EXHIBIT 10.14
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of April
5, 2000, by and between Ziff Xxxxx Media Inc., a Delaware corporation ("Buyer"),
and ZD Inc., a Delaware corporation ("Asset Seller").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement, dated as of December
6, 1999 (the "Purchase Agreement"), by and among Asset Seller, Xxxx-Xxxxx
(Europe) Holdings, Inc. (the "Stock Seller," and together with the Asset Seller,
the "Sellers") and Buyer, Buyer purchased certain publishing assets and
companies of the Sellers;
WHEREAS, in connection therewith, Buyer and Asset Seller desire that each
of Buyer and Asset Seller provide, or cause their respective wholly-owned direct
or indirect subsidiaries to provide, the other or such other's wholly-owned
direct or indirect subsidiaries, with certain transition services as set forth
herein (it being understood that the provision of certain other services by
Buyer on the one hand, and/or Asset Seller, on the other hand, is addressed in
other agreements executed and delivered as of the date hereof); and
WHEREAS, capitalized terms used herein and not otherwise defined herein
have the meanings given to such terms in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Buyer and Asset Seller agree as follows:
1. Transition Services.
(a) Subject to the other terms and conditions of this Agreement, each of
Buyer and Asset Seller shall provide, or shall cause its wholly-owned direct or
indirect subsidiaries to provide, to the other or wholly-owned direct or
indirect subsidiaries of the other, from the date of this Agreement and for the
period of time set forth on Attachment A with respect to each of the services,
the respective services set forth on Attachment A attached hereto and such other
transition assistance as may be mutually agreed by Buyer and Asset Seller
(collectively, the "Transition Services"). For purposes of this Agreement, each
party is referred to as a "Provider" in its capacity as the provider of a
Transition Service and as a "Recipient" in its capacity as the recipient of a
Transition Service.
(b) Unless otherwise agreed, the Transition Services shall be provided at
Vendor Cost. For purposes of this Agreement, "Vendor Cost" means the amount
specified on Attachment A. In addition, "Vendor Cost" shall include the direct
out-of-pocket costs incurred by the Provider in providing the services, but only
to the extent that such direct out-of-pocket costs have not been
included by the Provider in the amounts set forth on Attachment A. In addition,
unless otherwise specified on Attachment A, Asset Seller shall also pay to Buyer
any amounts that are required to be paid to any licensors of software that is
used in connection with the provision of any services hereunder, and any amounts
that are required to be paid to any such licensors to obtain the consent of such
licensors to provide any of the services hereunder. Subject to the immediately
preceding sentence, Buyer shall use reasonable efforts to obtain any consents
that may be required from such licensors in order to provide any of the services
hereunder.
(c) Each Provider of Transition Services shall perform such Transition
Services exercising the same degree of care as it exercises in performing the
same or similar services for its own account, with priority equal to that
provided to its own businesses or those of any of its affiliates, subsidiaries
or divisions.
2. Billing and Payment. With respect to each of the Transition Services,
the Recipient shall pay to the Provider the monthly charge or other charge
specified on Attachment A for each Transition Service by the last day of each
calendar month during the Transition Period. The Recipient shall promptly pay
all other bills and invoices for charges permitted hereunder that it receives
from the Provider for services provided under or pursuant to this Agreement,
subject to receiving, if requested, any appropriate support documentation for
such bills and invoices. Such additional charges may, at the Provider's option,
be billed as incurred if the amount involved equals or exceeds $10,000, or, if
such charges do not exceed $10,000, at the end of each calendar month during the
Transition Period. All amounts shall be paid by wire transfer in accordance with
the instructions provided by the Provider to the Recipient and, in the case of
additional charges, shall be paid not later than 10 days following receipt by
the Recipient of the Provider's invoice.
3. General Intent. Each party and its wholly-owned direct or indirect
subsidiaries agree to use their respective reasonable commercial efforts to end
their need to use the Transition Services as soon as reasonably possible and
(unless the parties otherwise agree) in all events to end such need with respect
to each service specified in Attachment A attached hereto not later than the
periods specified in Attachment A.
4. Validity of Documents. The parties hereto shall be entitled to rely upon
the genuineness, validity or truthfulness of any document, instrument or other
writing presented in connection with this Agreement unless such document,
instrument or other writing appears on its face to be fraudulent, false or
forged.
5. Term of Agreement. The term of this Agreement shall commence on the date
hereof and shall continue (unless sooner terminated pursuant to the terms
hereof) until January 1, 2001, or such shorter or longer period as may be agreed
by the parties or provided in Attachment A attached hereto with respect to
particular Transition Services described in Attachment A attached hereto.
6. Partial Termination. Any or all of the services provided hereunder are
only terminable earlier than the Transition Period or the period specified in
Attachment A attached hereto
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by the Recipient as of the end of a month upon 30 days' prior written notice to
the Provider (unless otherwise specifically provided in Attachment A). Any such
termination shall be final, subject to the Recipient's obligation to pay the
Provider for the monthly charges and other amounts owing in respect of such
terminated Transition Service.
7. Assignment. This Agreement shall not be assignable in whole or in part
by any party hereto without the prior written consent of the other parties
hereto.
8. Confidentiality. Each party shall cause each of its Affiliates and each
of their officers, directors and employees to hold all information relating to
the business of the other party disclosed to it by reason of this Agreement that
is not already generally available to the public confidential and will not
disclose any of such information to any party unless legally compelled to
disclose such information; provided, however, that to the extent that any of
them may become so legally compelled they may only disclose such information if
they shall first have used reasonable efforts to, and, if practicable, shall
have afforded the other party the opportunity to obtain, an appropriate
protective order or other satisfactory assurance of confidential treatment for
the information required to be so disclosed. Asset Seller hereby agrees that
neither it nor any of its subsidiaries, employees or agents will access or use
any Buyer or third party software on Buyer systems, other than the software and
systems specifically described in Attachment A.
9. Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
10. Limitation of Liability. Neither party shall be liable to the other or
any third party for any special, consequential or exemplary damages (including
lost or anticipated revenues or profits relating to the same) arising from any
claim relating to this Agreement or any of the services provided hereunder,
whether such claim is based on warranty, contract, tort (including negligence or
strict liability) or otherwise, even if an authorized representative of such
party is advised of the possibility or likelihood of the same. In addition,
neither party shall be liable to the other party or any third party for any
direct damages arising from any claim relating to this Agreement or any of the
services provided hereunder or required to be provided hereunder, except to the
extent that such direct damages are caused by the gross negligence or willful
misconduct of such party or their wholly-owned direct or indirect subsidiaries.
11. Consent to Jurisdiction; Waiver of Jury Trial.
(a) The parties hereto hereby irrevocably submit to the jurisdiction of the
courts of the State of New York and the federal courts of the United States of
America located in the State of New York solely in respect of the interpretation
and enforcement of the provisions of this agreement and of the documents
referred to in this Agreement, and in respect of the transactions contemplated
herein, and hereby waive, and agree not to assert, as a defense in any action
for the
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interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action may not be brought or is not maintainable in
said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a New York state or federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 13 of this Agreement or in such
other manner as may be permitted by law, shall be valid and sufficient service
thereof.
(b) Each party hereto hereby acknowledges and agrees that any controversy
which may arise under this agreement is likely to involve complicated and
difficult issues, and therefore each such party hereby irrevocably and
unconditionally waives any right such party may have to a trial by jury in
respect of any litigation directly or indirectly arising out of or relating to
this agreement or the transactions contemplated by this Agreement. Each party
certifies and acknowledges that (i) no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each
such party understands and has considered the implications of this waiver, (iii)
each such party makes this waiver voluntarily, and (iv) each such party has been
induced to enter into this agreement by, among other things, the mutual waivers
and certifications in this Section 11.
12. Counterparts. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties.
13. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or by
overnight courier to the recipient, one business day after being sent by telefax
(with transmission confirmed) or five days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to each party at
the address indicated below or to such other address or to the attention of such
other Person as the recipient party has specified by prior written notice to the
sending party.
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Buyer:
Ziff Xxxxx Media Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Partners II, L.P.
000 Xxxx Xxxxxx, Xxx. 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx
Fax: (000) 000-0000
Asset Seller:
ZD Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx
14. Modification, Nonwaiver, Severability. Neither this Agreement nor any
part hereof may be changed, altered or amended orally. Any modification must be
by written instrument signed by the parties. Failure by either party to exercise
promptly any right granted herein or to require strict performance of any
obligation imposed hereunder shall not be deemed a waiver of such right. If any
provision of this Agreement is held ineffective for any reason, the other
provisions shall remain effective.
15. Interpretation. The headings and captions contained in this Agreement
and in Attachment A attached hereto are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. The use
of the word "including" herein shall mean including without limitation."
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16. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any person.
17. Entire Agreement. This Agreement and the Recapitalization Agreement
contain the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
18. Relationship of Parties. Except as specifically provided herein, none
of the parties shall act or represent or hold itself out as having authority to
act as an agent or partner of the other parties, or in any way bind or commit
the other party to any obligations. Nothing contained in this Agreement shall be
construed as creating a partnership, joint venture, agency, trust or other
association of any kind, each party being individually responsible only for its
obligations as set forth in this Agreement.
19. Force Majeure. If any Provider is prevented from complying, either
totally or in part, with any of the terms or provisions of this Agreement by
reason of fire, flood, storm, strike, lockout or other labor trouble, any law,
order, proclamation, regulation, ordinance, demand or requirement of any
governmental authority, riot, war, rebellion or other causes beyond the
reasonable control of the Provider or other acts of God, then upon written
notice to the Recipient, the affected provisions and/or other requirements of
this Agreement shall be suspended during the period of such disability and the
Provider shall have no liability to the Recipient in connection therewith.
* * * * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date and year first set forth
above.
ZIFF XXXXX MEDIA INC.
By: /s/ XXXXXX X. XXXXXXXXXX
----------------------------
Title: Vice President
----------------------------
ZD INC.
By: /s/ J. XXXXXXX XXXXXX
----------------------------
Title: Senior Vice President
----------------------------
Attachment A
1. Banking and Cash Management Services.
A. Services; Duration. Buyer and Asset Seller shall provide the services
described in Schedule I attached hereto for the time periods set forth
in such Schedule 1.
B. Charges for Services. The services described on the attached Schedule
I shall be provided at no charge.
2. Use of Certain Financial Software.
A. Services; Duration. In addition to the banking and cash management
services described on Schedule I attached hereto, Buyer will provide
to Asset Seller and ZDTV access to and use of the People Soft
financial software and the Admarc software applications purchased by
Buyer as part of the Acquisition for Asset Seller's transaction
processing needs. Such access and use will be provided until June 30,
2000 (April 30, 2000 with respect to ZDTV) with respect to the
PeopleSoft software and until December 31,2000 with respect to the
Admarc software. Asset Seller shall be entitled to discontinue use of
such software prior to the specified dates upon at least 30 days'
prior written notice to Buyer. In the event the Admarc system is
replaced by Buyer, access to data relevant to Asset Seller will be
provided through alternate means (determined by Buyer) for the
remainder of the service period.
B. Charges for Services. Buyer shall charge Asset Seller an allocated
portion of the monthly operation cost of the software covered in this
paragraph 2B based on the "Charge-back Allocation Criteria" set forth
on the attached Schedule 2.
3. Information Technology Services.
A. Services; Duration; Charges. Buyer shall provide to Asset Seller and
the other businesses described in Schedule 2 attached hereto the
services described in such Schedule 2 for the time periods set forth
in such Schedule 2. Schedule 2 also describes the fees and charges
that Asset Seller shall pay to Buyer in exchange for the provision of
such services. To the extent that Buyer is providing services to
entities other than Asset Seller, Asset Seller shall be liable to
Buyer for such charges and Asset Seller shall seek reimbursement from
the applicable entity receiving such services.
4. Use of Premises.
A. Description. Schedule 5.11(a) attached to the Purchase Agreement sets
forth a list of the portions of the offices leased by Buyer (the
"Shared Spaces") that Asset Seller (or such other parties as are
indicated on such Schedule) will be entitled to continue to occupy for
a period of 6 months following the Closing. Such use shall be for such
purposes and in such manner as Sellers were using such spaces
immediately prior to the Closing. In addition to the Shared Spaces,
Buyer shall permit those employees of Sellers and Red Xxxxxxx whose
offices are located in areas of Buyer's offices which do not
constitute Shared Spaces to continue using such spaces or alternate
equivalent spaces designated by Buyer for a period of up to 3 months
following the Closing in order to permit Sellers to transition such
employee's work spaces to location of Sellers in an orderly fashion.
B. Charges. Sellers shall pay Buyer the allocable portion of all rent,
taxes, maintenance and other fees, expenses and charges incurred by
Buyer with respect to the Shared Spaces. Such allocation shall be
based on the approximate square footage of the Shared Spaces versus
the total square footage of the space covered by the applicable rent,
tax, fee, expense or charge. To the extent that Buyer is providing the
use of Shared Spaces to entities other than Asset Seller, Asset Seller
shall be liable to Buyer for amounts owed in respect of such Shared
Spaces and Asset Seller shall seek reimbursement from the applicable
entity using such Shared Spaces.
5. Accounting and Transaction Processing Services.
A. Services; Duration. Buyer shall provide to the "ZDNet" division of
Asset Seller and the ZDTV business transaction processing management
services through April 30, 2000. Such services shall consist of
credit, billing, collections, accounts payable and general accounting.
Buyer shall also provide to the "ZD Corporate" division of Asset
Seller accounts payable and general accounting services through June
30, 2000. Upon completion of the accounting services transition
period, Asset Seller will be responsible for maintaining the archive
of historical financial information for all businesses other than the
businesses acquired by Buyer. Asset Seller shall provide accounting
personnel to perform the transaction processing functions for ZDNet,
ZDTV and ZD Corporate. Asset Seller shall also provide personnel to
assist Buyer in transitioning the accounting services that Buyer is
retaining into a stand-alone business unit. Such services being
provided by Asset Seller shall be provided through June 30, 2000.
B. Charges. Attached as Schedule 3 hereto is a projected budget for the
accounting services described in paragraph 5A above. The allocation
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methodology contained in such projected budget shall be used by Buyer
and Asset Seller to determine the net amount owing by Asset Seller to
Buyer for the services being provided under this paragraph 5.
References to ZDNet, ZDTV or Computer Shopper in such budget are
references to amounts that will be charged to Asset Seller by Buyer.
6. Intellectual Property Legal Services.
A. Services; Intellectual Property Legal Services. Asset Seller shall
provide the following services to Buyer during the term specified
under "Duration", below:
1. Provide a list of all law firms, agents and foreign associates
used worldwide for trademark prosecution and enforcement,
including contact information. Asset Seller shall request that
each such law firm, agent and associate prepare and provide, at
Buyer's cost and expense, a list of applications and
registrations of active matters relating to the Division.
2. Provide copies of all written files.
3. Promptly provide an electronic copy of the docketing system of
all trademarks, including status and action items, and continue
to docket matters manually and advise Buyer of new deadlines
until such file transfer is completed.
4. Promptly forward all notices received from outside counsel and
registry officials, retaining one copy for docketing purposes.
5. Promptly forward all cease-and-desist letters or other notices of
actual or potential trademark infringement relating to all
trademarks.
6. Respond to Office Actions and other correspondence received from
the U.S. Patent and Trademark Office or U.S. Copyright Office,
consistent with past procedure.
7. Coordinate preparation by outside counsel of all filings required
to be made to update record title into name of Asset Seller for
those patents, trademark and copyright registrations and
applications identified by Buyer to Asset Seller in accordance
with the side letter agreement between Asset Seller and Buyer
dated of even date herewith.
B. Covered Persons. The following employees of Asset Seller (the "IP
Covered Persons") shall, so long as they remain in the employ of Asset
Seller, continue to provide services to Buyer following the Closing on
a basis consistent with services provided to the Division prior to the
Closing (percentages indicate the percentage of the applicable
employee's working time that will be devoted to providing services to
Buyer): Xxxxxx xxx Xxxxxx (80%), Xxxxxxx Xxxxxxxxxx (90%), Xxxxxx
Xxxxxxxxx (90%), Xxxxxxx
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Xxxxx (90%), Xxxxxx Xxxxxxx (90%) and Xxxx Xxxxxxxxx (50%). Such
persons shall at all times remain employees of Asset Seller, and
except as set forth in paragraph 6C below, Buyer shall have no
liability or obligation with respect to such persons in connection
with their employment by ZD Inc.
C. Charges. Buyer shall reimburse Asset Seller for 100% of outside
domestic and foreign counsel fees and disbursements and official fees
related to the services provided under this paragraph 6 (except as
otherwise provided pursuant to the side letter referenced in paragraph
6A.(7) above) and other direct out-of-pocket costs and expenses
incurred by Asset Seller and for a percentage of each of the Covered
Person's salary and bonus (which, in the case of the bonus, shall be
prorated for the periods during which each Covered Person provides
services to Buyer) in an amount equal to the percentage of that
person's time engaged in activities for the Buyer (as indicated in
paragraph 6B above). Such amounts shall be increased by 19% to
compensate Asset Seller for the benefits and other costs incurred by
Asset Seller with respect to such persons. Buyer shall have no
liability with respect to any severance, vacation, termination,
pension, profit sharing or other employee benefits that may be payable
to any covered person.
D. Duration. Asset Seller shall use commercially reasonable efforts to
have available the IP Covered Persons to continue to provide the
applicable services to Buyer until June 1, 2000.
7. Use of Certain Employees.
A. Covered Persons. The following employees of Asset Seller and Buyer
(the "Covered Persons") shall, so long as such Covered Persons remain
in the employ of the applicable party, continue to provide services to
the other following the Closing on a basis consistent with services
provided to the applicable business prior to the Closing (percentages
indicate the percentage of each person's working time that will be
devoted to providing services to the Recipient):
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Name Time Allocation Employer Recipient
---- --------------- -------- ---------
Xxxx Xxxxx 20% Asset Seller Buyer
Megumi Jinno 20% Asset Seller Buyer
Xxxxxxx Xxxxxxxx 50% Buyer Asset Seller
Xxxxxx Mini 50% Buyer Asset Seller
Xxxxxxxxx Xxxxx 25% Buyer Asset Seller
Such persons shall at all times remain employees of the applicable
"Employer", and, except as set forth in paragraph 7B below, the
Recipient shall have no liability or obligation with respect to such
persons in connection with their employment by the "Employer".
B. Charges. Each Recipient shall reimburse the Provider for a percentage
each of the Covered Person's salary in an amount equal to the
percentage "Time Allocation" for each such person (as indicated in
paragraph 7A above). Such amounts shall be increased by 19% to
compensate the applicable Provider for the benefits and other costs
incurred by such Provider with respect to such persons. The Recipient
shall have no liability with respect to any severance, vacation,
termination, pension, profit sharing or other employee benefits that
may be payable to any Covered Person of the Provider.
C. Duration. Each Provider shall use commercially reasonable efforts to
have available the Covered Persons to continue providing the
applicable services to the Recipient until December 31, 2000, or such
earlier date as the Recipient may specify in writing to the applicable
Provider with respect to each Covered Person with 30 days prior
written notice.
8. Continued Health Insurance Coverage.
A. Services; Duration; Charges. For the period beginning on the Closing
Date and continuing for the remainder of the calendar month in which
the Closing Date occurs and thereafter until May 31, 2000 (unless
Buyer provides Asset Seller with notice by April 14 of an earlier
termination in which case it shall be until April 30, 2000), Asset
Seller shall provide to the Transferred Employees the same medical
coverage under Asset Seller's Aetna's ASA medical plan that was
provided to such employees by Asset Seller immediately before Closing.
Buyer shall pay Asset Seller the amount of $220,000 per month for each
month as total compensation for such coverage, payable promptly after
this date with respect to April and on May 1 if not cancelled as
provided herein.
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Schedule 1
Accounts Receivable
Cash receipts into the lockbox accounts maintained by Asset Seller will be
posted to the Accounts Receivable ledger by the A/R department of Buyer (led by
Xxxxxxx Xxxxx). Once Asset Seller has established its own A/R department,
Buyer's team will provide reasonable assistance in transitioning to Asset Seller
the process of monitoring Asset Seller's lockbox accounts and posting receipts
to Asset Seller's Accounts Receivable ledger. Such transition shall occur as
soon as practicable, but in any event no later than June 1, 2000.
The majority of the existing lockbox accounts of Asset Seller will remain with
Asset Seller. Buyer's A/R department will continue to process receivables
ensuring the appropriate split between Asset Seller and Buyer. The cash received
in the lockbox accounts will be distributed to the appropriate bank accounts
(i.e., Asset Seller or Buyer).
Once Asset Seller's personnel have taken over receivable management and review
of the daily lockbox receipts for Asset Seller's lockbox accounts, Asset Seller
shall promptly remit (within 1 business day of receipt) all collections in
respect of payments made to Buyer.
If during the period that Buyer's personnel are managing Asset Seller's lockbox
accounts or the period that Asset Seller's personnel are managing such lockbox
accounts, any payment is received from a customer who purchases products or
services from both Buyer and Asset Seller without specification as to which
invoice such payment relates, the following procedures shall be implemented to
determine which party (Buyer or Asset Seller) is entitled to the benefit of such
payment:
o Contact the customer for specifics as to what invoices and what
company is being paid (this should be performed by the personnel
managing the lockbox (i.e. Buyer in the early transition and Asset
Seller in the later transition). A written indication (fax or e-mail)
should be requested from the customer to alleviate potential future
collection issues.
o If specifics are not available from the customer, the cash should be
applied to the oldest invoices of Buyer or Asset Seller and ratably to
any invoices which are the same aging.
Cash Disbursements
Cash disbursements are made primarily through accounts payable processing and
wire transfers. Wire transfers are discussed under Management of Daily Cash
Position.
Buyer shall continue to process Asset Seller's accounts payable through April
30, 2000, at which time Asset Seller's personnel will take over the processing
of Asset Seller's accounts payables. Accounts payable for Asset Seller will
continue to be processed out of the Delaware checking
account. Buyer will be permitted to continue to use Asset Seller's Delaware
checking account to process its disbursements on a transitional basis until
April 30, 2000. During the period that Buyer and Asset Seller are using the same
Delaware checking account for accounts payable processing, the account will be
funded by Asset Seller's concentration account (this is how the "mechanics" are
set at the bank) and Buyer will reimburse Asset Seller's concentration account
(from Buyer's concentration account).
Such reimbursement will be done at the time of a check run. A separate business
unit A/P will be set up to process Buyer's A/P. In this manner at the time of
cutting checks, the parties will know which checks relate to Buyer and which
relate to Asset Seller. Before checks are mailed in respect of Buyer's A/P,
Buyer will fund Asset Seller's concentration account in respect of such
payments.
Management of Daily Cash Position
Managing the daily cash position includes, managing overnight investing of cash
and repayment of debt with excess cash.
Wire transfers are currently processed by Xxx Xxxxxxx and approved by either
Xxxx Xxxxx or Xxx Xxxxxx. Prior to Closing, Asset Seller needs to set up
authorization for wire approval with an authorized representative of Asset
Seller. Such wires are processed out of Asset Seller's concentration account and
primarily relate to debt payments. Wires are currently approved through the Bank
of NY software system installed at Buyer. On a daily basis, Xxx Xxxxxxx prepares
a G/L upload file to record the day's wire activities in the G/L.
While Asset Seller works to train new users and to have the software installed
locally, Buyer will continue to provide this service. The parties may establish
a system of e-mail authorization to indicate wire transfers are made in
accordance with Asset Seller's instructions. Once Asset Seller has the software
installed and employees trained, it will take over the process of setting up the
wires for approval and preparing the G/L upload file (until 6/30/00, the file
will be uploaded to Buyer's PeopleSoft system). Such takeover of the process
shall occur no later than June 30, 2000.
Timing
Based on the above, Asset Seller's and Buyer's banking systems should be
operating separately no later than May 1, 2000. Asset Seller may continue to use
the links to Buyer's PeopleSoft system so accounting services can be provided
(i.e. ensure proper G/L posting of all cash transactions) through June 30, 2000
(in accordance with paragraph 2A of Attachment A).
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Schedule 2
Buyer agrees to provide continued support for users from each of the
organizations listed below of infrastructure, core business applications, and
departmental systems, being acquired by Buyer pursuant to the Purchase
Agreement, for the periods listed below. Services will be rendered on a monthly
charge-back basis (where applicable) throughout the transition period.
Charge-back fees will be calculated as described on the schedule included below.
The following sections outline the support to be provided for each organization.
In all cases the dates provided are projected based on requirements expressed by
the supported organizations. In each case the purpose of this service agreement
is to facilitate the smooth transition of existing Xxxx-Xxxxx Inc.
organizational components from an integrated centrally serviced group to
autonomous businesses each capable of sustaining operations independently. As
each business unit is able to transition to its own information systems
infrastructure the services provided by Buyer will be terminated. Accordingly,
the contents of this Schedule 2 form a framework that will be used to guide
activities between Buyer and other business components throughout the transition
period. Modifications will be negotiated as required due to operational
considerations within the spirit of this Schedule 2.
The information systems strategy for Buyer consists of migration of applications
from their current operational environment. The current applications platform
will remain in place (supported by Buyer) through the periods described below.
Supported organizations will require no change to their existing client
environment throughout this period. In any case where an organization requires
support after the dates provided, such support will be provided, however
additional costs may be incurred associated with changes in technology required
within the new applications environment of Buyer. These additional costs would
be passed directly through to the organizations(s) receiving such services.
Support provided for Asset Seller
PeopleSoft HR through 30 June 2000
PeopleSoft Accounting through 30 June 2000
ADMARC through 30 October 2000 (access to history provided through 1/1/2001)
ADSCOPE through 30 October 2000 (access to history provided through 1/1/2001)
Continued use of Wide Area Network through 30 October 2000
Support provided for ZD Events
PeopleSoft HR through 30 June 2000
PeopleSoft Accounting through 30 June 2000
Continued use of Wide Area Network through 30 June 2000
Support provided for ZDTV
Continued use of Wide Area Network through 30 June 2000
Support provided for Education
Continued use of Wide Area Network through 30 June 2000
Support provided for ZDTV
Continued use of Wide Area Network through 30 June 2000
Lotus Notes Environment
Ziff Xxxxx Publishing has begun the process of transitioning support for Lotus
Notes to Interliant, an external service provider. This transition project
involves an overall upgrade and consolidation of Publishing Lotus Notes servers,
upgrade of the Lotus Notes server software to version 5.0, and implementation of
a hierarchical addressing scheme. A copy of the Interliant project proposal has
been provided to ZDNet, ZDTV, and ZD Events for review. The primary Lotus Notes
asset acquired by Buyer in this area is the Lotus Notes Certificate (i.e. naming
convention) for the current Notes implementation. Accordingly, each separate
business entity (ZDNet, ZDTV, etc.) will be required to procure their own Lotus
Notes Certificate to continue operating Lotus Notes following the transition
period. However, the application implementations that have been developed with
Lotus Notes (Sales Territory Database etc.) are not controlled by any license
agreement and are considered shared. Accordingly, copies of the required
applications with associated data will be provided to each business organization
as part of their transition to their own Lotus Notes environment.
In regards to Lotus Notes Mail each organization will be developing an
addressing scheme independent of the current shared XxxxxXxxx_XxxxXxxx@XX.XXX
convention. For a period of time following separation, the service of forwarding
Internet e-mail addressed via XX.XXX will be required. During the transition
period continued routing of this e-mail will be maintained as is by the
Publishing Notes service provider. However, the XX.XXX domain name has not been
acquired by Buyer. Consequently, the service of providing internet e-mail
forwarding via this address, and related "new address notification", will
necessarily revert to the remaining company following the transition of
Publishing on or before June 30, 2000.
Throughout the transition period (projected through 30 June 2000) there will be
no charges for continued use of the existing Lotus Notes Certificate, e-mail, or
applications. In addition, Publishing will continue to share all information
regarding Interliant and the outsourcing of Notes support as an alternative to
be considered by each organization.
Charge-back Schedules
Wide Area Network -- Charges are based on connections supported and the number
of users within each organization. As each organization migrates to their own
WAN network charges for remaining organizations will not change. All charges
computed for WAN usage will be handled as a direct pass through and will be
reviewed with representatives of Asset Seller.
Core Business Applications -- Charge-back for core business applications
(PeopleSoft HR, PeopleSoft Accounting, ADSCOPE and ADMARC) will be based on the
following criteria. In each
-2-
case the schedule reflects only that cost associated with continued support of
these applications in their current configuration through the transition period.
On a monthly basis a detailed breakdown of operating cost for each application
will be provided in support of the charge-back fee. In addition, services
provided by the ZDNet and the ZD Inc. transition team that support the
Publishing transition will be deducted from monthly charge-back fees.
PeopleSoft Accounting - Charge-back for this application will be calculated
based on the percentage of the total number of AP invoices/GL line item
transactions processed by each user organization during a given month and
therefore will vary according to actual use.
PeopleSoft HR - Charge-back for this application will be calculated based on the
percentage of the total number of employees actively supported within the
application represented by each user organization during a given month and
therefore will vary according to employee count.
ADMARC - Charge-back for this application will be calculated based on the number
of ZDNet Active users as a percentage of the total actively supported users
within the application. The only organization affected is ZDNet with
approximately five current users as compared to approximately eighty for
Publishing. The Product Index application is considered a part of ADMARC within
this agreement.
ADSCOPE - Charge-back for this application will be calculated based on the
number of ZDNet Active users as a percentage of the total actively supported
users within the application. The only organization affected is ZDNet. These
calculations will take into account any external costs for licensing as well as
internal costs for support personnel as required.
Transition Support
The Publishing division has initiated projects to migrate all of these
applications to a new platform supported by an external service provider (Ciber,
Inc.). The cost of this transition project will not be included in calculations
of charge-back to supported organizations. In addition, Publishing will provide
all information related to Ciber for consideration by supported organizations,
as a possible service provider for their long term needs.
