EXHIBIT 10.5
SERVICES AGREEMENT
THIS SERVICES AGREEMENT is made and entered into as of the 1st day of
August, 1997, by and between AMERICAN SOFTWARE, INC., a Georgia corporation
("ASI"), and LOGILITY, INC., a Georgia corporation ("Logility").
WITNESSETH:
WHEREAS, Logility and certain ASI Entities (as defined below) have entered
into that certain Subsidiary Formation Agreement, dated of even date herewith,
pursuant to which those ASI Entities have agreed to transfer and assign to
Logility, and Logility has agreed to acquire and assume from those ASI Entities,
certain tangible and intangible property and assets of those ASI Entities
relating to the Business of Logility (as such term is defined in the Subsidiary
Formation Agreement);
WHEREAS, the ASI Entities have the resources, staff, and expertise to
support Logility in the Business of Logility until such time as Logility has the
internal staff and expertise necessary to operate independently; and
WHEREAS, on the terms and subject to the conditions set forth herein,
Logility desires to retain the ASI Entities as independent contractors to
provide, directly or indirectly, certain administrative, financial, management,
and other services to Logility and the Logility Subsidiaries (as defined below);
and
WHEREAS, on the terms and subject to the conditions set forth herein, ASI
desires to provide, directly or indirectly, such services to Logility and its
Subsidiaries.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ASI and Logility, for themselves,
and their respective successors and assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. As used in this Agreement, the following terms will have
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the following meanings:
(a) "Actions" has the meaning ascribed thereto in Section 4.04.
(b) "Agreement" means this Services Agreement as it may be amended and
supplemented from time to time in accordance with the terms hereof.
(c) "ASI" has the meaning ascribed thereto in the preamble hereto.
(d) "ASI Entities" means ASI and its Subsidiaries (excluding the Logility
Entities, unless otherwise required by the context), and an "ASI Entity" shall
mean any of the ASI Entities.
(e) "ASI Indemnified Person" has the meaning ascribed thereto in Section
4.03.
(f) "ASI Plans" has the meaning ascribed thereto in Section 3.05.
(g) "Benefit Billing" has the meaning ascribed thereto in Section 3.01.
(h) "Benefits Services" has the meaning ascribed thereto in Section 3.05.
(i) "Closing Date" means the date of the closing of the initial sale of
Common Stock in the Initial Public Offering.
(j) "Common Stock" means the issued and outstanding shares of Common Stock,
having no par value, of Logility, and any other class of Logility capital stock
representing the right to vote generally for the election of directors.
(k) "Confidential Information" has the meaning ascribed thereto in Section
7.08.
(l) "Cost Plus Billing" has the meaning ascribed thereto in Section 3.01.
(m) "Customary Billing" has the meaning ascribed thereto in Section 3.01.
(n) "Employee Welfare Plans" has the meaning ascribed thereto in Section
4.02.
(o) "ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations promulgated and rulings issued thereunder, as amended from time
to time.
(p) "Initial Public Offering" means the issuance of shares of Common Stock
to the public in an offering registered under the Securities Act of 1933, as
amended.
(q) "Logility" has the meaning ascribed thereto in the preamble hereto.
(r) "Logility Entities" means Logility and its Subsidiaries (if and when
any), and a "Logility Entity" shall mean any of the Logility Entities.
(s) "Logility Indemnified Person" has the meaning ascribed thereto in
Section 4.05.
(t) "Pass-Through Billing" has the meaning ascribed thereto in Section
3.01.
(u) "Payment Date" has the meaning ascribed thereto in Section 3.06(b).
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(v) "Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, government (and
any department or agency thereof), or other entity.
(w) "Schedule I" means the first schedule attached hereto which lists the
Services (other than Services relating to certain commercial services and to
employee plan and benefit matters) to be provided by ASI to Logility and sets
forth the related billing methodology.
(x) "Schedule II" means the second schedule attached hereto which describes
certain commercial services that may be provided by ASI to Logility and sets
forth the related billing methodology.
(y) "Schedule III" means the third schedule attached hereto which lists the
Services relating to employee plans and benefit arrangements to be provided by
ASI to Logility and sets forth the related billing methodology.
(z) "Schedules" has the meaning ascribed thereto in Section 3.01.
(aa) "Service Costs" has the meaning ascribed thereto in Section 3.01.
(bb) "Services" has the meaning ascribed thereto in Section 2.01.
(cc) "Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture, or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof. Subsidiary, when used
with respect to ASI or Logility, shall also include any other entity affiliated
with ASI and Logility, as the case may be, that ASI and Logility may hereafter
agree in writing shall be treated as a "Subsidiary" for the purposes of this
Agreement.
1.02. Internal References. Unless the context indicates otherwise, references
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to Articles, Sections, and paragraphs shall refer to the corresponding
articles, sections, and paragraphs in this Agreement, and references to the
parties shall mean the parties to this Agreement.
ARTICLE II
PURCHASE AND SALE OF SERVICES
Section 2.01. Purchase and Sale of Services.
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(a) On the terms and subject to the conditions of this Agreement and in
consideration of the Service Costs, ASI agrees to provide to Logility, or to
procure for the provision to Logility, and Logility agrees to purchase from ASI,
the services described in Schedules I, II, and III (the "Services"). Unless
otherwise specifically agreed by ASI and Logility, the Services to be provided
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or procured by ASI hereunder shall be substantially similar in scope, quality,
and nature to those provided to, or procured on behalf of, Logility prior to the
Closing Date.
(b) It is understood that (i) the Services to be provided to Logility under
this Agreement will, at Logility's request, be provided to Subsidiaries of
Logility, and (ii) ASI may satisfy its obligation to provide or procure Services
hereunder by causing one or more of its Subsidiaries to provide or procure such
Services. With respect to Services provided to, or procured on behalf of, any
Subsidiary of Logility, Logility agrees to pay on behalf of such Subsidiary all
amounts payable by or in respect of such Services.
Section 2.02. Additional Services. In addition to the Services to be provided
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or procured by ASI pursuant to Section 2.01, ASI from time to time may provide
additional services (including services not provided by ASI to Logility prior to
the Closing Date) to Logility; provided that the scope of any such services, as
well as the term, costs, and other terms and conditions applicable to such
services, shall be as mutually agreed in writing by ASI and Logility. Upon such
agreement, all such services shall be included in the term "Services" for
purposes of this Agreement.
ARTICLE III
SERVICE COSTS; OTHER CHARGES
Section 3.01. Service Costs Generally.
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(a) Schedules I, II, and III hereto (collectively, the "Schedules")
indicate, with respect to each Service listed therein, whether the costs to be
charged to Logility for such Service or program are determined by (i) the
customary billing method ("Customary Billing"), (ii) the pass-through billing
method ("Pass-Through Billing"), (iii) the cost-plus-fixed-fee billing method
("Cost Plus Billing"), or (iv) a calculation of certain costs relating to
employee benefit plans and benefit arrangements ("Benefit Billing"). The
Customary Billing, Pass-Through Billing, Cost Plus Billing, and Benefit Billing
methods applicable to the Services provided to Logility are collectively
referred to herein as the "Service Costs". Logility agrees to pay to ASI in the
manner set forth in Section 3.06 the Service Costs applicable to each of the
Services provided by ASI.
(b) As provided herein, ASI shall permit eligible Logility employees to
participate in certain of the ASI Plans. In addition to reimbursing ASI for the
Services as set forth herein, Logility shall reimburse ASI for ASI's costs
(including any contributions and premium costs and including certain third-party
expenses and allocations of certain ASI personnel expenses), subject to Section
3.05 hereof, relating to participation by Logility employees in the ASI Plans.
It is the express intent of the parties that Service Costs relating to the
administration of Logility employee plans and the performance of related
Services will not exceed reasonable compensation for such Services as defined in
29 CFR (S) 2550.408c-2.
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Section 3.02. Customary Billing. The costs of Services determined by the
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Customary Billing method shall be comparable to the costs for comparable
services charged from time to time to other businesses and Subsidiaries operated
by an ASI Entity.
Section 3.03. Pass-Through Billing. The costs of Services determined by the
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Pass-Through Billing method shall be equal to the third-party costs and expenses
incurred by any ASI Entity on behalf of any Logility Entity. If an ASI Entity
incurs costs or expenses on behalf of any Logility Entity as well as other
businesses operated by such ASI Entity, the ASI Entity will allocate any such
costs or expenses in good faith between the various businesses on behalf of
which such costs or expenses were incurred as such ASI Entity shall determine in
the exercise of its reasonable judgment. ASI shall apply usual and customary
accounting conventions in making such allocations, and ASI or its agents shall
keep and maintain such books and records as may be reasonably necessary to make
such allocations. ASI shall make copies of such books and records available to
Logility upon request and with reasonable notice.
Section 3.04. Cost Plus Billing. The costs of Services determined by the Cost
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Plus Billing method, as set forth on Schedule II, shall be equal to the costs
and expenses incurred by any ASI Entity on behalf of any Logility Entity, plus a
fixed percentage of such costs and expenses to be negotiated by the parties in
good faith. If an ASI Entity incurs costs or expenses on behalf of any Logility
Entity as well as other businesses operated by such ASI Entity, the ASI Entity
will allocate any such costs or expenses in good faith between the various
businesses on behalf of which such costs or expenses were incurred as the ASI
Entity shall determine in the exercise of its reasonable judgment. ASI shall
apply usual and customary accounting conventions in making such allocations, and
ASI or its agents shall keep and maintain such books and records as may be
reasonably necessary to make such allocations. ASI shall make copies of such
books and records available to Logility upon request and with reasonable notice.
Section 3.05. Benefit Billing.
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(a) Prior to the Closing Date, certain employees of Logility participated
in certain benefit plans sponsored by ASI. On and after the Closing Date,
Logility employees shall continue to be eligible to participate in certain ASI
Plans, as specified by ASI prior to the Closing Date ("ASI Plans"), subject to
the terms of the governing plan documents as interpreted by the appropriate plan
fiduciaries. On and after the Closing Date, subject to regulatory requirements
and the provisions of Section 4.01 hereof, ASI will continue to provide Benefits
Services to and in respect of Logility employees with reference to such ASI
Plans as it administered them prior to the Closing Date.
(b) The costs payable by Logility for Services relating to employee plans
and benefit arrangements ("Benefits Services") may be charged on the basis of
Customary Billing, Pass-Through Billing, or Benefit Billing. In addition, the
costs associated with certain plans and programs identified in Schedule III will
be paid principally through employee payroll deductions for such plans and
programs. Benefit Services consist of those categories of Services which are
more fully described on Schedule III attached hereto.
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