EXHIBIT 10.22
MODIFICATION AGREEMENT
This is an agreement made on November 1, 1994, by and among The
Zondervan Corporation ("Zondervan"), a Michigan corporation with its
principal place of business at 0000 Xxxxxxxxx X.X., Xxxxx Xxxxxx, Xxxxxxxx;
HarperCollins Publishers Inc. ("HC"), a Delaware corporation having an
office at 00 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Xxxxxxxx Consulting
("AC"), an Illinois partnership with its principal place of business at 00
X. Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx; General Electric Capital Computer
Leasing Corporation ("GE"), a California corporation having an office at
0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxx; and Family
Bookstores Company, Inc. ("FBS"), a Michigan corporation having an office
at 0000 Xxxxxxxxx X.X., Xxxxx Xxxxxx, Xxxxxxxx.
This Agreement is made with reference to the following existing
agreements: (a) Strategic Technology License and Services Agreement
("Service Agreement") between AC and Zondervan; (b) Base Software License
("Software License") between AC and Zondervan; (c) Agreement of Assignment
("Assignment Agreement") between AC and GE; and (d) Guaranty ("Guaranty")
by HC; all of which agreements are dated May 9, 1994.
I. RECITALS
Zondervan wishes to sell the assets of its Family Bookstores Division
to FBS (a newly formed entity) and, in conjunction with the sale, wishes
for its obligations under the Service Agreement and the Software License,
and those of HC (Zondervan's corporate parent) under the Guaranty, to be
released or reduced.
AC is willing to accede to such requests, in consideration of certain
modifications to the Service Agreement and the Software License, including
a provision for FBS to pre-pay certain of the payments to be made by
Zondervan under the Software License.
GE, as assignee of the right to receive payments under the Software
License pursuant to the Assignment Agreement and as beneficiary of the
Guaranty, is willing to consent to such modifications, in consideration of
being relieved by AC of a portion of its obligation to acquire from AC the
entirety of the anticipated stream of payments from Zondervan to AC under
the Software License, and AC is willing to grant such relief.
II. AGREEMENT
A. AMENDMENTS TO SOFTWARE LICENSE.
1. Schedule I of the Software License is hereby amended by
Zondervan and AC so as to read, in its entirety, as set forth in Schedule I
to this Agreement.
2. The first sentence of Section 4 of the Software License is
hereby amended by Zondervan and AC so as to read, in its entirety, as
follows:
"The obligations of Client to make payment of the amounts
required under paragraph 2 hereof or under any other paragraphs
hereof and to perform and observe the other covenants and
agreements contained herein shall be absolute and unconditional
in all events, except that Client shall have no obligation
(except for payments and/or damages recoverable pursuant to
subparagraph (iii) of Section 8 hereof) to make any payment for
which the date for payment, as specified in Schedule I hereto,
shall occur after the term of the license granted hereunder shall
have terminated."
3. The introductory clause of Section 8 of the Software License
is hereby amended by Zondervan and AC so as to read, in its entirety, as
follows:
"Whenever any event of default referred to in Section 7
hereof shall have happened and be continuing, or the term of the
licenses granted under this License Agreement shall end for any
reason, AC shall have the right, at its sole option without
further demand or notice, to take one or any combination of the
following remedial steps:"
4. Subparagraph (i) of Section 8 of the Software License is
hereby amended by Zondervan and AC by inserting after the words "License
Agreement" in the first sentence, the parenthetical phrase, "(if not by
then already terminated)".
5. Subparagraph (iii) of Section 8 of the Software License is
hereby amended by Zondervan and AC so as to read, in its entirety, as
follows:
"(iii) Recover payment from, and/or damages against, Client in an
amount equal to the present value (based upon an assumed
internal interest rate per annum equal to the then-current
yield on U.S. Treasury bills of a term equal to the period
between the date of such recovery and June 30, 2001) of the
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sum of all payments scheduled to be made under this License
Agreement for which the scheduled date for payment (as set
forth in Schedule I hereto) is July 1, 1995 or later and
that shall not yet have been paid, plus all other damages to
which AC is legally or equitably entitled and all of its
expenses (including reasonable attorneys' fees) of
collection; and"
6. GE hereby acknowledges and consents to the foregoing
provisions of this Section II.A.
B. AMENDMENT TO SERVICE AGREEMENT.
1. The Service Agreement is hereby amended by Zondervan and AC
by deleting therefrom the entirety of Section 13.8.3 (including Schedule
13.8.3 thereto).
2. Clause (ii) of Section 14.2 of the Service Agreement is
hereby amended by Zondervan and AC by inserting, after the words "Section
3.3.1 hereof" and before the comma and the word "provided," the words:
"and for which the scheduled date for payment, as set forth in
Schedule I to said Base Software License, is prior to July 1,
1995".
3. GE hereby acknowledges and consents to the foregoing
provisions of this Section II. B.
C. AMENDMENTS TO ASSIGNMENT AGREEMENT.
1. The fourth paragraph on the first page (introductory
paragraphs) of the Assignment Agreement is hereby amended by AC and GE, by
substituting the word "some" for the word "all".
2. Clause (a) of Section 1., "Assignment," of the Assignment
Agreement is hereby amended by AC and GE so as to read, in its entirety, as
follows:
"(a) all of Assignor's rights to receive any and all payments due
to Assignor under the License Agreement for which the
scheduled date for payment, as set forth in Schedule I to
said agreement, is July 1, 1995 or thereafter; and".
3. Section 4 of the Assignment Agreement is hereby amended by
AC and GE by changing the caption thereof from "Repurchase" to
"Reassignment," by deleting therefrom the entirety of paragraph 4(a), by
re-lettering paragraphs 4(b) and 4(c) as 4(a) and 4(b), respectively, and
by amending said paragraphs 4(a) and 4(b) so as to read, in their
respective entireties, as follows:
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"(a) In no event shall Assignee have any right of reimbursement,
indemnity, setoff, or other recourse against Assignor for
any failure by Obligor to make payments that are to be made
under the License Agreement. At such time as Assignee shall
have received or collected the entire sum of all amounts to
be paid by Obligor to Assignor under the License Agreement,
Assignee shall reassign to Assignor, free and clear of all
claims, liens, security interests and encumbrances arising
through any act or omission of Assignee or any person
claiming by, through or under Assignee, all of Assignee's
right, title and interest in and to the License Agreement,
the Base Software, any security interests in any of same,
and any other rights, properties or interests theretofore
assigned to or obtained by Assignee.
(b) Assignor shall have the right, in its discretion, but shall
not be obligated, to pay to Assignee any payment owing by
the Obligor under the License Agreement (and shall be
subrogated to the rights of Assignee against the Obligor
with respect to such amounts provided Assignor shall be
subordinated in payment to claims of Assignee against
Obligor)."
4. Paragraph 5(b) of the Assignment Agreement is hereby amended
by AC and GE by deleting therefrom the second sentence thereof and by
amending what had been the third sentence thereof so as to read, in its
entirety, as follows:
"If Assignor desires to arrange third-party financing for
any such increase in costs under the Principal Agreement,
any such financing shall be accomplished through
documentation separate from the License Agreement unless
Assignee provides such financing pursuant to an amendment to
the License Agreement."
5. Schedule A to the Assignment Agreement is hereby amended by
AC and GE so as to read, in its entirety, as set forth in Schedule A to
this Agreement.
6. Schedule B to the Assignment Agreement is hereby deleted by
AC and GE.
D. CONSENTS, ASSUMPTIONS, AND RELEASES.
1. AC and GE hereby consent to the sale or assignment by
Zondervan to FBS of all of the rights of Zondervan under the Service
Agreement and the Software License, subject to the assumption by FBS of all
of the duties, obligations, and liabilities of Zondervan under said
agreements.
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2. FBS hereby assumes and agrees to perform, discharge, and be
fully and unconditionally bound by all of the duties, obligations, and
liabilities of Zondervan under the Service Agreement and by all of the
duties, obligations, and liabilities of Zondervan under the Software
License.
3. AC and GE hereby release Zondervan from all duties,
obligations, and liabilities under the Service Agreement and the Software
License except for the following (for which Zondervan shall remain fully
responsible and liable): the duties and obligations of Zondervan under the
Software License with respect to payments for which the scheduled date for
payment (as set forth in Schedule I to said agreement, as herein amended)
is July 1, 1995 or thereafter.
E. GUARANTOR'S AGREEMENTS, GE CONSENT.
1. HC hereby acknowledges and consents to all of the amendments,
consents, assumptions, releases, and other agreements set forth above in
this Agreement.
2. HC hereby consents and agrees that Section 1. of the Guaranty is
hereby amended so as to read, its entirety, as follows:
"OBLIGATIONS. The term "Obligations" shall mean: (a) all
payments, fees and other amounts of any kind to be paid by
Company (or by any successor, assignee or delegates of the
Company) to AC pursuant to the License Agreement (and thus to
GECCL pursuant to the Assignment Agreement) for which the
scheduled date for payment, as set forth in Schedule I to the
License Agreement is July 1, 1995 or thereafter; and (b) all
representations, warranties, covenants, duties, actions,
indemnities and responsibilities of any kind to be performed by
Company (or by any such assignee or delegatee) pursuant to the
License Agreement."
3. HC and GE further acknowledge and agree that,
notwithstanding all of the foregoing provisions of this Agreement, the
Guaranty, as hereinabove amended, is hereby re-affirmed and shall be and
remain in full force and effect.
4. GE hereby acknowledges and consents and agrees to the
amendments to the Guaranty as set forth above in this Section II.E.
F. ACCEPTANCE.
To induce AC and GE to enter into this Agreement, Zondervan, HC
and FBS hereby jointly and severally represent, acknowledge, and agree: (a)
that all work to have been performed by AC up to the date of this
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Agreement, including the entirety of the Store System and all of the
preliminary design deliverables for the Home Office, have been delivered by
AC to Zondervan, tested, and accepted by Zondervan as being, and are hereby
agreed by FBS to be, fully in conformity with all of the Applicable
Specifications under the Service Agreement; and (b) that the sum of the
value of said work plus the value of all third-party licenses as to which
the Software License constitutes or includes a sublicense to Zondervan, as
components of the total value of the Software License, is fairly
represented by the amounts that are scheduled (under Schedule I to the
Software License as hereinabove amended) to be paid on July 1, 1995 or
thereafter.
G. CONDITION PRECEDENT.
All of the parties hereto do hereby mutually acknowledge and
agree that all of the provisions of this Agreement are subject to the
closing and consummation, by not later than December 15, 1994, of a sale by
Zondervan to FBS of all or substantially all of the assets of the Family
Bookstores Division of Zondervan, and that this Agreement shall be deemed
void AB INITIO and of no force or effect unless and until the consummation
of said sale transaction.
In witness and acceptance of the foregoing, the parties have executed
this Agreement on the date first written above.
THE ZONDERVAN CORPORATION
By: /S/_________________________________
Its: ___________________________________
HARPERCOLLINS PUBLISHERS INC.
By: /S/_________________________________
Its: ___________________________________
XXXXXXXX CONSULTING
By: /S/_________________________________
Its: ___________________________________
GENERAL ELECTRIC CAPITAL
COMPUTER LEASING CORPORATION
By: /S/_________________________________
Its: ___________________________________
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FAMILY BOOKSTORES COMPANY, INC.
By: /S/_________________________________
Its: ___________________________________
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