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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 1999
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THE VIALINK COMPANY
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(Exact Name of Registrant as Specified in Its Charter)
Oklahoma
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(State of Other Jurisdiction of Incorporation)
333-69319 73-1247666
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(Commission File Number) (IRS Employer Identification No.)
13800 Benson Road, Suite 100, Edmond, Oklahoma 73013
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(Address of Principal Executive Offices) (Zip Code)
(405) 936-2500
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Ernst & Young LLP Strategic Relationship
On May 3, 1999 we entered into a strategic relationship with Ernst &
Young LLP pursuant to which Ernst & Young has agreed to provide us with
marketing and sales support and consulting and integration services in
connection with the deployment of our Item Catalog service. This strategic
relationship consists of four agreements: an Alliance Agreement, a Warrant
Agreement, a Master Services Agreement and a Registration Rights Agreement.
Alliance Agreement
The Alliance Agreement between us and Ernst & Young is a non-exclusive
agreement by which Ernst & Young will provide us with its consulting services,
including services related to general systems integration, implementation,
project management and training in connection with our Item Catalog service and
other viaLink services.
Under the Alliance Agreement, we have agreed to pay Ernst & Young a
royalty for a period of two years beginning on the date of the agreement, which
may be extended in perpetuity upon the achievement of certain milestones. This
royalty will be equal to seven percent (7%) of our revenues from our
subscription services which we provide to suppliers and retailers of food and
consumer packaged goods. Ernst & Young will not receive any royalties for
services we provide to clients for which Ernst & Young serves as the principal
independent auditor and which are subject to the SEC's periodic reporting
requirements.
During this two-year term, if at least ten "significant clients"
subscribe to our services, we will be required to continue this royalty payment
to Ernst & Young in perpetuity. A significant client is defined to mean any
present or future client of Ernst & Young reasonably considered (upon the mutual
agreement of Ernst & Young and us) to be "Tier 1" based on sales, revenues,
income, market capitalization and stature in the industry and markets for
suppliers and retailers of consumer packaged goods for food, grocery, drug
store, convenience store and mass merchandise chains and food service operators.
However, a significant client shall not include any client for which Ernst &
Young serves as the principal independent auditor and which are subject to the
SEC's periodic reporting requirements.
Warrant
In connection with the Alliance Agreement, we issued a warrant to
Ernst & Young pursuant to which it may purchase up to 250,000 shares of our
common stock at a price of $8.00 per share. The Warrant can be exercised in two
tranches. The first tranche, consisting of 62,500 shares, must be exercised
within five days after the effective date of a registration statement relating
to the resale of such shares. The second tranche, consisting of 187,500 shares,
may be exercised within sixty-one (61) days after Ernst & Young gives us written
notice of an intent to exercise. The Warrant expires if this notice is not
given by March 3, 2002.
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As of the date of the issuance of the Warrant, the Warrant conversion
price was below the value of our stock. This difference will result in a non-
cash charge to our statement of operations.
Master Services Agreement
We also have entered into a Master Services Agreement with Ernst &
Young whereby it has agreed to provide professional services to us to further
the implementation of our viaLink services. We may pay for Ernst & Young's
services either in cash or in shares of our common stock. If we pay with our
common stock, we will receive a substantial discount from the standard rates
Ernst & Young charges for such services. Our common stock will be valued at 85%
of the average closing bid prices for the five trading days prior to the date
the invoice for these services is rendered to us by Ernst & Young. However, if
Ernst & Young is the beneficial owner of more than 9.99% of the voting power of
our common stock on a fully-diluted basis, we will not have the option to pay
for such services with our common stock.
Initially, we may request up to $500,000 in value of Ernst & Young's
services pursuant to this agreement. At such times as we enter into binding
agreements for our services with an aggregate of one, five and ten significant
clients of Ernst & Young, we may request an additional $500,000 in value of
Ernst & Young's services, up to a total of $2.0 million in the aggregate.
Registration Rights Agreement
In connection with the Alliance Agreement and the warrant, we granted
to Ernst & Young certain demand and piggyback registration rights pursuant to a
Registration Rights Agreement.
Copies of the Warrant, Registration Rights Agreement, Alliance
Agreement and Master Services Agreement, each dated as of May 3, 1999, by and
between Registrant and Ernst & Young, are attached hereto as Exhibits 4.1, 4.2,
10.1, and 10.2, respectively.
RISK FACTORS
In evaluating our business, you should carefully consider the
following risk factors, together with all other information contained in this
Form 8-K and our other filings, including our Annual Report on Form 10-KSB for
the year ended December 31, 1998, and our Quarterly Report on Form 10-QSB for
the period ended March 31, 1999. The risks set out below are not exhaustive.
The seven percent royalty we must pay to Ernst & Young could adversely affect
our ability to become profitable
Pursuant to the Alliance Agreement, we must pay a royalty of seven
percent (7%) of our service revenues to Ernst & Young until May 2001. Upon
meeting certain objectives
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relating to certain significant Ernst & Young clients becoming our customers,
these royalty payments will continue in perpetuity. These royalty payments could
inhibit our ability to become profitable and could have an adverse effect on our
operating results and financial condition.
We have recently entered into two strategic relationships and may enter into
more in the future. If these strategic relationships do not produce the
anticipated benefits or if we are unable to enter into additional future
strategic relationships, our viaLink services may not achieve market acceptance
Our current strategic relationships may not prove to be beneficial to
us, and they may not be sustained. Further, we may not be successful in
entering new strategic relationships in the future, which could have a material
adverse effect on our business, operating results and financial condition. We
recently have entered into strategic relationships with Ernst & Young and
Hewlett-Packard. We believe that maintaining these and other relationships will
help us to validate our technology, facilitate broad market acceptance of our
services and enhance our sales and marketing. However, if we are unable to
develop key relationships or maintain and enhance existing relationships, we may
have difficulty achieving market acceptance for our viaLink services.
The issuance of the warrant to Ernst & Young could result in substantial
dilution to our current shareholders
The issuance of the warrant to Ernst & Young to purchase 250,000
shares of our common stock could cause substantial dilution to our current
shareholders. Our common stock was trading at $21.25 on May 17, 1999 and the
warrant is exercisable for a price of $8.00 per share of our common stock.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
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4.1 $8.00 Warrant to Purchase Common Stock of The viaLink
Company dated May 3, 1999, issued by Registrant to
Ernst & Young U.S. LLP
4.2 Registration Rights Agreement dated May 3, 1999, by
and between Registrant and Ernst & Young U.S. LLP
10.1 Amended and Restated Alliance Agreement dated as of
May 3, 1999, by and between Registrant and Ernst &
Young LLP
10.2 Master Services Agreement dated May 3, 1999, by and
between Registrant and Ernst & Young LLP
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE VIALINK COMPANY
Dated: May 19, 1999 By: /s/ Lewis B. Kilbourne
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Lewis B. Kilbourne
Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
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4.1 $8.00 Warrant to Purchase Common Stock of The
viaLink Company dated May 3, 1999, issued by
Registrant to Ernst & Young U.S. LLP
4.2 Registration Rights Agreement dated May 3, 1999, by
and between Registrant and Ernst & Young U.S. LLP
10.1 Amended and Restated Alliance Agreement dated as of
May 3, 1999, by and between Registrant and Ernst &
Young LLP
10.2 Master Services Agreement dated May 3, 1999, by and
between Registrant and Ernst & Young LLP
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EXHIBIT 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGEFinancial Printing GroupFinancial Printing Group
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION UNDER
SUCH ACT AND APPLICABLE LAWS, OR IN A TRANSACTION WHICH, IN THE OPINION OF
COUNSEL TO THE HOLDERS OF THIS WARRANT (WHICH COUNSEL SHALL BE SATISFACTORY TO
THE COMPANY), QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE SECURITIES ACT AND
THE RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION THEREUNDER.
THIS WARRANT IS NOT TRANSFERABLE TO ANY PERSON OR ENTITY OTHER THAN AN ENTITY
AFFILIATED WITH ERNST & YOUNG U.S. LLP, AND THEN ONLY IN COMPLIANCE WITH THE
PROVISIONS HEREOF.
No. EY-001 May 3, 1999
$8.00 WARRANT TO PURCHASE COMMON STOCK
OF
THE VIALINK COMPANY
62,500 Shares Expiring as set forth in Section 1(a) hereof
and
187,500 Shares Expiring Unless Notice of Exercisability is Delivered Pursuant to
Section 1(b) hereof by March 3, 2002
This certifies that, for value received, ERNST & YOUNG U.S. LLP
("E&Y"), or registered assigns (the "Holder"), during the term of this Warrant
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as set forth in Section 1, is entitled to purchase from THE VIALINK COMPANY, an
Oklahoma corporation (including the Delaware corporation resulting from its
reincorporation, the "Company"), for value received, up to TWO HUNDRED FIFTY
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THOUSAND (250,000) shares (the "Warrant Shares") of the Common Stock of the
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Company, $0.001 par value (the "Common Stock"), upon surrender hereof, at the
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principal office of the Company referred to below, with a duly executed Notice
of Exercise in the form attached, and simultaneous payment therefor in lawful
money of the United States, at the Exercise Price set forth in Section 2. The
number, character and Exercise Price of such shares of Common Stock are subject
to adjustment as provided herein. The term "Warrant" as used herein shall
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include this Warrant, and any warrants delivered in substitution or exchange
therefor as provided herein.
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1. Term of Warrant. Subject to the terms and conditions set forth
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herein, this Warrant shall be exercisable as follows:
(a) with respect to the initial tranche of 62,500 Warrant Shares, in whole
but not in part with respect to such shares, at any time on or before 5:00
p.m. Oklahoma City time on the date which is five (5) days after the
effective date of the registration statement relating to the resale of the
62,500 Warrant Shares under this Section 1(a), after which time this
Warrant shall not thereafter be exercisable with respect to such Warrant
Shares; and
(b) with respect to the remaining 187,500 Warrant Shares, in whole or in
part consisting of not less than 62,500 Warrant Shares, at any time and
from time to time sixty-one (61) days after the giving of the notice
specified in subsection 3(a)(i) below, which shall in any event be given on
or before 5:00 p.m. Oklahoma City time on March 3, 2002, otherwise this
Warrant shall not thereafter be exercisable.
2. Exercise Price. The purchase price per share for the Common Stock
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purchased under this Warrant shall be EIGHT AND NO/100 DOLLARS ($8.00) (the
"Exercise Price"), subject to adjustment as provided under Section 14(a).
3. Exercise of Warrant.
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(a) Method of Exercise. The purchase rights represented by this Warrant
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are exercisable by the Holder as follows:
(i) in the case of Section 1(a) above, by delivery of a Notice of
Exercise, the form of which is attached hereto as Exhibit A, duly completed
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and executed on behalf of the Holder, at the office of the Company, and
upon payment of the aggregate Exercise Price of $500,000 with respect to
such Warrant Shares in cash or by check payable to the Company; and
(ii) in the case of Section 1(b) above, on the sixty-first (61st) day
following the delivery of a Notice of Exercisability in the form attached
hereto as Exhibit B by the holder thereof and thereafter at any time
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following the surrender of this Warrant and delivery of a Notice of
Exercise, the form of which is attached hereto as Exhibit A, including the
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undertaking pursuant to paragraph (c) below, duly completed and executed on
behalf of the Holder, at the office of the Company, and upon payment at or
prior to such 61st day equal to the product of the Exercise Price
multiplied by the number of shares designated by the Holder in the Notice
of Exercise in cash or by check payable to the Company.
(b) Other Matters. This Warrant shall be deemed to have been exercised
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immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive
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the shares of Common Stock issuable upon such exercise shall be treated for
all purposes as the holder of record of such shares as of the close of
business on such date. As promptly as practicable on or after such date
and in any event within ten (10) days thereafter, the Company at its
expense shall issue and deliver to the person or persons entitled to
receive the same a certificate or certificates for the number of shares
issued upon such exercise. In the event that this Warrant is exercised in
part, the Company at its expense will execute and deliver a new Warrant of
like tenor exercisable for the remaining number of shares for which this
Warrant may then be exercised.
(c) Special Transfer Restriction. Upon and as a condition to any exercise
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of all or any part of the Warrant Shares exercisable under Section 1(b)
above, Holder shall agree that notwithstanding any other rights it may
have, including with respect to the right to require registration of such
shares for resale pursuant to the terms of any registration rights
agreement between the Company and Holder, Holder will hold and not sell or
offer for sale to any third party any of such shares, nor request any
registration of the resale of such shares, for a period of six months after
the date of such exercise.
4. No Fractional Shares or Scrip. No fractional shares or scrip
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representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably
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satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
6. No Rights as Stockholder. This Warrant shall not entitle its Holder
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to any of the rights of a stockholder of the Company.
7. Transfer of Warrant.
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(a) Warrant Register. The Company will maintain a register (the "Warrant
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Register") containing the names and addresses of the Holder or Holders.
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Any Holder of this Warrant or any portion thereof may change his or her
address as shown on the Warrant Register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to
such Holder as shown on the Warrant Register and at the address shown on
the Warrant Register. Until this Warrant is transferred on the Warrant
Register of the Company, the
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Company may treat the Holder as shown on the Warrant Register as the
absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.
(b) Transferability and Nonnegotiability of Warrant. THIS WARRANT MAY NOT
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BE TRANSFERRED OR ASSIGNED IN WHOLE OR IN PART, EXCEPT TO AN ENTITY
AFFILIATED WITH E&Y WHO SHALL SIMILARLY AGREE TO BECOME BOUND HEREBY, AND
IN ANY EVENT MAY NOT BE TRANSFERRED WITHOUT COMPLIANCE WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS BY THE TRANSFEROR AND THE TRANSFEREE
(INCLUDING THE DELIVERY OF INVESTMENT REPRESENTATION LETTERS AND LEGAL
OPINIONS REASONABLY SATISFACTORY TO THE COMPANY). Subject to compliance
with the foregoing and the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, title to this
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Warrant may be transferred by endorsement (by the Holder executing the
Assignment Form annexed hereto) and delivery in the same manner as a
negotiable instrument transferable by endorsement and delivery. The Holder
or owner hereof by the taking hereof consents and agrees that any person in
possession of this Warrant properly endorsed for transfer to such person
(including endorsed in blank) is authorized to represent himself as
absolute owner hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his equities as
rights in this Warrant in favor of each such bona fide purchaser, and each
such bona fide purchaser shall acquire absolute title hereto and to all
rights represented hereby. Nothing in this paragraph (b) shall create any
liability on the part of the Company beyond any liability or responsibility
it has under law.
(c) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
-----------------------------------
exchange, properly endorsed on the Assignment Form and subject to the
provisions of this Warrant with respect to compliance with the Securities
Act and with the limitations on assignments and transfers contained in this
Section 7, the Company at its expense shall issue to or on the order of the
Holder a new warrant or warrants of like tenor, in the name of the Holder
or as the Holder (on payment by the Holder of any applicable transfer
taxes) may direct, for the number of shares issuable upon exercise hereof.
(d) Compliance with Securities Laws.
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(iii) The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the shares of Common Stock to be issued upon exercise
hereof are being acquired solely for the Holder's own account for
investment, and that the Holder will not offer, sell or otherwise
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dispose of this Warrant or any shares of Common Stock to be issued upon
exercise hereof or except under circumstances that will not result in a
violation of the Securities Act or any state securities laws. Upon
exercise of this Warrant, the Holder shall, if requested by the Company,
confirm in writing, by executing the form attached as Schedule 1 to Exhibit
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A hereto, that the shares of Common Stock so purchased are being acquired
-
for investment, and not with a view toward distribution or resale in
violation of applicable securities laws.
(iv) All shares of Common Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws and any other
agreement between Holder and the Company:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL TO THE
COMPANY OR THE HOLDERS OF THIS WARRANT (WHICH COUNSEL SHALL BE SATISFACTORY
TO THE COMPANY), QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE SECURITIES
ACT AND THE RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION
THEREUNDER.
(v) In connection with the issuance of this Warrant, the Holder
specifically represents to the Company by acceptance of this Warrant as
follows:
(A) The Holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire
this Warrant. The Holder is acquiring this Warrant for its own
account for investment purposes only and not with a view to, or for
the resale in connection with, any "distribution" thereof for purposes
of the Securities Act.
(B) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona
fide nature of the Holder's investment intent as expressed herein. In
this connection, the Holder understands that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis
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for such exemption may be unavailable if the Holder's representation
was predicated solely upon a
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present intention to hold the Warrant for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until
an increase or decrease in the market price of the Warrant, or for a
period of one year or any other fixed period in the future.
(C) The Holder further understands that this Warrant must be
held indefinitely unless subsequent registered under the Securities
Act and any applicable state securities laws, or unless exemptions
from registration are otherwise available. Moreover, the Holder
understands that the Company is under no obligation to register this
Warrant.
(D) The Holder is aware of the provisions of Rule 144 and 144A,
promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of
certain conditions, if applicable, including, among other things: The
availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased
and paid for the securities to be sold; the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934, as amended) and the amount of
securities being sold during any three-month period not exceeding the
specified limitations stated therein.
(E) The Holder further understands that at the time it wishes to
sell this Warrant there may be no public market upon which to make
such a sale, and that, even if such a public market then exists, the
Company may not be satisfying the current public information
requirements of Rule 144 and 144A, and that, in such event, the Holder
may be precluded from selling this Warrant under Rule 144 and 144A
even if the two-year minimum holding period had been satisfied.
(F) The Holder further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, not withstanding
the fact that Rule 144 and 144A are not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 and 144A will have a substantial burden of
proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective
brokers who participate in such transactions do so at their own risk.
8. Reservation of Stock. The Company covenants that during the term this
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Warrant is exercisable, the Company will reserve from its authorized and
unissued Common
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Stock a sufficient number of Warrant Shares to provide for the issuance of
Common Stock upon the exercise of this Warrant and, from time to time, will take
all steps necessary to amend its corporate charter, if necessary, to provide
sufficient reserves of Warrant Shares issuable upon exercise of the Warrant.
The Company further covenants that all Warrant Shares that may be issued upon
the exercise of this Warrant will be free from all taxes, liens and charges
except for restrictions on transfer and any taxes, liens and charges imposed on
the Holder unrelated to the Company's issuance of shares upon exercise of the
Warrant.
9. Representations and Warranties. The Company represents and warrants
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to the holder of this Warrant as follows:
(a) Authorization. This Warrant has been duly authorized and executed by
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the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors
and the rules of law or principles at equity governing specific
performance, injunctive and other equitable remedies;
(b) Reservation; Issuance. The Warrant Shares have been duly authorized
---------------------
and reserved for issuance by the Company and, when issued in accordance
with the terms hereof, will be validly issued, fully paid and
nonassessable;
(c) No Conflicts. The execution and delivery of this Warrant are not, and
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the issuance of the Warrant Shares upon exercise of this Warrant in
accordance with the terms hereof will not be, inconsistent with the
Company's charter or bylaws; do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to the
Company; and do not and will not conflict with or contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or
other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or
by, any federal, state or local government authority or agency or other
person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required
thereby, and the filing of any registration statements required to be filed
by the Company pursuant to any registration rights granted to Holder by the
Company.
(d) No Litigation. There are no actions, suits, audits, investigations or
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proceedings pending or, to the knowledge of the Company, threatened against
the Company in any court or before any governmental commission, board or
authority which, if adversely determined, will have a material adverse
effect on the ability of the Company to perform its obligations under this
Warrant.
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10. Notices. All such notices, advices and communications hereunder shall
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be deemed to have been received (i) in the case of personal delivery, on the
date of such delivery and (ii) in the case of mailing (which shall be effected
by registered or certified mail, postage prepaid), on the third business day
following the date of such mailing.
11. Amendments. Any term of this Warrant may be amended with the written
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consent of the Company and all of the Holders of this Warrant.
12. Adjustments. The Exercise Price and the number of shares purchasable
-----------
hereunder are subject to adjustment from time to time as follows:
(a) Adjustment for Dividends in Other Stock, Property, etc.;
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Reclassification, etc. In case at any time while this Warrant is
----------------------
outstanding and unexpired, the holders of Common Stock shall have received,
or (on or after the record date fixed for the determination of stockholders
eligible to receive) shall have become entitled to receive, without payment
therefor,
(i) other or additional stock or other securities or property (other
than cash) by way of dividend; or
(ii) other or additional stock or other securities or property by way
of stock split, spin off, split up, reclassification, recapitalization,
combination of shares or similar corporate rearrangement;
then and in each such case the Holder, upon the exercise hereof, shall be
entitled to receive the amount of stock and other securities and property
which such Holder would hold on the date of such exercise if on the
original issue date he had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the original issue date to and including
the date of such exercise, retained such shares and all such other or
additional stock and other securities and properties receivable by him as
aforesaid during such period, giving effect to all adjustments called for
during such period by this Section 14.
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(b) No Dilution or Impairment. The Company will not, by amendment to its
-------------------------
certificate of incorporation or through any reorganization, sale of assets,
consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of the Warrant. Without limiting the generality of
the foregoing, the Company (i) will not increase the par value of any
shares of stock receivable upon the exercise of the Warrant above the
amount payable therefor upon such exercise; and (ii) will take all such
action as
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may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of stock upon the full
exercise of the Warrant.
(c) Notices of Record Date, etc. In the event of:
---------------------------
(i) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend) or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right; or
(ii) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any conveyance
of all or substantially all the assets of the Company to or consolidation
or merger of the Company with or into any other corporation; or
(iii) any voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (A) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right; (B) the date on which any
such reorganization, reclassification, conveyance, consolidation, merger,
dissolution, liquidation, or winding up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares of Common Stock (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, conveyance, consolidation,
merger, dissolution, liquidation, or winding up; and (C) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least 15 days prior to
the date therein specified.
13. Miscellaneous.
-------------
(a) Successors and Assigns. This Warrant and the rights evidenced hereby
----------------------
shall inure to the benefit of and be binding upon the successors of the
Company and the Holder and their respective permitted assigns. The
provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant, and shall be enforceable by any
such Holder.
9
<PAGE>
(b) Headings. The headings of the Sections of this Warrant are for the
--------
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
(c) Choice of Law. This Warrant and the performance or breach thereo
-------------
shall be governed by and interpreted as to substantive matters in
accordance with the applicable laws of the State of Oklahoma (excluding its
choice of law rules), except that upon the Company's reincorporation as a
Delaware corporation, if effected, the Warrant shall be governed under
Delaware law.
* * * *
10
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: May __, 1999 The Company:
-----------
THE VIALINK COMPANY
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 13800 Benson Road
Edmond, OK 73013
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
------------------
(1) The undersigned hereby irrevocably elects to purchase [Section 1(b)
exercises only: on the date which is sixty-one (61) days after the date of this
Notice] ___________ shares of Common Stock of The viaLink Company, pursuant to
the terms of the attached Warrant, and tenders herewith payment in full of the
purchase price for such shares.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired for investment
and not with a view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing or
reselling such shares. In support thereof, the undersigned has executed an
Investment Representation Statement attached hereto as Schedule 1.
[Section 1(b) exercises only: (3) The undersigned further understands that, in
addition to any other restrictions imposed by applicable securities law, the
undersigned must hold the shares being acquired for at least six (6) months and
hereby agrees not to offer or sell or to request any registration with respect
to resale of such shares until the expiration of such six-month period.]
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name or names as
are specified below:
____________________________________
(Name)
____________________________________
____________________________________
(address)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
ERNST & YOUNG U.S. LLP
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
<PAGE>
Schedule 1
----------
INVESTMENT REPRESENTATION STATEMENT
To: The viaLink Company
Security: Common Stock issuable upon exercise of $8.00 Warrant dated May
__, 1999.
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
---------- ---------
follows:
(a) The Purchaser is aware of the Company business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Act").
---
(b) The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
---
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, the Purchaser
understands that the Company is under no obligation to register the Securities
except as set forth in the Warrant under which the Securities are being
acquired. In addition, the Purchaser understands that the certificate evidencing
the Securities will be imprinted with the legend referred to in the Warrant
under which the Securities are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions, if applicable, including,
among other things: The availability of certain public information about the
Company, the resale occurring not less than one year after the party has
purchased and paid for the securities to be sold; the sale being made through a
broker in an unsolicited "broker's
<PAGE>
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the amount of
securities being sold during any three-month period not exceeding the specified
limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the two-year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
Purchaser: _______________________
Date: ____________________________
<PAGE>
EXHIBIT B
NOTICE OF EXERCISABILITY
------------------------
Pursuant to the terms of the attached warrant, the undersigned hereby
gives notice to The viaLink Company, Inc. that the warrant with respect to
_____________ of the 187,500 warrant shares described in Section 1(b) thereof
will become exercisable within sixty-one (61) days after the date hereof.
Dated:
ERNST & YOUNG U.S. LLP
By:
-------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and does hereby irrevocably constitute and appoint ____________________ to make
such transfer on the books of The viaLink Company, maintained for the purpose,
with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except in compliance with Securities Act of 1933, as
amended, or any state securities laws. Further, the Assignee has acknowledge
that upon exercise of this Warrant, the Assignee shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or resale.
Signature:_______________________________________
Name of Holder:__________________________________
Name of Authorized Representative,
if a legal entity:______________________________
Title of Representative:_________________________
Date:____________________________________________
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of May 3,
1999, by and between The viaLink Company, an Oklahoma corporation (the
"Company"), and Ernst & Young U.S. LLP, a Delaware registered limited liability
partnership ("E&Y"). Certain capitalized terms used herein are defined in
Article I.
- -----------
W I T N E S S E T H
-------------------
WHEREAS, the Company and Ernst & Young LLP, an affiliate of E&Y, are
parties to that certain Master Services Agreement of even date herewith (as
defined herein) whereby the Company may issue Shares (as defined herein) to
Ernst & Young LLP or an Affiliate of Ernst & Young LLP in exchange for services
rendered upon the terms and conditions set forth therein (as defined herein);
and
WHEREAS, concurrently with the execution of this Agreement the parties are
entering in to an Alliance Agreement, whereby the Company has agreed to issue a
Warrant to E&Y upon the terms and conditions set forth therein; and
WHEREAS, the Company and E&Y wish to record their understanding regarding
certain matters relating to the registration and resale of the Shares and
certain other issues set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. In addition to the terms defined in the preamble,
-------------------
the following termsshall have the following meanings for the purposes of this
Agreement:
"Affiliate" of E&Y or Ernst & Young LLP means any corporation, partnership
or other business organization that is (i) a direct or indirect majority owned
or controlled subsidiary of E&Y or Ernst & Young LLP, respectively, or (ii) a
member firm of Ernst & Young International Ltd., or (iii) a direct or indirect
majority owned or controlled subsidiary of any EYI member firm.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the shares of common stock of the Company, $0.001 par
value per share, including the Services Shares and the Investment Shares.
<PAGE>
"Demand Registration" has the meaning set forth Section 2.1(a).
--------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Long-Form Registration" has the meaning set forth in Section 2.1(a).
--------------
"Master Services Agreement" means that certain Master Services Agreement of
even date herewith between the Company and E&Y.
"Other Common Stock" has the meaning set forth in Section 2.2(b).
--------------
"Person" means any individual, corporation, proprietorship, firm,
partnership, limited partnership, trust, association or other entity.
"Piggyback Registration" has the meaning set forth in Section 2.2(a).
--------------
"Primary Shares" has the meaning set forth in Section 2.2(b).
--------------
"Pro Rata Fraction" has the meaning set forth in Section 2.2(a).
--------------
"register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" means (i) the Shares held by E&Y or any assignee
hereunder, and (ii) any Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of the Shares; provided that Shares shall cease to be
Registrable Securities on such date as (1) such Shares may be sold in a 90-day
period under Rule 144 under the Securities Act, (2) a registration statement
covering such Shares has been declared effective and they have been disposed of
pursuant to such effective registration statement, (2) they are transferred on
the open market pursuant to any available exemption under the Securities Act,
(3) they have been otherwise transferred and the Company has delivered new
certificates or other evidences of ownership for them not subject to any stop
transfer order or other restriction on transfer and not bearing any legend
restricting transfer in the absence of an effective registration or an exemption
from the registration requirements of the Securities Act, or (4) they have been
sold, assigned, pledged, hypothecated or otherwise disposed of by E&Y in a
transaction in which E&Y's rights under this Agreement are not assigned or
assignable.
"Registration Expenses" has the meaning set forth in Section 5.3(a).
--------------
"Registration Notice" has the meaning set forth in Section 2.2(a).
--------------
"Resale Rules" has the meaning set forth in Section 6.3.
-----------
2
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Shareholders" means the shareholders of the Company.
"Shares" means those shares of Common Stock acquired by E&Y from time to
time pursuant to the Master Services Agreement or the Warrant.
"Short-Form Registration" has the meaning set forth in Section 2.1(a).
--------------
"Violation" has the meaning set forth in Section 5.6(a).
--------------
"Warrant" means that certain Warrant dated as of even date herewith
entitling E&Y to purchase up to 250,000 shares of Common Stock at a price of
$8.00 per share (subject to adjustment).
1.2 Other Terms. Other capitalized terms that are not defined in this
-----------
Agreement are used herein as defined in the Alliance Agreement.
ARTICLE II
REGISTRATION RIGHTS
2.1 Demand Registrations.
--------------------
(a) Right to Demand Registration. E&Y may, at any time not
----------------------------
prohibited under Section 2(c) of the Warrant or hereunder, request registration
under the Securities Act of the sale of any of its Registrable Securities
pursuant to a registration statement on Form S-1, Form SB-2 or any similar or
successor "long-form" registration statement available to the Company (each such
registration being a "Long-Form Registration") or, if available, on Form S-2,
Form S-3, or on any similar or successor short-form registration statement
("Short-Form Registration"); provided that the total number of Shares to be
--------
registered pursuant to any such registration is not less than 62,500. E&Y shall
be entitled to request two (2) Long-Form Registrations and three (3) Short-Form
Registrations; provided however that the registration of the 62,500 Shares
referred to in Section 1(a) of the Warrant shall not be deemed to have been
registered pursuant to a Demand Registration (defined below) hereunder. All
registrations requested pursuant to this Section 2.1(a) are referred to as
--------------
"Demand Registrations". A Demand Registration will be pursuant to a Short-Form
Registration whenever the Company is permitted to use any applicable short form.
(b) Cutback. If a Demand Registration is an underwritten public
-------
offering and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can successfully be sold in such offering,
the Company will include in such registration, prior to the inclusion of any
securities which are not Registrable
3
<PAGE>
Securities, the number of Registrable Securities requested to be included which
in the opinion of such underwriters can be successfully sold.
(c) Timing. The Company shall not be obligated to enter any Demand
------
Registration within 90 days of a previous Demand Registration or within 90 days
of a previous registration in which E&Y was given piggyback rights pursuant to
Section 2.2 below. The Company may postpone for up to 90 days the filing or
effectiveness of a registration statement for a Demand Registration if the
Company reasonably believes such Demand Registration would be detrimental to the
Company and its shareholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, or to
permit the Company to avoid a special audit.
(d) Bankers. The Company shall have the right to select the investment
-------
banker(s) and manager(s), if any, to administer the offering.
2.2 Piggyback Registrations.
-----------------------
(a) Right to Piggyback. If, at any time during which Registrable
------------------
Securities remain outstanding, but without obligation to do so, the Company
proposes to register any of its Common Stock under the Securities Act in an
underwritten public offering (other than pursuant to a registration on Form S-8
or Form S-4, or any similar forms then in effect) (each such registration being
a "Piggyback Registration"), the Company will give prompt written notice (the
"Registration Notice") to E&Y of its intention to effect such a registration and
will, subject to Sections 2.2(b) and 2.2(c) below, include in such registration
--------------- ------
all Registrable Securities of E&Y with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice, not to exceed a maximum number of shares for E&Y equal to the
product obtained when E&Y's pre-registration holdings of Registrable Securities
are multiplied by a fraction, the numerator of which is the total number of
shares proposed to be sold in the Piggyback Registration by all other selling
shareholders and the denominator of which is the total pre-transaction
shareholdings of all other selling shareholders ("Pro Rata Fraction").
Registrations effected pursuant to this Section 2.2 shall not be counted as
-----------
demands for registration or registrations effected pursuant to the other
sections of this Article II.
----------
(b) Priority on Primary Registrations. If a Piggyback Registration
---------------------------------
includes shares to be sold on behalf of the Company ("Primary Shares"), and the
managing underwriter or underwriters advise the Company that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without materially adversely
affecting the marketability of the offering, the Company will include in such
registration, (i) first, the securities the Company proposes to sell, and (ii)
second, the Registrable Securities requested to be included in such registration
by E&Y and all other Common Stock requested to be included in such registration
(the "Other Common Stock"), to be included pro rata on the basis of the number
of shares of such securities for which the Company has been given written
requests for inclusion therein by each such holder thereof.
4
<PAGE>
(c) Priority on Secondary Registrations. If a Piggyback Registration is
-----------------------------------
an underwritten secondary registration on behalf of holders of the Company's
securities (not including Primary Shares), and the managing underwriters advise
the Company in writing that in their opinion (the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Company will include in such registration (i) first, the securities requested to
be included therein by the holders requesting such registration, if any, and
(ii) second, the Registrable Securities requested to be included in such
registration by E&Y and all Other Common Stock requested to be included in such
registration, to be included pro rata on the basis of the number of shares of
such securities for which the Company has been given written requests for
inclusion therein by each such holder thereof.
2.3 Form S-3 Registration. If the Company shall receive from E&Y a
---------------------
written request that the Company effect a registration on Form S-3 (or any
equivalent successor form) and any related qualification or compliance with
respect to all or a part of the Shares, the Company shall: (a) promptly give E&Y
written notice of the proposed registration, and any related qualification or
compliance; and (b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of E&Y's Shares
as are specified in such request; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance,
pursuant to this Article VI if Form S-3 is not available for such offering of
the Company's securities by E&Y. Subject to the foregoing, the Company shall
file a registration statement covering the Shares and other securities so
requested to be registered within twenty (20) days after receipt of the request
of E&Y. Registrations effected pursuant to this Section 2.6 shall not be counted
as demands for registration or registrations effected pursuant to any other
section of this Article II.
ARTICLE III
OTHER PROVISIONS APPLICABLE TO REGISTRATION RIGHTS
3.1 Registration Procedures. If and whenever the Company is required by
-----------------------
any of the provisions of Article II to use its best efforts to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible:
(i) prepare and file with the Commission a registration
statement with respect to such securities and use commercially reasonable
efforts to cause such registration statement to become effective and remain
effective for as long as shall be necessary to complete the distribution of
the Registrable Securities so registered;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all
5
<PAGE>
securities covered by such registration statement whenever E&Y shall desire
to sell or otherwise dispose of the same;
(iii) furnish to E&Y such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as E&Y may
reasonably request in order to facilitate the public sale or other
disposition of the securities covered by such registration statement;
(iv) use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as E&Y shall
request, and do any and all other acts and things reasonably requested by
E&Y to assist it to consummate the public sale or other disposition in such
jurisdictions of the securities owned by E&Y, except that the Company shall
not for any such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(v) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable, an
earning statement covering the period of at least twelve months, beginning
with the first fiscal quarter beginning after the effective date of the
registration statement, which earning statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(vi) use commercially reasonable efforts to list such
securities on any securities exchange on which any shares of the Company
are then listed, if the listing of such securities is then permitted under
the rules of such exchange;
(vii) enter into and perform its obligations under an
underwriting agreement (including indemnification provisions), in usual and
customary form, with the managing underwriter or underwriters of such
underwritten offering, including, without limitation, to obtain an opinion of
counsel to the Company and a "comfort letter" from the independent public
accountants to the Company in the usual and customary form for such underwritten
offering;
(viii) notify E&Y, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Securities Act, of the happening of any event of which it has knowledge as a
result of which the prospectus included in such registration statement, as then
in effect, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and
6
<PAGE>
(ix) upon the request of E&Y, take any and all other actions
which may be reasonably necessary to complete the registration and
thereafter to complete the distribution of the Registrable Securities so
registered.
3.2 E&Y Procedures. In connection with any Registration Statement, the
--------------
Company may require E&Y to furnish to the Company such information regarding E&Y
and its proposed distribution of Registrable Securities, to the extent necessary
to comply with the Securities Act, as the Company may from time to time
reasonably request in writing. As a condition precedent to the Company's
obligations hereunder, E&Y agrees to cooperate with the Company in all
reasonable respects in connection with the preparation and filing of each
Registration Statement and any amendment thereof, any Prospectus relating
thereto and any Prospectus supplement relating thereto with respect to the offer
and sale of Registrable Securities of E&Y.
3.3 Registration Expenses.
---------------------
(a) Company Expenses. All expenses incident to the Company's
----------------
performance of or compliance with its registration obligations under this
Agreement, including all SEC and NASD registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, listing fees, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, and other
Persons retained by the Company, including all consultants, advisors, and
experts fees and expenses of the Company of the type ordinarily incurred in
connection with the registration of securities (all such expenses being herein
called "Registration Expenses"), will be borne by the Company; provided that
Registration Expenses shall not include underwriting discounts and commissions.
(b) E&Y Expenses. To the extent Registration Expenses are not required to
------------
be paid by the Company pursuant to Section 5.3(a), E&Y will, vis a vis the other
--------------
selling shareholders, pay its respective Pro Rata Fraction of those Registration
Expenses directly allocable to the registration of E&Y's securities so included,
and any Registration Expenses not so allocable will be borne by all sellers of
securities included in such registration in proportion to the aggregate selling
price of the securities to be so registered.
3.4 Market Stand-Off Agreement. If and to the extent required by the
--------------------------
managing underwriter of any offering, E&Y agrees not to effect any public sale
or distribution (including sales pursuant to Rule 144) of equity securities of
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, during the earlier of (a) the 180 day period beginning on
the effective date of any Demand Registration or Piggyback Registration in which
Registrable Securities are included (except as part of such underwritten
registration), and (b) the time period for which all executive officers and
directors of the Company agree to be bound pursuant to similar agreements,
unless the underwriters managing the registered public offering otherwise agree.
3.5 Participation in Underwritten Registrations. E&Y may not participate
-------------------------------------------
in any registration hereunder which is underwritten unless it (a) agrees to sell
its securities on the basis provided in any underwriting arrangements approved
by the Company and other Person or
7
<PAGE>
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, share custody agreements,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
3.6 Indemnification. In the event any Registrable Securities are included
---------------
in a registration statement under this Article V:
(a) By the Company. To the extent permitted by law, the Company
--------------
agrees to indemnify and hold harmless E&Y, any underwriter (as defined in the
Securities Act) for E&Y and each person, if any, who controls E&Y or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities joint or several) to which they may
become subject under the Securities Act, or the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, or the Exchange Act or any state securities law; and
the Company will pay to E&Y or each such underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
-------- -------
Section 5.6(a) shall not apply to amounts paid in settlement of any such loss,
- --------------
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
E&Y or any such underwriter or controlling person.
(b) By E&Y. To the extent permitted by law, E&Y agrees to indemnify and
------
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter and any controlling
person of any such underwriter against any losses, claims, damages, or
liabilities joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, or the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by E&Y expressly for use in
connection with such registration; and E&Y will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this Section 5.6(b), in connection with investigating or defending
--------------
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 5.6
-----------
8
<PAGE>
(b) shall not apply to amounts paid in settlement of any such loss, claim,
- ---
damage, liability or action if such settlement is effected without the consent
of E&Y, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this Section 5.6(b) exceed the gross proceeds
--------------
from the offering received by E&Y. For the purposes of this Section 5.6(b), the
--------------
indemnity obligations pursuant to this Section 5.6(b) shall be limited solely to
--------------
Ernst & Young U.S. L.L.P., and there shall be no recourse against its partners
or their assets.
(c) Procedures. Promptly after receipt by an indemnified party under this
----------
Section 5.6 of notice of the commencement of any action (including any
- -----------
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 5.6, deliver to
-----------
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
-------
5.6, but the omission so to deliver written notice to the indemnifying party
- ---
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.6.
-----------
(d) Contributions. If the indemnification provided for in this Section
------------- -------
5.6 is held by a court of competent jurisdiction to be unavailable to an
- ---
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Survival. The obligations of the Company and E&Y under this Section
-------- -------
5.6 shall survive the completion of any offering of Registrable Securities in a
- ---
registration statement under this Article V, and otherwise.
---------
9
<PAGE>
3.7 Assignment of Registration Rights. The rights to cause the Company to
---------------------------------
register Registrable Securities pursuant to this Article V may be assigned by
E&Y, provided that such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement; and such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act. For the purposes of determining the number of shares of
Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership.
3.8 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of E&Y, enter into any agreement with any holder or prospective holder of any
securities of the Company that would allow such holder or prospective holder to
include such securities in any registration statement filed by the Company
unless such registration rights are subordinate to the registration rights
granted to E&Y pursuant to this Agreement.
3.9 E&Y's Status and Responsibilities. E&Y acknowledges the limitations
---------------------------------
that may be imposed upon E&Y under Section 10 of the Exchange Act and the rules
and regulations thereunder in connection with E&Y's sale or transfer of Shares
and agrees to sell or transfer any such Shares only subject to any such
applicable limitations.
3.10 Rule 144. In order to permit E&Y to sell the Shares it holds, if it
--------
so desires, from time to time pursuant to Rule 144 promulgated by the Commission
or any successor to such rule or any other rule or regulation of the Commission
that may at any time permit E&Y to sell its Shares to the public without
registration ("Resale Rules"), the Company will:
(i) comply with all rules and regulations of the Commission
applicable in connection with use of the Resale Rules;
(ii) make and keep adequate and current public information
available, as those terms are understood and defined in the Resale Rules,
at all times;
(iii) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and
the Exchange Act;
(iv) furnish annually to E&Y material containing the
information required by Rule 14a-3(b) under the Exchange Act and Items 401,
402 and 403 of Regulation S-K of the Commission;
(v) furnish to E&Y so long as it owns any Shares, forthwith
upon request (i) a written statement by the Company that it has complied
with the reporting requirements of the Resale Rules, the Securities Act and
the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and any other reports and
10
<PAGE>
documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing E&Y of any rule or regulation of the
Commission which permits the selling of any such Shares without
registration; and
(vi) take any action (including cooperating with E&Y to cause
the transfer agent to remove any restrictive legend on certificates
evidencing the Shares) as shall be requested by E&Y or which shall
otherwise facilitate the sale of Shares from time to time by E&Y pursuant
to the Resale Rules.
3.11 Rule 144A Information. Until such time as the Company is subject to
---------------------
Section 13 or 15(d) of the Exchange Act, the Company will make available, upon
request, to E&Y and prospective purchaser or transferee of Shares designated by
E&Y, the information required to allow the resale or other transfer of Shares
pursuant to Rule 144A promulgated by the Commission under the Securities Act to
enable resales and other transfers of the Shares to be made pursuant to such
Rule 144A.
ARTICLE IV
MISCELLANEOUS
4.1 Non-Assignment. Neither party may assign, transfer or delegate this
--------------
Agreement, or any of its rights or obligations under this Agreement to any third
party, other than a party controlling, controlled by or under control with the
assigning party, without the prior written consent of the other party, which
consent may not be unreasonably withheld. Subject to the above, this Agreement
shall be binding upon and inure to the benefit of the parties of this Agreement,
as well as their respective permitted successors and assigns.
4.2 Mediation/Arbitration. Any controversy or claim arising out of or
---------------------
relating to this Agreement (including any such matter involving any parent,
subsidiary, affiliate, successor in interest, or agent of viaLink or of E&Y)
shall be submitted first to voluntary mediation, and if mediation is not
successful, then to binding arbitration, in accordance with the dispute
resolution procedures set forth in Attachment One to the Alliance Agreement.
Judgment on any arbitration award may be entered in any court having proper
jurisdiction.
4.3 Governing Law. This Agreement shall be governed by the laws of the
-------------
State of New York, without reference to its choice of law rules.
4.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5 Headings and References. The headings and captions used in this
-----------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. All references in this Agreement to
Sections or Exhibits shall, unless otherwise provided, refer to Sections hereof
or Exhibits attached hereto, all of which Exhibits are incorporated herein by
this reference.
11
<PAGE>
4.6 Notices. All notices, reports, requests, acceptances and other
-------
communications required or permitted under this Agreement will be in writing and
shall be sufficient only if personally delivered, delivered by a major
commercial rapid delivery courier service, sent via facsimile or mailed, postage
or charges prepaid, by certified or registered mail, return receipt requested to
a party at its address as set forth below or to such other address that the
receiving party may have provided for purposes of receiving notices as provided
in this Section. Notices will be deemed given when actually received, except
that if not received sooner, notice by mail shall be deemed received five (5)
days after deposit in the U.S. mails
To E&Y: Ernst & Young U.S. LLP
104 Decker Court
Irving, Texas 75062
Attn. Richard Doyle
Fax: (214) 665-5555
With a copy to: Ernst & Young U.S. LLP
787 Seventh Avenue
New York, New York 10019
Attn. Douglas M. Galin, Deputy General Counsel
Fax: (212) 773-6299
With a copy to: Mayer, Brown & Platt
190 South La Salle Street
Chicago, Illinois 60603
Attn. Edward S. Best
Fax: (312) 701-7711
To viaLink: The viaLink Company
13800 Benson Road
Edmond, Oklahoma 73013
Attn. Lewis Kilbourne
Fax: (405) 936-2599
With a copy to: Brobeck Phleger & Harrison LLP
301 Congress Avenue
Austin, Texas 78701
Attn. J. Matthew Lyons
Fax: (512) 477-5813
4.7 Amendments and Waivers. Any term of this Agreement may be amended and
----------------------
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and E&Y. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company. No waiver or failure to exercise any
option, right or
12
<PAGE>
privilege under the terms of this Agreement by either of the parties hereto on
any occasion or occasions shall be construed to be a waiver of the same on any
other occasion or of any other option, right or privilege.
4.8 Severability. If any provision of this Agreement, or the application
------------
thereof, shall for any reason and to any extent be determined by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
of this Agreement shall be interpreted so as best to reasonably effect the
intent of the parties. The parties further agree to replace any such invalid or
unenforceable provisions with valid and enforceable provisions designed to
achieve, to the extent possible, the business purposes and intent of such
invalid and unenforceable provisions.
4.9 Entire Agreement. This Agreement, all Exhibits hereto and any
----------------
agreements referenced herein constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all agreements and
understandings between the Company and E&Y with respect to the subject matter
hereof made prior to the date hereof. There are no representations, warranties,
understandings or agreements relating to the subject matter hereof which are not
fully expressed in this Agreement. No amendment, modification, waiver or
discharge of this Agreement shall be valid unless in writing and signed by an
authorized representative of the party against whom such amendment,
modification, waiver or discharge is sought to be enforced.
[Signature page follows]
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
THE VIALINK COMPANY
By: _________________________
Name: _________________________
Title:_________________________
ERNST & YOUNG U.S. LLP
By: _________________________
Name: _________________________
Title:_________________________
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED ALLIANCE AGREEMENT
---------------------------------------
(Ernst & Young LLP)
-------------------
This AMENDED AND RESTATED Alliance Agreement (the "Agreement") is entered
into effective as of May 3, 1999 (the "Agreement Date"), between The viaLink
Company ("viaLink"), with an address for purposes of this Agreement at 13800
Benson Road, Edmond, Oklahoma 73013, and Ernst & Young LLP ("E&Y"), whose
principal place of business for purposes of this Agreement is 787 Seventh
Avenue, New York, New York, 10019.
Background
----------
A. E&Y and viaLink are parties to an Alliance Agreement dated as of May
3, 1999 (the "Original Agreement").
B. E&Y and viaLink have agreed to amend and restate the Original
Agreement in its entirety.
C. E&Y and viaLink desire to work together with the goal of furthering
the implementation of the viaLink Services (as defined below).
D. E&Y desires to enhance its consulting service revenues by offering
services in connection with the viaLink Services.
E. viaLink desires to enhance its capabilities to market and support the
viaLink Services in connection with the use of E&Y's consulting and integration
services on a preferred provider basis.
F. E&Y and viaLink are parties to that certain Master Services Agreement
of even date herewith (the "Master Services Agreement"), the form of which is
attached as Exhibit D hereto.
----------
G. E&Y and viaLink desire to formalize their relationship by entering
into this Agreement to undertake cooperative efforts in connection with the
viaLink Services.
NOW, THEREFORE, E&Y and viaLink agree as follows:
1. Definitions. The following capitalized terms shall have the meanings given
-----------
to them below when used in this Agreement:
"Affiliate" of E&Y means any corporation, partnership or other business
organization that is (i) a direct or indirect majority owned or controlled
subsidiary of E&Y, or (ii) a member firm of Ernst & Young International
Ltd. ("EYI"), or (iii) a direct or indirect
<PAGE>
majority owned or controlled subsidiary of any EYI member firm; in each
case, which has executed an Affiliation Agreement.
"Affiliation Agreement" means an Affiliation Agreement to be signed by an
Affiliate, viaLink, and E&Y, which is in the form set forth as Exhibit A
---------
hereto.
"Agreement Date" is defined in the preamble paragraph of this Agreement.
"E&Y Services" means E&Y's consulting services related to the use and
operation of the viaLink Services. Those consulting services may include,
among other things, consulting services relating to general systems
integration, implementation and project management training, and education.
"Master Services Agreement" is defined in Background, paragraph D above.
"Initial Term" is defined in Section 6(a) below.
------------
"Proprietary Information" means:
(i) with respect to viaLink, the viaLink Services and all
confidential information and trade secrets contained in the viaLink
Services, including without limitation all data and results, prices,
product information or other data, database formats and any other
information of viaLink or its licensors, customers or subscribers
which by its nature is generally understood to be of a confidential
nature; and
(ii) with respect to E&Y, any information of E&Y which E&Y
indicates is confidential or which, by its nature, is generally
understood to be confidential information.
Information is not Proprietary Information to the extent that it:
(A) is or becomes publicly available through no act or
failure of the receiving party; or
(B) was known to the receiving party as of the time of its
disclosure by the disclosing party;
(C) is rightfully acquired from a third party which, to the
receiving party's knowledge, is not obligated to keep that
information confidential; or
(D) is independently developed by the receiving party
without use of or reference to any Proprietary Information of the
disclosing party.
2
<PAGE>
"Renewal Term" is defined in Section 6(b) below.
------------
"Royalties" is defined in Section 6(a) below.
------------
"Significant E&Y Client" means any of the present or future clients of E&Y
reasonably considered (upon mutual agreement of the parties, which
agreement shall not unreasonably be withheld) to be "Tier 1" based on
sales, revenues, income, market capitalization and stature in the industry
and markets for suppliers and retailers of consumer packaged goods for
food, grocery, drug store, convenience store and mass merchandise chains
and food service operators; provided, however, that the term "Significant
E&Y Client" shall not include those organizations (i) for which E&Y or its
Affiliates acts as the principal outside independent auditor and (ii) which
are subject to the periodic reporting requirements of the federal
securities laws, including Section 12(g) or Section 15(d) of the Securities
Exchange Act of 1934, or any successor statutes.
"Warrant" means the $8.00 Warrant to Purchase Common Stock, the form of
which is attached as Exhibit B hereto.
---------
"Territory" means worldwide and is not limited to the countries in which
E&Y has offices.
"viaLink Customer" is defined in Section 6(b) below.
------------
"viaLink Services" means the subscription catalog and item information data
services viaLink provides to suppliers and retailers of consumer packaged
goods for food, grocery, drug store, convenience store and mass
merchandise chains and food service operators.
"viaLink Services Revenue" means gross revenues paid to viaLink (or
received by viaLink from any of its affiliates) for the sale, use, hire or
subscription of the viaLink Services, as such services are provided to the
consumer packaged goods industry, consisting of: (i) subscription fees for
the item catalog, price book access, scan-based trading, collaborative
planning, forecasting and inventory replenishment; and (ii)
support/maintenance, set up and installation fees, in each case in clauses
(i) and (ii) directly related to the viaLink Services. Without limiting
the generality of the foregoing, viaLink Services Revenue specifically does
not include: (a) any fees or other revenues for services provided in
connection with industries other than the consumer packaged goods industry;
(b) any fees or other revenues for customization, outsourcing, data
management and other similar fees and related services; (c) any revenues
from new business ventures, marketing alliances or other relationships in
which viaLink is not currently engaged or a party as of the Agreement Date,
including without limitation with E&Y or any third party; or (d) any fees
or other revenues derived by viaLink from those organizations (i) for which
E&Y or its Affiliates acts as the principal outside independent auditor and
(ii) which are subject to the periodic reporting requirements of the
federal
3
<PAGE>
securities laws, including Section 12(g) or Section 15(d) of the Securities
Exchange Act of 1934, or any successor statutes".
2. Authorization
-------------
(a) Authority to Use Name and Logos. viaLink hereby authorizes E&Y
-------------------------------
and its Affiliates to use viaLink's name in accordance with marketing
communications standards provided by viaLink from time to time to E&Y and
its Affiliates, and to offer E&Y Services relating to the viaLink Services
to existing and prospective subscribers of the viaLink Services in the
Territory, subject to Section 11(a) and the terms of this Agreement,
-------------
provided that E&Y obtains viaLink's prior written permission for each such
use.
(b) Non-Exclusive Arrangement. The arrangement between viaLink and
-------------------------
E&Y is such that E&Y will be a preferred provider of services for
implementing viaLink's Services with its customers, but such arrangement
is non-exclusive. viaLink may, in its discretion, authorize other parties
to offer various services in the Territory relating to the viaLink
Services, and E&Y may, in its discretion, offer services in connection with
other products in the Territory.
(c) Separate Customer Agreements. viaLink and E&Y will contract
----------------------------
separately and independently of each other with their respective customers.
Each party will be solely responsible for and liable to its customers for
its own products and services. However, the parties may from time to time
enter into written agreements to jointly provide services for specific
customer engagements, with one party acting as the prime contractor and the
other party acting as the subcontractor or otherwise. The viaLink Services
are provided to customers subject to the terms of viaLink's standard
Purchase Order, as set forth in Exhibit C attached hereto, which is subject
---------
to change by viaLink from time to time ("viaLink Purchase Order").
3. viaLink Services and Responsibilities of viaLink
------------------------------------------------
(a) Demonstration Subscription to E&Y. viaLink shall provide E&Y with
---------------------------------
a limited number of demonstration subscriptions to the viaLink Services for
training and marketing demonstrations and for E&Y's internal use to permit
E&Y to evaluate the viaLink Services. Demonstration subscriptions do not
provide access to actual customer or product data. Such demonstration
subscriptions shall be provided at no charge and subject to the applicable
viaLink Purchase Order terms.
(b) Early-Release and Pre-Release Services. viaLink shall provide E&Y
--------------------------------------
with access to new, early release and pre-release features for review,
evaluation, staff training and long term planning purposes. Such access
will be provided at no charge but will be subject to Section 12
----------
(Confidentiality) below and viaLink's standard beta release terms and
conditions.
4
<PAGE>
(c) Training. viaLink will train and provide product-related course
--------
materials for at least two E&Y designated viaLink trainers on the use of
each of the viaLink Services on an on-going basis. Such training and
materials will be provided at no charge. E&Y will be responsible for its
own out-of-pocket costs associated with the training of such trainers, and
will be responsible for the training of all other E&Y personnel.
(d) Certification. If viaLink has or in the future establishes a
-------------
certification program for any viaLink Services, viaLink shall permit E&Y
and its personnel to participate in the program at no charge.
(e) Sales Support. viaLink will use commercially reasonable efforts to
-------------
assist E&Y and its Affiliates in their efforts to sell service engagements
that include the use of viaLink Services. viaLink may provide information,
presentations and demonstrations on the viaLink Services to E&Y customers
who are evaluating the viaLink Services. Each party shall bear its own
costs in connection with such sales activities. viaLink will recommend E&Y
as the preferred provider of viaLink's products and services.
(f) Alliance Support. viaLink will assign an alliance manager to
----------------
assist E&Y in the coordination and execution of all sales, marketing and
project delivery activities.
(g) Logo Usage. Subject to Section 11(a), viaLink may use the E&Y
---------- -------------
company logo and/or name in advertising and promotional materials in
connection with the sales and promotion of the viaLink Services and the E&Y
Services, in accordance with E&Y's then current marketing communications
standards protocols and procedures, provided that viaLink obtains E&Y's
prior written permission for each such use.
(h) User Groups. viaLink will invite E&Y to participate in viaLink
-----------
user conferences as a presenter and/or sponsor of a booth with respect to
the services E&Y can provide to customers. This participation will be at
no charge to E&Y, except that E&Y will be responsible for its own travel
and lodging expenses. In addition, E&Y consultants may attend viaLink user
conferences at no charge, except that E&Y will be responsible for its own
travel and lodging expenses.
4. Services and Responsibilities of E&Y
------------------------------------
(a) Employee Training. E&Y shall send its consultants who are
-----------------
expected to be providing training to E&Y personnel using the viaLink
Services to the training sessions provided by viaLink hereunder, and those
E&Y consultants will train such E&Y personnel as E&Y deems necessary to
provide such E&Y Services.
(b) Customer Information. E&Y shall use commercially reasonable
--------------------
efforts to: (i) make the viaLink Services known to its customers and
potential customers for whom such viaLink Services are appropriate in E&Y's
judgment; (ii) present the viaLink Services using only the service names
given by viaLink; and (iii) provide the prospective customers with the
viaLink Services marketing materials and non-confidential
5
<PAGE>
information provided by viaLink to E&Y. E&Y shall not make any warranties,
assurances or statements concerning viaLink Services features that are
misleading or materially divergent from the descriptive literature supplied
by viaLink or which exceed the limits of viaLink's standard warranties
contained in its subscription purchase order forms.
(c) Sales and Marketing. E&Y shall provide advice and assistance
-------------------
regarding market requirements, including changes in product mix and new
product development, and product and service pricing strategies which may
be requested by viaLink to maximize viaLink's sales and business
development. E&Y also shall assist in facilitating viaLink's access to
international markets by providing advice and assistance in determining
market requirements and viaLink's capabilities. E&Y shall participate in
and, if requested by viaLink, assist in the organization and implementation
of, the jointly sponsored marketing events, conferences, executive
conferences and committee meetings which may be agreed upon by the parties.
E&Y will endeavor to increase viaLink's visibility in the relevant market
using a strategy to be agreed upon by the parties.
(d) E&Y Coordinator. E&Y shall designate a coordinator (who is
---------------
reasonably acceptable to viaLink) with appropriate authority to coordinate
E&Y's activities with viaLink and act on behalf of E&Y within the scope of
this Agreement.
5. Services and Responsibilities of the Parties. To the extent reasonable
--------------------------------------------
under the circumstances and as permitted by each party's other agreements,
the parties shall undertake the following cooperative activities with
respect to identifying opportunities to promote the viaLink Services and
E&Y Services:
(a) Market Information. Each party shall regularly inform the other
------------------
party about general market developments and factors relating to the viaLink
Services in the marketplace and current projects and customer
implementations in which they are involved. This information shall be
designated and treated as Proprietary Information of the party providing
the information.
(b) Internal Notification. Each party shall inform the appropriate
---------------------
personnel in its organization of the existence of this Agreement.
(c) New Product Information. Each party shall endeavor to keep the
-----------------------
other party appraised about new products and services relating to the
viaLink Services.
(d) Other Information. The parties shall exchange such other
-----------------
information and conduct such other activities as the parties agree will
carry out the intent of this Agreement.
(e) Periodic Review. The parties shall meet at least twice a year to
---------------
review the status of their arrangement under this Agreement.
6
<PAGE>
6. Royalties and Payments; Audit; Grant of Warrant and Registration Rights
-----------------------------------------------------------------------
(a) Royalties. In consideration of the value to viaLink of E&Y's in-
---------
kind contributions and the E&Y Services, and in recognition of the
discounted rates which may be charged to viaLink by E&Y for the services
rendered under the Master Services Agreement, E&Y shall be entitled to
receive royalty payments ("Royalties") from viaLink as specified in this
Section 6. The Royalties will be equal to seven percent (7%) of viaLink
---------
Services Revenue per quarter for the first two (2) years after the
Agreement Date ("Initial Term") and for the additional time period(s)
specified in Section 6(b) below.
------------
(b) Term of Royalties; Extension. The continued payment of Royalties
----------------------------
to E&Y shall be dependent upon a minimum number of Significant E&Y Clients
being converted by E&Y to become viaLink Customers. "viaLink Customers" as
used in this Section means Significant E&Y Clients that have subscribed to
the viaLink Services at current viaLink list prices (less applicable
discounts), have agreed to the viaLink Services Purchase Order terms and
conditions and which remain subscribers for a minimum of twelve consecutive
(12) months). "Convert" or "converted" as used in this Section means that
E&Y is primarily responsible for causing such Significant E&Y Client to
become a viaLink Customer based on a direct referral and substantive,
additional assistance from E&Y or as part of an overall service engagement
by E&Y. If during the Initial Term, E&Y converts (subject to the
satisfaction of the condition that such subscriber remain a viaLink
subscriber for at least twelve (12) months, which condition need not be
satisfied within such term, so long as it began during such term) ten (10)
or more Significant E&Y Clients to viaLink Customers, the Royalties shall
continue thereafter in perpetuity. If during the Initial Term, E&Y
converts a minimum of seven (7) Significant E&Y Clients to viaLink
Customers, Royalties shall be paid for an additional one (1) year period
(the "Renewal Term"). If during the Renewal Term, E&Y converts (subject to
the satisfaction of the condition that such subscriber remain a viaLink
subscriber for at least twelve (12) months, which condition need not be
satisfied within such term, so long as it began during such term) three (3)
or more additional Significant E&Y Clients to viaLink Customers (for a
total of ten (10) or more current viaLink Customers who are Significant E&Y
Clients), the Royalties shall continue thereafter in perpetuity.
(c) Payment of Royalties. Subject to the terms and conditions of this
--------------------
Agreement, Royalties payments will be paid quarterly beginning on July 1,
1999. Royalties should be paid to E&Y within fourteen (14) days after the
end of each calendar quarter based on viaLink Service Revenue received in
such quarter.
(d) Audit. viaLink shall, or shall at its sole cost and expense
-----
retain a third party service provider to, keep full, accurate and adequate
records of the sales of viaLink Services subscriptions (including any
updated or other versions of viaLink Services) sufficient to document the
basis of its calculation of the Royalties. viaLink agrees to make such
records available to E&Y, at viaLink's premises during normal business
7
<PAGE>
hours, no more than twice each year as requested upon reasonable notice
from E&Y. If any such audit discloses a deficiency of greater than five
percent (5%) of the Royalties payable for the audit period, viaLink shall
pay the reasonable costs and expenses incurred by E&Y in connection with
such audit.
(e) Warrant; Registration Rights. As further consideration for the
----------------------------
execution of this Agreement, promptly following the execution of this
Agreement viaLink shall (i) issue and deliver the Warrant to E&Y, which
Warrant shall entitle E&Y to purchase up to 250,000 shares of viaLink's
Common Stock at a price of $8.00 per share, all on and subject to the
conditions set forth therein; and (ii) E&Y and viaLink shall enter into the
Registration Rights Agreement, the form of which is attached hereto as
Exhibit E, with respect to the resale of the shares of viaLink Common Stock
---------
issuable to E&Y under the Master Services Agreement or upon exercise of the
Warrant.
7. Representations, Warranties and Disclaimers
-------------------------------------------
(a) Representations and Warranties. Each party hereby represents and
------------------------------
warrants to the other party that:
(i) Authority. It has the right and power to enter into this
---------
Agreement.
(ii) No Violation. Entering into this Agreement does not violate
------------
the terms and conditions of any of its other agreements providing for
cooperative marketing of products of another entity, or any other
legal obligations.
(iii) No Infringement. The products, services, materials and
---------------
information it provides under this Agreement to the other party do not
infringe upon or constitute a misappropriation of any copyright,
trademark, patent, trade secret or other proprietary right of any
third party in the Territory. Each party's sole liability and the
other party's sole remedy for a breach by such party of the foregoing
warranty shall be indemnification pursuant to Section 11(e) below.
-------------
(b) Disclaimer of Warranty. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
----------------------
SECTION 7, NEITHER PARTY MAKES ANY WARRANTY TO THE OTHER PARTY, EITHER
EXPRESS, IMPLIED OR STATUTORY, NOR SHALL ANY WARRANTY ARISE BY COURSE OF
CONDUCT OR BY PERFORMANCE, CUSTOM OR USAGE IN THE TRADE, INCLUDING BUT NOT
LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
8. Term and Termination
--------------------
(a) Initial and Renewal Terms. This Agreement shall be effective as of
-------------------------
the Agreement Date and, unless sooner terminated in accordance with its
terms, shall continue in effect for (i) the Initial Term (as defined in
Section 6(a)) ending May 3, 2001,
------------
8
<PAGE>
and, (ii) provided that E&Y has converted the minimum number of Significant
E&Y Clients to viaLink Customers pursuant to Section 6(b), shall thereafter
------------
continue in effect for the Renewal Term (as defined in Section 6(b)) and
------------
successive one (1) year terms thereafter. After the Initial Term and the
Renewal Term (if applicable), either party may terminate this Agreement
upon ninety (90) days prior written notice to the other party, with or
without cause, in which event this Agreement shall expire on the last day
of the ninety (90) day notice period (except with respect to (A) any open
work order that remains open on such date, as to which this Agreement will
terminate on completion and (B) any Royalties earned or to be paid pursuant
to Section 6(b), which shall be in the manner and for the term set forth in
Sections 6(b), 6(c) and 6(d)).
(b) Termination. Each party may terminate this Agreement:
-----------
(i) if the other party should materially fail to fulfill
its obligations under this Agreement (a "breach") and should fail
to cure such breach within thirty (30) days after receiving
written notice from the non-breaching party of such breach and
the intention of such non-breaching party to terminate this
Agreement; provided, however, that, with respect to those
-------- -------
breaches which cannot reasonably be cured within such thirty (30)
day period, the breaching party shall have such period of time to
cure such breach as would be required by a party, in the exercise
of good faith and all commercially reasonable efforts, in order
to cure such breach; provided, further, that such breaching party
-------- -------
shall in fact exercise such good faith and such commercially
reasonable efforts to attempt to cure such breach. The failure to
cure such breach as stated in the preceding sentence will result
in the termination of this Agreement as of the end of such period
without prejudice to any other rights the parties may have; or
(ii) Immediately upon written notice if: (A) the other
party is adjudged insolvent or bankrupt, or upon the institution
of any proceeding against the other party seeking relief,
reorganization or arrangement under any laws relating to
insolvency, or for the making of any assignment for the benefit
of creditors, or upon the appointment of a receiver, liquidator
or trustee of any of the other party's property or assets, or
upon liquidation, dissolution or winding up of the other party's
business; or (B) the other party breaches the confidentiality
provisions set forth in Section 12 below.
----------
(c) Effect of Termination or Expiration. Upon termination or
-----------------------------------
expiration of this Agreement, each party shall cease acting in a manner
that would suggest any continuing relationship between the parties
regarding the viaLink Services, and shall cease all display and advertising
contemplated under this Agreement. Within thirty (30) business days after
the termination or expiration, each party shall return to the other party
or dispose of (as mutually agreed) all advertising materials and other
property, including all Proprietary Information, furnished to it by the
other party pursuant to this Agreement. Each party shall certify in writing
to the other that it has done so. Termination or expiration of this
Agreement shall not affect any obligation either party has to its
customers. The following provisions of this Agreement shall in all events
survive its termination or expiration: Sections 7 (Representations,
----------
Warranties and Disclaimers), 8 (Term and Termination), 10 (Relationship of
the Parties), 11 (Intellectual Property Rights), 12 (Confidentiality of
Proprietary Information), and 13 (General Provisions) and, except in the
case of termination by viaLink under Section 8(b)(i) for breach by E&Y, any
---------------
payment obligations as provided in Section 6(b).
------------
9. Force Majeure. Each party hereto shall be excused from default or
-------------
delay in the performance of its obligations hereunder if and to the extent
that such default or delay is caused by an act of God, or other cause
beyond its reasonable control, including but not limited to, work
stoppages, fires, riots, accident, explosion, flood, storm, or failures or
fluctuations in electrical power, heat light, air conditioning or
telecommunications
9
<PAGE>
equipment. In such event, the nonperforming party shall be excused from
performance for as long as such circumstances prevail and shall as soon as
practicable notify the other by telephone (to be confirmed promptly in
writing) of any actual or anticipated delay.
10. Relationship of Parties. The following provisions shall apply to the
-----------------------
relationship of the parties, notwithstanding any other provision of this
Agreement:
(a) Independent Contractors. E&Y and viaLink are independent
-----------------------
contractors acting for their own account, and neither party is authorized
to make any representation or commitment on behalf of the other party.
Neither party shall use the terms "joint venture", "partner", "partnership"
or similar terms to describe the relationship between the parties under
this Agreement. Any inadvertent use of such terms shall refer to the spirit
of cooperation and alliance between the parties and shall not create a
legal partnership or joint venture or any responsibility by one party for
the actions of the other, either expressly or by implication.
(b) No Distribution Rights. Neither party is a distributor or agent
----------------------
for the products or services of the other party. Each party's products and
services shall be available to prospective customers only through a
separate agreement between that party and its customers. Neither party is
responsible to any customer for the quality of products or services
provided by the other party, unless the parties otherwise agree in writing
with respect to specific customers engagements, pursuant to which one party
is the prime contractor and the other party is the subcontractor. Each
party is solely responsible for establishing the prices for its own
products and services.
(c) E&Y Affiliates. E&Y's Affiliates shall be entitled to exercise the
--------------
rights and shall be subject to the responsibilities imposed upon E&Y under
this Agreement upon execution of an Affiliation Agreement in the form
attached as Exhibit A hereto, with such changes as may be mutually agreed
---------
upon in writing by viaLink, such Affiliate and E&Y. viaLink shall provide
E&Y with prompt notice of the fact that an Affiliate has signed or wishes
to enter into an Affiliation Agreement and with a copy of the fully
executed Affiliation Agreement within a reasonable time after execution. No
Affiliation Agreement shall be effective until executed by viaLink. E&Y's
agreement and each Affiliate's agreement with viaLink shall be separate and
independent from one another. In no event shall E&Y be liable for any
Affiliate's obligations under an Affiliation Agreement, nor shall any
Affiliate be liable for E&Y's obligations under this Agreement.
11. Intellectual Property Rights
----------------------------
(a) Trademarks, Etc. This Agreement does not authorize either party to
---------------
use or display any names, trademarks, logos or service marks ("Marks") of
-----
the other party except to identify the viaLink Services and E&Y Services to
the extent permitted by this Agreement. Either party may use the trademarks
or other proprietary words or symbols of the other party to properly
identify the viaLink Services or E&Y Services of the other party in
correspondence and proposals issued in the ordinary course of business to
the
10
<PAGE>
extent such use would be permitted by applicable law in the absence of this
Agreement. Except as described in the preceding sentence, each party shall
submit to the other party for written prepublication approval, any
materials which may use or display any Mark of the other party. All use of
a party's Marks by shall inure to the benefit of that party. Each party
agrees not to apply for registration of the other party's Marks (or any
mark confusingly similar thereto) anywhere in the world.
(b) Certain Intellectual Property Rights. E&Y acknowledges that title
------------------------------------
to all intellectual property rights, including without limitation patent,
copyright, trademark, and trade secret rights, in the viaLink Services and
materials provided by viaLink to E&Y (including any modifications,
enhancements, versions, releases, or correction levels to those viaLink
Services and materials) shall remain exclusively with viaLink. viaLink does
not, by this Agreement, transfer or assign any of its intellectual property
rights to E&Y. Provided that a party does not infringe or misappropriate
any intellectual property right of the other party, or breach its
obligations under Section 12, neither party shall be restricted from using
----------
any ideas, concepts, techniques or know-how developed in the course of
their relationship under this Agreement.
(c) Access and Modification. This Agreement does not grant to E&Y (i)
-----------------------
the right to decompile, modify, or alter the viaLink Services in any way
that jeopardizes viaLink's proprietary rights, or (ii) any right to access
the viaLink Services structure or source code. E&Y shall have no right to
make modifications or enhancements to the viaLink Services in the course of
providing E&Y Services to its customers, however, it may modify or enhance
the interfaces or systems that customers use to access the viaLink
Services, provided that those modifications and enhancements are for use by
E&Y's customers and are accomplished through use of tools viaLink supplies
with the viaLink Services.
(d) E&Y Developments. Except for viaLink Services and E&Y Services
----------------
covered by the existing Master Services Agreement, the following provisions
describe which party will own the computer software developed by E&Y and
its independent contractors in connection with the viaLink Services.
(i) Integration Software. E&Y shall own and have all right, title
--------------------
and interest in and to any computer software that E&Y develops
independently to integrate the viaLink Services to other computer
software used by E&Y's customers, to the extent the computer software
E&Y develops is not a modification to the viaLink Services.
(ii) Products of Tools. E&Y shall own and have all right, title
-----------------
and interest in and to any computer software that E&Y creates
independently by using tools provided by viaLink, if any, to the
extent the software E&Y develops is not a modification to the viaLink
Services.
11
<PAGE>
(iii) viaLink shall have and E&Y hereby grants to viaLink a
nonexclusive, nontransferable, royalty free license to use the
software E&Y develops or has developed pursuant to clauses (i) and
(ii) above, for use to assist viaLink's customers with their use of
the viaLink Services.
(e) Indemnification.
---------------
(i) E&Y shall, at its sole expense, defend, indemnify and hold
viaLink harmless from and against any and all third party suits,
proceedings and claims, and all resulting losses, liabilities, costs and
expenses (including reasonable attorneys' fees), for misappropriation of
trade secrets, technical information and/or know-how or for infringement of
any copyright, patent or other intellectual property right of any third
party arising out of the performance of the E&Y Services by E&Y, or arising
out of any breach of any of E&Y's representations and warranties in this
Agreement, or otherwise arising out of the E&Y Services or E&Y's activities
hereunder, except in the case of viaLink's indemnification pursuant to
Section 11(e)(ii); provided, that E&Y is notified promptly in writing of
such claim or of the commencement of such suit or proceeding, as the case
may be, and is given sole control and authority, information and reasonable
assistance, at E&Y's expense, for the defense or settlement thereof; and
provided further, that viaLink shall not settle such claim, suit or
proceeding without the written consent of E&Y, which consent shall not be
unreasonably withheld.
(ii) viaLink shall, at its sole expense, defend, indemnify and hold
E&Y harmless from and against any and all suits, proceedings and claims,
and all resulting losses, liabilities, costs and expenses (including
reasonable attorneys' fees), for misappropriations of any trade secrets,
technical information or know-how or for infringement of any copyright,
patent or other intellectual property right of a third party arising out of
the performance of the viaLink Services by viaLink or arising out of any
breach of any of viaLink's representations and warranties in this
Agreement, or otherwise arising out of the viaLink Services or viaLink's
activities hereunder, except in the case of E&Y's indemnification pursuant
to Section 11(e)(i); provided that viaLink is notified in writing of such
----------------
claim or of the commencement of such suit or proceeding, as the case may
be, and is given sole control and authority, information and reasonable
assistance, at viaLink's expense, for the defense or settlement thereof;
and provided further, that E&Y shall not settle such claim, suit or
proceeding without the prior written consent of the viaLink, which consent
shall not be unreasonably withheld.
(iii) This Section 11(e) specifies the sole and exclusive remedy of
-------------
each party for third party claims of misappropriation or infringement of
intellectual property.
12
<PAGE>
12. Confidential Information.
---------------------------
(a) Each party acknowledges that, during the term of this Agreement,
it will from time to time receive or possess Proprietary Information and
other material nonpublic information (collectively, "Confidential
Information") from the other party. Neither party shall disclose any
Confidential Information to third parties or use any Confidential
Information other than for purposes of this Agreement. Each party shall
protect the Confidential Information of the other party with at least the
same protection and care that it customarily uses in safeguarding its own
confidential information of a similar nature, but shall use no less than a
reasonable degree of care. Each party will disclose the other party's
Confidential Information to its personnel only on a need-to-know basis.
Each party shall take reasonable steps to advise its employees and
consultants of the confidential nature of the other party's Confidential
Information and their obligation to comply with the confidentiality
requirements in this Agreement. Without limiting the generality of the
foregoing, E&Y understands that viaLink is a public company. E&Y is aware,
and will take reasonable precautions to make its employees and
representatives who may become informed of any such information aware, of
the restrictions imposed by the United States federal securities laws on
the purchase and sale of securities by any person who has received material
nonpublic information from the issuer of such securities of the
communication of such information to any other person.
(b) The receiving party acknowledges and agrees that due to the unique
nature of the disclosing party's Confidential Information, there can be no
adequate remedy at law for any breach of its obligations hereunder, that
any such breach may allow the receiving party or third parties to unfairly
compete with the disclosing party resulting in irreparable harm to the
disclosing party, and therefore, that upon any such breach or any threat
thereof, the disclosing party shall be entitled to appropriate equitable
relief in addition to whatever remedies it might have at law and to be
indemnified by the receiving party from any loss or harm, including,
without limitation, lost profits and attorneys' fees, in connection with
any breach or enforcement of the receiving party's obligations hereunder or
the unauthorized use or release of any such Confidential Information. The
receiving party will notify the disclosing party in writing immediately
upon the occurrence of any such unauthorized release or other breach. Any
breach of this Section 12(b) will constitute a material breach of this
-------------
Agreement.
13. Further Understandings.
----------------------
(a) Non-Solicitation. During the term of this Agreement and for a
----------------
period of twelve (12) months thereafter, personnel of either party who have
been directly and substantially involved in the performance of such party's
obligations under this Agreement shall not knowingly directly or indirectly
solicit for employment any of the other party's personnel who have been
directly and substantively involved in the performance of this Agreement,
without the prior written consent of the other party.
13
<PAGE>
(b) Notices. All notices, reports, requests, acceptances and other
-------
communications required or permitted under this Agreement will be in
writing and shall be sufficient only if personally delivered, delivered by
a major commercial rapid delivery courier service, sent via facsimile, or
mailed, postage or charges prepaid, by certified or registered mail, return
receipt requested to a party at its address as set forth below or to such
other address that the receiving party may have provided for purposes of
receiving notices as provided in this Section. Notices will be deemed given
when actually received, except that if not received sooner, notice by mail
shall be deemed received five (5) days after deposit in the U.S. mail.
To E&Y: Ernst & Young LLP
104 Decker Court
Irving, Texas 75062
Attn. Richard Doyle
Fax: (214) 665-5555
With a copy to: Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
Attn. Douglas M. Galin, Deputy General Counsel
Fax: (212) 773-6299
With a copy to: Mayer, Brown & Platt
190 South La Salle Street
Chicago, Illinois 60603
Attn. Edward S. Best
Fax: (312) 701-7711
To viaLink: The viaLink Company
13800 Benson Road
Edmond, Oklahoma 73013
Attn. Lewis Kilbourne
Fax: (405) 936-2599
With a copy to: Brobeck Phleger & Harrison LLP
301 Congress Avenue
Austin, Texas 78701
Attn. J. Matthew Lyons
Fax: (512) 477-5813
(c) Entire Agreement. This Agreement, all Exhibits hereto, any work
----------------
orders hereunder constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all agreements and
understandings between viaLink and E&Y with respect to the subject matter
hereof made prior to the date hereof, including without limitation that
certain Confidentiality Agreement dated November 20, 1998, and
14
<PAGE>
each of those certain Letters of Understanding dated September 8, 1998 and
January 11, 1999. There are no representations, warranties, understandings or
agreements relating to the subject matter hereof which are not fully expressed
in this Agreement. No amendment, modification, waiver or discharge of this
Agreement shall be valid unless in writing and signed by an authorized
representative of the party against whom such amendment, modification, waiver or
discharge is sought to be enforced.
(d) Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York, without reference to its
choice of law rules. In any action to enforce this Agreement the prevailing
party will be entitled to costs and reasonable attorneys' fees.
(e) Alternative Dispute Resolution. Any controversy or claim arising out
-------------------------------
of or relating to this Agreement, any work order or the services provided by E&Y
pursuant thereto (including any such matter involving any parent, subsidiary,
affiliate, successor in interest, or agent of viaLink or of E&Y) shall be
submitted first to voluntary mediation, and if mediation is not successful, then
to binding arbitration, in accordance with the dispute resolution procedures set
forth in Attachment One to this Agreement. Judgment on any arbitration award
--------------
may be entered in any court having proper jurisdiction.
(f) Severability. If any provision of this Agreement, or the application
-------------
thereof, shall for any reason and to any extent be determined by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
of this Agreement shall be interpreted so as best to reasonably effect the
intent of the parties. The parties further agree to replace any such invalid or
unenforceable provisions with valid and enforceable provisions designed to
achieve, to the extent possible, the business purposes and intent of such
invalid and unenforceable provisions.
(g) Non-Assignment. Neither party may assign, transfer or delegate this
---------------
Agreement, or any of its rights or obligations under this Agreement to any third
party, other than a party controlling, controlled by or under control with the
assigning party, without the prior written consent of the other party, which
consent may not be unreasonably withheld. Subject to the above, this Agreement
shall be binding upon and inure to the benefit of the parties of this Agreement,
as well as their respective permitted successors and assigns.
(h) No Waiver. No waiver or failure to exercise any option, right or
----------
privilege under the terms of this Agreement by either of the parties hereto on
any occasion or occasions shall be construed to be a waiver of the same on any
other occasion or of any other option, right or privilege.
(i) Headings and References. The headings and captions used in this
------------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. All references in this Agreement to
Sections, Attachments or Exhibits shall, unless otherwise provided, refer to
Sections hereof, Attachments
15
<PAGE>
attached hereto or Exhibits attached hereto, all of which Attachments and
Exhibits are incorporated herein by this reference.
(j) Limitation on Damages. Neither party (nor any of its licensors) shall
----------------------
have any liability to the other party or any third parties for any loss of
business, loss of profits, loss of data, or computer malfunction, or any
indirect, incidental, special, consequential or punitive damages, even if such
party has been appraised of the possibility of that loss or damage.
(k) Press Release and Publicity. Neither party shall issue any news
----------------------------
release, public announcement, advertisement or publicity concerning this
Agreement or any matters arising under this Agreement without the prior written
approval of the other party, except to the extent required or compelled by law
or judicial order or decree, or the rules of any securities exchange or
interdealer quotation system on which its securities are listed or qualified for
inclusion.
(l) Equitable Relief. Notwithstanding the provisions of Section 13(e)
----------------- -------------
hereof, any claim limited solely to injunctive or other equitable relief
relating to intellectual property or proprietary rights or from a breach of the
other party's obligations under Section 12 of this Agreement may be submitted as
----------
a matter of right by the party seeking such relief to any court having proper
jurisdiction over such claim. In no event, however, may the arbitrators
referred to in Attachment One award any nonmonetary or equitable relief of any
--------------
sort.
(m) Expenses. Each party shall bear its own legal fees and expenses
---------
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement, the documents attached as Exhibits hereto and letters of
intent or preliminary agreements prior to the date hereof.
(n) No Finder's Fees. Each party represents that it neither is nor will be
-----------------
obligated for any finders' fee or commission in connection with this
transaction. E&Y agrees to indemnify and to hold harmless viaLink from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which E&Y or any of its officers, partners, employees, or
representatives is responsible with respect to this transaction. viaLink agrees
to indemnify and hold harmless E&Y from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which viaLink or any
of its officers, employees or representatives is responsible with respect to
this transaction.
[Signature Page follows]
16
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Alliance Agreement to be signed by their duly authorized representatives as
of the Agreement Date.
ERNST & YOUNG LLP THE VIALINK COMPANY
By: By:
-------------------------- -----------------------------
Printed Printed
Name: Name:
------------------------ ---------------------------
Title: Title:
----------------------- --------------------------
<PAGE>
Attachment One
Dispute Resolution Procedures
The following procedures shall be used to resolve any controversy or claim
("Dispute") arising under this Agreement. If any provisions in this Attachment
One are determined to be invalid or unenforceable, it shall not affect the
enforceability of the remaining provisions in Exhibit E and the Agreement and
the court shall enforce all remaining provisions to the extent permitted by law.
Mediation
Any Dispute shall be submitted to mediation upon written notice to the
other party or parties. In the mediation process, the parties shall use their
good faith efforts to resolve the dispute voluntarily with the aid of an
impartial mediator, who will attempt to facilitate negotiations. The mediator
will be selected by agreement of the parties. If the parties cannot agree on a
mediator, a mediator will be designated by the American Arbitration Association
("AAA") at the request of a party. Any mediator so designated must be
acceptable to all parties.
The mediation will be conducted as specified by the mediator and agreed
upon by the parties.
The mediation shall be a settlement discussion and therefore will be
confidential. The mediator may not be subpoenaed to or voluntarily testify for
either party in any later proceeding relating to the dispute. All papers and
writings submitted to the mediator are confidential and may not be subpoenaed by
either party. No recording or transcript shall be made of the mediation
proceedings.
Each party will bear its own fees and costs in the mediation. The fees and
expenses of the mediator will be shared equally by the parties.
Arbitration
If a Dispute is not resolved within 90 days after the written notice
beginning the mediation process (or a longer period, if the parties agree to
extend the mediation), the mediation shall terminate and the dispute will be
settled by binding arbitration. The arbitration will be conducted in accordance
with the procedures in this Agreement and the Arbitration Rules for Professional
Accounting and Related Services Disputes of the AAA ("AAA Rules"). In the event
of a conflict between the AAA Rules and this Agreement, the provisions of this
Agreement shall control.
The arbitration will be conducted before a panel of three arbitrators,
regardless of the amount in controversy in the Dispute, to be selected as
provided in the AAA Rules. Any issue concerning the extent to which any Dispute
is subject to arbitration, or concerning the applicability, interpretation, or
enforceability of these procedures, including any contention that all or part of
these procedures are invalid or unenforceable, shall be governed by the Federal
<PAGE>
Arbitration Act and resolved by the arbitrators. No potential arbitrator may
serve on the panel unless he or she has agreed in writing to abide and be bound
by these procedures.
Unless otherwise provided in this Agreement, the arbitrators may not award
any non-monetary or equitable relief of any sort. They shall have no power to
award (i) damages inconsistent with the Agreement or (ii) punitive damages or
any other damages not measured by the prevailing party's actual damages, and the
parties expressly waive their right to obtain such damages in arbitration or in
any other forum. In no event, even if any other portion of these provisions is
held to be invalid or unenforceable, shall the arbitrators have power to make an
award or impose a remedy that could not be made or imposed by a court deciding
the matter in the same jurisdiction.
No discovery will be permitted in connection with the arbitration unless it
is expressly authorized by the arbitration panel upon a showing of substantial
need by the party seeking discovery.
All aspects of the arbitration shall be treated as confidential. Neither
the parties nor the arbitrators may disclose the existence, content or results
of the arbitration, except as necessary to comply with a court order or
regulatory requirements. Before making any such disclosure, the party shall give
written notice to all other parties and shall afford such parties a reasonable
opportunity to protect their interests.
The result of the arbitration will be binding on the parties, and judgment
on the arbitrators' award may be entered in any court having jurisdiction.
ONE-2
<PAGE>
EXHIBIT A
---------
AFFILIATION AGREEMENT
---------------------
For good and valuable consideration, _________________________ ("Member
Firm"), a corporation/partnership organized under the laws of ______________ and
a member firm or a subsidiary of a member firm in good standing of Ernst & Young
International Ltd. ("EYI"), hereby covenants and agrees with Ernst & Young LLP
("E&Y"), and The viaLink Company ("viaLink"), that it will comply with all
obligations of E&Y under the Alliance Agreement dated as of _________________
(the "Agreement"), including all exhibits thereto and all other agreements
referred to therein, as fully as if Member Firm had executed the Agreement and
shall be entitled to exercise all rights thereunder, with such changes thereto
as are set forth below as mutually agreed to by viaLink and the Member Firm and
set forth in accordance with the terms hereof.
1. Capitalized terms used herein but not otherwise defined herein shall
have the meaning given to them in the Agreement.
[2. The Agreement shall be amended as set forth in the attachment to this
Affiliation Agreement, which attachment has been executed by both viaLink and
Member Firm. Member Firm hereby represents that the following amendments to the
Agreement are otherwise acceptable to viaLink and E&Y: _______________________.]
3. Notwithstanding any other provision of the Agreement, in no event shall
Member Firm or any other member firm of EYI or any other Affiliate, including
E&Y, be liable to viaLink or any other party for any act or failure to act by
any other member firm or EYI or any other Affiliate or any failure by such party
to fulfill the obligations imposed upon Member Firm pursuant to the terms of
this Affiliation Agreement.
4. This Affiliation Agreement shall be effective as of ________________.
This Affiliation Agreement shall terminate upon the earlier of (i) the
termination or expiration of the Agreement, or (ii) the date at which Member
Firm ceases to be a member firm, or a subsidiary of a member firm, in good
standing of EYI.
5. This Affiliation Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflict of
law provisions thereof.
A-1
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Affiliation Agreement to
be signed by the authorized representatives as of the date shown above.
[Formal Name of MEMBER FIRM] The viaLink Company
By:_________________________ By:________________________
Printed Printed
Name:_______________________ Name:______________________
Title:______________________ Title:_____________________
Ernst & Young LLP
By:_________________________
Printed
Name:_______________________
Title:______________________
A-2
<PAGE>
EXHIBIT B
---------
FORM OF WARRANT
---------------
<PAGE>
EXHIBIT C
---------
VIALINK SERVICES PURCHASE ORDER TERMS AND CONDITIONS
----------------------------------------------------
See attached.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Purchase Order
for viaLink(R) Services [LOGO OF viaLink(R)]
The viaLink Company
1300 Benson Road
Edmond, OK 73013-6417
Phone: (405) 936-2500 Fax: (405) 936-2599 Email: Customer [email protected] Website: www.vialink.com
</TABLE>
Purchaser:_____________________________ Contact:___________________________
Full Company Name Name, Title
- --------------------------------------------------------------------------------
Purchaser is (check one):
[_] Supplier [_] Retailer [_] Wholesaler [_] Other_______________
- --------------------------------------------------------------------------------
Address:________________________________________________________________________
Phone:____________________ Fax:__________________ Email:__________________
- --------------------------------------------------------------------------------
Service(s) ordered (check which ones are applicable):
[_] Item Catalog [_] Item Express [_] Exchange Manager [_] Chain Pricing
Other:__________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Basic Fees for Services (specify):
Additional fees are applicable if Your use of the Service extends beyond that
covered by the Basic Fees described above.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Payment Method (Check One): [_] Visa [_] MasterCard [_] Check [_] ACH
______________________________________ _____________________________________
Credit Card No. Name on Credit Card
______________________________________ _____________________________________
Expiration Date Signature of Card Holder
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Custom terms (if any):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
By signing below, You the Purchaser order the Services specified above and agree
to pay the applicable fees and The viaLink Company agrees to provide the
Services to You, all in accordance with and subject to the attached Terms and
Conditions. Either party may terminate on thirty days prior written notice to
the other party.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
_________________________________________ ________________________________________________
Purchaser's representative (please print) The viaLink Company representative (please print)
_________________________________________ ________________________________________________
Title Date Title Date
</TABLE>
<PAGE>
TERMS AND CONDITIONS
The Services. The viaLink Company ("viaLink") agrees to provide You, the
Purchaser, with the services that have been checked on the cover page to this
Purchase Order (the "Services"). The Services allow users to share price,
product, promotional and other information ("Data") on viaLink computers
accessed via the Internet. You understand that the exact nature of the Services
will be dependent on whether You have indicated on the cover page that You are a
Supplier, Retailer, Wholesaler or other user of the Services.
Your Obligations. In order to receive the Services, You must access viaLink's
computers at the following Internet address (or any successor or mirror
addresses): http://www.vialink.com (the "viaLink Web Site"). You are
----------------------
responsible for having sufficient equipment, software and connectivity to the
Internet and the associated costs. You are responsible for all charges or
expenses incurred by anyone using Your account. You agree to take adequate
precautions to protect Yourself against damage to Your operations that might be
caused by defects, interruptions, or malfunctions in or relating to the Services
or loss or corruption of Data. You agree to strictly adhere to all security
measures, terms of use and related procedures set forth on the viaLink Web site,
which may be updated from time to time. You agree to pay viaLink the fees
applicable to the Services and You further agree to pay and hold viaLink
harmless from any applicable sales, use, excise, value added, utility or similar
to other taxes relating to the Services. Fixed monthly charges for Services
initiated or terminated during a calendar month shall be prorated for such
month. Our invoices are payable in U.S. dollars, within thirty (30) days from
the date of the invoice and are subject to interest charges at an annual rate
equal to eighteen (18) percent per annum, or if lower, the maximum lawful
interest rate allowable.
Licenses. You agree that viaLink may use and distribute Your name (with
appropriate trademark, if applicable), street address, phone number, e-mail
address and fax number, as follows: (a) in connection with the Services; (b) on
any reference or customer lists or directories published by or for viaLink; and
(c) in any advertising or other communications promoting the Services. In
addition viaLink may disclose such information for mailing lists for use by
third parties. You may opt out of these uses of this information at any time, by
so informing viaLink in writing. You understand that the Service and this
Purchase Order ("PO") do not give You any rights in the Data provided by other
users of the Service.
Warranties. viaLink warrants (i) that the Services will be in substantial
compliance with the applicable specifications set forth on viaLink's Web site
(the "Specifications") and (ii) that viaLink shall use diligent efforts to
transmit the Data to You and other users of the Services without corrupting such
Data; provided, that You understand that viaLink is dependent on You and other
users inputting accurate Data and thus viaLink cannot warrant the accuracy of
the Data or the rights of others to make the Data available. You understand that
certain Data may not be accurate because users provide such Data from legacy
systems, which among other things, cannot accurately store and process date
data. You warrant that You have the right to provide all Data and other
information that You input and that such other information shall be accurate.
THESE WARRANTIES ARE EXCLUSIVE AND EACH PARTY DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. viaLink does not warrant
that the Services shall meet Your requirements or that the operation of the
Services shall be uninterrupted, without delays or error-free.
Exclusive Remedies. For any breach of the above warranties You agree that Your
exclusive remedy shall be: (i) a reduction to the total charge for the month
during which such failure occurs equal to the percentage of the total month
during which the Service was unavailable or otherwise failed to substantially
comply with the Specifications and (ii) if viaLink fails to restore performance
of the Services within a thirty (30) day period, You may terminate this PO. You
agree that in no event shall viaLink's maximum aggregate liability to You under
this PO under contract, tort or other theory exceed the amount actually paid by
You for the Services, form which viaLink's liability, if any, arose for the
three (3) month period immediately prior to such event which is the cause of
liability. In no event shall either party be liable for any exemplary, special,
indirect, incidental or consequential damages, including, without limiting the
generality of the foregoing, any loss of business, profits, savings, Data or
goodwill, even if the party has been advised of the possibility of such loss,
had reason to know, or in fact knew of the possibility thereof.
Indemnities. viaLink shall, at its cost and expense, indemnify, defend, and
hold You harmless from any claims, demands, actions, suits, proceedings,
damages, costs, reasonable attorney fees or judgments which may be brought
against You based solely upon a claim that viaLink's computers and software on
which the Service operates infringes any patent, copyright, trademark, or other
intellectual property right that exists as of the effective date of this PO and
is enforceable in the United States or Canada. You shall, at Your cost and
expense, indemnify, defend and hold viaLink harmless from and against any
claims, demands, actions, suits, proceedings, damages, costs, reasonable
attorney fees or judgments which may be brought against viaLink or which viaLink
may incur as a result of or arising out of any of the acts or omissions by You
or on Your behalf relating to the Services. In each case the indemnified party
must promptly notify the indemnifying party of any claim under this indemnity
and must give the indemnifying party authority to control the defense of the
claim. The indemnified party shall also give the indemnifying party, at the
indemnified party's expense, such information and assistance for the defense as
the indemnifying party may reasonably request.
<PAGE>
Term and Termination. The initial term of this PO is one (1) year; provided,
that either party may terminate at any time upon thirty days prior written
notice to the other party. Following the initial term, this PO will continue on
a month-to-month basis. viaLink may also immediately terminate this PO and the
Services in the event that You fail to pay the Service fees as they fall due or
if You otherwise commit a material breach of this PO or if You become bankrupt
or insolvent.
General. This PO and the documents referenced in this PO constitute the entire
agreement between us and may not be modified without our mutual written consent.
The PO is binding on and inures to the benefit of the parties' respective
successors and permitted assigns. This PO and performance of the Services shall
be governed by the laws of the State of Oklahoma. Any claim arising out of or
relating to this PO must be commenced within one (1) year from the date such
claim shall have first arose and shall be settled by binding arbitration at a
location designated by viaLink in Oklahoma in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association ("AAA").
Neither party shall be responsible for failure of performance due to any
cause(s) beyond its reasonable control, including without limitation, accidents,
Acts of God, Internet brown outs, or labor disputes. viaLink may sell or assign
its rights and obligations under this PO; provided, however, that the person
acquiring the rights agrees to abide by all the obligations of viaLink under
this PO. If any provision of this PO is found to invalid or unenforceable, it
shall be ineffective to the minimum extent necessary without invalidating the
rest of the PO or affecting the validity or enforceability of the other
provisions of this PO. Any waiver by a party of any breach of any provision of
this PO shall not be construed as a waiver of any continuing or succeeding
breach of such provision. All notices pursuant to this PO shall be made in
writing and shall be personally delivered, mailed by certified mail, postage
prepaid, or sent by overnight courier to the party at its address specified on
the cover page of this PO or as otherwise communicated in writing to the other
party. Your obligations to pay for past Services and the following provisions
shall survive termination of this PO: "Exclusive Remedies," "Indemnities" and
"General." 138725 (rev1.3/99).
- --------------------------------------------------------------------------------
(C) 1999, The viaLink Company. VIALINK and the VIALINK LOGO are trademarks of
The viaLink Company. All rights reserved.
<PAGE>
EXHIBIT D
---------
FORM OF MASTER SERVICES AGREEMENT
---------------------------------
<PAGE>
EXHIBIT E
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
<PAGE>
EXHIBIT 10.2
MASTER SERVICES AGREEMENT
-------------------------
This MASTER SERVICES AGREEMENT (this "Agreement") is entered into as of May
3, 1999 ("Effective Date") by and between Ernst & Young LLP, a Delaware limited
--------------
partnership with offices located at 787 Seventh Avenue, New York, New York 10019
("E&Y"), and The viaLink Company, an Oklahoma corporation, with its principal
---
office located at 13800 Benson Road, Edmond, Oklahoma 73013 ("viaLink").
RECITALS:
--------
WHEREAS, viaLink desires to engage E&Y to perform professional services for
viaLink as may be requested by viaLink and hereafter agreed upon in writing by
the parties pursuant to a work order (the "Services") in accordance with the
--------
terms and conditions of this Agreement; and
WHEREAS, E&Y agrees to provide the Services to viaLink in accordance with
the terms and conditions of this Agreement; and
WHEREAS, the parties concurrently are entering into an Alliance Agreement;
and
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants hereinafter expressed, the parties hereby mutually agree
as follows:
1. TERM; EFFECTIVE DATE
Subject to subsection (b) below, this Agreement shall be effective as of
the Effective Date and, unless sooner terminated in accordance with its terms,
shall continue in effect for an initial term ending May 3, 2001, and shall
thereafter continue in effect for successive one (1) year terms, unless not
later than thirty (30) days prior to the end of the then current term, either
party shall notify the other that this Agreement will expire, in which event
this Agreement shall expire on the last day of the then current term (except
with respect to any open Work Order (as hereinafter defined) that remains open
on such date, as to which this Agreement will terminate on completion thereof).
2. SCOPE
(a) Services. E&Y will provide the Services on a project-by-project basis
--------
as authorized in a mutually agreeable Work Order.
(b) Work Orders. viaLink shall, from time to time, identify any
-----------
Services which viaLink desires to be performed by E&Y. Following consultation
between viaLink and E&Y, and upon E&Y's determination that the value of such
Services
<PAGE>
(as determined in accordance with this Agreement) (as defined in Section 3(a)),
------------
E&Y shall prepare a proposed Work Order (as defined below) which shall include,
to the extent applicable:
(i) Project identification, approach and objectives, the agreed upon
scope of the Services and the location where the Services will be
performed;
(ii) The written deliverables to be developed or prepared specifically
for viaLink under such Work Order (the "Deliverables"), if any;
------------
(iii) Any acceptance tests or standards applicable to the Services or any
Deliverables to be provided under such Work Order;
(iv) The fees for the Services under such Work Order;
(v) The period of performance for the Services under such Work Order;
(vi) Any project assumptions;
(vii) Staffing by the parties and any viaLink resource commitments and
responsibilities in addition to those set forth in this Agreement;
(viii) Any agreement regarding intellectual property rights of the parties
to the extent such agreement would differ from the agreements set forth in
Section 5;
---------
(ix) The identification of any third party intellectual property made
available by each party; and
(x) Any other information or agreements deemed relevant by the parties.
Each proposed work order shall be approved by an officer of viaLink and a
designated partner of E&Y and, when acceptable to each such officer and partner,
shall be executed by both parties (upon such execution, and as may be modified
from time to time in accordance herewith, a "Work Order"). Each Work Order is
----------
incorporated by reference into, and shall be deemed a part of, this Agreement.
E&Y will perform the Services contemplated by each Work Order. Except as may be
expressly provided in this Agreement and the Exhibits hereto, nothing in this
Agreement shall constitute a commitment of either party to enter any particular
Work Order. Except as may otherwise agreed in writing, E&Y shall be compensated
- ----------
as provided in Exhibits A and B in preparing any proposed work order, or any
---------- -
proposed addendum or change order to a Work Order, which is prepared at the
request of viaLink.
2
<PAGE>
(c) Amendments to Work Orders. If at any time a party believes that
-------------------------
services or activities that are in addition to or inconsistent with the Services
under a particular Work Order are desirable or necessary, that party shall
notify the other party and shall submit a proposal to the other party, which
shall describe the terms of the revised Work Order so affected. If such
proposal is approved by the other party, the parties shall execute an addendum
or change order applicable to such Work Order and incorporate such proposal into
such Work Order.
(d) viaLink Delays. E&Y's performance hereunder is contingent upon the
--------------
cooperation of viaLink, including the supply to E&Y of resources and information
as specified pursuant to any Work Order. If any delays in E&Y performance occur
as a result of failure or untimely performance by viaLink and/or vendors
required by any Work Order, the time for E&Y's affected performance under a Work
Order shall be extended to the extent of any such delay and E&Y shall not incur
any liability to viaLink as a result of such delay. If such delays last for
thirty (30) days or more, E&Y shall be entitled to terminate the applicable Work
Order by giving written notice to viaLink, such termination to be effective on
the date indicated in said notice.
3. COMPENSATION
(a) Unless otherwise agreed to by the parties, the compensation for the
Services and for the discharge of all E&Y's obligations under any Work Order
shall be payable by viaLink as set forth herein to E&Y, at the option of
viaLink, subject to the restriction set forth in subparagraph 3(g) below, either
(i) in kind in the form of Common Stock of viaLink (valued as set forth in
subparagraph (d) below) or (ii) in cash. If paid in cash, such fees would be
based upon E&Y's market rates (which rates shall be mutually agreed upon by the
parties).
(b) As of the date hereof, viaLink may request up to $500,000 in Services
from E&Y pursuant to Section 2. From time to time after the date hereof,
---------
viaLink may request Services from E&Y in the following amounts and upon the
following conditions: (i) viaLink may request up to an additional $500,000 in
Services upon E&Y's receipt of written notice from viaLink that it has secured a
binding agreement with at least one (1) Significant Client; (ii) viaLink may
request up to an additional $500,000 in Services upon E&Y's receipt of written
notice from viaLink that it has secured binding agreements with at least five
(5) Significant Clients; and (iii) viaLink may request up to an additional
$500,000 in Services upon E&Y's receipt of written notice from viaLink that it
has secured binding agreements with at least ten (10) Significant Clients. For
purposes of this Section 3(b), the term "Significant Client" shall mean any of
------------ ------------------
the present or future clients of E&Y reasonably considered (upon mutual
agreement of the parties, which agreement shall not unreasonably be withheld) to
be "Tier 1" based on sales, revenues, income, market capitalization and stature
in the relative industry and markets.
(c) No Services shall be required to be performed by E&Y under this
Agreement if (and to the extent that) (i) the value of the Services and related
expenses set forth on the proposed Work Order exceeds applicable limit set forth
in subsection (b) above, or (ii) the aggregate value of all Services requested
by viaLink hereunder exceeds $2,000,000; provided, however, that at
-------- -------
3
<PAGE>
any time during the term of this Agreement, E&Y at its discretion may agree to
provide Services to viaLink in excess of the limits set forth in clause (i) or
(ii) above.
(d) In the event viaLink elects to compensate E&Y in its Common Stock,
viaLink shall immediately be granted a 50% reduction in the amount of the fees
and other charges that would otherwise be payable to E&Y based upon E&Y's
standard rates set forth in Exhibit A and other charges schedule set forth in
---------
Exhibit B (as so reduced and to be converted to equity, "Convertible
- --------- -----------
Compensation"), and shall be convertible into equity of viaLink as follows. On
- ------------
a quarterly basis on the first day of each quarter following the completion of
any Work Order and corresponding acceptance of Deliverables, and in amounts not
less than $200,000 (after giving effect to such discount), viaLink shall issue
to E&Y or an affiliate thereof equity in the form of shares (collectively,
"Shares") of its Common Stock, $0.001 par value per share, in exchange for the
------
outstanding Convertible Compensation at a per share conversion rate equal to
eighty-five percent (85%) of the average closing prices of viaLink's Common
Stock for the five trading days ended on the date prior to the date of the
invoice rendered by E&Y (which date shall be deemed to be the date of any new
invoice in the event of any modification). Each of the Shares issued to E&Y or
any of its affiliates pursuant to this Section 3 shall benefit from the
Registration Rights Agreement. Unless otherwise notified in writing, all Shares
shall be issuable hereunder in the name of Ernst & Young U.S. LLP. viaLink
shall not be required to issue any fractional shares, with all amounts being
rounded to the nearest whole share (with .5 being rounded up).
(e) E&Y will issue monthly statements which shall include a description of
the Services which were performed during the prior month for each Work Order and
the compensation accrued for such period. viaLink shall be afforded the
opportunity to review and contest any such statement prior to the requirement of
making any payment hereunder
(f) viaLink shall compensate E&Y for its reasonable travel, administrative
and out-of-pocket expenses, in accordance with the guidelines attached hereto as
Exhibit B, and in the method described in this Section (3).
- ---------
(g) viaLink shall not have the option to pay E&Y in shares pursuant to the
provisions of subsection 3(d) above if (i) E&Y is then the beneficial owner of
more than 9.99% of the voting power of viaLink's Common Stock on a fully diluted
basis or (ii) the shares receivable for such convertible Compensation would
cause E&Y to become the beneficial owner of more than 9.99% of the voting power
of viaLink's Common Stock on a fully diluted basis on the date of such issuance.
(h) Concurrently with execution of the Agreement, and in any event as a
condition to the requirement of viaLink to deliver to E&Y any shares hereunder,
E&Y shall execute and deliver the investment representation letter attached as
Exhibit D hereto. E&Y covenants and agrees that it will promptly advise viaLink
in the event any of such statements become untrue, and in any event prior to any
election by viaLink to pay E&Y any Convertible Compensation hereunder.
4
<PAGE>
4. CONFIDENTIAL INFORMATION
(a) Definition. "Confidential Information" means all information that is
---------- ------------------------
not generally known to the public and which the disclosing party, or its
suppliers, clients or other persons (to the extent such party owes a duty of
confidence to any such person) has rights, which information is marked
confidential, restricted or proprietary by the party having rights in the same,
or which, under all of the circumstances, ought reasonably to be treated as
confidential and/or proprietary, including this Agreement. Notwithstanding the
foregoing, Confidential Information does not include information that: (i) is,
as of the time of its disclosure, or thereafter becomes, part of the public
domain through a source other than the receiving party; (ii) was known to the
receiving party as of the time of its disclosure; (iii) is independently
developed by the receiving party without use of or reference to the Confidential
Information; or (iv) is subsequently learned from a third party (i.e., not E&Y,
viaLink or any of their respective employees or agents) not subject to an
obligation of confidentiality with respect to the information disclosed.
(b) Restrictions. Each party agrees that with respect to any Confidential
------------
Information that is disclosed by one party to the other party that the party
receiving such Confidential Information shall use such Confidential Information
only in connection with its obligations under this Agreement and, except as
expressly specified in this Agreement, the receiving party shall (i) maintain in
confidence such Confidential Information, using the same degree of care as it
uses to protect its own confidential information of like nature, but not less
than a reasonable degree of care, and (ii) not disclose any such Confidential
Information to any person outside that party's business organization.
(c) Exceptions. Nothing in this Agreement shall limit the ability of a
----------
party in possession of the Confidential Information of the other to disclose
such Confidential Information, and such party shall have no liability for such
disclosure, if such disclosure is (i) required to be made pursuant to law or
regulation, government authority, duly authorized subpoena or court order,
whereupon the receiving party will provide prompt notice to the disclosing party
and give such party an opportunity to respond prior to such disclosure; (ii)
required to be made to a court or other tribunal in connection with the
enforcement of such party's rights under this Agreement; or (iii) is approved by
the prior written consent of the disclosing party.
(d) No Adequate Remedy. The receiving party acknowledges and agrees that
------------------
due to the unique nature of the disclosing party's Confidential Information,
there can be no adequate remedy at law for any breach of its obligations
hereunder, that any such breach may allow the receiving party or third parties
to unfairly compete with the disclosing party resulting in irreparable harm to
the disclosing party, and therefore, that upon any such breach or any threat
thereof, the disclosing party shall be entitled to appropriate equitable relief
in addition to whatever remedies it might have at law and to be indemnified by
the receiving party from any loss or harm, including, without limitation, lost
profits and attorneys' fees, in connection with any breach or enforcement of the
receiving party's obligations hereunder or the unauthorized use or release of
any such Confidential Information. The receiving party will notify the
disclosing
5
<PAGE>
party in writing immediately upon the occurrence of any such unauthorized
release or other breach. Any breach of this Section 4(d) will constitute a
------------
material breach of this Agreement.
(e) Survival of Restrictions. The terms of this Section 4 will survive the
------------------------
expiration or earlier termination of this Agreement and will continue in full
force and effect for a period of five (5) years from the date of such expiration
or termination of this Agreement or as otherwise required by law or regulation.
The provisions of this Section 4 shall not limit any of the rights of the
---------
parties set forth in Section 5.
---------
5. INTELLECTUAL PROPERTY
Unless otherwise specified in a Work Order and subject to any third party's
rights, upon full payment, E&Y hereby assigns to viaLink any and all rights,
title and interest, including, without limitation, copyrights, patent rights,
trade secrets, moral rights and all other proprietary rights, in and to the
Deliverables. The Deliverables shall be deemed to be "works made for hire"
under the federal copyright laws. E&Y agrees to give viaLink reasonable
assistance, at viaLink's expense, to perfect such assignment of such rights,
titles and interest. Notwithstanding the foregoing, the Deliverables may also
include data, modules, components, designs, utilities, subsets, objects, program
listings, tools, models, methodologies, programs, systems, analysis frameworks,
leading or best practices and specifications ("Technical Elements") owned or
------------------
developed by E&Y prior to, or independently from, its engagement hereunder and
E&Y retains all rights thereto; provided that E&Y shall notify viaLink in
writing prior to incorporating any Technical Elements in a Deliverable.
Accordingly, to the extent that any Technical Elements are integrated into any
Deliverables, E&Y hereby grants to viaLink a perpetual, worldwide, fully paid-up
limited license to use and modify such Technical Elements as integrated into
such Deliverables for use in connection with viaLink's data information systems
and service business. Conversely, viaLink hereby grants to E&Y a perpetual,
worldwide, fully paid-up license to use and modify any Technical Elements
developed hereunder in the course of E&Y's consulting services business except
to the extent that such Technical Elements are specifically developed at the
request of viaLink or contain any viaLink technology or Confidential
Information. In addition, E&Y retains the right to use its knowledge,
experience, and know-how, including processes, ideas, concepts and techniques
developed in the course of performing the Services provided that it does not
infringe or misappropriate any proprietary rights of viaLink or breach its
obligations under Section 4 (Confidential Information).
---------
6. STAFFING
The staffing mix of the parties will include senior, industry experienced
personnel, and the majority of these personnel are expected to be focused on
functional/technical tasks. viaLink and E&Y will mutually review all staffing
levels across projects on a quarterly basis (or more frequently if deemed
necessary by either party) to verify that the appropriate staffing mix of E&Y
and viaLink is being achieved and to identify appropriate staffing adjustments
and/or corrective actions, if required. Each of E&Y and viaLink will cooperate
to minimize any adverse impact on the scheduled time and projected cost of the
project that may be caused by its determination to remove its employees from a
project, but each acknowledges that their
6
<PAGE>
respective businesses may require re-allocation of personnel from time to time
and that resignations and personal hardships may require the alteration of
project teams.
7. RELATIONSHIP OF PARTIES
(a) Independent Contractor. Nothing herein contained will be construed to
----------------------
imply a joint venture, partnership or principal-agent relationship between
viaLink and E&Y. E&Y, will provide Services as an independent contractor. E&Y
does not undertake by this Agreement or otherwise to perform any obligation of
viaLink, whether regulatory or contractual, or to assume any responsibility for
viaLink's business or operations.
(b) Concerning Employees of viaLink and E&Y. Personnel supplied by either
---------------------------------------
party will be deemed employees of such party and will not for any purpose be
considered employees or agents of the other party. Except as may otherwise be
provided in this Agreement, each party shall be solely responsible for the
supervision, daily direction and control of its employees and payment of their
salaries (including withholding of appropriate payroll taxes), workers'
compensation, disability and other benefits.
(c) Related Agreements. Concurrently with the execution of this Agreement,
------------------
viaLink and E&Y shall, and as applicable, E&Y shall cause its affiliates to,
enter into the Related Agreements.
8. VIALINK RESPONSIBILITY
viaLink shall: (a) have the overall direction and responsibility for all
Services to be performed hereunder; (b) provide E&Y, in a timely fashion, with
all information in its control reasonably required for the performance of the
Services by E&Y hereunder; (c) provide E&Y with reasonable access to the
premises necessary for the performance of the Services; (d) reasonably cooperate
with E&Y in the providing of Services; (e) provide adequate existing resources
as specified in the applicable Work Order to participate in or facilitate the
performance of the Services; (f) participate in the conduct of training
sessions; (g) be responsible for the development of new manual procedures; (h)
timely participate in meetings and make its personnel readily available for such
meetings; (i) approve or reject Deliverables and reports provided to viaLink by
E&Y within 14 days of receipt (and if not rejected in writing within such
period, such Deliverables will be deemed accepted) and (j) assign personnel with
relevant training and experience to work as part of a project team with E&Y or
in consultation with E&Y's personnel; provided that in each case listed above,
viaLink shall not be required to do anything that interferes with the conduct of
its normal business operations.
9. CONTRACT PERFORMANCE
(a) Project Sponsor. A management official designated by viaLink (the
---------------
"Project Sponsor") shall have overall responsibility for the performance of each
---------------
Work Order by viaLink, for coordinating the performance of the Services with
E&Y, for acting as a day-to-day contact with the Account Executive (as defined
below) and for making available to E&Y the data,
7
<PAGE>
facilities, resources and other support services from viaLink required for E&Y
to be able to perform the Services in a timely and accurate manner.
(b) Account Executive. Charles W. Harrison, or such other person as may be
-----------------
designated by E&Y (the "Account Executive") shall have primary operational
responsibility for E&Y's performance of the Services, including all E&Y
personnel and other technical resources used in performing the Services, and
will serve as day-to-day contact with the Project Sponsor.
(c) Authority To Make Changes. The Project Sponsor and the Account
-------------------------
Executive may propose, accept and implement changes to technical aspects of any
Work Order by signing amendments thereto setting forth such changes, provided
such changes do not affect the fees or reimbursements agreed upon under any Work
Order or materially change the Services. Any material change to the Services
under any Work Order must be agreed to by the parties and set forth in writing
in an addendum or change order to the relevant Work Order executed by the
parties.
(d) Steering Committee. viaLink and E&Y shall each appoint two
------------------
representatives (or such other number, equally divided among viaLink and E&Y, as
they may agree from time-to-time) to a Steering Committee (the "Steering
--------
Committee") which will meet on a regular basis and at such time as its members
- ---------
or the parties deem appropriate, to discuss relevant developments relating to
this Agreement. The Steering Committee shall serve an advisory function only,
except that the parties may agree to confer specific duties and responsibilities
thereon, which shall be set forth on a written charter for the Steering
Committee signed by the parties.
10. WARRANTY AND LIMITATION OF LIABILITY
(a) Warranty. E&Y represents and warrants that (i) it will exercise due
--------
professional care and competence in the performance of the Services, and (ii)
the Services will comply and be in accordance with the terms, requirements and
specifications in the applicable Work Order. viaLink must provide E&Y with
written notice of any deficiencies in the Services within ninety (90) days of
completion of the Services under any Work Order. For any breach of the above
warranty so notified to E&Y, viaLink's exclusive remedy, and E&Y's entire
liability, shall be the re-performance of the Services. If E&Y is unable to re-
perform the Services as warranted, viaLink shall be entitled to recover the fees
and expenses paid to E&Y under the deficient Work Order.
(b) Limited Liability. Except for each party's obligations to indemnify
-----------------
under Sections 11 and 12 or for a breach of Section 4, and only to the fullest
extent permitted by applicable law, the total aggregate liability to viaLink of
E&Y and its subcontractors, collectively, regardless of whether such liability
is based on breach of contract, tort, strict liability, breach of warranties,
failure of essential purpose or otherwise, under this Agreement or any Work
Order shall be limited to the fees and expenses paid by viaLink to E&Y pursuant
to the Work Order under which any such liability arises.
8
<PAGE>
(c) Exclusion of Consequential Damages and Limited Recourse. In no event
-------------------------------------------------------
will E&Y, its subcontractors, or viaLink be liable for consequential,
incidental, indirect or special damages (including loss of profits, data,
business or goodwill), from all causes of action of any kind, including
contract, tort or otherwise, even if advised of the likelihood of such damages
occurring, except in the case of grossly negligence or intentional misconduct.
viaLink's recourse with respect to any liability or obligation of E&Y hereunder
shall be limited to the assets of E&Y, and viaLink shall have no recourse
against, and shall bring no claim against, any partner or employee of E&Y or any
of the assets thereof. E&Y's recourse with respect to any liability or
obligation of viaLink hereunder shall be limited to the assets of viaLink, and
E&Y shall have no recourse against, and shall bring no claim against, any
officer, director or employee or consultant of viaLink or any of the assets
thereof.
(d) Year 2000 Defects.
-----------------
1. Computer systems and other digital devices and components thereof
("Systems") that primarily or incidentally process dates might produce erroneous
-------
results or fail to function due to imprecise or ambiguous entry, storage,
interpretation or reporting of year data ("Year 2000 Defects"), which Year 2000
-----------------
Defects may be exceptionally pervasive, complex and latent in viaLink's Systems.
2. E&Y warrants that any computer software produced exclusively by E&Y
hereunder with software tools selected entirely by E&Y that primarily or
incidentally processes dates is designed to operate dates correctly, including
dates occurring on and after January 1, 2000, provided that any and all dates
that are entered into or otherwise supplied for processing by such software are
unambiguous as to the year, in the correct format, and otherwise accurate.
EXCEPT AS PROVIDED IN THIS PARAGRAPH, E&Y SHALL HAVE NO LIABILITY FOR ANY DEFECT
OR PROBLEM ARISING OUT OF OR RELATED TO DATE PROCESSING IN ANY OF VIALINK'S
SYSTEMS.
3. VIALINK UNDERSTANDS THAT E&Y IS PERFORMING THE SERVICES HEREUNDER IN
RELATION TO SYSTEMS AND DATA THAT HAVE BEEN PRODUCED BY VIALINK, OR SUPPLIED TO
VIALINK BY THIRD PARTIES, AND FOR WHICH E&Y HAS NO RESPONSIBILITY. E&Y WILL
HAVE NO LIABILITY FOR (I) THE YEAR 2000 READINESS OF, OR FOR ANY YEAR 2000
DEFECT OR ANY OTHER DEFICIENCY IN, ANY SYSTEM OR OTHER ITEM OR SERVICE THAT IS
NOT DEVELOPED OR PERFORMED BY E&Y PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, VIALINK'S PRODUCTION AND LEGACY SYSTEMS AND SYSTEMS THAT RECEIVE
DATA FROM SYSTEMS PRODUCED BY E&Y, OR (II) ANY PROCESSING DEFICIENCY IN ANY
SYSTEM THAT IS CAUSED IN WHOLE OR PART BY INPUT DATA (OTHER THAN BY E&Y)
CONTAINING DATES THAT ARE AMBIGUOUS AS TO THE YEAR, NOT IN THE CORRECT FORMAT,
OR ARE OTHERWISE INACCURATE.
(f) NO OTHER WARRANTIES. EXCEPT AS OTHERWISE STATED IN THIS SECTION 10,
-------------------
E&Y MAKES NO WARRANTIES OF ANY KIND OR NATURE,
9
<PAGE>
WHETHER EXPRESS OR IMPLIED INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, OR WARRANTIES OF ANY
PRODUCTS OR SERVICES.
11. INDEMNITY
Each party shall indemnify and hold harmless the other party from and
against any third party claims against, and any resulting liabilities,
penalties, damages, judgments and expenses, including reasonable attorneys'
fees, arising out of bodily injury, death or physical damage to tangible
property to the extent such injury, death or damages arises from such party's
negligence or willful misconduct. Each party's obligation to indemnify and hold
harmless the other party pursuant to this Section 11 is subject to (i) the
----------
indemnified party having given the indemnifying party prompt written notice of
the claim or of the commencement of the related action, as the case may be, (ii)
the indemnifying party having sole control over the defense and settlement of
the claim, and (iii) the indemnified party providing, at the indemnifying
party's expense, all reasonable assistance requested by the indemnifying party
in connection with such claim. viaLink, at its option, may require E&Y to
furnish evidence of insurance reasonably satisfactory to viaLink covering the
liabilities and indemnification provided above but no acceptance of such
evidence by viaLink shall be deemed a waiver or release of such liabilities or
duty to indemnify.
12. INTELLECTUAL PROPERTY INDEMNITY
(a) E&Y shall, at its sole expense, defend, indemnify and hold viaLink
harmless from and against any and all third party suits, proceedings and claims,
and all resulting losses, liabilities, costs and expenses, for misappropriation
of trade secrets, technical information and/or know-how or for infringement of
any copyright, patent or other intellectual property right of any third party,
arising out of viaLink's use of the Deliverables or the performance of Services
by E&Y hereunder, except in the case of viaLink's indemnification pursuant to
Section 12(b); provided, that E&Y is notified promptly in writing of such claim
- -------------
or of the commencement of such suit or proceeding, as the case may be, and is
given sole control and authority, information and reasonable assistance, at
E&Y's expense, for the defense or settlement thereof; and provided further, that
viaLink shall not settle such claim, suit or proceeding without the written
consent of E&Y, which consent shall not be unreasonably withheld. Furthermore,
in the event viaLink should be enjoined in such suit or proceeding from use of
such Deliverables or any other materials, equipment, combination or process, E&Y
may, at its option, either (i) secure termination of the injunction and obtain a
right to complete the Services or Deliverables or (ii) modify the Services or
Deliverables to become noninfringing at E&Y's expense without any loss of
features or functionality required by the applicable Work Order. If neither of
the foregoing options is reasonably feasible, E&Y may terminate the applicable
Work Order this Agreement upon notice to viaLink and refund all fees and
expenses paid by viaLink thereunder.
(b) viaLink shall, at its sole expense, defend, indemnify and hold E&Y
harmless from and against any and all third party suits, proceedings and claims,
and all resulting losses, liabilities, costs and expenses, for misappropriations
of any trade secrets, technical information or know-how or for infringement of
any copyright, patent or other intellectual property right of a
10
<PAGE>
third party arising out of the performance of the Services by reason of E&Y's
use of (i) any viaLink software and/or the third party software (as such term is
defined herein) in accordance with viaLink's instructions under a Work Order,
(ii) a particular combination or process required or directed by viaLink under a
Work Order, if no infringing implementation is possible or (iii) materials,
software or equipment supplied by viaLink; provided that viaLink is notified in
writing of such claim or of the commencement of such suit or proceeding, as the
case may be, and is given sole control and authority, information and reasonable
assistance, at viaLink's expense, for the defense or settlement thereof; and
provided further, that E&Y shall not settle such claim, suit or proceeding
without the prior written consent of the viaLink, which consent shall not be
unreasonably withheld.
(c) E&Y's indemnity shall not apply to any infringement that results from:
(i) viaLink's use of any Deliverable for other than the purposes contemplated by
this Agreement or the applicable Work Order or in connection with other goods or
services not provided under this Agreement or (ii) to the extent such
infringement arises because of a failure of viaLink to have all necessary
ownership, license or other rights to intellectual property made available by
viaLink to E&Y pursuant to this Agreement or the applicable Work Order,
including all necessary rights of access and modification.
(d) This Section 12 specifies the sole and exclusive remedy of each party
----------
for third party claims of misappropriation or infringement of intellectual
property.
13. TERMINATION
(a) Breach. If either party should materially fail to fulfill its
------
obligations under this Agreement or any Work Order (a "breach"), the other
------
party, without liability therefor, may terminate this Agreement, and all
outstanding Work Orders, in whole or in part, by giving the breaching party
written notice of such breach and the intention of such other party to terminate
this Agreement. The breaching party will have thirty (30) days from receipt of
such notification to cure such breach, except that, with respect to those
breaches which cannot reasonably be cured within such thirty (30) day period,
the breaching party shall have such period of time to cure such breach as would
be required by a party, in the exercise of good faith and all commercially
reasonable efforts, in order to cure such breach; provided, however, that such
breaching party shall in fact exercise such good faith and such commercially
reasonable efforts to attempt to cure such breach. The failure to cure such
breach as stated in the preceding sentence will result in the termination of
this Agreement and each Work Order as of the end of such period without
prejudice to any other rights the parties may have.
(b) Bankruptcy. Either party may terminate this Agreement and all Work
----------
Orders hereunder effective immediately upon giving notification thereof in the
event the other party is adjudged insolvent or bankrupt, or upon the institution
of any proceeding against the other party seeking relief, reorganization or
arrangement under any laws relating to insolvency, or for the making of any
assignment for the benefit of creditors, or upon the appointment of a receiver,
liquidator or trustee of any of the other party's property or assets, or upon
liquidation, dissolution or winding up of the other party's business.
11
<PAGE>
(c) No Outstanding Work Orders. Unless the parties agree in writing, after
--------------------------
the expiration of the initial term of this Agreement, this Agreement shall
automatically terminate on the twelve (12) month anniversary following the date
of the final delivery of Deliverables under any Work Order if, through the
period ending on such day, no open Work Order remains to be completed and no new
Work Order is approved.
14. FORCE MAJEURE
Each party hereto shall be excused from default or delay in the performance
of its obligations hereunder if and to the extent that such default or delay is
caused by an act of God, or other cause beyond its reasonable control, including
but not limited to, work stoppages, fires, riots, accident, explosion, flood,
storm, or failures or fluctuations in electrical power, heat light, air
conditioning or telecommunications equipment. In such event, the nonperforming
party shall be excused from performance for as long as such circumstances
prevail and shall as soon as practicable notify the other by telephone (to be
confirmed promptly in writing) of any actual or anticipated delay.
15. FURTHER UNDERSTANDINGS
(a) Non-Solicitation. During the term of this Agreement and for a period
----------------
of twelve (12) months thereafter, personnel of either party who have been
directly and substantially involved in the performance of such party's
obligations under this Agreement shall not knowingly directly or indirectly
solicit for employment any of the other party's personnel who have been directly
and substantively involved in the performance of this Agreement, without the
prior written consent of the other party.
(b) Notices. All notices, reports, requests, acceptances and other
-------
communications required or permitted under this Agreement (except for direct
communications between Project Sponsor and the Account Representative as
contemplated in Section 9) will be in writing and shall be sufficient only if
personally delivered, delivered by a major commercial rapid delivery courier
service, sent via facsimile, or mailed, postage or charges prepaid, by certified
or registered mail, return receipt requested to a party at its address as set
forth below or to such other address that the receiving party may have provided
for purposes of receiving notices as provided in this Section. Notices will be
deemed given when actually received, except that if not received sooner, notice
by mail shall be deemed received five (5) days after deposit in the U.S. mails.
Notices will be deemed given when actually received.
To E&Y: Ernst & Young LLP
104 Decker Court
Irving, Texas 75062
Attn. Richard Doyle
Fax: (214) 665-5555
12
<PAGE>
With a copy to: Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
Attn. Douglas M. Galin, Deputy General Counsel
Fax: (212) 773-6299
With a copy to: Mayer, Brown & Platt
190 South La Salle Street
Chicago, Illinois 60603
Attn. Edward S. Best
Fax: (312) 701-7711
To viaLink: The viaLink Company
13800 Benson Road
Edmond, Oklahoma 73013
Attn. Lewis Kilbourne
Fax: (405) 936-2599
With a copy to: Brobeck Phleger & Harrison
301 Congress Avenue
Austin, Texas 78701
Attn. J. Matthew Lyons
Fax: (512) 477-5813
(c) Non-Assignment. Neither party may assign, transfer or delegate this
--------------
Agreement, or any of its rights or obligations under this Agreement to any third
party, other than a party controlling, controlled by or under control with the
assigning party, without the prior written consent of the other party, which
consent may not be unreasonably withheld. Subject to the above, this Agreement
shall be binding upon and inure to the benefit of the parties of this Agreement,
as well as their respective permitted successors and assigns.
(d) Severability. If any provision of this Agreement, or the application
------------
thereof, shall for any reason and to any extent be determined by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
of this Agreement shall be interpreted so as best to reasonably effect the
intent of the parties. The parties further agree to replace any such invalid or
unenforceable provisions with valid and enforceable provisions designed to
achieve, to the extent possible, the business purposes and intent of such
invalid and unenforceable provisions.
(e) Entire Agreement. This Agreement, all Exhibits hereto and any Work
----------------
Orders hereunder constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all agreements and
understandings between viaLink and E&Y with respect to the subject matter hereof
made prior to the date hereof. There are no representations, warranties,
understandings or agreements relating to the subject matter hereof which are not
fully expressed in this Agreement. No amendment, modification, waiver or
discharge of this
13
<PAGE>
Agreement shall be valid unless in writing and signed by an authorized
representative of the party against whom such amendment, modification, waiver or
discharge is sought to be enforced.
(f) Governing Law. This Agreement shall be governed by the laws of the
-------------
State of New York, without reference to its choice of law rules. In any action
to enforce this Agreement the prevailing party will be entitled to costs and
reasonable attorneys' fees.
(g) No Waiver. No waiver or failure to exercise any option, right or
---------
privilege under the terms of this Agreement by either of the parties hereto on
any occasion or occasions shall be construed to be a waiver of the same on any
other occasion or of any other option, right or privilege.
(h) Headings and References. The headings and captions used in this
-----------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. All references in this Agreement to
Sections or Exhibits shall, unless otherwise provided, refer to Sections hereof
or Exhibits attached hereto, all of which Exhibits are incorporated herein by
this reference.
(i) Survival. In addition to the obligations to pay compensation set forth
--------
in Section 3, the provisions in Section 4, the provisions set forth in Sections
--------- --------- --------
5, 10, 11, 12 and 15, and the provisions of any agreement set forth in an
- - -- -- -- --
Exhibit or Work Order hereto to the extent expressly stated therein, shall
survive the expiration or any termination of this Agreement.
(j) Order of Precedence. In the event of inconsistency between or among
-------------------
the documents listed below, the following order of precedence shall govern:
(i) the Alliance Agreement;
(ii) this Agreement and its Exhibits; and
(iii) Work Orders (except as to terms specifically identified as
superseding the terms of this Agreement, which terms shall control over this
Agreement for that Work Order only).
(k) Mediation/Arbitration. Any controversy or claim arising out of or
---------------------
relating to this Agreement, any Work Order or the Services provided by E&Y
pursuant thereto (including any such matter involving any parent, subsidiary,
affiliate, successor in interest, or agent of viaLink or of E&Y) shall be
submitted first to voluntary mediation, and if mediation is not successful, then
to binding arbitration, in accordance with the dispute resolution procedures set
forth in Attachment One to the Alliance Agreement. Judgment on any arbitration
award may be entered in any court having proper jurisdiction.
(l) Equitable Relief. Notwithstanding the provisions of Section 15(l)
---------------- -------------
hereof, any claim limited solely to injunctive or other equitable relief from
with respect to intellectual property or proprietary rights or a breach of the
other party's obligations under Section 4 of this
---------
14
<PAGE>
Agreement may be submitted as a matter of right by the party seeking such relief
to any court having proper jurisdiction over such claim. In no event, however,
may the arbitrators referred to in Attachment One to the Alliance Agreement
award any nonmonetary or equitable relief of any sort.
(m) Trademarks. This Agreement and any Work Order does not give either
----------
party ownership in or right to use the other party's trade name or trademarks.
(n) Taxes. Any applicable taxes incurred in connection with the Services
-----
or Deliverables (except for taxes imposed on the income of E&Y) will be billed
to, and paid by, viaLink, in addition to fees and expenses.
[Signature page follows]
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Master Services
Agreement as of the day and year first above written.
ERNST & YOUNG LLP THE VIALINK COMPANY
By:_________________________ By:________________________
Printed Printed
Name:_______________________ Name:______________________
Title:______________________ Title:_____________________
<PAGE>
EXHIBIT A
RATE SCHEDULE
E&Y's standard rates are subject to annual increases, which increases shall
occur, if at all, on July 1 of each year. The standard rates to be charged by
E&Y for Services shall be determined as follows:
Partner $ 530.00 - $ 590.00
Principal $ 530.00 - $ 565.00
Senior Manager $ 370.00 - $ 520.00
Manager $ 280.00 - $ 350.00
Senior Consultant $ 190.00 - $ 260.00
Consultant $ 100.00 - $ 170.00
Admin. Support $ 50.00
<PAGE>
EXHIBIT B
TRAVEL, LIVING, AND MISCELLANEOUS
EXPENSE REIMBURSEMENT GUIDELINES
[TO COME]
<PAGE>
EXHIBIT C
INVESTMENT REPRESENTATION STATEMENT
TO: THE VIALINK COMPANY
FROM: ERNST & YOUNG U.S. LLP
In connection with the issuance to the undersigned from time to time of
shares of the Company's Common Stock pursuant to that certain Master Services
Agreement (the "Securities"), the undersigned (the "Purchaser") represents to
the Company as follows:
(a) The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Act").
(b) The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that the Company is under no obligation to register the Securities except as set
forth in the Warrant under which the Securities are being acquired. In addition,
the Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a nonpublic offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of
<PAGE>
securities being sold during any three month period not exceeding the specified
limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the two year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
ERNST & YOUNG U.S. LLP:
By:
Title:
Date:
