Master Program Agreement
This Master Program Agreement ("Agreement") dated July 26, 1999 is entered into
between NetWolves Corporation, a New York corporation, located at 000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, ("NetWolves"), and Comdisco, Inc., a
Delaware Corporation, located at 0000 X. Xxxxx Xxxx, Xxxxxxxx, XX 00000
("Comdisco").
NetWolves is the manufacturer of certain equipment known as the FoxBox and
Comdisco is in the business of financing equipment and providing services in
connection with the equipment.
This Agreement contemplates an on-going business relationship in which Comdisco
will (i) acquire from NetWolves, all of the right, title and interest in the
equipment with the exception of intellectual property rights, software upgrades
and software application and content; (ii) take an assignment in associated
leases between NetWolves and certain customers of NetWolves; and (iii) provide
services with respect to the equipment as NetWolves' subcontractor and take an
assignment of the services fees in connection therewith.
NOW THEREFORE, in consideration of the foregoing and the covenants and
conditions set forth herein, the parties have entered into this Agreement and
mutually agree as follows.
Definitions
"Commencement Certificate" means an acceptance certificate substantially in the
form of Exhibit A confirming acceptance of the leased Equipment.
"Equipment" means the FoxBox equipment which will be sold to Comdisco under this
Agreement and leased to Target Customers by NetWolves or sold directly by
NetWolves to Target Customers. The Equipment is specified in Exhibit B.
"Lease" or "Lease Documents" means the Product Agreement and related Equipment
Schedule in the form of Exhibit C which NetWolves will use to lease the
Equipment and provide Services to Target Customers.
"Lessee" means a Target Customer under a Lease.
"Losses" means all losses, claims, liabilities, demands and expenses whatsoever
including, without limitation, reasonable attorney's fees.
"Related Software" means NetWolves' software described in Exhibit D which is an
integral part of the Equipment.
"Services" means the roll-out, maintenance, deinstallation and other services as
detailed in the Statement of Work under Services and Lease Documents provided by
Comdisco to Target Customers as NetWolves' subcontractor.
"Services Documents" means the Services Agreement and Services Schedule in the
form of Exhibit E which NetWolves will use to provide Services to Target
Customers who purchase the Equipment directly from NetWolves.
"Software Application and Content"
"Target Customer" shall be limited to companies that will lease or purchase the
Equipment as detailed in Exhibit F.
"Transaction Package for Leased Equipment" means the following completed and
properly executed documents between NetWolves and the Target Customer: (i)
Product Agreement; (ii) Equipment Schedule.
"Transaction Package for Purchased Equipment" means the following completed and
properly executed documents between NetWolves and the Target Customer: (i)
Services Agreement; (ii) Services Schedule; and (iii) Master Sale Agreement.
1.0 Transaction Origination, Administration and Assignment
1.1 Comdisco and NetWolves will, simultaneously with the execution of this
Agreement, execute the Master Agreement and Services Schedule in the form
of Exhibit G to provide the Services on behalf of NetWolves to Target
Customers pursuant to the terms of this Agreement.
1.2 Upon approving the credit of a Target Customer (as detailed in Section 3.0)
Comdisco will prepare and forward original Lease or Services Documents to
NetWolves, as applicable, to present to the Target Customer for execution.
Any changes to the Lease or Services Documents will require Comdisco's
approval.
1.3 Upon Comdisco's receipt and approval of the Transaction Package for Leased
Equipment, NetWolves, upon receipt of payment from Comdisco for the
Equipment, will be deemed to have assigned to Comdisco all of NetWolves'
right, title and interest in the Equipment, with the exception of
intellectual property rights, software upgrades and Software Application
and Content, the Product Agreement, and the Equipment Schedule, including
the right to receive any rental payments included therein. Thereafter,
NetWolves will have no further right to any rentals associated with the
Lease Documents during the Initial Term of any Equipment Schedule.
Notwithstanding the foregoing assignment, NetWolves shall not be relieved
of any of its obligations as a manufacturer, including warranty
obligations.
1.4 Upon Comdisco's receipt and approval of a Transaction Package for Purchased
Equipment, NetWolves, upon receipt of payment from Comdisco for the
Equipment, will be deemed to have assigned to Comdisco all amounts due, if
any, under a Master Sale Agreement, and all right, title and interest to
the Services Agreement and Services Schedule (except for any obligations to
be performed by NetWolves pursuant to the Master Agreement) and all amounts
due or to become due thereunder. Thereafter, NetWolves will have no further
right to any revenues associated with the foregoing documents.
1.5 Upon taking an assignment as described in 1.3 and 1.4 above or upon receipt
of the executed Master Sale Agreement, Comdisco will undertake all
invoicing on NetWolves' letterhead to the Target Customer in accordance
with the terms of the Lease or Services Documents or the Master Sale
Agreement, as applicable. If NetWolves becomes aware of any default by a
Target Customer under the Lease or Services Documents, it shall promptly
notify Comdisco.
1.6 Lessee shall be responsible for and shall file and pay all property taxes
incurred in connection with the lease of the Equipment. The Product
Agreement shall provide that Lessee shall indemnify and hold Lessor
harmless from and against all taxes, other than those taxes based upon the
net income of Lessor.
1.7 NetWolves will at all times remain the owner of the Related Software and
agrees to transfer all Related Software to the Target Customers, pursuant
to the terms of NetWolves' standard documentation evidencing such transfer.
1.8 Comdisco acknowledges that it is purchasing the Equipment for resale/lease
and will provide NetWolves with valid exemption certificates.
2.0 Financial Arrangement
2.1 Comdisco has entered into this financial arrangement on the basis of
NetWolves intending to implement 40,000 Target Customer locations within
forty-eight (48) months from the date of this Master Program Agreement.
2.2 The calculation of the Equipment purchase price is contingent upon whether
the Target Customer purchases or leases the Equipment ("purchase price").
2.2.1Target Customer Elects to Purchase the Equipment. If a Target Customer
elects to purchase the Equipment from NetWolves instead of entering
into a Lease, and elects not to take the Services, then upon
Comdisco's receipt and approval of a Transaction Package for Purchased
Equipment containing the Master Sale Agreement only, and receipt of
the sale price from the Target Customer, Comdisco will remit to
NetWolves an amount equal to the purchase price of the Equipment less
$1,400. If a Target Customer elects to purchase the Equipment and
elects to take the Services, then upon Comdisco's receipt and approval
of a Transaction Package for Purchased Equipment and receipt of the
sale price from the Target Customer, Comdisco will remit to NetWolves
the full purchase price. All Services provided will be based on a term
of forty-eight (48) months.
2.2.2Target Customer Elects to Lease the Equipment. If a Target Customer
elects to lease the Equipment, then upon Comdisco's receipt and
approval of a Transaction Package for Leased Equipment, the purchase
price for each unit of Equipment will equal the present value of the
rental stream at an interest rate commensurate with the Target
Customer's credit rating and prevailing market rates. Comdisco will
purchase the Equipment from NetWolves, without recourse but subject to
Section 4.1(h), at 95% of the purchase price. Comdisco agrees to remit
payment to NetWolves for the Equipment within ten (10) days of
Comdisco's receipt and approval of the applicable Transaction Package
for Leased Equipment and Commencement Certificate. At the time of
payment, NetWolves will provide Comdisco with a xxxx of sale.
2.3 Comdisco will charge a Service fee of $600.00 to install each item of
Equipment. Comdisco will charge a minimum Service fee of $300.00 to
deinstall each item of Equipment. In the event NetWolves charges a Target
Customer a Service Fee greater than $300.00 to deinstall an item of
Equipment, NetWolves and Comdisco will share the excess amount on the basis
of 73% to NetWolves and 27% to Comdisco. All amounts in connection with the
installation or deinstallation of the Equipment will be invoiced upon
completion of such installation or deinstallation.
2.4 For the first twelve (12) months of an Equipment Schedule or a Services
Schedule, as applicable, the Target customer will not be obligated to pay
Service fees other than for installation and deinstallation, because the
Equipment is considered to be under manufacturer warranty. Beginning in
month thirteen (13) of the Equipment or Services Schedule, Customer will be
obligated to pay a Service fee of $28.00 per month per item of Equipment.
2.5 The rent under an Equipment Schedule is estimated to be $200.00 per month
per item of Equipment installed, exclusive of taxes.
2.6 The Lease Documents will require Lessee to pay Lessor the last month's rent
at the time that the first rent payment is due.
2.7 Comdisco's obligation to purchase the Equipment and to pay NetWolves the
purchase price is contingent upon the following:
a. Lessee's credit has been approved and there is no adverse change in
Lessee's credit as defined under the Equipment Schedule.
b. The Lessee is not in default under any Equipment Schedule.
c. Comdisco has received a completed and approved Transaction Package for
Leased Equipment, and an executed Commencement Certificate.
d. Comdisco has received a completed and approved the applicable
Transaction Package for Purchased Equipment and the sale price from
the Target Customer.
e. NetWolves is not in default under this Agreement, the Master Agreement
or the Services Schedule.
f. Neither NetWolves nor a Target Customer is in default under any Lease
or Services Documents.
2.8 NetWolves agrees that Comdisco may, on a periodic basis, review and audit,
at reasonable times and on reasonable notice, NetWolves' sale of Equipment
to Target Customers.
3.0 Credit Review
3.1 Prior to entering into Lease or Services Documentation with a Target
Customer, NetWolves will request credit approval from Comdisco with respect
to the Target Customer. Credit approval and the rent under the Lease
Documents will be calculated based on the Credit Table set forth below and
all credit approval will be valid for a period of forty-five (45) days from
the date of approval.
3.2 Credit Table
Moodys Rating Basis Points Above Like Term Treasuries
------------- ---------------------------------------
AAA Aa3 175 basis points
A1 A3 200
Baa1 Baa3 225
Below Baa3 Individual Credit Review Needed
Comdisco reserves the right to re-adjust the basis points listed above
based upon a change in market conditions as determined by Comdisco within
six (6) months from the date of this Agreement and every six (6) months
thereafter. If market conditions change so that Comdisco readjusts the
basis points as provided for herein, and NetWolves deems such readjustment
to be above competitive market rates, NetWolves will obtain three (3)
quoted rates from a third party using a similar point structure (the
"Quoted Rates"). If Comdisco matches the average of the Quoted Rates,
NetWolves will be deemed to accept Comdisco's readjustment. If Comdisco
elects not to match the Quoted Rates, NetWolves may obtain hardware
financing from one of the three parties supplying the Quoted Rates.
4.0 Representations and Warranties
4.1 NetWolves hereby represents and warrants (as of the date of execution of
this Agreement as to (a) and (b) below) that:
a. It is a corporation duly organized and validly existing in good standing
under the laws of the jurisdiction of its incorporation with full corporate
power to enter into this Agreement and to carry out transactions
contemplated herein.
b. The execution and delivery of this Agreement, and all other documents
contemplated herein (including but not limited to the Warrant Agreement),
as well as performance of the contemplated transactions hereunder have been
duly authorized by all necessary corporate action and this Agreement, and
all other documents contemplated herein, constitute a legal, valid and
binding obligation enforceable in accordance with its terms.
c. Except as detailed in this Agreement, there will be no other agreements
between NetWolves and the Target Customer relating to the Equipment and
Services in contradiction of the terms of this Agreement. Nothing contained
in this Agreement shall preclude NetWolves from selling or leasing other
services to the Target Customer.
d. All credit information known to NetWolves concerning a Target Customer will
have been disclosed or made available to Comdisco.
e. The Target Customer is not be in default under any other agreement with
NetWolves which is not the subject of this Agreement.
f. As of the payment of the purchase price to NetWolves, it is the owner of
the Equipment and that title to the Equipment will be free and clear of all
liens, claims, interests and encumbrances of any kind, including, but not
limited to, infringement for claims of third party proprietary rights.
g. If Comdisco purchases the Equipment from NetWolves, pursuant to the Target
Customer's election to lease the Equipment, title to the Equipment will
vest in Comdisco upon payment of the purchase price.
h. The Equipment will be in working order at the time of installation at the
Target Customer location, will perform in all material respects in
accordance with NetWolves specifications published at the time the
Equipment is installed, and will be subject to NetWolves then current
manufacturer warranties.
4.2 Comdisco hereby represents and warrants that, as of the date of execution
of this Agreement that:
a. It is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation with
full corporate power to enter into this Agreement and to carry out the
transactions contemplated herein.
b. The execution and delivery of this Agreement, and all other documents
contemplated herein, as well as the performance of the contemplated
transactions hereunder have been duly authorized by all necessary
corporate action and this Agreement, and all other documents
contemplated herein, constitute a legal, valid and binding obligation
enforceable in accordance with its terms.
5.0 Indemnification
5.1 NetWolves agrees to indemnify and hold harmless Comdisco and its
affiliates, subsidiaries, employees and agents, successors and assigns
from any and all:
a. Losses arising from any third party claims based upon a breach of
NetWolves' representations, warranties or obligations under this
Agreement.
b. Losses resulting directly or indirectly from claims including,
without limitation, third party claims arising in strict
liability or negligence or claims of infringement or
misappropriation of any proprietary interest or right of any
third party, including without limitation any trademark, patent,
copyright or trade secret in connection with the Equipment and/or
Related Software:
c. Losses arising from third party claims based upon any inaccurate
or incomplete information willfully or intentionally provided by
NetWolves.
5.2 In the event that a third party claims that the Equipment or any Related
Software infringes a trade secret, patent, copyright or any proprietary
right of a third party, NetWolves agrees to defend Comdisco, at NetWolves'
expense, and NetWolves will pay all costs, damages and reasonable
attorney's fees awarded to a third party arising from such infringement.
Comdisco agrees to promptly notify NetWolves of any such claim and will
allow NetWolves to control the defense and any related settlement
negotiations, provided such settlement does not affect Comdisco's right as
owner of the Equipment nor diminish or increase Comdisco's or Target
Customer's rights or obligations under the Lease or Services Documentation.
Comdisco may participate in the defense of any such claim at its own cost
and expense.
6.0 Limitation of Liability
IN CONNECTION WITH THIS AGREEMENT, NEITHER COMDISCO NOR NETWOLVES WILL BE
LIABLE TO THE OTHER FOR INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
7.0 Equipment Maintenance
7.1 The responsibilities of Comdisco and NetWolves in connection with
maintenance will be as detailed in the Statement of Work, attached to the
Services Schedule under the Master Agreement.
8.0 Remarketing
8.1 Comdisco will, at the request of NetWolves, either directly or indirectly
through its subcontractor, perform the following services following a Lease
termination:
a. Upon expiration of the Initial Term of any Equipment Schedule, any
in-place extension rental and in-place purchase price negotiated
between Comdisco and Lessee will be apportioned between Comdisco and
NetWolves as follows: NetWolves 73% and Comdisco 27%.
b. For any Equipment that is returned to Comdisco by a Lessee at lease
termination, and that is remarketed to a subsequent user, Comdisco
will take the first $400.00 per item of Equipment for storage and
refurbishing costs incurred by Comdisco. Any remarketing proceeds in
excess of $400.00 shall be apportioned 73% to NetWolves and 27% to
Comdisco.
9.0 Term and Termination
9.1 This Agreement shall be effective as of the date first set forth above and
shall continue for an initial period of four (4) years (the "initial
term"), and thereafter shall be automatically renewed for additional
one-year periods (the "extended term"), unless terminated in writing by
either party given thirty (30) days prior to the expiration of the initial
term. During the extended term, either party may terminate this Agreement
at any time upon thirty (30) days prior written notice.
9.2 Either party may, by written notice, terminate this Agreement for cause if
the other party fails to cure a material default under the Agreement. Any
material default must be specifically identified in the notice of
termination. After written notice, the notified party will have thirty (30)
days to remedy any default. Failure to remedy the material default within
the time period provided for herein will give cause for immediate
termination.
9.3 Notwithstanding any termination of this Agreement, the terms and conditions
of this Agreement will survive for purposes of any Equipment Schedule or
Services Schedule in effect with a Target Customer.
9.4 Provided Comdisco is not in material default under this Agreement and
subject to paragraphs 4.1(c) and 3.2, during the initial or any extended
term of this Agreement or upon the lease or purchase of 20,000 units of
Equipment as contemplated under this Agreement, whichever comes first,
NetWolves agrees not to enter into any agreement in connection with any
Target Customer with any other technology services provider for the purpose
of providing hardware financing and the Services specified under the
Statement of Work in Exhibit E.
10.0 Publicity
Except as hereinafter provided in this Section, NetWolves and Comdisco will
consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the other
transactions contemplated hereby, including using any tradename, or service
xxxx which identifies the other party, and shall not issue any press
release or make any such public statement prior to receiving the consent of
the other party, which consent will not be unreasonably withheld or
delayed. Nothing contained herein shall prohibit any party from making a
press release or other statement required by law or by obligations pursuant
to any agreement with any automated interdealer quotation system if the
party making the disclosure has first consulted with the other party
hereto.
11.0 Warrant Coverage
In consideration of entering into this Agreement, NetWolves will
simultaneous with the execution of this Agreement issue a Warrant Agreement
granting to Comdisco the right to purchase 175,000 shares of NetWolves
Common Stock, for an Exercise Price of $10.00 per share, with a term of no
less than five (5) years. The form of Warrant Agreement shall be as
attached to this Agreement as Exhibit H, "Warrant Agreement". The number
and purchase price of shares shall be subject to adjustment as provided in
Section 8 of the Warrant Agreement. The Exercise Price may be paid at
Comdisco's election either by cash or check or by surrender of Warrants
("Net Issuance") as determined in the Warrant Agreement.
12.0 Confidentiality
Each party (including its employees and agents) will use the same standard
of care to protect any confidential information of the other disclosed
during negotiation or performance of this Agreement that it uses to protect
its own confidential information. Confidential Information will not include
information which (i) is or becomes publicly available through no wrongful
act of the receiving party; (ii) was known by the receiving party at the
time of disclosure without any obligation of confidentiality; (iii) was
acquired by the receiving party from a third party without restriction on
nondisclosure; or (iv) was developed independently by the receiving party.
13.0 Miscellaneous
13.1 Each party is an independent contractor and, except as expressly set forth
herein, will have no authority to bind or commit the other party. Nothing
herein shall be deemed or construed to create a joint venture, partnership
or agency relationship between the parties.
13.2 Except as set forth herein, neither party may assign their rights and
obligations described in this Agreement without the prior written consent
of the other party except for assignments to affiliates or subsidiaries who
agree to be bound by the terms of this Agreement. In addition, in the event
of any such assignment on the part of NetWolves, NetWolves agrees to remain
primarily liable for the performance of all obligations hereunder.
Notwithstanding the foregoing, Comdisco may subcontract the performance of
its Services to a third party or assign its rights as provided for under
the Lease.
13.3 The waiver by either party of a breach of any provision of this Agreement
will not be construed as a waiver of any subsequent breach. The invalidity,
in whole or in part, of any provision of this Agreement will not affect the
validity of the remaining provisions.
13.4 This Agreement including each Exhibit represents the entire agreement
between the parties and supersedes all oral or other written agreements
understandings between the parties concerning the Equipment and Services.
This Agreement may not be modified unless in writing and signed by the
party against whom enforcement of the modification is sought.
13.5 Any notice, request or other communication under this Agreement will be
given in writing and deemed received upon the earlier of actual receipt or
three (3) days after mailing if mailed postage prepaid by regular or
airmail to the address set forth above or, one day after such notice is
sent by courier or facsimile transmission. Copies to NetWolves also are to
be provided to Xxxxx X. Xxxxxxxxx, Esq., Blau, Kramer, Wactlar & Xxxxxxxxx,
P.C., 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, XX 00000.
13.6 Those terms and conditions which would, by their meaning or intent, survive
the expiration or termination of this Agreement will so survive.
13.7 THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ITS CONFLICT OF LAWS PROVISIONS. If there is any dispute or
litigation as a result of this Agreement, the prevailing party will be
entitled to reasonable attorney's fees. Any action by either party must be
brought within two (2) years after the cause of action arose.
13.8 All Exhibits to this Agreement are hereby incorporated into and deemed to
be a part of this Agreement.
13.9 In connection with the Services, in the event of any conflict between this
Agreement and the Master Agreement, the Master Agreement will govern.
13.10Terms and conditions on any NetWolves' purchase order or other
acknowledgment form in addition to, different from or in conflict with the
terms of this Agreement will be of no force or effect.
13.11NetWolves will promptly deliver to Comdisco after filing such documents
with the Securities and Exchange Commission, at Comdisco's request:
a. NetWolves' Quarterly and Annual forms 10Q and 10K.
b. Such other information concerning the financial condition of NetWolves
which is available to the public as Comdisco may from time to time
request.
13.12Comdisco and NetWolves will cooperate by furnishing such records and
supporting material relating to transactions contemplated hereunder as may
be reasonably requested by each party, and in the preparation of forms,
including notices to Lessees, and the execution of such other documents as
may be necessary to fulfill the intent and effectuate the purpose of this
Agreement.
13.13This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, personal representatives,
executors, heirs and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth above.
NETWOLVES CORPORATION COMDISCO, INC.
By; /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxxxxxxx
Title: ___________________________ Title: ____________________________
Date: _____________________________ Date: ____________________________
