ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this 23rd day
of April, 1998, by and among SmartServ Online, Inc., a Delaware corporation
("Seller"), and Data Transmission Network Corporation, a Delaware corporation
("Buyer").
RECITALS:
A. Seller is engaged in the business of providing products and
services on the internet referred to as "SmartServ Pro", "TradeNet", and
"BrokerNet" (the "Business"). The Business shall not include any other portion
of Seller's operations including but not limited to (i) its telephone screen
services, (ii) its internet products and services not identified above,
including order routing services referred to as "Night Trade" or its
derivatives, or (iii) its wireless or PCS services.
B. Seller desires to sell certain of the assets used by it in the
conduct of the Business, and Buyer desires to acquire such assets.
C. To facilitate Buyer's future conduct of the Business, Seller
agrees to license to Buyer and maintain certain computer software programs as
provided for in this Agreement
In consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer, intending to be
legally bound, agree as follows:
1. PURCHASE AND SALE. Buyer agrees to purchase from Seller, and
Seller agrees to sell to Buyer, the following assets of the Business (the
"Acquired Assets"), to-wit:
(a) The three client servers listed on Schedule 1 attached hereto
and incorporated herein by this reference;
(b) The trade names "TradeNet" and "BrokerNet" and those
maintenance agreements and other contracts, if any, listed on
Schedule 7(k); and
(c) All of Seller's contracts with customers to provide services
of the Business and the assignable agreements with suppliers
pertaining to or used in the Business (including, without
limitation all contracts listed on Schedule 7(j));
(d) All of Seller's goodwill pertaining to or arising out of the
Business.
Notwithstanding the foregoing, the Acquired Assets shall not include any assets
of the Seller not enumerated above, including but not limited to (i) Seller's
cash and cash equivalents and all securities of Seller, (ii) Seller's computer
software to be licensed to Buyer pursuant to Paragraph 5 of this Agreement,
(iii) Seller's furniture, leasehold interests or real property interests, (iv)
any records not relating to the Business and all corporate, accounting and tax
records relating to the Business, (v) Seller's rights under this Agreement, (vi)
the name "SmartServ Pro" and (vii) any of Seller's assets not used in the
Business.
2. PURCHASE PRICE. Buyer agrees to pay, and Seller agrees to
accept, as the entire aggregate purchase price for the Acquired Assets, the sum
of Eight Hundred Fifty Thousand Dollars ($850,000) less a credit for prepaid
revenue and unpaid accounts receivable of Seller for services of the Business to
be performed after the Closing as reflected on Seller's books and records
(hereinafter referred to as the "Purchase Price"). The Purchase Price shall be
paid by Buyer to Seller by wire transfer upon the Closing.
3. ASSUMPTION OF LIABILITIES. Buyer shall assume, agree to
perform, and discharge when due only those obligations of Seller arising out of
the contracts and agreements listed on Schedules 7(j) and 7(k) with respect to
the period from and after the Closing (the Assumed Liabilities"). Seller and
Buyer agree that, other than the Assumed Liabilities, Buyer does not agree to
assume and shall have no responsibility for any of the debts, obligations or
liabilities of Seller (the "Excluded Liabilities"), all of which shall remain
the sole responsibility of Seller. The Excluded Liabilities include without
limitation all of the following:
(a) Any tax liability or tax obligation of Seller, which has been
or may be asserted by any taxing authority, including without
limitation any such liability or obligation arising out of or
in connection with this Agreement or the transactions
contemplated hereby.
(b) Any liability or obligation of Seller whether incurred prior
to, at or subsequent to the Closing for any amounts due or
which may become due to any person or entity solely by reason
of the fact that such person or entity is or has been a holder
of any debt or equity security of Seller.
(c) Any trade account payable or note payable of Seller or any
contract obligation of Seller (other than the Assumed
Liabilities) whether incurred prior to, at or subsequent to
the Closing.
(d) Any liability or obligation arising out of any litigation,
suit, proceeding, action, claim or investigation, at law or in
equity or in arbitration, related to Seller's operation of the
Business prior to the Closing.
(e) Any claim, liability or obligation, known or unknown,
contingent or otherwise, the existence of which is a breach
of, or inconsistent with, any representation, warranty or
covenant of Seller set forth in this Agreement.
(f) Any liability or obligation specifically stated in this
Agreement or the Schedules hereto as not to be assumed by
Buyer.
4. TRANSFER DOCUMENTS; ADDITIONAL DOCUMENTS. Upon the Closing,
Seller shall sell, transfer, assign, convey, and deliver to Buyer the Acquired
Assets by duly executed titles, warranty xxxx of sale and assignment, and other
good and sufficient instruments of sale, assignment, conveyance and transfer as
shall be required to effectively vest in Buyer all of Seller's right, title, and
interest in and to such Assets, free and clear of all liens, encumbrances,
security interests, actions, claims and equities of any kind whatsoever and
Buyer shall assume by duly executed assumption of liability the Assumed
Liabilities. Buyer shall be entitled to possession of the Acquired Assets upon
the Closing and payment of the Purchase Price. Upon the Closing, Seller and
Buyer shall enter into the Software License and Maintenance Agreement in the
form of Exhibit "A" hereto and the Source Code Escrow Agreement in the form of
Exhibit "B" hereto with an escrow agent mutually acceptable to Seller and Buyer.
5. CLOSING. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall occur on May 1, 1998, at a time and place
mutually acceptable to Seller and Buyer.
2
6. OBLIGATIONS TO EMPLOYEES. Seller agrees that it shall be
responsible for any obligations to any of its employees which heretofore may
have arisen or hereafter may arise by reason of any services rendered by such
employees prior to the Closing, including but not limited to salaries, bonuses,
vacation pay, retirement benefits, and other fringe benefits; and Seller hereby
agrees to pay all of such obligations directly to the employees involved when
due. Seller agrees timely to pay all payroll tax, withholding, and unemployment
compensation payments required to be made with respect to the compensation of
such employees and to hold Buyer harmless therefrom. Seller shall furnish to
Buyer such evidence of Seller's compliance with the provisions of this paragraph
as Buyer reasonably may request from time to time.
7. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller warrants,
represents, and covenants to and with Buyer, now and as of the Closing:
(a) That Seller has full right and lawful authority to enter into
this Agreement and to sell the items of personal property to
be acquired by Buyer pursuant to this Agreement; that Seller's
performance of its obligations under this Agreement will not
violate any agreement, document, trust (constructive or
otherwise), order, judgment or decree to which Seller is a
party or by which it is bound; and that, upon the transfer and
assignment of such property to Buyer as hereinbefore
mentioned, Buyer will acquire good and merchantable title
thereto, free and clear of any liens, encumbrances, security
interests, actions, claims, and equities of any kind
whatsoever.
(b) That Seller is the sole and lawful owner of and has good and
marketable title to all of the items of personal property to
be acquired by Buyer pursuant to this Agreement, free and
clear of any liens, encumbrances, security interests, actions,
claims, and equities of any kind whatsoever.
(c) All material items of tangible personal property to be
acquired by Buyer pursuant to this Agreement are in good
operating condition, subject to normal wear.
(d) That there are no suits, arbitrations or other legal or
governmental proceedings pending or threatened against Seller
which might conceivably affect the title to the items of
personal property to be acquired by Buyer pursuant to this
Agreement.
(e) That Seller has duly filed all federal, state, and local tax
returns of every kind whatsoever required to be filed on or
before the Closing and has paid in full the tax liability
shown on such returns; that no unpaid deficiencies are in
existence which have been asserted against Seller by any
official or agency as a result of the filing of such returns;
and that, to the knowledge of Seller, there is not now pending
any examination with respect to any such returns nor does
Seller know of any impending examination with respect to any
such returns.
(f) Seller shall timely pay all sales and use taxes imposed on or
collectible by Seller and shall furnish to Buyer evidence that
all of Seller's sales and use taxes have been paid.
(g) The property to be acquired by Buyer pursuant to this
Agreement, together with the rights, property and services to
be rendered or furnished to Buyer pursuant to the Software
License and Maintenance Agreement attached as Exhibit "A"
hereto, will include at Closing all material rights and
property necessary to the conduct of the Business by Buyer in
the manner it is conducted by Seller on the date of this
Agreement.
3
(h) There is no fact, development, or threatened development with
respect to the markets, products, customers, vendors,
suppliers, operations, assets or prospects of the Business
which are known to Seller which would materially adversely
affect the business, operations or prospects of the Business
considered as a whole, other than such conditions as may
affect as a whole the economy generally.
(i) The financial statements of Seller for the year ended June 30,
1997 and for the six month period ended December 31, 1997,
furnished to Buyer fairly and accurately represent the
financial operations of Seller for such periods.
(j) That Seller has listed on Schedule 7(j) all of Seller's
contracts (oral or written) with customers and suppliers of
the Business; Seller has no other contracts (oral or written)
with customers and suppliers of the Business. Seller has
delivered to Buyer true, correct and complete copies of all
written contracts relating to the Business, and written
summaries of the terms of all oral contracts relating to the
Business, and all of such contracts are presently in full
force and effect and are assignable to Buyer unless otherwise
indicated. Seller has not received any notices from any
customers or suppliers of the Business that indicate that they
intend to terminate any of such contracts and, except as
reflected in the copies delivered to Buyer or on Schedule
7(j), such contracts have not been amended and Seller and the
other parties to such contracts are not in default in any
material respect under such contracts. Seller has not been
apprised and does not currently believe or have reason to
believe that any of the customers of the Business plan to
cancel or reduce the volume under any customer contracts.
(k) That Schedule 7(k) contains a complete list of all of Seller's
contracts (oral and written) relating to the Business, if any,
other than the contracts with customers and suppliers listed
on Schedule 7(j). Seller has delivered to Buyer true, correct
and complete copies of all such other written contracts
relating to the Business and written summaries of the terms of
all such other oral contracts relating to the Business, and
all of such contracts are presently in full force and effect
and are assignable unless otherwise indicated, and, except as
reflected in the copies delivered to Buyer or on Schedule
7(k), such contracts have not been amended and Seller and the
other parties to such contracts are not in default in any
material respect under such contracts.
(l) That Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
Seller has the corporate power and authority required to
conduct the Business and to own and use the properties
currently owned and used by it. Seller has the corporate power
and authority to execute and deliver this Agreement and to
perform its respective obligations thereunder. The execution
and delivery of this Agreement by Seller and the performance
of its obligations thereunder have been duly and validly
authorized by all necessary corporate action. This Agreement
has been duly and validly executed and delivered by Seller and
constitutes a legal, valid and binding obligation of Seller,
enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance, and other
similar laws or judicial decisions affecting the validity and
enforcement of creditors' rights generally.
(m) That neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated thereby, (i)
conflicts with or violates any provision of the Certificate of
Incorporation or bylaws of Seller, (ii) requires on the part
of Seller any
4
filing with, or permit, authorization, consent or approval of,
any federal or state governmental agency or entity, (iii)
conflicts with, results in a breach of, constitutes (with or
without notice or lapse of time or both) a default under, or
requires any notice, consent or waiver under any contract,
lease, license, franchise, permit, indenture, agreement or
mortgage for borrowed money or other agreement to which Seller
is a party or by which Seller is bound or to which any of its
assets is subject, or (iv) violates any statute, rule or
regulation, or any order, writ, injunction or decree
applicable to Seller or any properties or assets of Seller.
(n) Unless otherwise approved by Buyer, Seller shall maintain and
operate the Business between the date of this Agreement and
the Closing in the ordinary course consistent with past
practices.
8. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer warrants,
represents, and covenants to and with Seller, now and as of the Closing:
(i) That Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
Buyer has the corporate power and authority to execute and
deliver this Agreement and to perform its respective
obligations thereunder. The execution and delivery of this
Agreement by Buyer and the performance of its obligations
thereunder have been duly and validly authorized by all
necessary corporate action. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes a
legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance, and other similar laws or judicial
decisions affecting the validity and enforcement of creditors'
rights generally.
(ii) That neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated thereby, (i)
conflicts with or violates any provision of the Certificate of
Incorporation or bylaws of Buyer, (ii) requires on the part of
Buyer any filing with, or permit, authorization, consent or
approval of, any federal or state governmental agency or
entity, (iii) conflicts with, results in a breach of,
constitutes (with or without notice or lapse of time or both)
a default under, or requires any notice, consent or waiver
under any contract, lease, license, franchise, permit,
indenture, agreement or mortgage for borrowed money or other
agreement to which Buyer is a party or by which Buyer is bound
or to which any of its assets is subject, or (iv) violates any
statute, rule or regulation, or any order, writ, injunction or
decree applicable to Buyer or any properties or assets of
Buyer.
9. INDEMNIFICATION. Seller agrees to indemnify Buyer and to hold
Buyer harmless from any and all loss, damage, cost, or expense incurred or
sustained by Buyer by reason of the failure of any warranty or representation
contained in this Agreement to be true or as a result of Seller's failure to
abide by any covenant or agreement on its part contained in this Agreement or
arising out of any claim by a stockholder of Seller alleging that Seller
improperly failed to obtain stockholders approval of the transactions
contemplated by this Agreement or arising out of any claim made against Buyer
alleging that Seller failed to comply with the bulk sales laws of the State of
Connecticut.
10. SURVIVAL. The representations, warranties, and covenants on
the part of Seller and Buyer contained in this Agreement shall survive the
Closing and shall be binding upon each party and their respective successors and
assigns.
5
11. PAYMENT OF LIABILITIES. Seller agrees that it is responsible
for all liabilities of Seller existing on the Closing and to hold Buyer harmless
therefrom. Buyer and Seller agree that Buyer is not assuming and shall have no
responsibility for any of the debts, obligations, or liabilities of Seller,
including but not limited to any liabilities or obligations of Seller (whether
fixed, absolute, contingent, known, unknown, direct, indirect, or otherwise)
whether incurred or accrued before or after the Closing, which in any way relate
to the performance or non-performance of, or any other liability or obligation
relating to any service or product furnished or sold by Seller prior to or after
the Closing, and Seller hereby agrees to hold Buyer harmless from any cost or
expense arising out of or relating to any such debts, obligations, or
liabilities; provided, however, such indemnification by Seller does not extend
to any Assumed Liabilities. Buyer agrees to be responsible for any and all
liabilities of Buyer existing at the Closing or assumed by Buyer as a result of
this Agreement and to hold Seller harmless therefrom. Seller and Buyer agree
that if either receives any payment under a contract which is included among the
Acquired Assets which payment belongs to the other, it will promptly forward
such payment to the other.
12. TRANSFER TAXES. Seller shall pay all sales and other similar
taxes imposed on or collectible by Seller or Buyer by reason of the transfer of
the property being acquired by Buyer pursuant to this Agreement.
13. NONCOMPETE. During the term of the Software License and
Maintenance Agreement to be entered into at the Closing, Seller shall not,
directly or indirectly, whether as a shareholder, partner or investor possessing
any ownership interest, or as principal, agent, employee, proprietor,
independent contractor, consultant or in any other capacity, solicit for itself
or others, or advise or recommend to any other person that such person solicit,
any current customer of the Business, for the purpose of competing with Buyer in
the Business. If any court having jurisdiction at any time hereafter shall hold
any of such restrictive covenants to be unenforceable or unreasonable as to its
scope, territory, or period of time, and such court in its judgment or decree
shall declare or determine the scope, territory, or period of time which such
court deems to be reasonable, then such scope, territory or period of time, as
the case may be, shall be deemed automatically to have been reduced to that
declared or determined to be reasonable by such court. Notwithstanding the
foregoing, if any clause or provision of this paragraph shall be unenforceable,
then such clause or provision shall be deemed to be deleted from this paragraph,
but every other clause and provision shall continue in full force and effect.
These covenants are an integral part of the asset purchase transaction
contemplated by this Agreement and Buyer would not have entered into this
Agreement in the absence of such covenants. Seller acknowledges that the
agreements contained in this paragraph are reasonable and necessary to protect
the Business being purchased by Buyer and that any breach thereof will result in
irreparable injury to Buyer for which Buyer has no adequate remedy at law.
Seller therefore agrees that, in the event either of them breaches any of the
agreements contained in this paragraph, Buyer shall be authorized and entitled
to seek from any court of competent jurisdiction (i) a temporary restraining
order, (ii) preliminary and permanent injunctive relief, (iii) an equitable
accounting of all profits or benefits arising out of such breach, and (iv)
direct, incidental, and consequential damages resulting from such breach. Such
rights or remedies shall be cumulative and in addition to all other rights or
remedies to which Buyer may be entitled.
14. ENTIRE AGREEMENT. This document constitutes the entire
agreement of the parties with respect to the subject matter hereof and may not
be modified, amended, or terminated except by a written agreement specifically
referring to this Agreement and signed by all of the parties hereto.
15. BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
6
16. FURTHER INSTRUMENTS. After the Closing, the parties hereto
shall execute and deliver such additional instruments and documents as may be
reasonably requested by any of them in order to carry out the purposes and
intent of this Agreement and to fulfill their respective obligations.
17. FURTHER ACTIONS. Seller agrees to take after the Closing such
actions from time to time as may in the reasonable judgment of Buyer or its
counsel be necessary or advisable to confirm the title of Buyer to any of the
items of property acquired by Buyer from Seller pursuant to this Agreement.
18. GOVERNING LAW. This agreement shall be construed in accordance
with the laws of the State of Nebraska.
19. 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.
20. 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.
21. SCHEDULES AND EXHIBITS. All references to Schedules and
Exhibits herein, unless otherwise stated, means the schedules and exhibits
attached to this Agreement which are hereby incorporated by reference.
22. NOTIFICATION. All notices which either party may be required
or desire to give to the other party shall be in writing and shall be given by
personal service, telecopy, registered air mail or certified air mail (or its
equivalent) to the other party at its respective address or telecopy telephone
number set forth below. Notices shall be deemed to be given upon actual receipt
by the party to be notified. Notices delivered by telecopy shall be confirmed in
writing by overnight courier.
If to Seller: SmartServ Online, Inc.
Metro Center, Xxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Telecopy No. (000) 000-0000
If to Buyer: Data Transmission Network
Corporation
0000 Xxxx Xxxxx Xxxx, #000
Xxxxx, XX 00000
Attn: Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
DATA TRANSMISSION NETWORK
CORPORATION, a Delaware corporation
By: /S/ XXXXXXX X. XXXX
--------------------------------
Xxxxxxx X. Xxxx, Xx. Vice President
SMARTSERV ONLINE, INC., a
Delaware corporation
By: /S/ XXXXXXXXX X. XXXXXXXX
--------------------------------
Chief Executive Officer
8
SCHEDULE 1
List of Smartserv Equipment
---------------------------
Server One
Ultra 2 Sun MicroSystems Computer
Dual CPU 300 MHz
1 GB RAM
4.2 G Hard Drive
100 Mbs Ethernet Card
Solaris 2.5
Serial number 742FC47
Server Two
Ultra 2 Sun MicroSystems Computer
Dual CPU 300 MHz
1 GB RAM
2 4.2 G Hard Drives
100 Mbs Ethernet Card
Solaris 2.5
Serial number
Server Three
Ultra 2 Sun MicroSystems Computer
Dual CPU 200 MHz
500 MG RAM
2 G Hard Drive
100 Mbs Ethernet Card
Solaris 2.5
Serial number 638FOF57
SCHEDULE 7(j)
Customer and Supplier Contracts
-------------------------------
Reality On Line - Reuters News Agreement
Standard & Poors - Distribution Agreement
Agreement between AT&T Corp. and SmartServ Online, Inc. for AT&T WorldNet
Services
Terms and Conditions for Subscribers to SmartServ Services
SCHEDULE 7(k)
List of Other Contracts
-----------------------
None
EXHIBIT "A"
SOFTWARE LICENSE AND
SERVICE AGREEMENT
-----------------
THIS AGREEMENT (the "Agreement") is made and entered into as of
____________________, 1998 (the "Effective Date") by and between SmartServ
Online, Inc., a Delaware corporation having an office at Metro Center, Xxx
Xxxxxxx Xxxxx, Xxxxxxxx, XX 00000 ("SmartServ") and Data Transmission Network
Corporation, a Delaware corporation, having an office at 0000 Xxxx Xxxxx Xxxx,
Xxxxx 000, Xxxxx, Xxxxxxxx 00000 ("DTN").
RECITALS
A. SmartServ is the owner of certain computer software as
described in Schedule "A" attached hereto and the documentation and related
materials therefore listed in Schedule "A" (as modified and enhanced in
accordance with this Agreement, the "Internet Software") and SmartServ desires
to license the Internet Software to DTN.
B. Pursuant to that certain Asset Purchase Agreement dated April
23, 1998 between SmartServ and DTN (the "Purchase Agreement"), DTN acquired from
SmartServ three client servers. Such servers will remain located at the premises
of SmartServ as provided herein. When used with such servers and additional
hardware and equipment owned exclusively by SmartServ (the use of which will be
provided by SmartServ as set forth in this Agreement), the Internet Software
will allow DTN's subscribers internet access to continuous market quotations and
other financial and news information services offered from time to time by DTN
(the "Internet Services").
C. SmartServ agrees to service, support, maintain and enhance the
Internet Software and the related computer hardware as more fully described
herein so as to allow DTN's subscribers to access the Internet Services at any
time during the term of this Agreement.
D. DTN desires to acquire such licenses and services from
SmartServ as described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises contained herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 DEFINED TERMS. The following defined terms when used in this
Agreement shall have the meanings designated below:
BUSINESS HOURS means the time period commencing one hour prior
to and ending one hour after the trading hours of the New York Stock
Exchange.
CONFIDENTIAL INFORMATION has the meaning given to such term in
Paragraph 5.2 of this Agreement.
DOCUMENTATION has the meaning given to such term in Paragraph
4.2 of this Agreement.
ESCROW AGENT means the Escrow Agent under that certain Source
Code Escrow Agreement with SmartServ and DTN executed concurrently
with this Agreement.
ESCROW RELEASE EVENTS has the meaning given to such term in
Paragraph 2.3(e) of this Agreement.
HARDWARE means the servers acquired by DTN pursuant to the
Purchase Agreement and Paragraph 4.7 of this Agreement and all
replacements and additions thereto which will be manipulated by the
Internet Software to allow DTN's subscribers to obtain the Internet
Services.
INTERNET SOFTWARE has the meaning given to such term in
Recital A to this Agreement.
LICENSE has the meaning given to such term in Paragraph 2.1 of
this Agreement.
LICENSE FEE has the meaning given to such term in Paragraph
3.1 of this Agreement.
LICENSE TERM has the meaning given to such term in Paragraph
7.1 of this Agreement.
MAINTENANCE SERVICES has the meaning given to such term in
Paragraph 4.1 of this Agreement.
SMARTSERV EQUIPMENT means the computer hardware and equipment
owned by SmartServ and described in Schedule "B" and all
replacements and additions thereto (except as provided in Paragraph
4.7) which when used with the Hardware and Internet Software will
allow DTN's subscribers to obtain the Internet Services.
SOURCE CODE ESCROW PACKAGE has the meaning given to such term
in Paragraph 2.3(a) of this Agreement.
UPDATES has the meaning given to such term in Paragraph 4.5 of
this Agreement.
ARTICLE 2
THE LICENSE
-----------
2.1 THE LICENSED SOFTWARE. SmartServ hereby grants to DTN, its
subsidiaries and affiliates, a license (the "License") to use the Internet
Software as part of DTN's, and its subsidiaries' and affiliates', business
operations and to allow DTN's subscribers to use the Internet Software to access
the Internet Services. The License shall be a limited exclusive license as
follows: SmartServ agrees not to license, sell, convey or otherwise transfer
(collectively, "Transfer") to anyone other than DTN any rights in the Internet
Software during the term of this Agreement without DTN's prior written consent,
which consent will not be unreasonably withheld or delayed by DTN, provided that
the agreement under which SmartServ shall Transfer any rights in the Internet
Software to a third party shall provide that the transferee's use of the
Internet Software would not constitute a breach of Section 13 of the Purchase
Agreement, if such other party were SmartServ. In addition, SmartServ shall not
use or allow anyone other than DTN to use the Internet Software to compete with
the Internet Services. If during any calendar quarter ending after the first
twelve months of the License Term, DTN does not obtain at least 600 subscribers
to the Internet Services (exclusive of renewing subscribers, but not net of
terminating subscribers) and pay License Fees of $100,000, then the exclusivity
with respect to the License shall cease and the License shall become
nonexclusive.
2
2.2 OBJECT CODE. SmartServ shall deliver the Internet Software to
DTN in object code form. DTN may reproduce the Internet Software as necessary to
include (a) a production version for DTN's use in accordance with this
Agreement; (b) a test version which may be run for testing and development
purposes; and (c) copies for archival and backup purposes. DTN shall also have
the right to maintain and modify or retain third party entities to maintain and
modify the Internet Software in the event of an Escrow Release Event or if
SmartServ fails to or is no longer obligated to maintain the Internet Software
under this Agreement or any future maintenance agreements between DTN and
SmartServ.
2.3 SOURCE CODE ESCROW.
a. The term "Source Code Escrow Package" means the following:
i. a complete copy in machine-readable form of the source
code and object code of the Internet Software;
ii. a complete copy of any existing design documentation and
user documentation; and
iii. complete instructions for compiling and linking every
part of the source code into executable code, for purposes of
enabling verification of the completeness of the source code
as provided below. Such instructions shall include precise
identification of all compilers, library packages, and linkers
used to generate executable code.
b. Within five (5) days after the Closing, SmartServ shall
deliver a Source Code Escrow Package to Escrow Agent.
c. When and if SmartServ provides DTN with a maintenance release
or upgrade version of any part of the Internet Software, SmartServ shall within
ten (10) business days thereafter deposit with Escrow Agent, in accordance with
Section 2.3, a Source Code Escrow Package for the maintenance release or upgrade
version.
d. DTN, at its option and expense, may at any time verify the
completeness and accuracy of any Source Code Escrow Package. Unless otherwise
agreed at the time by SmartServ and DTN, verification will be performed onsite
at Escrow Agent's or SmartServ's premises at a time specified by DTN. SmartServ
shall make technical and support personnel available as reasonably necessary for
the verification. SmartServ may in its discretion designate a representative to
be present at the verification.
e. The Source Code Escrow Package shall, upon request of DTN, be
released from escrow to DTN for use by DTN in accordance with this Agreement
upon the occurrence of one or more of the following "Escrow Release Events"
defined below:
i. SmartServ is in breach of its obligations under the Source
Code Escrow Agreement with DTN and Escrow Agent;
ii. if SmartServ files a petition for liquidation and
dissolution under Chapter 7 of the Bankruptcy Code of the United
States, or an involuntary petition in bankruptcy is filed against
SmartServ and is not dismissed or converted for reorganization under
Chapter 11 of the Bankruptcy Code of the United States within sixty
(60) days thereafter, or this Agreement is rejected in a proceeding
under Chapter 11 of the Bankruptcy Code of the United States; or
3
iii. if SmartServ proves unable or otherwise fails to cure a
breach of this Agreement within the applicable cure period set forth
in this Agreement;
f. Within ten (10) days after the execution and delivery of this
Agreement, SmartServ shall deliver to DTN two (2) keys which shall operate to
open the (i) front door and (ii) door to the computer room, respectively, of
SmartServ's principal offices located at Xxx Xxxxxxx Xxxxx, Xxxxxxxx, XX 00000.
These keys may be used by a limited number of employees of DTN for the purpose
of accessing, operating and maintaining the Internet Software and Hardware in
the event that SmartServ is unable to do so in accordance with the terms and
conditions set forth in this Agreement.
2.4 COMPETITION. Nothing in this Agreement shall impair DTN's
rights to use or distribute similar ideas or programs which have been
independently developed by DTN or submitted by others to DTN, provided that
SmartServ' patents, copyrights and trade secrets are not infringed.
ARTICLE 3
FEES AND PAYMENT
----------------
3.1 LICENSE AND MAINTENANCE FEE. Except as provided below, during
the License Term DTN shall pay to SmartServ a monthly license and maintenance
fee (the "License Fee") equal to the sum of the amounts determined by
multiplying the applicable percentages set forth below by the revenues earned
and received for such month by DTN from the corresponding number of subscribers
to the Internet Services at each level, in excess of the first 1,000
subscribers.
Percentage of
Subscribers Subscriber Revenue
----------- ------------------
1,001 - 2,000 20%
2,001 - 4000 25%
4,001 - 8,000 30%
Over 8,000 40%
DTN shall guaranty a minimum monthly payment of $100,000 during the first twelve
months of the License Term. The minimum monthly payments during the first twelve
months of the License Term shall be paid in advance on the first day of such
month. Otherwise, the License Fee shall be paid within twenty (20) days after
the end of the month to which it relates. The License Fee shall be determined
using the average revenue per subscriber for such month. As an example, if the
revenues earned and received by DTN during a month are $800,000 from 4,000
subscribers, then the monthly payment to SSOL will be $140,000 computed as the
sum of (i) 20% of the product of $200 (the average revenue per subscriber for
such month) multiplied by 1,000 subscribers and (ii) 25% of the product of $200
multiplied by 2,000 subscribers. For purposes of such computation, the number of
subscribers in a month shall be the weighted average of the number of
subscribers for such month. Notwithstanding the foregoing, if SmartServ breaches
any of its obligations under Article 4 of this Agreement and fails to cure such
breach within thirty (30) days after written notice thereof, DTN may at its sole
cost elect to provide its own maintenance of the Internet Software and the
Hardware, in which case DTN shall have no further obligation to pay the License
Fee and SmartServ shall have no further obligations under Article 4 of this
Agreement.
3.2 AUDIT RIGHTS. SmartServ and/or a SmartServ representative
shall have the right, exercisable not more than once per year, at any reasonable
time to inspect, audit and make copies of the books and records of DTN which
relate to the calculation of the License Fee. Except as set forth below, such
audit shall be at the expense of SmartServ. In the event any such inspection and
audit reveals that DTN underpaid
4
the License Fee owing for any month, then DTN shall promptly pay to SmartServ
the amount of such underpayment together with interest thereon from its due date
at the rate of eight percent (8%) per annum. In the event that DTN underpaid by
more than five percent (5%) the License Fee owing for any month, then DTN also
shall promptly pay to SmartServ the reasonable out-of-pocket costs and expenses
actually incurred by SmartServ in conducting such audit, up to an amount not in
excess of such underpayment.
ARTICLE 4
MAINTENANCE SERVICES
--------------------
4.1 SERVICES OF SMARTSERV. During the License Term, SmartServ
agrees to service, support, maintain and enhance the Internet Software and the
Hardware as provided in this Article 4 (the "Maintenance Services"). SmartServ
agrees to use its best efforts in performing the Maintenance Services so as to
allow DTN's subscribers prompt access to the Internet Services at any time
during the License Term. It is agreed by the parties that SmartServ will have
during the first twelve months of the License Term a minimum of six (6)
programming resources trained in the Internet Software available at all
reasonable times to provide the Maintenance Services; provided, however, that
SmartServ may be required to have additional programming resources available to
perform the Maintenance Services during critical times as needed. DTN and
SmartServ agree that during the remainder of the License Term SmartServ will
have a minimum of three (3) programming resources trained in the Internet
Software available at all reasonable times to provide the Maintenance Services;
provided, however, that SmartServ may be required to have additional programming
resources available to perform the Maintenance Services during critical times as
needed.
4.2 CORRECTION OF INTERNET SOFTWARE. The Maintenance Services
shall include, without limitation, SmartServ correcting any failure of the
Internet Software to operate in accordance with the documentation for the
Internet Software (as modified pursuant to this Agreement, the "Documentation").
The Documentation shall provide for the Internet Software to operate in an
efficient and responsive manner in accordance with the highest of industry
standards.
4.3 OUTAGES. SmartServ understands the need for DTN's subscribers
to have continuous access to the Internet Services. SmartServ warrants that it
will use its best efforts to maintain the Internet Software and the Hardware in
a condition which will allow DTN's subscribers to access the Internet Services
24 hours per day, 365 days per year. Notwithstanding the force majeure
provisions of Section 8.5, should outages occur during Business Hours due to the
failure of the Internet Software or the Hardware that exceed 1% in the aggregate
during any calendar month, SmartServ shall forfeit the entire License Fee for
such month as liquidated damages. Should outages occur during Business Hours due
to the failure of the Internet Software or the Hardware that exceed 2% in the
aggregate during any calendar month or 3% in the aggregate during each of two
consecutive calendar months, DTN may elect (without granting SmartServ a cure
period) to provide at its sole cost its own maintenance of the Internet Software
and the Hardware, in which case DTN shall have no further obligation to pay the
License Fee during the remainder of the License Term and SmartServ shall have no
further obligations under Article 4 of this Agreement.
4.4 REQUIRED UPGRADES. DTN receives its market quotations and
other news and financial information from various third-party providers. DTN
shall have the right anytime during the License Term, in its sole discretion, to
change the third-party providers of information for the Internet Services. As
part of Maintenance Services, at no additional cost to DTN, but subject to the
limitations set forth in Paragraph 4.6, SmartServ shall provide all
modifications required to enable the Internet Software to operate in accordance
with any new or modified system requirements specified by such third-party
providers within the time periods specified in the contracts with such
third-party providers, which shall not be less than thirty (30) days after
receipt of notice from DTN of the new or modified system requirements.
5
4.5 UPDATES. As part of Maintenance Services, at no additional
cost to DTN, SmartServ shall provide during the License Term (other than the
first twelve months thereof) all revisions, improvements, modifications,
corrections, releases and enhancements (the "Updates") to any portion of the
Internet Software. SmartServ shall use its best efforts to provide the Updates
as necessary to maintain the quality and competitive position of the Internet
Services in the industry. Such Updates shall not degrade the performance,
functioning or operation of the Internet Software. If any such Updates are not
acceptable to DTN, DTN may refuse to accept such Updates, and, in such event,
SmartServ agrees to maintain the Internet Software without such Updates. Once an
Update is incorporated in the Internet Software, it shall be considered part of
the Internet Software for all purposes hereunder.
4.6 LIMITATION ON EXPENDITURES. Excluding the first twelve months
of the License Term, SmartServ reserves the right to limit the expenditure of
its resources for performing the upgrades and Updates referred to in Sections
4.4 and 4.5 to twenty percent (20%) of its revenues earned hereunder (excluding
such initial twelve months) on a cumulative basis. Accordingly, if SmartServ
uses 10% of its revenues during one year, then it has 30% of its revenues
available for the next year.
4.7 HARDWARE MAINTENANCE. So long as SmartServ is to provide the
Maintenance Services as provided herein, the Hardware shall be located at
SmartServ's premises at no additional cost to DTN, except for property taxes on
the Hardware which shall be the sole responsibility of DTN. As part of
Maintenance Services, at no additional cost to DTN, SmartServ shall make all
necessary adjustments and minor repairs to keep the Hardware in good operating
condition and functioning properly at the premises of SmartServ. SmartServ will
use its best efforts to advise DTN sufficiently in advance of any needed major
repairs or replacements to the Hardware and DTN will, at its cost, provide new
or equivalent used replacement parts for the Hardware. In addition, DTN will, at
its cost, furnish an additional client server for each additional 500
subscribers to the Internet Service in excess of the first 1,500 subscribers.
The SmartServ Equipment will accommodate three more servers, in addition to the
ones owned by DTN. Each server is capable of serving 500 additional subscribers
for a total of 3,000 subscribers. Adding additional subscribers, beyond 3,000
may require additional computer hardware to be added to the system, which DTN
will furnish at its cost and which will become Hardware for purposes of this
Agreement. The Hardware and all additions and replacements shall at all times
remain the property of DTN. Parts or replacements required for the Hardware as a
result of the negligence or fault of SmartServ shall be furnished by SmartServ
at its cost. During the License Term, SmartServ shall use its best efforts to
provide adequate facilities, including without limitation work space, heat,
light, ventilation, electric current and outlets, for operation of the Hardware.
SmartServ agrees that it shall not move, or permit to be moved, the Hardware
during the License Term without DTN's prior written consent. Notwithstanding any
contrary provision contained herein, DTN shall be responsible for all
telecommunication costs incurred in the operation of the Hardware and Internet
Software as contemplated in this Agreement. SmartServ agrees, at no additional
cost to DTN, to maintain casualty insurance on the Hardware with the same
coverage as it has for its own computer equipment and shall replace any loss to
the Hardware as a result of events covered by such insurance. Such policies of
insurance shall name DTN as an additional insured and may not be canceled
without at least ten days prior written notice to DTN.
4.8 TELEPHONE SUPPORT. As part of Maintenance Services, at no
additional cost to DTN, SmartServ shall provide reasonable technical assistance
and consultation in the use of the Internet Software and the Hardware by
telephone, during DTN's normal working hours.
4.9 TRAINING. As part of Maintenance Services, at no additional
cost to DTN, SmartServ shall provide such training as may reasonably be
requested by DTN to enable it to use the Internet Software and the Hardware for
providing the Internet Services.
6
4.10 SMARTSERV EQUIPMENT. The system to be used to provide the
Internet Services includes the SmartServ Equipment in addition to the Hardware
and Internet Software. During the License Term, SmartServ agrees to furnish the
use of the SmartServ Equipment so as to allow DTN's subscribers prompt access to
the Internet Services. In addition, SmartServ agrees to service, support, and
maintain the SmartServ Equipment, subject to the obligations of DTN set forth in
this Article 4.
ARTICLE 5
PROPRIETARY RIGHTS AND CONFIDENTIALITY
--------------------------------------
5.1 OWNERSHIP OF THE INTERNET SOFTWARE. Subject to the rights
granted to DTN herein, all right, title and interest to the Internet Software
shall at all times remain in SmartServ, including but not limited to all
applicable copyrights, trade secrets and patents. DTN shall safeguard the
Internet Software with reasonable efforts using not less than the same degree of
care that is exercised by DTN for its own confidential and proprietary software.
5.2 CONFIDENTIAL INFORMATION. DTN and SmartServ acknowledge that
in the course of dealings between the parties, each party will acquire
information about the other party, its business activities and operations, its
technical information and trade secrets, of a highly confidential and
proprietary nature ("Confidential Information"). The Confidential Information of
each party shall be safeguarded by the other at least to the same extent that it
safeguards its own confidential materials or data relating to its own business.
5.3 CONFIDENTIAL COMPUTER PROGRAMS. Except as set forth herein,
neither party shall make copies of the computer programs and related materials
of the other party nor permit them to be used by or for any person or entity
except as set forth herein and all such computer programs and related materials
shall be considered Confidential Information hereunder.
5.4 CONFIDENTIALITY EXCLUSIONS. Nothing in this Article 5 shall
restrict either party with respect to information or data identical or similar
to that contained in the Confidential Information but which (a) that party
rightfully possessed before it received such information from the other as
evidenced by written documentation; (b) subsequently becomes publicly available
through no fault of that party; (c) is subsequently furnished rightfully to that
party by a third party without restrictions on use or disclosure; or (d) is
required to be disclosed by law, provided that the disclosing party will
exercise reasonable efforts to allow the other party to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
to the Confidential Information.
5.5 REMEDY. SmartServ and DTN agree that if either of them, their
officers, employees or anyone obtaining access to the Confidential Information
of the other party by, through or under them, breaches any provision of this
Article 5, the non-breaching party would suffer irreparable harm and the total
amount of monetary damages for any injury to the non-breaching party from any
violation of this Article 5 would be impossible to calculate and would therefore
be an inadequate remedy. Accordingly, the parties agree that the non-breaching
party shall be entitled to temporary and permanent injunctive relief against the
breaching party, its officers or employees, and such other rights and remedies
to which the non-breaching party may be entitled to at law, in equity and under
this Agreement for any violation of this Article 5.
ARTICLE 6
WARRANTIES AND INDEMNIFICATION
------------------------------
6.1 QUIET ENJOYMENT. SmartServ warrants to DTN that: (i) SmartServ
has the right to furnish to DTN the Internet Software and other materials
covered hereunder free of all liens, claims, encumbrances and
7
other restrictions, except as stated to the contrary herein; (ii) DTN shall
quietly and peacefully possess the Internet Software and other materials
furnished hereunder subject to and in accordance with the provisions of this
Agreement; and (iii) DTN's permitted use and possession of the Internet Software
and other materials will not be interrupted or otherwise disturbed by any entity
asserting a claim under or through SmartServ.
6.2 INTERNET SOFTWARE. SmartServ warrants that the Documentation
faithfully and accurately reflects the functionality provided by the Internet
Software. SmartServ warrants that the Internet Software (i) is free from known
material defects and (ii) materially performs in accordance with the
Documentation. SmartServ further warrants and represents that the occurrence in
or use by the Internet Software of dates on or after January 1, 2000
("millennial dates") will not adversely affect the performance of the Internet
Software with respect to data dependent data, compilations, output, or other
functions (including but not limited to calculating, comparing and sequencing)
and that the Internet Software will create, store, process and output
information related to or including millennial dates without error or omissions
and at no additional cost to DTN.
6.3 DEFECT CORRECTION. In the event that the Internet Software
does not perform as warranted in paragraph 6.2 hereof, SmartServ agrees to use
its best efforts to promptly make the Internet Software perform as so warranted.
If SmartServ is unable to make the Internet Software perform as so warranted,
DTN may, at its sole option, terminate this Agreement.
6.4 SERVICES. SmartServ warrants that all services performed by
SmartServ hereunder, including but not limited to Maintenance Services,
installing the Internet Software, training, programming and consulting, will be
performed in a professional manner by qualified personnel.
6.5 WARRANTY PERIOD. Commencing upon the Effective Date and
continuing at all times during the License Term, subject to termination as
provided in Section 3.1, SmartServ shall perform Maintenance Services, at no
additional charge to DTN, in accordance with Article 4 hereof.
6.6 INTELLECTUAL PROPERTY INDEMNIFICATION. (a) SmartServ shall
indemnify, defend and hold DTN, its subsidiaries, affiliates and sublicensees
harmless from any claims, damages or judgments including all reasonable
attorney's fees, directly or indirectly resulting from any claimed infringement
or violation of any patent, copyright, trademark, trade secret or other
intellectual property right of a third party with respect to the Internet
Software. Following notice of a claim or threat thereof, SmartServ shall use its
best efforts to either (i) procure for DTN the right to continue to modify and
use the Internet Software as provided herein, at no additional costs to DTN, or
(ii) provide DTN with a noninfringing version of the Internet Software, provided
that such new version does not degrade the performance, functionality or
operation of the Internet Software in any material respect. If SmartServ is
unable to perform either (i) or (ii) above, DTN may upon reasonable notice
terminate this Agreement and the License. DTN agrees to give SmartServ
reasonable notice of any such claim or threat and reasonable cooperation with
SmartServ in any defense or settlement of any such claim or threat.
(b) DTN shall indemnify, defend and hold SmartServ, its subsidiaries
and affiliates harmless from any claims, damages or judgments including all
reasonable attorney's fees, directly or indirectly resulting from any claimed
infringement or violation of any patent, copyright, trademark, trade secret or
other intellectual property right of a third party with respect to the Internet
Services (other than with respect to the Internet Software). SmartServ agrees to
give DTN reasonable notice of any such claim or threat and reasonable
cooperation with DTN in any defense or settlement of any such claim or threat.
8
ARTICLE 7
TERM AND TERMINATION
--------------------
7.1 TERM. The term of this Agreement shall commence upon the
Effective Date and, unless terminated earlier pursuant to Article 7, shall
continue until either party terminates this Agreement by written notice to the
other party given at least one year in advance of such termination, provided
such termination may not occur earlier than three years after the Effective
Date. Such term is referred to in this Agreement as the "License Term".
7.2 TERMINATION FOR CAUSE. Either party shall have the right to
terminate this Agreement and/or the License upon: (a) violation, breach or
default of the other party, its officers or employees of any material provision
of this Agreement, including but not limited to proprietary rights and
confidentiality obligations; or (b) the other party becoming insolvent,
commencing or becoming subject to any proceedings under any bankruptcy or
insolvency law or making any assignment for the benefit of creditors, suffering
or permitting the appointment of a receiver for its business or assets or
commencing the winding up or liquidating its business or affairs, voluntarily or
otherwise. In addition, DTN may terminate this Agreement in accordance with
paragraphs 6.3, 6.6 and 7.1 hereof.
7.3 RIGHT TO CURE. Notwithstanding the foregoing paragraph 7.2
hereof, neither party may terminate this Agreement and/or the License pursuant
thereto, unless and until the party seeking to terminate has specified the cause
for the termination in writing, notifying the other party that it intends to
terminate this Agreement and/or the License, and such cause for the termination
has not been cured by the other party within thirty (30) days after receipt of
such written notice, except with respect to the breach of a confidentiality
obligation, in which case such cause must be cured within five (5) days after
receipt of such written notice.
7.4 OBLIGATIONS UPON TERMINATION. Upon termination of this
Agreement and the License, all rights and obligations granted herein shall
cease, except as otherwise provided, and each party shall forthwith return to
the other party all papers, materials, documentation, and any other properties
of the other party received pursuant to this Agreement, including but not
limited to the Source Code Escrow Package.
7.5 SURVIVAL OF CERTAIN PROVISIONS. The terms and conditions in
the following paragraphs shall survive the termination of this Agreement:
5.1-5.5, 6.6, 7.4, 7.5, 8.1-8.4, 8.8-8.10.
ARTICLE 8
GENERAL
-------
8.1 AGREEMENT INTERPRETATION AND CONSTRUCTION. If any provision of
this Agreement is held invalid or unenforceable for any reason, such invalidity
shall not affect the validity of the remaining provisions of this Agreement, and
the parties shall substitute for the invalid provisions a valid provision which
most closely approximates the intent and economic effect of the invalid
provision. The recitals set forth on the first page of this Agreement are an
integral part of this Agreement and are incorporated by reference into the body
of this Agreement. The section headings in this Agreement are solely for
convenience and shall not be considered in its interpretation. The language of
this Agreement has been approved by the counsel for both parties and shall be
construed as a whole according to its fair meaning and neither of the parties
hereto shall be deemed to be the draftsman of this Agreement in any action which
may hereafter arise between the parties.
8.2 NON-WAIVER. The failure of either party at any time to require
performance by the other party of any provision of the Agreement shall not
affect in any way the full right to require such performance at any
9
subsequent time, nor shall the waiver by either party of a breach of any
provision of this Agreement be taken or held to be a waiver of the provision
itself.
8.3 ATTORNEYS' FEES. In any action between the parties to enforce
any of the terms of this Agreement, the prevailing party shall be entitled to
recover expenses, including reasonable attorneys' fees.
8.4 NOTIFICATION. All notices which either party may be required
or desire to give to the other party shall be in writing and shall be given by
personal service, telecopy, registered air mail or certified air mail (or its
equivalent) to the other party at its respective address or telecopy telephone
number set forth below. Notices shall be deemed to be given upon actual receipt
by the party to be notified. Notices delivered by telecopy shall be confirmed in
writing by overnight courier.
If to SmartServ: Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Telecopy No. (000) 000-0000
If to DTN: Data Transmission Network
Corporation
0000 Xxxx Xxxxx Xxxx, #000
Xxxxx, XX 00000
Attn: Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
8.5 FORCE MAJEURE. Neither party shall be liable or deemed to be
in default for any delay or failure in performance under this Agreement
resulting directly or indirectly from acts of God or any causes beyond the
reasonable control of such party, provided that such party shall be without
fault or negligence. Performance time under this Agreement shall be extended for
a period of time equivalent to the time lost because of any delay which is
excusable under this paragraph. If any such excusable delay shall last for a
period of more than thirty (30) consecutive calendar days, the party not relying
on the excusable delay, at its option, may terminate this Agreement.
8.6 INDEPENDENT CONTRACTORS. It is expressly agreed that SmartServ
and DTN are acting hereunder as independent contractors and under no
circumstances shall any of the employees of one party be deemed the employees of
the other for any purpose. This Agreement shall not be construed as authority
for either party to act for the other party in any agency or other capacity, or
to make commitments of any kind on the account of or on the behalf of the other
except to the extent and for the purposes provided for herein. All persons
furnished by SmartServ shall be considered solely SmartServ's employees or
agents and SmartServ shall be responsible for compliance with all laws, rules
and regulations including, but not limited to employment of labor, hours of
labor, working conditions, workers' compensation, payment of wages, and payment
of taxes, such as unemployment, social security and other payroll taxes,
including applicable contributions from such persons when required by law.
SmartServ's employees and agents shall have no right to any benefits that DTN
grants its employees. SmartServ shall indemnify and hold harmless, and, if
required, defend DTN against any claims or lawsuits arising out of SmartServ's
failure to comply with any such laws, rules or regulations.
8.7 COMPLIANCE WITH LAWS. SmartServ, its employees and agents
shall comply with the applicable EEO, Fair Labor Standards Act and The
Occupational Safety and Health Act and all other federal, state, and local laws,
ordinances, regulations and codes including identification and procurement or
required permits,
10
certificates, approvals and inspections, in performance under this Agreement.
SmartServ agrees to indemnify DTN for any loss or damage that may be sustained
by reason of any failure to do so.
8.8 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of Nebraska,
without regard to principles of conflicts of laws.
8.9 JURISDICTION. The parties hereby submit to the exclusive
jurisdiction of Nebraska in any legal action or proceeding arising out of or
relating to this Agreement or the legal relationship established by such
Agreement, and the parties hereby agree that all claims with respect to any such
action or proceeding shall be heard and determined in such courts. The parties
hereby waive any objection they may have to the existence of personal
jurisdiction or the laying of venue, and waive any defense of an inconvenient
forum, with respect to the maintenance of any such action or proceeding.
8.10 PUBLICITY. Except as otherwise set forth herein, neither party
shall use the name of the other in advertising or publicity releases without
securing the prior written consent of the other party. Without the prior written
consent of the other party, neither party shall disclose, advertise or publish
the existence of this Agreement or any terms of this Agreement, except as is
required by law or regulation or for compliance with the requirements of NASDAQ.
8.11 ASSIGNMENT. SmartServ's rights and obligations under this
Agreement are personal and SmartServ may not assign (either voluntarily or by
operation of law) or subcontract, its rights, duties or obligations under this
Agreement without the prior written consent of DTN; provided, however, SmartServ
may assign its rights under this Agreement in connection with a merger or sale
of all or substantially all of its assets so long as (i) SmartServ shall first
give DTN the right to acquire SmartServ or substantially all of its assets upon
the same terms as the proposed merger or sale (DTN shall have thirty days after
receipt of all material terms of the offer within which to accept the proposal)
and (ii) the proposed transferee is not listed on Schedule C attached hereto.
Subject to the foregoing, this Agreement shall inure to the benefit of and be
binding upon the parties and their successors and assigns.
8.12 ENTIRE AGREEMENT. This Agreement, including the Schedules
hereto, and the Purchase Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersedes all previous
proposals, both oral and written, negotiations, representations, commitments,
writings and all other communications between the parties. This Agreement may
not be released, discharged, modified or amended except by an instrument in
writing signed by a duly authorized representative of each of the parties.
IN WITNESS WHEREOF, the parties to this Agreement have caused it to
be executed by their duly authorized officers as of the Effective Date. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
DATA TRANSMISSION NETWORK SMARTSERV ONLINE, INC.
CORPORATION
By: /S/ XXXXXXX X. XXXX By: /S/ XXXXXXXXX X. XXXXXXXX
-------------------------------- --------------------------------
Title: Senior Vice President Title: Chief Executive Officer
SCHEDULE A
Internet Software Description,
Documentation and Related Materials
-----------------------------------
SCHEDULE B
List of SmartServ Equipment
---------------------------
SCHEDULE C
List of Prohibited Transferees
------------------------------
PC Quote
Data Broadcast Corp.
Bridge/Telerate
Xxxxx.xxx
S&P Xxxxxxxx
Xxxxxxxx
Telemet America Inc.
A-T Financial
Hoovers, Inc.
Media General Financial Services Inc.
Zannett Securities Corp.
Xxxxxxxx Financial
Bloomberg L.P.
Reuters
North American Quotes
ADP
Track Data
EXHIBIT "B"
SOURCE CODE ESCROW AGREEMENT
THIS AGREEMENT, made and entered into this _____ day of
________________, 1997, by and between DATA TRANSMISSION NETWORK CORPORATION, a
Delaware corporation (hereinafter "DTN"), SMARTSERV ONLINE, INC., a Delaware
corporation (hereinafter "SSOL"), and __________________________, a
____________________ (hereinafter "Escrow Agent").
W I T N E S S E T H:
WHEREAS, SSOL and DTN have entered into a Software License and
Service Agreement (the "Service Agreement") pursuant to which SSOL has agreed to
(i) license to DTN certain proprietary software programs (the "Internet
Software") utilized to provide Internet Services (as such term is defined in the
Service Agreement) to DTN's customers and (ii) provide other services to DTN
(the "SSOL Services");
WHEREAS, SSOL and DTN have agreed to place the source code for the
Internet Software in escrow to be released to DTN upon breach of SSOL's
obligations set forth in the Service Agreement or this Agreement;
NOW, THEREFORE, in consideration of the above recitals which are
made a contractual part of this Agreement, and in consideration of the mutual
agreements, provisions and covenants set forth in this Agreement, the parties do
hereby agree as follows:
SECTION 1
DEFINITIONS
-----------
For the purposes of this Agreement, in addition to definitions set
forth elsewhere in this Agreement, the definitions set forth in this Section 1
shall apply to the respective capitalized terms immediately preceding each
definition.
1.1 "AGREEMENT". This Source Code Escrow Agreement, including any
exhibits, addenda, amendments, and modifications hereto.
1.2 "SOURCE CODE". Human-readable computer programming code,
associated procedural code, commentary and related and supporting documentation,
corresponding to the Internet Software and all subsequent versions thereof to be
provided to DTN during the term of the Service Agreement. The Source Code in
present form is more fully described in Exhibit "A" to this Agreement.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SSOL
--------------------------------------
2.1 OWNERSHIP OF SOURCE CODE. SSOL warrants and represents to DTN
that it is the owner of and holder of all rights in the Source Code and that
SSOL has the right to grant to DTN the license rights to the Source Code
pursuant to Section 7.1 of this Agreement and to deposit the Source Code with
Escrow Agent pursuant to the terms of this Agreement.
2.2 LICENSED PROGRAMS CORRESPOND WITH SOURCE CODE. SSOL warrants
and represents to DTN that the Source Code to be deposited with Escrow Agent is
the most current version of the source code of the Internet Software and
conforms to the description set forth in Exhibit "A" to this Agreement.
SECTION 3
PURPOSE OF AGREEMENT; DEPOSIT OF SOURCE CODE
--------------------------------------------
3.1 DEPOSIT OF SOURCE CODE. The deposit of the Source Code and the
license of the Source Code to DTN pursuant to Section 7.1 of this Agreement is
intended to provide assurance to DTN of full and unrestricted access and right
of use of the Source Code in the event that SSOL fails to provide SSOL Services
under the Service Agreement, ceases to do business or is otherwise in breach of
its obligations under the Service Agreement or this Agreement. Escrow Agent
agrees to accept from SSOL and SSOL agrees to deposit with Escrow Agent, within
five (5) days of the date of this Agreement, a copy of the Source Code. SSOL
will furnish to Escrow Agent a list describing all Source Code so deposited. The
Source Code to be initially deposited with Escrow Agent is described in Exhibit
"A" to this Agreement, and such descriptions will be supplemented and updated by
SSOL with each subsequent deposit of Source Code by SSOL with Escrow Agent.
3.2 UPDATE AND MAINTENANCE OF SOURCE CODE. During the term of this
Agreement, SSOL shall keep the Source Code in escrow fully current by depositing
with Escrow Agent the listings and all supporting documentation and related
materials for each and every update, correction, or new release of the Internet
Software. Such deposits will be completed no later than ten (10) days after the
date that SSOL provides such update, correction or new release to DTN for the
performance of the Internet Services.
3.3 VERIFICATION AND TESTING OF SOURCE CODE. DTN, its agents,
designees, or representatives, shall, upon written notice to SSOL, have the
right to inspect, test, and review the Source Code (under obligations of
confidentiality) at the time of the initial deposit and at the time of each
subsequent deposit of the Source Code in escrow to verify that it corresponds to
the Internet Software. Such verification and testing shall be done under the
supervision of SSOL or its designee.
SECTION 4
TITLE TO SOURCE CODE
--------------------
4.1 Title to the Source Code shall remain in SSOL, but in the
event the Source Code shall be delivered to DTN pursuant to this Agreement, DTN
shall be entitled to use the Source Code pursuant to the terms of the license
granted in Section 7.1. Upon the expiration of the License Term defined in the
Service
2
Agreement, the Escrow Agent or DTN, as the case may be, shall return the Source
Code to SSOL.
SECTION 5
RELEASE OF SOURCE CODE TO DTN
-----------------------------
5.1 RELEASE OF CODE. The copy of the Source Code to be deposited
in escrow pursuant to this Agreement shall be released to DTN only upon the
occurrence of one or more of the Escrow Release Events as defined in the Service
Agreement.
5.2 NOTICE OF ESCROW RELEASE EVENT. If DTN shall conclude in good
faith that an Escrow Release Event has occurred, DTN shall so notify SSOL in
writing, specifying in reasonable detail the occurrence of such event and a copy
of such notice will be served simultaneously upon Escrow Agent. Escrow Agent
shall immediately deliver the Source Code to DTN pursuant to the terms of this
Agreement.
5.3 INJUNCTIVE RELIEF. SSOL and DTN acknowledge and agree that DTN
will suffer irreparable harm to its business and operations in the event that
release of the Source Code to DTN pursuant to the terms of this Agreement is
wrongfully delayed by SSOL. DTN may petition any court of competent jurisdiction
in Nebraska for injunctive or other equitable relief to prevent SSOL from
seeking to delay such release or to otherwise enforce the provisions of this
Agreement, and SSOL hereby waives the claim or defense that DTN has or may have
an adequate remedy at law. SSOL hereby consents to personal jurisdiction in any
action brought in any court within the State of Nebraska having subject matter
jurisdiction arising under this Agreement.
SECTION 6
CONFLICTING PROVISIONS
----------------------
6.1 In the event of any conflict between the provisions of the
Service Agreement and the provisions of this Agreement regarding the release of
the Source Code to DTN upon the occurrence of an Escrow Release Event, the
provisions of the Service Agreement shall control.
SECTION 7
LICENSE OF SOURCE CODE
----------------------
7.1 In the event that the Source Code shall be delivered out of
escrow to DTN pursuant to the terms of this Agreement, SSOL does hereby grant a
license to DTN for the License Term defined in the Service Agreement, to use,
modify, maintain, and update the Source Code in all such respects as may be
necessary for DTN to maintain and update the Internet Software to perform the
Internet Services in accordance with the description of such services in the
Service Agreement and the object code resulting from such use shall be owned by
DTN.
3
SECTION 8
RIGHT OF ESCROW AGENT TO FILE INTERPLEADER ACTION
-------------------------------------------------
8.1 Despite any other provision of this Agreement, in the event
Escrow Agent shall receive conflicting demands from SSOL and DTN respecting the
release of the Source Code to DTN under this Agreement, Escrow Agent may, in its
sole discretion, file an interpleader action in any court of competent
jurisdiction in Nebraska and deposit the Source Code with the clerk of the court
or withhold release of the Source Code until instructed otherwise by court
order.
SECTION 9
LIMITATION ON OBLIGATION OF ESCROW AGENT
----------------------------------------
9.1 Escrow Agent shall not be required to inquire into the truth
of any statements or representations contained in any notices, certificates, or
other documents required or otherwise provided under this Agreement, and Escrow
Agent shall be entitled to assume that the signatures on such documents are
genuine, that the persons signing on behalf of any party thereto are duly
authorized to execute the same, and that all actions necessary to render any
such documents binding on the party purporting to be executing the same have
been duly undertaken. Without limiting the foregoing, Escrow Agent may in its
discretion require from SSOL or DTN additional documents that it deems to be
necessary or desirable to aid it in the course of performing its obligations
under this Agreement.
SECTION 10
RELEASE AND INDEMNIFICATION OF ESCROW AGENT
-------------------------------------------
10.1 SSOL and DTN, severally, hereby do release Escrow Agent from
any and all liability for losses, damages, and expenses (including attorney
fees) that may be incurred on account of any action taken by Escrow Agent in
good faith pursuant to this Agreement, and SSOL and DTN do hereby severally
indemnify Escrow Agent and undertake to hold harmless Escrow Agent from and
against any and all claims, demands, or actions arising out of or resulting from
such performance by Escrow Agent under this Agreement.
SECTION 11
CONFIDENTIALITY AND USE OF SOURCE CODE
--------------------------------------
11.1 CONFIDENTIALITY UNDERTAKING. The Source Code released to DTN
pursuant to this Agreement shall be used by DTN solely for the purposes
permitted by the Service Agreement. DTN shall treat and preserve the Source Code
as a trade secret of SSOL in accordance with the same practices employed by DTN
to safeguard its own trade secrets against unauthorized use and disclosure.
4
SECTION 12
INDEPENDENT CONTRACTOR STATUS
-----------------------------
12.1 The parties to this Agreement are and shall be independent
contractors under this Agreement, and nothing herein shall be construed to
create a partnership, joint venture, or agency relationship between the parties
to this Agreement. No party to this Agreement shall have the authority to enter
into agreements of any kind on behalf of the other parties to this Agreement in
any manner.
SECTION 13
CONTINUED ABILITY TO PERFORM OBLIGATIONS
----------------------------------------
13.1 The parties to this Agreement represent and warrant that they
have full power and authority to undertake the obligations set forth in this
Agreement and that they have not entered into any other agreements nor will they
enter into any other agreements that would render them incapable of
satisfactorily performing their respective obligations under this Agreement.
SECTION 14
TERM OF AGREEMENT
-----------------
14.1 The term of this Agreement shall commence as of the date first
above written and shall continue until the Source Code shall be transferred to
DTN pursuant to the terms of this Agreement, or, if such transfer shall not have
so occurred, the Agreement shall terminate and the Source Code shall be returned
to SSOL at the end of the License Term as defined in the Service Agreement.
SECTION 15
MISCELLANEOUS
-------------
15.1 COMPLIANCE WITH LAWS. The parties agree that they shall comply
with all applicable laws and regulations of governmental bodies or agencies in
their respective performance of obligations under this Agreement.
15.2 NO UNDISCLOSED AGENCY; NO ASSIGNMENT. Each party represents
that it is acting on its own behalf and is not acting as an agent for or on
behalf of any third party and agrees that it may not assign its rights or
obligations under this Agreement without the prior written consent of the other
parties to this Agreement.
15.3 NOTICES. All notices or other communications required or
permitted to be given pursuant to this Agreement shall be given in writing by
telecopier, personal messenger, overnight courier who shall obtain a written
receipt therefor or by deposit thereof in the United States mail, registered or
certified, return receipt requested, to the following addresses:
If to DTN: Data Transmission Network Corporation
0000 X. Xxxxx Xx.
Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
5
If to SSOL: SmartServ Online, Inc.
Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
If to Escrow Agent: ________________________________
________________________________
________________________________
All notices and other communications shall be deemed delivered on the date the
receipt acknowledges that they were personally delivered to the other party, or,
for all notices and communications sent by mail, at the time reflected on the
return receipt. Either party may change the address to which notices are to be
delivered and may specify a copy address to which copy of all notices must be
sent by giving notice to the other party in the manner herein provided.
15.4 GOVERNING LAW. All questions concerning the validity,
operation, interpretation, and construction of this Agreement shall be governed
by and determined in accordance with the laws of the State of Nebraska.
15.5 NO WAIVER. No party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to have waived any
breach by the other parties of any of the provisions of this Agreement. Further,
the waiver by any party of a particular breach of this Agreement by any other
party shall not be construed as or constitute a continuing waiver of such breach
or of other breaches of the same or other provisions of this Agreement.
15.6 PARTIAL INVALIDITY. If any part, term, or provision of this
Agreement shall be held illegal, unenforceable, or in conflict with any law of a
federal, state, or local government having jurisdiction over this Agreement, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby.
15.7 BINDING AGREEMENT. The parties acknowledge that each has read
this Agreement, understands it, and agrees to be bound by its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
DATA TRANSMISSION NETWORK SMARTSERV ONLINE, INC.,
CORPORATION, a Delaware a Delaware corporation
corporation
By: XXXXXXX X. XXXX By: XXXXXXXXX X. XXXXXXXX
---------------------------- ----------------------------
Title: Senior Vice President Title: Chief Executive Officer
6
