Execution Copy
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AMENDED AND RESTATED JOINT SERVICES AGREEMENT
between
XXXXXX XXXXXXXXXX, X.X.,
On behalf of itself and its direct and indirect, current and future,
subsidiaries, other than eSpeed, Inc. and its direct and indirect, current
and future, subsidiaries
and
eSPEED, INC.,
On behalf of itself and its direct and indirect, current and
future, subsidiaries
Dated as of April 1, 2001
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AMENDED AND RESTATED JOINT SERVICES AGREEMENT
This AMENDED AND RESTATED JOINT SERVICES AGREEMENT is made and entered
into as of April 1, 2001, among Xxxxxx Xxxxxxxxxx, X.X., a Delaware limited
partnership ("CFLP"), on behalf of itself and its direct and indirect, current
and future, subsidiaries, other than eSpeed, Inc. and its direct and indirect,
current and future, subsidiaries (the "Cantor Parties"), on the one hand, and
eSpeed, Inc., a Delaware corporation ("eSpeed"), on behalf of itself and its
direct and indirect, current and future, subsidiaries (the "eSpeed Parties"), on
the other hand. All capitalized terms used in this Agreement and not otherwise
defined shall have the meanings ascribed to such terms in Section 1 of this
Agreement. Each direct and indirect subsidiary of CFLP and eSpeed will
automatically become a party to this Agreement, unless it becomes a party to a
substantially identical separate agreement, provided, however, that this
Agreement shall not apply to any subsidiary, division or business unit of CFLP
at such time as it is no longer controlled by CFLP or one of its direct or
indirect subsidiaries, subject to reasonable arrangements and services provided
during reasonable transitional periods, unless such entity contemporaneously
with such change of control otherwise agrees in writing to be governed hereby.
W I T N E S S E T H:
WHEREAS, the eSpeed Parties are engaged in, among other things, the
business of creating, developing and operating Marketplaces, including
Electronic Marketplaces, in and through which buyers and sellers of fixed-income
securities, futures contracts, commodities and other Financial Products and
other Products may effect transactions in those Financial Products and other
Products;
WHEREAS, the eSpeed Parties and the Cantor Parties collaborate in
providing brokerage services to customers through existing Electronic
Marketplaces, and in creating and developing Electronic Marketplaces for new
Financial Products and other Products pursuant to the Joint Services Agreement
among the Cantor Parties and the eSpeed Parties dated as of December 15, 1999,
as amended (the "Joint Services Agreement"); and
WHEREAS, the eSpeed Parties and the Cantor Parties wish to amend and
restate the Joint Services Agreement;
NOW, THEREFORE, in consideration of the premises contained herein, it
is agreed as follows:
1. Defined Terms. For purposes of this Agreement, the following terms
have the meanings specified or referred to in this Section 1:
"Ancillary IT Services" means technology support services (other
than in respect of the Electronic Energy Marketplace), including, but not
limited to, (i) systems administration, (ii) internal network support, (iii)
support and procurement for desktops of Cantor Party end-user equipment, (iv)
operations and disaster recovery services, (v) voice communications, (vi)
support and development of systems for Clearance, Settlement and Fulfillment
Services, (vii) systems support for Cantor Party brokers, and (viii) electronic
applications systems and network support
and development for Unrelated Dealer Businesses; provided that Ancillary IT
Services does not include the provision of desktop hardware for use by Cantor
Party employees.
"Baseline Gaming Budget" means $750,000 for each calendar quarter,
which shall be the minimum amount of costs required to be incurred by the eSpeed
Parties with respect to any quarter for Gaming Development Services and
Ancillary IT Services in connection with a Gaming Business, as requested by the
Cantor Parties.
"Cantor Exchange" means Cantor Financial Futures Exchange, Inc. and
any successor thereto or to the operations thereof.
"Cantor Services" means any one of, or any combination of, Voice
Assisted Brokerage Services, Clearance, Settlement and Fulfillment Services and
Related Services.
"Clearance, Settlement and Fulfillment Services" means all such
services as are necessary to clear, settle and fulfill, or arrange settlement or
fulfillment as a name give-up or other intermediary of, in accordance with
customary market practice and taking into account applicable regulatory
requirements, a purchase and sale of a particular Product, including, but not
limited to, collection of money; arrangement of delivery of Products; receipt,
delivery and maintenance of margin and collateral, if appropriate; dealing with
issues relating to failures to receive or deliver payments or Products; and
collection and payment of transfer or similar taxes, to the extent applicable to
such Product. Clearance, Settlement and Fulfillment Services may include, but
are not limited to, acting as a riskless principal or other intermediary between
the buyer and the seller of a Product.
"Collaborative Marketplace" means an Electronic Marketplace that is
operated by a Cantor Party and an eSpeed Party in collaboration pursuant to
Section 3 of this Agreement. All Marketplaces shall be Collaborative
Marketplaces, unless otherwise determined in accordance with this Agreement. In
no event shall the Electronic Energy Marketplace or a marketplace involved in a
Gaming Business or an Unrelated Dealer Business be deemed to be a Collaborative
Marketplace for purposes of this Agreement.
"Electronic Brokerage Services" means the effecting of transactions
in, and purchases and sales of, a Product on an Electronic Marketplace in and
through the operation of an Electronic Trading System. Electronic Brokerage
Services include, but are not limited to, the provision and operation of network
distribution systems, transaction processing systems and customer interface
systems, in each case that are related to the effecting of transactions in, and
purchases and sales of, a Product on an Electronic Marketplace. Electronic
Brokerage Services do not include Voice Assisted Brokerage Services, Clearance,
Settlement and Fulfillment Services, Information Services or Related Services.
"Electronic Gaming Marketplace" means a marketplace in which
transactions constituting all or a portion of a Gaming Business may be effected
in whole or in part electronically, but does not include a marketplace involving
a Gaming Business that is merely electronically assisted, such as screen
assisted phone betting.
"Electronic Marketplace" means a Marketplace on which transactions
in, and purchases and sales of, Products may be effected in whole or in part
electronically, but does not
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include a Marketplace that is merely electronically assisted, such as screen
assisted open outcry. In no event shall the Electronic Energy Marketplace or a
marketplace involved in a Gaming Business or an Unrelated Dealer Business be
deemed to be an Electronic Marketplace for purposes of this Agreement.
"Electronic Energy Marketplace" means the marketplace and affiliated
web portal sponsored by TradeSpark on or through which North American wholesale
transactions in, and purchases and sales of, Energy Products and derivatives
thereof, including futures contracts and options on futures contracts involving
Energy Products (and related services) may be effected in whole or in part
electronically. Only transactions that are to be executed, settled and delivered
in North America shall be effected on or through the Electronic Energy
Marketplace.
"Electronic Trading System" means, as to any Electronic Marketplace,
the hardware, software, network infrastructure and other similar assets that are
used to effect purchases and sales in that Electronic Marketplace.
"Energy Products" means natural gas, electricity, coal, sulphur
dioxide and nitrogen oxides emissions allowances, and weather financial
products.
"eSpeed Marketplace" means a Marketplace (i) in which an eSpeed
Party renders Electronic Brokerage Services and (ii) that is not a Collaborative
Marketplace. In no event shall a marketplace involved in a Gaming Business or an
Unrelated Dealer Business be deemed an eSpeed Marketplace for the purposes of
this Agreement.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.
"Financial Product" means any financial asset or financial
instrument, any intangible commodity or any tangible fungible commodity,
including, but not limited to, any security, futures contract, foreign exchange
transaction, swap transaction, credit derivative, repurchase or reverse
repurchase obligation, currency or swap (as currently defined in the Federal
Bankruptcy Code of 1978) or any option or derivative on any of the foregoing;
provided that in no event shall any Energy Product traded on the Electronic
Energy Marketplace or any derivative thereof, including futures contracts and
options on futures contracts involving Energy Products traded on the Electronic
Energy Marketplace, be considered a Financial Product, nor shall any product
traded in a marketplace involving a Gaming Business or an Unrelated Dealer
Business be considered a Financial Product.
"Gaming Business" means the current business conducted by Cantor
Index Holdings, L.P. ("CIH") or a subsidiary thereof, which consists of
financial spread betting and equity contracts for difference, and those
activities described in clauses (i) through (iv) below that shall be conducted
from time to time in the future by CIH or any of its subsidiaries controlled by
CIH, directly or through its subsidiaries. Gaming Business shall also mean
activities that the Cantor Parties may irrevocably designate in writing from
time to time, primarily with individual customers, directly or indirectly,
wherever located and however conducted, currently and in the future, that
involve (i) receiving or negotiating bets or conducting pool betting operations
or the provision of services in connection therewith; (ii) organizing or
conducting gaming or the provision of services in connection therewith; (iii)
organizing or
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conducting the distribution of prizes by lot or chance or the provision of
services in connection therewith; and (iv) activities similar or related to the
foregoing activities, including without limitation activities commonly known as
fantasy games, hypothetical or virtual betting and spread betting, contracts for
differences, gambling, odds making, lotteries, gaming, wagering, staking,
drawing or casting lots; provided, however, that Gaming Business shall also
include, to the extent and only to the extent designated by the Cantor Parties
separately and in writing, those activities that would be gaming activities
except for the fact that they are not conducted with individual customers,
directly or indirectly, to the extent to which they are part of, ancillary to or
substantially connected with the activities described in clauses (i) and/or (ii)
above; provided, further, that Gaming Business does not include a Multi-dealer
Futures Business. For the purposes of this definition, "bet" means entering into
a contract by which each party undertakes to pay or forfeit to the other money
or other value if an issue, in doubt at the time of the contract, is determined
in accordance with the other party's forecast; "gaming" means the playing of a
game of chance for winnings in money or other value; and "game of chance"
includes a game of chance and skill combined and a pretended "game of chance."
"Gaming Development Services" means the services provided by the
eSpeed Parties in connection with developing or otherwise acquiring technology
in connection with a Gaming Business for the Cantor Parties; provided that
Gaming Development Services does not include the provision of desktop hardware
for use by Cantor Party employees.
"Gaming Product" means any intangible asset, good or interest that
can be bought or sold or otherwise is the subject of an activity constituting a
Gaming Business.
"Gaming Revenue Share" means 25% of Gaming Transaction Revenues.
"Gaming Transaction Revenues" means the net trading revenues (as
determined by the Cantor Parties in a manner consistent with their customary
business practices) and all other net fees (including without limitation
participation fees, commissions, spreads, markups or other similar amounts)
received from a customer in connection with participation by such customer in
activities constituting a Gaming Business.
"Information" means information relating to bids, offers or trades,
or any other information, that is input into, created by or otherwise resides on
an Electronic Trading System or is created in connection with a Gaming Business
or an Unrelated Dealer Business.
"Information Services" means the provision of Information to a
Person with respect to a Marketplace, a Gaming Business or an Unrelated Dealer
Business as a separate service not in connection with transactions by such
Person on such Marketplace or in connection with a Gaming Business or an
Unrelated Dealer Business. Information Services shall not include the provision
of Information to purchasers and sellers of a Product incident to the provision
of Electronic Brokerage Services and/or Voice Assisted Brokerage Services to
such customers.
"Marketplace" means a marketplace operated or to be operated by the
Cantor Parties and/or the eSpeed Parties in and through which buyers and sellers
of a Product may effect transactions in the Product. In no event shall the
Electronic Energy Marketplace or a
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marketplace involved in a Gaming Business or an Unrelated Dealer Business be
deemed to be a Marketplace for purposes of this Agreement.
"Multi-dealer Futures Business" means activities with respect to
futures contracts and options on futures contracts in marketplaces which, with
respect to activities in such futures contracts and options on futures
contracts, permit prices to be regularly offered by more than four market making
entities ("dealers") that trade such futures contracts or options on futures
contracts with multiple buyers and sellers.
"New Market Notice" means, with respect to a Marketplace, a written
notice describing with reasonable specificity the anticipated nature, general
level of volume and trading needs of that Marketplace.
"North America" means the United States, Canada and Mexico.
"Person" means any corporation, general or limited partnership,
limited liability company, joint venture, estate, trust, association,
organization or other entity or governmental or regulatory authority or agency.
"Product" means any tangible or intangible asset or good, other than
an Energy Product traded on the Electronic Energy Marketplace or any derivative
thereof, including futures contracts and options on futures contracts involving
Energy Products traded on the Electronic Energy Marketplace, and other than a
product traded in a marketplace involving a Gaming Business or an Unrelated
Dealer Business.
"Product or Pricing Decisions" means, as to an Electronic
Marketplace for a particular Product, (i) the definition of the Product, (ii)
the hours of operation of the Marketplace, (iii) the rules relating to trading
priority, incentives and other trading related issues and (iv) the rates and
schedules of commissions and other Transaction Revenues for the Marketplace,
including any variation thereof for particular customers or classes of
customers.
"Related Services" includes (i) credit and risk management services,
(ii) services related to sales positioning of Products, (iii) oversight of
customer suitability and regulatory compliance and (iv) such other services
customary to brokerage operations as are agreed to by CFLP and eSpeed.
"Transaction Revenues" means the standard fees, commissions,
spreads, markups or other similar standard amounts received from a customer in
connection with effecting transactions in a Marketplace.
"Unrelated Dealer Businesses" means (i) the equity businesses of the
Cantor Parties as they may exist from time to time, (ii) the money market
instruments and securities lending divisions of the Cantor Parties as they may
exist from time to time, (iii) any business or portion thereof or activity in
which a Cantor Party acts as a dealer or otherwise takes market risk or
positions, including in the process of executing matched principal transactions,
providing the services of a specialist or market maker or providing trading or
arbitrage operations, (iv) any activities that are not within the definition of
Gaming Business but would be if so designated by
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a Cantor Party, as set forth in the definition of Gaming Business herein, and
(v) any business not involving operating a Marketplace, other than a Gaming
Business.
"Voice Assisted Brokerage Services" means the effecting of
transactions in, and purchases and sales of, a Product on an Electronic
Marketplace in and through a broker or other human intermediary, in each case
who is an employee of, or providing services to, a Cantor Party. Voice Assisted
Brokerage Services include the entry of an order by a broker or other human
intermediary into the Electronic Trading System.
2. Term. The term of this Agreement shall be in effect perpetually,
unless sooner ended by the mutual agreement, in writing, of CFLP and eSpeed (the
"Term").
3. Joint Services in Collaborative Marketplaces.
(a) Subject to the terms and conditions stated herein, the Cantor
Parties and the eSpeed Parties intend to collaborate in providing
brokerage services to customers in and through Electronic Marketplaces.
In any case in which the Cantor Parties and the eSpeed Parties do so
collaborate, the Marketplace shall be a Collaborative Marketplace and
the respective authority, responsibilities and obligations of the
parties shall be governed by this Section 3.
(b) In the case of each Collaborative Marketplace, any Product or
Pricing Decision shall be made jointly by the Cantor Parties and the
eSpeed Parties. If the parties are unable to agree on a particular
Product or Pricing Decision after good faith efforts to do so, then the
final Product or Pricing Decision shall be made by (i) a Cantor Party,
in the case of a Marketplace or the portion thereof in which or for
which a Cantor Party provides any Voice Assisted Brokerage Services, and
(ii) an eSpeed Party, in the case of a fully electronic Marketplace
(that is, a Marketplace in which no Cantor Party provides Voice Assisted
Brokerage Services) or the portion of a Marketplace that is fully
electronic; provided, however, that no Product and Pricing Decision made
by an eSpeed Party with respect to a fully electronic Marketplace shall
result in the Cantor Party's share of Transaction Revenues for the
transactions effected in the Marketplace being less than the amount
necessary to cover the Cantor Party's actual costs of providing Cantor
Services in connection with such Marketplace.
(c) In the case of each Collaborative Marketplace, the applicable
eSpeed Party (i) shall own and operate the Electronic Trading System
associated with the Electronic Marketplace, (ii) shall be responsible,
as between the parties, for the provision of Electronic Brokerage
Services to customers and (iii) except as provided above with respect to
Product or Pricing Decisions, shall have reasonable discretion as to the
manner and means of operating the Electronic Trading System and
providing Electronic Brokerage Services to customers and Cantor brokers
in connection therewith.
(d) In the case of each Collaborative Marketplace, the applicable
Cantor Party (i) shall be responsible, as between the parties, for the
provision of Cantor Services to customers and (ii) except as provided
above with respect to Product or Pricing Decisions, shall have
reasonable discretion as to the manner and means of providing the Cantor
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Services. The applicable Cantor Party shall be responsible for
maintenance of books and records and compliance with applicable
securities laws, rules and regulations, as determined by the applicable
Cantor Party. Cantor Parties that are U.S. registered broker-dealers
pursuant to the Exchange Act shall be responsible for compliance with
the reporting requirements under Regulation ATS and related provisions
of the Exchange Act. In that regard, such Cantor Parties that are U.S.
registered broker-dealers each will be the broker for all transactions
in the systems, and each will determine the various non-discretionary
parameters under which transactions are executed in their respective
systems. eSpeed Parties that are U.S. registered broker-dealers pursuant
to the Exchange Act shall cooperate with the Cantor Parties that are
U.S. registered broker-dealers in all regulatory compliance matters and,
if applicable, in complying with Regulation ATS.
(e) Without limiting the authority of the parties in their
respective areas of responsibility pursuant to paragraphs (c) and (d),
the parties recognize the importance of providing an integrated and
seamless service to customers. Accordingly, the parties shall consult
diligently and in good faith, as and as often as necessary, to ensure
that their respective services are properly integrated.
(f) All information and data, other than Information, created,
developed, used in connection with or relating to the operation of and
effecting of transactions in any Marketplace or in connection with a
Gaming Business or an Unrelated Dealer Business ("Data") shall
constitute the sole property of the Cantor Parties or the eSpeed
Parties, as applicable, on the following basis: (i) if the Data relate
to Financial Products, a Gaming Business or an Unrelated Dealer
Business, the Data shall belong solely to the Cantor Parties, (ii) if
the Data relate to a Collaborative Marketplace in which only Products
that are not Financial Products are traded, the ownership of the Data
shall be determined by the Cantor Parties and the eSpeed Parties on a
case-by-case basis based on good faith negotiations, (iii) if the Data
relate to an eSpeed Marketplace in which only Products that are not
Financial Products are traded, the Data shall belong solely to the
eSpeed Parties and (iv) if the Data relate to a non-Collaborative
Marketplace that is not an eSpeed Marketplace and in which Financial
Products are traded, the Data shall belong solely to the Cantor Parties.
All Information relating to Financial Products transmitted and
disseminated on or through the Electronic Marketplace or relating to a
Gaming Business or an Unrelated Dealer Business shall be the sole
property of the Cantor Parties and, as between the parties, the Cantor
Parties shall have the sole and exclusive right to use, publish and be
compensated for Information Services in connection with or relating to
such Information; provided, however, in the case of each Collaborative
Marketplace, that the eSpeed Parties shall have the right (without any
obligation to pay the Cantor Parties therefor) to use such Information
in connection with the execution of transactions in the applicable
Collaborative Marketplace.
(g) To such extent as is consistent with the Cantor Parties' own
businesses of providing Electronic Brokerage Services in Marketplaces
that are not Collaborative Marketplaces, the Cantor Parties shall
promote and market eSpeed Marketplaces for effecting transactions in
Financial Products, and shall refer customers and prospective customers
to the applicable eSpeed Parties in an effort to cause such customers to
effect transactions in Financial Products in eSpeed Marketplaces.
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4. Sharing of Transaction Revenues. (A) The Cantor Parties and the
eSpeed Parties agree to share Transaction Revenues with regard to transactions
effected through Collaborative Marketplaces in the following manner:
(a) If (i) the Electronic Marketplace is a Collaborative
Marketplace, (ii) the transaction relates to a Financial Product (other
than a Financial Product that is traded on the Cantor Exchange) and
(iii) no Cantor Party provides Voice Assisted Brokerage Services in
connection with the transaction to which the Transaction Revenues relate
(that is, the transaction is fully electronic), then the applicable
eSpeed Party will receive the aggregate Transaction Revenues and will
pay to the applicable Cantor Party a service fee equal to 35% of the
Transaction Revenues.
(b) If (i) the Electronic Marketplace is a Collaborative
Marketplace, (ii) the transaction relates to U.S. Treasury securities
and U.S. federally-sponsored agency securities involving that certain
eSpeed business unit generally known as eSpeed Online, or any successor
thereof, and (iii) a Cantor Party provides Voice Assisted Brokerage
Services through any of the employees of such eSpeed Online business
unit or successor thereof in connection with the transaction to which
the Transaction Revenues relate, then the applicable eSpeed Party will
receive the aggregate Transaction Revenues and will pay to the
applicable Cantor Party a service fee equal to 35% of the Transaction
Revenues.
(c) If (i) the Electronic Marketplace is a Collaborative
Marketplace, (ii) the transaction relates to a Financial Product (other
than a Financial Product that is traded on the Cantor Exchange) and
(iii) a Cantor Party provides Voice Assisted Brokerage Services in
connection with the transaction to which the Transaction Revenues
relate, then the applicable Cantor Party will receive the aggregate
Transaction Revenues and will pay to the applicable eSpeed Party a
service fee equal to 7% of the Transaction Revenues.
(d) If (i) the Electronic Marketplace is a Collaborative
Marketplace, (ii) the transaction relates to a Product that is traded on
the Cantor Exchange and (iii) no Cantor Party provides Voice Assisted
Brokerage Services in connection with the transaction to which the
Transaction Revenues relate (that is, the transaction is fully
electronic), then the applicable eSpeed Party will receive the aggregate
Transaction Revenues and will pay to the applicable Cantor Party a
service fee equal to 20% of the Transaction Revenues.
(e) If (i) the Electronic Marketplace is a Collaborative
Marketplace, (ii) the transaction relates to a Product that is traded on
the Cantor Exchange and (iii) a Cantor Party provides Voice Assisted
Brokerage Services in connection with the transaction to which the
Transaction Revenues relate, then the applicable eSpeed Party will
receive the aggregate Transaction Revenues and will pay to the
applicable Cantor Party a service fee equal to 55% of the Transaction
Revenues.
(f) If (i) the Electronic Marketplace is a Collaborative Marketplace
and (ii) the transaction relates to a Product that (x) is not a
Financial Product and (y) is not traded on the Cantor Exchange, then the
applicable Cantor Party and the applicable eSpeed Party will share
Transaction Revenues in such manner as they shall agree.
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(B) The Cantor Parties and the eSpeed Parties agree to share
Transaction Revenues with regard to transactions effected through eSpeed
Marketplaces in the following manner:
(a) If (i) the Electronic Marketplace is an eSpeed Marketplace
and (ii) the transaction relates to a Financial Product, then the
applicable eSpeed Party will receive the aggregate Transaction Revenues
and will pay to CFLP a service fee equal to 20% of the Transaction
Revenues.
(b) If (i) the Electronic Marketplace is an eSpeed Marketplace
and (ii) the transaction relates to a Product other than a Financial
Product, then the applicable eSpeed Party will receive and retain all
of the Transaction Revenues.
(C) The Cantor Parties and the eSpeed Parties agree to share
Transaction Revenues with regard to transactions effected through other
Marketplaces, other than in connection with a Gaming Business or an Unrelated
Dealer Business, in the following manner:
(a) If (i) a transaction is effected in an Electronic Marketplace
that is not a Collaborative Marketplace and is not an eSpeed
Marketplace, but that is a Marketplace in which Cantor provides
Electronic Brokerage Services, and (ii) the transaction relates to a
Financial Product, then the applicable Cantor Party will receive the
aggregate Transaction Revenues and pay to eSpeed a service fee equal to
30% of the amount eSpeed would have received pursuant to Section 4(a) or
4(c) of this Agreement if the Marketplace had been a Collaborative
Marketplace. For purposes of this paragraph (i), the Transaction
Revenues shall be reduced by the costs incurred or paid by a Cantor
Party to a third party to provide or arrange for the provision of
Electronic Brokerage Services.
(b) If a transaction (i) is not effected through an Electronic
Marketplace, but (ii) is electronically assisted (by way of example, but
not limited to, a screen-assisted open outcry transaction), then the
applicable Cantor Party will receive the aggregate Transaction Revenues
and will pay to the applicable eSpeed Party 2.5% of the Transaction
Revenues.
(D) Each of the Cantor Parties and the eSpeed Parties agree to share
Gaming Transaction Revenues in connection with Gaming Businesses in the
following manner, such amount to be determined on a quarterly basis as provided
in Section 12 hereof. The applicable Cantor Party shall be responsible for and
shall collect 100% of all Gaming Transaction Revenues and shall pay over to
eSpeed with respect to any applicable calendar quarter as follows: eSpeed shall
receive the Gaming Revenue Share plus the excess, if any, of (i) the actual
costs in such calendar quarter of Gaming Development Services and Ancillary IT
Services incurred by the eSpeed Parties in connection with Gaming Businesses, as
requested by the Cantor Parties in writing, less the Baseline Gaming Budget,
over (ii) one-half of the difference of (x) the Gaming Revenue Share minus (y)
133% of the Baseline Gaming Budget, provided that, if (x) minus (y) is a
negative number, then it shall be considered zero for the purpose of calculating
the foregoing formula. All amounts due and payable pursuant to this Section 4(D)
shall be paid in the manner specified in Section 12 of this Agreement.
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(E) Notwithstanding the foregoing, in the event that a Cantor Party's
direct costs payable to third parties (other than the Cantor Parties and their
affiliates) for providing Clearance, Settlement and Fulfillment Services with
respect to transactions in a Collaborative Marketplace with respect to any
Financial Product for any month exceed the direct costs incurred by the Cantor
Parties to clear and settle cash transactions in United States Treasury
securities for such month, the cost of such excess shall be borne pro rata by
the applicable Cantor Party and the applicable eSpeed Party in the same
proportion as the Transaction Revenues and service fees for such transactions
are to be shared.
(F) For any month, for any Product for which sales and purchases during
such month are effected both through fully electronic transactions and through
voice-brokered transactions, Transaction Revenues earned with respect to such
Product shall be allocated between fully electronic transactions and
voice-brokered transactions as follows: the amount of Transaction Revenues
attributable to fully electronic transactions or voice-brokered transactions, as
the case may be, for such Product during such month in a Marketplace shall be
equal to (x) total Transaction Revenues for such Product for such month in such
Marketplace multiplied by (y) a fraction, the numerator of which is the notional
volume (by currency) of all transactions in such specific Product type for such
month in such Marketplace effected by fully electronic transactions or
voice-brokered transactions, as the case may be, and the denominator of which is
the notional volume (by currency) of all transactions in such specific Product
type for such month in such Marketplace.
(G) In the event that a customer does not pay, or pays only a portion
of, the Transaction Revenues relating to a transaction described in paragraphs
(a) through (i) above (a "Loss Event"), then the relevant Cantor Party and the
relevant eSpeed Party each shall bear its respective share of the loss arising
from the Loss Event in the same proportion as the Transaction Revenues and
service fees for such transaction are to be shared.
(H) All amounts due and payable to a Cantor Party or an eSpeed Party by
the other pursuant to this Section 4 shall be paid in the manner specified in
Section 12 of this Agreement.
(I) In the event that any tax is imposed on Transaction Revenues with
respect to a transaction (other than a Tax on net income), the cost of such tax
will be borne by the applicable eSpeed Party and the applicable Cantor Party in
the same proportion as the Transaction Revenues and service fees for such
transaction are to be shared.
5. Ancillary IT Services and Gaming Development Services.
(a) During the Term, the eSpeed Parties shall provide Ancillary IT
Services to the Cantor Parties.
(b) CFLP shall pay to eSpeed in consideration for the Ancillary IT
Services an amount equal to the direct and indirect costs, including
overhead, that the eSpeed Parties incur in performing those services
other than in connection with a Gaming Business.
(c) The eSpeed Parties shall provide Gaming Development Services and
Ancillary IT Services to the Cantor Parties with respect to Gaming
Businesses and shall incur costs in each calendar quarter in respect of
such services in an amount equal to the
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Baseline Gaming Budget for such quarter or, at the election of and in
the sole discretion of the Cantor Parties, such larger amount as may be
requested by the Cantor Parties in writing. For the avoidance of doubt,
Gaming Development Services and Ancillary IT Services do not include the
provision of desktop hardware for use by Cantor Party employees.
(d) The Cantor Parties shall not be required to reimburse eSpeed for
any amounts expended for the Ancillary IT Services for any Gaming
Business or Gaming Development Services pursuant to this Section 5, it
being understood that the eSpeed Parties are being compensated for such
services and expenses solely by the amounts earned by the eSpeed Parties
hereunder pursuant to Section 4(D).
(e) Notwithstanding any prior agreement or arrangement between or
among the parties hereto, the eSpeed Parties and the Cantor Parties
agree that they do not owe any monies to each other for the provisions
of Ancillary IT Services, Gaming Development Services, Gaming Revenue
Share or otherwise with respect to any Gaming Business prior to the date
of this Agreement.
(f) If any direct or indirect subsidiary, division or business unit
of a Cantor Party becomes no longer controlled by CFLP or one of its
direct or indirect subsidiaries (including any successors or assigns of
such direct or indirect subsidiary, division or business unit, the
"Separating Business"), contemporaneously with such change of control
any such Separating Business shall have the right, in its sole
discretion, to agree in writing to be governed by this Agreement;
provided, however, that in the event that the Separating Business does
not choose to be governed by this Agreement, the eSpeed Parties agree,
if requested by CFLP, to (i) provide reasonable transition services for
a reasonable period of time to the Separating Business and (ii) (x)
transfer (at cost) or (y) license on a non-exclusive basis (for a fee
that, in the discretion of eSpeed, reasonably approximates cost), at
eSpeed's option, any assets (or their functional equivalent, at eSpeed's
discretion) that may be reasonably requested by the Separating Business
in order for it to continue operating its business without the benefit
of the services contemplated by this Agreement.
6. Representations and Warranties.
(a) Organization and Good Standing.
(i) CFLP is duly organized, validly existing and in good
standing under the laws of the state of Delaware and has the
requisite power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
(ii) eSpeed is duly organized, validly existing and in good
standing under the laws of Delaware and has the requisite power and
authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby.
11
(b) Authority; Binding Effect; No Conflicts.
(i) CFLP has taken all necessary actions to authorize the
execution and delivery of this Agreement and to perform all of its
obligations under, and to consummate the transactions contemplated
by, this Agreement. This Agreement has been duly and validly
executed by CFLP. This Agreement constitutes the valid and binding
obligation of CFLP enforceable against CFLP in accordance with its
terms, subject to the effect of reorganization, bankruptcy,
insolvency, moratorium, fraudulent conveyance and other similar laws
relating to or affecting creditors' rights generally and court
decisions with respect thereto, and subject to the application of
equitable principles and the discretion of the court (regardless of
whether the enforceability is considered in a proceeding in equity
or at law). The execution, delivery and performance by CFLP of this
Agreement shall not, with or without the giving of notice or the
lapse of time or both, (x) violate any provision of any federal,
state, local or foreign law, statute, rule or regulation to which
CFLP is subject, (y) violate any injunction, order, judgment,
ruling, decree or settlement applicable to CFLP or (z) conflict
with, or result in a breach or violation of, any provision of the
certificate of incorporation, by-laws, partnership agreement or
similar governing document of CFLP or any lease, contract,
agreement, instrument, undertaking or covenant by which CFLP is
bound.
(ii) eSpeed has taken all necessary corporate actions to
authorize, execute and deliver this Agreement and to perform all of
its obligations under, and to consummate the transactions
contemplated by, this Agreement. This Agreement has been duly and
validly executed by eSpeed. This Agreement constitutes the valid and
binding obligation of eSpeed enforceable against eSpeed in
accordance with its terms, subject to the effect of reorganization,
bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance and other similar laws relating to or affecting
creditors' rights generally and court decisions with respect
thereto, and subject to the application of equitable principles and
the discretion of the court (regardless of whether the
enforceability is considered in a proceeding in equity or at law).
The execution, delivery and performance by eSpeed of this Agreement
will not, with or without the giving of notice or the lapse of time
or both, (x) violate any provision of any federal, state or local
law, statute, rule or regulation to which eSpeed is subject, (y)
violate any injunction, order, judgment, ruling, decree or
settlement applicable to eSpeed, or (z) conflict with, or result in
a breach or violation of, any provision of the certificate of
incorporation or by-laws of eSpeed or any lease, contract,
agreement, instrument, undertaking or covenant by which eSpeed is
bound.
(c) Litigation; No Undisclosed Liabilities. Except as disclosed in
the documents filed by eSpeed with the Securities and Exchange
Commission pursuant to the Exchange Act, there is no litigation pending
or, to eSpeed's or CFLP's knowledge, threatened, which questions the
validity or enforceability of this Agreement or seeks to enjoin the
consummation of any of the transactions contemplated hereby.
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7. New Marketplaces; Non-competition; Strategic Alliances.
(a) If a Cantor Party wishes to create a new Marketplace for a
Financial Product, then such Cantor Party may, by providing a New Market
Notice to eSpeed, require eSpeed to provide, or cause another eSpeed
Party to provide, Electronic Brokerage Services with respect to that
Marketplace. In such a case, eSpeed shall use commercially reasonable
efforts to develop an Electronic Trading System for, and to render
Electronic Brokerage Services with respect to, that Marketplace under
the terms of this Agreement. If eSpeed is able to develop and put into
operation an Electronic Trading System for the Marketplace within 180
days, then the Marketplace shall be a Collaborative Marketplace and the
operation thereof shall be subject to the provisions of Section 3 of
this Agreement. If, after diligent effort, eSpeed is unable to develop
and put into operation an Electronic Trading System for the Marketplace
within 180 days, then (i) eSpeed shall have no liability to any Cantor
Party for its failure to provide an Electronic Trading System, (ii) the
Cantor Party may create and operate the Marketplace in any manner that
the Cantor Party deems to be acceptable and (iii) the Marketplace shall
not be a Collaborative Marketplace. CFLP agrees that its proposal to
create a new Marketplace and the requirements relating thereto will be
commercially reasonable in scope and that CFLP or another Cantor Party
will diligently pursue the development of such Marketplace in a
meaningful way and that failure to do so within two years of the
provision of the New Market Notice will cause any rights of the eSpeed
Parties and the Cantor Parties in this Section 7 and Section 8 of this
Agreement to revert to their original status.
(b) If a Cantor Party wishes to create a new Marketplace for a
Financial Product that will involve the provision of Electronic
Brokerage Services and the Cantor Party does not require eSpeed to
operate an Electronic Trading System and to provide Electronic Brokerage
Services for that Marketplace pursuant to paragraph (a) of this Section
7, then the Cantor Party shall provide to eSpeed a New Market Notice
relating thereto and eSpeed shall have a right of first refusal to
provide Electronic Brokerage Services with respect to that Marketplace
under the terms of this Agreement. If eSpeed notifies the Cantor Party
that it wishes to provide Electronic Brokerage Services with respect to
the new Marketplace, then eSpeed shall use commercially reasonable
efforts to develop and put into operation an Electronic Trading System
for the Marketplace within 180 days. If eSpeed is able to develop and
put into operation an Electronic Trading System for the Marketplace
within 180 days, then the Marketplace shall be a Collaborative
Marketplace and the operation thereof shall be subject to Section 3 of
this Agreement. If, after diligent effort, eSpeed is unable to develop
and put into operation an Electronic Trading System for the Marketplace
within 180 days, or eSpeed notifies the Cantor Party that it does not
wish to provide Electronic Brokerage Services with respect to the new
Marketplace, then (i) the applicable Cantor Party may provide or obtain
from a third party Electronic Brokerage Services for that Marketplace in
any manner that the Cantor Party deems to be acceptable and (ii) the
Marketplace shall not be a Collaborative Marketplace. CFLP agrees that
its proposal to create a new Marketplace and the requirements relating
thereto will be commercially reasonable in scope and that CFLP or
another Cantor Party will diligently pursue the development of such
Marketplace in a meaningful way and that failure to do so within two
years of the provision of the New
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Market Notice will cause any rights of the eSpeed Parties and the Cantor
Parties in this Section 7 and Section 8 of this Agreement to revert to
their original status.
(c) If a Cantor Party wishes to create a new Electronic Marketplace
for a Product that is not a Financial Product, then the Cantor Party
shall provide to eSpeed a New Market Notice relating thereto. eSpeed or
another eSpeed Party shall have the opportunity to offer to provide
Electronic Brokerage Services with respect to the new Marketplace, which
offer the Cantor Party shall review and negotiate in good faith, but may
accept or reject in its reasonable discretion. If the Cantor Party
accepts the eSpeed Party's negotiated terms of proposed offer to provide
Electronic Brokerage Services, then the Marketplace shall be a
Collaborative Marketplace and the operation thereof shall be subject to
Section 3 of this Agreement on such terms as the applicable Cantor Party
and the applicable eSpeed Party shall agree. If the Cantor Party rejects
the eSpeed Party's negotiated terms of proposed offer to provide
Electronic Brokerage Services, then (i) the Marketplace shall not be a
Collaborative Marketplace and (ii) the Cantor Party may create and
operate the Marketplace in any manner that the Cantor Party deems to be
acceptable.
(d) If an eSpeed Party wishes to create a new Electronic Marketplace
for a Financial Product, then the eSpeed Party shall provide to CFLP a
New Market Notice relating thereto and CFLP or another Cantor Party
shall have a right of first refusal to provide the applicable Cantor
Services with respect to that Marketplace under the terms of this
Agreement. If, within 30 days of receiving the New Market Notice, CFLP
or another Cantor Party notifies the eSpeed Party that it wishes to
provide such Cantor Services with respect to the new Marketplace, then
the Marketplace shall be a Collaborative Marketplace and the operation
thereof shall be subject to Section 3 of this Agreement. If (i) CFLP
notifies the eSpeed Party that it does not wish to provide such Cantor
Services or (ii) CFLP fails to notify the eSpeed Party within the 30-day
time period that it wishes to provide such Cantor Services with respect
to the new Marketplace, then the eSpeed Party may provide or obtain from
a third party those services for that Marketplace in any manner that the
eSpeed Party deems to be acceptable, and the Marketplace shall be an
eSpeed Marketplace for purposes of this Agreement.
(e) If an eSpeed Party wishes to create a new Electronic Marketplace
for a Product that is not a Financial Product, then the eSpeed Party
shall provide to CFLP a New Market Notice relating thereto. CFLP or
another Cantor Party shall have the opportunity to offer to provide
Cantor Services with respect to the new Marketplace if, within 30 days
of receiving the New Market Notice, CFLP or another Cantor Party
notifies the eSpeed Party that it wishes to provide such Cantor Services
with respect to the new Marketplace. The eSpeed Party shall review and
negotiate the offer of CFLP or the other CFLP Party in good faith, but
may accept or reject that offer in its reasonable discretion. If the
eSpeed Party accepts a Cantor Party's negotiated terms of proposed offer
to provide Cantor Services, then the Marketplace shall be a
Collaborative Marketplace and the operation thereof shall be subject to
Section 3 of this Agreement on such terms as the applicable Cantor Party
and the applicable eSpeed Party shall agree. If the eSpeed Party rejects
the Cantor Party's negotiated terms of proposed offer to provide
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Cantor Services, then (i) the Marketplace shall not be a Collaborative
Marketplace and (ii) the eSpeed Party may create and operate the
Marketplace in any manner that the eSpeed Party deems to be acceptable.
(f) No eSpeed Party shall, directly, indirectly or in connection
with a third Person, engage in any activities competitive with a
business activity now or hereafter conducted by a Cantor Party or
provide or assist any other Person in providing any Cantor Service,
other than (i) in collaboration with a Cantor Party pursuant to Section
3 of this Agreement, (ii) with respect to a new Marketplace involving a
Financial Product, after CFLP (x) has indicated that it is unable or
unwilling to provide such Cantor Service or (y) fails to indicate to the
eSpeed Party within the prescribed 30-day period that it does wish to
provide such Cantor Service with respect to that Marketplace in
accordance with paragraph (d) of this Section 7, (iii) with respect to a
new Marketplace involving a Product that is not a Financial Product or
an Energy Product traded on the Electronic Energy Marketplace in
accordance with paragraph (c) or paragraph (e) of this Section 7, (iv)
with respect to an Unrelated Dealer Business in which an eSpeed Party
develops and operates a fully electronic Marketplace, or (v) with
respect to the Electronic Energy Marketplace. No eSpeed Party shall,
directly, indirectly or in connection with a third Person, engage in or
otherwise provide services for any Gaming Business, or engage in or
otherwise provide services for any activities that are not within the
definition of Gaming Business but would be if so designated by a Cantor
Party, as set forth in the definition of Gaming Business herein, without
the prior written consent of CFLP.
(g) No Cantor Party shall, directly, indirectly or in connection
with a third Person, provide or assist any other Person in providing
Electronic Brokerage Services, other than (i) in collaboration with
eSpeed pursuant to Section 3 of this Agreement, (ii) with respect to a
new Marketplace, after eSpeed (x) has indicated that it is unable to
develop and put into operation an Electronic Trading System with respect
to that new Marketplace in accordance with paragraph (a) of this Section
7 or (y) has declined to exercise its right of first refusal or is
unable to develop and put into operation an Electronic Trading System
with respect to that new Marketplace in accordance with paragraph (b) of
this Section 7, including, without limitation, the time period specified
therein, (iii) with respect to an Unrelated Dealer Business, (iv) with
respect to the Electronic Energy Marketplace or (v) with respect to a
Gaming Business.
(h) Notwithstanding the foregoing and anything to the contrary in
this Section 7, the Unrelated Dealer Businesses and Gaming Businesses
are expressly excluded from eSpeed's rights of first refusal under
paragraph (b) and the conduct by any Cantor Party either directly, or
indirectly with or through another Person, of any of the Unrelated
Dealer Businesses and Gaming Businesses shall not be deemed to be a
violation of this Section 7.
(i) The Cantor Parties and the eSpeed Parties shall be entitled to
and may enter into strategic alliances, joint ventures, partnerships or
similar arrangements with Persons and consummate Business Combinations
with Persons (all of the foregoing, collectively, "Alliance
Opportunities") on the following basis only. If an Alliance Opportunity
(i) relates to a Person that directly or indirectly provides Cantor
Services and
15
engages in business operations that do not involve Electronic Brokerage
Services, then any Cantor Party shall be entitled to consummate a
transaction with respect to such an Alliance Opportunity, (ii) relates
to a Person that directly or indirectly provides Electronic Brokerage
Services and engages in business operations that do not involve any
Cantor Service, then any eSpeed Party shall be entitled to consummate a
transaction with respect to such an Alliance Opportunity and (iii) is an
Alliance Opportunity with respect to a Person other than those described
in clauses (i) and (ii) above, then the Cantor Parties and the eSpeed
Parties shall cooperate to jointly pursue and consummate a transaction
with respect to such Alliance Opportunity on mutually agreeable terms,
provided, however that any Alliance Opportunity with TradeSpark with
respect to the Electronic Energy Marketplace shall not be considered an
Alliance Opportunity and any such Alliance Opportunity with TradeSpark
with respect to the Electronic Energy Marketplace shall be specifically
permitted in accordance with the terms and conditions agreed to by any
eSpeed Party or any Cantor Party. For purposes of this paragraph, a
"Business Combination" shall mean, with respect to any Person(other than
TradeSpark with respect to the Electronic Energy Marketplace), a
transaction initiated by and/or in which a Cantor Party or an eSpeed
Party is the acquiror involving (i) a merger, consolidation,
amalgamation or combination, (ii) any sale, dividend, split or other
disposition of any capital stock or other equity interests (or
securities convertible into or exchangeable for or options or warrants
to purchase any capital stock or other equity equivalents) of the
Person, (iii) any tender offer (including without limitation a
self-tender), exchange offer, recapitalization, liquidation, dissolution
or similar transaction, (iv) any sale, dividend or other disposition of
a significant portion of the assets and properties of the Person (even
if less than all or substantially all of such assets or properties), and
(v) entering into of any agreement or understanding, or the granting of
any rights or options, with respect to any of the foregoing.
8. Exclusive Patent Licenses.
(a) Subject to the second following sentence, the Cantor Parties
hereby grant to the eSpeed Parties an exclusive, perpetual, irrevocable,
worldwide, royalty-free right and license, with the right to sublicense
to its subsidiaries, under all patents, patent applications and
inventions of the Cantor Parties related to Electronic Marketplaces and
Electronic Gaming Marketplaces, now known and existing, including all
provisionals, divisionals, continuations, continuations-in-part,
reissues and extensions derived therefrom, as well as all foreign
patents and patent applications now known or pending and other
counterparts thereof (the "Patent Rights"). The Cantor Parties agree to
take all commercially reasonable actions requested by the eSpeed
Parties, at the sole expense of the eSpeed Parties, to cause the Patent
Rights to remain in full force and effect to the extent permitted by
law. In the event that eSpeed (x) has indicated that it is unable to
develop and put into operation an Electronic Trading System with respect
to a new Marketplace in accordance with paragraph (a) of Section 7 or
(y) has declined to exercise its right of first refusal with respect to
a new Marketplace in accordance with paragraph (b) of Section 7, then
the Cantor Parties shall have a limited right to use the Patent Rights
solely in connection with the operation of that new Marketplace. The
Cantor Parties shall cooperate with the eSpeed Parties, at the eSpeed
Parties' sole expense, in any attempt by the eSpeed Parties to prevent
or otherwise seek remedies or damages which, in any case,
16
shall inure to the eSpeed Parties for any third party infringement of
the Patent Rights that are the subject of the license granted to the
eSpeed Parties pursuant to this Section 8 or to defend against any third
party claim relating to the Patent Rights.
(b) The Cantor Parties hereby grant to the eSpeed Parties a
non-exclusive, perpetual, irrevocable, worldwide, royalty-free right and
license, with the right to sublicense to its subsidiaries and
affiliates, to use such trademarks and servicemarks as now or
hereinafter may be used (collectively, the "Trademark Rights"), in all
media now known or hereinafter developed, in connection with Electronic
Marketplaces and Electronic Gaming Marketplaces. The Cantor Parties
agree to take all commercially reasonable actions requested by the
eSpeed Parties, at the sole expense of the eSpeed Parties, to cause the
Trademark Rights to remain in full force and effect to the extent
permitted by law. The eSpeed Parties acknowledge that the applicable
Cantor Parties own the Trademark Rights, including all goodwill now or
hereafter associated therewith, and that all goodwill and improved
reputation generated by the eSpeed Parties' use of the Trademark Rights
shall inure to the benefit of the applicable Cantor Parties. In order to
preserve the inherent value of the Trademark Rights, the eSpeed Parties
agree to use reasonable efforts to ensure that the products and services
in connection with which the eSpeed Parties use the Trademark Rights
shall be at least equal to the standard prevailing in the operation of
the Electronic Marketplaces and in connection with Gaming Businesses
immediately prior to the date of the Agreement.
9. Indemnification.
(a) CFLP's Indemnification Obligations. Subject to the terms and
conditions of this Section 9, CFLP agrees to defend, indemnify and hold
eSpeed, the other eSpeed Parties and their respective officers,
directors, affiliates, agents, attorneys, employees and representatives
harmless from and against any and all liabilities, losses, costs,
damages, expenses, penalties, fines and taxes, including, without
limitation, reasonable legal and other expenses (collectively,
"Damages"), directly or indirectly arising out of, resulting from or
relating to:
(i) any breach of any covenant, agreement or obligation of any
Cantor Party contained in this Agreement; and
(ii) any liability resulting from CFLP broker errors and errors
arising in connection with the provision by any Cantor
Party of Clearance, Settlement and Fulfillment Services.
(b) eSpeed's Indemnification Obligations. Subject to the terms and
conditions of this Section 9, eSpeed agrees to defend, indemnify and
hold CFLP, the other Cantor Parties and their respective officers,
directors, affiliates, agents, attorneys, employees and representatives
harmless from and against any and all Damages directly or indirectly
arising out of, resulting from or relating to:
(i) any breach of any covenant, agreement or obligation of any
eSpeed Party contained in this Agreement;
17
(ii) any liability resulting from failures of eSpeed's
technology and errors caused by the technology of the
Electronic Marketplaces; and
(iii) any liability resulting from any claims asserted against
Xxxxxx with respect to an eSpeed Party's exercise of its
Patent Rights.
(c) Claims for Indemnification; Defense of Indemnified Claims. For
purposes of this Section, the party entitled to indemnification shall be
referred to as the "Indemnified Party" and the party required to
indemnify shall be referred to as the "Indemnifying Party." In the event
that the Indemnifying Party shall be obligated to the Indemnified Party
pursuant to this Section 9 or in the event that a suit, action,
investigation, claim or proceeding is begun, made or instituted as a
result of which the Indemnifying Party may become obligated to the
Indemnified Party hereunder, the Indemnified Party shall give prompt
written notice to the Indemnifying Party of the occurrence of such
event, specifying the basis for such claim or demand, and the amount or
estimated amount thereof to the extent then determinable (which estimate
shall not be conclusive of the final amount of such claim or demand);
provided, however, that the failure to give such notice shall not
constitute a waiver of the right to indemnification hereunder unless the
Indemnifying Party is actually prejudiced in a material respect thereby.
The Indemnifying Party agrees to defend, contest or otherwise protect
the Indemnified Party against any such suit, action, investigation,
claim or proceeding at the Indemnifying Party's own cost and expense
with counsel of its own choice, who shall be, however, reasonably
acceptable to the Indemnified Party. The Indemnifying Party may not make
any compromise or settlement without the prior written consent of the
Indemnified Party (which will not be unreasonably withheld or delayed)
and the Indemnified Party shall receive a full and unconditional release
reasonably satisfactory to it pursuant to such compromise or settlement.
The Indemnified Party shall have the right but not the obligation to
participate at its own expense in the defense thereof by counsel of its
own choice. If requested by the Indemnifying Party, the Indemnified
Party shall (at the Indemnifying Party's expense) (i) cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand
which the Indemnifying Party defends, (ii) provide the Indemnifying
Party with reasonable access during normal business hours to its books
and records to the extent they relate to the condition or operation of a
Marketplace and are requested by the Indemnifying Party to perform its
indemnification obligations hereunder, and to make copies of such books
and records, and (iii) make personnel available to assist in locating
any books and records relating to a Marketplace or whose assistance,
participation or testimony is reasonably required in anticipation of,
preparation for or the prosecution and defense of, any claim subject to
this Section 9. In the event that the Indemnifying Party fails timely to
defend, contest or otherwise protect the Indemnified Party against any
such suit, action, investigation, claim or proceeding, the Indemnified
Party shall have the right to defend, contest or otherwise protect the
Indemnified Party against the same and may make any compromise or
settlement thereof and recover the entire cost thereof from the
Indemnifying Party, including, without limitation, reasonable attorneys'
fees, disbursements and all amounts paid as a result of such suit,
action, investigation, claim or proceeding or compromise or settlement
thereof.
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(d) Payments; Non-Exclusivity. Any amounts due an Indemnified Party
under this Section 9 shall be due and payable by the Indemnifying Party
within fifteen (15) business days after (x) in the case of a claim which
does not involve any third party, receipt of written demand therefor and
(y) in the case of a claim which involves a third party, the final
disposition of such claim or demand, provided that reasonable legal and
other out-of-pocket costs and expenses are reimbursed currently within
15 business days after demand therefor. The remedies conferred in this
Section 9 are intended to be without prejudice to any other rights or
remedies available at law or equity to the Indemnified Parties, now or
hereafter.
10. Relationship of the Parties.
(a) The relationship of the Cantor Parties on the one hand and the
eSpeed Parties on the other hand is that of independent contractors.
Pursuant to this Agreement, the Cantor Parties and the eSpeed Parties
intend to render separate but related services to customers and to
divide certain of the revenues arising from those services, but the
parties do not intend to share profits or losses or to enter into or
create any partnership, and no partnership or other like arrangement
shall be deemed to be created hereby. None of the Cantor Parties or
eSpeed Parties shall have any claim against the others or right of
contribution with respect to any uninsured loss incurred by any of them
nor shall any of them have a claim or right against the others with
respect to any loss that is deemed to be included within the deductible,
retention or self-insured portion of any insured risk.
(b) eSpeed agrees to execute a separate agreement that is
substantially identical to this Agreement with respect to any discrete
line of business or businesses and/or with any company or companies that
are Cantor Parties at CFLP's request.
11. Audit. eSpeed may request a review, by those certified public
accountants who examine CFLP's books and records, of CFLP's allocation of
Transaction Revenues and Gaming Transaction Revenues to eSpeed to determine
whether such allocation was based upon the procedures set forth herein. Such a
review is to be conducted at eSpeed's expense. CFLP may request a review, by
those certified public accountants who examine eSpeed's books and records, of
eSpeed's allocation of Transaction Revenues to CFLP to determine whether such
allocation was based upon the procedures set forth herein. Such a review is to
be conducted at CFLP's expense.
12. Invoicing and Billing; Payment of Service Fees.
(a) Except with respect to a Gaming Business, the eSpeed Parties and
the Cantor Parties shall pay to the other, within 30 days of the end of
each calendar month, the amounts owed to the Cantor Parties or the
eSpeed Parties, as the case may be (determined in the manner provided in
Section 4 of this Agreement), during that calendar month. The eSpeed
Parties shall invoice the Cantor Parties for charges for Ancillary IT
Services provided pursuant hereto on a monthly basis as incurred, such
invoices to be delivered to CFLP by eSpeed within 15 days after the end
of each calendar month. The Cantor Parties shall pay to the eSpeed
Parties the aggregate charge for Ancillary IT
19
Services provided under this Agreement in arrears within 30 days after
the end of each calendar month.
(b) Each of the Cantor Parties shall pay to the eSpeed Parties,
within 30 days of the end of each calendar quarter, the amounts due to
the eSpeed Parties with respect to Gaming Businesses (determined in the
manner provided in Section 4(D) of this Agreement) during that calendar
quarter.
(c) Amounts due by one party to another under this Agreement shall
be settled against amounts due by the second party to the first under
this or any other agreement. All payments to be made pursuant to this
Agreement shall be exclusive of United Kingdom Value Added Tax which, if
applicable to any payments hereunder, shall be added to the amount of,
and be paid in addition to, such payments.
(d) Amounts paid to eSpeed in respect of any Transaction Revenues or
Gaming Transaction Revenues for which the payments by a customer to a
Cantor Party under applicable bankruptcy or insolvency laws are deemed
voidable preference payment or similar voidable payment, and for which a
Cantor Party has been required to refund or pay-over to such bankrupt or
insolvent customer or debtor's estate, may be deducted by the Cantor
Parties from the amounts otherwise due to an eSpeed Party in the month
following the month in which such amounts are returned to the customer
or the debtor's estate.
13. Documentation. All Transaction Revenues, Gaming Transaction
Revenues, service fees, costs of Ancillary IT Services, Gaming Development
Services and other benefits hereunder shall be substantiated by and payments
thereof shall be preceded or accompanied by, as applicable, appropriate
schedules, invoices or other documentation.
14. Force Majeure. Any failure or omission by a party in the
performance of any obligation under this Agreement shall not be deemed a breach
of this Agreement or create any liability if the same arises from any cause or
causes beyond the control of such party, including, but not limited to, the
following, which, for purposes of this Agreement shall be regarded as beyond the
control of each of the parties hereto: acts of God, fire, storm, flood,
earthquake, governmental regulation or direction, acts of the public enemy, war,
rebellion, insurrection, riot, invasion, strike or lockout; provided, however,
that such party shall resume the performance whenever such causes are removed.
15. Post-Termination Payments. Notwithstanding any provision herein to
the contrary, all payment obligations hereof shall survive the happening of any
termination of this Agreement until all amounts due hereunder have been paid.
16. Confidentiality.
(a) CFLP and its affiliates agree to treat as confidential and not
to disclose to any person (other than to CFLP employees who have a need
to know the same for purposes of CFLP's performing its obligations
hereunder) or use the same for its own benefit or for any purpose other
than performing its obligations hereunder, all confidential or
proprietary information, trade secrets, information related to, and all
20
subject matter covered by, any pending patent applications, data, plans,
strategies, projections, budgets, reports, research, financial
information, files, reports, software, agreements and other materials
and information (individually and collectively, "Confidential
Information") it receives, obtains or learns about eSpeed and its
affiliates, an Electronic Marketplace or any other program, service,
software or system eSpeed and/or CFLP develops in connection with this
Agreement. CFLP shall notify those of its employees who perform services
for eSpeed and its affiliates of this covenant and shall, to the extent
practical, secure their agreement to abide by its terms.
(b) eSpeed and its affiliates agree, during the term of this
Agreement, to treat as confidential and not to disclose to any person
(other than to eSpeed employees who have a need to know the same for
purposes of eSpeed's performing its obligations hereunder) or use the
same for its own benefit or for any purpose other than performing its
obligations hereunder, all Confidential Information it receives, obtains
or learns about CFLP and its affiliates or any other program, service,
software or system CFLP and/or eSpeed develops in connection with this
Agreement. eSpeed shall notify those of its employees who perform
services under this Agreement of this covenant and shall, to the extent
practical, secure their agreement to abide by its terms.
(c) Notwithstanding the foregoing, neither party shall be obligated
with respect to confidential or proprietary information that it can
document: (i) is or has become readily publicly available through no
fault of its own or that of its affiliates, employees or agents; or (ii)
is received from a third party lawfully in possession of such
information and lawfully empowered to freely disclose such information
to it; or (iii) was lawfully in its possession, without restriction,
after the date hereof.
17. Miscellaneous.
(a) This Agreement and all the covenants herein contained shall be
binding upon the parties hereto, their respective heirs, successors,
legal representatives and assigns. No party shall have the right to
assign all or any portion of its rights, obligations or interests in
this Agreement or any monies which may be due pursuant hereto without
the prior written consent of the other affected parties and which
consent may not be unreasonably withheld, provided, however, that CFLP
may make such assignment to any of its direct or indirect, current or
future, subsidiaries, other than eSpeed and its direct or indirect,
current or future subsidiaries, such assignment shall relieve CFLP of
its obligations hereunder with respect to such assignment and following
such assignment the eSpeed Parties shall not have recourse to CFLP with
respect to such assignment.
(b) No waiver by any party hereto of any of its rights under this
Agreement shall be effective unless in writing and signed by an officer
of the party waiving such right. No waiver of any breach of this
Agreement shall constitute a waiver of any subsequent breach, whether or
not of the same nature. This Agreement may not be modified except by a
writing signed by officers of each of the parties hereto; provided,
however, that each amendment, modification and/or waiver hereof or
hereunder must be approved by a majority of the outside directors of
eSpeed or the applicable eSpeed Party. For purposes of this Agreement,
an outside director shall mean a director who is not an
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employee, partner or affiliate (other than solely by reason of being an
eSpeed director) of eSpeed, CFLP or any of their respective affiliates.
(c) This Agreement constitutes the entire Agreement of the parties
with respect to the services and benefits described herein, and cancels
and supersedes any and all prior written or oral contracts or
negotiations between the parties with respect to the subject matter
hereof.
(d) This Agreement shall be strictly construed as independent from
any other agreement or relationship between the parties.
(e) This Agreement is made pursuant to and shall be governed and
construed in accordance with the laws of the State of New York, without
regard to the principles of conflict of laws thereof.
(f) The descriptive headings of the several sections hereof are
inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
(g) Any notice, request or other communication required or permitted
in this Agreement shall be in writing and shall be sufficiently given if
personally delivered or if sent by registered or certified mail, postage
prepaid, addressed as follows:
(i) If to a Cantor Party:
One World Trade Center, 000xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(ii) If to an eSpeed Party:
One World Trade Center, 000xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
The address of any party hereto may be changed on notice to the other
parties hereto duly served in accordance with the foregoing provisions.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Joint Services Agreement to be executed in their respective names by their
respective officers thereunto duly authorized, as of the date first written
above.
CANTOR XXXXXXXXXX, X.X., on behalf
of itself and its direct and
indirect, current and future,
subsidiaries, other than eSpeed,
Inc. and its direct and indirect,
current and future, subsidiaries
By: CF Group Management, Inc.
its Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
ESPEED, INC., on behalf of itself
and its direct and indirect,
current and future, subsidiaries
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief
Executive Officer
[Signature Page for Joint Services Agreement]
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