Services Agreement - priceline.com Inc. and PriceLine WebHouse Club Inc.
SERVICES AGREEMENT
This SERVICES AGREEMENT, dated as of October 26, 1999 (this
"Agreement"), between PRICELINE.COM INCORPORATED., a Delaware corporation
("Priceline"), and PRICELINE WEBHOUSE CLUB, INC., a Delaware corporation (the
"Company"),
W I T N E S S E T H :
WHEREAS, Priceline is an Internet-based company with significant
name recognition of its trademarked "priceline" name and patented "demand
collection system" for selling products over the internet;
WHEREAS, Walker Digital, LLC ("Walker Digital") is a research and
development company containing certain trade secrets, know-how and other
intellectual property;
WHEREAS, in connection with the establishment of the Company's
business of the sale of retail products in a "name your price" format over the
Internet for the sale of products by businesses to consumers (the "Business")
(i) Walker Digital is (A) contributing certain know-how and other assets and
liabilities used in or incurred during the initial development of the Business
pursuant to an asset contribution agreement dated as of the date hereof (the
"Asset Contribution Agreement") between Walker Digital and the Company, and (B)
licensing certain intellectual property pursuant to a license agreement between
Walker Digital and Priceline, dated as of the date hereof, which intellectual
property shall in turn be sublicensed by Priceline to the Company, (ii) Walker
Digital Corporation, a research and development company, is contributing certain
employees to the Company under the Asset Contribution Agreement, and (iii)
Priceline is (A) licensing and sublicensing, as applicable, the use of the
"priceline" name, certain patent rights and other intellectual property rights
for use in connection with the Business, pursuant to an intellectual property
license agreement between Priceline and the Company, dated as of the date hereof
(the "Priceline License Agreement"), (B) providing professional services,
including accounting and legal services to the Company pursuant to this
Agreement, and (C) providing certain marketing and technical services to the
Company pursuant to a marketing and technical services agreement between
Priceline and the Company, dated as of the date hereof (the "Marketing and
Technical Services Agreement");
WHEREAS, in consideration for the cash and the assets it has
contributed pursuant to the Asset Contribution Agreement, Walker Digital is
receiving from the Company a Promissory Note in the amount of $14,592,185.60
payable on April 26, 2000;
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WHEREAS, in consideration of their cash contributions, Walker
Digital and certain other investors (the "Investors") are receiving a total of
23,500,000 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), pursuant to the subscription agreement (the "Subscription
Agreement") dated as of the date hereof between WebHouse and the Investors;
WHEREAS, in consideration for its execution and deliveries pursuant
to the Priceline License Agreement, Priceline is receiving a warrant (the
"Priceline Warrant") to purchase, under certain circumstances, up to 137.5
million shares of Common Stock and has certain rights to participate in the
Company's corporate governance;
WHEREAS, in connection with the establishment of the Company,
Priceline is agreeing, pursuant to this Agreement and the Marketing and
Technical Services Agreement, to provide services to, and to coordinate
marketing activities with, the Company in exchange for arm's-length
consideration; and
WHEREAS, subsequent to the date of this Agreement, Priceline is
willing to provide or cause to be provided to the Company for a limited period
of time certain professional, operating and administrative services with respect
to the Business.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
THE SERVICES
SECTION 1.01. Provision of Services. Subject to the terms and
conditions set forth in this Agreement, Priceline shall provide or cause to be
provided the professional services, including, but not limited to, accounting
and legal to the Company currently provided by Priceline to the Business (the
"Services"); provided, however, that Priceline shall only be required to provide
such Services to the extent that it has the internal resources available at the
time to provide such Services and Priceline shall have no obligation to engage
any third party to provide such Services.
SECTION 1.02. Covered Services. Priceline shall be obligated to make
available and provide the Services at the time of execution and throughout the
Term as reasonably requested from time to time, in writing, by the Company.
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SECTION 1.03. Standard of Performance. Priceline agrees to provide
or cause to be provided to the Company the Services in substantially the same
manner and at substantially the same quality levels as such Services are
currently provided to the Company by Priceline; provided that the Company may
request the provision of a lower volume of any Services.
SECTION 1.04. Term. Unless earlier terminated pursuant to Section
1.05, this Agreement shall terminate on October 26, 2000 (the "Term") and
thereafter shall be of no further force and effect, except nothing herein shall
relieve either party hereto from liability for any willful breach hereof;
provided that the parties by mutual written agreement may extend the term of the
Agreement.
SECTION 1.05. Termination. Priceline shall continue to make the
Services available through the end of the Term or, if earlier, until canceled by
the Company by written notice to Priceline. Notwithstanding the foregoing, this
Agreement (and the obligation to provide any Services) may be terminated:
(a) by mutual agreement of Priceline and the Company;
(b) by Priceline, at any time, not less than 60 days after delivery
of notice to the Company, in the event that the Company shall have
defaulted on or breached any material term of this Agreement and shall not
have cured such breach within 30 days after receiving notice from
Priceline specifying the nature of such default or breach;
(c) by the Company, at any time, not less than 60 days after
delivery of notice to Priceline, in the event that Priceline shall have
defaulted on or breached any material term of this Agreement and shall not
have cured such breach within 30 days after receiving notice from the
Company specifying the nature of such default or breach;
(d) by either party, immediately upon delivery of notice to the
other party, in the event that such other party (x) requires a composition
or other similar arrangement with creditors, files for bankruptcy or is
declared bankrupt or (y) shall have assigned or transferred to any third
party any of its rights or obligations hereunder except in accordance with
Section 4.07; or
(e) by Priceline, at any time, following the expiration, in
accordance with its terms, of Priceline's warrant to purchase 137.5
million shares of Common Stock pursuant to the Warrant Agreement.
SECTION 1.06. Compensation for Services. The amount of compensation
and Services to be provided shall be $[**] for all Services provided from the
date of this Agreement through to December 31, 1999, and, after such time,
specific Services and compensation therefor shall be negotiated in good faith in
advance of the provision of such
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Services; provided that compensation for such Services shall be provided at
their fair market value.
SECTION 1.07. Changes. The Company may request the provision of
additional Services or new services which were not previously requested and
which are acceptable to Priceline, in its sole discretion, to provide, and may
request the cessation of specific Services then being provided. In such case,
the parties shall negotiate in good faith on any additional compensation to be
paid for additional Services or new services or for a rebate of the compensation
paid or to be paid in respect of Services no longer rendered. In the event the
parties are unable to agree on the amount of compensation or the specific
Services to be provided for any given quarter, the compensation shall equal the
amount agreed upon in the immediately preceding quarter plus [**]% (on an annual
basis) and the Services provided shall be the same Services provided the
previous quarter. In the event the parties are unable to agree on the amount of
compensation or Services for the first quarter of the year 2000, the
compensation shall equal one-quarter of the annualized amount of the
compensation agreed upon for the partial 1999 year plus [**]% of such quarterly
amount and the Services shall be the same Services provided during 1999.
ARTICLE II
RESPONSIBILITY
SECTION 2.01. Relationship of the Parties. Nothing in this Agreement
shall be construed as (a) an assumption by Priceline of any obligation to
maintain or increase the sales or profits of the Company or otherwise to assume
responsibility for the Company's operations; (b) an assumption by Priceline of
any financial obligation of the Company; (c) the creation of any relationship of
employment or agency between the Company and employees or consultants of
Priceline, its subsidiaries or associated companies; (d) an assumption by
Priceline of any responsibility for the work performed by outside suppliers
employed by the Company at the suggestion or recommendation of Priceline; or (e)
the delegation of any function or authority of the Company to Priceline. In all
matters relating to this Agreement, each party hereto shall be solely
responsible for the acts of its own employees, and employees of one party shall
not be considered employees of the other party. Except as specifically permitted
by this Agreement, no party hereto nor any of its employees shall have any
authority to negotiate, enter into any contract or incur any obligation, on
behalf of the other party. The parties hereto are independent contractors and
neither party is an employee, partner or joint venturer of the other.
SECTION 2.02. Limitation of Liability. Priceline MAKES NO WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER. Priceline
shall have no liability for any losses or damages that the Company may incur as
a result of the provision or non-provision of Services except to the extent
caused by the gross negligence
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or wilful misconduct of such person. In no event shall Priceline, its officers,
directors, employees, agents, independent contractors, affiliates and
stockholders be liable for any consequential or special damages suffered by the
Company as a result of any representations, actions or inactions by any person
or entity in respect of its obligations hereunder.
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ARTICLE III
CONFIDENTIALITY
SECTION 3.01. Confidentiality. The Company will receive or learn
from Priceline, and Priceline's parents, subsidiaries and affiliates, and
Priceline will learn from the Company, information, both orally and in writing,
concerning the business of Priceline or the Company, respectively, including,
without limitation, financial, technical and marketing information, data,
information related to the development of technology and services, trade
secrets, technology, plans, methods, processes, specifications, models,
protocols, techniques, research projects, information management systems and
software, whether protectable by patent, copyright or other statutory means,
relating to the Company's and Priceline's business, as the case may be, and
which information is deemed, in the case of the Company, proprietary to the
Company and, in the case of Priceline, proprietary to Priceline. Both parties
hereby agree, as set forth below, to protect such information, whether furnished
before, on or after the date of this Agreement, as it protects its own similar
confidential information, but never less than commercially reasonable efforts,
and not to disclose such information to anyone except as otherwise provided for
in this Agreement. Such information, in whole or in part, together with
analyses, compilations, programs, reports, proposals, studies or any other
documentation prepared by the parties, as the case may be, which contains or
otherwise reflects or makes reference to such information, is hereinafter
referred to as "Confidential Information". Both parties hereby agree that the
Confidential Information will be used solely for the purpose of this Agreement
and not for any other purpose. Both parties further agree that any Confidential
Information pertaining to the other party is the sole and exclusive property of
such other party, and that the receiving party shall not have any right, title,
or interest in or to such Confidential Information except as expressly provided
in this Agreement. Both parties further agree to hold in the strictest
confidence and not to disclose to anyone for any reason Confidential Information
pertaining to the other party; provided that
(a) such Confidential Information may be disclosed to the receiving
party's respective officers, directors, employees, agents, or
representatives (collectively, "Representatives") on a "need to know"
basis for the purpose of this Agreement on the condition that
(i) each such Representative will be informed by the receiving
party of the confidential nature of such Confidential Information
and will agree to be bound by the terms of this Agreement and not to
disclose the Confidential Information to any other person and
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(ii)both parties agree to accept full responsibility for any
breach of this Section 3.01 by its respective Representatives; and
(b) Confidential Information pertaining to the other party may be
disclosed upon the prior written consent of the other party.
Both parties hereby agree, upon the request of the other party, to promptly
deliver to the other party, at its own cost, the Confidential Information
pertaining to such other party, without retaining any copies thereof.
SECTION 3.02. Nonconfidential Information. The term "Confidential
Information" shall not include any information which: (a) at the time of
disclosure or thereafter is generally available to or known by the public (other
than as a result of a disclosure directly or indirectly by the receiving party);
(b) is independently developed by the receiving party, without reference to or
use of the Confidential Information of the other party; (c) was known by the
receiving party as of the time of disclosure without breach of confidentiality;
(d) is lawfully learned from a third party not under obligation to the
disclosing party; or (e) is required to be disclosed pursuant to a subpoena,
court order or other legal process, whereupon the receiving party shall provide
prompt written notice to the other party prior to such disclosure.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 4.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 4.02):
(a) if to Priceline:
priceline.com Incorporated
Five High Ridge Park
Stamford, CT 06905
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Telecopy No.: (203) 595-8345
Attention: Melissa Taub
(b) if to the Company:
Priceline WebHouse Club, Inc.
One High Ridge Park
Stanford, CT 06905
Telecopy No.: (203) 595-8305
Attention: Anne Maffei
SECTION 4.03. Public Announcements. Except as required by law, by
governmental regulation or by the requirements of any securities exchange on
which the securities of a party hereto are listed, no party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or otherwise communicate with any news media without
the prior written consent of the other party, and the parties shall cooperate as
to the timing and contents of any such press release or public announcement.
SECTION 4.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 4.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 4.06. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
with respect to the subject matter hereof.
SECTION 4.07. Assignment and Sublicense. This Agreement may not be
assigned by either party without the express written consent of the other party
(which consent may be granted or withheld in the sole discretion of any party),
except that (i) this Agreement may be assigned, without consent, in connection
with the sale of a party's business whether such is a sale of all or
substantially all of such party's assets, a merger or a stock sale and (ii)
Priceline
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may assign or sublicense its rights hereunder to an affiliate thereof; provided
that any such assignment shall not relieve Priceline of its obligations
hereunder. This Agreement shall inure to the benefit of, and be binding upon,
the successors of the parties hereto, provided such assignment was in compliance
with the terms hereof.
SECTION 4.08. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 4.09. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of, each of
the parties.
SECTION 4.10. Governing Law. This Agreement shall be governed by the
laws of the State of New York. All actions and proceedings arising out of or
relating to this Agreement may be heard and determined in any New York State or
federal court sitting in the City of New York, County of Manhattan, and the
parties hereto hereby irrevocably submit to the nonexclusive jurisdiction of
such courts in any such action or proceeding and irrevocably waive any defense
of an inconvenient forum to the maintenance of any such action or proceeding.
SECTION 4.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section 4.11; provided that receipt of copies of such counterparts is confirmed.
SECTION 4.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 4.13. Waiver of Jury Trial. Each of the parties hereto
irrevocably and unconditionally waives trial by jury in any legal action or
proceeding relating to this Agreement or the transactions contemplated hereby
and for any counterclaim therein.
SECTION 4.14. Relationship of the Parties. The parties hereto are
independent contractors and neither party is an employee, partner or joint
venturer of the other. Under no circumstances shall any of the employees of a
party hereto be deemed to be employees of the other party for any purpose.
Neither party shall have the right to bind the other to any agreement with a
third party nor to represent itself as a partner or joint venturer of the other.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized signatories thereunto duly authorized
as of the date first above written.
PRICELINE.COM INCORPORATED
By: _________________________________
Name:
Title:
PRICELINE WEBHOUSE CLUB, INC.
By: _________________________________
Name:
Title:
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