1
EXHIBIT 10.3
XXXXXXXXXX OUTBOUND TELEMARKETING
EXCLUSIVE SERVICES AGREEMENT
This Agreement, including the attached schedules (collectively
"Agreement"), is made as of the 13th day of January, 1998 (the "Effective Date")
by and between THE XXXXXXXXXX GROUP, LTD., a New York corporation with offices
at 0000 Xxxxxxxxx-Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("SGL") and QUARTERDECK
CORPORATION ("Client"), with offices at 00000 Xxxxxxxx Xxx, Xxxxxx xxx Xxx,
Xxxxxxxxxx 00000.
Client's wholly-owned subsidiary, Quarterdeck Select Corporation
("QDS"), has previously provided to Client outbound telemarketing services with
respect to the sale of Client's products.
Client has caused QDS to sell to SGL the outbound telemarketing
business and related assets of QDS pursuant to a certain asset purchase
agreement intended to be dated of even date herewith between SGL and QDS (the
"Asset Purchase Agreement").
Client desires to obtain, and SGL desires to provide, services in
relation to the staffing and management of a Telesales and Telemarketing Program
to support the sales of Client products.
In light of the foregoing and in consideration of the promises
exchanged herein, the parties agree as follows:
1. Scope:
1.1 SGL will provide Client, with respect to the sale of Client's
products, with certain database telesales services on the terms and conditions
described in this Agreement. SGL shall manage and supervise the operation of the
telesales services as described herein. Staffing of the telesales services shall
be at the levels determined pursuant to the Allocation of Resources set forth in
Schedule "1.1". SGL will make reasonable efforts to adjust staffing levels and
reallocate resources as quickly as possible whenever the commitment is adjusted
according to the methodology set forth in Schedule "1.1".
1.2 SGL will be Client's sole and exclusive source of the outbound
telesales and corporate telesales services for sales in the United States and
Canada of all products then offered for sale under Client's tradename or
trademarks, except that Client may conduct outbound telesales and corporate
telesales activities from time to time on a limited scale, using its own regular
employees. The total number of Client's regular employees engaged in such
activities at any given time may not exceed four percent (4%) of SGL's then
current staffing
1
2
levels (rounded up to the nearest whole number) for Client's telesales
determined at that time pursuant to the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary:
(A) SGL acknowledges that Client markets its products through
distributors, retailers, OEMs, and other resellers (collectively, "Resellers")
and may continue to do so by any means. Client does not necessarily limit its
Resellers' distribution rights to prevent Resellers from distributing Client
products through outbound telesales or corporate telesales and that this
Agreement does not require Client to do so. Provided that Client does not engage
any third party specifically for the purpose of providing outbound telesales and
corporate telesales services, therefore, Client will not be in violation of this
Agreement merely because a Reseller markets or is authorized to market Client
products via outbound telesales or corporate telesales.
(B) SGL shall have a non-exclusive right to conduct outbound
telesales activities and corporate telesales activities with respect to
governmental entities (including responding to Requests for Proposal to
governmental agencies) and educational institutions. During the period
commencing on the date hereof and ending December 31, 1998 (the "first year"),
this right shall be non-exclusive only in the sense that Client will have the
right to use its own employees (in any number) to conduct outbound telesales
activities and corporate telesales activities with respect to governmental
entities (including responding to Requests for Proposal to governmental
agencies) and educational institutions. If, during the first year, SGL generates
Net Revenues of at least One Million Dollars ($1,000,000) (the "first year
goal") from sales to governmental and educational institutions, then such right
shall remain non-exclusive only in the sense indicated above. In that event, the
parties shall agree upon a reasonable goal for the second year (calendar year
1999). From then on, the parties shall agree upon a new annual goal at the end
of each year in which the goal is accomplished. At any time that SGL fails to
meet the first year goal, second year goal or any subsequent year's goal, then
its right to conduct corporate telesales and outbound telesales to governmental
and educational institutions shall be non-exclusive in all respects for the
remaining term of this Agreement, thus allowing Client to retain third parties
to conduct outbound telesales and corporate telesales to such institutions.
(C) Further, SGL acknowledges that Client may market or
publish products under licenses and that such licenses will not necessarily
authorize any outbound telesales or corporate telesales. Additionally, SGL
acknowledges that, subject to Section 22, Client may assign or otherwise
transfer a portion or all of its rights in any product and if such product is no
longer sold under Client's tradename, trademarks, or those of its subsidiaries,
such product shall no longer be subject to this Agreement.
1.3 SGL shall use its best efforts to market and promote the Client's
products
2
3
through outbound telesales and corporate telesales channels. Best Efforts is
defined as not less than is customarily applied to other SGL clients in the
consumer software market and if there are no other SGL clients in the consumer
software market, then as customarily applied to other SGL clients generally.
1.4 Client shall determine, in consultation with SGL, which Client
products SGL will emphasize in its marketing efforts at any time. Client shall
determine all of the terms under which SGL markets Client's products. Client may
accept or reject any order or offer to purchase any Client products in the
exercise of its sole and absolute discretion.
1.5 SGL is an independent contractor providing services to Client.
1.6 As used in this Agreement (including all schedules hereto), (i)
"outbound" telesales shall mean telesales of Client's products for sales of
seventy-five (75) or fewer units per sale, (ii) "corporate" telesales shall mean
telesales of Client's products for sales of more than seventy-five (75) units
per sale, and (iii) " telesales" does not include:
(A) Telephone calls in which the sale of products is
not completed, and payment or authorization of payment is not required, until
after a face-to-face sales presentation by the Client ("direct sales");
(B) Telephone calls initiated by (i) any potential
customer, except when in response to a call from a telesales representative,
including without limitation those in response to an advertisement through any
media including direct mail solicitations or (ii) a prior customer of Client
("inbound telesales"), and any reply or follow up calls to any inbound telesales
call;
(C) Telephone calls as the result of a solicitation
of a potential customer by an SGL telesales representative and the referral of
that potential customer to Client; or
(D) Telephone calls soliciting transactions with any
Resellers for resale or other transactions that SGL is prohibited from
soliciting.
For purposes of the foregoing, the number of "units" per sale
is the maximum number of computers on which a copy of the software sold may be
installed or from which it may be accessed. For sales of subscription based
services, "units" per sale is the number of computers or users (as the case may
be) authorized to utilize such service. For other types of sales, units shall be
defined appropriately, as the context shall require.
Sales by Client which may not be "telesales" but which (i) are
made by Client directly to a customer other than a Fortune 500 customer and
which follow the entry by SGL
3
4
of a product order from that customer as a result of SGL's telesales services
hereunder, or (ii) are made by Client directly to a division or purchasing group
of a Fortune 500 customer and which follow the entry by SGL of a product order
from that same division or purchasing group as a result of SGL's telesales
services hereunder, will entitle SGL to commissions as set forth in attached
Schedule 4.1 hereof ("sales to SGL-seeded accounts"); provided that SGL-seeded
accounts shall in no event include any customers that had obtained any Client
products within eighteen (18) months before first obtaining a Client product
through SGL.
Notwithstanding the foregoing, SGL acknowledges and
understands that it may not always be reasonably practical for Client to
determine whether a customer is an SGL-seeded account; provided that Client
shall reasonably cooperate with SGL in an effort to establish procedures for
doing so. Nevertheless, SGL agrees that Client shall be under no obligation to
undertake any measures that are not reasonably practical to determine whether an
account is an SGL-seeded account. Without limiting the generality of the
foregoing, SGL acknowledges that Client need not ask any question of its
customers or record any information from Client's customer relating to SGL in
connection with any transaction by Client involving less than Ten Thousand
Dollars ($10,000). Further, Client will not be obligated to attempt to obtain
such information in connection with any transaction not involving a live
conversation between Client and the customer, such as any transaction mediated
by any third party or any on-line transaction.
2. SGL's Responsibilities:
2.1 SGL shall provide telesales representatives, sales supervisors,
administrators and program managers, all of whom shall be dedicated exclusively
to providing services to Client, as well as client services managers, business
analysts and other necessary personnel. All SGL personnel shall have that level
of training and experience which is appropriate to the nature and special
requirements of the Services described herein. The personnel assigned by SGL to
the Client account shall be acceptable to Client, acting in its reasonable
discretion. Personnel formerly employed by QDS shall be deemed to be acceptable
to Client for so long as they continue to perform in a reasonably acceptable
manner.
2.2 SGL shall provide the facilities, computer systems, training,
reporting, administrative functions, all telephony equipment and systems, and
other required infrastructure to perform the services described herein, except
as may be the responsibility of Client as set forth in Section 3 hereof.
2.3 SGL shall comply at all times with all Federal, state and local
authorities, statutes, rules and regulations applicable to its business
activities and shall provide worker's compensation insurance in amounts required
by applicable law.
4
5
2.4 SGL, its employees and contractors shall comply at all times with
all rules and regulations, policies and practices applicable to Client's
business activities which are communicated to SGL management by Client.
2.5 For a period of ninety (90) days from the Closing, SGL shall make
Xxxxxx Xxx Brandvic and Xxxx Xxxx reasonably available at no charge to provide
transition services to Quarterdeck's corporate Human Resources department in
connection with Quarterdeck's HRIS system.
2.6 In no event shall SGL collect or receive funds on Client's behalf.
3. Client's Responsibilities:
3.1 Client is responsible for direct mail operations, advertising and
customer awareness programs for all of Client's products. Client shall determine
in the exercise of its sole and absolute discretion whether to conduct any
direct mail campaigns and the extent of any advertising or customer awareness
programs.
3.2 Client will be responsible for acceptance (or rejection) of
customer orders, credit card verification, billing, customer service,
collections, fulfillment for sales, and inbound telesales generated by the
programs described at Section 3.1.
3.3 Client shall establish, and at all times maintain, an interface
between the existing computer infrastructure, presently located in Buildings 400
and 410 located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx (the
"Clearwater Facility") and Client's computer systems, conforming to the
specifications therefor in Schedule "3.3". There may be reasons that either
Party wishes to modify their respective systems and processes during the course
of this Agreement. If implemented, such modifications may impact the systems and
processes of the other Party as well as the interfaces between those systems. To
the extent a Party wishes to modify any of its systems after the Effective Date,
and if such modifications could impact the systems and processes of the other
Party or the interfaces between those systems, the Party wishing to make such
modifications will inform the other Party in writing of the anticipated
modifications within a reasonable time prior to implementing such modification
and the other Party will work with the Party wishing to make such modifications
in an effort to minimize the potential for material additional costs to
accommodate such modifications. The Party wishing to make such modifications
shall be responsible for the cost to develop the necessary interfaces between
its modified systems and the systems of the other Party.
3.4 Client will aid and assist SGL in the work of promoting the sale of
Client's products and services by making commercially reasonable efforts to
promptly answer any reasonable inquiries addressed to Client by SGL. SGL shall
have no obligation to perform
5
6
Client's warranty or support obligations with respect to any product or service
which is the subject of this Agreement.
3.5 Client will train SGL's telesales employees regarding Client's
products at SGL's Clearwater facility. Client shall pay those out-of pocket
travel, lodging and similar expenses incurred by Client in providing such
training. Client shall provide anticipated release schedules and other
information as SGL reasonably requires. Except for initial program start up,
training will be accomplished via audio and video conferencing.
3.6 To permit the uninterrupted transition from QDS to SGL of telesales
services to be rendered to Client hereunder, upon the reasonable request of SGL
at any time, and from time to time, for a period of up to three (3) months from
the effective date of this Agreement, Client shall, at Client's expense, make
its MIS personnel available to SGL for assistance and training on the effective
use and maintenance of (i) Client's order entry system to be used by SGL
telesales representatives, (ii) the interfaces described in Section 3.3, (iii)
any technology included in the assets acquired by SGL from QDS and Client, (iv)
the EIS predictive dialer system, (v) the ASPECT switch, and (vi) the MITEL
switch. If within three (3) months of the effective date of this Agreement, SGL
shall have a full-time MIS person employed by SGL at the Clearwater Facility,
then Client shall make its MIS personnel available to SGL for such assistance
and training for an additional two (2) months (for a total period of up to five
(5) months from the effective date of this Agreement).
3.7 The long distance telephone network services agreement previously
used by QDS in providing telesales services to Client is not directly
transferable to SGL. Therefore, during the term of this Agreement and solely to
the extent that it is permitted to do so without incurring any cost, Client
agrees to make available to SGL for purposes of SGL rendering telesales services
to Client, the benefits of any of Client's long distance telephone network
services agreements. SGL's payment obligation will be only for actual use by SGL
at the rates set forth in the applicable long distance telephone network
services agreements.
3.8 Client is a party to a software license agreement with ONYX dated
June 28, 1995, pursuant to which Client has the right to use the licensed
software at an unlimited number of seats. The ONYX software licenses previously
used by QDS in providing telesales services to Client are not directly
transferable to SGL. Therefore, during the term of this Agreement, Client agrees
to maintain and make available to SGL for purposes of SGL rendering telesales
services to Client, the benefits of the ONYX software license agreement at no
additional cost to SGL.
3.9 Client may, at any time and from time to time, subcontract any of
its responsibilities to a third party(ies) but Client shall remain fully liable
for performance of Client's responsibilities according to the terms of this
Agreement.
6
7
4. Fees:
4.1 Client shall pay SGL for its services and costs as described in the
attached Schedule "4.1" titled, Xxxxxxxxxx Service Fees.
4.2 SGL shall invoice on the first (1st) day of the month in which the
services are to be performed for the "Fixed Rate " component of SGL's service
fees for that month and for the "Sales Commission" component of SGL's service
fees for the prior month. SGL shall include with each monthly invoice to Client
a summary accounting of the number of telesales reps deducted exclusively to the
Client's account in the form set forth in Schedule "4.2".
4.3 The Fixed Rate component will be reconciled at the end of each
month against SGL's records based on the number of telesales reps dedicated
exclusively to Client's account that month, for a determination of the Fixed
Rate component actually due SGL, as set forth in Schedules "1.1" and "4.1". The
invoice for the next month will reflect any required adjustment.
4.4 Provided Client provides SGL with written notice of the orders
shipped by Client for the month within two (2) business days of the last day of
the month, the "Sales Commission" component of SGL's service fees shall be
billed on the basis of orders shipped by Client less a fourteen percent (14%)
reserve amount to anticipate accepted orders not paid, returns, etc. Should SGL
not receive notice of the actual number of orders shipped within that time, the
Sales Commission component of SGL's service fees shall be billed on the basis of
orders entered by SGL into Client's system less the fourteen percent (14%)
reserve amount; provided that such reserve percentage may be increased or
decreased at any time based on the prior two (2) quarter's actual experience;
and provided further that, if Client provides notice of the actual number of
orders shipped for the past month prior to payment of that invoice being due,
Client may pay on the basis of the orders shipped without being in breach of
this Agreement, provided such payment is made by the date the original invoice
was due. The Sales Commission component will be reconciled once each quarter
against Client's records for adjustment based on accepted orders not paid,
returns, etc., all as provided for the final determination of the Sales
Commission component actually due SGL, as set forth in Schedule "4.1".
4.5 Commencing with the sixteenth (16th) month of this Agreement and
continuing through the term of this Agreement, Client shall be entitled to take
a monthly discount of One Hundred Thousand Dollars ($100,000.00) against fees
otherwise due and owing to SGL during each such month. This discount is not
subject to acceleration, is payable only out of fees otherwise due to SGL during
the month in question and is not cumulative.
7
8
4.6 Payment shall be due to SGL within thirty (30) days of receipt of
an invoice from SGL and, if not paid within that time, will bear interest from
that date, until paid, at the rate of one percent (1%) per month for any part of
the next 30 days and one and one-half percent (1-1/2%) per month for any time
thereafter the invoice remains unpaid.
4.7 Fees due under this Agreement are payable by Client without setoff
or deduction by Client, except as provided in Section 7 below.
5. Term of the Agreement:
This Agreement shall be effective upon execution by both parties and
will terminate on December 31, 2001, unless terminated earlier pursuant to
Section 6 of this Agreement.
6. Early Termination of the Agreement:
6.1 Termination for Convenience:
6.1.1 During the First Twelve (12) Months: After the first one-hundred
eighty (180) days following the Effective Date, the Client shall have the right
to give notice of termination of this Agreement, with such termination becoming
effective no sooner than one-hundred eighty (180) days from the effective date
of the notice.
6.1.2 After the First Twelve (12) Months: After the first anniversary
of the Effective Date, the Client shall have the right to give notice of
termination of this Agreement, with such termination becoming effective no
sooner than one-hundred twenty (120) days from the effective date of the notice
(the "120 Day Notice Period"); provided that, during the last thirty (30) days
of the 120 Day Notice Period, the Part A Maximum will be reduced by one-half
(1/2).
6.1.3 Sole Source: Notwithstanding any contrary provision in Section
1.2, immediately upon any notice of termination of this Agreement pursuant to
this Section 6.1, and for the last one hundred twenty (120) days before
expiration of the term of this Agreement, Client shall no longer be restricted
hereunder in any way from performing or authorizing or retaining any third party
to perform outbound telesales and/or corporate telesales services for any of
Client's products.
8
9
6.2 Termination for Cause
6.2.1 Termination by Client: The Client shall have the right to
terminate this Agreement (i) in the event an arbitrator determines that SGL has
breached this Agreement and SGL fails to cure such breach within thirty (30)
days of the arbitrator's determination, or (ii) in the event it is determined
under the procedures set forth below that three (3) separate "Bad Acts" have
occurred during the term of this Agreement. A "Bad Act" is defined as an act of
theft (including larceny, forgery, fraud or intentional wrongful conversion) by
SGL or any of its employees perpetrated against the Client or one of its
customers, or a "Pattern" of SGL or any of its employees making any material,
untrue or misleading statements or representations as the result of a policy
implemented by SGL (or the lack of an effective policy to protect against such
activities) in performing outbound telesales or corporate telesales hereunder.
Except as provided in the following paragraph, the determination that a Bad Act
has occurred is conditioned upon Client, within ten (10) business days of
Client's discovery of the occurrence of circumstances which Client alleges to be
a Bad Act, giving to SGL notice thereof specifying what circumstances are
alleged to have occurred.
Within the First Year: The determination that a Bad Act has occurred
within the first twelve (12) months of this Agreement is conditioned
upon Client, within ten (10) business days of Client's discovery of the
occurrence of circumstances which Client alleges to be a Bad Act,
giving to SGL notice thereof specifying what circumstances are alleged
to have occurred, that Client deems that such circumstances constitute
a Bad Act under this Agreement, and the basis for Client's claim that
such circumstances constitute such a Bad Act.
For purposes of the foregoing, a "Pattern" consist of acts which occur in such
numbers and within such a period of time that reasonable people would agree that
those acts were not isolated or unrelated.
Effect of Termination by Client: In the event this Agreement is
terminated pursuant to this Section 6.2.1, in addition to any other
rights and remedies Client may have, SGL acknowledges that Quarterdeck
Select Corporation ("QDS") or its assignee shall have the right to
terminate that certain sublease intended to be dated of even date
herewith between SGL and QDS (the "Sublease"). If termination pursuant
to this Section 6.2.1 occurs during the first year of the term of this
Agreement, then (i) the Client will have the right to solicit for
employment those persons then employed by SGL at the Clearwater
facility that were formerly employees of the Client or QDS, and (ii)
Client or its designee will have the right to reacquire from SGL those
tangible assets originally transferred to SGL pursuant to the Asset
Purchase Agreement which are still in the possession of SGL at the
Clearwater facility. The repurchase price for these assets shall be
equal to a percentage of $1.5 Million less amounts received by SGL, if
any,
9
10
from a transfer by SGL of some portion of the acquired assets, the
numerator of which is the number of days remaining (as of the date of
the event giving rise to the right to reacquire the assets) in the
first year of the term of this Agreement and the denominator of which
is three hundred sixty-five (365). The right of Client to acquire
assets shall not apply to any replacement assets.
6.2.2 Termination by SGL: SGL shall have the right to terminate this
Agreement in the event (i) Client fails to make any payment due hereunder (to
SGL or the escrow agent as provided in Section 7.5) within twenty (20) days
after written notice of non-payment from SGL, which notice must state that SGL
may terminate this Agreement if payment is not made within twenty (20) days; or
(ii) an arbitrator determines that Client has breached this Agreement and Client
fails to cure such breach within thirty (30) days of the arbitrator's
determination.
Effect of Termination by SGL: In the event this Agreement is terminated
pursuant to this Section 6.2.2, in addition to any other rights and
remedies SGL may have, Client acknowledges that SGL shall have the
right to terminate the Sublease.
6.3 Termination Fee: If during the first year of the term of this
Agreement, Client terminates this Agreement in breach of the Agreement or in any
way not provided for in this Section 6, or if, during the first year of the term
of this Agreement, SGL terminates this Agreement pursuant to Section 6.2.2
(after providing Client with the specified cure period) as a result of an
arbitrator's decision that (i) the Client failed to pay amounts due to SGL
hereunder to either SGL or escrow, or (ii) that the uncured breach of this
Agreement by Client effectively deprived SGL of the benefits of this Agreement
to an extent sufficient to constitute constructive termination of this Agreement
by the Client in breach of this Agreement, then damages will be suffered by SGL
and the parties agree that it would be impracticable or extremely difficult to
ascertain with any degree of certainty the amount of damages which would be
suffered by SGL in such event. Therefore, in order to avoid such difficulties,
the parties hereby agree that Client shall pay SGL as a liquidated damage
amount, the following termination fee (the "Termination Fee") if this Agreement
terminates as provided in this Section 6.3 during the first year of the term of
this Agreement. The Termination Fee shall be equal to the sum of (A) and (B) for
each month during the period beginning upon such termination and ending one (1)
year after the Effective Date (prorated for any partial months), where (A) is
$6,065 times the minimum number of outbound telesales representatives required
under Schedule "1.1" during such month, and (B) is $6,412 times the minimum
number of corporate telesales representatives required under Schedule "1.1"
during such month. This amount is agreed to be a reasonable estimate of the loss
likely to be sustained by SGL as a result of such a breach by Client during the
first year of this Agreement, and not a penalty.
10
11
7. Dispute Resolution:
7.1 Notice and Cure: Except as provided in Section 6.2.2(i), in the
event of an alleged breach of this Agreement by either party, the non-breaching
party shall give the breaching party notice of any alleged breach and thirty
(30) days to cure. The breaching party will be deemed to have cured such breach
if, within such cure period, the breaching party remedies any direct damage for
which it is responsible resulting from such breach and takes such steps as are
reasonable to prevent a similar future breach. For purposes of this Agreement,
direct damages from any breach include, without limitation, any diminution of
the value of confidential or trade secret information that is used or disclosed
without authorization, and costs of cover as defined in Section 10.2.
7.2 Binding Arbitration: If an alleged breach is not cured to the
non-breaching party's satisfaction, the determination of whether a breach
occurred and whether the breach was cured will be resolved by a single
arbitrator in Chicago, Illinois, in accordance with the Expedited Procedures of
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA") then in force. The arbitration shall be governed by the United States
Arbitration Act, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. Notwithstanding the Expedited
Procedures of the Commercial Arbitration Rules of the AAA, the parties agree
that the AAA shall appoint the arbitrator without the parties submitting lists
of requested arbitrators. In addition, the arbitrator shall be instructed to
complete any hearings within thirty (30) days after his or her appointment or as
soon thereafter as is reasonably possible consistent with providing each party a
meaningful opportunity to conduct such discovery as is reasonably necessary and
otherwise prepare its argument. The arbitrator shall grant such orders and
impose such sanctions as are reasonably required to conform to the foregoing
schedule.
7.3 Powers of the Arbitrator: In addition to the powers granted to an
arbitrator pursuant to the rules of the American Arbitration Association, the
arbitrator shall have the authority (i) to award injunctive relief where
necessary, providing that the party seeking such injunctive relief provides an
undertaking of sufficient amount to protect the party being enjoined and in an
amount acceptable to the arbitrator, (ii) make a determination of whether a
breach was a Bad Act breach as referenced in Section 6.2.1, and (iii) whether a
breach was a constructive termination of this Agreement by Client as referenced
in Section 6.3. Each party agrees that it shall not seek (and an arbitrator
shall not have the power to provide a party with) the remedy or relief of
termination of this Agreement, except as set forth in Section 6 hereof.
7.4 Intellectual Property Infringement: Notwithstanding the foregoing,
any party shall have the right to seek immediate relief in State or Federal
Court for claims for infringement or misappropriation of any intellectual
property rights and to have all legal and factual issues relating to such claims
resolved in such court. Each party agrees that it shall not seek (and a court
litigating such a claim shall not
11
12
have the authority to provide a party with) the remedy or relief of termination
of this Agreement, except as set forth in Section 6 hereof.
7.5 Escrow and Setoff: In the event of a dispute and during the
pendency of an arbitration or litigation, SGL will continue to provide services
under the terms of this Agreement, and the Client shall abide by the terms of
this Agreement, except that fees which are invoiced or claimed by SGL shall, at
Client's discretion, be paid either to SGL or to an independent escrow agent
pending the resolution of such dispute. Failure to pay to either SGL or to the
escrow agent any fee which is invoiced shall be deemed a breach of this
Agreement. Any monies held by the escrow agent in the escrow fund shall be
invested by the escrow agent in interest bearing federally insured accounts, and
the fees of the escrow agent shall be shared equally by the parties hereto. The
parties receiving funds from such escrow shall also receive the interest earned
on that portion of the escrowed funds so received. Payment to the escrow agent
pursuant to this paragraph shall be considered as satisfying the Client's
payment obligation with respect to the escrowed amount and shall not constitute
a breach of, or the release of, any claim under the Agreement. Client shall have
the right to setoff any direct damages award by an arbitrator or court against
fees due to SGL. This setoff can be made against amounts held in escrow or
otherwise. The escrow agent shall be instructed to distribute funds in
accordance with the parties' mutual written instructions or any written
instructions of any arbitrator or court. Unless otherwise mutually agreed upon
by the parties, the independent escrow agent may be any attorney or CPA (or law
or accounting firm) regularly engaged by either party.
8. Transition Services: Except when this Agreement is terminated by SGL for the
Client's failure to make payment to SGL, upon any termination or expiration of
this Agreement, Client shall have the right (exercisable not less than 60 days
before the termination or expiration date) to continue to engage the services of
SGL for a total additional period determined by Client but not to exceed six (6)
months on the same terms and conditions set forth herein, including the fees for
services to be rendered by SGL during any such transition period which are to be
paid at the same rate as set forth in Schedule "4.1," except (i) Schedule "1.1"
will not apply during any such transition period (i.e., the amount to be paid by
Client to SGL will be based on the actual number of staff requested by Client
and supplied by SGL for the transition period), (ii) the discount described in
Section 4.5 will not apply, and (iii) Client shall no longer be restricted
hereunder in any way from performing or authorizing or retaining any third party
to perform outbound telesales and/or corporate telesales services for any of
Client's products. Client shall provide SGL with sixty (60) day's advance notice
of the staffing levels to be employed during any transition month and the
staffing levels requested by Client will never increase over the level of any
prior month during the transition period.
9. Warranties:
12
13
9.1 SGL represents and warrants that the Services to be provided by SGL
hereunder shall be done in a workmanlike manner and conform at all times in all
material respects to the descriptions and levels of Service set forth in this
Agreement.
9.2 SGL does not warrant or guarantee in any way any result from the
services provided under this Agreement. Except as set forth in this Agreement,
the Services to be provided by SGL to Client hereunder are provided without any
warranties, express or implied, including but not limited to the warranties of
merchantability and fitness for a particular purpose.
9.3 Except as provided in Section 11, Client makes no warranties
whatsoever. Without limiting the generality of the foregoing, Client makes no
warranties to SGL with respect to any Client product, and Client expressly
disclaims any implied warranties of merchantability, fitness for a particular
purpose and non-infringement. Except to the extent that Client may expressly
authorize in writing, SGL shall not make or pass through any warranty on behalf
of Client.
9.4 Client shall provide SGL with notice of the warranties it will
offer its customers in contracts for the products being marketed hereunder
("Customer Contracts"). In the Customer Contracts, Client will negate all other
warranties not specifically offered to its customers therein, and Client will
include standard provisions for merger, exclusive remedies and limitation of
liability as used in the consumer software market. SGL acknowledges that the
Customer Contracts are typically not signed by the customer nor made available
to the customer for viewing before the customer obtains the software to which
such Customer Contract pertains. Although Client believes that such Customer
Contracts are nevertheless enforceable under applicable law, Client makes no
representations or warranty to that effect.
10. Limitation of Liability:
10.1 IN NO EVENT WILL SGL HAVE ANY LIABILITY, WHETHER BASED ON
CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), WARRANTY OR ANY
OTHER LEGAL OR EQUITABLE GROUNDS, FOR ANY LOSS OF INTEREST, PROFIT OR REVENUE BY
THE CLIENT, NOR SHALL EITHER PARTY HAVE ANY LIABILITY, WHETHER BASED ON
CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), WARRANTY OR ANY
OTHER LEGAL OR EQUITABLE GROUNDS, FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING FROM OR RELATED TO THIS
AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES
OR DAMAGES.
10.2 Notwithstanding the foregoing, nothing in this Agreement precludes
Client's right to seek direct damages in the event that SGL breaches this
Agreement, including, SGL
13
14
shall be liable for Client's cost to "cover" by making in good faith and without
reasonable delay any reasonable contract for services in substitution for those
due from SGL, but less expenses saved by the Client in consequence of the breach
of this Agreement.
10.3 The monetary liability of either party for all claims resulting
from its performance or non-performance under this Agreement, regardless of the
form of the action, and whether in contract, tort (including, but not limited
to, negligence), warranty or other legal or equitable grounds, will be limited
to Five Million Dollars ($5,000,000.00).
10.4 Notwithstanding any other provision hereof, nothing in this
Section 10 shall in any way limit or exclude any right or remedy available to
either party for or under, and this Section 10 shall not apply to, (i) any
claims for breach or misappropriation of any trade secret, copyright, patent,
trademark, or other intellectual property right, or (ii) any claim under or for
breach of Sections 11 (indemnification) or 13 (confidentiality) of this
Agreement.
11. Indemnification:
11.1 By Client. Client shall defend SGL against any claim that any
Client product or service infringes or misappropriates any patent, trademark,
copyright, or similar intellectual property rights (including without
limitation, misappropriation of trade secrets) or any claim that any information
contained in any telemarketing plan and other materials approved by Client is
untrue or misleading when presented in a similar manner as presented by Client
and shall pay any settlement of or final judgement awarded in connection with
such claim, provided that SGL promptly (i) notifies Client of such claim and
(ii) tenders to Client the sole control of the defense and settlement thereof.
11.2 By SGL. SGL shall defend Client against any claim that SGL has
made any misrepresentations or misleading statements that are not supported by
any telemarketing plans or other materials supplied by Client and shall pay any
settlement of or final judgement awarded in connection with such claim, provided
that Client promptly (i) notifies SGL of such claim and (ii) tenders to SGL the
sole control of the defense and settlement thereof.
11.3 Limitation. Neither party shall be liable under this Section 11 in
connection with any claim against the other party to the extent that such claim
is based upon acts that constitute a breach of this Agreement by the other
party.
14
15
12. Relationship between the Parties:
The performance by SGL of its duties and obligations under this
Agreement shall not be deemed to constitute a joint venture or partnership
between the parties. SGL shall not negligently or knowingly misrepresent Client
products or services. Client will establish in its sole discretion all terms
(including but not limited to price) of any sales made through SGL. All customer
orders are to be directed to Client for acceptance. Unless subsequently agreed
to by the parties in a written agreement, SGL will not accept on behalf of the
Client, purchase orders for Client's products, or otherwise enter into contracts
for the sale or license of Client's products, nor collect payments for the sale
of the products or services of Client. Nothing in this Agreement shall be
construed as prohibiting or restricting the right of SGL to provide similar
services to any other entity.
13. Confidentiality:
13.1 All confidential or proprietary information made available by a
party to the other in document or other tangible form bearing an appropriate
legend indicating its confidential or proprietary nature, or which, if initially
disclosed orally or visually, is identified as confidential at the time of
disclosure and a written summary thereof, also marked with such a legend is
provided to the other party reasonably promptly following the initial disclosure
("Confidential Information") shall be held in confidence by the receiving party.
The receiving party shall protect such Confidential Information using the same
degree of care it uses to protect its own confidential or proprietary
information, but in no event less care than is prudent under the circumstances.
Except as is reasonably necessary to the performance of its duties and
obligations or exercise of its rights under this Agreement, neither party shall
use Confidential Information of the other party in any form. Each party shall be
permitted to disclose relevant aspects of the other parties' Confidential
Information to its officers, agents and employees to the extent that such
disclosure is reasonably necessary to the performance of its duties and its
obligations or exercise of its rights under this Agreement. All SGL employees
assigned to Client's project team will sign SGL's standard employee
non-disclosure agreement.
13.2. Confidential Information shall not include (1) information which,
at the time of disclosure is in the public domain; (2) information which, after
disclosure, enters the public domain except where such entry is the result of a
breach of this Agreement; (3) information which, prior to disclosure hereunder,
can be demonstrated by records to have already been in the recipient's
possession and not subject to any obligation of confidence imposed in another
agreement or relationship; or (4) information which, subsequent to disclosure
hereunder, was obtained by the recipient on a non-confidential basis from a
third party who has the right to disclose such information.
15
16
13.3 The obligations in Section 13.1 hereof shall not restrict any
disclosure by either party that is required under applicable law, or by order of
any court or government agency (provided that the disclosing party shall
endeavor to give such notice to the other party as may be reasonable under the
circumstances) and shall not apply with respect to information three (3) years
after the termination of this Agreement.
13.4 Without limiting any of its other obligations under this Section
13, SGL will take those steps outlined in Schedule "13.4" attached hereto to
create a barrier to intra-company disclosures of Client's confidential and
proprietary business information.
14. Taxes:
Client shall, in addition to other payments required hereunder, pay all
sales, use, transfer or service taxes, whether federal or state or local,
however designated, that are levied or assessed on the provision of the Services
by SGL to Client or on the charges to Client under this Agreement, excluding
however, income taxes that may be levied against SGL.
15. Non-Solicitation of Employees:
Except as provided in Section 6.2.1, during the term of this Agreement
and for a period of one (1) year after its termination, neither SGL nor Client
shall knowingly solicit any full-time employee of the other with whom it has had
direct contact as a result of this Agreement (or any former employee who has
left the employ of the other within the prior one (1) year period), to become
its employee or contractor or through any third party without the consent of the
other party to this Agreement.
16. Unavoidable Delays:
Neither party shall be responsible for delays in its performance under
this Agreement occurring by reasons or circumstances beyond its control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots,
or failure of transportation, communication or power supply; provided that the
party whose performance is delayed shall use commercially reasonable efforts to
complete such performance as soon as possible.
16
17
17. Property Rights:
17.1 As between SGL and Client, Client retains all right, title and
interest in and to all of Client's products. Client reserves all rights not
expressly granted hereunder. Without limiting the generality of the foregoing,
SGL is not authorized and agrees not to market Client's products other than
through outbound telesales or corporate telesales and is not authorized and
agrees not to market Client's products for resale.
17.2 All rights in any information regarding Quarterdeck's customers or
prospects, including their names, addresses, telephone numbers, and customer or
campaign specific purchasing patterns and preferences, shall belong exclusively
to Quarterdeck, including without limitation information supplied by Quarterdeck
to Xxxxxxxxxx and any of the following information developed or acquired by
Xxxxxxxxxx in performing services under this Agreement: any Quarterdeck specific
information, any specific information related to Quarterdeck's customers and any
market-related information specific to Quarterdeck's products. Client will
retain all rights to the database resulting from the telemarketing services
rendered pursuant to this Agreement, including any associated reports delivered
to Client by SGL as well as any data provided by Client and incorporated into
the telemarketing services to be rendered by SGL. All of the foregoing material
shall be considered Client Confidential Information without further action on
the part of Client. This material and all other Client property shall be
immediately provided to Client on termination or expiration of this Agreement.
17.3 SGL will retain all rights to the ideas, know-how, techniques, and
software related to the contact management system used by SGL in rendering, or
to facilitate the rendering of, the Services or the manner and method by which
the Services are rendered (other than rules and regulations, policies and
practices referenced in Section 2.4). This information and software shall be
considered SGL property and SGL Confidential Information without further action
on the part of SGL.
18. Notices:
All notices, requests, and demands hereunder will be given in writing
and shall be deemed to have been given if delivered in person, or via a
reputable, receipted overnight courier service, or by United States mail,
certified or registered, with return receipt requested, in either case addressed
as follows (or to such other address as either party specifies in writing to the
other):
17
18
If to Client: If to SGL:
Quarterdeck Corporation The Xxxxxxxxxx Group, Ltd.
00000 Xxxxxxxx Xxx 0000 X Xxxxxxxxx-Xxxxxx Xxxx
Xxxxxx xxx Xxx, XX 00000 Xxxxxxxxx, Xxx Xxxx 00000
Attn: Sr. Vice President, Product Attn: General Manager
Development and Marketing Quarterdeck Program
With a copy sent to the above address, With a copy sent to:
Attn: Legal Department Phillips, Lytle, Xxxxxxxxx, Xxxxx &
Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Any notice, sent as provided above, will be deemed given upon receipt
at the address provided for above.
19. Governing Law:
This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without giving effect to conflicts of law
principles.
20. Audits and Attorneys' Fees:
20.1 Subject to the last paragraph of Section 1.6, Client shall keep
complete and accurate records related to its sales transactions for a period of
three (3) years, unless in dispute, in which event they shall be kept until said
dispute is settled. Such records shall be available during reasonable business
hours at the place at which such records are customarily kept for examination by
SGL and its representatives, for the purpose of verifying compliance by Client
with the provisions hereof. SGL shall keep complete and accurate records related
to its provision of services hereunder. SGL is not required to maintain any
particular records related to its Best Efforts covenant in Section 1.3. Records
relating to the amount of time worked by outbound telesales or corporate
telesales representatives will be in the form of Schedule 20.1. All such records
shall be kept for a period of three (3) years, unless in dispute, in which event
they shall be kept until said dispute is settled. All such records shall be
available during reasonable business hours at the place at which such records
are customarily kept for examination by the other party and its representatives,
for the purpose of verifying compliance with the provisions hereof. If any audit
or examination reveals that Client has underpaid SGL by more than five percent
(5%) during the period to which the audit relates, the direct and reasonable
costs of such audit or examination shall be borne by Client. If any audit or
examination reveals that SGL has overcharged Client by more than five percent
(5%) during the period to which the audit relates, the direct and reasonable
costs of such audit or examination
18
19
shall be borne by SGL. Neither party shall audit the other party's records more
often than twice per year.
20.2 In addition to the foregoing, Client shall have the right to have
a third party perform an audit of SGL's records, if any, related to SGL's
compliance with the Best Efforts covenant in Section 1.3. Client acknowledges
the confidential and proprietary nature of SGL's records concerning SGL's
compliance with Section 1.3. Such records may be audited on behalf of Client
upon reasonable notice subject to the following confidentiality provisions.
Records to be audited shall be made available for inspection only to an
independent accounting firm designated by Client, and approved by SGL (which
approval shall not be unreasonably withheld), and shall be provided pursuant to
procedures designed to protect the confidentiality of such information in
accordance with applicable contractual and legal requirements, including the
omitting of names and other identifying material from the records before they
are made available for inspection if required under contract or applicable law.
Client and its designated accounting firm shall provide SGL with their
respective confidentiality and hold harmless agreements in a form reasonably
acceptable to SGL. Such agreements shall provide, in part, that the information
shall be used solely for purposes of auditing SGL's compliance with this Section
1.3, and may not be used for any other purpose, nor copied, compiled, disclosed
or removed from SGL's premises. The expenses of Client (including fees and
expense of the designated independent accounting firm) shall be borne by Client.
20.3 Each party shall reimburse the other party on demand for all
reasonable attorneys' fees, witness fees and court costs and reasonable expenses
of counsel incurred in the successful enforcement by such other party of any
right or remedy hereunder.
20.4 Each party shall give the other copies of the information
described in Section 20.1 as it shall reasonably request to verify the accuracy
of amounts paid or invoiced hereunder without resort to a full audit pursuant to
Section 20.1, at the cost of the requesting party.
21. Survival:
The provisions hereof related to Payment, Warranty, Indemnification,
Property Rights, Confidentiality, Transition Services, Audit and Binding
Arbitration will survive any termination of this Agreement. In addition, any
other terms of this Agreement which by their terms extend beyond the termination
of this Agreement shall remain in effect until fulfilled.
22. Successors and Assigns:
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. The sale or transfer
of all or substantially all of the assets or
19
20
business of a party, without the transferee expressly assuming the obligations
hereunder of the transferor, will be deemed a breach of this Agreement by
transferor.
23. Non-Waiver:
The failure of either party to enforce at any time any of the
provisions of this Agreement or to require any act of performance hereunder
shall not be construed a waiver of such provisions or right to performance nor
in any way to affect the validity of this Agreement or the right of either party
to, thereafter, enforce each and every provision or right to performance.
24. Savings Clause:
The invalidity of, or inability to enforce any particular provision of
this Agreement will not affect the other provisions of this Agreement, and this
Agreement will be construed in all respects as if any invalid or unenforceable
provision had been omitted.
25. Captions:
The paragraph headings in this Agreement have been inserted for the
purpose of convenience and ready reference. They do not purport to and shall not
be deemed to define, limit or extend the scope or intent of the paragraph to
which they pertain.
26. Entire Agreement:
This Agreement and its schedules embody the entire agreement of the
parties with respect to the subject matter contained herein. There are no
promises, terms, conditions, or obligations other than those contained herein.
This Agreement supersedes all previous and contemporaneous communications,
representations or agreements, either verbal or written, between the parties
with respect to its subject matter, including, but not limited to, the
Memorandum of Understanding dated November 26, 1997, and the Memorandum of
Understanding dated December 12, 1997. It shall not be modified except by a
written agreement dated subsequent to the date of this Agreement and signed on
behalf of SGL and the Client by their respective duly authorized
representatives.
20
21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
THE XXXXXXXXXX GROUP, LTD. QUARTERDECK CORPORATION
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
Name: Name:
Title: Title:
21
