauthorized use of any Licensed Technology or Buy.Com Mark or Licensee
Modification will constitute a material breach of this Agreement and will cause
substantial harm to Buy.Com or Licensee, as the case may be, for which damages
would not be a fully adequate remedy.  In the event of any such breach, in
addition to other available remedies, the applicable Primary Party shall have
the right to seek injunctive relief (without being required to post any bond or
other security).

     11.4  Survival.  Sections 1, 3.3, 5, 6.3 (to the extent of royalties
           --------
accrued and unpaid as of the date of termination), 6.4 (to the extent of
royalties accrued and unpaid as of the date of termination), 6.5, 7, 8, 9, 10,
11.3, 11.4, 12, 13 and 14 shall survive the termination of this Agreement.

12. ARBITRATION OF DISPUTES.

     12.1  Upgrade Dispute Negotiation.  With respect to any dispute,
           ---------------------------
controversy or claim raised or made by Licensee based solely on the allegation
of Licensee that Buy.Com has breached its obligation under Section 2.6 to
                                                           -----------
provide Licensee with any Upgrades (each an "Upgrade Dispute"), the Primary
Parties will attempt in good faith to resolve through negotiation the Upgrade
Dispute in accordance with this Section 12.1 prior to commencing any arbitration
                                ------------
or litigation proceedings under Section 12.2.  Either Primary Party may initiate
                                ------------
negotiations by providing written notice in letter form to the other Primary
Party, setting forth the subject of the dispute and the relief requested.  The
recipient of such notice will respond in writing within ten (10) days with a
statement of its position on, and recommended solution to, the dispute.  If the
Upgrade Dispute is not resolved by this exchange of correspondence, then one or
more representatives of each Primary Party with full settlement authority will
meet in a mutually agreeable time and manner (whether in-person or via
videoconference or telephone) within ten (10) days of the date of the response
to the initial notice to attempt to resolve the Upgrade Dispute ("Initial
Meeting").  If the Upgrade Dispute is not resolved within ten (10) days of the
Initial Meeting, the Chief Financial Officer or, if no such person, an
alternative representative with full settlement authority of each Primary Party
will meet in a mutually agreeable time and manner (whether in-person or via
videoconference or telephone) within twenty (20) days of the Initial Meeting to
attempt to resolve the Upgrade Dispute ("CFO Meeting").  If the Upgrade Dispute
is not resolved within ten (10) days of the CFO Meeting, the Chief Executive
Officer of each Primary Party will meet in a mutually agreeable time and manner
(whether in-person or via videoconference or telephone) within twenty (20) days
of the CFO Meeting to attempt to resolve the Upgrade Dispute ("CEO Meeting").
Only if the Upgrade Dispute is not resolved within thirty (30) days of the CEO
Meeting, may Licensee initiate an arbitration or litigation of the Upgrade
Dispute under this Agreement.  This Section 12.1 does not apply to any dispute,
                                    ------------
controversy or claim between the Parties that does not constitute an Upgrade
Dispute (each an "Other Dispute").

     12.2  Arbitration.
           -----------

           12.2.1  Arbitration Procedure.  Subject to Section 12.1, any dispute,
                   ---------------------              ------------
controversy or claim arising under, relating to, or concerning this Agreement
(including each and every

                                       23
<PAGE>

Upgrade Dispute and each and every Other Dispute) shall be determined by binding
arbitration conducted under the then current International Arbitration Rules of
the American Arbitration Association ("AAA") in Orange County, California, in
                                       ---
accordance with this Section 12.2. The number of arbitrators for each
                     ------------
arbitration shall be three (3). The language of each arbitration shall be in
English. Buy.Com shall select one (1) arbitrator and Licensee and Guarantor
shall collectively select one (1) arbitrator, and a third arbitrator shall be
chosen by the two arbitrators chosen by the Parties. If the two arbitrators
cannot agree on the third arbitrator, the third arbitrator shall, within thirty
(30) days of submission of a request by the two arbitrators chosen by the
Parties, be chosen by the AAA from a panel of arbitrators knowledgeable and
experienced in matters involving commercial transactions, computer technology
and software licensing. The Parties hereby request that the arbitrators decide
each arbitration within six (6) months of the initiation of the arbitration. The
arbitrators are not empowered to award damages in excess of compensatory
damages, and each Party waives any damages in excess of compensatory damages. To
the maximum extent permitted, the written determination of the arbitrators shall
be final and shall not be subject to judicial review; provided, however, that
any award of determination rendered by the arbitrators may be entered in a court
of competent jurisdiction. The prevailing Party shall be entitled to recover the
costs of arbitration and attorneys' fees and expenses, which shall be made part
of the arbitrator's award. The arbitrators shall determine the prevailing Party
for this purpose. Notwithstanding the foregoing, each Primary Party reserves the
right to seek before the state and federal courts having within their
jurisdiction the location of Buy.Com's principal place of business, a judicial
temporary restraining order, preliminary injunction, or other similar short-term
equitable relief, and grant the arbitrators the right to make a final
determination of the Parties' rights, including whether to make permanent or
dissolve such order.

           12.2.2  Place of Arbitration.  Each and every arbitration of each
                   --------------------
and every Other Dispute shall be held in Orange County, California, United
States, in accordance with the procedures set forth in Section 12.2.1.  Subject
                                                       --------------
to Section 12.1, with respect to each and every Upgrade Dispute, if Licensee
   ------------
wishes to arbitrate and/or litigate the Upgrade Dispute, it shall elect to (i)
initiate and prosecute the arbitration of the Upgrade Dispute under the
procedures set forth in Section 12.2.1 in London, England, United Kingdom, or,
                        --------------
alternatively, (ii) initiate and prosecute the arbitration of the Upgrade
Dispute under the procedures set forth in Section 12.2.1 in Orange County,
                                          --------------
California, United States.  For the avoidance of doubt, the parties acknowledge
and agree that, if Licensee initiates arbitration of any Upgrade Dispute under
this Section 12.2.2 in London, England, Licensee does not thereby waive and, in
     --------------
prosecuting such Upgrade Dispute, neither Primary Party will be deemed to have
waived any rights to initiate or prosecute any arbitration of any Other Dispute
under this Section 12.2.2, even if such Other Dispute arises out of the same
           --------------
facts and circumstances as the Upgrade Dispute.

     12.3  Express Waiver and Release of Claims by Licensee.  For the purposes
           ------------------------------------------------
of this Section 12.3, (i) "Deed" shall mean that certain deed of covenant
        ------------
entered into by and among Buy.Com, Licensee and JLP Victoria Limited ("JLP"),
dated concurrently herewith and set forth in  Schedule 4 of the Acquisition
                                              ----------
Agreement and (ii) "Warranties" shall mean any of the warranties made under

clauses J.1 and J.5 of the Acquisition Agreement.  Notwithstanding anything
-----------     ---
else, if any allegation, claim, dispute or matter of difference arises relating
to Buy.Com's use of the Licensed Technology, Buy.Com Marks and/or Licensee
Modifications in

                                       24
<PAGE>

the Territory or to any claim that the Licensed Technology (as of the Effective
Date) infringes or misappropriates any third party intellectual property rights
("License Claim") and Licensee or JLP (or any Affiliate of Licensee or JLP) has
commenced proceedings (in arbitration, litigation or through any other dispute
resolution mechanism) to enforce or in respect of a breach or alleged breach of
the Deed and/or the Warranties under the Acquisition Agreement arising from the
same facts or circumstances which give rise to the License Claim, then Licensee
hereby agrees that it and its Affiliates are prohibited from commencing,
prosecuting, enforcing or invoking in any litigation, arbitration or other
dispute resolution mechanism any claim of breach by Buy.Com or indemnification
by Buy.Com in relation to such License Claim under this Agreement and may only
seek and obtain relief through enforcement of the Deed and/or Acquisition
Agreement. The Parties acknowledge that Buy.Com, Licensee and JLP have entered
into a similar agreement under the Deed and Acquisition Agreement pursuant to
which if any allegation, claim, dispute or matter of difference arises in
respect of the Deed and/or Warranties ("Covenant Claim") and any of the parties
to the Deed and/or Acquisition Agreement and/or any Affiliate thereof have
commenced proceedings (in arbitration, litigation or through any other dispute
resolution mechanism) to enforce this Agreement or in respect of a breach or
alleged breach of or indemnification under this Agreement arising from the same
facts and circumstances which give rise to the Covenant Claim then Buy.Com,
Licensee and JLP have agreed that they shall be prohibited from commencing,
prosecuting or enforcing in any litigation, arbitration or other dispute
resolution mechanism any claim of breach by Buy.Com in relation to such Covenant
Claim under the Deed and/or Acquisition Agreement and may only seek and obtain
relief through enforcement of this Agreement.

13.  GUARANTY.  Guarantor hereby irrevocably and unconditionally guaranties to
Buy.Com the payment of and hereby agrees to be responsible for any and all
present and future payment obligations of Licensee under Sections 6.3 and 6.4 of
                                                         ------------     ---
this Agreement and each Sublicensee under Section 3.2 of its respective
                                          -----------
Sublicense Agreement (including, without limitation, the payment of any and all
royalties and interest that may accrue at any time during the term of the
Agreement), in each case when and as the same shall become due and payable.
This Guaranty is a primary and original obligation of Guarantor, is not merely
the creation of a surety relationship, and is an absolute, unconditional, and
continuing guaranty of payment which shall remain in full force and effect
without respect to future changes in conditions.  All payments to be made
hereunder by Guarantor shall be made in accordance with Section 6.4.
                                                        -----------
14.  MISCELLANEOUS

     14.1  Non-Solicitation.  During the Exclusivity Period, Licensee and
           ----------------
Buy.Com each agree that neither Primary Party will, directly or indirectly,
solicit or induce, or attempt to solicit or induce any employee, sales
representative, agent, or consultant of the other Primary Party to terminate
their employment, representation or other association with the other Primary
Party.

     14.2  Force Majeure.  A Primary Party shall not be liable for any delays
           -------------
or failure to perform as a direct result of causes beyond the control of such
Primary Party and not due to the negligence on the part of the Primary Party
claiming excuse for delay or failure, including, but not limited to, acts of God
(such as fire, storm, earthquake), labor disputes, wars, hostilities,
revolutions, riots, civil commotion, national emergency, ordinance or other act
or order of any

                                       25
<PAGE>

court, government or governmental agency. The Primary Party claiming excuse must
promptly notify the other of the event and its expected duration and use its
Best Efforts to mitigate its effects.

     14.3  Assignment and Transfer.  This Agreement and all of the provisions
           -----------------------
hereof shall be binding upon and inure to the benefit of the Parties and their
respective successors, transferees and assignees; provided, however, that no
Party may assign or otherwise transfer, pursuant to a Change in Control or
otherwise, any of its respective rights or obligations under this Agreement
without the prior written consent of the other two Parties.  Notwithstanding the
foregoing, (a) Licensee may transfer this Agreement to Guarantor or to a wholly-
owned subsidiary of Guarantor, without the consent of Buy.Com, and (b) Buy.Com
may transfer this Agreement pursuant to a Change in Control of Buy.Com, without
the consent of Licensee or Guarantor.  It shall be a condition to the
effectiveness of any such transfer that, at a minimum, the transfer be of the
entire Agreement and all of the transferor's rights and obligations thereunder
and that transferee enter into a valid and binding written agreement to be bound
by all of the transferor's obligations under this Agreement and confirming the
representations, warranties, and indemnifications of the transferor set forth in
this Agreement, all in form and substance reasonably acceptable to the non-
transferring Party or Parties.  Any transfer in violation of this Section 14.3
                                                                  ------------
shall be null and void.

     14.4  Waiver.  The waiver or failure of either Primary Party to exercise
           ------
in any respect any right provided for herein shall not be deemed a waiver of
that right in any other circumstances or a waiver of any further rights.

     14.5  Relationship.  Buy.Com, on the one hand, and Guarantor and Licensee,
           ------------
on the other hand, are independent contractors.  Nothing herein shall be deemed
to establish a partnership, joint venture, franchise or any other form of
relationship as participants in a joint undertaking between Buy.Com, on the one
hand, and Guarantor and Licensee, on the other hand.  Buy.Com shall be solely
responsible for any claims, damages or lawsuits arising out of its acts or those
of its employees and agents and Licensee and Guarantor shall be solely
responsible for any claims, damages or lawsuits arising out of their acts or
those of their employees and agents.  Buy.Com shall not incur any obligations
for or in the name of Licensee or Guarantor, nor have the authority to bind or
obligate Licensee or Guarantor.  Licensee and Guarantor shall not incur any
obligations for or in the name of Buy.Com, nor have the authority to bind or
obligate Buy.Com.

     14.6  Notices.  All notices and reports required by this Agreement shall
           -------
be in writing and shall be delivered personally, by facsimile transmission, by
overnight courier or by registered or certified mail, return receipt requested.
All postage and other delivery charges shall be prepaid by the Party sending the
notice.  Notice shall be effective only upon receipt by the Party being served,
except notice shall be deemed received seven (7) days after posting by the
United States Post Office or the UK Royal Mail if sent by mail in accordance
with this Section 14.6. Confirmation of receipt of any facsimile sent must be
          ------------
received in order to presume that the transmission was received, and notice by
facsimile shall, if received after close of business for the receiving Primary
Party, be deemed received on the next business day.  All notices shall be
addressed as follows unless changed by written notice pursuant to the terms of
this Section 14.6:
     ------------

                                       26
<PAGE>

To Buy.Com:              Buy.Com Inc.
                         895 Enterprise
                         Aliso Viejo, California 92656
                         U.S.A.
                         Attention:    General Counsel
                         Telephone:    (949) 389-2130 (U.S.)
                         Fax:          (949) 389-2830 (U.S.)

With Copy To:            Brobeck, Phleger & Harrison LLP
                         38 Technology Drive
                         Irvine, California 92618
                         U.S.A.
                         Attention:    Craig S. Gunther, Esq.
                         Telephone:    (949) 790-6341 (U.S.)
                         Fax:          (949) 790-6301 (U.S.)

To Licensee:             Buy.Com UK Limited
                         171 Victoria Street
                         London, England SW1 E5NN
                         U.K.
                         Attention:  Company Secretary
                         Telephone:  (207) 592-6365 (U.K.)
                         Fax:        (207) 592-6566 (U.K.)

With Copy To:            Buy.Com UK Limited
                         171 Victoria Street
                         London, England SW1 E5NN
                         U.K.
                         Attention:  Development Director
                         Telephone:  (207) 592-6306 (U.K.)
                         Fax:        (207) 592-6524 (U.K.)

To Guarantor:            John Lewis plc
                         171 Victoria Street
                         London, England SW1 E5NN
                         U.K.
                         Attention:  Company Secretary
                         Telephone:  (207) 592-6365 (U.K.)
                         Fax:        (207) 592-6566 (U.K.)

                                       27
<PAGE>

With Copy To:            John Lewis plc
                         171 Victoria Street
                         London, England SW1 E5NN
                         U.K.
                         Attention:  Development Director
                         Telephone:  (207) 592-6306 (U.K.)
                         Fax:        (207) 592-6524 (U.K.)

     14.7  Governing Law.  This Agreement shall be governed by and construed
           -------------
and interpreted in accordance with the laws of the State of California,
disregarding any conflict-of-laws rules which may direct the application of the
laws of another jurisdiction, and the United Nations Convention on Contracts for
the International Sale of Goods is hereby excluded.  No provision of this
Agreement shall be construed against any Party by reason of that Party having
drafted the same.   Subject to any arbitration brought in accordance with
Section 12.2, the sole jurisdiction and venue for actions related to the subject
matter hereof shall be the state and federal courts having within their
jurisdiction the location of Buy.Com's principal place of business, and all
Parties hereby consent to such jurisdiction and venue.

     14.8  Attorneys Fees.  In the event of any dispute or legal proceeding
           --------------
between the parties arising out of or relating to this Agreement or its breach,
the prevailing Party shall be entitled to recover from the other Parties all of
its fees, costs and expenses, including but not limited to attorneys fees, costs
and expert witness fees, incurred in connection with such dispute or legal
proceeding.

     14.9  Entire Agreement.  This Agreement, together with the Acquisition
           ----------------
Agreement and the Service Agreement and the exhibits attached thereto
constitutes the entire and only agreement of the parties relating to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
negotiations regarding the same.  This Agreement may not be modified or amended
except in writing signed by all three Parties.

     14.10  Severability.  If any term or provision of this Agreement, or the
            ------------
application thereof to any person or circumstance, shall to any extent be found
to be invalid, void, or unenforceable, the remaining provisions of this
Agreement and any application thereof shall, nevertheless, continue in full
force and effect without being impaired or invalidated in any way.

           14.11  Headings.  Headings and captions are for convenience only and
                  --------
are not to be used in the interpretation of this Agreement.

           14.12  Counterparts.  This Agreement may be executed in two or more
                  ------------
counterparts, each of which will be deemed an original, but all of which taken
together shall constitute one and the same instrument.  A facsimile signature
shall be deemed an original for purposes of evidencing execution of this
Agreement.

                                       28
<PAGE>

           14.13  Remedies.  The rights and remedies of a Primary Party set
                  --------
forth herein with respect to failure of the other to comply with the terms of
this Agreement (including, without limitation, rights of termination of this
Agreement) are not exclusive, the exercise thereof shall not constitute an
election of remedies and the aggrieved Primary Party shall in all events be
entitled to seek whatever additional remedies may be available in law or in
equity.

           14.14  No Third-Party Beneficiary.  The Agreement has been entered
                  --------------------------
into for the sole benefit of the Parties and in no event shall any third-party
beneficiaries be created thereby.  For the avoidance of doubt, the Parties
acknowledge and agree that under no circumstances shall any Sublicensee be a
third-party beneficiary under this Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.

LICENSEE                                   BUY.COM

By:_________________________________       By:_________________________________

Name:_______________________________       Name:_______________________________

Title:______________________________       Title:______________________________

Date:_______________________________       Date:_______________________________

GUARANTOR

By: ________________________________

Name:_______________________________

Title:______________________________

Date:_______________________________

                                       29

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