SERVICES AGREEMENT
This Services Agreement is made as of the 29th day of July, 1998 between
DIGITAL RIVER, INC., a Delaware corporation ("DRI") and TECH SQUARED, INC., a
Minnesota corporation ("T2").
RECITALS
The parties desire that T2 provide certain services to DRI, and T2 is
willing to provide such services on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. ADMINISTRATIVE SERVICES.
T2 currently makes available to DRI the services of its Director of
Finance, Xxxxxxx X. Xxxxxxxxx (the "Administrative Services"). In consideration
for such Administrative Services, DRI agrees to reimburse T2 an amount equal to
eighty percent (80%) of Xx. Xxxxxxxxx'x salary and benefits regularly paid by T2
in consideration for eighty percent (80%) of his salaried time spent providing
Administrative Services to DRI.
2. FULFILLMENT SERVICES.
During the term of this Services Agreement, T2 shall provide to DRI the
fulfillment services (the "Fulfillment Services") set forth in the proposal
attached hereto as SCHEDULE 1. In consideration for such services, DRI agrees to
reimburse T2 the amounts set forth in SCHEDULE 1. SCHEDULE 1 shall be subject to
adjustment by mutual agreement.
3. PERFORMANCE OF SERVICES.
A. T2 shall not be obligated to acquire new or additional assets or
hire new or additional employees to perform the Administrative Services and
Fulfillment Services described above (collectively, the "Services"). T2 may not
contract with one or more third parties for the performance of all or any part
of the Services.
B. Each party shall provide to the other party on a timely basis any
and all information which is necessary for T2 to provide the Services as set
forth herein. Neither party shall have any right to obtain any confidential or
proprietary information of the other party as the result of the Services
provided hereunder, and any such information so obtained shall be treated in
accordance with Section 7.
4. PERFORMANCE AND LIMITATION OF SERVICES.
A. T2 shall provide the Services at a comparable level to that
provided for its internal operations. In addition, T2 shall be required to
provide the Services only as reasonably appropriate and shall not be required to
provide a level of service which is materially higher than that currently
provided by T2 for its internal operations or as contemplated by T2's operating
budget.
B. T2 shall not be required to perform any Services, to the extent
such Services would result in the breach of any license or other applicable
contract by which it is bound. If T2 believes it is unable to provide any
Services pursuant to the foregoing, T2 shall use reasonable efforts to obtain
the rights necessary to provide such Services, including obtaining any
appropriate consents from third parties. DRI shall be responsible for all
additional costs and expenses incurred by T2 in order to allow T2 to provide
such Services.
C. T2 shall not be required to provide any Services to the extent
the performance of such Services becomes impracticable as a result of a cause or
causes outside T2's reasonable control or to the extent the performance of such
Services would require it to violate any applicable laws, rules or regulations.
D. T2 MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
AND T2 SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES PROVIDED
HEREUNDER.
5. PAYMENT.
T2 shall submit to DRI a monthly invoice for reimbursement for the
Services performed by T2 during the prior month under this Services
Agreement. The invoice shall be payable to T2 on or prior to the 10(th) day
following receipt of invoice.
6. TERM.
A. Unless terminated earlier as provided in this Section 6, this
Services Agreement shall terminate on December 31, 1998 (the "Termination
Date"). The Termination Date shall be automatically extended for successive one
year periods unless written notice of termination is given by the terminating
party to the other party at least thirty days in advance of the next Termination
Date.
B. This Services Agreement may be terminated upon thirty days'
notice by the mutual consent of the parties.
C. Either party may terminate this Services Agreement if the other
party is in material default under this Services Agreement and fails to correct
such default within thirty days after receiving written notice of such default.
7. INDEMNIFICATION.
A. DRI shall indemnify and hold harmless T2, its affiliates, and
their officers, directors, employees, and agents from and against all claims,
liabilities, obligations, suits, causes of action, or expenses (including
reasonable attorneys' fees) (collectively "Claims") claimed to have resulted,
directly or indirectly, from or in connection with the performance of the
Services; provided, however, that DRI shall not be required to indemnify or hold
harmless T2 to the extent the Claims are caused by the negligence or willful
misconduct of T2.
B. T2 shall indemnify and hold harmless DRI, its affiliates, and
their officers, directors, employees, and agents from and against all Claims
claimed to have resulted, directly or
indirectly, from or in connection with the performance of the Services;
provided, however, that T2 shall not be required to indemnify or hold
harmless DRI to the extent the Claims are caused by the negligence or willful
misconduct of DRI.
C. Any indemnitee shall provide written notice to the indemnifying
party of any Claims with respect to which it seeks indemnification, and the
indemnifying party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnitee. If such defense is assumed by the
indemnifying party with counsel so selected, the indemnifying party will not be
subject to any liability for any settlement of such claim made by an indemnified
party without the indemnifying party's consent (such consent not to be
unreasonably withheld or delayed). No indemnified party will be subject to any
liability for any settlement of such Claims made by the indemnifying party
without such party's consent (such consent not to be unreasonably withheld or
delayed), and such settlement shall include an unconditional release of all
indemnitees from all liability on such claims. If an indemnified party desires
to retain separate counsel, such indemnified party shall have the right to do
so, but the indemnifying party will not be obligated to pay the fees and
expenses of such separate counsel. The parties hereto agree to cooperate fully
with each other in connection with the defense, negotiation or settlement of any
legal proceeding, claim or demand and to engage in no action that would result
in or increase liability on the part of another party.
D. Claims reimbursable hereunder shall not include any losses or
expenses covered by the indemnitee's insurance.
E. The provisions of this Section 7 shall survive termination of the
Services Agreement.
8. CONFIDENTIALITY.
A. Except as expressly provided herein, DRI and T2 agree that, for
the term of this Agreement and for five years thereafter, the receiving party
shall keep completely confidential and shall not publish or otherwise disclose
and shall not use for any purpose any information or otherwise disclose and
shall not use for any purpose any information furnished to it by the other party
pursuant to this Services Agreement, except to the extent that it can be
established by the receiving party by competent proof that such information:
(i) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure;
(ii) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(iii) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Services Agreement;
(iv) was subsequently lawfully disclosed to the receiving party
by a person other than the disclosing party; or
(v) was developed by the receiving party without reference to
any information or materials disclosed by the disclosing party.
B. Notwithstanding the foregoing, a party hereto may nevertheless
disclose the other party's information to the extent such disclosure is
reasonably necessary in complying with applicable governmental regulations or
otherwise submitting information to tax or other governmental authorities,
provided that if a party is required to make any such disclosure of another
party's secret or confidential information it will give reasonable advance
notice to the other party and will use efforts consistent with prudent business
judgment to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or confidentiality agreements or
otherwise).
9. MISCELLANEOUS.
A. NOTICES. All notices required or permitted to be given under
this Services Agreement shall be in writing and shall be sent by facsimile
transmission or mailed by registered or certified mail addressed to the party to
whom such notice is required or permitted to be given. All notices shall be
deemed to have been given when transmitted if given by facsimile and
confirmation of receipt is received or, if mailed, forty-eight hours after
mailed as evidenced by the postmark at the point of mailing.
All notices to T2 shall be addressed as follows:
Tech Squared, Inc.
0000 Xxxx 00(xx) Xxxxxx
Xxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
All notices to DRI shall be addressed as follows:
Digital River, Inc.
0000 Xxxx 00(xx) Xxxxxx
Xxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
Either party may, by written notice to the other, designate a new
address or number to which notices to the party giving the notice shall
thereafter be mailed or sent.
B. FORCE MAJEURE. T2 shall not be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that T2 uses its reasonable best efforts to overcome
the same.
C. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR INDIRECT, CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES,
INCLUDING BUT NOT LIMITED TO LOST PROFITS, ARISING
FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF
SUCH DAMAGES. NOTHING IN THIS SECTION 9(C) IS INTENDED TO LIMIT OR RESTRICT
THE INDEMNIFICATION RIGHTS OR OBLIGATION OF EITHER PARTY.
D. ENTIRE AGREEMENT. This Services Agreement constitutes the entire
understanding of the parties with respect to the matters provided for herein and
supersedes any previous agreements and understanding between the parties with
respect to the subject matter hereof and thereof. No amendment, modification or
alteration of the terms or provisions of this Services Agreement shall be
binding unless the same shall be in writing and duly executed by the party
against whom such amendment, modification or alteration is asserted.
E. MODIFICATIONS AND WAIVERS. Any of the terms or conditions of
this Services Agreement may be waived in writing at any time by the party which
is entitled to the benefits thereof. No waiver of any of the provisions of this
Services Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar) or of the same provision in respect
of a subsequent event.
F. SEVERABILITY. If any provisions hereof shall be held by any
court of competent jurisdiction to be illegal, void or unenforceable, such
provision shall be thereafter amended by the parties hereto such that it is
hereafter legal, valid and enforceable and gives effect to the intention of the
parties, but in any event the illegality or unenforceability of such provision
shall have no effect upon and shall not impair the enforceability of any other
provision of this Services Agreement.
G. GOVERNING LAW. This Services Agreement shall be construed in
accordance with and governed by the laws of the State of Minnesota applicable to
agreements made and performed in such jurisdiction.
H. ASSIGNMENT. Neither T2 nor DRI shall delegate duties of
performance or assign, in whole or in part, rights or obligations under this
Services Agreement without the prior written consent of the other party, except
that either may assign this Services Agreement without such consent to an entity
that acquires all or substantially all of the assets or business of such party,
whether by sale, merger or otherwise. The terms and conditions of this Services
Agreement shall be binding on and inure to the benefit of the permitted
successors and assigns of the parties.
I. COUNTERPARTS. This Services Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
J. HEADINGS. The headings of this Services Agreement are included
for convenience only and shall not be deemed to constitute part of this Services
Agreement or to affect the construction hereof.
This Services Agreement is executed by the parties as of the date indicated
above.
TECH SQUARED, INC. DIGITAL RIVER, INC.
/s/ Xxxxxxx X. Apple /s/ Xxxx X. Xxxxxxx
---------------------------- -----------------------------
Xxxxxxx X. Apple Xxxx Xxxxxxx
Chief Executive Officer President and Chief
Executive Officer
SCHEDULE 1
PROPOSAL BETWEEN DIGITAL RIVER, INC. AND
TECH SQUARED, INC. FOR PHYSICAL INVENTORY
FULFILLMENT REVENUE SPLIT
This Agreement is made as of September 19, 1997, between Digital River,
Inc. ("DR") and Tech Squared, Inc. ("T2").
1. PURPOSE
DR wishes to distribute physical inventory ("Inventory") to dealers and end
user customers (the "Customers") for itself and on behalf of its clients. T2
has agreed to assist DR in the management and distribution of the Inventory.
2. SERVICES
Services began in xxxxxxx August 1, 1997.
3. Term of Agreement
The agreement will be for a term initially ending December 31, 1998.
There will be a 90-day probation period to determine the appropriateness of
the initial revenue split as outlined below to ensure that both DR and T2 are
satisfied with the matching of revenue/fees with the related expense. The
agreement will be automatically renewed for successive one year terms unless
notice is given by either party 90 days prior to the anniversary date.
4. Responsibilities of DR
DR will enter into the T2 system all orders to be distributed by T2 and
collect all payments from the Customers. DR will indicate on the purchase
order from where the Inventory is to be taken; either from DR consigned
inventory, DR owned inventory, T2 owned inventory or a third party (i.e.
Xxxxxx, etc.).
DR will order or request Inventory that is in the DR consigned inventory
or DR owned inventory based on its needs and with stock reports from T2.
DR will provide inventory information (i.e., description, SKU #, weight,
etc.) for new Inventory items to T2 so that its system can be updated to
manage the Inventory.
5. Responsibilities of T2
T2 will establish on its FACTS system, the capability to manage DR
Inventory including setting up part numbers, segmenting the Inventory into
separate warehouses (i.e. DR consigned and DR owned) and creating a special
XX xxxxxx for reporting and reconciling purposes.
T2 will provide a FACTS system connection to DR to allow DR to enter
orders directly to the system.
T2 will provide space for storage of Inventory in its warehouse that is
segregated from T2 inventory.
T2 will secure the Inventory and be responsible for any loss or spoilage.
T2 will receive Inventory on DR's behalf, recording it to the proper
warehouse in the FACTS system and forwarding the appropriate paperwork to DR
for its accounting purposes.
T2 will, upon receipt of an order placed by DR, either ship the item per
the invoice or purchase the item and order it to be drop shipped. T2 will
purchase and use DR imprinted invoices and non-descript boxes or other
shipping material. T2 will properly update the FACTS system for Inventory
shipped.
T2 will accept returns of Inventory and update the FACTS system, issuing
credit memo where appropriate.
T2 will provide appropriate accounting and status reports to DR at least
monthly and by no later than four business days after the end of a month.
6. Payments from DR to T2 and T2 to DR
Payments owing between DR and T2 will be paid monthly after the close of
accounting for the month but not later than the 10(th) workday of the
following month. Payments will be based on the following table:
-------------------------------------------------------------------
INVENTORY FROM:
-------------------------------------------------------------------
DIGITAL
ORDERED ORDER (T2/DR HARD GOODS HARD GOODS T2 DROP
FROM SPLIT) DR OWN DR CONSIGN T2 OWNED SHIP
-------------------------------------------------------------------------------
Digital 0%/100% Transaction Same as DR 50/50 split 50/50 split
River/3(rd) fee as Own of GM $ of GM $
Party agreed by
Hosts DR and T2
-------------------------------------------------------------------------------
Tech 15%/15-30% 50/50 Split 50/50 split 100%/0% (T2 Same as
Squared of rev of GM $ of GM $ process T2 owned
Web Site credit
(DTP) card)
-------------------------------------------------------------------------------
Summary of relationship:
- T2 pays DR for Hosting Site
- DR pays T2 for storage (per pallet space)
- T2 to calculate per order fulfillment cost (estimate is $3.35/order)
- Benefits of DR/T2 fulfillment relationship:
DR gets: Warehousing of goods used in other Vendor/Host relationships
Fulfillment services from T2
Inventory management; receiving/inventory/cycle counts
Access to T2 products and pricing
Access to T2 vendors (e.g., Xxxxxx)
T2 gets: Web Site Host
Access to DR Products
Developed Commerce System and related technology
Incremental DR Revenue
Vendor spin
7. Termination
Either party can terminate this agreement pursuant to Section 3 or
immediately for gross negligence.
