Exhibit 10.41
General Services
Agreement
This
General Services Agreement (the “ Agreement ”), dated as
of October 27, 2008, documents the business relationship between
Franklin Covey Co., a Utah corporation (“FC”), and
Electronic Data Systems, LLP, a Delaware corporation (“
EDS ”), and describes the terms and conditions under
which EDS will provide to FC certain services, resources and
deliverables on an as requested basis.
Whereas , The Parties entered into an agreement for
Information Technology Services, dated April 1, 2001 which included
the various Services to be provided there under (the “Prior
Agreement”). The Prior Agreement has been amended
numerous times prior to the Effective Date of this Agreement
including but not limited to the Addendum #8 dated as of
July 2008, which acknowledged, among other things, the
divestiture of a business unit of FC and elimination of call center
services to FC; and
Whereas during
the term of the Prior Agreement there have been a variety of
amendments and other related agreements as set forth in Schedule 1,
Documents Deleted In Their Entirety And Superseded
, attached hereto, that are no longer
applicable and are hereby deleted in their entirety and superseded
by this Agreement and the Work Orders, as defined in
Section 2(a) below, and
Whereas during
the term of the Prior Agreement, the following documents were
executed between the parties, which shall remain in full force and
effect: Implementation of Oracle 11i Project Implementation
Waiver/Release dated1/12/2004; 7 Habits Development & License
Agreement dated 6/30/2001; Sublease by and between Electronic Data
Systems, LLC (Sublandlord) and Franklin Covey Co. (Subtenant) dated
June 30, 2001, and First Amendment to Standard Sublease Agreement
dated 2/1/2007; and
Whereas, The
Parties now desire to simplify, consolidate and update the
contractual documents which describe and set forth the current
rights and obligations of the Parties;
Now,
therefore , as of the
Agreement Effective Date, the Parties hereby agree as
follows:
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Term . Subject to Section 11, the term of
this Agreement will begin on October 27, 2008 (the “
Effective Date ”), and, unless earlier terminated as
provided in this Agreement, will continue through June 30,
2016. Such original term may be extended by mutual
written agreement of the Parties. In addition, if one or
more Work Orders (as defined below) are outstanding when this
Agreement expires (whether after the original term or otherwise),
this Agreement will remain in full force and effect solely for
purposes of allowing the activities covered by such Work Orders to
be completed. The obligations of EDS set forth in this
Agreement will be performed by EDS, itself and through its
affiliates. All references to EDS in this Agreement will
be deemed to include all such affiliates, and EDS and FC may be
referred to in this Agreement individually as a “Party”
and together as the “Parties”.
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Work
Orders for Services . During the term of this Agreement,
FC may request EDS to provide FC with such services, resources and
deliverables as are mutually agreed upon from time to time by EDS
and FC and confirmed in a mutually acceptable written authorization
letter substantially in
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the form
attached hereto as Exhibit A (the “ Work Order
”). This Agreement establishes the standard
provisions that will apply to each Work Order. Each Work
Order will include, at a minimum, (a) an Attachment 1 which
will describe the services, resources and deliverables that EDS
will provide thereunder, (b) also in Attachment 1 will
describe FC’s role and responsibilities, if any, in
connection with such services, resources and
deliverables and (c) an Attachment 2 which will describe the
charges to be paid by FC to EDS in consideration for such services,
resources and deliverables. Each Work Order will be
numbered sequentially beginning with the number one and, when
executed by the Parties, will be attached hereto and made a part
hereof for all purposes. In the event of any express
conflict or inconsistency between the provisions of an Work Order
and the provisions of this Agreement, the provisions of the Work
Order will govern and control with respect to the interpretation of
that Work Order; provided , however , that the
provisions of the Work Order will be so construed to give effect to
the applicable provisions of this Agreement to the fullest extent
possible. Any changes or modifications made to this Agreement in
accordance with Section 19 will apply to all Work Orders,
and any changes or modifications made to any Work Order in
accordance with Section 19 will apply only to that Work
Order, unless the Parties otherwise expressly agree in
writing. The work to be performed by EDS under this
Agreement, as set forth in the Work Orders, is collectively
referred to herein as the “ EDS Services
”.
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Change
Control Procedures . Subject to the other provisions of this
Agreement, the Parties may revise, amend, alter or otherwise change
the nature and scope of the EDS Services being provided under an
Work Order from time to time by mutual written agreement and
otherwise in accordance with the procedures set forth
in Exhibit A-1 . Such procedures do
not apply to changes that result in new services, which will be
initiated, reviewed, approved, documented and implemented in
accordance with Section 2(a) . The Parties agree
to consider any proposed changes in good faith and to make a good
faith effort to accept equitable adjustments to the affected Work
Order where appropriate to accomplish the mutual objectives of the
Parties.
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Service Locations
. Notwithstanding anything to the
contrary in this Agreement or any Work Order, EDS may perform the
EDS Services or any portion thereof from any location determined by
EDS or relocate any software or equipment used by EDS to perform
the EDS Services; provided , however , that EDS will
provide FC prior written notice of any change in service location
and provided, further that any change in service location
made by EDS will not (i) materially and adversely impact EDS’
ability to perform its obligations in accordance with the terms
hereof, including the achievement of any applicable service levels,
(ii) increase FC’s fees or costs (unless EDS agrees in
writing to reimburse FC for such increase) or (iii) materially and
adversely impact the way in which FC conducts its business or
operations.
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Representatives
. During the term of this Agreement,
EDS and FC will each maintain a representative who will be its
primary point of contact in dealing with the other under this
Agreement and will have the authority and power to make decisions
with respect to actions to be taken by it under this
Agreement. Either Party may change its representative by
giving notice to the other of the new representative and the date
upon which such change will become effective. In
performing its obligations under this Agreement, EDS will be
entitled to rely upon any routine instructions, authorizations,
approvals or other information provided to EDS by FC’s
representative or, as to areas of competency specifically
identified by such representative, by any other FC personnel
identified by FC’s representative, from time to time, as
having authority to provide the same on behalf of FC in such
person’s area of competency. Unless EDS knew of
any error, incorrectness or inaccuracy in such instructions,
authorizations, approvals or other information, EDS will incur no
liability or responsibility of any kind in relying on or complying
with any such instructions, authorizations, approvals or other
information.
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Certain Financial Matters
. In consideration for the performance
of the EDS Services, FC will pay to EDS the charges set forth in
Attachment 2 of each Work Order, and such charges will be
subject to periodic adjustment in the manner and to the extent
indicated therein. In addition, FC will pay or reimburse
EDS for (a) all pass-through and reasonable out-of-pocket expenses
incurred by EDS, with the prior written approval of FC in writing,
in the performance of the EDS Services and (b) any federal, state,
local, foreign or provincial taxes, assessments, claims and other
tax charges, including without limitation sales, use, property,
fees, surcharges, ad valorem, telecommunications, gross receipts,
excise, stamp, transaction, goods and services, customs, duties
and/or value-added taxes, and interest imposed in connection
therewith, but excluding income taxes that are based on or measured
by EDS’ net income. EDS will submit a written
invoice to FC on a monthly basis in arrears reflecting the amount
owed to EDS by FC for the EDS Services, with such supporting
documentation as FC reasonably requests, and FC will pay the
invoiced amount within 30 days of the date of the
invoice. Payment by FC will be by check payable to the
order of EDS, except that if any outstanding amount exceeding
$1,000,000 will be payable to EDS electronically (either by wire
transfer or ACH) in accordance with payment instructions provided
by EDS from time to time, so as in each case to constitute
immediately available funds by 12:00 p.m., local time in the place
of payment, on the payment date. If a due date does not
fall on a business day, payments must be received by EDS on or
before one business day after such date. Any past due
amounts will bear interest until paid at a rate of interest equal
to the lesser of (i) the prime rate established from time to time
by Citibank of New York plus four percent or (ii) the maximum rate
of interest allowed by applicable law. In addition, at
EDS’ request, FC will provide EDS with an explanation of why
an undisputed amount is not paid when due and a proposed payment
plan for FC to bring such past due amount current. If FC
disputes an amount on an invoice in good faith, FC will notify EDS
in writing of the specific items in dispute and will describe in
detail FC’s reason for disputing each such item within 20
days of the date of the invoice on which a disputed amount
appears. Within 20 days of EDS’ receipt of such
notice, the Parties will negotiate in good faith pursuant to the
provisions of Section 10 to reach settlement on any items
that are the subject of such dispute. If FC does not
notify EDS of any items in dispute within such 20-day period of
time, FC will be deemed to have approved and accepted such invoice.
If any portion of an amount due to EDS under this Agreement is
subject to a bona fide dispute between the Parties as provided
above, FC will pay to EDS on the date such amount is due all
amounts not disputed in good faith by FC, and the disputed amount
will be paid pending resolution of the dispute into an escrow
account that is structured by agreement of the
Parties. Notwithstanding anything to the contrary in
this Agreement, in no event may FC withhold in any one month, as a
disputed amount, more than 50% of EDS’ charges (exclusive of
reimbursable expenses) for that month.
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Employees . The EDS personnel performing the EDS
Services will be and remain the employees of EDS, and EDS will
provide for and pay the compensation and other benefits of such
employees, including salary, health, accident and workers’
compensation benefits and all taxes and contributions which an
employer is required to pay relating to the employment of
employees. During the term of this Agreement and for a
period of 12 months thereafter, neither Party will solicit,
directly or indirectly, for employment or employ any employee of
the other Party who is or was involved in the performance of the
EDS Services without the prior written consent of such other
Party. For purposes of this Section 5 ,
“solicit” does not include advertisements or other
publications of general circulation or employment that results
directly from responses to such advertisements or publications, and
such advertisements and publications will not constitute a breach
of this Section 5 .
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Privacy Laws
. The Parties acknowledge and agree
that FC will be and remain the controller of the information
relating to FC and its customers that identifies or is identifiable
to an individual person (the
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“ FC
Personal Data ”) for purposes of all applicable laws
relating to data privacy, personal data, transborder data flow and
data protection (collectively, the “ Privacy Laws
”), with rights under such laws to determine the purposes for
which the FC Personal Data is processed, and nothing in this
Agreement will restrict or limit in any way FC’s rights or
obligations as owner and/or controller of the FC Personal Data for
such purposes. As such controller of the FC Personal
Data, FC is directing EDS to process the FC Data in accordance with
the terms of this Agreement. The Parties also
acknowledge and agree that EDS may have certain responsibilities
prescribed as of the date hereof by applicable Privacy Laws as a
processor of the FC Personal Data, and EDS hereby acknowledges such
responsibilities to the extent required thereby for processors of
personal data and agrees that such responsibilities will be
considered as a part of the EDS Services to be provided by EDS
under this Agreement. In the event that Privacy Laws to
which the activities contemplated by this Agreement are subject are
modified or new Privacy Laws that are applicable to such activities
come into effect, EDS will work with FC in an effort to continue to
comply with such Privacy Laws, as so modified or added, but to the
extent that such modifications or additions expand the scope or
increase the cost of the activities previously undertaken by EDS
pursuant to this Section 6 , EDS will, at FC’s
reasonable request, provide such additional activities as
additional services, but only to the extent that the Parties have
reached agreement regarding the nature and scope of such services,
the period of time during which such services will be provided and
the basis upon which EDS will be compensated therefor.
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Confidentiality
. EDS and FC will have the
confidentiality obligations set forth in Exhibit B
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Representations, Warranties and Additional
Covenants . EDS and FC will have the obligations relating
to the representations, warranties and additional covenants set
forth in Exhibit C .
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Developed Software and Other
Deliverables .
Each party will retain all rights, including
trademarks, patents, trade secrets and copyrights (“IP
Rights”), in any software, ideas, concepts, know-how,
development tools, techniques or any other proprietary material or
information that it owned or developed prior to the date of this
Agreement, or acquired or developed after the date of this
Agreement without reference to or use of the intellectual property
of the other party. Subject to any third party rights or
restrictions and the other provisions of this Section 9, FC will
own the IP Rights (either as a work for hire or by assignment from
EDS) in and to all deliverables that (a) are developed and
delivered by EDS under this Agreement and (b) are paid for by
FC. Notwithstanding anything to the contrary in this
Agreement, EDS (i) will retain all IP Rights in and to all software
development tools, know-how, methodologies, processes, technologies
or algorithms used in performing the Services which are based on
previously developed trade secrets or proprietary information of
EDS or are otherwise owned or licensed by EDS (collectively,
“tools”), (ii) will be free to use the
ideas, concepts and know-how which are developed or created in the
course of performing the Services and may be retained by EDS’
employees in intangible form, all of which constitute substantial
rights on the part of EDS in the technology developed as a result
of the Services performed under this Agreement, and (iii) will
retain ownership of any prior-developed EDS-owned software or tools
(“EDS Tools”) that are used in producing the
deliverables and become embedded in the
deliverables. EDS hereby grants to FC a perpetual
(subject to compliance with this sentence), royalty-free,
nontransferable, nonexclusive license to use such embedded EDS
Tools (if any) solely in connection with FC’s internal use
and exploitation of the deliverables and only so long as such
software and tools (if any) remain embedded in the deliverables and
are not separated there from. EDS will own patent rights
with respect to processes and methodologies developed by EDS in
connection with deliverables other
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than the
copyright ownership rights granted to FC pursuant to this Section
9. To the extent that EDS commercializes any patent or
deliverable designed, created or paid-for by FC, EDS shall
negotiate in good faith with FC a royalty. Such royalty shall be in
a reasonable amount under all of the circumstances surrounding such
commercialization and the total of such royalty payments shall in
any event be limited to the amount required to reimburse FC for any
and all development fees incurred in creating said patent or
deliverable, which limitation shall be agreed upon in writing at
the time the royalty is negotiated. No licenses will be
deemed to have been granted by either party to any of its patents,
trade secrets, trademarks or copyrights, except as otherwise
expressly provided in this Agreement. Nothing in this
Agreement (A) will require EDS or FC to violate the proprietary
rights of any third party in any software or otherwise or (B) will
impair EDS’ right to acquire, license, market, distribute,
develop for itself or others or have others develop for EDS similar
technology performing the same or similar functions as the
technology and Services contemplated by this
Agreement. The provisions of this Section 9 will
survive the expiration or termination of this Agreement for any
reason .
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Third
Party Software . To the extent that EDS uses any third party
software or documentation and such software or documentation
becomes embedded in a Deliverable, EDS will obtain for FC a
perpetual, royalty-free, nontransferable, nonexclusive, worldwide
license to use such software or documentation as part of the
Deliverable, or such other license as EDS and FC agree in writing.
Nothing in this Agreement will require EDS or FC to violate the
proprietary rights of any third party in any software or
otherwise.
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EDS
Development Tools; Residual Technology
. Notwithstanding
anything to the contrary in this Agreement, EDS will retain all
right, title and interest in and to, and will be free to use, (a)
the EDS Development Tools and (b) subject to the confidentiality
obligations set forth in Section 7 , the Residual
Technology. The Parties acknowledge and agree that
EDS’ right, title and interest in and to the Residual
Technology constitute substantial rights in the technology
developed as a result of the Services performed under this
Agreement. No licenses will be deemed to have been granted by
either Party to any of its patents, trade secrets, trademarks or
copyrights, except as otherwise expressly provided in this
Agreement. Nothing in this Agreement will require EDS or
FC to violate the proprietary rights of any third party in any
software or otherwise. The term “Residual
Technology” means the ideas, concepts, methodologies,
processes and know-how which are developed or created by EDS in the
course of performing the Services and may be retained by EDS’
employees in intangible form.
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Licenses . EDS hereby grants to FC a perpetual,
royalty-free, nontransferable, nonexclusive, worldwide license to
use any embedded Tools and Residual Technology as part of the
Deliverables. No licenses will be deemed to have been
granted by either Party to any of its patents, trade secrets,
trademarks or copyrights, except as otherwise expressly provided in
this Section 9 .
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(e)
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Rights
in Software Outside this Agreement
. Each Party will retain all rights in
any software, documentation, tools, techniques, methodologies,
trade secrets or any other proprietary material or information that
it owned as of the date of this Agreement or acquired or developed
after the date hereof without reference to or use of the
intellectual property of the other Party.
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Other . EDS and FC agree to execute and
deliver such other instruments and documents as either Party
reasonably requests to evidence or effect the transactions
contemplated by this Section 9 .
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The provisions
of this Section 9 will survive the expiration or termination
of this Agreement for any reason.
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Dispute Escalation and
Resolution .
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(a) In
the event of any dispute, controversy or claim arising under, out
of, in connection with or in relation to this Agreement or any Work
Order, or the breach, termination, validity or enforceability of
any provision hereof or thereof (a “ Dispute ”),
then upon the written request of either Party, each of the Parties
will appoint a designated senior business executive whose task it
will be to meet of the purpose of endeavoring to resolve the
Dispute. The designated executives will meet as often as
the Parties reasonably deem necessary in order to gather an furnish
to the other all information with respect to the matter in issue
which the Parties believe to be appropriate and germane in
connection with its resolution. Such executives will
discuss the Dispute and will negotiate in good faith in an effort
to resolve the Dispute without the necessity of any formal
proceeding relating thereto. The specific format for
such discussions will be left to the discretion of the designated
executives buy may include the preparation of agreed upon
statements of fact or written statements of position furnished to
the other Party. Nor formal proceedings for the
resolution of the Dispute under Section 10(b) or Section 10(c) may
be commenced until the earlier to occur of (i) a good faith mutual
conclusion by the designated executives that amicable resolution
through continued negotiation of the matter in issue does not
appear likely or (ii) the 30 th day after the initial request to negotiate the
Dispute.
(b) Any
Dispute not resolved informally through negotiation between the
Parties pursuant to Section 10(a) will be submitted to non-binding
mediation. The Parties will mutually determine who the
mediator will be from a list of mediators obtained from the
Judicial, Arbitration and Mediation Service office located in the
city determined as set forth below in this Section 10(b)
(“ JAMS ”). If the Parties are unable
to agree on the mediator, the mediator will be selected by
JAMS.
(c) If
any Dispute is not resolved through mediation pursuant to Section
10(b), it will be resolved by final and binding arbitration
conducted by a panel of three arbitrators in accordance with and
subject to the JAMS Comprehensive Arbitration Rules and Procedures
then applicable. One arbitrator will be selected by FC,
one arbitrator will be selected by EDS and the third arbitrator
will be selected by the arbitrators designated by FC and
EDS. If the two arbitrators cannot agree on a third
arbitrator, the third arbitrator will be selected by
JAMS. The arbitrators will allow such discovery as is
appropriate, consistent with the purposes of arbitration in
accomplishing fair, speedy and cost effective resolution of
disputes. The arbitrators will reference the Federal
Rules of Civil Procedure then in effect in setting the scope of
discovery, except that no requests for admissions will be permitted
and interrogatories will be limited to identifying (a) persons
with knowledge of relevant facts and (b) expert witnesses and their
opinions and the bases therefor. Judgment upon the award
rendered in any such arbitration may be entered in any court having
jurisdiction thereof. Any negotiation, mediation or
arbitration conducted pursuant to this Section 10 will take
place in Plano, Texas, if initiated by FC, and in Salt Lake City,
Utah, if initiated by EDS, and each Party will bear its own costs
and expenses with respect to any such negotiation, mediation or
arbitration, including one-half of the fees and expenses of the
mediator or arbitrators, if applicable. Other than those
matters involving injunctive relief or any action necessary to
enforce the final award of the arbitrators, the Parties agree that
the provisions of this Section 10(c) are a complete defense
to any suit, action or other proceeding instituted in any court or
before any administrative tribunal with respect to any Dispute or
the performance of the EDS Services by EDS. Nothing in
this Section 10(c) prevents the Parties from exercising
their right to terminate this Agreement and all outstanding Work
Orders in accordance with Section 11 .
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Termination
. If either Party materially defaults
in the performance of any of its obligations under this Agreement
or any Work Order, which default (a) if of a non-monetary nature,
is not substantially cured within 30 days after notice is
given to the defaulting Party specifying the default or, with
respect to those defaults that cannot reasonably be cured within 30
days, should the defaulting Party fail to proceed within
30 days to commence curing the default and thereafter to
proceed with all reasonable diligence to substantially cure the
default, or (b) if of a monetary nature, is not cured within 10
days after notice is given to the defaulting Party specifying the
default, the Party not in default may, by giving written notice
thereof to the defaulting Party, terminate this Agreement and all
outstanding Work Orders as of a date specified in such notice of
termination. In addition to the requirements of
Section 17 , to be effective and to commence the running of
any applicable cure period, any notice given pursuant to this
Section 11 must explicitly identify the type of notice being
given, whether of default or of termination, and reference this
Section 11 . In addition and except as otherwise
set forth in a specific Work Order, FC may terminate this Agreement
at any time upon at least six (6) months prior written notice to
EDS. Upon expiration or termination of this Agreement
and all Work Orders for any reason, except as set forth in the last
sentence of Section 1 , EDS will cease to perform the EDS
Services for FC, and FC will pay to EDS all sums due to EDS as a
result of the EDS Services performed and expenses incurred
(including those expenses that, instead of being concurrently
billed, have been included in future payments to be made by FC)
through the effective date of such expiration or termination
(prorated as appropriate). The expiration or termination
of this Agreement and all Work Orders for any reason will not
release either Party from any liabilities or obligations set forth
herein or therein which (a) the Parties have expressly agreed will
survive any such expiration or termination or (b) remain to be
performed or by their nature would be intended to be applicable
following any such expiration or termination. Any
materials or equipment furnished by FC and any materials or
equipment, the cost are reimbursed to EDS by the FC hereunder, are
to be and remain the sole property of FC and are to be returned to
FC within thirty (30) days of the expiration or earlier termination
of this Agreement, or within ten (10) days after written demand by
FC, whichever first occurs.
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Indemnities
. EDS and FC will have the indemnity
obligations set forth in Exhibit D .
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General Limitation
. Subject to the last sentence of this
Section 13(a) , the liability of each Party to the other for
all damages arising out of or related to an Work Order, regardless
of the form of action that imposes liability, whether in contract,
equity, negligence, intended conduct, tort or otherwise, will be
limited to and will not exceed, in the aggregate for all claims,
actions and causes of action of every kind and nature, the Work
Order Damages Limit for such Work Order. The “Work
Order Damages Limit” for each Work Order will be stated in
such Work Order. However, if the Work Order Damages
Limit is omitted from an Work Order, the Work Order Damages Limit
for such Work Order will be equal to the charges paid by FC to EDS
under such Work Order for the 12 months preceding the
last act or omission giving rise to such liability
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