EXHIBIT 10.21
STRATEGIC TECHNOLOGY LICENSE AND SERVICES AGREEMENT
This Strategic Technology License and Services Agreement (this
"Agreement") is made this 9th day of May, 1994, by and between Andersen
Consulting ("AC"), an Illinois partnership with its principal place of
business at 69 W. Washington Street, Chicago, Illinois; and The Zondervan
Corporation, a Michigan corporation with its principal place of business at
5300 Patterson S.E., Grand Rapids, Michigan ("Client"); and is made by
Client with respect to Client's operating division known as Family
Bookstores ("Family"), which has its central office in Grand Rapids,
Michigan.
For and in consideration of the mutual promises and covenants
contained herein, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties agree as follows:
1.0 BACKGROUND; PURPOSE
1.1 BUSINESS OF AC
AC is engaged in the business of providing business consulting
services, including strategic services, systems development, systems
integration, change management, business process management, LAN and WAN
network management, technical support, and related services.
1.2 EXISTING SERVICES, CUTOVER, NEW SYSTEM
Client wishes to obtain from AC, for the benefit of Family, and AC is
willing to provide to Client, certain of the kinds of management
information services that Client currently provides to Family. Initially,
AC will provide these services through the use of a system currently in
place. While managing that system, AC will also be developing a new system
to replace the current system; after the cutover to the newly configured
system, AC will provide certain other services and products as described
herein.
1.3 AVAILABILITY OF RESOURCES FOR EXISTING SYSTEM
In order to enable AC to provide the agreed services, Client will
allow AC, on the terms and conditions set forth in this Agreement, the use
of certain properties and rights being used by Client on the "Effective
Date" (as defined below) in providing management information services to
Family.
1.4 EXCLUSIVE PROVIDER
During the term of this Agreement, AC shall provide to Client and
Client shall obtain from AC all of the requirements of Family for the types
of management information services and products that are to be provided by
AC under this Agreement. Client agrees to inform AC of all proposals that
it may receive from others for the providing of any "Special Services" or
"Changes" (as those terms are defined below), and Client shall not acquire
or obtain any such Special Service or Change from any other person or
entity unless: (i) AC shall have been given, by means of a written offer
delivered to AC, the right of first refusal to provide such Special Service
or Change on the same terms and conditions as offered by such other person
or entity, and (ii) AC shall have failed to accept such offer by written
acceptance delivered to Client within thirty (30) days after receipt of the
offer. The parties understand and agree that regarding any services or
products to be provided by AC hereunder, AC can, at its discretion, choose
either to perform or develop them itself or to subcontract for their
performance or development; provided, however, that AC shall remain
responsible for any such subcontracted performance or development.
2.0 DEFINITIONS
As used in this Agreement, each capitalized term shall have the
meaning specified in this Section 2.0, or if not specified in this Section
2.0, the meaning specified elsewhere in this Agreement.
2.1 "AFFILIATE" means as to each party any entity directly or
indirectly controlled by, controlling, or under common control with, such
party.
2.2 "APPLICABLE SPECIFICATIONS" means the functional, performance and
operational characteristics of a developed management information system
(or of any component thereof), jointly approved by Client and AC, and
described in a document such as a functional specifications document or a
detailed design document.
2.3 "APPLICATION SYSTEM" means "Software" (as defined below) used for
business process management, such as purchase order management.
2.4 "APPLICATION SYSTEMS DEVELOPMENT" means any work performed or
furnished by AC with regard to an Application System that exceeds
"Maintenance" (as defined below) in terms of scope or level of effort.
2.5 "CLIENT," for all purposes except (i) in the context of the legal
liability and responsibility of Client for the performance of its duties
and obligations hereunder (including obligations of payment, indemnity, and
damages), or (ii) as otherwise expressly specified, shall mean Family, as
though the business operated as the Family Bookstore division of Client
were itself a legal entity. However, The Zondervan Corporation shall in
all events be liable and responsible for all of the duties and obligations
of "Client" hereunder.
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2.6 "CURRENT SYSTEM" means the "Software" (as defined below) and
"Hardware" (as defined below) that are utilized by Client on the Effective
Date to provide Family with the "Existing Services" (as defined below).
2.7 "DATA CENTER" means the portion of the facilities occupied by
Family at 5300 Patterson S.E., Grand Rapids, Michigan, in which Client's
management-information services department is located, and all leasehold
improvements thereto and all furniture, fixtures and equipment (other than
Hardware) located therein and used in such department.
2.8 "DATA CENTER LEASE" means that certain Master Lease Agreement by
and between Client and Meadowbrooke Business Park Associates, Limited
Partnership, dated October 3, 1990, as amended by The First Amendment To
The Lease, dated September 20, 1991, and again amended by The Addendum To
Office/Warehouse Lease, dated August 19, 1992; a correct and complete copy
of said documents has been furnished by Client to AC.
2.9 "EFFECTIVE DATE" means May 2, 1994.
2.10 "EMPLOYEE PLANS" means all "employee benefit plans" and "employee
welfare plans" as defined in the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), all "multi-employer plans" as defined in
Section 3(37) of ERISA, all specified fringe benefit plans as defined in
Section 6039D of the Internal Revenue Code of 1986, as amended, and all
other compensation plans, agreements or policies and any trust, escrow or
other funding agreement related to such plans, that are maintained by
Client or contributed to by Client or with respect to which Client has any
liability for the benefit of employees of Family, regardless of whether
funded or not.
2.11 "EXISTING SERVICES" shall mean all of the kinds of electronic
management information services that are currently being provided by
HarperCollins Publishers Inc. to Family, other than applications on the LAN
system including Word Processing, Spreadsheets and Interface to the HC
General Ledger and Payroll systems, and LAN management services.
2.12 "HARDWARE" means computers, CPUs, auxiliary storage devices,
monitors, keyboards, terminals, computerized registers, printers, modems,
peripherals, cables, bridges, routers, multiplexers, and other items of
computer or data-communications equipment.
2.13 "LEASED HARDWARE" means the items of Hardware that are used for
the Existing Services and are located at the Data Center or at Retail
Stores that are held by Client under equipment leases ("Hardware Leases"),
correct and complete copies of which have been furnished by Client to AC.
2.14 "LICENSED SOFTWARE" means the Software that is used for the
Existing Services and is licensed to Client by third parties under software
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licenses ("Software Licenses"), correct and complete copies of which have
been furnished by Client to AC.
2.15 "LOSSES" means all losses, liabilities, damages and claims
(including taxes), and all related costs and expenses (including any and
all reasonable attorneys fees and costs of investigation, litigation,
settlement, judgment, interest and penalties).
2.16 "MAINTENANCE" means any correction or modification of a system to
correct bugs or errors, that does not otherwise materially improve or add
functionality or a feature to the system; to "Maintain" is to perform
Maintenance.
2.17 "MANAGEMENT CUTOVER" means the assumption by AC of management
responsibility for the operation and Maintenance of the Current System.
2.18 "MANAGEMENT CUTOVER DATE" means July 1, 1994, or such other date
as may be mutually agreed upon in writing by the parties.
2.19 "MONTHLY BASE CHARGE" means the monthly charge to be paid to AC
by Client pursuant to Section 8.1 of this Agreement.
2.20 "NEW SYSTEM" shall have the meaning set forth in Section 3.1.1
hereof (referring to Hardware and Software to be developed or obtained for
Client hereunder).
2.21 "REQUIRED CONSENTS" means all consents that must be obtained by
Client in order for Client: (i) to grant to AC the right to use Client's
premises as contemplated by Section 4.3 hereof; (ii) to grant to AC the
right to use the Current System's Hardware and Software as provided in
Section 3.2 hereof; and (iii) to grant to AC the right to use the "Client
Components" (as defined in Section 3.1.3) as provided in Section 3.1.3
hereof.
2.22 "RETAIL STORE" means a retail store whose business is owned
directly or indirectly by the Client and that is engaged in the retail sale
of books and other products.
2.23 "SOFTWARE" means computer programs, the tangible media on which
they are recorded, and their supporting documentation, including input and
output formats, program listings, narrative descriptions and operating
instructions.
2.24 "SPECIAL SERVICE" means any management information service
requested by Client that is outside the scope of the "System Services" (as
defined below).
2.25 "SYSTEM CUTOVER" means the complete cutover of Client's
management information systems from the Current System to the New System.
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2.26 "SYSTEM CUTOVER DATE" means the date on which System Cutover
occurs.
2.27 "SYSTEM INTEGRATION SERVICES" shall have the meaning set forth in
Section 3.1.1 (referring to the creation and implementation of the New
System) of this Agreement.
2.28 "SYSTEM MANAGEMENT SERVICES" shall have the meaning set forth in
Section 3.2.1 (referring to the management of the Current System) of this
Agreement.
2.29 "SYSTEM OPERATION SERVICES" shall have the meaning set forth in
Section 3.3.2 (referring to the management and operation of the New System)
of this Agreement.
2.30 "SYSTEM SERVICES" means System Integration Services, System
Management Services and System Operation Services.
2.31 "THIRD PARTY SERVICES CONTRACTS" means the key contracts under
which Client is receiving services as of the Effective Date for use in
providing the Existing Services, all of which have been identified by the
Client and set forth by it in Schedule 2.31 hereto.
2.32 "THIRD PARTY SOFTWARE" means any Software that: (a) is not owned
by Client or AC, and (b) is acquired or licensed from a third party for
operation by AC in performing System Services under this Agreement.
3.0 LICENSES TO BE GRANTED, AND SERVICES TO BE PROVIDED, BY AC
3.1 CREATION AND IMPLEMENTATION OF NEW SYSTEM
3.1.1 EFFORTS LEADING TO CUTOVER
From and after the Effective Date, AC shall apply its diligent efforts
("System Integration Services") to design, develop, create, and/or obtain
(except for items to be obtained by Client as set forth below) the
ownership or right of usage of the Hardware and Software components of; to
install; and to prepare for a cut-over from the Current System to, a new
management information system for Client (the "New System"). The New
System is expected to be based upon the Hardware and Software components
and general specifications set forth in Schedule 3.1.1 hereto, but such
elements, as well as a more detailed statement of components and
specifications, shall be subject to negotiations, which shall be conducted
promptly and in good faith by the parties; the parties shall use
commercially reasonable efforts to reach a written agreement on such
matters by not later than July 31, 1994, but should they fail to agree then
Schedule 3.1.1 shall stand as their agreement with respect to such
components and specifications.
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3.1.2 JDA SOFTWARE
It is mutually understood and agreed that the basic Application System
for the New System shall be the Merchandise Management System and the
Distributed Store System (collectively, the "JDA System") of JDA Software,
Inc. ("JDA"), to which AC has acquired a non-exclusive license ("JDA
License") of which a copy is attached as Schedule 3.1.2 hereto.
3.1.3 CLIENT COMPONENTS
It is mutually understood and agreed that all Hardware components of
the New System shall be procured by, and owned by or leased to, Client (or
an Affiliate of Client); that all operating Software for such Hardware
components shall be procured by and licensed to Client (or an affiliate of
Client); and that all of such Hardware and operating Software components
(collectively, "Client's Components") shall be selected by Client (and may
be replaced at any time by Client) in its sole discretion, although AC
shall make recommendations for such selections and shall assist Client in
attempting to negotiate favorable terms for such purchases, leases and
licenses. With respect to all of Client's Components: (i) Client shall
make the Client Components available to AC throughout the "Term" (as
defined below) to the extent necessary to enable AC to perform the System
Services; (ii) Client shall assign to AC, for the duration of the Term, all
warranties and other benefits available to Client as purchaser or licensee
of the Client Components, to the extent necessary in order for AC to
perform the System Services; (iii) AC shall be responsible for coordination
of maintenance activities of Client Components; and (iv) Client shall
grant, and does hereby grant to AC the right and license to use the Client
Components, to the extent necessary in order for AC to perform the System
Services, throughout the Term, which right and license shall be exclusive,
subject to Client's or its Affiliates' right to utilize the Client
Components and the output and benefits of the Client Components in the
course of its business and subject to any rights of Client to engage third
parties pursuant to Sections 3.4 or 3.5 of this Agreement.
3.1.4 BASE SOFTWARE
It is mutually understood and agreed that all Software components of
the New System other than the Client Components (collectively, the "Base
Software"), including the JDA System and all other Third Party Software,
shall be procured by, and owned by or licensed to, AC (or an Affiliate of
AC).
3.1.5 SYSTEM CUTOVER
AC shall accomplish the System Cutover on or before July 1, 1995
(subject to delays caused or necessitated by Client or by Special Services
or "Changes" (as defined below)), with as little interruption of Client's
business operations as is reasonably practicable under the circumstances.
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3.2 MANAGEMENT OF CURRENT SYSTEM
3.2.1 AC RESPONSIBLE AFTER MANAGEMENT CUTOVER
The parties shall accomplish the Management Cutover on the Management
Cutover Date. From and after the Management Cutover, AC shall manage the
operations and Maintenance of the Current System ("System Management
Services"), pending its replacement by the New System.
3.2.2 RIGHT TO USE CLIENT RESOURCES
In performing the System Management Services, AC shall be entitled: to
utilize all of the Hardware and Software of the Current System; to utilize
the services of all personnel engaged (at any level of responsibility) in
the operation or Maintenance of the Current System; and to have full and
unlimited access to, and presence in, the Data Center; in all cases, free
of charge to AC and at the sole cost and expense of Client. In particular,
Client shall provide a sufficient number of trained and qualified personnel
(whether employed by Client or by others) to operate and Maintain the
Current System, until the System Cutover Date. Notwithstanding the
foregoing, it is understood and agreed that AC's services under this
Section 3.2 (the System Management Services) shall be performed solely in a
managerial role; that AC shall not interfere with Client's personnel in
their conduct of actual operations and Maintenance of the Current System
and of normal activities other than the Existing Services; and that AC's
personnel, while within Client's premises, shall comply with the rules and
regulations of Client applicable to Client's employees (copies of which
rules and regulations have been delivered by Client to AC).
3.2.3 SERVICE LEVELS FOR EXISTING SYSTEM
Subject to the limitations set forth in Section 3.2.2 hereof, AC shall
use commercially reasonable efforts to cause the Current System to be
operated substantially in compliance with presently existing service levels
and procedures (to the extent such levels and procedures can be readily
ascertained), but AC cannot be held responsible for errors or omissions of
Client's personnel not occurring at AC's direction.
3.3 LICENSING AND MANAGEMENT OF NEW SYSTEM
3.3.1 BASE SOFTWARE LICENSE
AC hereby grants to Client the non-exclusive right and license to use
the Base Software, for the consideration, for the term, and on the other
terms and conditions set forth in a certain Base Software License, of which
a copy is attached hereto as Exhibit 3.3.1, which has been executed and
delivered by the parties hereto concurrently with the execution and
delivery of this Agreement. The preceding sentence is an independent
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covenant of AC pursuant to this Agreement, which shall be subject to all of
the rights and remedies of the parties under this Agreement and shall be
irrespective of any limitations on remedies set forth in the Base Software
License. AC represents, warrants and agrees with Client that it owns (or
has the rights to use and license) the Base Software and possesses all
necessary rights in the Base Software to grant the Base Software License to
Client, and that it will, at all times during the term of the Base Software
License, own (or have the rights to use and license) the Base Software and
possess all necessary rights in the Base Software to grant the Base
Software License to Client. AC represents, warrants and agrees that the
use of the Base Software under the Base Software License does not and will
not infringe upon any patent, copyright, license, trade secret or other
proprietary right or interest of any third party.
3.3.2 SYSTEM OPERATION SERVICES
From and after the System Cutover, and for the remainder of the Term,
AC shall have full and exclusive responsibility for the management,
operation and Maintenance of the New System; provided, however, that AC
shall not be responsible for errors, defects, delays, or other problems
with the New System to the extent caused by errors or omissions of Client's
personnel in the usage of the New System or its interfaces by Client,
otherwise than under AC's direction, or by the failure of Client to provide
the necessary Client Components. Although it is expected that the specific
services that are to constitute the System Operation Services after the
System Cutover Date shall be based upon the services set forth in Schedule
3.3.2 hereto, said Schedule contains certain unresolved issues, and the
entire subject matter of said Schedule shall be subject to negotiations,
which shall be conducted promptly and in good faith by the parties; the
parties shall use commercially reasonable efforts to reach a written
agreement on such matters but should they fail to so agree then Schedule
3.3.2 shall stand as their agreement with respect to the System Operation
Services after the System Cutover Date.
3.3.3 SERVICE LEVELS FOR NEW SYSTEM
The service levels at which the System Operation Services are to be
operated after the System Cutover Date ("Service Levels") shall be based
upon the service levels set forth in Schedule 3.3.3 hereto, but the final
version of the Services Levels shall also be subject to negotiations, which
shall be conducted promptly and in good faith by the parties; the parties
shall use commercially reasonable efforts to reach a written agreement on
the Service Levels, but should they fail to so agree then Schedule 3.3.3
shall stand as their agreement with respect to Service Levels.
3.4 SPECIAL SERVICES
At Client's request, AC may perform Special Services. AC will advise
Client in writing that a requested service is a Special Service and whether
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AC desires to perform the Special Service. If AC elects to perform the
Special Service, it shall provide Client with a description of the work to
be performed by each party, the parties' responsibilities with respect to
that work, a schedule and AC's charges for that work. Upon AC's receiving:
(a) Client's written approval of the authorization to proceed and agreement
to pay AC's charges, and (where appropriate) (b) Applicable Specifications,
the parties shall execute a written amendment to this Agreement setting
forth any special terms and conditions applicable to such Special Services,
and AC shall begin performing the Special Services. Except as may be
specifically otherwise agreed pursuant to clause (b) of the preceding
sentence, all Special Services shall be subject in all respects to the
duties, obligations and standards applicable to System Services under this
Agreement. Should AC elect not to perform any Special Service requested by
Client, Client may engage a third party to perform the service at Client's
sole expense, and AC shall provide such third party with cooperation and
access to the Current System and/or the New System (as the case may be),
provided that Client shall assure that such third party shall be
appropriately qualified to do the work, shall cooperate with AC in its
performance of the work, and shall perform the work in a manner that does
not, in AC's reasonable judgment, interfere with AC's performance of the
System Services nor affect the Current System or the New System so as to
delay or make more difficult or costly AC's future performance of the
System Services.
3.5 CHANGES
All additions, modifications or changes to the Current System or the
service levels for Existing Services that are proposed before the System
Cutover Date; all additions, modifications or changes that are proposed at
any time to the New System, the System Services, or the Service Levels; and
all other systems-development or systems-operations services not included
in this Agreement; (collectively, "Changes") to the extent not resolved
pursuant to the change-management provisions of the Schedules hereto
relating to the scope of work and the Service Levels, shall be controlled
using a formal process (the "Change Control Process"), as follows: (i) The
party proposing a Change will propose it in writing and provide cost and
business justification (in general terms, without need to provide detailed
studies or specifications) for the Change and specify a desired
implementation date; (ii) AC will assess the impact of the proposed Change,
considering resources required, interfaces to other systems, and other
planned and in-process changes, and will make a proposal to Client
specifying the amount of any charges to Client for the implementation of
the Change and the amount of any increase or decrease in the "Monthly Base
Charge" (as defined below) that would result from the Change; and (iii) the
completed proposal of AC will be presented for approval to the Management
Steering Committee referred to in Section 10.3 hereof. No Change will be
implemented without: (i) approval of the Management Steering Committee, and
(ii) written approval by AC and Client. Upon completion of such approvals,
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the parties shall execute a written amendment to this Agreement setting
forth the terms and conditions reflecting or applicable to such Change and
reflecting the extent of any modification of the Current System, the New
System, the Service Levels, or any other provision of this Agreement or any
schedule hereto, that results from the Change. If the Management Steering
Committee, or AC, fails to approve a Change requested by Client, Client may
engage a third party to perform the Change, at Client's sole expense,
provided that Client shall assure that such third party shall be
appropriately qualified to do the work, shall cooperate with AC in its
performance of the work, and shall perform the work in a manner that does
not interfere with AC's performance of the System Services nor affect the
Hardware or Software so as to make more difficult or costly AC's future
performance of the System Services.
3.6 COST CONTROL
To the extent reasonably practicable (and no more costly to AC) under
the circumstances, and consistent with its other obligations hereunder, AC
will arrange for its programmers who are dedicated to performing services
for Client hereunder to work on Changes and Special Services without any
additional charge to Client.
4.0 RESPONSIBILITIES OF CLIENT
4.1 GENERAL RESPONSIBILITIES
Client shall perform (or cause to be performed) all of the obligations
to be performed by it (or by HarperCollins Publishers Inc.) under any of
the Schedules hereto and all of the following tasks, and assume the
following responsibilities:
4.1.1 OBLIGATIONS PRIOR TO MANAGEMENT CUTOVER DATE
During the period prior to the Management Cutover Date, Client shall:
a) provide, operate, and Maintain the Current System for Client;
b) provide and assign to the Current System, sufficient qualified
personnel to operate and Maintain it for Client;
c) make available to AC all available operations-related
documentation on the Current System and the Existing Services;
d) make available to AC all available cost-data and performance-data
relating to the Current System and the Existing Services, for use
by the parties in developing the revised versions of Schedules
3.1.1, 3.3.2 and 3.3.3, as contemplated by Sections 3.1.1, 3.3.2,
and 3.3.3 hereof;
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e) give AC reasonable notice of all material business developments
regarding Client and its Affiliates that are relevant to AC's
performance of the System Services;
f) cooperate with AC in coordinating arrangements for the
procurement by Client of the Client Components and the
procurement by AC of the Base Software;
g) cooperate with AC to allow and facilitate the providing by AC of
the System Integration Services;
h) cooperate with AC to facilitate the Management Cutover on the
Management Cutover Date; and
i) use commercially reasonable efforts to obtain the Required
Consents, and make alternative arrangements in any cases where
not available;
provided, however, that nothing in this Section 4.1.1 shall require Client
to act in a commercially unreasonable manner.
4.1.2 OBLIGATIONS BETWEEN MANAGEMENT CUTOVER DATE AND SYSTEM
CUTOVER DATE
During the period between the Management Cutover Date and the System
Cutover Date, Client shall:
a) continue to provide, operate and Maintain the Current System for
Client, subject to management by AC as provided in Section 3.2;
b) continue to provide, and assign to the Current System, sufficient
qualified personnel to operate and Maintain it for Client;
c) continue to provide to AC all available cost-data and
performance-data relating to the Current System and the Existing
Services;
d) continue to give AC reasonable notice of all material business
developments regarding Client and its Affiliates that are
relevant to AC's performance of the System Services;
e) cooperate with AC to allow and facilitate the providing by AC of
the System Management Services;
f) continue to cooperate with AC in coordinating arrangements for
the procurement by Client of the Client Components and the
procurement by AC of the Base Software;
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g) obtain, set up, install and wire all Client Components within any
reasonable time frames specified by AC;
h) cooperate with AC to allow AC to install the Base Software; and
i) cooperate with AC to facilitate the System Cutover;
provided, however, that nothing in this Section 4.1.2 shall require Client
to act in a commercially unreasonable manner.
4.1.3 OBLIGATIONS AFTER SYSTEM CUTOVER DATE
After the System Cutover Date, Client shall cooperate with AC to allow
and facilitate the providing by AC of the System Operation Services and
shall be responsible for the Client Components (and for any dealings with
the vendors and licensors regarding any problems, defects or claims
regarding the Client Components), but Client shall have no responsibility
for the management, operation or Maintenance of the New System, except as
the user of the New System.
4.2 HUMAN RESOURCE MATTERS
4.2.1 CURRENT EMPLOYEES
From and after the Effective Date, Client will allow AC to interview
all current employees whose current duties are solely or primarily in the
management or operation of the Current System ("Current Employees"). With
regard to any Current Employees whom AC shall designate to Client as
employees that AC prefers to have retained by Client at least until the
System Cutover Date, Client will encourage such individuals to continue as
employees of Client until the System Cutover Date, and will replace with
qualified personnel any of them who do not so continue (or will use
alternative means to provide the same resources as such employees were
providing). With regard to Current Employees whom AC wishes to hire on or
before the System Cutover Date, Client will allow such employees to accept
employment with AC and will release them from their respective employment
obligations to permit them to do so.
4.2.2 RESPONSIBILITY FOR RETAINED EMPLOYEES
With the exception of employees who die, resign, become disabled or
are terminated by Client, Client shall remain the employer of the Current
Employees until the System Cutover Date and shall make such employees
available for AC's use in performing its Services hereunder. For each such
employee, Client's obligation to pay wages, continue to provide benefits
and make employer's contributions, benefits and contributions, shall
terminate upon: (a) the System Cutover Date, or (b) the termination of such
employee's employment with Client, or (c) such date, if any, as Client
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terminates such obligations with respect to all its employees generally,
whichever occurs first. AC shall have no liability whatsoever as the
employer or successor-employer of any of the Current Employees for any
period prior to its hiring of them, or in consequence of their ceasing to
be employed by Client, including, but not limited to, liability for accrued
vacation or sick leave, bonuses or other forms of compensation, or any
other employee benefit. Client shall retain, and AC shall not have any
liability whatsoever for, any COBRA coverage or severance payments arising
in connection with the events described in this Section 4.2 to any of the
Current Employees who do not become employees of AC. In no event shall AC
and Client be or be deemed to be the joint employer of any Current
Employee.
4.2.3 NO HIRING OF AC EMPLOYEES
Except as provided above in this Section 4.2, Client agrees that
during the term of this Agreement and (in the event of termination by AC
for cause) for twelve (12) months thereafter, neither The Zondervan
Corporation nor any division or subsidiary of The Zondervan Corporation
shall, except with the prior written consent of AC (which consent may be
withheld in AC's sole discretion), offer employment to or employ any person
employed by AC who has been assigned work under this Agreement within one
(1) year preceding Client's hire date of the Employee.
4.3 USE OF PREMISES
In order for AC to perform its services hereunder, Client hereby
grants to AC the unlimited right of usage and access, twenty-four (24)
hours per day, 365 (or 366) days per year, throughout the Term, of and to
the portion of the Data Center indicated on Schedule 4.3 hereto consisting
of approximately 5,175 square feet (the "Space"), and all related utilities
and services; such rights shall be primary to AC as to the "AC" space and
joint with Client as to the "Joint" space indicated on said Schedule.
Nothing herein shall be deemed to construe the relationship of Client and
AC as that of landlord and tenant, or sublandlord and subtenant, nor shall
AC's right to use the Space for the purposes specified herein be deemed a
lease or sublease or confer upon AC any rights, statutory or otherwise, of
a tenant or subtenant. AC has reviewed and is familiar with the terms of
the Data Center Lease. AC's use of the Space shall be subject and
subordinate to the Data Center Lease in all respects. AC shall not cause,
permit or suffer to exist any act or omission that would constitute a
default under the Data Center Lease. AC shall have no right to perform any
alterations to the Space or to assign its right to use the Space or sublet
or permit the use or occupancy of the Space by anyone other than AC and its
employees and employees of Client during the term of this Agreement.
Client shall also provide AC, at no additional charge, with appropriate
equipment, facilities and other resources such as furniture, office
supplies, facsimile service, duplication service, telecommunication
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services (including voice mail), clerical support, postage facilities,
overnight delivery services, computer resources, workstation equipment, and
access to software tools. The parties acknowledge and agree that the
details of these other resources to be made available, shall be subject to
negotiations, which shall be conducted promptly and in good faith by the
parties, and to the consent of Client's landlord; the parties shall use
commercially reasonable efforts to reach agreement on these matters, and to
obtain the consent of Client's landlord to the rights of access and usage
described in this Section 4.3, by not later than May 31, 1994. AC
acknowledges that Client's lease for its present facility may expire before
the end of the Term, and in such event AC shall relocate to Client's new
facility provided that (a) AC has been given at least six (6) months' prior
notice of the required move, (b) AC is given the same rights as given above
in this Section 4.3 regarding space in the new facility that is of
substantially the same area, and suitability for AC's purposes hereunder,
as that covered by the area described in this Section 4.3, and (c) Client
pays or reimburses all of AC's costs of removing the New System, moving it,
and re-installing it in the new facility.
5.0 TERM
5.1 INITIAL TERM
This Agreement shall become effective on the Effective Date and shall
expire on June 30, 2001 (the "Initial Term"), subject to early termination
pursuant to Article 13.0 hereof or renewal pursuant to Section 5.2 hereof.
5.2 ADDITIONAL TERM
The term of this Agreement shall be deemed extended: (i) for an
additional term of three (3) years ("Additional Term"), after expiration of
the Initial Term, unless either party, before December 31, 2000, shall have
delivered notice to the other party of its election to terminate this
Agreement, and if so extended, (ii) thereafter for a maximum of three (3)
additional one-year terms ("Additional Terms"), unless either party, before
December 31 of the particular Additional Term, shall have delivered notice
to the other party of its intention to terminate this Agreement.
5.3 TERM
For purposes of this Agreement, the word "Term" shall mean the
combination of the Initial Term and the Additional Term or Terms, if any.
6.0 PROPRIETARY RIGHTS
6.1 CURRENT SYSTEMS
Client grants to AC, at no charge to AC, the unrestricted, exclusive
(effective as of the Management Cutover Date) right to use the Current
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System for the purpose of providing the System Management Services to
Client as contemplated by this Agreement, subject to its continuing usage
by Client's employees under AC's management, subject to Client's right to
utilize the output and benefits of the Current System in the course of its
business, and subject further to any rights of Client to engage third
parties pursuant to Sections 3.4 or 3.5 of this Agreement. Client shall
use commercially reasonable efforts to obtain any Required Consents from
third parties necessary for AC to provide such services. If the Required
Consents cannot be obtained for AC to provide such System Management
Services, or if such a Consent is given but any issue with regard thereto
shall subsequently arise, then AC and Client shall work together to achieve
an alternate solution pursuant to Article 12.0 hereof. In the event that
either party believes that it is necessary to acquire and implement any
substitute system(s), the decision to do so and the costs of such system(s)
will be handled in accordance with the Change Control Process established
in Section 3.5 of this Agreement.
6.2 NEW SYSTEM
The components of the New System shall be and remain the property of
the respective parties that obtained such components. However, AC shall
have the unrestricted, exclusive right to use the New System to provide the
System Operation Services for Client as contemplated by this Agreement, all
subject to Client's right to utilize the output and benefits of the New
System in the course of its business, and subject to any rights of Client
to engage third parties pursuant to Sections 3.4 or 3.5 of this Agreement.
7.0 SAFEGUARDING THE CLIENT DATA, CONFIDENTIALITY, SECURITY, DISCOVERY
7.1 CLIENT DATA
The data of Client provided to AC for processing under this Agreement
shall be and remain the property of Client. Upon the termination of this
Agreement for any reason or, with respect to any particular data, on such
date as the same shall no longer be required by AC in order to provide the
System Operation Services, such Client data shall be returned to Client by
AC at AC's expense, if Client delivers to AC a written request for such
return within thirty (30) days after termination; if not, such data shall
be erased. The data of Client shall not be used by AC for any purpose
other than that of providing System Operation Services, nor shall such data
or any part of such data be disclosed, sold, assigned, leased or otherwise
disposed of to third parties by AC or commercially exploited by or on
behalf of AC, its employees or agents.
7.2 SAFEGUARDING CLIENT DATA
AC will establish and maintain safeguards against the destruction,
loss or alteration of the data of Client in the possession of AC that are
consistent with commercially reasonable standards as customarily used by AC
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and at least comparable to Client's current standards. In the event that
additional safeguards for such data are reasonably requested by Client, AC
shall provide such additional safeguards, and Client shall reimburse AC for
AC's costs in providing such additional safeguards.
7.3 CONFIDENTIALITY
AC and Client each acknowledge and agree that, in the course of this
Agreement, they will have access to and/or be in possession of confidential
information of the other. "Confidential Information" means information
regarded and maintained by that party as confidential, including
information relating to its past, present or future research, development
or business affairs and other proprietary products, materials or
methodologies. Each party shall hold in confidence, in the same manner as
it holds its own Confidential Information of like kind, all Confidential
Information of the other to which it may have access herein. Access to
Confidential Information shall be restricted to those of the party's
personnel and agents with a need to know and a legal duty to protect the
Confidential Information (including the retention, subject to the terms of
this Section 7.3, of copies of the Confidential Information required for
compliance with its quality management requirements). The foregoing shall
not prohibit or limit either party's use of Confidential Information
(including, but not limited to, ideas, concepts, know-how, techniques and
methodologies): (a) previously known to it, (b) independently developed by
it, (c) acquired by it from a third party not known by the acquiring party
to be under a legally enforceable obligation of confidentiality to the
other party hereto, or (d) which is, or becomes, publicly available through
no breach of this Agreement, nor shall it prohibit disclosure as may be
required by law or disclosure to a party's attorneys, accountants and other
professional advisors.
7.4 SECURITY AT DATA CENTERS
AC will perform security procedures that are consistent with
commercially reasonable standards as customarily used by AC, at any place
where System Operation Services are performed by AC for Client. Such
procedures at the Data Center shall be consistent with those currently in
place. In the event that additional security procedures are reasonably
requested by Client for any location where AC is providing services to
Client, AC shall perform such additional security procedures, and Client
shall reimburse AC for AC's costs in providing such additional safeguards.
AC personnel shall comply with the reasonable rules of Client (which shall
not unreasonably impede AC in the performance of its obligations under this
Agreement) with respect to access to Client offices, the Client's data and
data files.
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7.5 THIRD PARTY DISCOVERY
If any governmental agency or any third party shall in any way seek
discovery of, access to, or production of ("Discovery"), any Software, any
Confidential Information or any other data or records of one party that may
be in the possession of the other party, the other party shall immediately
notify the first party and shall, at the first party's written request and
at the first party's expense, oppose such Discovery (unless in the opinion
of counsel for the other party there is no reasonable basis for opposing
discovery), and cooperate with the first party in the first party's efforts
to preclude, quash, limit or impose protective orders or similar
restrictions on such Discovery.
8.0 PAYMENTS
8.1 MONTHLY BASE CHARGE
For all of the System Services to be provided by AC to Client during
the term of this Agreement, and separate from and in addition to the
amounts payable to AC pursuant to the Base Software License referred to in
Section 3.3.1 hereof, Client shall pay to AC a monthly base charge in
accordance with Schedule 8.1 hereto (the "Monthly Base Charge").
8.2 CHARGES FOR SPECIAL SERVICES AND CHANGES
Client shall also pay AC for all Special Services and Changes
provided or implemented by AC, in accordance with the amounts agreed upon
in writing by the parties; provided, however, that any Special Services,
Changes or Maintenance necessitated by any incorrect or incomplete
Applicable Specification generated by Client or based upon incorrect or
incomplete information furnished by Client or resulting from an omission by
Client, shall be paid for by Client at AC's then current rates.
8.3 OUT-OF-POCKET EXPENSES
Client shall also pay, or reimburse AC for, all reasonable,
documented, out-of-pocket expenses, including, but not limited to, coach-
class airfare, lodging, ground transportation and per diem expenses
incurred by AC in connection with AC's performance of this Agreement;
provided, however, that it is understood that AC's services hereunder will
be performed primarily from the Data Center or by Grand Rapids-based
personnel. All travel will be performed according to AC's travel
guidelines. As part of the annual budgeting process, AC will estimate for
Client the anticipated out-of-pocket expenses for each of Client's fiscal
quarters; estimated expenses for the four quarters starting on July 1,
1994, have been included in Schedule 8.1 hereto.
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8.4 RERUNS
To the extent AC cannot, without incurring additional costs, provide
reruns by using employees dedicated to performing services to Client during
the normal working day, Client shall also pay the reasonable charges of AC:
(i) for reruns necessitated by incorrect or incomplete data or erroneous
instructions supplied to AC by Client; (ii) to reject incorrect reports
within the time frames specified in the Service Levels; and, to the extent
they interfere with AC's performance hereunder, (iii) for the correction of
programming, operator and other processing errors caused by Client, its
employees or agents.
8.5 TIME AND MANNER OF PAYMENT
Client will pay AC, by check: (i) the Monthly Base Charge for each
month, on or before the tenth day of such month; and (ii) any charges for
Special Services, and other amounts charged to Client pursuant to any other
provision of this Agreement, on or before the tenth day after delivery to
Client of any invoice from AC for such charges. Any sum due by either
party to the other party, for which a time for payment is not otherwise
specified, shall be due and payable within ten (10) days after delivery of
an invoice therefor. Any sum due by either party to the other party, that
is not paid within ten (10) days of delivery of the invoice shall accrue
interest until paid at a rate of interest equal to one percent (1.0%) per
month, or the maximum rate of interest allowed by applicable law, if less.
8.6 DISPUTED AMOUNTS
In the event of any dispute with respect to the amount of an invoice,
the parties shall cooperate in good faith to resolve such disputed amount
pursuant to the provisions of Article 12.0 hereof. In the event the
parties determine an overpayment was made by Client, AC shall credit to the
next invoice the amount of such overpayment, plus interest at one percent
(1.0%) per month. In the event the parties determine an underpayment was
made by Client, Client shall pay AC the amount of such underpayment, plus
interest from the date of the invoice at one percent (1.0%) per month. No
party shall be deemed in default hereunder for failure to pay an invoice
that it has reasonably disputed in good faith, provided that: (i) it has
delivered to the other party, within ten (10) days after delivery to the
disputing party of the invoice, a written notice specifying the amounts
disputed and the reasons for the dispute, (ii) it has paid, when due in
accordance with Section 8.5 hereof, the undisputed portion (if any) of the
invoice, and (iii) the disputed amount (plus applicable interest, but net
of any adjustments to which the parties may by then have agreed) has been
paid in full within sixty (60) days after the delivery of the invoice to
the disputing party. A party shall be deemed in default if, and as soon
as, it has failed to fulfill any one or more of the conditions set forth in
the preceding sentence as to any one or more invoices, and shall remain in
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default until it has paid in full such invoice or invoices (including
applicable interest, but net of any adjustments to which the parties shall
have agreed).
8.7 TAXES
Client shall pay or reimburse AC for any amount equal to any and
all applicable taxes, however designated, incurred as a result of or
otherwise in connection with this Agreement or any of the services
described herein including, without limitation, state and local privilege,
excise, sales and use taxes, and any taxes or amounts in lieu thereof, paid
or payable by AC, but excluding payroll taxes and the Michigan "single-
business tax" and taxes based solely upon the net income of AC.
8.8 VERIFICATION OF INFORMATION
The charges set forth in this Agreement are based upon information
furnished by Client to AC but not independently verified by AC. Client
represents to AC that such information, particularly as it relates to
costs, is accurate and contains no material errors or omissions.
Accordingly, if any such information should prove to contain any material
error or omission that has the effect of leading AC to underestimate or
overestimate its costs of providing the System Services, the amounts to be
charged hereunder to Client shall be adjusted appropriately so as to
compensate for such error or omission.
8.9 PRORATION
All periodic charges under this Agreement are to be computed on a
calendar month basis, and will be prorated for any partial month.
8.10 RIGHTS OF SET-OFF
With respect to any amount to be paid or reimbursed to a party ("first
party") or otherwise payable to first party by the other party ("second
party") pursuant to this Agreement, including any damages to which the
first party may be entitled due to the second party's breach hereof, second
party may, at its option, pay that amount by giving first party a credit
against the charges otherwise payable, in the order in which such charges
come due, to second party under this Agreement, and in the case of such
damages, the first party may offset the amount of such damages against any
payment that would otherwise be due to the second party hereunder.
9.0 REPRESENTATIONS AND WARRANTIES
9.1 BY CLIENT
The Zondervan Corporation represents, warrants and promises to AC as
follows:
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9.1.1 INCORPORATION, POWERS
The Zondervan Corporation: (a) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Michigan and (b) has full corporate power to own, lease, and operate its
properties and assets, to conduct its business as that business is
currently being conducted, and to consummate the transactions contemplated
by this Agreement to be consummated by Client.
9.1.2 AUTHORITY, ENFORCEABILITY
This Agreement has been duly authorized, executed and delivered by The
Zondervan Corporation and constitutes a valid and binding agreement of The
Zondervan Corporation, enforceable against it in accordance with this
Agreement's terms, subject to the effect of bankruptcy, insolvency,
moratorium and other laws now or hereafter in effect relating to and
affecting the rights of creditors generally and to equitable principles of
general application.
9.1.3 NO CONFLICTS
Neither the execution nor delivery by The Zondervan Corporation of
this Agreement, nor the consummation by it of any of the transactions
contemplated by this Agreement, will result in the breach of any term or
provisions of, or constitute a default under, any charter provision or
bylaw, or material agreement (subject to any applicable Required Consent),
order law, rule or regulation to which it is a party or that is otherwise
applicable to it.
9.1.4 LABOR MATTERS
The Zondervan Corporation is not a party to or subject to any
collective bargaining agreement, its employees are not represented by or
claimed to be represented by any labor union or labor organization, and
there is no unfair labor practice complaint pending or, to the knowledge of
Client, threatened against it before any federal or state agency or board
or tribunal or governmental entity.
9.1.5 EMPLOYEE PLANS
True and complete copies of summary plan descriptions of all written
Employee Plans maintained or contributed to by The Zondervan Corporation
for the benefit of any of the Current Employees have been delivered by
Client to AC. There have been no prohibited transactions or other breaches
or violations of any law applicable to the Employee Plans that would
subject AC to any liability. No condition exists that will subject AC or
any of its employees to any material excise tax, penalty tax, fine, or any
other liability related to any Employee Plan. There are no agreements that
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will provide payments to any officer, employee, shareholder or highly
compensated individual which will be "parachute payments" under Section
280G of the Internal Revenue Code that are nondeductible to Client or
subject to tax under Section 4999 of the Internal Revenue Code for which AC
would have any withholding liability.
9.1.6 RIGHT TO USE SYSTEMS
To Client's knowledge after reasonable investigation, and subject to
receipt of any applicable Required Consents and government filings, AC will
obtain on the Effective Date the right to manage the operation and
maintenance of the Current System to perform the System Services, as
contemplated by this Agreement.
9.2 BY AC
AC represents, warrants and promises to Client as follows:
9.2.1 ORGANIZATION, POWERS
AC is an Illinois general partnership, validly existing and in good
standing under the laws of the State of Illinois, and has full power to
own, lease, and operate its properties and assets, to conduct its business
as that business is currently being conducted, and to consummate the
transactions contemplated by this Agreement to be consummated by AC.
9.2.2 AUTHORITY, ENFORCEABILITY
This Agreement has been duly authorized, executed and delivered by it
and constitutes a valid and binding agreement of it, enforceable against it
in accordance with this Agreement's terms, subject to the effect of
bankruptcy, insolvency, moratorium and other laws now or hereafter in
effect relating to and affecting the rights of creditors generally and to
equitable principles of general application.
9.2.3 NO CONFLICTS
Neither the execution nor delivery by it of this Agreement, nor the
consummation by it of any of the transactions contemplated by this
Agreement, will result in the breach of any term or provision of, or
constitute a default under, any charter provision or bylaw, or material
agreement (subject to any applicable Required Consent), order, law, rule or
regulation to which it is a party or which is otherwise applicable to it.
9.2.4 STANDARDS
The System Services will be diligently performed in a good,
workmanlike and timely manner in conformity with the Service Levels and to
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the other applicable schedules and provisions of this Agreement (as amended
from time to time to reflect Changes and other mutually-agreed provisions)
and consistently with professional standards; provided, however, that AC's
use of any of Client's employees to perform System Operation Services until
the System Cutover Date shall not in and of itself constitute a breach of
this warranty.
9.2.5 RIGHT TO USE SYSTEMS
From and after the System Cutover Date, AC will have the right to
manage, operate and maintain the New System to perform the System Services,
as contemplated by this Agreement.
9.2.6 DISCLAIMER OF WARRANTIES
This is a license and services agreement. ACCORDINGLY, EXCEPT AS
SPECIFIED IN SECTION 9.2.4 ABOVE, AC MAKES NO WARRANTIES OR GUARANTEES,
EXPRESS OR IMPLIED, FROM A COURSE OF PERFORMANCE OR DEALING OR TRADE USAGE,
(A) ABOUT SERVICES OR OTHER DELIVERABLES, OR (B) OF UNINTERRUPTED OPERATION
WITHOUT ERROR. THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
10.0 RELATIONSHIP MANAGEMENT
10.1 LIAISON DIRECTORS
Each party shall appoint a "Liaison Director" by May 31, 1994, subject
to the approval of the other party (which approval shall not be
unreasonably withheld).
10.1.1 CLIENT'S LIAISON DIRECTOR
The primary responsibility of the Client's Liaison Director shall be
the following:
a) preparation and monitoring of Client's MIS budget;
b) communicating Client needs and requirements;
c) monitoring Client's performance of its responsibilities;
d) assisting in development of operations procedures;
e) reviewing of AC invoices;
f) assistance in preparing for monthly Management Steering Committee
meetings; and
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g) assistance in preparing for quarterly Joint Executive Oversight
Committee meetings;
10.1.2 AC'S LIAISON DIRECTOR
The primary responsibilities of AC's Liaison Director shall be the
following:
a) directing of performance of AC responsibilities;
b) reporting AC performance;
c) development and maintenance operations procedures;
d) preparation of annual System Operation Services report;
e) participation in Client's annual planning process to forecast
growth and new requirements;
f) preparation of documents for the Joint Executive Oversight
Committee quarterly meetings; and
g) preparation for AC's semi-annual quality management assessments.
10.2 JOINT EXECUTIVE OVERSIGHT COMMITTEE
10.2.1 STRUCTURE OF COMMITTEE
Client and AC shall each appoint an equal number of representatives,
not to exceed three (3) persons each, to a Joint Executive Oversight
Committee. The primary responsibility of this Committee is to manage the
human resources and technology assets appropriately to match Client's
business needs. The Committee shall be composed of Client and AC
executives, and shall meet at regularly scheduled quarterly meetings
throughout the year, and more frequently as the parties may wish. AC shall
have responsibility for coordination and scheduling of meetings and for
meeting materials. Initially, the Committee will be composed of the
following individuals:
Leslie Dietzman (Co-Chairman of Committee);
Richard Butler;
Neil Topham;
Jeffrey R. Smith (Co-Chairman of Committee);
Donald P. Wingard; and
Steven W. Louis.
10.2.2 SPECIFIC ACTIVITIES OF COMMITTEE
The Committee shall engage in the following specific activities:
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a) review and approve annual plans and budgets for Changes;
b) review Family business plans and activities and assess possible
amendments to this Agreement;
c) review and approve significant changes in MIS policies and
procedures;
d) receive status reports and make decisions on other management
issues;
e) review performance of each party's responsibilities;
f) review and approve recommendations for Changes to System Services
or Special Services;
g) review and respond to recommendations of Client's systems-auditor;
h) attempt to resolve disputes, disagreements and Problems,
including designation of individuals to resolve disputes or
disagreements;
i) participation in the semi-annual AC quality management process;
j) general oversight of the Agreement; and
k) such other duties as delegated from time to time by Client and AC
to the Committee.
Committee membership will be reviewed yearly, and each party may
propose changes in its representatives from time to time, based upon
changes in responsibilities or business needs.
10.3 MANAGEMENT STEERING COMMITTEE
The Management Steering Committee shall be composed of management
representatives from AC and Client. The primary responsibilities of the
Management Steering Committee are to foster cooperation and assist with
effective communication between Client's corporate functions and field
operations, and the MIS department; to support development of technology
plans; promote technology deployment among the various organizational units
within Client; to take responsibility for annual technology plan updates
(using the Phase 1 Information Technology Strategy developed in 1993 as a
working document); to provide adequate user resource participation on
projects and other initiatives; and to consider Changes proposed by either
party. The Management Steering Committee shall meet monthly and shall
engage in the following specific activities:
a) approve the initiative of major projects;
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b) resolve cross-functional user issues;
c) establish application and project priorities and resolve
conflicts based upon costs, business benefits and project time
frames;
d) review the status of key projects;
e) review the plans for the upcoming month;
f) agree upon and monitor the key performance indicators established
for the arrangement; and
g) organize and implement subcommittees or other action groups
required to fulfill committee responsibilities.
Initially, the Management Steering Committee shall be composed of the
following individuals:
Leslie Dietzman (Co-Chairman of Committee);
Richard Butler;
Craig Klamer;
Dennis Wade;
Hal Bailey;
Jeffrey R. Smith (Co-Chairman of Committee);
John E. Fite;
Michael Gelaude;
Robert Szambelan; and
Steven W. Louis.
10.4 CROSS-PARTICIPATION
AC participants will require access to and/or participation in
committees, projects and management meetings associated with the roles and
responsibilities in which they are functioning and consistent with Client's
practices. However, AC will only participate by invitation of Client in
the monthly Client Information Services management meeting as a technology
representative for Family to the staff of the Vice President of Information
Systems for Client. In this way, AC will serve Family by providing monthly
status reports to the Client MIS community, and staying informed about
directions, plans and issues with potential impact on Family.
10.5 ACTIONS
Any action taken by the Joint Executive Oversight Committee or the
Management Steering Committee shall require the mutual consent of both
parties, evidenced by the written consent of the Co-Chairmen of the
respective parties.
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11.0 FURTHER MATTERS TO BE RESOLVED
The parties agree to negotiate in good faith and use commercially
reasonable efforts to accomplish the following, as soon as reasonably
possible:
11.1 CONFIGURATION OF NEW SYSTEM
The execution by the parties of a mutually acceptable, revised, final
version of Schedule 3.1.1 hereto, setting forth a detailed listing of all
Hardware and Software to be acquired or developed by, or leased or licensed
to, AC and to become the components of the New System.
11.2 SYSTEM OPERATING SERVICES
The execution by the parties of a mutually acceptable, revised, final
version of Schedule 3.3.2 hereto, setting forth a detailed description of
the nature and scope of the services that, from and after the System
Cutover Date, are to constitute the System Operating Services.
11.3 SERVICE LEVELS
The execution by the parties of a mutually acceptable, revised, final
version of Schedule 3.3.3 hereto, setting forth a detailed specification of
the Service Levels to be applicable from and after the System Cutover Date.
11.4 REQUIRED CONSENTS
The obtaining by Client of all of the Required Consents.
11.5 ACCESS, RESOURCES
Provisions for the furnishing of other resources as contemplated by
Section 4.3.
12.0 DISPUTE PREVENTION AND RESOLUTION
12.1 PROBLEMS
A "Problem," as that term is used herein, shall mean any problem or
circumstance (other than a matter involving the provisions of Articles 6.0
or 7.0 hereof) that consists of or results from: (i) an alleged failure by
either party to perform its obligations under this Agreement (other than a
failure to pay an undisputed invoice), (ii) the alleged inadequacy of
either party's performance, (iii) a request for products, services or
resources where the parties disagree whether such products, services or
resources are within the scope of this Agreement, (iv) any dispute
regarding the correct meaning of interpretation of this Agreement, or (v)
any event described in Section 16.11 (Force Majeure).
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12.2 PROBLEM RESOLUTION
If a Problem arises, the complaining party shall promptly notify the
other party of such Problem, including a detailed description of the
circumstances relating to that Problem and (if available) reasonable
documentation of the existence of the Problem. The parties shall discuss
and make an effort to resolve such Problem prior to the next Joint
Executive Oversight Committee meeting, by following, if applicable, any
incident-management provisions of the relevant Schedules hereto and, if
that fails, by referring the matter to the Joint Executive Oversight
Committee. If an authorized representative of each party shall have
executed a "Problem Report" describing the agreed upon solution to the
Problem, each party shall begin performance in accordance with such Problem
Report. At any time, a party may refer a Problem to the Joint Executive
Oversight Committee for resolution.
12.3 MEDIATION
The parties agree to attempt to resolve any Problem not resolved
pursuant to procedures described in Section 12.2 hereof, by non-binding
mediation prior to litigation. Unless otherwise agreed in writing, the
following procedures will apply to any mediation. The mediation will be
commenced by notifying the other party in writing to both its Liaison and
its Legal Department of its demand for mediation and its mediator, and
demanding that the other party select its mediator. The proceeding shall
be held by a panel of three mediators, one selected by each party and a
third appointed by the two so chosen (and if no such third in fourteen (14)
days after the notice is served then per the rules of the American
Arbitration Association ("AAA"). The mediators may only be persons who
have held management positions in companies engaged in, and who
individually have been responsible for, maintenance and use of mainframe
computer package and custom business software applications and systems for
at least eight of the last ten years, but who have not had in the last ten
years any employment, investment, personal or other relationship with
either party or their attorneys or certified public accountants. The
mediation will be conducted per the AAA Commercial Dispute rules and be
held in a mutually agreed-upon location. The mediators will decide whether
or not the formal rules of evidence and discovery procedures will be used.
The initiation and outcome of the proceeding will be maintained
confidential by both parties and their representatives.
12.4 TIMING
The parties mutually consent and agree to use their best efforts to
bring about an expeditious conclusion and resolution of all Problems
pursuant to the foregoing procedures. If Client shall assert that there is
a Problem consisting of a breach or default hereunder by AC that Client
believes in good faith to be causing a material disruption or breakdown in
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Client's business ("Major Problem"), then the parties shall attempt to
resolve and cure the Problem within thirty (30) days.
13.0 TERMINATION
13.1 TERMINATION FOR CAUSE
The non-defaulting party may end the Term of this Agreement
immediately, by delivering written notice to the other party of such
termination, if:
13.1.1 NON-PAYMENT
Either party fails to pay in full any invoice when due hereunder and:
(i) if the invoice was not properly and timely disputed in accordance with
Section 8.6 hereof, such party fails to pay in full such invoice within
twenty (20) days after the delivery to it by the non-defaulting party of
written notice of non-payment; or, (ii) if all or any portion of such
invoice was properly and timely disputed by the recipient party, such
recipient party is deemed to be in default under the provisions of Section
8.6 hereof; or
13.1.2 PROPRIETARY RIGHTS, SECURITY MATTERS
Either party breaches any of its obligations under Article 6.0 or
Article 7.0 of this Agreement and fails to cure such breach within five (5)
days after the delivery to it by the non-defaulting party of written notice
that the breach has occurred; or
13.1.3 OTHER OBLIGATIONS
Either party fails, neglects or refuses to duly observe or perform any
material obligation, covenant or condition under this Agreement other than
those described in Sections 13.1.1 or 13.1.2 hereof and fails to cure such
default by 5:00 p.m, local time, on whichever is applicable of the
following: (i) in the case of a Major Problem, the 30th day after delivery
to the defaulting party by the non-defaulting party of notice of the
existence of the Problem, in accordance with Article 12.0 hereof, or (ii)
in the case of any Problem that is not a Major Problem, the 60th day after
delivery to the defaulting party by the non-defaulting party of notice of
the existence of the Problem, in accordance with Article 12.0 hereof.
13.1.4 BREACH OF BASE SOFTWARE LICENSE
The Base Software License described in Section 3.3.1 hereof is
terminated on account of a breach or default thereunder by Client.
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13.2 TERMINATION FOR CONVENIENCE
Client may end the Term of this Agreement for any reason (other than
pursuant to the other provisions of this Article 13.0) by delivering to AC
ninety (90) days' advance notice of termination, delivered no earlier than
the third anniversary of the Effective Date.
13.3 TERMINATION FOR CONDITIONS NOT FULFILLED
Either party may end the Term of this Agreement by giving written
notice to the other at any time after (i) May 31, 1994, in the case of the
Required Consents referred to in clauses (i) and (ii) of Section 2.21
hereof, or (ii) March 1, 1995, in the case of the Required Consents
referred to in clause (iii) of Section 2.21 hereof, if (in the event AC is
the party effecting termination) by the time of its giving such notice
Client, having received at least thirty (30) days' prior notice of AC's
intention to terminate if the Required Consents are not obtained, shall
have failed to obtain the Required Consents and shall have failed to make
alternative arrangements satisfactory to AC.
13.4 TERMINATION FOR INSOLVENCY
Either party shall have the right to end the Term of this Agreement
immediately by delivery of notice to the other party if such other party:
becomes insolvent or generally fails to pay, or admits in writing its
inability to pay, debts as they become due; or applies for, consents to, or
acquiesces in the appointment of, a trustee, receiver or other custodian
for such party, or its property, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for such
party or for a substantial part of its property and is not discharged
within sixty (60) days; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding in respect of such party,
and if such case or proceeding is not commenced by such party, consented to
or acquiesced in by such party or remains for sixty (60) days undismissed;
or such party takes any action to authorize, or in furtherance of, any of
the foregoing.
13.5 TERMINATION RESULTING FROM A CHANGE IN CONTROL
If there is a material change in the ownership or management control
of The Zondervan Corporation or of Family or the assets of Family that
could have the effect of making the continued performance of this Agreement
by AC in violation of any applicable law, regulation or accounting rule or
standard, AC may end the Term of this Agreement by giving Client at least
sixty (60) days' advance notice of termination.
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13.6 TERMINATION FOR NON-ACCEPTANCE OF SYSTEM
Notwithstanding any requirement of notice set forth elsewhere in this
Article 13.0, the Term of this Agreement shall end, without any notice or
other action by either party, as of July 1, 1995, unless Client, on or
before July 1, 1995 (or at or before the end of any applicable cure-period
with respect to any Problem as to which notice of the existence of the
Problem was delivered to AC on or before July 1, 1995), shall have executed
and delivered to AC a written "System Acceptance" stating that Client has
accepted the New System (including the Base Software) and has waived and
released any and all claims that AC may have failed in any way to perform
and discharge any of its material obligations, covenants and conditions set
forth in Section 3.1 of this Agreement.
13.7 AC'S OBLIGATIONS UPON TERMINATION
Upon the ending or expiration of the Term, and in addition to any
other remedies available to either party at law, in equity, by statute, or
otherwise:
13.7.1 CLIENT DATA
AC shall deliver to Client all copies of Client data in AC's
possession upon termination.
13.7.2 SOFTWARE LICENSES
Subject to any rights of repossession of, or deprivation of Client of
the use of, the Base Software to which AC (or its assignee) may be entitled
under the terms of the Base Software License, (i) AC shall assign to Client
the JDA License and all other third-party licenses or sublicenses for any
of the Base Software, and Client shall assume and perform all of AC's
obligations thereunder arising after the date of the assignment and defend
and indemnify AC with regard thereto, and (ii) AC shall grant to Client a
non-exclusive licenses to all of the other Base Software, which assignment,
assumption and grant (A) shall take effect automatically (i.e., as to the
JDA license, within thirty (30) days after JDA's receipt of notice from
either AC or Client, as specified in Section 4 of Exhibit 2 of the JDA
License) and with no further action by either party (other than such prior
notice to JDA) simultaneously with the ending of the Term, and (B) which
assignment and grant shall be on the same terms and conditions as the Base
Software License, except that it shall be for a term that shall expire on
June 30, 2024.
13.7.3 TERMINATION ASSISTANCE
AC shall provide Client with termination assistance and a reasonable
amount of advice and training to persons designated by Client to render
comparable System Operation Services.
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13.7.4 THIRD PARTY NOTICES
AC shall assist Client in notification of all third-party vendors,
with Client paying any fees associated with the transfer to Client or its
designated agent.
13.8 CLIENT'S OBLIGATIONS UPON TERMINATION
Upon the ending or expiration of the Term, and in addition to any
other remedies available to either party at law, in equity, by statute, or
otherwise:
13.8.1 MEDIA AND EQUIPMENT USAGE
Client shall reimburse AC for the cost of any tapes, diskettes and
other data-storage media requested by Client.
13.8.2 COSTS
Unless termination is pursuant to Section 13.5 (regarding changes in
control), Client shall reimburse AC for all additional expenses incurred by
AC as a result of the termination, including, without limitation, (i) all
demobilization expenses of AC and AC's Subcontractors, including reasonable
and customary severance payments and benefits for employees terminated on
account of termination of the Agreement; (ii) all penalties incurred by AC
for early termination of any lease for equipment or facilities that AC
leased in connection with its performance under this Agreement, based upon
the expectation of completion of the Term, and other costs related thereto;
and (iii) all penalties incurred by AC for early termination of any
Software License entered into by AC based upon the expectation of
completion of the Term, and other costs related thereto; provided, however,
that Client's obligation to make payment of such reimbursement (A) shall be
subject, at the time of such payment and thereafter, to any damages to
which Client may be entitled under the terms of this Agreement and to any
right of set-off to which it may be entitled with respect to such damages
and (B) shall not constitute a determination as to the ultimate liability
of Client with respect to such payment or the amount thereof or of AC's
entitlement to receive or retain such amount. Client's rights under clause
(A) above shall include, without limitation, Client's rights to claim as
damages its liability to AC for the payment by Client of the amount set
forth in this Section 13.8.2 if the term of this Agreement is ended as a
result of any breach or default by AC hereunder (subject to the provisions
and limitations of Article 14.0 hereof) and any right of set-off to which
it may be entitled with respect to such damages.
13.8.3 LICENSE TERMINATION FEE
In the event that the Term of this Agreement is ended as of July 1,
1995 pursuant to the provisions of Section 13.6 hereof, or on or before
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July 1, 1995, pursuant to any other provision of this Article 13.0, then
regardless of which party has given the notice of termination and
regardless of the reason why it was terminated, Client shall immediately
pay to AC an amount determined in accordance with the provisions of
Schedule 13.8.3 hereto (less any amounts that may have been paid by then by
Client under said Base Software License), based upon the date on which the
Term shall have ended; provided that Client's obligation to make such
payment (i) shall be subject, at the time of such payment and thereafter,
to any damages to which Client may be entitled under the terms of this
Agreement and to any right of set-off to which it may be entitled with
respect to such damages and (ii) shall not constitute a determination as to
the ultimate liability of Client with respect to such payment or the amount
thereof or of AC's entitlement to receive and retain such amount. Client's
rights under clause (i) above shall include, without limitation, Client's
rights to claim as damages its liability to AC for the payment by Client of
the amount set forth on Schedule 13.8.3 if the term of this Agreement is
ended as a result of any breach or default by AC hereunder (subject to the
provisions and limitations of Article 14.0 hereof), and any right of set-
off to which it may be entitled with respect to such damages.
13.9 TERMINATION ASSISTANCE AFTER TERMINATION DATE
13.9.1 TRANSITION SERVICES
Provided that termination of this Agreement was not by AC pursuant to
Sections 13.1, 13.3 or 13.4, nor by Client pursuant to Section 13.2, AC
shall provide Client reasonable assistance to provide an orderly transition
of System Operation Services to Client or its representatives or agents.
This assistance shall be provided for a period of six (6) months following
termination date unless mutually agreed otherwise.
13.9.2 COST
Client shall pay AC for transition assistance services performed after
the termination date at the rates provided for herein for services of that
type, if applicable, or if rates for such services are not provided for
herein, then at AC's normal rates then in effect for clients similar to
Client, and shall reimburse AC for reasonable out-of-pocket costs and
expenses.
14.0 REMEDIES
14.1 MEASURE OF DAMAGES
The measure of damages recoverable from one party by the other for any
reason, whether arising by negligence, intended conduct or otherwise, shall
not include any amounts for indirect, special, consequential, incidental,
or punitive damages or expenses of any party (including lost profits or
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savings), including third parties, even if such damages are foreseeable.
Further, AC shall have no liability for damages that could have been
avoided had Client exercised reasonable efforts to verify the data
furnished by AC before utilization of such data.
14.2 LIMITATION OF DAMAGES
The limit of AC's liability (whether in contract, tort, negligence,
strict liability in tort or by statute or otherwise) to Client or to any
third party concerning performance or non-performance by AC, or in any
manner related to this Agreement, for any and all claims shall not in the
aggregate exceed the sum of: (i) the fees and expenses paid by Client to AC
for AC's services hereunder; plus (ii) the amounts paid by Client under the
Base Software License described in Section 3.3.1 hereof, provided, however,
that these limitations shall not apply to personal injury caused by the
gross negligence or willful misconduct of AC's employees or agents and not
consisting of the loss of anticipated benefits under this Agreement.
14.3 LIMITATION PERIOD
Any action by either party based upon any claim or breach or default
of any provision of this Agreement must be brought within two (2) years
after the cause of action arose.
14.4 BARGAINED-FOR EXCHANGE
The allocations of liability in this Article 14.0 represent the agreed
and bargained-for understanding of the parties, and AC's compensation under
Article 8.0 hereof reflects such allocations.
14.5 OTHER REMEDIES
Notwithstanding anything to the contrary contained in Articles 12.0 or
13.0 or in any other provision of this Agreement, either party, in the
event of a breach or default by the other party of any of the provisions of
Articles 6.0 or 7.0 of this Agreement, shall have the right, in addition to
any other remedies that might be available to it, to seek immediate
injunctive or other equitable relief without having to pursue or exhaust
any other procedures or remedies set forth in this Agreement.
15.0 INDEMNITIES
15.1 INDEMNITY BY CLIENT
Client agrees to indemnify, defend and hold harmless AC, and its
officers, directors, partners, employees, agents, successors and assigns,
in accordance with the procedures described in Section 15.4 of this
Agreement, from and against any and all third-party claims and Losses
arising from or in connection with:
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15.1.1 AC'S SERVICES
AC's services or any use by Client of any deliverable item, except to
the extent any such claim results from gross negligence or willful
misconduct of AC or (b) is covered by AC's indemnities specified in Section
15.2;
15.1.2 INFRINGEMENTS
Any claims of infringement made against AC of any United States of
America letters patent, or a trade secret, or any copyright, trademark,
service mark, trade name or similar proprietary rights conferred by
contract or by common law or by any law of the United States of America or
any state, alleged to have occurred because of Systems or other resources
or items provided to AC by Client;
15.1.3 THIRD PARTY AGREEMENTS
Any obligations to be performed by Client pursuant to any contracts or
other arrangements between Client and any third parties;
15.1.4 REQUIRED CONSENTS
The performance by AC of System Services being deemed a breach or
default under any lease, contract or agreement as to which Client was to
obtain a Required Consent;
15.1.5 HAZARDOUS MATERIALS
Any: (i) "hazardous materials" or "hazardous substances" (as defined
in any applicable law or regulation) in, on, under or above the Data Center
as of or prior to the Effective Date; (ii) violation or alleged violation
of or any liability under any law, regulation, or ordinance, or order,
pertaining to any Hazardous Material located in, on, under or above the
Data Center as of or prior to the System Cutover Date; (iii) step taken by
any person or entity other than AC, to clean up, remedy, or remove
Hazardous Materials released or disposed of prior to the System Cutover
Date; (iv) off-site disposal, treatment, or storage of Hazardous Materials
generated by Client's operation of Data Center prior to the System Cutover
Date; or (v) violation or alleged violation by Client of any federal, state
or local laws relating to environmental matters; and
15.1.6 EMPLOYEE PLANS
Any Employee Plan.
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15.2 INDEMNITY BY AC
AC agrees to indemnify, defend and hold harmless Client and its
officers, directors, employees, agents, successors and assigns, in
accordance with the procedures described in Section 15.4 of this Agreement,
from and against any and all third-party claims and Losses arising from or
in connection with:
15.2.1 INFRINGEMENT
Any claims of infringement made against Client for infringement of any
United States of America letters patent, or a trade secret, or any
copyright, trademark, service mark, trade name or similar proprietary
rights conferred by contract or by common law or by any law of the United
States of America or any state, alleged to have occurred because of Systems
or other resources or items provided to Client by AC;
15.2.2 HAZARDOUS MATERIALS
Any (i) hazardous materials, or hazardous substances (as defined in
any applicable law or regulation) placed in, on, under or above the Data
Center by AC or its agents or invitees ("Subsequent Hazardous Materials");
(ii) violation or alleged violation of or any liability under any law,
regulation, or ordinance or order, pertaining to any Subsequent Hazardous
Material; (iii) step taken by AC, to clean up, remedy, or remove Hazardous
Materials released or disposed of subsequent to the Effective Date; (iv)
off-site disposal, treatment, or storage of Hazardous Materials generated
by AC's operation of the Data Center subsequent to the Effective Date; or
(v) violation or alleged violation by AC after the Effective Date of any
federal, state or local laws relating to environmental matters; or
15.2.3 THIRD PARTY AGREEMENTS
Any obligations to be performed by AC pursuant to any contracts or
other arrangements between AC and third parties.
15.3 CROSS INDEMNITY
AC and Client each agree to indemnify, defend and hold harmless the
other, and the other's officers, directors, partners, employees, agents,
successors and assigns in accordance with the procedures described in
Section 15.4 of this Agreement, from any and all Losses arising from or in
connection with: (a) the death or bodily injury of any agent, employee,
customer, business invitee or business visitor of the indemnitor; or (b)
the damage, loss or destruction of any real or tangible personal property
in the possession or under the control of the indemnitor. The employees or
agents of either party shall not, when at the premises of the other party,
be deemed the other party's business invitee or business visitor.
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15.4 INDEMNIFICATION PROCEDURES
Promptly after receipt by any person entitled to indemnification under
Sections 15.1 through 15.3 of this Agreement (an "Indemnified Party") of
notice of the commencement (or threatened commencement) of any claim in
respect of which the Indemnified Party will seek indemnification, the
Indemnified Party shall notify the party which is obligated to provide such
indemnification (an "Indemnifying Party") of such claim in writing. The
Indemnifying Party shall be entitled to have sole control over the defense
and/or settlement of such claim, provided that, within fifteen (15) days
after receipt of such written notice, the Indemnifying Party notifies the
Indemnified Party of its election to so assume full control. In that
event: (a) the Indemnified Party shall be entitled to participate in the
defense of such claim and to employ counsel at its own expense to assist in
the handling of such claim, and (b) the Indemnifying Party shall obtain the
prior written approval of the Indemnified Party before the entering into
any settlement of such claim or ceasing to defend against such claim if
such settlement or cessation would cause injunctive or other relief to be
imposed against the Indemnified Party. After notice by the Indemnifying
Party to the Indemnified Party of its election to assume full control of
the defense of any such action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal expenses incurred by such
Indemnified Party in connection with the defense of that claim. If the
Indemnifying Party does not assume sole control over the defense of such
claim as provided in this Section 14.4, the Indemnifying Party may
participate in such defense and the Indemnified party shall have the right
to defend the claim in such manner as it may deem appropriate, at the cost
and expense of the Indemnifying Party. The Indemnifying Party shall
promptly reimburse the Indemnified Party for such costs and expenses, in
accordance with the applicable Section of this Article 15.0.
15.5 SUBROGATION
In the event that an Indemnifying Party shall be obliged to indemnify
an Indemnified Party pursuant to Section 15.1 through 15.3 of this
Agreement, the Indemnifying Party shall, upon payment of such indemnity in
full, be subrogated to all rights of the Indemnified Party with respect to
the claims to which such indemnification relates.
15.6 EXCLUSIVE REMEDY
The indemnification rights of each Indemnified Party pursuant to this
Article 15.0 of this Agreement shall be the exclusive remedy of such
Indemnified Party with respect to the third-party claims to which such
indemnification relates; provided, however, that such Indemnified Party
shall retain the right to seek injunctive or other non monetary equitable
remedies with respect to such claims.
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15.7 INSURANCE
Each party represents and agrees that it presently has, and throughout
the Term shall maintain in force and effect, the levels and types of
insurance coverage listed for it in Schedule 15.7 hereto.
16.0 MISCELLANEOUS
16.1 ENTIRE AGREEMENT
Except as expressly stated herein, this Agreement, together with the
annexed schedules and exhibits, constitutes the entire understanding and
agreement between the parties with respect to the transactions contemplated
herein, and supersedes any and all prior or contemporaneous, oral or
written communication with respect to the subject matter hereof. No other
document, usage of trade, or other regular practice or method of dealing
between the parties hereto or others, will be used to modify, interpret,
supplement, or alter in any manner the express terms of this Agreement.
Subject to AC's representation and agreement that it shall perform the
System Services in conformity with the Service Levels and in accordance
with all of the other terms and conditions of this Agreement, Client
acknowledges that AC does not represent or guarantee that any of the
objectives of Client will be achieved, that there will be any benefits to
Client from the use of the New System, nor that the Hardware or Software to
be utilized in the New System will necessarily prove to be the most
appropriate for the intended purposes.
16.2 CAPTIONS; COUNTERPARTS; SECTION NUMBERS
Captions, Tables of Contents, Index of Definitions, and Schedule
Titles are used herein for convenience only and will not be used in the
construction or interpretation of this Agreement. This Agreement may be
executed in more than one counterpart, in which case all of them shall be
deemed one and the same Agreement. This Agreement shall be deemed executed
as soon as each party has executed a counterpart, even if not the same one
as executed by the other parties. Any reference herein to a particular
Section number (e.g., "Section 14.1"), shall be deemed a reference as well
to all Sections that bear sub-numbers to the number of the referenced
Section (e.g., Sections 14.1.1, etc.).
16.3 BINDING NATURE AND ASSIGNMENT
This Agreement shall bind the parties and their successors and
permitted assigns. Neither party may assign this Agreement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed; provided that either party shall have the right to
assign this Agreement to any Affiliate of such party without the other
party's consent, upon giving the other party written notice of such
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assignment, and further provided that Client may assign this Agreement to
any person or entity that acquires substantially all of the assets of
Client's Family division. Any other assignment attempted without the
written consent of the other party shall be void. Notwithstanding the
foregoing, no assignment shall relieve the assignor of its liability for
the performance of any or all of its duties and obligations under this
Agreement.
16.4 RELATIONSHIP OF PARTIES
In connection with this Agreement, each party is an independent
contractor and, as such, will not have any authority to bind or commit the
other. Nothing herein shall be deemed or construed to create a joint
venture, partnership or agency relationship between the parties for any
purpose. Without limiting the generality of the foregoing and except where
this Agreement expressly provides otherwise, AC does not undertake by this
Agreement or otherwise to perform any obligation of Client, whether
regulatory or contractual, or to assume any responsibility for Client's
business or operations.
16.5 EMPLOYEES
AC reserves the right to determine which of its personnel shall be
assigned to perform services, and to replace or reassign such personnel
during the term hereof; provided, however, that it will, subject to
scheduling and staffing considerations, attempt to honor Client's request
for specific individuals.
16.6 AUDIT RIGHTS
In addition to any reviews specified in this Agreement or in any
schedule hereto, Client shall have the right to review the status of
budgets, cost records, and billings with AC, subject to at least seven (7)
days' advance notice. Costs of AC's assistance for any reviews of this
type will be billable to Client separately from this Agreement at AC's
normal hourly rates plus out-of-pocket expenses. However, AC shall not
provide any of its competitors, if Client designates any such competitor to
perform such audit, with access to AC's trade secrets or Confidential
Information. Client shall pay AC for AC's costs for any resources required
by the audit or inspection in addition to the resources that AC would
otherwise use in the performance of this Agreement.
16.7 AMENDMENTS; WAIVERS
Except as provided expressly herein, this Agreement shall not be
modified, amended or in any way altered except by written document signed
by both of the parties hereto. No waiver of any provision of this
Agreement, or of any rights or obligations of any party hereunder, shall be
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effective unless in writing and signed by the party waiving compliance, and
such waiver shall be effective only in the specific instance, and for the
specific purpose, stated in such writing. No waiver of breach of, or
default under, any provision of this Agreement shall be deemed a waiver of
any other provision, or of any subsequent breach or default of the same
provision, of this Agreement.
16.8 APPROVALS AND SIMILAR ACTIONS
Where agreement, approval, acceptance, consent or similar action by
either party is required by any provision of this Agreement, such action
shall not be unreasonably delayed or withheld, unless specifically
permitted by this Agreement.
16.9 NOTICES
Any notice, invoice, or other communication given pursuant to this
Agreement shall be in writing and shall be effective either when delivered
personally by hand or transmitted electronically to the premises of the
party for whom intended, on the next business day after it is deposited
with an overnight delivery service such as Federal Express, or at close of
business on the third (3rd) business day following deposit of the same into
the United States mail (certified mail, return receipt requested, or first
class postage prepaid), addressed to such party at the address set forth on
the initial page of this Agreement. Either party may designate a different
address by notice to the other given in accordance herewith. To be
effective, any notice asserting a material breach or termination of this
Agreement must also be sent to the recipient party's legal department by
the same method and, if delivered on or before July 1, 1995 (or in respect
of a Problem arising on or before said date), to the assignee (if any) of
AC's rights under the Base Software License at the address specified by
such assignee in the instrument of assignment. Either party may designate
a different address by notice to the other given in accordance herewith.
16.10 RIGHT OF AC TO PERFORM SERVICES FOR OTHERS
Client understands and agrees that AC may perform services as AC sees
fit for third parties excepting solely that, during the Term of this
Agreement, AC agrees not to provide the System Services using the New
System and the JDA Software to other full members from time to time of the
Christian Booksellers Association ("CBA") headquartered and located in the
United States, unless otherwise agreed between the parties. However, the
prohibition in the prior sentence does not apply to nor bar AC from
providing (i) any other type of service(s) and/or product(s) to any third
party, (ii) any service(s) and/or product(s) to any third party that joins
the CBA after AC arranges to provide that third party such service(s)
and/or product(s), (iii) AC staff for other services to a CBA full member,
(iv) any type of service(s) and/or product(s) to any associate or affiliate
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member of the CBA (e.g., providers of services or materials to CBA full
members, if any) or (v) after the Term of this Agreement. Client agrees to
furnish a complete copy of the list of CBA full members promptly upon
request by AC. In the event that the CBA's purpose, mission and/or overall
membership changes during the Term to include primarily secular retailers
of books, gifts and/or other consumer products (i.e., rather than the
current scope of solely U.S. retailers that specialize in Christian books,
gifts and related products), then this Section 16.10 shall be reformed so
as to continue to accomplish its essential, initial purpose. This
provision of the Agreement does not modify the confidential information
non-disclosure provision of the Agreement.
16.11 FORCE MAJEURE
Each party shall be excused from performance under this Agreement and
shall have no liability to the other party for any period it is prevented
from performing any of its obligations (other than payment obligations), in
whole or in part, as a result of delays caused by the other party or by an
act of God, war, civil disturbance, court order, labor dispute, third party
performance or nonperformance, or other cause beyond its reasonable
control, including failures or fluctuations in electrical power, heat,
light, or telecommunications, and such nonperformance shall not be a
default under, or grounds for termination of, this Agreement; provided,
however, that the delayed party shall promptly notify the other party of
the occurrence, cause, nature and expected duration and severity of impact
and all shall cooperate with the other party in minimizing any adverse
impact of such occurrence. In the event AC's performance of this Agreement
is prevented by an event of force majeure and a material disruption to
Client's business operations results or is reasonably foreseen by Client,
Client may engage one or more third parties to perform the System Operation
Services or any other services required of AC hereunder, utilizing the New
System or any other Hardware or Software; provided that Client shall assure
that each such third party shall be appropriately qualified to do the work,
shall cooperate with AC in its performance of the work, and shall perform
the work in a manner that does not interfere with AC's performance of the
System Services nor affect the Hardware or Software so as to make more
difficult or costly AC's future performance of the System Services.
16.12 SEVERABILITY
If any provision of this Agreement is held to be unenforceable, then
both parties shall be relieved of all obligations arising under such
provision, but only to the extent that such provision is unenforceable, and
this Agreement shall be deemed amended by modifying such provision to the
extent necessary to make it enforceable while preserving its intent or, if
that is not possible, by substituting another provision that is enforceable
and achieves the same objective and economic result. If such unenforceable
provision does not relate to the payments to be made to AC, and if the
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remainder of this Agreement is capable of substantial performance, then the
remainder of this Agreement shall be enforced to the extent permitted by
law. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH PROVISION OF THIS
AGREEMENT WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF
WARRANTIES, INDEMNIFICATION OR EXCLUSION OF DAMAGES OR OTHER REMEDIES IS
INTENDED TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND TO BE
ENFORCED AS SUCH. FURTHER, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT IN
THE EVENT ANY REMEDY UNDER THIS AGREEMENT IS DETERMINED TO HAVE FAILED OF
ITS ESSENTIAL PURPOSE, ALL LIMITATIONS OF LIABILITY AND EXCLUSIONS OF
DAMAGES OR OTHER REMEDIES SHALL REMAIN IN EFFECT.
16.13 SURVIVAL OF RIGHTS AND OBLIGATIONS
The rights and obligations of the parties under the following Sections
and Articles of this Agreement shall survive and continue after the ending
or expiration of the Term, and shall bind the parties and their legal
representatives, successors, heirs, and assigns: Section 4.2.3 and Articles
6.0, 7.0, 8.0, 9.0, 12.0, 13.0, 14.0, 15.0 and (to the extent appropriate
in context) 16.0. Claims under this Agreement arising prior to the end of
the Term, shall also survive the ending or expiration of the Term.
16.14 SCHEDULES
The Schedules attached hereto or incorporated herein by reference are
an integral part of the Agreement. To the extent that there are any
conflicts between the terms and conditions in the Schedules and those
contained in the Agreement itself, the terms and conditions set forth in
the Agreement itself shall control.
16.15 EXPENSES
Each party shall bear all of its own costs and expenses (including
attorneys' fees) relating to the negotiation, preparation, drafting and
execution of this Agreement.
16.16 MEDIA RELEASES
All media releases, public announcements and public disclosures by
Client or AC or its employees or agents relating to this Agreement or its
subject matter, including promotional or marketing materials, shall be
coordinated with and approved by the other party prior to release. This
restriction does not apply (a) to any announcement intended solely for
internal distribution at Client or at AC, (b) any disclosure required by
legal, accounting or regulatory requirements beyond the reasonable control
of the disclosing party, nor (c) to descriptions of this project (including
identification of Client) in private communications with other clients and
prospective clients of AC.
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16.17 NO THIRD PARTY BENEFICIARIES
The parties agree that this Agreement is solely for the benefit of the
parties hereto and is not intended to, and shall not, confer any legal
rights or benefits on any third party and that there are no third party
beneficiaries to this Agreement nor to any part or specific provision of
this Agreement.
16.18 GOVERNING LAW; VENUE
This Agreement shall be governed by and construed in accordance with
the substantive laws of Illinois. Any action or proceeding arising out of,
or related to this Agreement may be brought only in an appropriate court in
Illinois.
IN WITNESS WHEREOF, each party has caused this Agreement to be signed
and delivered by its duly authorized representative.
Andersen Consulting The Zondervan Corporation
By: /S/__________________________ By: /S/ LESLIE E. DIETZMAN
-----------------------
Title: __________________________ Title: PRESIDENT
Date: __________________________ Date: MAY 9, 1994
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