Exhibit 10.1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
BEST SOFTWARE INC./KRONOS INCORPORATED
AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 15th day of March,
2002, (the "Effective Date") by and between Kronos Incorporated, a Massachusetts
corporation, having a place of business at 297 Billerica Road, Chelmsford, MA
01824 (hereinafter called "Kronos"), and Best Software, Inc., a Virginia
corporation, having a place of business at 11413 Isaac Newton Square, Reston,
Virginia 22090 (hereinafter called "Best").
WHEREAS, Kronos owns certain time and attendance software products and licenses
such products to its customers;
WHEREAS, Best owns human resources and payroll software products and licenses
such products to its customers;
WHEREAS, Kronos wishes to integrate its time and attendance software with Best's
human resources and payroll software and license the integrated products to its
customers;
WHEREAS, Kronos desires to obtain, and Best wishes to grant, a limited license
to the source code and object code for the Best software on the terms and
conditions set forth herein; and
WHEREAS, Kronos desires to receive, and Best wishes to provide, certain
maintenance and support services and enhancements described herein for its
software and Kronos wishes to pay certain technology delivery fees, royalties
and other sums to Best;
NOW, THEREFORE, in consideration of the mutual covenants of the parties, the
parties hereby agree as follows:
1. Definitions.
1.1 "Best Derivative Works" shall mean Derivative Works prepared by Best, other
than Upgrades, or Kronos Derivative Works.
1.2 "Competitor" shall mean any company, other than Kronos or Best, in the
business of selling Human Resources and/or Payroll record keeping
administration services software products.
1.3 "Delivery Date" shall mean the date on which Best completes its initial
delivery of the Licensed Materials as described in Section 5.1.
1.4 "Derivative Works" shall mean all modifications, improvements, updates and
derivative works of and to the Software, other than Upgrades.
1.5 "Documentation" shall mean all existing printed, typewritten, electronic or
other material as specified on Schedule B.
1.6 "Employees" shall mean, for the purpose of calculating payments under this
Agreement, persons about whom information is processed through the Software
or a Kronos Derivative Work by a Kronos Customer during any portion of a
Year for which any payment is made. By way of example, if a Kronos Customer
uses the Software to calculate payroll for 375 persons during a Year, then
that Kronos Customer has 375 Employees.
1.7 "Hosted Environment" will be the delivery by Kronos of the Royalty Bearing
Software in a computer-hosting environment. The Hosted Environment allows
Kronos to assume the Information Technology responsibility for the customer
to simplify the customer's ongoing usage of the Software. In that
environment, Kronos will offer the customer the Royalty Bearing Software
with the following incremental services:
o Kronos will maintain the servers and server software licenses to house the
Royalty Bearing Software and deliver application access to the customer's
users. Such access will be over the public Internet or customer specific
network connections as required. The servers may be housed at a third party
hosting center at Kronos' discretion.
o Kronos will deliver the Royalty Bearing Software in a configuration where
only one Kronos Customer's data is stored in each database instance so that
a Kronos Customer's employee count is clearly uniquely defined as those
employees in that one database. At no time will multiple Kronos Customers
be combined into a single database instance for access through the Royalty
Bearing Software.
o Kronos, and the third party hosting center provider if required, will
provide normal computer data center management. These would be the same
services that an internal Information Technology would provide in a typical
internal software implementation. This would include such services as
backup and restore, troubleshooting connectivity issues and upgrades of
system software.
o Kronos may apply Upgrades of the Royalty Bearing Software to the customer's
system as housed at the hosting center.
1.8 "Kronos Customer" shall mean all current and future customers to which
Kronos or Kronos Resellers Sublicense the Software or a Kronos Derivative
Work in accordance with this Agreement, now or in the future.
1.9 "Kronos Derivative Works" shall mean Derivative Works prepared by or on
behalf of Kronos.
1.10 "Kronos Reseller" shall mean a third party authorized by Kronos to
Sublicense Kronos products, and which is a party to a written agreement
with Kronos regarding the same.
1.11 "Licensed Materials" shall mean, collectively, the Software and the
Documentation.
1.12 "Net Hosting Fee" shall mean the fees charged by Kronos for use of the
Hosted Environment exclusive of any one-time professional service fees.
1.13 "Royalty Bearing Software" shall mean (i) Software and/or Kronos Derivative
Works that include functionality that implements computer based
administration for Human Resource activities for customers, including in
the aggregate, life-cycle maintenance of employment records from hiring to
firing, benefits plan definition, benefits plan enrollment, and human
resources legislative reporting; and/or (ii) Software and/or Kronos
Derivative Works that include functionality that implements computer based
administration for Payroll activities for customers, including in the
aggregate, payroll deduction definitions, payroll tax (federal, state and
local) tax calculations and related required gross-to-net pay calculations.
Royalty Bearing Software shall not mean other Kronos software that may
contain technology and/or functionality provided to Kronos by Best (such as
Workforce Central) that Kronos licenses to its customers for non Human
Resources and/or non Payroll activities.
1.14 "Quarter" shall mean a quarter of a Year.
1.15 "Software" shall mean the computer program(s) and database structure(s), on
software media in compiled machine-only readable form ("object code") and
in user-readable symbolic form ("source code"), as specified on Schedule A,
required to develop, build, test, install and maintain in accordance with
this Agreement and all subsequently issued Upgrades "Object code" shall
include program and database structures whose form is both machine-only
readable compiled code and user-and-machine readable symbolic code
("interpreted code"). "Raw source code" shall mean source code that is
compiled to machine-only readable code.
1.16 "Sublicense" shall mean a sublicense of the Software or a sublicense or
license of a Kronos Derivative Work, in object code only, as permitted
under Section 3.3 or, as a verb, to sublicense the Software or sublicense
or license a Kronos Derivative Work, in object code only, as permitted
under Section 3.3.
1.17 "Term" shall mean the term of this Agreement, as set forth in Section 15.1.
1.18 "Upgrades" shall mean all updates, corrections, bug fixes, tax updates,
modifications or enhancements to the Software which Best provides generally
to its customers that purchase required upgrades from Best or that have
valid maintenance and support agreements in place with Best. For example,
an Upgrade would be a change to the version number of the Software that may
be either to the left or the right of the decimal number (i.e. 3.04 to 3.05
or 3.05 to 4.00).
1.19 "Year" shall mean (i) any of the year-long periods described in Section
6.2(a) as they relate to royalty payments, or (ii) any of the year-long
periods described in Section 6.7 as they relate to minimum royalty
payments. Year One shall commence on the first day of the month closest to
the date of Kronos' receipt of the first customer purchase order for
Royalty Bearing Software or November 1, 2002, which ever first occurs. Year
Two shall be one year from the first day of the month closest to the date
of Kronos' receipt of the first customer purchase order for Royalty Bearing
Software or November 1, 2002, which ever first occurs, and so on through
Year Ten, it being understood that Year Ten ends on the tenth anniversary
of the Effective Date.
2. Statement of Relationship.
2.1 Independent Contractors. The parties acknowledge that: (a) neither party
shall exercise any control over the activities and operations of the other
party (except for limitations hereinafter contained); (b) both parties
hereto are independent contractors and neither party shall in any way
represent itself as an employee, joint venturer, partner, servant, agent or
general representative of the other party for any purpose whatsoever; and
(c) neither party has any authority to commit the other party to any
contract, term or condition not set forth herein, or otherwise make the
other party liable, in any manner, cause or undertaking whatsoever
including to make any representations, warranties, or guarantees.
3. Grant of License.
3.1 License. Subject to the terms and conditions of this Agreement, Best hereby
grants Kronos a nonexclusive, worldwide, non-transferable, perpetual
(subject to termination as set forth in Section 15.2) license to reproduce,
market, Sublicense and distribute the Software and to create Kronos
Derivative Works, as and to the extent expressly authorized herein.
Notwithstanding the generality of the foregoing, Kronos shall not, under
any circumstances, reproduce, market, display, sublicense or distribute the
raw source code for the Software, including, without limitation, as part of
a Kronos Derivative Work, to or for any third party, including, without
limitation, a Kronos Customer, or otherwise authorize or permit any third
party to use or have access to the source code for the Software, without
Best's prior written consent. For the avoidance of doubt, the foregoing
license does not extend to Best Derivative Works.
3.2 Derivative Works. Under no circumstances may Kronos authorize or permit any
Kronos Customer or other third party, through Sublicense or otherwise, to
create any Derivative Works from the source code of any Licensed Materials.
Kronos may engage a third party to assist Kronos in creating Kronos
Derivative Works for Kronos, provided that such third party executes a
written agreement with Kronos: (a) acknowledging that the Licensed
Materials are Confidential Information, as described in Section 17.1, and
(b) agreeing to the restrictions imposed on Kronos pursuant to this
Agreement. The limitations set forth in this Section 3.2 shall not be
deemed to prevent Kronos Customers or third parties from using any
functionality in the Software, as modified by Kronos, to generate
customized reports or to take advantage of the Kronos defined application
programming interfaces or database interfaces. It is understood that Kronos
shall not, under any circumstances, reproduce, market, display, sublicense
or distribute the raw source code for the Software, including, without
limitation, as part of a Kronos Derivative Work, to or for any third party,
including, without limitation, a Kronos Customer, or otherwise authorize or
permit any third party to use or have access to the raw source code,
without Best's prior written consent.
3.3 Sublicensing of Software. Kronos may sublicense the Software, in object
code form only and subject to the terms and conditions of this Agreement,
to Kronos Customers. Any such Sublicense shall be pursuant to an executed
agreement containing the terms and conditions set forth in Schedule D. To
enable Best to facilitate the verification of royalty payments hereunder,
within thirty (30) days of the end of each Quarter, Kronos shall provide to
Best a list which shall state the number of Employees of each Kronos
Customer.
3.4 Kronos Resellers. Kronos may sublicense to Kronos Resellers the right to
Sublicense the Software, provided that each such Kronos Reseller executes
an agreement containing the terms and conditions set forth in Schedule E.
For the purpose of calculating royalties and other payments hereunder,
Sublicenses granted by Kronos Resellers shall be deemed to have been
granted by Kronos. Kronos shall include Sublicenses entered into by such
Kronos Resellers in its quarterly reports to Best pursuant to Section 6.5
as if they were entered into by Kronos.
3.5 Service Bureau Offerings. The following table outlines the primary
differences between a Payroll Service Bureau and payroll software deployed
in-house or in a Hosted Environment.
Payroll Service Bureau Matrix
Attribute/Function Payroll Service Bureau In-house or Hosted Environment
- ------------------ ---------------------- ------------------------------
Customer licenses No. Customer signs a Yes
Software service agreement
- ------------------ ---------------------- ------------------------------
1 Database per No. Typically multiple Yes
company companies in same DB
- ------------------ ---------------------- ------------------------------
Finishing and Performed by vendor Performed by customer
distribution
- ------------------ ---------------------- ------------------------------
Tax filing Performed by vendor Performed by customer or third
party via file transfer of
customer data
- ------------------ ---------------------- ------------------------------
Direct deposit Performed by vendor Performed by customer or third
party via file transfer of
customer data
- ------------------ ---------------------- ------------------------------
Kronos shall not use the Royalty Bearing Software to build a Payroll Service
Bureau as it is defined in the above Payroll Service Bureau Matrix. In the event
a Kronos Customer is using Kronos Royalty Bearing Software and wishes to
outsource a portion of their payroll process to a Payroll Service Bureau, Kronos
may partner with the Payroll Service Bureau to provide services to the Kronos
customer.
The following table outlines the primary differences between a HR Service Bureau
and HR software deployed in-house or in a Hosted Environment.
HR Service Bureau Matrix
Attribute/Function HR Service Bureau In-house or Hosted Environment
- ------------------ ---------------------- ------------------------------
Customer licenses No. Customer signs a Yes
software service agreement
- ------------------ ---------------------- ------------------------------
1 Database per No. Typically multiple Yes
company companies in same DB
- ------------------ ---------------------- ------------------------------
Collect benefit Performed by vendor Performed by customer or third
changes and party via file transfer of
distribute to customer data
benefit providers
- ------------------ ---------------------- ------------------------------
Process employee Performed by vendor Performed by customer or third
and job candidate party via file transfer of
background checks customer data
- ------------------ ---------------------- ------------------------------
Kronos shall not use the Royalty Bearing Software to build an HR service bureau
as it is defined in the above HR Service Bureau Matrix. In the event a Kronos
Customer is using Kronos Royalty Bearing Software and wishes to outsource a
portion of their HR process to a HR Service Bureau, Kronos may partner with the
HR Service Bureau to provide services to the Kronos customer.
Additional Kronos Service Options
Kronos may purchase an existing Payroll or HR service bureau and then offer the
Payroll or HR Service Bureau service directly to Kronos Customers so long as
Kronos does not utilize or otherwise incorporate the Royalty Bearing Software to
deliver that service.
Kronos may offer additional business process outsource services other than the
HR or Payroll Service Bureaus. For example, a Kronos Customer who is using
Royalty Bearing Software requests a compensation management service or a stock
option administration service, Kronos may, in its sole discretion, elect to
offer such services.
3.6 Escrow by Kronos; Transfers of Sublicenses. Kronos may, if so requested by
a Kronos Customer, place a copy of the Software into escrow, provided that:
(a) such Software may only be placed into escrow (i) if Kronos also places
its own proprietary software into escrow and (ii) on the same terms and
conditions as Kronos places its own proprietary software into escrow; and
(b) in the event that either (i) for any reason, within five (5) years from
the Effective Date, the Software is reasonably anticipated to be released from
escrow or, (ii) for any reason, other than that Kronos ceases to do business,
beyond five (5) years from the Effective Date, then Kronos shall (i) notify Best
in writing no less than thirty (30) business days prior to such release, and
(ii) at Best's request, assign to Best, free of charge, all of its rights,
duties and obligations under the applicable agreement with the applicable Kronos
Customer so that Best may prevent the release of the Software from escrow.
3.7 License to End-User Version of the Software. Best hereby grants Kronos a
license to use the Software, in object code form, for its own internal use,
subject to the terms and conditions of the Abra Enterprise Software Product
End-User License Agreement attached hereto as Schedule M.
4. Title and Ownership; Use of Proprietary Notices.
4.1 Title and Ownership of Licensed Materials and Best Derivative Works. Title
to and sole ownership of the Licensed Materials and of any Best Derivative
Works, and all patent, trademark, copyright, trade secret and other rights
of whatever kind or nature therein now or hereafter existing, shall at all
times remain with Best and/or Best's lawful successors and assigns. Any and
all rights in the Licensed Materials and in any Best Derivative Works not
expressly granted to Kronos are hereby reserved to Best.
4.2 Title and Ownership of Kronos Derivative Works; License to Kronos
Derivative Works. In the event that Kronos develops or causes to be
developed any Kronos Derivative Works, subject to Best's underlying
proprietary rights, including, but not limited to, all patent, trademark,
copyright, trade secret and other rights of whatever kind or nature therein
now or hereafter existing in the Licensed Materials, title to and sole
ownership of any new elements in such Kronos Derivative Works that have
been added to the Software, including all patent, trademark, copyright,
trade secret and other rights of whatever kind of nature therein now or
hereafter existing, shall at all times remain with Kronos.
4.3 Proprietary Notices. Kronos shall ensure that (a) all copies of the
Licensed Materials developed and/or provided by Best shall reproduce and
include all copyright and other intellectual property rights notices
embedded in such Licensed Materials in substantially the same locations as
in the original Licensed Materials; and (b) all Kronos Derivative Works
shall reproduce and include the intellectual property rights notices set
forth in Schedule F in locations as directed by Best.
4.4 No Use of Trademarks. Notwithstanding the provisions of Section 4.2,
neither party may use any trade name, trademark or service mark of the
other party without the prior written consent of the other party. Kronos
may request a single consent from Best for multiple forms of uses of Best
trade names, trademarks or service marks within the United States (but not
internationally) and, if Best grants such consent in writing, Kronos may
continue such use without seeking further consent from Best, provided that
such use remains consistent with the forms of use initially approved by
Best. Kronos may not use any Best trade names, trademarks or service marks
outside the United States without specific prior written consent from Best,
which consent shall not be unreasonably withheld or delayed.
5. Technology Delivery.
5.1 Technology Delivery Plan. The parties have developed a plan for delivering
from Best to Kronos certain technology and information associated with the
Software (such plan, the "Technology Delivery Plan"). The Technology
Delivery Plan is attached hereto as Schedule G.
5.2 Milestones. Best shall deliver technology to Kronos according to the
milestones set forth below. Kronos shall use its best efforts to assist
Best as necessary to ensure that each of the following milestones are
achieved within any timeline set forth for such milestone.
(a) Milestone I: The parties agree that the following sub-milestones will be
completed by [**]:
(i) Best shall provide Kronos with: (1) one master copy of the Software (as
such Software exists as of the time of delivery) in source code and object code
formats, and (2) one electronic and one hard copy of the Documentation related
thereto (as such Documentation exists as of the time of delivery);
(ii) Best shall successfully complete the Regression Test of the build of
the original source code, as further described in the Technology Delivery Plan;
(iii) Best shall make available assistance to Kronos to create and test the
Kronos Initial Release as further described in the Technology Delivery Plan and
(iv) Best shall make available initial training for Kronos' engineers on
the design and implementation of the Software, as further described in the
Technology Delivery Plan.
6. Payments.
6.1 One-Time Payments. As payment for the technology delivery to Kronos under
this Agreement, Kronos agrees to pay Best a non-refundable fee of [**]
dollars ($[**]), as follows:
(a) [**] dollars ($[**]) upon the execution of this Agreement;
(b) [**] dollars ($[**]), paid as follows: (A) [**] Dollars ($[**]) upon
the occurrence of the event described in 5. 2(a)(ii) herein; (B) [**] Dollars
($[**]) upon the occurrence of the event described in 5.2(a)(iii) herein; and
(C) [**] Dollars ($[**]) upon the occurrence of the event described in
5.2(a)(iv) herein, more specifically, upon the earlier of: (i) [**]; or (ii) the
date of Kronos' consumption of [**] hours of Engineering and QA training and
[**] hours of CLAD training; or (iii) the receipt by Best of written acceptance
from Kronos that the actual amount of training hours consumed by Kronos, if less
than the total training hours described in (ii) above, allows Best to meet this
initial-training sub-Milestone; and
(c) [**] dollars ($[**]) on [**] provided Best is in compliance with all of
the terms and conditions of this Agreement.
6.2 Royalties . As payment for the license provided by Best hereunder, Kronos
shall pay Best the one-time royalties set forth below upon the Sublicense
of the Royalty Bearing Software by a Kronos Customer.
(a) Royalties for [**] or fewer Employees:
(i) For Kronos Customers that sublicense the Royalty Bearing Software and
that have [**] or fewer Employees, the royalties are as follows:
(1) Year 1: $[**] per Employee;
(2) Year 2: $[**] per Employee;
(3) Year 3: $[**] per Employee;
(4) Years 4-10: $[**] per Employee; and
(b) Royalties for more than [**] Employees:
(i) For Kronos Customers that sublicense the Royalty Bearing Software and
that have more than [**] Employees, the royalties are as follows:
(1) Years 1-3: $ [**] per Employee;
(2) Years 4-10: $ [**] per Employee; and
(c) Kronos shall pay the royalties described in subsections (a)(i) and
(b)(i) until Kronos has paid Best a total of $[**] in royalties and/or
maintenance and support fees as described in Section 9.1,in addition to, and
independent and exclusive of, the $[**] technology delivery fee described in
Section 6.1. Thereafter, for the Term of this Agreement Kronos shall pay Best
only the royalties described in subsection (a)(i) for Kronos Customers that
sublicense the Royalty Bearing Software and that have [**] or fewer Employees.
(d) Kronos shall pay the royalties and maintenance and support fees
described in subsection (c) until Kronos has paid Best a total of $[**] in
royalties and/or maintenance and support fees as described in Section 9.1, in
addition to, and independent and exclusive of, the $[**] technology delivery fee
described in Section 6.1. Thereafter, and for the Term of this Agreement, Kronos
shall pay Best a one-time royalty of $[**] per Employee for Kronos Customers
that Sublicense the Royalty Bearing Software and that have [**] or fewer
Employees.
(e) The royalty obligations set forth herein shall continue until the [**]
anniversary of the Effective Date, after which time Kronos shall discontinue
paying Best all royalties. After the [**] anniversary of the Effective Date,
Kronos shall have a royalty free, nonexclusive, worldwide, nontransferable and
perpetual license to reproduce, market, Sublicense and distribute the software
and to create Kronos Derivative Works of the Software. After the [**]
anniversary of the Effective Date, Kronos shall also have the unlimited,
unrestricted right to use Software and/or Derivative Works to provide Hosted
and/or Service Bureau services.
6.3 Deployments of Fewer Than [**] Employees. In the event that a Kronos
Customer sublicenses Royalty Bearing Software and has more than [**]
Employees, but chooses to deploy or utilize the Royalty Bearing Software in
smaller increments at that Kronos Customer's various locations, the royalty
shall be paid using the more than [**] Employee rate as described in
Section 6.2(b)-(d).
6.4 Licenses by Tier. If Kronos Sublicenses the Royalty Bearing Software by
tier then, for Kronos Customers with more than [**] actual Employees,
Kronos shall pay Best on the next highest tier level to a Kronos Customer's
actual Employee count. For example, if a Kronos Customer has [**] Employees
and the nearest tier that Kronos Sublicenses is [**] Employees, Kronos
shall pay Best based on the [**] Employee count and the Kronos Customer may
utilize the Software for up to [**] Employees.
6.5 Additional Sublicense Sales. In the event a Kronos Customer initially
purchases Sublicenses for fewer than [**] Employees and then the same
Kronos Customer subsequently purchases additional Sublicenses for
additional Employees which raises the total Employee count for that
Customer to greater than [**] Employees, then Kronos shall pay Best royalty
payments at the "[**] or Fewer Employee" rates for [**] employees and at
the "Greater Than [**] Employee" rates for the number of employees over
[**] and shall so itemize any such payments in the quarterly Royalty
Report. For example
Employee Count Pay Rate
------------------------- --------------------------
[**] "[**] or fewer" rate for
[**] employees
------------------------- --------------------------
Additional [**] "[**] or fewer" rate for
[**] employees
and
"Greater than [**]" rate
for [**] employees
------------------------- --------------------------
6.6 Royalty Credits. In the event (i) Kronos accepts the cancellation of any
Sublicense and return of the Software from any Kronos customer for which
Kronos has paid royalties, or (ii) writes off a bad debt for any nonpayment
of a Sublicense for which Kronos has paid royalties within six (6) months
from the date of such Sublicense then Kronos may apply any such amounts
paid or written off as a credit against future royalties owed to Best and
Kronos shall reflect such specific information in the quarterly Royalty
Report. In the event that Kronos discovers that it made an overpayment
during a previous Quarter, it may adjust such overpayment in a subsequent
Quarter, adequately documenting such so that an auditor can understand the
reason for such credit. In the event that Kronos does not receive payment
from a customer and has to write-off the receivable Kronos gets credit for
any associated royalties paid against future royalties owed.
6.7 Minimum Royalty Payments. Kronos shall pay Best minimum royalties of $[**]
over a [**]-Year period beginning on the commencement of Year One. The
first annual minimum royalty payment shall be due on the last day of Year
One. Subsequent payments shall be due on the last day of each Year
thereafter, during the remainder of the [**] year period. If royalties paid
to Best in any Year set forth below are less than the respective amount
specified below, Kronos shall pay Best the difference between the actual
royalties paid to Best in the applicable Year and the minimum payments
specified below:
[**]
6.8 Hosted Environments. Kronos may offer Royalty Bearing Software directly to
Kronos Customers in a Hosted Environment. Kronos may also permit a Kronos
Reseller to offer Royalty Bearing Software to its customers in a Hosted
Environment so long as the Hosted Environment is provided to the Kronos
Reseller's customer by Kronos.
After a Year where [**]% or more of the total employees licensed in such Year
are licensed Royalty Bearing Software in a Hosted Environment, Best at its
discretion, may elect to forego the one-time license fees defined in Section 6.2
and receive from Kronos the following fees on any new Hosted Environment Royalty
Bearing Software sales: (i) For Kronos Customers purchasing Hosted Environment
Royalty Bearing Software with [**] or fewer employees, Kronos shall pay Best a
royalty of [**]% of the total Net Hosting Fee it receives from Kronos Customer's
on a monthly basis, exclusive of any one time professional service fees; and
(ii) For Kronos Customers purchasing Hosted Environment Royalty Bearing Software
with greater than [**] employees, Kronos shall pay Best a royalty of [**]% of
the total Net Hosting Fee it receives from Kronos Customer's on a monthly basis,
exclusive of any one time professional service fees.
In those cases when a Kronos Customer deploys both Royalty Bearing Software and
Kronos products in a Hosted Environment, the following formula will be used to
determine the percentage of the Net Hosting Fee due Best on a monthly basis:
a. Kronos will give Best notice of its established competitive retail hosting
fee for (i) Royalty Bearing Software and (ii) other Kronos products that
will be sold in a Hosted Environment.
b. The retail hosting fee for the Royalty Bearing Software will be divided by
the sum of the all retail hosting fees on the customer order.
c. The total of all Net Hosting Fees on the order, will be multiplied by the
percentage calculated in section (b) above.
d. For Kronos Customers with [**] or fewer employees, Kronos shall pay Best a
royalty of [**]% of the dollar value calculated in Section (c) above that
Kronos receives from Kronos Customers on a monthly basis, exclusive of any
one time professional service fees; and for Kronos Customers purchasing
Royalty Bearing Software with greater than [**] employees, Kronos shall pay
Best a royalty of [**]% of the dollar value calculated in Section (c) above
that Kronos receives from Kronos Customers on a monthly basis, exclusive of
any one time professional service fees.
EXAMPLE:
a. The total Retail Hosting Fee for the products sold is $[**] per employee
per month broken down as follows:
Royalty Bearing Software $[**]
Kronos time and attendance software $[**]
Kronos scheduling software $[**]
b. $[**] divided by $[**] equals [**] or [**]%.
c. The total Net Hosting Fee for the products sold is $[**] per employee.
$[**] x [**] equals $[**] per employee.
d. For a customer with [**] employees or less, the royalty owed Best is $[**]
x [**], or $[**] per employee. For a customer with greater than [**]
employees, the royalty owed Best is $[**] x [**] or $[**] per employee.
6.9 Payment Procedures and Reports. All payments due to Best under this
Agreement, other than the minimum royalty payments described in Section
6.7, shall be made by Kronos to Best within thirty (30) days from the end
of each Quarter. Kronos shall make any required minimum royalty payments
within thirty (30) days from the end of the Quarter in which the applicable
Year ends. With respect to each Kronos Customer, Kronos shall pay the
above-referenced royalties in full at the end of the Quarter in which the
Kronos Customer Sublicensed the Royalty Bearing Software. Simultaneously
with such payment, Kronos shall provide Best with a written report,
substantially in the form of Schedule H, which shall show the quantity of
Royalty Bearing Software Sublicensed during the previous Quarter broken
down by: (a) royalties due to Best for Kronos Customers that Sublicensed
Royalty Bearing Software for [**] or less Employees, and (b) royalties for
Kronos Customers that Sublicensed Royalty Bearing Software for greater than
[**] Employees. Such reports shall include such information as is
reasonably necessary or desirable for Best to verify the accuracy of the
information contained therein and the amount of the payment to Best
accompanying such report. The one-time payments totaling [**] dollars
($[**]) described in Section 6.1 and all required minimum royalty payments
described in Section 6.7 made by Kronos under this Agreement shall be made
by means of a wire transfer of immediately available funds to an account
specified in writing by Best such that such funds are deposited in such
account on or before the date due. All other payments may be made by means
of check disbursement drawn from funds in a US commercial bank.
6.10 Late Payments. Time of payment is of the essence under this Agreement. All
amounts owed hereunder that are not paid when due and payable will bear
interest from the date such amounts are due and payable at the lesser of
(a) 1.5 percent (1.5%) per month or (b) the maximum allowable rate of
interest permitted by law for transactions between sophisticated commercial
parties.
6.11 Taxes. As between Best and Kronos, Kronos shall, in addition to the
payments required hereunder, be responsible for all sales, use, value
added, transfer or other taxes, duties or other governmental charges,
whether national, state or local, however designated, which are levied or
imposed by reason of the transaction contemplated hereby; excluding,
however, income taxes on profits which may be levied against Best. Kronos
shall reimburse Best for the amount of any such taxes paid or accrued by
Best as a result of this transaction.
6.12 Payment Disputes.
(a) Any good faith dispute over the proper amount of a payment of the royalties
described in Section 6.2 shall be resolved in accordance with the
provisions of this Agreement. During the pendency of any such dispute, in
order to avoid a Default under this Agreement pursuant to Section 16.2, the
party making such payment may deposit the amount of such payment that is in
dispute with mutually agreed escrow agent. Any escrow fees shall be paid by
the party depositing the disputed amount.
(b) The escrow agent shall be instructed to release the disputed payment as
follows:
(i) If either party believes that the dispute over the payment has
been resolved, such party may provide to the escrow agent written notice of
such resolution and a request for the release of the disputed payment to
the proper parties in accordance with such resolution. Upon receipt of such
notice, the escrow agent shall provide a copy of the notice to the other
party by overnight mail.
(ii) From the date the escrow agent mails the copy of the forgoing
notice to the other party, such party shall have ten (10) business days to
deliver to the escrow agent a written representation by such party that the
dispute over the payment amount has not been resolved. Upon receipt of such
representation, the escrow agent shall send a copy to the first party by
overnight mail.
(iii) If the escrow agent receives a representation in accordance with
subsection (ii), the escrow agent shall continue to hold the disputed
payment amount pending (1) joint instructions from the parties to release
the disputed payment, (2) instructions from an arbitration panel convened
pursuant to Section 17.1, or (3) order of a court.
(iv) If the escrow agent does not receive a representation in
accordance with subsection (ii), the escrow agent shall release the
disputed payment amount to the first party per the first party's
instructions.
7. Audit Procedures.
7.1 Audit. Kronos agrees to keep and maintain, for a period of two (2) years
after the end of the Year to which they pertain, complete and accurate
records of the Royalty Bearing Software Sublicensed by Kronos, including
the names of Kronos Customers and the numbers of Employees of such Kronos
Customers, in order to calculate and confirm the royalties required to be
paid by Kronos. Upon ten (10) business days' prior notice, Best shall have
the right, exercisable not more than once every twelve (12) months, to
appoint an independent accounting firm, reasonably acceptable to Kronos, at
Best's expense (except as otherwise provided herein), to examine such
books, records and accounts during Kronos' normal business hours to verify
the royalties due from Kronos to Best under Section 6 above. Although Best
may propose any accountant for Kronos' acceptance pursuant to this Section,
the accounting firms set forth on Schedule L shall be deemed acceptable to
Kronos throughout the Term. In the event such audit discloses an
underpayment or overpayment of royalties by Kronos hereunder, then (a) the
appropriate party will promptly remit the amounts due to the other party;
(b) if such audit discloses an underpayment by an amount greater than five
per cent (5%) of the proper amount owed for a Quarter, then Kronos shall
reimburse Best for the costs associated with such audit; and (c) if such
audit discloses an overpayment of any amount then Best shall pay the cost
the audit and shall credit Kronos the amount of the overpayment.
8. Warranties and Representations.
8.1 Best Warranties. Best warrants to Kronos that the media on which Best
provides the Software will be free from defects in materials and
workmanship and that the Software as delivered on the delivery date
performs substantially in accordance with the accompanying Documentation.
Additionally, Best represents and warrants that:
(a) it has sufficient rights in the Software to grant to Kronos the license
granted under this Agreement;
(b) to its knowledge, there are no pending claims based on infringement of a
patent, copyright or other proprietary right or improper use or
misappropriation of a trade secret asserted against Best with respect to
the Software that would restrict Kronos' rights to use the Software as
permitted under this Agreement; and
(c) it has the full corporate right, power and authority to enter into this
Agreement and to perform the acts required of it hereunder.
8.2 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8.1, THE LICENSED
MATERIALS AND MEDIA ARE PROVIDED ON AN "AS IS" BASIS. BEST SHALL NOT BE
DEEMED TO HAVE MADE, AND BEST HEREBY EXPRESSLY DISCLAIMS, ANY GUARANTEE,
WARRANTY (WHETHER ARISING UNDER STATUTE OR OTHERWISE IN LAW OR FROM A
COURSE OF DEALING OR USAGE OF TRADE) OR REPRESENTATION OF ANY KIND, WHETHER
EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING, WITHOUT LIMITATION, AS TO
THE: (a) CONDITION; (b) DESIGN; (c) OPERATION; (d) PERFORMANCE; (e)
RELIABILITY OF THE RESULTS GENERATED OR OUTPUT; (f) MERCHANTABILITY; AND(g)
FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USE, OF THE LICENSED
MATERIALS, MEDIA, DERIVATIVE WORKS OR OTHERWISE. BEST DOES NOT WARRANT THAT
USE BY KRONOS, ANY KRONOS CUSTOMER, ANY KRONOS RESELLER OR ANY OTHER THIRD
PARTY OF THE LICENSED MATERIALS OR MEDIA PROVIDED UNDER THIS AGREEMENT WILL
BE UNINTERRUPTED OR ERROR-FREE. THIS DISCLAIMER OF WARRANTY CONSTITUTES AN
ESSENTIAL PART OF THIS AGREEMENT.
8.3 Kronos Warranties. Kronos represents and warrants that it has the full
corporate right, power and authority to enter into this Agreement and to
execute, deliver and perform its duties and obligations under this
Agreement. Kronos represents and warrants that all use of the Licensed
Materials shall be performed by technically competent and qualified
personnel and shall be performed in accordance with generally accepted
professional standards associated with the industry, profession and/or
discipline involved.
8.4 Mutual Representations and Warranties. Each party to this Agreement
represents and warrants to the other party that: (a) its execution of this
Agreement and performance of its obligations hereunder do not and will not
violate any agreement to which it is a party or by which it is bound; and
(b) when executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of such party, enforceable against it in
accordance with its terms.
9. Best's Support Obligations.
9.1 Best's Support Obligations. Best shall make available to Kronos the
maintenance and support services set forth in the renewable maintenance and
support services agreement in Schedule I, which Kronos may utilize at its
sole discretion for twelve (12) months from the Effective Support Date as
identified in Schedule I. Thereafter, at Kronos' option, Kronos may elect
to purchase support and maintenance services from Best for an annual fee of
[**] dollars ($[**]) and by executing a copy of the Support and Maintenance
Agreement attached hereto as part of Schedule I. In the event that Best
discontinues the availability of annual contractual support and maintenance
services in the future, Best shall give Kronos at least [**] months advance
notice. Notwithstanding the above, Best shall not discontinue the
availability of annual contractual maintenance and support service before
April 1, 2004.
9.2 Support for Kronos Derivative Works. Notwithstanding anything in this
Agreement to the contrary, Best shall have no obligation to provide any
support or maintenance services for any Kronos Derivative Works.
9.3 Telephone Support. During the first nine months from the Effective Date of
this Agreement, Best shall provide the following telephone support or an
equivalent thereof to Kronos in the manner in which it is currently
provided to Best's customers. Best shall provide such telephone support in
the manner in which the parties mutually agree that such support is
relevant to the Software.
Best shall provide up to 1200 hours of backup beyond Level 1support as
required by Kronos, Monday through Friday, except Best holidays, between
the hours of 8:00 a.m. and 8:00 p.m., Eastern Standard Time. Per mutual
agreement, both parties will continue to work off-hours and provide support
as needed during critical situations.
Level Level Definition
- --------------------------------- --------------------------------------------
Level I Support (Generalist) Responsible for interfacing with
Kronos Customer and triaging problems.
This level responsible for resolving basic
operation and configuration inquiries.
Level I engineers are generalists.
- --------------------------------- --------------------------------------------
Level II Support (Specialist) This level responsible for resolving issues,
which cannot be resolved by Level I.
Level II engineers are specialists.
- --------------------------------- --------------------------------------------
Level III Support (Kronos Level III responsible for resolving issues,
Engineering Org.) which can be resolved by Level II. If Level
III cannot resolve the problem they are
responsible for data gathering and fault
replication prior to escalation to Kronos
engineering organization. Level III will
also track and age all escalations to
engineering and manage Kronos Customers
during this period and will use best efforts
to resolve internally before contacting Best
engineering organization.
- --------------------------------- --------------------------------------------
9.4 Mentoring Support. Best shall provide the following mentoring support upon
request by Kronos:
Support:
o Kronos may send six (6) support personnel (two (2) at a time)during the
first nine (9) months from the Effective Date to Best support center for
in-house mentoring up to 27 weeks. While on-site Kronos support personnel
will, under the tutelage of Best support engineers, answer in-bound support
calls from Best customers.
o Kronos agrees to fund all T&E, using Kronos travel policy, for Best support
engineers in the event they are on-site at the Kronos Global Support
facility.
Sales and Marketing
The following information to be provided to Kronos within sixty (60) days of the
Effective Date.
o Overview of the HR/Payroll market.
o Overview of the marketing and sales processes that Best Software used.
o Information on competitors: positioning, pricing, customer base, strengths
and weaknesses, value proposition of Best product versus the competitors,
etc.
o Guidance on messaging
o Information on in-house solutions versus outsourced solutions.
o Guidance on where to prospect for personnel, lists of head hunters, and
hints on interviewing for Application Engineers.
o Guidance on messaging: outsourcing versus in house; Do you usually lead
with HR, with Payroll, or with a message about an integrated solution?
o All of the above to be delivered in presentations or calls which can be
recorded for re-use and on-going training.
o Conduct remote demo (2 hour session) for Chelmsford-based Kronos employees.
Due to the large number of employees that will want to see this demo,
conduct 2-3 sessions within thirty (30) days of Effective Date.
9.5 Training. Scheduling of the training sessions will be determined by mutual
agreement of Kronos and Best at a later date. Best shall provide technical,
functional and sales training.
Technical & Implementation Training (3 sessions allowing up to 15 participants
per session. Each standard session will provide [**] hours of course time.)
Product Overview
o Product Features
o System Architecture
o Terminology
o Navigation
o Point-In-Time
o Employee & Manager Roles
HR/Payroll Setup
o Organizations
o Code Tables & Code Grouping
o Positions
o Job Codes
o Pay Grades
o Benefits
o Attendance
o Payroll Setup
o Compensations
o Deductions
o Taxes
o G/L Setup
o Security
o Other
Basic Employee Information
o Key Employee Information & Actions
HR/Payroll Processing
o HR Actions
o Payroll Actions
o Reports
o Payroll Processing
o Time Entry
o Calculating Trial Payroll
o Payroll Balancing
o Finalizing Payroll
o Printing Checks & Advices
o Creating ACH Files
o Exporting to G/L
o Quarterly Processing
o Year-End Processing
Employee & Manager Roles
o Overview
o Parameter File Structure
o Managing Roles
o Roles Navigation
o Roles Processes
Open Enrollment & Life Events
o Plan Setup
o Implementation
o Verification
Implementation Methodology
o HR Only
o HR & Payroll
o Payroll Only
Launch Tools
o Overview
o Importing & Exporting
o Creating Organizations and Positions
o Data Validation Processes
o Accumulator Conversions
Link Builder
o Setup & Customization
o Implementation
Functional/End User Training (3 sessions allowing up to 15 participants per
session. Each standard session will provide [**] hours of course time.)
Product Overview
o Product Features
o System Architecture
o Terminology
o Navigation
o Point-In-Time
o Employee & Manager Roles
HR/Payroll Setup
o Organizations
o Code Tables & Code Grouping
o Positions
o Job Codes
o Pay Grades
o Benefits
o Attendance
o Payroll Setup
o Compensations
o Deductions
o Taxes
o G/L Setup
o Security
o Other
Basic Employee Information
o Key Employee Information & Actions
HR/Payroll Processing
o HR Actions
o Payroll Actions
o Reports
o Payroll Processing
o Time Entry
o Calculating Trial Payroll
o Payroll Balancing
o Finalizing Payroll
o Printing Checks & Advices
o Creating ACH Files
o Exporting to G/L
o Quarterly Processing
o Year-End Processing
Employee & Manager Roles
o Overview
o Parameter File Structure
o Managing Roles
o Roles Navigation
o Roles Processes
Open Enrollment & Life Events
o Plan Setup
o Implementation
o Verification
Sales (3 sessions allowing up to 15 participants per session. Each standard
session will provide [**] hours of course time.)
o Abra Enterprise Sales Cycle
o Review of sales tools
o Product and technology overview
o How to demo - Roles
o How to demo -HR & Payroll admin
o Needs analysis
o Product positioning
o Competitive landscape
o Sample needs analysis exercise
o Needs analysis role playing
o Positioning Professional Services
Kronos agrees to fund all T&E for Best trainers while on-site at a Kronos
teaching facility.
9.6 Tax updates support. Best will provide up to [**] hours of engineering
or training necessary to support the successful integration and delivery
of the 2002 year end tax updates. This is anticipated by the parties to be
completed by February, 2003.
10. Transition Teams.
10.1 Appointment of Transition Team. The parties shall appoint qualified
personnel from their management, engineering and sales staffs to a
transition team.
10.2 Duties of Transition Team. The duties of the transition team appointed
pursuant to Section 11.1 are set forth on Schedule K.
11. Implementation Assistance.
11.1 Implementations:
o Best shall designate implementation personnel with qualifications and
responsibilities comparable to those described herein for the Kronos
Project Manager, Application Consultant, Technology Consultant and Trainer.
These individuals will be used to educate their Kronos counterparts on all
aspects of implementing a Best solution. This education shall include the
use of documentation, sizing tools, implementation methodologies,
application installation, application configuration and checklists.
Level Kronos Level Definition
- ------------------------ -----------------------------------------------------
Project Manager The Project manager is responsible for managing all
assigned Kronos implementations including complex
projects involving multiple locations and or
departments in hardware/software, multi-vendor,
multi protocol environments. This position is the
focal point for all communications with the customer
for Kronos, on their assigned accounts, through the
implementation process and will efficiently project
manage the customer and internal Kronos resources to
meet the established implementation milestones and
targeted completion dates.
- ------------------------ -----------------------------------------------------
Application Consultant The Application Consultant provides the process
knowledge and related Kronos product knowledge to
successfully implement a wide array of Kronos core
applications and ancillary modules in the customer
environment. The AC works in conjunction with the
Project manager. The AC acts as an application
architect on complex line of business applications
and leads the trouble shooting effort on our most
complex system problems.
- ------------------------ -----------------------------------------------------
Technology Consultant The Technology Consultant provides in-depth
technical pre and post-sales support to the Abra
Enterprise and Regional Service organizations on an
Area-wide basis. The TC is knowledgeable at the
system level and is capable of interfacing with
senior MIS staff on major accounts. The TC will
work with the local Regional personnel (PM & AC),
providing the technical expertise necessary to
maintain customer satisfaction in the larger, more
technically complex situations within each area. In
addition, the TC will understand, implement, and
support all technology manufacturers that distribute
their product through Kronos.
- ------------------------ -----------------------------------------------------
Trainer The Trainer is responsible for the development and
delivery of training on products for customer's and
internal service readiness.
- ------------------------ -----------------------------------------------------
o Best shall provide to Kronos the implementation assistance set forth on
Schedule I for up to the first six Kronos Customer implementations, but not
to exceed an aggregate total of [**] hours. The application variants shall
be HR only, HR with Payroll and HR with ESS Link implementations. The
parties shall use commercially reasonable best efforts to ensure the most
efficient and cost-effective use of implementation resources. In the event
that Kronos requires implementation assistance from Best beyond the [**]
hours, Best shall make such assistance available on a time and materials
basis at the rates set forth in Schedule J.
o Kronos may apply the total number of implementation hours at its
discretion, however, all hours must be applied within [**] months from the
Effective Date. Best implementation personnel will play the lead role, as
requested by Kronos, for any initial implementations that are selected by
Kronos for each of the application variants.
o Kronos agrees to fund all T&E for Best implementation personnel who are
working on-site at a customer location within Kronos travel guidelines
12. Non Solicitation.
12.1 Non-Solicitation. The parties agree that they shall not, directly or
indirectly, solicit each other's employees during the Term. This shall not
prohibit either party, however, from hiring an employee of the other party
who has responded to a general solicitation or public advertisement (i.e.
internet, employment agency, newspaper or trade journal) for employment.
13. Press Releases.
13.1 Press Releases. Each of Best and Kronos shall forward to the other party,
no less than 48 hours prior to the issuance of any press announcement or
other public relations ("PR") relating to the relationship of the parties
or relating to the other Party's name, logos, trademarks, copyrights, trade
secrets or any other proprietary or intellectual property rights, a draft
of such PR. Any PR that mentions the other party, or in any way relates to
the relationship or any activity between the parties, must be approved in
writing by both parties before public or industry dissemination.
14. Indemnification.
14.1 Intellectual Property Indemnification by Best.
(a) Best agrees to indemnify and hold harmless Kronos, its affiliates, and
their respective officers, directors, employees, consultants, attorneys and
agents, from and against any and all claims, costs, fees and expenses
(including reasonable attorneys' fees) arising out of any claim that the
Licensed Materials, excluding any Kronos Derivative Work, as delivered to
Kronos on the Delivery Date, infringe any United States copyright, patent
or other intellectual property right of a third party, provided that Best
is given prompt written notice of any such claim and has sole control over
the investigation, preparation, defense and settlement of such claim, and
further provided that Kronos reasonably cooperates with Best in connection
with the foregoing and provides Best with all information in Kronos'
possession related to such claim and any further assistance reasonably
requested by Best. Kronos may, at its expense and in its discretion,
participate in the defense of such claim using its own counsel. Best shall
have no obligation to indemnify Kronos or any of the foregoing parties to
the extent any such claim is based on any Kronos Derivative Work.
(b) Should any or all of the Licensed Materials subject to the foregoing
indemnity become, or in Best's reasonable opinion be likely to become, the
subject of any injunction contained in a final non appealable order of a
court of competent jurisdiction, Best shall procure for Kronos the right to
continue to use the affected Licensed Materials as contemplated hereunder
or replace or modify the Licensed Materials to make their use
non-infringing.
14.2 Intellectual Property Indemnification by Kronos. Kronos agrees to indemnify
and hold harmless Best, its parent and affiliates, and their respective
officers, directors, employees, consultants, attorneys and agents, from and
against any and all claims, costs, fees and expenses (including reasonable
attorneys' fees) arising out of any claim that any Kronos Derivative Work
infringes any United States copyright, patent or other intellectual
property right of a third party, provided that Kronos is given prompt
written notice of any such claim and has sole control over the
investigation, preparation, defense and settlement of such claim, and
further provided that Best reasonably cooperates with Kronos in connection
with the foregoing and provides Kronos with all information in Best's
possession related to such claim and any further assistance reasonably
requested by Kronos. Best may, at its expense and in its discretion,
participate in the defense of such claim using its own counsel.
14.3 Additional Indemnity. Kronos agrees to indemnify, save and hold harmless
Best, its parent and affiliates, and their respective officers, directors,
employees, consultants, attorneys and agents, from and against any and all
claims, costs, fees and expenses (including reasonable attorneys' fees)
arising out of Kronos' gross negligence, willful misconduct or failure to
comply with the terms and conditions of the licenses granted hereunder,
including, without limitation, (a) the use or disclosure of, or grant of
access to, the Software other than as permitted by this Agreement, and (b)
the use of any Best trade name, trademark or service mark without Best's
prior written consent.
14.4 Additional Indemnity. Best agrees to indemnify, save and hold harmless
Kronos from and against claims arising out of material defects in any
specific tax updates provided that, prior to any claim, (a) Kronos had
incorporated a Best-approved Disclaimer of Warranty specifically relating
to tax updates into Kronos' license agreement for the Complainant Customer
and/or Complainant Reseller; (b) said disclaimer was rendered as void or
invalid by a court of competent jurisdiction in which any said claim was
filed; and (c) Kronos provided sufficient documented evidence to Best's
reasonable satisfaction that the material defect in the tax update
sublicensed by Kronos from which the customer's claim at issue arose also
appeared in the corresponding source tax update originally provided by Best
to Kronos.
15. Term; Termination; Rights Upon Expiration or Termination.
15.1 Term. The term of this Agreement (the "Term") shall begin on the Effective
Date and shall continue for ten (10) years or until sooner terminated as
described herein.
15.2 Termination. This Agreement may be terminated upon written notice by either
party upon the occurrence of a Default (as defined below) by the other
party.
(a) A party shall have committed a Default under this Agreement upon the
occurrence of any of the following events:
(i) breach of the obligation to pay any sum of money due hereunder, which
breach has not been cured within ten (10) days after the breaching party
has received written notice thereof from the non-breaching party, provided,
however, that with respect to payments of the royalties or maintenance and
support fees described in Section 6.2, in the event that such unpaid
amounts are the subject of a good faith dispute, a Default shall not be
deemed to have occurred for so long as the party withholding such monies
has deposited the amount of payment in dispute with a mutually agreed upon
escrow agent as set forth in Section 6.9;
(ii) any material breach of its representations, warranties or covenants
contained herein or any material breach of its other obligations hereunder,
which breach has not been cured within thirty (30) days after the breaching
party has received written notice thereof from the non-breaching party; or
(iii)the party (1) ceases business in the ordinary course, (2) files a
voluntary petition for bankruptcy, (3) has an involuntary petition for
bankruptcy filed against it that is not dismissed within sixty (60) days of
filing, (3) makes an assignment for the benefit of its creditors, or (4)
any substantial portion of the party's property is subjected to any levy,
seizure, assignment, application or sale for or by any creditor or
governmental agency, which proceeding, levy, seizure, assignment or
application or sale is not dismissed within sixty (60) days.
15.3 Notice of Termination. Upon the occurrence of a Default, the non-defaulting
party that desires to terminate the Agreement shall provide the other party
with a written notice of termination setting forth the nature of any such
Default. Any such notice shall become effective on the date thereof.
15.4 Termination of Licenses. If this Agreement is terminated as a result of a
breach by Kronos, then:
(a) (i) Kronos may not grant any additional Sublicenses for Royalty Bearing
Software but may continue to provide maintenance and support for the
Royalty Bearing Software to existing Kronos Customers to whom Kronos is
contractually obligated to provide maintenance and support services. Kronos
shall be entitled to retain a sufficient number of copies of the Royalty
Bearing Software to enable it to provide such maintenance and support
services. Kronos shall promptly provide to Best all other copies of the
Licensed Materials in its possession or shall destroy all copies of such
Licensed Materials and shall provide to Best written certification of such
destruction.
15.5 Continuation of Sublicenses. Upon the termination of this Agreement for any
reason other than a breach by Kronos, such termination shall not terminate
or diminish the right of Kronos Customers to continue to use the Royalty
Bearing Software under Sublicenses validly issued during the Term.
Additionally, upon such termination, Kronos shall have a, nonexclusive,
worldwide, nontransferable and perpetual license to reproduce, market,
Sublicense and distribute the Software and to create Kronos Derivative
Works of the Software. Kronos' obligation to pay royalties to Best under
the terms of this Agreement shall continue through the [**] anniversary of
the Effective Date. Kronos shall also have the right to use Software and/or
Derivative Works to provide Hosted and/or Service Bureau services.
15.6 Survival. Notwithstanding the termination or expiration of this Agreement
for any reason, the rights and duties of the parties under Sections [1-4, 6
(for any payments outstanding as of the date of such termination or
expiration) 7, 8.1, 8.4, and 15-21] of this Agreement shall survive such
termination or expiration and remain in full force and effect.
16. Confidential Information
16.1 Confidential Information. Best and Kronos recognize that, in the
performance of this Agreement, employees of Best and Kronos may learn of or
be exposed to trade secrets or other confidential information, including,
without limitation, the source code for the Software and all information
concerning the business, operations or customers of Best or Kronos, whether
designated as confidential or proprietary or not so designated
(collectively "Confidential Information"), which are the property of Best
or Kronos, respectively. The term "Confidential Information" shall not
include any information that: (a) is in or becomes part of the public
domain other than by disclosure by Kronos or Best in violation of this
Agreement, (b) is demonstrably known to Kronos or Best previously, (c) is
independently developed by Kronos or Best without use of Confidential
Information of the other party, or (d) is rightfully obtained by Kronos or
Best from third parties
16.2 Obligation to Maintain Confidentiality. Each of Kronos and Best shall (a)
use the same degree of care in handling the other party's Confidential
Information as it uses with regard to its own proprietary and/or
confidential information in order to prevent the disclosure thereof, and
(b) disclose the Confidential Information only to such employees and
consultants as have a need to know such information, and such employees and
consultants will be cautioned that such information is confidential. In
addition, each of Kronos and Best agree to obtain signed confidentiality
agreements from any third parties hired or otherwise engaged by it in
connection with this Agreement prior to allowing access to any Confidential
Information and to deliver copies of the same to the other upon request.
Each party will cause its employees to be bound by the obligation of
confidentiality contained herein.
16.3 Required Disclosures. In the event that Best or Kronos is requested or
required by law, regulation, supervisory authority or other applicable
judicial or governmental order to disclose any Confidential Information of
the other party, Best or Kronos will provide the other party with prompt
written notice of such request or requirement so that the other party may
seek an appropriate protective order. If, failing the entry of a protective
order, Best or Kronos is, in the opinion of its counsel, compelled to
disclose such Confidential Information, it may disclose only that portion
of the Confidential Information that its counsel advises it is compelled to
disclose and will exercise reasonable efforts to obtain assurance that
confidential treatment will be accorded to that portion of the Confidential
Information that is being disclosed.
17. Limitation of Liability.
17.1 Limitation of Liability. EXCEPT FOR (a) CLAIMS INVOLVING THE UNAUTHORIZED
USE OR DISCLOSURE OF, OR PROVISION OF ACCESS TO, THE SOFTWARE BY KRONOS
OTHER THAN AS PERMITTED UNDER THIS AGREEMENT, AND (b) CLAIMS ARISING
PURSUANT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTIONS 15.1(a)
OR 15.2, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
ANY LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF USE OR DATA, INTERRUPTION OF
BUSINESS, OTHER ECONOMIC LOSS, OR FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL,
EXEMPLARY, PUNITIVE OR OTHER INDIRECT DAMAGES OF ANY KIND OR NATURE, FOR
ANY REASON, INCLUDING WITHOUT LIMITATION THE BREACH OF THIS AGREEMENT OR
ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT, WHETHER SUCH LIABILITY IS
ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT
LIABILITY) OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE
POSSIBILITY OF SUCH DAMAGES. WITHOUT LIMITING THE FOREGOING, IN NO EVENT
SHALL BEST'S OBLIGATIONS OR LIABILITY TO KRONOS UNDER THIS AGREEMENT OR
OTHERWISE EXCEED, IN THE AGGREGATE, THE ROYALTIES PAID TO BEST BY KRONOS
FOR THE YEAR (AS DEFINED HEREIN) PRECEDING THE DATE THAT BEST RECEIVES
NOTICE FROM KRONOS OF A CLAIM.
18. Arbitration.
18.1 Arbitration. All claims, demands, disputes, controversies, differences or
misunderstandings between the parties hereto arising out of or by virtue of
this Agreement, upon the failure of good faith negotiation, shall be
submitted to mediation and, upon failure to reach resolution thereunder,
any unresolved disputes between the parties relating to this Agreement
shall be determined by arbitration in Reston, Virginia if initiated by
Kronos or Boston, Massachusetts if initiated by Best. If the parties are
unable to agree on an arbitrator within ten (10) business days after any
party shall have given written notice to the other that it desires to
submit any issue to arbitration, then the American Arbitration Association
may be designated by any party to appoint one (1) arbitrator and to
arbitrate the matter under its rules. If, within ten (10) business days
after any party shall have given written notice to the other that it
desires to submit any issue to arbitration, either party expresses a desire
to have such arbitration conducted by a panel of three (3) arbitrators,
then the arbitration shall be conducted by a three (3)-member panel
comprised of one (1) arbitrator from each party, and one (1) arbitrator
jointly selected by the parties' arbitrators. The award of the arbitrator
or arbitration panel shall be made in writing, shall be within the scope of
this Agreement, shall not change any of its terms or conditions, shall be
binding and conclusive on the parties, and shall include a finding for the
payment of costs of the arbitration proceeding, including an award of
reasonable attorneys' fees to the prevailing party. It is further agreed
that judgment of a court having jurisdiction may be entered upon the award
of the arbitrator or arbitration panel.
18.2 Access to the Names of Kronos Customers. In the event that the parties
commence an arbitration proceeding, Kronos shall release to Best the names
of then-current and past Kronos Customers and the numbers of Employees of
such Kronos Customers.
19. General Provisions.
19.1 Force Majeure. Neither party will be liable for any failure to perform any
obligation (other than payment obligations) hereunder, or from any delay in
the performance thereof, due to causes beyond its control, including
industrial disputes of whatever nature, acts of God, public enemy, acts of
government, failure of telecommunications or other casualty.
19.2 Non-Waiver. Failure of either party to assert any of its rights on any one
occasion under this Agreement shall in no way be construed as a waiver of
such rights on any other occasion nor shall a waiver of any right of either
party constitute or be deemed a waiver of any other right.
19.3 Amendment. The terms of this Agreement may be amended only by a written
instrument signed on behalf of both parties.
19.4 Severability. If any provision of this Agreement shall be invalid or
unenforceable, the remainder of this Agreement shall not be affected
thereby.
19.5 Governing Law. The terms of this Agreement and any disputes arising
therefrom shall be governed by the laws of the Commonwealth of Virginia
applicable to agreements entered into and wholly to be performed therein,
without giving effect to any conflict or choice of law provision or rule
thereof.
19.6 Assignment; Change of Control. This Agreement shall be binding on the
parties, their successors and permitted assigns. Neither party may assign
its rights, duties or obligations hereunder (exclusive of merger, transfer
of all or substantially all assets, change of control, sale of stock,
operation of law or the like) without the prior written consent of the
other party, which consent shall not be unreasonably withheld, except that
in the event that Kronos so assigns to a Competitor, Best's withholding of
consent or refusal to consent shall not be deemed to be unreasonable. In
the event that Kronos assigns its rights, duties or obligations hereunder,
due to business acquisition, merger, transfer of all or substantially all
assets, change of control, sale of stock, operation of law or otherwise,
then effective upon the date of any such change in control and written
notice thereof to Best the one-time royalty of $[**] per Employee as
described in 6.2 (d) shall be eliminated immediately and the royalty
payments by Kronos shall revert back to those described in 6.2 (a)
("Royalties for [**] or fewer employees") and all royalty payment caps of
6.2(d) shall thereafter be eliminated. In the case of any such an
assignment by Kronos, Kronos shall remain liable for the performance of its
duties and obligations under this Agreement. Any attempt to assign any
rights, duties, or obligations arising out of this Agreement in
contravention of this Section shall be null and void and of no force or
effect.
19.7 Export. Kronos understands that any export of the Software outside the
United States may require an export license and Kronos assumes full
responsibility for obtaining such license.
19.8 Notices. All notices, requests, demands, other communications under this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered in person or, if mailed, when mailed by certified or
registered mail, or overnight courier, postage prepaid, return receipt
requested, to the parties at the addresses set forth below or at such other
address as may be given in writing by either party to the other in
accordance with this Section.
If to Kronos:
Kronos Incorporated
297 Billerica Road
Chelmsford, Massachusetts 01824
Attn: James Kizielewicz, V.P., Marketing
Copy: General Counsel
If to Best:
Best Software, Inc.
11413 Isaac Newton Square
Reston, VA 20190
Attn: Himanshu Palsule, EVP Marketing
Copy: General Counsel
19.9 Entire Agreement. This Agreement together with any Schedules attached
hereto constitutes the entire Agreement and is the entire understanding
between the parties relating to the subject matter of this Agreement and
supersedes all prior writings, negotiations, or understandings with respect
thereto.
19.10 Counterparts. This Agreement and any amendments to this Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Agreement or amendment, as the case may be.
19.11 Headings. The headings used in this Agreement are included for reference
only and shall not affect the meaning or interpretation of this Agreement.
19.12 Superiority. In the event of a conflict between the provisions of the body
of this Agreement and the provisions of any Schedule hereto, the provisions
in the body of this Agreement shall control.
IN WITNESS HEREOF, the parties hereto caused their duly authorized
representatives to execute and deliver this Agreement as of the Effective Date:
BEST SOFTWARE, INC. KRONOS INCORPORATED
By: /s/ James Foster By: /s/ James Kizielewicz
- --------------------------- ---------------------------------
Title: President & COO Title: V.P. Marketing & Corporate
Specialty Products Div. Strategy