1
EXHIBIT 10.6
SOURCE CODE ESCROW AGREEMENT
THIS SOURCE CODE ESCROW AGREEMENT ("Escrow Agreement") is effective as
of October 31, 1998, by and among Data Securities International, Inc., a
Delaware corporation ("DSI"), iMall, Inc., a Nevada corporation ("Depositor"),
and First Data Management Services Corporation, a Florida corporation ("FDMS").
WHEREAS, Depositor and FDMS have entered into that certain Development
and Marketing Agreement dated October 31, 1998 as such agreement may be amended
from time to time (the "Marketing Agreement") regarding, inter alia, the Company
Software and Electronic Commerce Tools (as defined in the Marketing Agreement,
collectively, the "Company Materials");
WHEREAS, Depositor and FDMS desire this Escrow Agreement to be
supplementary to such Development and Marketing Agreement pursuant to 00 Xxxxxx
Xxxxxx Code Section 365(n);
WHEREAS, availability of or access to the Source Code is critical to
the conduct of FDMS' business; and
WHEREAS, Depositor will deposit with DSI proprietary data to provide
for FDMS' access to the Source Code under conditions specified herein.
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Escrow
Agreement, DSI shall open a deposit account ("Deposit Account") for
Depositor. The opening of the Deposit Account means that DSI shall
establish an account ledger in the name of Depositor, assign a deposit
account number ("Deposit Account Number"), calendar renewal notices to
be sent to Depositor as provided in Section 30, and request the initial
deposit ("Initial Deposit") from Depositor. Depositor has an obligation
to make the Initial Deposit within thirty (30) days after the Effective
Date set forth in the Marketing Agreement. Unless and until Depositor
makes the Initial Deposit with DSI, DSI shall request the Initial
Deposit from Depositor.
2. FDMS Account. Following the execution and delivery of this Escrow
Agreement, DSI shall open an account for FDMS ("FDMS Account"). The
opening of the FDMS Account means that DSI shall establish under the
Deposit Account an account ledger with a unique registration number
("Registration Number") in the name of FDMS, calendar renewal notices
to be sent to FDMS as provided in Section 30, and request the Initial
Deposit from Depositor. DSI shall notify FDMS upon receipt of Initial
Deposit.
3. Term of Escrow Agreement. The term of this Escrow Agreement shall be
coterminous with the Term of the Marketing Agreement, and shall
commence as of the date first written above and shall continue in full
force unless terminated earlier as provided in this Escrow Agreement.
1
2
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor and FDMS shall be sent to the parties at the addresses set
forth in Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication to DSI shall be sent to the DSI offices set forth in
Exhibit A.
Depositor and FDMS agree to each name their respective designated
contact ("Designated Contact") to receive notices from DSI and to act
on their behalf in the performance of their obligations as set forth in
this Escrow Agreement. Depositor and FDMS agree to notify DSI promptly
of a change of their Designated Contact in the manner set forth in
Exhibit A.
5. Exhibit B and Deposit Material. Depositor shall submit source code and
related material for the Company Materials ("Deposit Material") to DSI
for retention and administration in the Deposit Account.
The Company shall submit the Deposit Material together with a completed
document called a "Description of Deposit Material", hereafter referred
to as Exhibit B. Each Exhibit B shall be signed by Depositor prior to
submission to DSI and shall be signed by DSI upon completion of the
Deposit Material inspection.
Depositor represents, warrants and covenants that it lawfully possesses
all Deposit Material, can transfer the Deposit Material to DSI and has
the authority to store the Deposit Material in accordance with the
terms of this Escrow Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI shall be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the
Exhibit B and validating the count of the materials to the quantity
listed on the Exhibit B. DSI shall not be responsible for any other
claims made by the Depositor on the Exhibit B. Acceptance shall occur
when DSI reasonably concludes that the Deposit Material Inspection is
complete. Upon acceptance, DSI shall sign the Exhibit B and assign it
the next Exhibit B number. DSI shall issue a copy of the Exhibit B to
Depositor and FDMS within ten (10) days after acceptance.
7. Initial Deposit. The Initial Deposit shall consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor shall update the Deposit Account with
supplemental Deposit Material at least once every thirty (30) days, or
at such other intervals as the parties may agree.
Supplemental Deposit ("Supplemental") is Deposit Material which is to
be added to the Deposit Account.
2
3
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days after receipt of Replacement
from Depositor, DSI shall send a letter to FDMS stating that Depositor
requests to replace existing Deposit Material, and DSI shall include a
copy of the new Exhibit B(s) listing the new Deposit Material.
FDMS has twenty (20) days from the receipt of such letter by DSI to
instruct DSI to retain the existing Deposit Material held by DSI, and
if so instructed, DSI shall change the Replacement to a Supplemental.
Conversion to Supplemental may cause an additional storage unit fee as
specified by DSI's Fee and Services Schedule.
If FDMS does not instruct DSI to retain the existing Deposit Material,
DSI shall permit such Deposit Material to be replaced with the
Replacement. Within ten (10) days after acceptance of the Replacement
by DSI, DSI shall issue a copy of the executed Exhibit B(s) to
Depositor and FDMS. DSI shall either destroy or return to Depositor all
Deposit Material replaced by the Replacement.
11. Verification Rights. Depositor grants to FDMS the option to verify the
Deposit for accuracy, completeness and sufficiency. Depositor agrees to
permit DSI and at least one employee of FDMS to be present at
Depositor's facility to verify, audit and inspect of the Deposit for
the benefit of FDMS. If DSI is present or is selected to perform the
verification, DSI shall be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
12. Title to Media. Subject to the terms of this Escrow Agreement, title to
the media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor shall retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
13. Storage Unit. DSI shall store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
14. Deposit Obligations of Confidentiality. DSI shall establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of one or more of its officers,
selected by DSI, whose identity shall be available to Depositor at all
times.
3
4
DSI shall exercise a professional level of care in carrying out the
terms of this Escrow Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and protect
the confidentiality of the Deposit.
Except as provided for in this Escrow Agreement, DSI agrees that it
shall not divulge, disclose, make available to third parties, or make
any use whatsoever of the Deposit.
15. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to this Escrow Agreement. DSI shall
issue to Depositor and FDMS an annual report profiling the Deposit
Account. Such annual report will identify the Depositor, FDMS, the
current Designated Contacts, selected special services, and the Exhibit
B history, which includes Deposit Material acceptance and destruction
or return dates.
Upon reasonable notice, during normal business hours and during the
term of this Escrow Agreement, Depositor or FDMS shall be entitled to
inspect the records of DSI pertaining to this Escrow Agreement, and
accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
16. Expiration. If this Escrow Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and FDMS
shall terminate, provided that DSI may extend the period of this Escrow
Agreement to cover the processing of any outstanding instruction made
during any period of this Escrow Agreement. If Depositor requests the
return of the Deposit, DSI shall return the Deposit to Depositor only
after any outstanding invoices and the Deposit return fee are paid. If
the fees are not received by the Expiration Date of this Escrow
Agreement, DSI, at its option, may destroy the Deposit.
17. Certification by Depositor. Depositor represents and warrants to FDMS
that:
a. The Deposit delivered to DSI consists of the following: source
code of the Company Materials deposited on computer magnetic
media; all necessary and available information, proprietary
information, and technical documentation which shall enable a
reasonably skilled programmer of FDMS to create, maintain
and/or enhance the proprietary technology without the aid of
Depositor or any other person or reference to any other
materials; maintenance tools (test programs and program
specifications); proprietary or third party system utilities
(compiler and assembler descriptions); description of the
system/program generation; descriptions and locations of
programs not owned by Depositor but required for use and/or
support; and names of key developers for the technology on
Depositor's staff.
b. The Deposit shall be defined in Exhibit B(s).
These representations and warranties shall be deemed to be made
continuously throughout the term of this Escrow Agreement.
4
5
18. Indemnification. Depositor and FDMS agree to defend and indemnify DSI
and hold DSI harmless from and against any and all claims, actions and
suits, whether in contract or in tort, and from and against any and all
liabilities, losses, damages, costs, charges, penalties, counsel fees,
and other expenses of any nature (including, without limitation,
settlement costs) incurred by DSI as a result of performance of this
Escrow Agreement except in the event of a judgment which specifies that
DSI acted with gross negligence or willful misconduct.
19. Filing for Release of Deposit by FDMS. Upon notice to DSI by FDMS of
the occurrence of a release condition as defined in Section 21 and
payment of the release request fee, DSI shall: (a) promptly notify
Depositor by certified mail or commercial express mail service with a
copy of the notice from FDMS; and (b) proceed with its obligations set
forth in Section 22.
20. Intentionally Left Blank.
21. Release Conditions of Deposit to FDMS. Capitalized terms not otherwise
defined in this Escrow Agreement shall have the meaning set forth in
the Marketing Agreement (as the same may be amended from time to time).
The following shall constitute a Release Condition: a termination of
the Marketing Agreement pursuant to Section 12.4 thereof, permitting
FDMS to exercise its rights under this Agreement pursuant to Section
12.6.2 of the Marketing Agreement.
22. Release of Deposit to FDMS. Upon DSI's receipt of notice from FDMS that
a Release Condition has occurred ("Release Condition Notice"), DSI is
authorized to and shall release the Deposit to FDMS, within five (5)
business days after receipt of a Release Condition Notice, without
Depositor's approval or permission, and regardless of any contrary
instruction DSI may receive from Depositor, provided that FDMS pays all
fees due to DSI including Deposit copying and delivery fees.
23. Grant of Use License. Subject to the terms and conditions of this
Escrow Agreement, Depositor hereby transfers and upon execution by DSI,
DSI hereby accepts, a non-exclusive, irrevocable, perpetual, and
royalty-free Use License which DSI shall transfer to FDMS upon
controlled release of the Deposit as described in this Escrow
Agreement. The Use License shall be for the sole purpose of continuing
the benefits afforded to FDMS through any existing license,
maintenance, or other agreement with Depositor, it being understood
that if the Arbitration Panel (as defined in the Marketing Agreement)
rules that no Release Condition shall have occurred: (i) FDMS shall
promptly return to DSI the Deposit Materials and all copies thereof
made by FDMS; and (ii) the license granted pursuant to this Section 23
shall immediately terminate. After any such re-deposit, the terms and
conditions of this Escrow Agreement shall remain in full force and
effect.
24. Use License Representation. Depositor represents and warrants to FDMS
and DSI that it has no knowledge of any incumbrance or infringement of
the Deposit, or that any claim has been made that the Deposit
infringes, misappropriates, or violates any patent, trade secret,
copyright or other proprietary right of any third party. Depositor
represents and warrants that
5
6
it has the full right, power, and ability to enter into and perform
this Escrow Agreement, to grant the foregoing Use License, and to
permit the Deposit to be placed with DSI.
25. Miscellaneous Terms.
a. Further Assurances. Each party hereto agrees to cooperate with the other
party, at such other party's request and at such other party's expense, to
execute any and all documents or instruments, or to obtain any consents, in
order to assign, transfer, perfect, record, maintain, enforce or otherwise carry
out the intent of the terms of this Escrow Agreement.
b. Amendments. Except as otherwise expressly provided herein, the provisions of
this Escrow Agreement may be amended only by a writing signed by the parties
hereto.
c. Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing upon any breach or default of a party under this Escrow
Agreement shall impair any such right, power or remedy of any such holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any such holder of
any provisions or conditions of this Escrow Agreement must be made in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, under this Escrow Agreement shall be cumulative and not
alternative.
d. Governing Law. THE VALIDITY, MEANING AND EFFECT OF THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THAT STATE.
e. Successors and Assigns. Except as otherwise expressly provided herein, all
covenants and agreements contained in this Escrow Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, whether so expressed or not.
f. Final Agreement. This Escrow Agreement, together with those documents which
are exhibits hereto, constitute the final agreement of the parties concerning
the matters referred to herein and therein, and supersedes all prior and
contemporaneous agreements and understandings.
g. Severability. Whenever possible, each provision of this Escrow Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Escrow Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Escrow Agreement.
h. Descriptive Heading. The descriptive headings of this Escrow Agreement are
inserted for convenience of reference only and do not constitute a part of this
Escrow Agreement.
6
7
i. Independent Contractor. The relationship of the parties shall be solely that
of independent contractor and not that of a joint venture, partnership, or any
other joint relationship.
j. Dispute Resolution. In the event of a Dispute, the parties shall resolve the
same in accordance with the terms set forth in Exhibit 12.11 of the Marketing
Agreement.
26. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in connection
with or relating to this Escrow Agreement has apparent authority and
has been duly authorized to do so. DSI may provide copies of this
Escrow Agreement or account history information to any employee of
Depositor or FDMS upon their request. For purposes of termination or
replacement, Deposit Material shall be returned only to Depositor's
Designated Contact, unless otherwise instructed by Depositor's
Designated Contact.
DSI is not responsible for failure to fulfill its obligations under
this Escrow Agreement due to causes beyond DSI's reasonable control.
27. Termination of Rights. The Use License as described above shall
terminate in the event that this Escrow Agreement is terminated without
the Use License transferring to FDMS.
28. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days after the date of the
invoice, DSI may terminate this Escrow Agreement. If the payment is not
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one percent per month (12% per annum) from the
date of the invoice for all late payments.
Renewal fees shall be due in full upon the receipt of invoice unless
otherwise specified by the invoice. If renewal fees are not received
thirty (30) days prior to the Expiration Date, DSI shall so notify
Depositor and FDMS. If the renewal fees are not received by the
Expiration Date, DSI may terminate this Escrow Agreement without
further notice and without liability of DSI to Depositor or FDMS.
DSI shall not be required to process any request for service unless the
payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's standard
fees, DSI shall notify Depositor and FDMS at least ninety (90) days
prior to the renewal of this Escrow Agreement. For any service not
listed on the Fee and Services Schedule, DSI shall provide a quote
prior to rendering such service.
7
8
IMALL, INC. FIRST DATA MANAGEMENT SERVICES
CORPORATION
By:_______________________________ By:________________________________
Name:_____________________________ Name:______________________________
Title:____________________________ Title:_____________________________
DATA SECURITIES
INTERNATIONAL, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
9
EXHIBIT A
DESIGNATED CONTACT
Account Number: _______
NOTICES, DEPOSIT MATERIAL RETURNS AND COMMUNICATION, INCLUDING DELINQUENCIES TO
DEPOSITOR SHOULD BE ADDRESSED TO:
iMall, Inc.
Designated Contact: President/Chief Executive Officer
Telephone:__________________________________
Facsimile:__________________________________
State of Incorporation: Nevada
NOTICES AND COMMUNICATION, INCLUDING DELINQUENCIES TO FDMS
SHOULD BE ADDRESSED TO:
First Data Management Services Corporation
Designated Contact: Vice President, Technical Support
Services
Telephone: ( )_____________________
Facsimile: ( )_____________________
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI SHOULD BE
ADDRESSED TO:
DSI
Attn: Contract Administration
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Date: October 30, 1998
INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
iMall, Inc.
Invoice Contact:____________________________
INVOICES TO FDMS SHOULD BE ADDRESSED TO:
First Data Management Services Corporation
Invoice Contact:____________________________
INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
SHOULD BE ADDRESSED TO:
DSI
Attn: Accounts Receivable
00 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number:_________________________________________________________
Depositor Company Name: iMall, Inc.
DEPOSIT TYPE:
__________ Initial ___________ Supplemental __________ Replacement
If Replacement: ___________ Destroy Deposit ___________ Return Deposit
ENVIRONMENT:
Host System CPU/OS:_____________________________________________________________
Version:________________________________________________________________________
Backup:_________________________________________________________________________
Source System CPU/OS:___________________________________________________________
Version:________________________________________________________________________
Compiler:_______________________________________________________________________
Special Instructions:___________________________________________________________
DEPOSIT MATERIAL:
Exhibit B Name:_________________________ Version:_______________________________
Item Label Description Media Quantity
For DSI, I received the above
For Depositor, I certify that the described Deposit Material subject
above described Deposit Material to the terms on the reverse side
was sent to DSI: of this Exhibit:
By:_______________________________ By:_________________________________
Print Name:_______________________ Print Name:_________________________
Date:_____________________________ Date of Acceptance:_________________
ISE:___________ EXHIBIT B#:_________
