PURCHASE AND SERVICE AGREEMENT
This Purchase and Service Agreement ("this Agreement") is made and
entered into this day of , 1997, between Data Transmission
Network Corporation, a Delaware corporation ("DTN"), whose address is 0000 Xxxx
Xxxxx Xxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000, and Arkansas Farm Bureau
Federation ("AFB"), whose address is , Arkansas.
RECITALS:
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A. DTN is the owner and operator of an electronic information system
using color satellite data terminals (the "System") which continuously transmits
information to DTN's subscribers ("DTN Subscribers"). DTN provides various
information services to DTN Subscribers over the System. One of such services is
known as the FarmDayta II service (the "FarmDayta II Service").
B. AFB is a provider of services to the agriculture industry in the
State of Arkansas. AFB currently transmits information to subscribers ("AFB
Subscribers") of its ACRES program on equipment owned by AFB, which equipment
includes a monitor, databox, Ku satellite receiver, LNB, cable, and satellite
dish. Such satellite dish, LNB, and cable may be used by DTN in providing
information to the DTN Subscribers on the System, while the monitor, databox and
Ku satellite receiver must be replaced with DTN's equipment.
C. AFB desires for DTN to make the FarmDayta II Service and its other
information services available to the AFB Subscribers and other members of AFB
and AFB is willing to promote DTN's information services as provided in this
Agreement. DTN desires to provide its information services to the AFB
Subscribers who contract to receive such services.
D. AFB also desires for DTN to purchase certain of AFB's equipment
used by it in transmitting information to AFB Subscribers, and DTN is willing to
purchase such equipment pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the aforementioned recitals and
the covenants and conditions herein contained, the parties hereto agree as
follows:
1. Sale and Purchase. DTN agrees to purchase from AFB, and AFB agrees
to sell to DTN the equipment and accessories now owned by AFB and currently
being used by the Converted Subscribers (defined below) to receive AFB's
information service which shall include for each Converted Subscriber a monitor,
databox, Ku satellite receiver, LNB, cable, and satellite dish (hereinafter
collectively referred to as a "Unit"). AFB represents that there are
approximately 750 AFB Subscribers who possess one Unit each. The Units used by
Converted Subscribers which are to be sold to DTN are collectively referred to
in this Agreement as the "Converted Subscriber Units". For purposes of this
Agreement, the term "Converted Subscribers" shall mean those AFB Subscribers who
convert to and become DTN Subscribers during the Conversion Period (defined
below) upon the terms set forth in this Agreement, including the minimum
requirement of a 1-year subscription term. For purposes of this Agreement, the
term "Conversion Period" shall mean the 120-day period following the date of
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this Agreement. In addition, DTN agrees to purchase those sets of color
satellite data terminals which AFB elects to sell (each set must consist of a
monitor, databox and Ku satellite receiver and is referred to herein as a "Color
Unit") and which are either currently being used by AFB Subscribers who do not
become Converted Subscribers or held in inventory by AFB. Color Units shall not
include any Converted Subscriber Units. For purposes of this Agreement, all
Converted Subscriber Units and Color Units shall be referred to in the aggregate
as the "Purchased Equipment".
2. Payments. In consideration for the Purchased Equipment and
for the services to be performed by AFB pursuant to this Agreement, DTN agrees
to pay AFB, and AFB agrees to accept from DTN as payment in full, the following
payments:
(a) Six Hundred Dollars ($600) for each Converted Subscriber. DTN
shall have no obligation to pay $600 to AFB for AFB
Subscribers who convert to and become DTN Subscribers after
the Conversion Period. This fee shall be paid on or before
the 15th day of the month following the month in which such
Converted Subscriber begins to receive the DTN information
service or the month in which that portion of the Converted
Subscriber Unit which is to be returned to DTN is received by
DTN in acceptable condition, whichever is later.
(b) Fifty Dollars ($50) for each Color Unit which AFB elects to
sell to DTN. This fee shall be paid on or before the 15th day
of the month following the month in which the Color Unit is
received by DTN in acceptable condition.
(c) During the term of this Agreement, DTN shall pay AFB a
monthly fee determined by multiplying Six Dollars ($6.00) by
the number of paid Converted Subscribers receiving a DTN
information service during such month. The per Converted
Subscriber fee shall be paid in arrears on or before the 15th
day of each month based on the number of paid Converted
Subscribers receiving the service in the prior month.
AFB shall be responsible for any sales or related taxes which may result as a
result of the payments made to AFB under this Agreement.
3. AFB Services. During the Conversion Period, AFB shall solicit (via
telephone call, written correspondence or face to face meeting) each AFB
Subscriber to enter into DTN's standard form of subscription agreement for the
FarmDayta II Service or another color service of DTN on the System for at least
a one (1) year subscription term. AFB agrees at its expense to send during the
Conversion Period to each AFB Subscriber a letter recommending DTN's information
services to such AFB Subscriber, which letter is to be accompanied by
promotional materials furnished by DTN. Such letter shall be in a form
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satisfactory to both DTN and AFB. AFB shall be responsible for obtaining the
subscription agreement signed by the Converted Subscriber and returning it to
DTN for acceptance by DTN. An AFB Subscriber will not be considered a Converted
Subscriber until the subscription agreement is accepted by DTN in Omaha,
Nebraska. DTN will then deliver to each Converted Subscriber the DTN equipment
(likely to be the monitor, databox and satellite receiver) which will be needed
to allow such Converted Subscriber to receive the applicable DTN service. AFB
shall cause to be picked up from each Converted Subscriber that portion of the
Converted Subscriber Unit which has been replaced by the DTN equipment
(exclusive of monochrome monitors believed to be undesirable) and, at AFB's
expense, delivered to DTN. Where possible, such pick up and delivery shall be
accomplished through the use of UPS call tags. AFB shall be responsible for
installing or assisting the Converted Subscribers in installing the DTN
equipment and providing the necessary assistance and support to assure AFB
Subscribers a smooth conversion to the System. DTN will be responsible for
training Converted Subscribers on how to use the DTN equipment. In addition, AFB
shall at its expense deliver the Color Units to DTN no later than sixty (60)
days after the expiration of the Conversion Period.
4. DTN Services. DTN agrees to provide the FarmDayta II Service to
each Converted Subscriber at the same subscription rate at which such subscriber
currently receives the AFB service, during the initial 12-month period in which
such subscriber is a Converted Subscriber. DTN agrees to provide its DTN AgDaily
service to each Converted Subscriber at the subscription rate of Forty-Five
Dollars ($45.00) per month during the initial 12-month period in which such
subscriber is a Converted Subscriber. With respect to any DTN information
service offered on the color platform (other than the FarmDayta II Service and
the DTN AgDaily service), DTN will offer a Converted Subscriber a Five Dollar
($5.00) discount from DTN's standard monthly subscription rate for such service
during the initial 12-month period in which such subscriber is a Converted
Subscriber. A Converted Subscriber also will receive no initiation or start up
fee with its initial DTN subscription. DTN will impose no more than a Two Dollar
($2.00) increase in the standard monthly subscription rate during the second
12-month subscription period for those Converted Subscribers who have not
changed the DTN information service initially received by them. During the term
of this Agreement, DTN will furnish to AFB that number of complimentary DTN
units which equals the number of complimentary units currently furnished to AFB
in the ACRES program or a maximum of twenty (20), whichever is less. Such units
shall consist of no more than three units receiving the FarmDayta II Service, no
more than three units receiving DTN's AgDaily Pro service, no more than two
units receiving real time commodity quotations, and the remaining units shall
receive DTN's basic AgDaily service. AFB and DTN will execute DTN's standard
Subscription Agreements applicable to the various services, which will be
provided free of charge, except AFB will be responsible for all real time
exchange fees. DTN also shall provide to AFB during the term of this Agreement,
free of charge, a 5-page DTN Group E-Mail segment (to be used by the Vocational
Agriculture Department) and an 11-page DTN Group E-Mail segment (to be used by
the Cooperative Extension Service) on the System for delivery to those DTN
Subscribers in Arkansas designated by AFB. Such segments will be updated no more
than once per calendar week. AFB and DTN will execute DTN's standard Electronic
Mail Service Agreement applicable to such services.
5. Term. The term of this Agreement shall be for a period of ten (10)
years from the date of this Agreement, unless this Agreement is terminated
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earlier as otherwise provided in this Agreement. This Agreement also shall
terminate upon the occurrence of the first to occur of either of the following
events:
(i) The mutual written agreement of both DTN and AFB; or
(ii) The adjudication of either party as a bankrupt, the
execution by either party of an assignment for the benefit
of its creditors, or the appointment of a receiver for
either party or substantially all of either party's
property.
6. Promotion. During the term of this Agreement, AFB agrees to
encourage all AFB members to use DTN's services and to otherwise promote to all
AFB members the DTN services being provided on the System. AFB agrees to
cooperate with DTN to market DTN's services to all AFB members; provided,
however, AFB shall not be required to incur out-of-pocket costs for such
marketing, except as specifically provided in this Agreement.
7. Cotton/Rice Information. During the term of this Agreement
(so long as such information or similar information is available to AFB), AFB
will furnish to DTN for transmission on the System the cotton and rice
information package currently provided by AFB to AFB Subscribers under the name
of Xxxx Xxxxxx (the "Cotton/Rice Information"). AFB may rename the Cotton/Rice
Information at its discretion if Mr. Xxxx Xxxxxx is no longer involved in
furnishing such information. During the term of this Agreement, DTN will
transmit the Cotton/Rice Information free of charge to all Converted Subscribers
who remain DTN Subscribers. During those periods in which DTN elects to offer
the Cotton/Rice Information to DTN Subscribers located in Arkansas (other than
the Converted Subscribers), DTN will offer such information free of charge.
8. Sales Agency. After the Conversion Period, AFB shall be eligible
to act as a sales agent of DTN to solicit and obtain subscriptions to DTN's
information services. AFB shall receive $200 for obtaining a basic subscription
agreement with a new DTN Subscriber and $350 for obtaining a real time
subscription agreement with a new DTN Subscriber. AFB and DTN will execute DTN's
standard Sales Agency Agreement upon the foregoing terms. AFB will be a sales
agent of DTN only for the purposes and to the extent expressly set forth in such
Sales Agency Agreement and its relationship with DTN shall be solely that of an
independent contractor. AFB also shall be entitled to receive a referral fee of
$50.00 for any referral which results in a new DTN Subscriber. Any solicitation
at an AFB meeting which results in a new DTN Subscriber or generates a referral
which leads to a new DTN Subscriber shall entitle AFB to the applicable fees as
set forth in this paragraph regardless of whether such solicitation is made by a
DTN sales representative or a staff member of AFB.
9. Xxxx of Sale. Concurrently with the execution of this Agreement,
AFB agrees to sell, transfer, assign and convey to DTN the Purchase Equipment by
duly executed warranty xxxx of sale and assignment, free and clear of all liens,
encumbrances, security interests, leasehold interests, actions, claims, and
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equities of any kind whatsoever. AFB agrees to take such actions from time to
time as may in the reasonable judgment of DTN or its counsel be necessary or
advisable to confirm the title of DTN to any of the items of personal property
acquired by DTN from AFB pursuant to this Agreement. DTN shall be entitled to
possession of the Purchased Equipment upon the execution of this Agreement;
provided, however, that AFB agrees to maintain full replacement value insurance
on the Purchased Equipment until it is transported to DTN.
10. Bulk Sales Transfer. If applicable, DTN waives compliance by AFB
with the Bulk Sales provisions of the Arkansas Uniform Commercial Code or any
equivalent statute, and AFB agrees to indemnify DTN and to hold DTN harmless
from any loss or expense arising by reason of such non-compliance.
11.Representations of AFB. AFB warrants, represents and covenants to
and with DTN that AFB is the sole and lawful owner and has good and merchantable
title to all of the items of personal property to be acquired by DTN pursuant to
this Agreement and that, upon the transfer and assignment of such property to
DTN by warranty xxxx of sale and assignment as hereinbefore mentioned, DTN will
acquire good and merchantable title thereto, free and clear of interests,
leasehold interests, and claims of any kind whatsoever. AFB further warrants,
represents and covenants to and with DTN that the Purchased Equipment, when it
is received by DTN, will be in the same condition as it was when located at the
AFB Subscriber sites and, otherwise, DTN accepts the Purchased Equipment in its
present condition. The representations, warranties, and covenants contained in
this Agreement shall survive the date of this Agreement and shall be binding
upon the parties hereto and their successors and assigns.
12. Indemnification. Each party hereto agrees to indemnify and hold
harmless the other party, its officers, directors, employees, and agents from
and against any and all claims, demands, liability, loss, cost, damage, penalty
or expense, including attorneys' fees and costs of settlement, resulting from or
arising out of the failure of the indemnifying party to observe any covenant or
condition set forth in this Agreement, and the inaccuracy of any representation
made by the indemnifying party in this Agreement.
13. Covenant Not to Compete. After the Conversion Period and during
each month of the term of this Agreement in which AFB receives at least $2,000
in fees pursuant to Paragraph 2(c) of this Agreement, AFB and its affiliates
shall not, directly or indirectly, whether as an agent, consultant, independent
contractor, owner, partner or otherwise:
a) Solicit for itself or others, or advise or recommend to any
other person that such person solicit, any customer or
prospective customer of DTN or any current or future member of
AFB, for the purpose of obtaining the business of such
customer or member, in competition with DTN; or
b) Offer, transmit, facilitate or promote the distribution or
transmission to AFB members of information services in compe-
tition with DTN.
The phrase "in competition with DTN" shall mean any business that distributes or
transmits via any electronic information system the same or similar type of
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information as currently offered by AFB on its ACRES program or the Cotton/Rice
Information; provided, however, AFB shall retain the right to continue providing
(i) the Cotton/Rice Information to ACRES pursuant to its existing contract and
(ii) in the context and via the medium currently provided, its information
services other than its ACRES program. Accordingly, AFB shall terminate
operation of its ACRES program by the end of the Conversion Period. AFB shall be
responsible for all of its obligations to AFB Subscribers and DTN does not
assume any of such obligations.
The covenants contained in this Section 13 are independent of one
another and are severable. In the event any part of the covenants set forth in
this Section shall be held to be invalid or unenforceable, the remaining parts
thereof will continue to be valid and enforceable. If any provisions of these
covenants relating to the time period, activity and/or area of restriction shall
be declared by a court of competent jurisdiction to exceed the maximum time
periods, activities or areas which such court deems reasonable and enforceable,
such time period, activity and/or area of restriction shall be deemed to be the
maximum time period, activity and/or area which such court deems reasonable and
enforceable. AFB acknowledges that the restrictions contained in this Section 13
are reasonable and necessary to protect the goodwill of that portion of the
business of AFB being acquired by DTN pursuant to this Agreement.
14. Severability. In the event that one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any of the other provisions contained in this Agreement, which
provisions shall remain in full force and effect.
15. Relationship of Parties. Nothing contained in this Agreement shall
be deemed or construed to create the relationship of principal and agent or of
partnership, joint venture, or any association whatsoever between the parties,
it being expressly understood and agreed that each party shall be an independent
contractor with respect to the other party in connection with the work performed
hereunder. Except as otherwise provided in this Agreement, each party shall bear
its own expenses with respect to the subject matter of this Agreement.
16. Notices. Any and all written notices, communications or payments
shall be made to the respective parties at their addresses indicated in the
first paragraph of this Agreement or at such other address as the party may
indicate in a written notice to the other party of this Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto in separate counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
18. Choice of Law. This Agreement shall be subject to and
interpreted in accordance with the substantive laws of the State of Nebraska.
19. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, legal
representatives, and assigns; provided, however, that the rights, duties, and
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privileges of AFB hereunder may not be assigned or otherwise transferred by it,
in whole or in part, without the prior written consent of DTN which may be
withheld for any reason.
20. Default. This Agreement may be terminated by either party upon
twenty (20) days prior written notice if the other party has materially breached
the provisions of this Agreement and has not cured such breach within such
notice period. Upon the occurrence of any event of default, the non-defaulting
party may exercise any right or remedy which may be available to it under
applicable law.
21. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter of this
Agreement and shall supersede all prior offers, negotiations, and agreements
with respect to such subject matter. Any provision of any party's invoices,
statements, orders, acknowledgements, or other forms which is inconsistent with
or in addition to the provisions of this Agreement shall be of no force or
effect unless specifically consented to in writing by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DATA TRANSMISSION NETWORK
CORPORATION, a Delaware corporation
By:
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Title:
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ARKANSAS FARM BUREAU FEDERATION
By:
--------------------------------
Title:
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