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Exhibit 4.(a)(vi)
MASTER AGREEMENT
AGREEMENT made this 12th day of April, 2000 by and between Xxxxx.connect
Holdings B.V., a corporation incorporated under the laws of The Netherlands,
with a place of business at Wexham Springs, Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxx, XX0
0XX, Xxxxxxx on behalf of itself and its Affiliates (collectively "Xxxxx"), and
Vital Network Services LLC, a limited liability company organized under the laws
of the State of Delaware, USA, with principal offices located at 0 Xxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000 XXX ("Vital").
WHEREAS, Xxxxx markets certain Token Ring and ATM equipment (the "Products, as
defined below) and related services to customers worldwide, and in connection
therewith offers on-site installation, maintenance and value-add services to
such customers;
WHEREAS, Vital provides on-site installation, maintenance and value-add
servicing of communications equipment worldwide and has a worldwide
infrastructure to perform on-site installation, maintenance and value-added
services; and
WHEREAS, Xxxxx and Vital now desire to enter into an agreement whereby Xxxxx
will outsource its Products technical support operations comprised of (i)
central support, (ii) EMEA customer support, (iii) Product training and (iv)
personnel to Vital, and Vital, as an independent contractor, will operate the
Service Business in the name of Vital and for the benefit of Vital.
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1.0 DEFINITIONS AND SCHEDULES
1.1 "Affiliate" means those corporations, companies or other entities directly
or indirectly controlled by a party hereto. "Control" means ownership or control
of more than fifty percent (50%) of the outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) of an entity. Such entities shall be deemed to be Affiliates only so
long as such ownership or control exists. Each party shall be responsible for
the acts and omissions of its Affiliates hereunder.
1.2 "Competitor" means Cisco, IBM, 3Com, Nortel Networks, Fore and Intel and if
this Agreement is modified to add a new Xxxxx product line to the list of
Products to be covered by this Agreement, Xxxxx reserves the right to reasonably
extend this list of Competitors upon written notice to Vital.
1.2A "OEM Contracts" means all forms of agreement between Xxxxx and third
parties, whereby Xxxxx has agreed to supply certain Products to such third
parties and provide related technical support. A listing of all OEM Contracts
hereunder and the related Products for each OEM Contract are set forth in
Schedule 10. Vital's obligations hereunder with regard to any OEM Contract shall
only extend to the specific Product(s) identified in Schedule 10 for such OEM
Contract.
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1.3 "Office Hours" means 9am to 5pm in UK and East Coast USA.
1.4 "Product(s)" means those Xxxxx products to be Serviced by Vital hereunder
and are set forth in Schedule 1.
1.5 "Service(s) (d)" means any or all of Free of Charge Services, Transition
Services, Contract Services (as such terms are defined in Section 3.0 below),
after-sales installation, maintenance, customer technical support, product
training and all forms of related value-added and professional services relating
to the Products and provided to Xxxxx customers world wide; the business of
which is referred to as the "Service Business"
1.6 "Service Business Contracts" means all form of written agreement between
Xxxxx and a third party with regard to the provision of Services by Xxxxx for
the Products. This also includes all Service Contracts sold by Xxxxx to its
channel partners, some of which have been sold on by the channel to customers
and some which have not. A listing of the Service Business Contracts is set
forth in Schedule 5.
1.7 "Telephone Technical Support" means the management, investigation,
escalation and resolution of technical issues reported via telephone, fax, email
or via the web and carried out as per the escalations procedures set forth in
Schedule 8 hereto. This to be provided during Office Hours.
1.8 "Transferred Employees" means those Xxxxx employees in the Service Business
who are transferred to Vital hereunder. A listing of Transferred Employees is
set forth in Schedule 2.
1.9 The following Schedules are attached hereto, an integral part of this
Agreement and incorporated by this reference:
Schedule 1 - Listing of Products
Schedule 2 - Transferred Employees
Schedule 3 - Vital Performance Requirements and Measurement
Schedule 4 - Service Business Equipment to be Transferred to Vital
(Xxxxx and Non-Xxxxx Service Business Equipment)
Schedule 5 - Listing of Service Business Contracts
Schedule 6 - Assets to be Sold to Vital.
Schedule 7 - Transition Schedule
Schedule 8 - Escalation and RMA Procedures
Schedule 9 - Xxxxx Authorised Service Partners and Relevant
Commission Agents
Schedule 10 - OEM Contracts
Schedule 11 - Key Account Customers, Tier 1 Resellers and Key WAVE
Accounts
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Exception Schedules:
Schedule 5.3 - Litigation
Schedule 5.6 - Changes in Terms of Employment
Schedule 5.8 - Changes to Service Business Contracts
1.10 The introductory Whereas and related clauses above are an integral part of
this Agreement as if fully set forth in the body hereto.
2.0 TERM
2.1 This Agreement shall remain in full force and effect for an initial term of
five (5) years from the Closing Date (as defined in Section 4) unless terminated
earlier pursuant to Section 21. This Agreement shall automatically renew for an
additional term of 5 years unless either party gives ninety (90) days written
notice of its intention not to renew prior to the expiration date of the initial
term. Where used in this Agreement the "Term" shall be as defined above.
3.0 SCOPE
3.1 Vital shall perform the Free of Charge Services, Transition Services and
Contract Services as defined below and upon the terms and to the standards set
out herein. Xxxxx shall give Vital exclusive access to the relevant research and
development team to enable Vital to provide the Services. Xxxxx shall (i) use
all reasonable efforts to assign to Vital all Xxxxx Service Business Contracts,
(ii) transfer to Vital the Transferred Employees (iii) transfer to Vital, free
of charge, certain Xxxxx and non-Xxxxx laboratory and test equipment required to
operate the Service Business (the "Xxxxx Service Business Equipment and the
Non-Xxxxx Service Business Equipment" as further defined in Section 10 below)
(iv) sell to Vital certain related fixtures and other assets (the "Assets"), and
(v) grant to Vital a royalty-free license to use certain Xxxxx technology as
necessary to perform the Services. During the Term, Xxxxx shall not, save as set
out in Section 12, authorize any third party to perform Services for the
Products nor perform Services for the Products itself. Xxxxx will however,
reserve the right to instruct a 3rd party or use their own personnel, at Madge's
expense, to assist in specific customer related issues where, in Madge's
reasonable judgement and only after consultation with Vital and an opportunity
for Vital to resolve the issue, Vital has been unable to resolve the issue to
the customer's satisfaction.
3.2 "FREE OF CHARGE SERVICES" means Vital will provide the following services to
Xxxxx and Xxxxx Product customers world wide during the Term at no charge to
such customers. These services are;
a. The availability of a technical support area of the Vital website
with regard to the Products to provide the following services and
information to customers;
- Frequently Asked Questions (FAQs)
- Known problem solutions
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- Ability to download released software(2)
- Access to on-line product documentation(3)
- Contact information
Xxxxx shall transfer to Vital promptly after Closing the required content
and programs, and allow certain hyperlinks between the Xxxxx and Vital
websites to be established, both in order for Vital to provide the
technical support website area above, and Xxxxx shall provide reasonable
assistance to Vital as Vital implements such content, programs and
hyperlink. Xxxxx hereby grants to Vital a nonexclusive, royalty-free,
fully-paid right and license to utilize such content and programs with
regard to its website during the Term.
b. Telephone Technical Support during Office Hours for the first 90 days
following the date of shipment of a Product to a Xxxxx Product customer.
There will be no guaranteed service levels associated with this service.
c. A Telephone Technical Support email only service allowing customers to
email their questions to Vital to be answered by the technical support
personnel via email. There will be no guaranteed service levels associated
with this service.
d. Support of the Xxxxx hardware warranty for the Products by receiving
the telephone call, verifying equipment is in warranty, qualifying the
suspected hardware failure and then passing the RMA request to Xxxxx in
accordance with Madge's RMA process.
e. Telephone Technical Support for Xxxxx pre-sales engineers to provide
information on product functionality and specification. This to be
provided during Office Hours. Will not include Xxxxx presales engineers
reporting post sales technical issues on behalf of a customer.
f. OEMs - Listed in Schedule 10. Notwithstanding anything in the OEM
Contract to the contrary, Vital shall only be obligated to provide free
Telephone Technical Support, for the specific Products listed for the
specific OEM in Schedule 10, during Office Hours.
3.3 "TRANSITION SERVICES" means that in the course of transitioning
certain Xxxxx customers from a free to a fee service program, Vital will
provide the following services to transition Xxxxx product customers
worldwide:
a. Except as otherwise agreed by the parties, existing free phone numbers
(toll-free 800 numbers) will be retained by Vital for at least 6 months
after the Closing Date. Vital may decide to retain these for longer.
b. Key Account Customers and Tier 1 Resellers - listed in (Schedule 11).
In the United States Xxxxx designated Platinum Resellers are Tier 1, and
in the rest of the world, Xxxxx designated Gold Resellers are Tier 1.
- Each Key Account Customer/Tier 1 Reseller will be contacted by Vital
and offered a free office hours only Telephone Technical Support
contract; such contract to have a duration of a minimum of three (3)
months. Vital may agree to give the Key Account Customer / Tier 1
Reseller a longer period of free support.
- If the customer decides not to renew this contract for a fee-based
contract, at the end of contracted period above, Vital will consult
with the Xxxxx sales team to decide a strategy for ongoing technical
support for this customer.
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(2) Hyperlink Item - Content provided direct from Xxxxx website
(3) Hyperlink Item - Content provided direct from Xxxxx website
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c. MASPs - Listed in Schedule 9. MASPs shall be handled by Vital as
set forth in Section 12.6 below.
d. Tier 2 Resellers and Remaining End Users. In the United States Xxxxx
designated Gold Resellers are Tier 2, and in the rest of the world Xxxxx
designated Silver Resellers are Tier 2. If the Xxxxx Product customer is
not a Key Account Customer, a Tier 1 Reseller or a Tier 2 Reseller they
are classified as "Remaining End Users".
- As each Tier 2 Reseller/Remaining End User contacts technical
support, they will be provided with an explanation of the
Xxxxx/Vital relationship and information regarding the telephone
technical support services available and will be given a free 3
month Office Hours only Telephone Technical Support contract.
- If the customer decides not to renew this contract for a fee-based
contract, at the end of contracted period above, Vital will decide a
strategy for ongoing technical support for this customer.
3.4 "CONTRACT SERVICES" means the services required to support existing
and new Service Business Contracts, and are listed below:
a. HARDWARE FAILURE IN MANUFACTURERS STANDARD WARRANTY PERIOD.
Vital take call, verify hardware is faulty and pass RMA request to Xxxxx
in accordance with Madge's RMA procedure.
- Xxxxx replace faulty hardware and receive faulty hardware from
customer.
- Customer ships faulty hardware to Xxxxx.
- Xxxxx to pay for replacement.
b. HARDWARE FAILURE - EXTENDED WARRANTY CONTRACT SOLD PRIOR TO CLOSING
- No revenue transferred to Vital, No revenue split.
- Vital take call, verify hardware is faulty and pass RMA
request to Xxxxx in accordance with Madge's RMA procedure.
- Xxxxx ship replacement to customer.
- Customer ships faulty hardware to Xxxxx.
- Xxxxx to pay for replacement.
c. HARDWARE FAILURE - EXTENDED WARRANTY CONTRACT SOLD BY EITHER PARTY
POST CLOSING
- Revenue split in accordance with Section 11.2.1 below.
- Vital take call, verify hardware is faulty.
- Vital ships replacement to customer from consigned inventory
(4)
- Customer ships faulty hardware to Vital.(5)
- Vital request replacement from Xxxxx and ship faulty hardware
to Xxxxx
- Xxxxx ship replacement hardware to Vital.
- Xxxxx invoices Vital for replacement if outside standard
warranty.
(4) Xxxxx shall be responsible for this process for the ninety (90) day period
after the Closing Date, after which Vital shall be assume the
responsibility.
(5) Xxxxx shall be responsible for this process for the ninety (90) day period
after the Closing Date, after which Vital shall be assume the
responsibility.
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D. HARDWARE FAILURE - ADVANCED REPLACEMENT SOLD PRIOR TO CLOSING
- No revenue transferred to Vital, No revenue split.
- Vital take call, verify hardware is faulty and pass RMA request
to Xxxxx in accordance with Madge's RMA procedure.
- Xxxxx ship replacement to customer.
- Customer ships faulty hardware to Xxxxx.
- Xxxxx to pay for replacement.
E. HARDWARE FAILURE - ADVANCED REPLACEMENT SOLD BY EITHER PARTY POST
CLOSING
- Revenue split in accordance with Section 11.2.1 below.
- Vital take call, verify hardware is faulty.
- Vital cross ships replacement to customer from consigned
inventory(6)
- Customer ships faulty hardware to Vital.(7)
- Vital request replacement from Xxxxx and ship faulty hardware to
Xxxxx
- Xxxxx ship replacement hardware to Vital.
- Xxxxx invoices Vital for replacement if outside standard
warranty.
F. HARDWARE FAILURE - ON SITE REPLACEMENT SOLD PRIOR TO CLOSING - ALL
EXPIRED
G. HARDWARE FAILURE - ON SITE REPLACEMENT SOLD BY EITHER PARTY POST
CLOSING.
- Revenue split as per agreement
- Vital take call, verify hardware is faulty.
- Vital despatch field engineer with spare.
- Vital Field Engineer replaces hardware and returns faulty
hardware to Vital
- Vital request replacement from Xxxxx and ship faulty hardware to
Xxxxx
- Xxxxx ship replacement hardware to Vital.
- Xxxxx invoices Vital for replacement only if failed equipment is
outside Madge's standard warranty period.
H. 24X7 TELEPHONE SUPPORT SOLD PRIOR TO CLOSING
- No revenue transferred to Vital, No revenue split.
- Vital take call in accordance with the Telephone Technical
Support.
I. 24X7 TELEPHONE SUPPORT SOLD BY EITHER PARTY POST CLOSING
- Revenue split in accordance with Section 11.2.1 below.
- Vital take call in accordance with Vital's service level
agreement with the customer
3.5 In addition, Vital shall be Madge's preferred provider of Services
for new products and new business opportunities. "Preferred" means that
Xxxxx shall in good faith first offer such Service business to Vital
before presenting it to any third party or performing it itself.
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(6) Xxxxx shall be responsible for this process for the ninety (90) day period
after the Closing Date, after which Vital shall be assume the responsibility.
(6) Xxxxx shall be responsible for this process for the ninety (90) day period
after the Closing Date, after which Vital shall be assume the responsibility.
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3.6 Vital shall provide the Services as further described herein during
the Term. Services may be provided by Vital Affiliates, Affiliates of
its parent company and by Vital sub-contractors, dependant upon the
location of the Products provided that Vital will always remain liable
under the terms of this Agreement.
3.7 It is agreed, except as expressly provided hereunder, that Vital
assumes no liabilities or obligations of Xxxxx or the Service Business
of any kind or nature whatsoever including, without limitation, any
liability of Xxxxx under any Service Business Contracts or any
liability of Xxxxx to the Transferred Employees, based on transactions,
events or facts existing, occurring or arising or otherwise accruing
prior to the Closing Date (as defined below). Xxxxx shall defend,
indemnify and hold Vital and its Affiliates harmless from and against
any and all such liabilities or obligations as well as against all cost
and expenses of defending against such liabilities or obligations,
including products liability and intellectual property infringement
claims, except to the extent Vital expressly assumes any such liability
or obligation hereunder and except to the extent that any such
liability arises from an act or omission on Vital's part, after the
Closing Date.
3.8 It is agreed, except as expressly provided hereunder, that Xxxxx
assumes no liabilities or obligations of Vital or the Service Business
of any kind or nature whatsoever including, without limitation, any
liability under the Service Business Contracts or any liability
relating to the Transferred Employees based on transactions, events or
facts existing, occurring or arising or otherwise accruing on or after
the Closing Date (as defined below). Vital shall defend, indemnify and
hold Xxxxx and its Affiliates harmless from and against any and all
such liabilities or obligations as well as against all cost and
expenses of defending against such liabilities or obligations, except
to the extent Xxxxx expressly assumes any such liability or obligation
hereunder, and specifically excluding any claims based upon the
manufacture and sale of the Products by or on behalf of Xxxxx.
3.9 The indemnification obligations of Sections 3.7 and 3.8 do not
apply to the extent that liability arises as a result of the
indemnified party's negligent acts or omissions, or breach of its
representations set forth in Sections 5.0 and 6.0 below.
3.10 Xxxxx shall retain responsibility for all purchase orders issued
to suppliers for the procurement of services, equipment or material for
the Services Business, that are executory in part or full as of the
Closing Date.
3.11 Xxxxx Video Business. Xxxxx manufactures, sells and services ISDN
video products (the "Video Business"). The products of the Video
Business are access switches, modules, a LAN video gateway and various
third party camera and codecs (which Xxxxx only OEMs). Xxxxx has
provided information to Vital with regard to the accounts, call
volumes, contracts and installations of Video Business and has
requested that Vital provide Services to the Video Business customers
hereunder. The Video Business customers are set forth in Schedule 11
under the heading of "Key WAVE Accounts". As Xxxxx has also informed
Vital of the possibility of a divestiture of the Video Business, the
parties have agreed that Vital shall provide Services for the Video
Business customers only as follows:
a. The ROW sites of existing customers of the Video Business shall
be deemed to be Key Account Customers and Vital's obligation to
provide Services to them shall be as set forth above in Section
3.3(b). "ROW" means worldwide excluding North and South America.
Vital shall not provide Services to such customers in North and
South America.
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b. In the event that Xxxxx does divest the Video Business, Xxxxx
shall cause the buyer of the Video Business to agree in writing
with Vital (prior to effective date of the divestiture) that the
buyer will continue to support the products of the Video Business
for all installations in ROW for the duration of all Service
Contracts then in force for such customers (or, in the case of
customers without a Service Contract, the duration of the product
warranty for the purchased video products).
4.0 CLOSING
4.1 The closing (the "Closing") under this Agreement shall be held on
Monday, 17th April, 2000 (the "Closing Date"). The Closing shall take
place at the facilities of Xxxxx in Wexham, Slough, UK or at such other
place or via some other method as the parties may agree.
4.2 At the Closing, Xxxxx shall deliver to Vital:-
(i) Copies, where available, and full details of the OEM Contracts
set forth in Schedule 10, (and all amendments thereto), and
copies, where available, and full details of the Service Business
Contracts set forth in Schedule 5 (and all amendments thereto)
that Xxxxx will use reasonable efforts to have assigned to Vital
within sixty (60) days following the Closing Date. However, the
parties acknowledge that Vital has relied upon a representation
from Xxxxx that the significant majority of the Service Business
Contracts are unmodified, standard Xxxxx forms. Examples of such
standard forms have been provided to Vital. In the event that a
copy of any Service Business Contract is not provided to Vital
because it is not available to Xxxxx, then Vital shall be deemed
to have only assumed the obligations under such Service Business
Contract to the extent it contains provisions that are the same
as the standard Xxxxx forms provided to Vital. Any variation or
modification thereto must be specifically agreed to by Vital in
writing;
(ii) transfer title, (including releases of all liens and
encumbrances), to the Assets and Service Business Equipment which
do not include a software element set forth in Schedules 6 & 4
respectively hereto. If these Assets or Service Business
Equipment contain a software element Xxxxx will use all
reasonable efforts to have the necessary licenses assigned to
Vital within sixty (60) days following the Closing Date,
4.3 Within sixty (60) days after the Closing, (and thereafter as
required), the parties shall settle and adjust with each other any
payments due to each other for the matters set forth in this Agreement.
Except as otherwise expressly set forth in this Agreement to the
contrary, Vital is responsible for all costs and expenses with regard
to the Transferred Employees, performing the Service Business
Contracts, the Assets and, the Non-Xxxxx Service Business Equipment
accruing on or after the Closing and Xxxxx is responsible for such
costs and expenses accruing prior to Closing. The parties shall
promptly pay the other such amounts.
5.0 REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXX
Xxxxx represents and warrants to Vital as follows:
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5.1 Xxxxx.connect Holding B.V. is a corporation duly organized, validly
existing and in good standing under the laws of The Netherlands and
each Affiliate of Xxxxx.connect Holding B.V. performing any obligation
hereunder shall be duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or
organization.
5.2 This Agreement has been duly authorized by all necessary corporate
action on the part of Xxxxx. This Agreement is a valid, binding
obligation of Xxxxx enforceable against Xxxxx in accordance with its
terms. There are no provisions of Madge's corporate formation
documents, or of any agreement to which Xxxxx is a party, which
prohibit, limit or otherwise affect the right and authority of Xxxxx to
execute this Agreement, except that consent may be required to assign
software licenses that form part of the Service Business Equipment and
Assets.
5.3 Save for those disclosed to Vital during due diligence which are
set forth hereto in Schedule 5.3, there are no actions or proceedings
pending or to Madge's knowledge threatened (commercial, employee,
intellectual property or otherwise) against Xxxxx, any Affiliate or any
Product, and Xxxxx has no knowledge or belief of any such pending,
threatened or imminent litigation, governmental investigations or
claims, complaints, actions or prosecutions involving Xxxxx, any
Affiliate or any Product, which if adversely determined would impair
their ability to perform their obligations hereunder or which would
have any negative effect upon Vital or its ability to perform.
5.4 The Transferred Employees are not party to any collective
bargaining agreement. Madge's relationship with the Transferred
Employees is, in Madge's opinion, excellent and there are and have been
no strikes, lockouts, other work stoppages, picketing or labor disputes
during the past five (5) years involving Xxxxx.
5.5 The Transferred Employees are the only Xxxxx employees wholly or
mainly employed in the Service Business in the United Kingdom, and the
only Xxxxx employees entitled to the protection of the Transfer of
Undertakings (Protection of Employment) Regulations 1981 ("TUPE") with
regard to the outsourcing of the Service Business to Vital hereunder.
5.6 The terms of employment existing as of February 18, 2000 for any of
the Transferred Employees including, without limitation, salaries,
benefits and incentive compensation have not been increased nor has any
commitment or arrangement been made to so increase the same prior to
the Closing Date other than those (if any) disclosed to Vital during
due diligence and which are set forth hereto in Schedule 5.6.
5.7 Except for any third party software contained therein Xxxxx has
good and marketable title to and owns outright all of the Assets set
forth in Schedule 6, and the Service Business Equipment set forth in
Schedule 4. There are no third party liens pending or threatened
against the Assets or Services Business Equipment, and, all shall be
transferred to Vital free and clear of all liens, claims and
encumbrances. As shown in Section 4.2(ii) Xxxxx will use all reasonable
efforts to have any necessary software licenses assigned to Vital.
5.8 Except as set forth in Schedule 5.8, since February 18, 2000 Xxxxx
(i) has not materially modified any of the Service Business Contracts
nor incurred any material
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obligations or liabilities thereto whether absolute or contingent, (ii)
has operated the Service Business in the ordinary course of business in
accordance with customary practices and procedures as in the past, and
(iii) there has been no material, adverse change to such Service
Business Contracts or Service Business.
5.9 Xxxxx has complied with all laws, ordinances, regulations and
orders ("Laws") with regard to the Service Business including, without
limitation, TUPE and other Laws respecting employment, employment
practices, benefits, and wages and salaries.
5.10 As of the Closing Date, Xxxxx has no plans to discontinue the
manufacture and sale of its Token Ring or ATM Product lines. In the
event that during the Term, Xxxxx does decide to discontinue any of the
Products then, subject to Madge's obligations to provide spare parts as
set forth in Section 14.2 below, Xxxxx shall endeavor to provide Vital
with as much notice as possible of their intention to discontinue,
which shall not be less than the longest notice period that Xxxxx is
required to provide (or does provide) any customer of Xxxxx, but in any
event Xxxxx shall use its best efforts to provide not less than ninety
(90) days prior, written notice.
5.11 All information and documents provided to Vital by Xxxxx or on
behalf of Xxxxx in response to Vital's due diligence requests are
accurate and complete in all material aspects, and Xxxxx has fully
responded to all such requests.
5.12 Xxxxx shall commit sufficient resources to meet its obligations
hereunder.
5.13 The warranties and representation of Xxxxx above are in addition
to and not in lieu of any other warranties and representations set
forth elsewhere in this Agreement.
6.0 REPRESENTATIONS, WARRANTIES AND COVENANTS OF VITAL
Vital represents and warrants to Xxxxx as follows:
6.1 Vital Network Services LLC is a company duly organized, validly
existing and in good standing under the laws of the State of Delaware,
USA, and each Affiliate of Vital Network Services LLC performing
Services hereunder shall be duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation
or organization.
6.2 This Agreement has been duly authorized by all necessary corporate
action on the part of Vital. This Agreement is a valid, binding
obligation of Vital enforceable against Vital in accordance with its
terms. There are no provisions of Vital's formation documents, or of
any agreement to which Vital is a party, which prohibit, limit or
otherwise affect the right and authority of Vital to execute this
Agreement.
6.3 There are no actions or proceedings pending or threatened
(commercial, employee or otherwise) against Vital or its Affiliates and
Vital has no knowledge or belief of any such pending, threatened or
imminent litigation, governmental investigations or claims, complaints,
actions or
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prosecutions involving Vital or any such Affiliate, which if adversely
determined would impair their ability to perform hereunder or would
have any negative effect upon Xxxxx or its Products.
6.4 Vital shall perform the Services using a level of professional
skill and care, not less than that previously utilized by Xxxxx and in
accordance with the Performance Requirements and Measurement in
Schedule 3 commencing August 1, 2000.
6.5 Each quarter following the Closing Date Vital shall provide Xxxxx
with a report showing its performance of the Service Business including
the Service Business Contracts as applicable and required in the
Performance Requirements and Measurement information in Schedule 3.
6.6 At the end of the transition period specified in 12.1, Vital has
the requisite know-how to perform the Services and shall commit
sufficient resources to meet its obligations hereunder.
7.0 TRANSFER OF EMPLOYEES
7.1 Vital and Xxxxx acknowledge and agree that under TUPE the contracts
of employment of the Transferred Employees will have effect after the
Closing Date as if originally made between Vital and the Transferred
Employees. Upon Closing, Vital shall employ the Transferred Employees
on employment terms to which they are presently contractually entitled
including, without limitation, salaries, benefits and incentive
compensation, equal to or better than those provided to the Transferred
Employees by Xxxxx immediately prior to the Closing Date, except where
it is not reasonably practicable to provide the same benefit, in which
event equivalent compensation or an alternative equivalent scheme will
be provided as agreed between Vital and the Transferred Employees.
7.2 Xxxxx shall be solely responsible for all costs, expenses and
liabilities with regard to the Transferred Employees accruing prior to
the Closing Date, and Vital shall be solely responsible for all such
costs, expenses and liabilities accruing on and after the Closing Date.
Each party (the "Indemnifying Party") shall, in accordance with Section
18.2 below, indemnify the other from and against all costs, expenses
and liabilities that are the responsibility of the Indemnifying Party
as set forth in this Section 7.2.
7.3 The parties acknowledge that Xxxxx has committed to pay each
Transferred Employee that remains at Xxxxx (or any successor employer
under TUPE, which Vital is deemed to be) until April 30, 2000, an
unconditional bonus equal to a percentage of the Transferred Employee's
annual salary on such date. Such percentages and the applicable annual
salary by employee are set forth in Schedule 2 (the "Bonus"). Purely
for administration purposes Xxxxx has agreed that these Bonuses will be
paid to the Transferred Employees in their wages they will receive at
the end of May unless Vital and the Transferred Employees agree
otherwise. Notwithstanding the Closing Date, the obligation to pay the
bonus shall be assumed and satisfied by Vital in the Transferred
Employees May salary. To the extent Vital has failed to make such
payment(s), Vital shall indemnify Xxxxx for any Transferred Employee
claims for payment in relation thereto.
7.4 In the event that Vital, in its sole business judgement and within
ninety (90) days after the Closing Date, decides to restructure the
Service Business and as a result terminates the employment
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of some of the Transferred Employees within ninety (90) days after the
Closing Date, then Xxxxx shall reimburse Vital for the actual costs of
such termination in respect of up to six (6) such terminated
Transferred Employees, such costs to be limited to the salary, benefits
and Bonus (Bonus shall not be included if the termination is after the
payment of the Bonus) for the applicable statutory notice period
(salary and benefits determined as of immediately prior to the Closing
Date), and redundancy payments per the Xxxxx redundancy policy in
effect as of February 18, 2000 calculated as if such employees were
still employees of Xxxxx. Any notice period and any reimbursable
redundancy payments shall be as per Madge's redundancy policy or the
minimum required by law (whichever is the greater).
7.5 In the event that Vital, in its sole business judgement and within
ninety (90) days after the date which is six (6) months after the
Closing Date, decides to restructure the Service Business and as a
result terminates the employment of some of the Transferred Employees,
then Xxxxx shall reimburse Vital for the actual costs of such
termination in respect of up to an additional five (5) such terminated
Transferred Employees, such costs to be limited to the salary and
benefits for the applicable statutory notice period (salary and
benefits determined as of the date which is six (6) months after the
Closing Date), and redundancy payments per the Xxxxx redundancy policy
in effect as of February 18, 2000 calculated as if such employees were
still employees of Xxxxx. Any notice period and any reimbursable
redundancy payments shall be as per Madge's redundancy policy or the
minimum required by law (whichever is the greater). Notwithstanding
anything to the contrary in this Section 7.5 or section 7.4 above, the
number of Transferred Employees that voluntarily resign from Vital
prior to the date which is six (6) months after the Closing Date shall
be deducted from the number of Transferred Employees for which Xxxxx is
obligated to reimburse Vital's redundancy costs under Sections 7.4 and
7.5.
7.6 In the event that this Agreement is terminated for cause by Xxxxx
under Section 21.1 below within eighteen (18) months of the Closing
Date, Xxxxx shall have the option, no later that twenty-one (21) days
after such termination, to nominate in writing to Vital such of the
Vital Employees (as defined below in Section 7.7) who were as of the
effective date of termination spending at least seventy five percent
(75%) of their work time (calculated based on the three month period
prior to termination) working on Servicing the Products. Xxxxx shall
have the right, on behalf of itself or a third party, to offer a
contract of employment to such Vital Employees to continue the
provision of Services for the Products as an employee of Xxxxx or a
third party.
7.7 In the event that this Agreement is terminated for cause by Xxxxx
under Section 21.1 below, and except for TUPE Actions caused by the
acts or omissions of Xxxxx, then any claim by Xxxxx against Vital with
regard to such termination may include sums for judgments paid by or
assessed against Xxxxx for any and all claims filed against Xxxxx by
Vital Employees under TUPE in relation to such termination ("TUPE
Actions"). "Vital Employees" means only those Vital employees providing
Services for the Products. The amount of the TUPE Actions claimed by
Xxxxx against Vital shall not exceed One Hundred Thousand Dollars
(US$100,000).
8.0 ASSIGNMENT OF SERVICE BUSINESS CONTRACTS
8.1 Xxxxx shall assign, transfer and set over to Vital at the Closing
all right, title and interest in and to the Service Business Contracts
set forth in Schedule 5; however, nothing herein shall be construed as
an attempt to assign a contract which is non-assignable without the
consent of the other party or parties to such contract. With regard to
those Service Business Contracts not requiring consent, the contracts
shall be deemed assigned to Vital without any further action by the
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parties upon the Closing Date. Xxxxx shall use its reasonable, good
faith efforts to secure the required consents for the assignment of all
the Service Business Contracts within sixty (60) days following the
Closing Date.
8.2 To the extent any Service Business Contract by its terms requires
the consent of a party thereto other than Xxxxx, and such consent is
not obtained prior to the Closing Date, then Vital shall perform such
Service Business Contract in the name of Xxxxx. Where any Service
Business Contract cannot be assigned or subcontracted, the parties
shall agree upon other arrangements in relation to such Service
Business Contract that shall provide the benefits and obligations of
such Service Business Contract to Vital after the Closing.
9.0 PURCHASE AND SALE OF ASSETS AND FIXTURES
9.1 Xxxxx agrees to sell to and transfer to Vital, and Vital agrees to
purchase from Xxxxx, subject to the terms and conditions herein, the
assets and fixtures (the "Assets") to be agreed between the parties
during the transition period set forth in Section 12.1 below.
9.2 The purchase price for the Assets shall be agreed between the
parties during the transition period but shall not exceed the fair
market value, and shall be paid by Vital at the end of the transition
period by wire transfer in accordance with wire transfer instructions
provided to Vital.
9.3 With regard to the Assets, Xxxxx warrants and represents to Vital:
9.3.1 The Assets are in a good working order and operating
condition, ordinary wear and tear excepted, given the
customary, commercial use to which they have been put;
9.3.2 Xxxxx will transfer to Vital good title to the Assets,
free and clear of all security interests, mortgages, liens,
attachments and encumbrances;
9.4 Xxxxx will use reasonable efforts to transfer to Vital on or within
a reasonable period after the Closing Date all manufacturer's
warranties maintenance contracts, software licenses and other similar
contracts and licenses with regard to the Assets so far as the same can
be transferred. Where this is not possible, the parties shall use
reasonable efforts to agree upon other arrangements that shall provide
the benefits thereof to Vital after the Closing.
10.0 TRANSFER OF SERVICE BUSINESS EQUIPMENT
10.1 "Xxxxx Service Business Equipment" means certain Xxxxx
products to be used by Vital hereunder as test, training and
laboratory equipment. "Non-Xxxxx Service Business Equipment"
means certain products of third parties to be used by Vital
hereunder as test, training and laboratory equipment. The
Xxxxx Service Business Equipment shall be loaned to
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Vital and the Non-Xxxxx Service Business Equipment shall be
transferred to Vital at the Closing. Both types of equipment
are set forth in Schedule 4 hereto.
10.2 Xxxxx hereby transfers to Vital at the Closing Date the
Non-Xxxxx Service Business Equipment for the primary purpose
of providing the Services hereunder. The equipment shall be
provided to Vital at no charge, "as is" and the cost of
de-installation at Xxxxx and delivery and reinstallation at
Vital's premises shall be borne by Vital. Xxxxx shall have no
liability to maintain or upgrade this equipment.
10.3 Xxxxx hereby grants Vital the right to use the Xxxxx Service
Business Equipment for the primary purpose of providing the
Services hereunder. Title to the Xxxxx Service Business
Equipment shall at all times remain with Xxxxx. Vital shall be
responsible for the risk of loss or damage to the Xxxxx
Service Business Equipment while in the possession of Vital.
The equipment shall be provided to Vital at no charge, "as is"
and the cost of de-installation at Xxxxx and delivery and
reinstallation at Vital's premises shall be borne by Vital.
Xxxxx shall provide to Vital at no charge all maintenance
releases and upgrades (both hardware and related software) for
the Xxxxx Service Business Equipment during the Term.
10.4 Xxxxx will use reasonable efforts to transfer to Vital on or
within thirty (30) days following the Closing Date all
manufacturer's warranties, maintenance contracts, software
licenses and other similar contracts and licenses with regard
to the Non-Xxxxx Service Business Equipment so far as the same
can be transferred. Where this is not possible, the parties
shall use reasonable efforts to agree upon other arrangements
that shall provide the benefits thereof to Vital after the
Closing.
10.5 Xxxxx warrants and represents to Vital that the Xxxxx Service
Business Equipment and the Non-Xxxxx Service Business
Equipment is the same equipment utilized by Xxxxx and the
Transferred Employees prior to the Closing to operate the
Service Business, and are in a good working order and
operating condition, ordinary wear and tear excepted. Xxxxx
does not warrant that this is an exhaustive list of all such
equipment used by Xxxxx and the Transferred Employees as some
of the equipment belongs to the Research and Development unit
of Xxxxx and will be retained by such unit; however, Xxxxx
does warrant that the Xxxxx Service Business Equipment and
Non-Xxxxx Service Business Equipment, together with the
technical equipment that Vital can obtain via loan from Xxxxx
pursuant to Section 10.6 below, are sufficient for Vital to
operate the Service Business as it is today hereunder.
10.6 Xxxxx and Vital agree that they will loan technical equipment
to the other free of charge in order for each party to perform
its obligations under this Agreement.
10.7 Xxxxx and Vital shall equally share the cost of the
installation and operation of a wide area network link (or
other form of communications technology) between the Vital
facility at Wokingham, UK and Xxxxx facility at Wexham
Springs.
11.0 FINANCIAL CONSIDERATION
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11.1 In consideration of the performance of each party's obligations
hereunder, certain costs and revenue shall be shared between the
parties as set forth below.
11.1.1 Cost Sharing. In consideration of the provision of the
Services and the transfer of the Transferred Employees to
Vital, Xxxxx shall pay to Vital the amount of $4,810,000
during the following periods. All amounts are stated in United
States Dollars:
YEAR 1 YEAR 2 YEAR 3
$2,700,000 $1,410,000 $700,000
Year 1 shall commence on the Closing Date, Year 2 on the first
anniversary of the Closing Date, Year 3 on the second anniversary of
the Closing Date, and each such year shall end twelve (12) months
thereafter. Each yearly amount shall be paid in total during the
applicable year in three equal installments. One third shall be paid on
the first day of the yearly period (the "Start Date"), one third shall
be paid three months after the Start Date and the final third shall be
paid six months after the Start Date.
11.1.2 In consideration of the provision by Vital to Xxxxx of the
technical services described below in this Section 11.1.2, Xxxxx shall
pay to Vital the amount of US$240,000. The total amount shall be due
and payable to Vital in Year 1 on the dates as set forth above in the
last sentence of Section 11.1.1. Vital shall provide to Xxxxx during
Year 1 of the Term up to two (2) person years of technical consulting
services to be used by Xxxxx as Xxxxx sees fit. There shall be no
carryover to Year 2 of any unused technical consulting services. Such
services shall be provided by any worldwide Vital personnel as Vital
determines and Vital will send to Xxxxx a report each month of the
amount of the US$240,000 that has been used up since the Closing Date.
A person year is defined as two hundred ten (210) days and excludes all
holidays at the location of the service as well as weekends. Any time
provided in excess of four hundred twenty (420) days (2 person years)
within Year 1, shall be at additional charges in accordance with Vital
standard rates.
11.1.3 Cost Sharing Credits. In the event that Vital fails to meet its
obligations to provide Services to Xxxxx Product customers whether
existing at the Closing Date or subsequent to it and whether or not
covered by a Service Business Contract, then up to US$750,000 of the
cost sharing amounts previously paid by Xxxxx in Year 1 and up to
US$250,000 of the cost sharing amounts previously paid by Xxxxx in Year
2 may be subject to return to Xxxxx on a pro-rata basis. "Failure to
provide Services" and the amount of any prorata return shall be
determined by the parties on the basis of the procedures for customer
surveys, objective measurement devices and formulae as set forth in
Schedule 3. Any pro-rata amounts due Xxxxx for Year 1 shall be offset
against Madge's cost sharing obligations for Year 2. Any pro-rata
amounts due Xxxxx for Year 2 shall be offset against Madge's cost
sharing obligations for Year 3. Except for the right of Xxxxx to claim
damages for TUPE Actions as set forth in Section 7.6 above, the
provisions of this Section 11.1.3 shall be Madge's sole remedy for
damages for Vital's failure to provide Services in years 1 and 2.
Nothing in this Section 11.1.3 shall limit Madge's rights hereunder to
terminate the Agreement.
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11.2 *Revenue Sharing. The revenue amounts set forth below have been
projected by Vital to be received by Vital in its performance of
Services to Xxxxx Product Customers hereunder based in part on
information supplied by Xxxxx. All amounts below are in United States
Dollars. The parties acknowledge that the revenue amounts below are
projections and presented for illustrative purposes only in determining
revenue sharing, and are not nor shall be construed, implied or any
inference drawn whatsoever that they are commitments or obligations of
Vital or Xxxxx that such revenue amounts will be achieved.
Year 1 Year 2 Year 3 Total
Training Revenue XXX XXX XXX
Legacy Service Revenue XXX XXX XXX
SafetyNet Revenue XXX XXX XXX
MultiVendor Revenue XXX XXX XXX
Renewal Revenue XXX XXX XXX
Total Service Revenue XXX XXX XXX XXX
11.2.1 In Year 1 Total Service Revenue shall be shared 95/5 in
favor of Vital (95% to Vital, 5% to Xxxxx). In Year 2 Total
Service Revenue shall be shared 90/10 in favor of Vital and in
all years thereafter during the Term, revenue shall be shared
80/20 in favor of Vital. However, all revenue amounts in
excess of the Total Service Revenue shown above for Year 1
shall be shared 90/10 in favor of Vital and all revenue
amounts in excess of the Total Service Revenue shown above for
Year 2 shall be shared 85/15 in favor of Vital. With regard to
Year 3, all revenue amounts in excess of the Total Service
Revenue shown above for Year 3 shall be shared 75/25 in favor
of Vital.
11.2.2 "Revenue" means the recognized revenue received by
Vital from the (i) Service Business Contracts and (ii) new
Service contracts accepted by Vital from (x) a business unit
of an entity where the business unit is a Xxxxx Product
customer and (y) any other entity or business unit that was
referred to Vital in writing by Xxxxx or a Xxxxx Product
customer. Revenue does not include any amounts received by
Vital from any contracts with Xxxxx customers that Vital
entered into prior to the Closing Date.
11.2.3 Vital shall pay to Xxxxx all shared amounts due Xxxxx
within sixty (60) days after the date of the Vital invoice to
the customer; however, in the event that invoiced revenue is
deemed by Vital to be uncollectable after reasonable and
customary efforts to collect, then the shared amount paid to
Xxxxx for such uncollectable revenue shall be offset and
deducted by Vital from subsequent revenue sharing payments to
Xxxxx or promptly paid to Vital by Xxxxx in the event there
are no revenue sharing payments to offset. Uncollectable
amounts may not be offset by Vital more than one (1) year
after the original Vital invoice date. Vital shall provide
Xxxxx with notice of any amount(s) it reasonably believes will
become uncollectable, and to the extent it is able to do so,
Xxxxx may at its discretion assist Vital in the collection of
such amount(s). The parties shall, within sixty (60) days
after the Closing, develop procedures with regard to the
sharing of billing data and inter-party invoices as related to
revenue sharing payments.
--------------
*Confidential treatment requested by Xxxxx Xxxxxxxx X.X.
000
00
11.3 Audit Rights. Each party shall have the right, upon reasonable,
prior written notice, to audit the other party's financial records as
such records relate to and support such party's payment obligations
hereunder, no more than one (1) time during each year of the Term. The
audit shall be conducted during normal business hours on the premises
of the other party, and the records audited shall be deemed
Confidential Information. Each party shall have the right to use third
party auditors to perform such audits so long as the third parties are
nationally or internationally recognized accounting firms, and the
third parties agree in writing with the party being audited to respect
the confidentiality of that party's records.
12.0 TRANSITION OF THE SERVICE BUSINESS FROM XXXXX TO VITAL
12.1 The parties shall require a limited transition period (anticipated
to be between eight (8) and ten (10) weeks) after the Closing Date
whereby Xxxxx will continue to provide certain Services for the
Products to certain customers. Key milestone, activities and
responsibilities for this Transition period are set out in Schedule 7.
At the end of the transition period, Xxxxx will cease to provide any
end user or post-sales reseller technical support or other Services for
the Products (save for the obligations Xxxxx has under the agreements
set out in Section 12.5 and 12.6 below). During the transition period,
each party (the "Indemnifying Party") shall be responsible for its
actions and omissions in the performance of Services, and shall,
subject to Section 18.2, defend, indemnify and hold the other party
harmless and reimburse the other upon demand for any claims, loss,
damage, liability, cost and expense arising out of or with respect to,
or resulting from such Services, including, without limitation,
reasonable attorney's fees.
12.2 After the transition period, Vital will assume the responsibility
for providing 1st, 2nd and 3rd level technical support operation for
the Products in accordance with the escalation process ("Escalation
Process") in Schedule 8.
12.3 Vital will escalate any problems directly associated with the
Products, that cannot be resolved within the Vital operation, in
accordance with the Escalation Process as set forth in Schedule 8.
12.4 Vital will, upon written acceptance of a Statement of Work
provided by Xxxxx and detailing the services outside the scope of this
Agreement to be provided by Vital, provide such services to Xxxxx.
Xxxxx will raise a purchase order for an amount and at a frequency to
be agreed, and to be reviewed annually. Vital will raise an invoice
against the open purchase order provided by Xxxxx for such services.
12.5 Xxxxx shall retain responsibility for all product liability and
new hardware warranty replacement claims as per Madge's published
standard hardware warranty with regard to the Products except to the
extent caused by an act or omission on the part of Vital. Xxxxx shall
retain the responsibility for the logistics processes and all costs
associated with the RMA process and replacements necessary in relation
to the same.
12.6 Vital acknowledges that Xxxxx has a number of third parties who
are authorised to act as a Xxxxx Authorised Service Partner (MASP) and
thereby to sell services to end users of Xxxxx
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Products. The Agreements between Xxxxx and the MASPs call for a minimum
of twelve (12) months prior, written notice of termination. Within
thirty (30) days following the Closing, Xxxxx shall provide the
required notice of termination for each of the MASP Agreements. This
notice of termination, in conjunction with an explanation of the
outsourcing of the Service Business to Vital, will be communicated
jointly to each MASP by Xxxxx and Vital after the Closing Date. During
this communication process, Xxxxx shall subcontract to Vital the
technical support aspects of all the MASP Agreements for the remainder
of their term and Vital shall provide free Office Hours only Telephone
Technical Support for each MASP. If, in Vital's sole discretion, it
desires to utilize the services of such MASP, Vital shall contract for
such service directly with the MASP.
13.0 SALES AND MARKETING
13.1 Xxxxx will assist Vital to obtain access to the Xxxxx customer
base and Xxxxx sales and marketing organization by entering into joint
sales and marketing activities, to be defined by the parties within
ninety (90) days following the Closing Date, which will promote Vital
Services as part of the Xxxxx Product sales effort. As part of this
effort, Xxxxx shall commit the resources of a minimum of one (1) of its
own employees to be a marketing/sales manager on a dedicated basis to
assist in the performance of such joint sales and marketing activities.
Vital shall commit two (2) of its own employees to be sales persons on
a dedicated basis to perform the sales activities hereunder. The
identity and duties of these persons shall be determined by the parties
within ninety (90) days following the Closing and shall be reviewed
annually during the Term by the parties and adjusted as agreed. In
addition, in the event that the sales goals for Year 1 are achieved (as
set forth in Section 11.2 above), then Xxxxx shall review in good faith
with Vital the requirement for two (2) of its own employees to be
additional sales persons to perform the sales activities hereunder for
the balance of the Term.
13.2 Xxxxx and Vital shall each commit an equal amount of money, not to
be less than Fifty Thousand Dollars ($50,000) each, in the first year,
to be spent on marketing activities to be agreed between the parties
within ninety (90) days following the Closing. Such amounts are in
addition to and not in lieu of the cost to supply the marketing/sales
persons set forth above in Section 13.1. The total amount to be spent
and such marketing activities will be reviewed annually during the Term
by the parties and adjusted as agreed. In addition, Xxxxx shall provide
and retain separate quotas and a competitive incentive compensation
scheme for its sales persons specifically designed to generate the sale
of Services for the Products.
14.0 SPARES
14.1 In order for Vital to perform its Service obligations hereunder,
Xxxxx will, upon the expiration of the transition period, consign to
Vital as required and agreed to by Xxxxx (such agreement not to be
unreasonably withheld or delayed), a suitable number of spare parts at
a suitable number of locations for the Products based upon Madge's
and/or Vital's prior experience servicing the Products. Additional
spare parts will be consigned to Vital from time to time, subject to
Vital's documentation that such additional spare parts are necessary
for the performance of such Service obligations, and that Vital has
reasonably exhausted the possibility of reusing spare parts already
consigned. Except as provided below, Xxxxx shall not charge Vital for
spare parts used by Vital, unless such spare parts are purchased by the
customer from Vital. Replacement charges to Vital shall be the Product
Recommended list price as published by Xxxxx on a quarterly basis, less
seventy percent (70%). Xxxxx shall bear the risk of loss of or damage
to the spare parts shipped by Xxxxx to Vital; Vital shall bear the risk
of loss of or damage to the spare parts shipped by Vital to
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Vital's possession. During the period that Xxxxx is responsible for the
RMA logistics process (see the footnotes to Section 3.4 above), Xxxxx
will be responsible for all freight charges. However, when Vital is
responsible for the RMA logistics process, Vital shall be responsible
for all freight charges to send the faulty Products to Xxxxx, and Xxxxx
shall be responsible for all freight charges to return the replaced
Products to Vital or the customer as applicable. All faulty Product
must be returned to Xxxxx for repair.
14.2 Xxxxx shall make spare parts available to Vital in accordance with
Section 14.1 above, during the life of the Service Business Contracts
and any Service contracts for the Products entered into by Vital
(including renewals and extensions) during the Term. Xxxxx shall be
liable for services relating to the repair or replacement of Xxxxx
Products in accordance with the terms of the Xxxxx Repair and
Replacement Policy in place from time to time. However if Vital agrees
with its customers a repair and replacement policy beyond Madge's
Repair and Replacement Policy, Vital shall be liable for such services
provided above and beyond the requirements of the Xxxxx Repair and
Replacement Policy in place at such time.
15.0 PAYMENT TERMS.
15.1 Except as may be otherwise provided herein, payment terms for all
amounts due a party by the other are net thirty (30) days from invoice
date payable in United States dollars. Invoices not paid within thirty
(30) days will carry an interest charge of one percent (1 %) per month
calculated from the original due date, or the maximum allowed by law
whichever is lower. Acceptance of a partial payment will not be a
waiver of the right to be paid the remainder due.
16.0 PRIMARY CONTACT PERSONS
16.1 Each party shall assign one individual to act as primary contact
person for business issues, one individual to act as primary contact
person for contract issues, one individual to act as primary contact
person for technical issues and one as primary contact for sales and
marketing issues. However, it is Vital's intent to have a "Customer
Executive" assigned as the "prime" contact for all initial
communications.
17.0 DISPUTE RESOLUTION BY THE PARTIES
17.1 Dispute Resolution. A designated representative of Vital and a
designated representative of Xxxxx shall meet as often as requested by
either party but at least once a quarter to review the performance of
the parties hereunder. In the event of any dispute that cannot be
resolved by such representatives, then upon the written notice of
either party, each party shall appoint a designated officer whose task
will be to meet to attempt to resolve such dispute within ten (10)
business days after receipt of notice. The designated officers shall
meet as often as the parties reasonably deem necessary during such
period in order to gather and review all information with respect to
the disputed matter. Such officers will discuss the problem and
negotiate in good faith without the necessity of any formal proceeding.
No formal proceedings for the judicial resolution of such dispute shall
be commenced by a party, nor any action taken to terminate this
Agreement for cause, until that party's
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designated officer has concluded in good faith that a reasonable
resolution through continued negotiation of the matter at issue does
not appear to be imminent or likely. Notwithstanding the foregoing, the
procedures above shall apply to the resolution of performance issues
and shall not prevent a party from seeking injunctive relief at any
time.
18.0 INFRINGEMENT/INDEMNIFICATION/INSURANCE
18.1 Each party (the "Indemnifying Party") shall, upon written demand,
defend, indemnify and hold the other harmless against and reimburse the
other on demand for any claims, loss, damage, liability, cost and
expense (each a "Claim") including, without limitation, reasonable
attorney's fees, to the extent incurred by the other by reason of:
(i) Any breach by the Indemnifying Party of its
representations as set forth in Sections 5.0 and 6.0 above;
(ii) The use or disclosure of Confidential Information in
violation of the terms of this Agreement by Indemnifying
Party, its employees, agents or the employees, agents of its
Affiliates, or others acting on its behalf.
18.2 Each party's obligation to defend and indemnify hereunder is
conditioned upon (i) receipt by the indemnifying party of timely
written notice of the Claim from the other party, (ii) the continuing
full cooperation of the other party in the defense of the Claim and the
disclosure to the indemnifying party or its attorneys of all evidence
related to the Claim, and (iii) the indemnifying party having the sole
control of the defense and settlement of the Claim.
19.0 PUBLIC ANNOUNCEMENTS
19.1 Neither Vital nor Xxxxx shall, without first obtaining the written
consent of the other party hereto, in any manner, (i) advertise or
publish or release for publication any statement (including verbal
information) mentioning the other party or the fact that this Agreement
has been entered into, (ii) release any information concerning its
relationship with the other party (including all terms and conditions
of this Agreement), or (iii) indicate any information about the other
party that is not already available as public information, except
either party may do the foregoing in compliance with SEC regulations or
as otherwise required by law (after notification of this required
disclosure to the other).
20.0 CONFIDENTIAL INFORMATION
20.1 As used in this Agreement, "Confidential Information" means any
specifications, plans, software, data or other business, financial or
technical information related to a party's business, financial standing
and present and future products and services disclosed, either orally
or in writing,
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by such party to the other under this Agreement provided, that if the
information is disclosed in writing, it must be clearly labeled as
"Confidential", "Proprietary" or with a similar legend, and if the
information is disclosed orally, it must be (i) identified as
Confidential Information at the time of disclosure by the disclosing
party and (ii) summarized in a writing confirming it is Confidential
Information and sent to the receiving party within fifteen (15) days
after disclosure.
20.2 Confidential Information does not include information that the
receiving party can demonstrate (i) is now, or hereafter becomes,
through no fault of the receiving party, generally known or available
to the public; (ii) was known by the receiving party before receiving
such information from the disclosing party; (iii) is hereafter
rightfully obtained by the receiving party from a third party, without
breach of any obligation to the disclosing party; or (iv) is
independently developed by the receiving party without use of or
reference to the Confidential Information by persons who had no access
to the Confidential Information.
20.3 Each party agrees to hold the other party's Confidential
Information in confidence and not to disclose such Confidential
Information to any third party except as specifically authorized by
this Agreement or by the other party in writing. Each party may
disclose the other's Confidential Information to its employees with a
bona fide need to know such Confidential Information, but only to the
extent necessary to carry out the purposes of this Agreement and on the
condition that each party shall ensure that such employees are aware of
the confidentiality associated with such Confidential Information.
20.4 All Confidential Information disclosed hereunder is and shall
remain the property of the disclosing party. No right or license is
granted other than as expressly set forth in this Agreement.
20.5 Upon the disclosing party's request or upon the termination or
expiration of this Agreement, the receiving party shall promptly return
to the disclosing party all copies of the Confidential Information,
will destroy all notes, abstracts, or other documents that contain
Confidential Information, and will provide to the disclosing party a
written certification of an officer of the receiving party that it has
done so.
20.6 These Section 20.0 obligations shall survive for three years from
the date of initial disclosure of the Confidential Information.
21.0 TERMINATION AND BANKRUPTCY
21.1 Except as set forth below with regard to extended cure periods in
the case of an Event of Material Breach by Vital, either party may
terminate this Agreement if the other (i) is in breach of any of its
material obligations in this Agreement and does not remedy such breach
within 30 days of written notice to do so or (ii) becomes subject to
liquidation or similar proceedings, ceases to carry on business as an
ongoing concern, or a receiver is appointed for a substantial part of
its assets. Termination in this case shall be upon written notice from
the other.
21.2 With regard to Vital's obligations, breach of a material
obligation shall include but not be limited to:
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a. if the measurement of Vital's performance under this Agreement
for any measurement period as set forth in Schedule 3,
produces a result in three or more of any of the six
measurement metrics set out in Schedule 3 that is worse than
the range specified in the 67% column of the Cost Sharing
Credit Evaluation Table (the "Table") of Schedule 3 (an "Event
of Material Breach"). For example, the range in the 67% column
for metric 1 (Call Response Time) is between >120 seconds and
=<240 seconds. Therefore, a result of 241 seconds would be
"worse" than the range specified for this measurement metric.
b. In the event that an Event of Material Breach occurs, Vital
shall promptly present to Xxxxx and implement a corrective
plan of action for the subsequent ninety (90) day period.
Another measurement will be taken at the conclusion of the
ninety (90) day period. If (i) the measurement again produces
an Event of Material Breach (not necessarily in relation to
the same metrics as the original Event of Material Breach) and
(ii) Vital has not made and is not making substantial, good
faith efforts and progress towards correcting its performance,
then Xxxxx shall have the right to terminate this Agreement
upon written notice to Vital.
21.3 In addition, Xxxxx may terminate this Agreement in the event that
(a) Vital or its parent company General DataComm, Inc. ("GDC") is
acquired by a Competitor of Xxxxx and, in the case of GDC, such
acquiring Competitor does not continue to operate Vital as an
independent entity with a policy of no parent access to Vital customer
information or (b) Vital sells or otherwise markets networking products
in competition with the Products to the extent that Xxxxx reasonably
believes and can demonstrate that such action will likely have a
material adverse impact upon Madge's ability to retain its customer
base for the Products, it being understood the performance of Services
by Vital and all related activities to install, maintain or repair
competing networking products are expressly excluded herefrom. or, (c)
Vital files or becomes subject to a petition under any bankruptcy laws
or regulations where a liquidation plan is filed that involves the
dissolution of that portion of Vital's business related to the Services
for the Products.
21.4 Xxxxx acknowledges that following the expiration or termination of
this Agreement by either party and for any reason, Vital will have
ongoing obligations to its customers for the provision of Services for
the Products, which obligations accrued prior to the expiration or
termination of this Agreement. In such event, Vital will require
support, including spare parts as and to the extent provided in Section
14, from Xxxxx in order to satisfy its obligations to such customers.
Therefore, Xxxxx shall continue to provide its support obligations
hereunder to Vital with respect to such existing Vital customer
agreements for a period expiring on the last to occur of (i) twelve
(12) months from the effective date of termination or expiration of
this Agreement or, (ii) the date of expiration of the last Vital
customer agreement; Xxxxx shall provide such support obligations at the
most favorable Xxxxx rates Xxxxx charges for such support obligations
except there shall be no charge for spare parts for Service Business
Contracts existing at the Closing Date as set forth in Section 14. For
new Service contracts for Products entered into by Vital after the
Closing Date, Xxxxx will charge Vital for spare parts at no more than
the Xxxxx standard list price for such parts.
21.5 In the event that Xxxxx files or becomes subject to a petition
under any bankruptcy or similar laws or regulations where (a) this
Agreement is not assumed without modification; (b) a liquidation plan
is filed that involves the dissolution of that portion of Madge's
business related to the Products; or (c) this Agreement is rejected by
Xxxxx or a bankruptcy trustee, (each a "Bankruptcy Event") then Vital
is then hereby granted, for the sole and limited purpose of continuing
to provide Services for the Products that it is contractually obliged
to perform, a non-exclusive, royalty-free (except for any royalties
payable to third parties which shall be paid by Vital), right and
license to use the technical information and Xxxxx Service Business
Equipment in its possession with regard to such Products, the software
and the source code for such Products and such other documentation as
is necessary to provide such Service. Nothing in this Section shall
require Xxxxx to xxxxx a license for Vital to use intellectual property
it does not own or have the right to sublicense to Vital in this
situation. Vital shall
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not be obligated to pay to Xxxxx the revenue sharing amounts set forth
above in Section 11.2 if Xxxxx (or the Xxxxx trustee as applicable)
does not fully cooperate with Vital to Vital's reasonable satisfaction
in the provision of the foregoing rights, licenses, technical and other
information required to be furnished under this Section 21.5.
21.6 In the event that this Agreement is terminated by Xxxxx for cause
within 18 months of the Closing Date, Xxxxx shall have the right to the
return of the Xxxxx Service Business Equipment provided to Vital at the
outset of this Agreement as set forth in Section 10 above in accordance
with the following rules:-
(i) All Xxxxx Service Business Equipment as defined in
Schedule 4 will be returned to Xxxxx by Vital;
(ii) All Non-Xxxxx Service Business Equipment as defined
in Schedule 4 that is not PC/server equipment will be
returned to Xxxxx by Vital;
(iii) Non-Xxxxx Service Business Equipment that is
PC/server equipment will be divided between the
parties and the parties agree to work in good faith
to try and ensure that both parties can continue to
operate their respective service businesses.
(iv) Non-Xxxxx Service Business Equipment that is not
operational, or that has been replaced, destroyed or
removed from service by Vital due to obsolescence, is
not subject to return to Xxxxx.
If Xxxxx does exercise its right in 21.6(i) above then, upon the request of
Vital, Xxxxx shall sell to Vital replacement Xxxxx Service Business Equipment at
the standard Xxxxx list price for such equipment. The cost of de-installation of
any equipment at Vital transferred to Xxxxx pursuant to this clause and delivery
to and reinstallation at Xxxxx of such equipment shall be borne by Xxxxx.
22.0 GENERAL.
22.1 This Agreement and its Schedules make up the entire agreement
between the parties regarding the outsourcing of the Xxxxx Service
Business to Vital. This Agreement supersedes all prior oral and written
agreements and understandings between the parties relating to such
outsourcing, including the Memo of Understanding dated February 18,
2000 between the parties, and may only be amended or modified in a
writing signed by an authorized representative of each party. This
Agreement supersedes and replaces any terms and conditions of any
purchase order, acknowledgment, or other standard form of commercial
document of either party exchanged between the parties during the Term.
In the event of any conflict, ambiguity or inconsistency between the
terms and conditions of this Agreement and the terms and conditions of
any Schedule hereto, the terms and conditions of this Agreement shall
control.
22.2 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY OR A THIRD PARTY FOR ANY
SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, WHETHER BASED
UPON CONTRACT, TORT, OR ANY OTHER LEGAL THEORY (INCLUDING, WITHOUT
LIMITATION, LOST PROFITS AND OPPORTUNITY), EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
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22.3 This Agreement is intended solely for the benefit of the executing
parties and their permitted successors and assigns. Except as otherwise
agreed, no other person or entity shall have any rights under or in
connection with this Agreement. The parties hereto are independent
contractors, one with the other, and nothing herein shall constitute
either party the agent or legal representative of the other for any
purpose whatsoever except as specifically set forth in this Agreement.
22.4 Any notice required or permitted to be given hereunder shall be in
writing and shall be deemed to have been given and received in all
respects when personally delivered, received by courier, or sent by
certified mail, return receipt requested, postage prepaid, addressed
and delivered in all cases to the following:
If to Vital: P. Xxxx Xxxxx
President
Vital Network Services, LLC
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Corporate Counsel
General DataComm, Inc.
Xxxx Xxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
If to Xxxxx: Xxxxxxx Xxxxxx
Chief Executive Officer
Xxxxx.connect Holdings B.V.
Wexham Springs
Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxx, XX0 0XX
England
With a copy to:
Kirstie Hallgate, Esq.
Legal Counsel
(at the same address above)
22.5 Neither party may sell, transfer or assign any right, duty or
obligation granted or imposed upon it under this Agreement without the
prior written consent of the other party. Notwithstanding the
foregoing, Vital may assign this Agreement in whole or in part without
such consent to (i) any entity that acquires substantially all its
capital stock or assets, subject to Madge's rights of termination in
Sections 21.2 (a) and (b) herein or (ii) to any Affiliate, provided
such entity or Affiliate expressly assumes Vital's obligations
hereunder. Xxxxx may assign this Agreement in whole or in part without
such consent to (i) any entity that acquires substantially all its
capital stock or assets or (ii) to any Affiliate, provided such entity
or Affiliate expressly assumes Madge's obligations hereunder.
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22.6 This Agreement shall be deemed to have been entered into and shall
be construed and enforced in accordance with the laws of England.
22.7 During the Term and for one (1) year thereafter, neither party
shall, directly or indirectly, either solicit for employment, offer
employment, hire or use the services of any employee of the other, so
long as such employee is employed by the other and for a period of one
hundred eighty (180) days thereafter, without first receiving the
written consent of the other. This Section 22.7 shall not apply to
Vital's hiring of the Transferred Employees or to the Xxxxx re-hiring
of any Transferred Employees terminated by Vital pursuant to Section
7.4.
22.8 Any waiver of a breach of this Agreement shall not be a waiver of
any other or subsequent breach.
22.9 Any indemnification obligations of a party hereto shall survive
the expiration of the Term for a period of one (1) year. Any other
Section or the specific provisions of any other Section which by their
nature are clearly intended to survive the expiration of the Term,
shall so survive.
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IN WITNESS WHEREOF, each party represents that it has caused this Agreement
to be executed on its behalf on the date first above written by a
representative empowered to bind that party with respect to the undertakings
and obligations contained herein.
VITAL NETWORK
SERVICES, LLC XXXXX.CONNECT HOLDINGS B.V.
BY:/s/ X X Xxxxx BY /s/ Xxxxxxx X. Xxxxxx
___________________________ _________________________________
NAME: X X Xxxxx NAME: Xxxxxxx X. Xxxxxx
________________________ _______________________________
TITLE: President TITLE Chief Executive Officer
________________________ ______________________________
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SCHEDULE 1
LIST OF PRODUCTS
SCHEDULE 2
TRANSFERRED EMPLOYEES
SCHEDULE 3
VITAL PERFORMANCE REQUIREMENTS AND MEASUREMENT
SCHEDULE 4
XXXXX SERVICE BUSINESS EQUIPMENT TO BE LOANED TO VITAL AND NON-
XXXXX SERVICE BUSINESS EQUIPMENT TO TRANSFERRED TO VITAL.
SCHEDULE 5
LISTING OF SERVICE BUSINESS CONTRACTS AS AT CLOSING DATE.
SCHEDULE 6
ASSETS
SCHEDULE 7
TRANSITION SCHEDULE
SCHEDULE 8
ESCALATION & RMA PROCEDURES
SCHEDULE 9
XXXXX AUTHORISED SERVICE PARTNERS
SCHEDULE 10
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OEM CONTRACTS AND RELATED PRODUCTS FOR EACH OEM CONTRACT
SCHEDULE 11
KEY ACCOUNT CUSTOMERS, TIER 1 RESELLERS & Key WAVE Accounts in ROW
EXCEPTION SCHEDULE 5.3
EXCEPTION SCHEDULE 5.6
EXCEPTION SCHEDULE 5.8
SCHEDULES AVAILABLE UPON REQUEST
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