This excerpt taken from the BIDZ 10-K filed Apr 29, 2008.
Item 13Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
Relationship with LA Jewelers
LA Jewelers, Inc. was one of the first suppliers to extend us payment terms to purchase our inventory. LA Jewelers had extended credit to us of approximately $4.3 million as of December 31, 2006 and approximately $5.1 million as of December 31, 2007. Of the merchandise purchased by us, LA Jewelers supplied approximately 11.9%, 26.4% and 37.1% during fiscal 2007, 2006 and 2005, respectively. One of the managers of LA Jewelers, Saied Aframian, beneficially owns 1,328,000 shares of our common stock as of December 31, 2007.
Transactions with Mr. Zinberg
During September 2005, Mr. Zinberg, our President and Chief Executive Officer, purchased an automobile from us for approximately $57,000, which represented the fair market value of the automobile.
Claudia Y. Liu, our Chief Operating Officer, is the wife of Lawrence Y. Kong, our Chief Financial Officer. Ms. Liu and Mr. Kong are not in a reporting position to each other and both Ms. Liu and Mr. Kong report to the Chief Executive Officer.
Marina Zinberg, who is a Vice President and beneficially owns 31.8% of our outstanding shares of common stock, is the sister of David Zinberg, our Chairman of the Board, President, and Chief Executive Officer. During 2007, we paid Marina Zinberg a salary of $100,000. Ms. Zinberg, who was formerly our corporate secretary and treasurer, reports to Mr. Zinberg.
Review, Approval or Ratification of Transactions with Related Persons
Our Corporate Governance Principles and Code of Conduct require that every employee avoid situations where loyalties may be divided between our interests and the employees own interests. Employees and directors must avoid conflicts of interests that interfere with the performance of their duties or are not in our best interests.
Pursuant to its written charter, the Audit Committee reviews and approves all related-party transactions as such term is used by SFAS No. 57 Related Party Disclosures, or as otherwise required to be disclosed in our financial statements or periodic filings with the SEC, other than compensation, including the grant of stock options and restricted stock awards authorized by the Board or any committee thereof. Related party transactions include transactions between us, our executive officers and directors, beneficial owners of five percent or greater of our securities, and all other related persons specified under Item 404 of Regulation S-K promulgated by the SEC. We have adopted written policies and procedures regarding the identification of related parties and transactions, and the approval process. The Audit Committee considers each proposed transaction in light of the specific facts and circumstances presented, including but not limited to the risks, costs and benefits to us and the availability from other sources of comparable services or products.
Independence of the Board of Directors
Our Board of Directors has determined, after considering all the relevant facts and circumstances, that Messrs. Hanelt, Singh, and Itkin are independent directors, as independence is defined by NASDAQ and the SEC, because they have no relationship with us that would interfere with their exercise of independent judgment.
This excerpt taken from the BIDZ 10-K filed Mar 12, 2008.