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Exhibit 10.3
MASTER
SHARED SERVICES AGREEMENT
BETWEEN
THE
FCP COMPANIES IDENTIFIED HEREIN
AND
THE
SHARED SERVICES COMPANIES IDENTIFIED HEREIN
MADE
EFFECTIVE AS OF
JULY
5, 2008, 11:59 P.M., MOUNTAIN DAYLIGHT TIME
MASTER SHARED SERVICES AGREEMENT
This
MASTER SHARED
SERVICES AGREEMENT (this “ Agreement
”), dated as of July 7, 2008, and effective as of
July 5, 2008, at 11:59 P.M. Mountain Daylight Time, is made by
and among Franklin Covey Products, LLC, a Utah limited
liability company (“ FCP ”),
Franklin Covey Products Canada ULC, a Canadian corporation
(“ FCP
Canada ”), Franklin Covey Products Europe
Limited, a company registered in the United Kingdom (“
FCP
Europe ”), and FC Products de Mexico S. de R.L.
de C.V. (“ FCP Mexico ”
and, together with FCP, FCP Canada and FCP Europe, the “
FCP
Companies ”), and Franklin Covey Co., a Utah
corporation (the “ Company ”),
Franklin Covey Client Sales, Inc., a Utah corporation (“
Client
Sales ”), Franklin Covey Product Sales, Inc., a
Utah corporation (“ Product Sales
”), Franklin Development Corp., a Utah corporation
(“ Development
”), Franklin Covey de Mexico S. de R.L. de C.V. (“
FC
Mexico ”),
Franklin Covey Canada, Ltd. (“ Canada ”),
and Franklin Covey Europe, Ltd. (“ Europe ”
and together with the Company, Client Sales, Product Sales, FC
Mexico and Canada, the “ Shared
Services
Companies ”).
Recitals
WHEREAS , the Shared Services Companies and FCP,
together with the other Selling Companies named therein, are
parties to a Master Asset Purchase Agreement dated as of
May 22, 2008, as amended (the “ Master Asset Purchase
Agreement ”) and the Ancillary Agreements contemplated
therein (collectively, the “ Transaction Agreements
”), including the Master License Agreement effective as of
July 5, 2008 at 11:59 P.M. Mountain Daylight Time (the “
Master License
Agreement ”), pursuant to which the Selling Companies
have agreed to sell and license to FCP or the other FCP
Companies, and FCP has agreed to buy and license, or cause the
other FCP Companies to buy and license, from the Selling
Companies, certain assets relating to the Company’s Consumer
Solution Business Unit (the “ Business ”) as
identified therein; and
WHEREAS , in connection with the transactions contemplated
by the Transaction Agreements, the Shared Services
Companies, FCP and the other FCP Companies have agreed to
enter into this Agreement to provide for the provision of certain
shared services on the terms and conditions and for the time
periods set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereto agree as
follows:
1.
Definitions
. Any term used herein that is not defined in
this Agreement but is defined in the Transaction Agreements has the
meaning ascribed to it in the Transaction Agreements.
2.
Shared Services
.
(a)
Services . On the terms and subject to the
conditions of this Agreement, from and after the Closing Date, the
Shared Services Companies will provide to the FCP Companies
the services described on the Schedules attached to this Agreement
(the “ Shared Services
”) and other services described in this
Agreement. A list of the Schedules is attached to
this Agreement as Exhibit 1. Unless otherwise
provided in any Schedule, the term
“
Consistent
With Past Practice ” means substantially in the
same scope, nature and manner as such services were provided
immediately prior to the Closing Date.
(b)
Pricing . In consideration of the provision of
each of the Shared Services, the applicable FCP Companies will
pay the amounts set forth on each of the Schedules attached hereto
(as such schedules may be amended from time to time, the “
Schedules
”). Except as provided on the Schedules, on or
before the first day of each month, the applicable FCP
Companies will pay to the Company, in advance, any fixed fee
amounts for Shared Services to be provided by the Shared Services
Companies to any FCP Companies in each month, as set forth on
the Schedules. Unless otherwise set forth on the
Schedules, the Company will invoice FCP monthly for all other
Shared Services rendered through the end of each month, or as
otherwise provided in the Schedules or agreed by the parties in
writing, and FCP will pay, or will cause the other FCP
Companies to pay, as applicable, all invoices in full within
forty-five (45) days of receipt. The parties agree
that (i) the amounts set forth in the Schedules (including,
but not limited to, the fixed fees set forth in Schedule A and
Schedule B) are based upon historical allocations of costs
attributable to the Business prior to the Closing Date,
and (ii) none of such amounts set forth in the Schedules
represent a premium or mark-up above the Company’s historical
allocated or estimated costs to provide such Shared
Services.
(c)
Third-Party Services .
(i)
On
the terms and subject to the conditions of this Agreement, the
Company will use commercially reasonable efforts to cause the
services set forth on the Schedules attached hereto, which prior to
the Closing Date were provided to the Business by third parties
(“ Third-Party Services
”), to be provided to the FCP Companies as set forth on
the Schedules attached hereto. If any additional
services are provided to the Business by third parties and such
services have not been assigned to FCP pursuant to the Master
Asset Purchase Agreement or have not otherwise been provided for in
this Agreement or in the Ancillary Agreements, the Company
and FCP will, in good faith, seek to enter into any additional
Schedules pursuant to Section 2(d) of this Agreement so that
such services may be provided to the FCP
Companies.
(ii)
If
the Company has not obtained all Required Consents pursuant to the
Master Asset Purchase Agreement, and irrespective of such failure,
the Closing occurs, then, in accordance with Section 2.9 of
the Master Asset Purchase Agreement, the Company will use
commercially reasonable efforts to obtain all such Required
Consents as promptly as reasonably practicable following
Closing. Prior to obtaining such unobtained Required
Consents, the Shared Services Companies will (1) as requested
by FCP, (A) use commercially reasonable efforts to
provide the benefits of the Restricted Assets to the FCP
Companies in substantially the same manner as such benefits were
provided to the Business immediately prior to the Closing Date,
or (B) cooperate in good faith with the FCP Companies to
pursue and effectuate any reasonable and lawful alternative
arrangement to provide the benefits of the Restricted Assets to
the FCP Companies including, with respect to unobtained
Required Consents relating to leases of real property, entering
into subleases to the extent permitted under the terms of the
applicable lease agreements; and (2) as reasonably requested
by any FCP Company, enforce any rights of the Shared Services
Companies under any
Restricted
Asset or, to the extent permitted under any agreement that is
the subject of an unobtained Required Consent, assign the
right to enforce such rights to the FCP
Companies.
(iii)
FCP
shall reimburse the Company for any actual costs, expenses or other
obligations to third parties that the Company incurs in performing
services related to the Restricted Assets or enforcing any rights
under the Restricted Assets pursuant to
Section 2(c)(ii). Pursuant to Section 2(b),
the Company will provide FCP an invoice containing a
reasonably detailed description of the services provided by the
Company under this Section 2(c)(iii), and FCP shall pay
the Company, for such actual costs, expenses or other obligations
for which it is entitled to reimbursement pursuant to this
Section 2(c)(iii) as set forth in the
invoice. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall any FCP Company
be obligated to reimburse the Company for any costs, expenses or
other obligations incurred by the Company in connection with
obtaining any Required Consent.
(iv)
If
the Company successfully obtains a Required Consent following the
Closing Date, the Restricted Assets related to such Required
Consent will be transferred to the FCP Companies pursuant to
the terms of the Master Asset Purchase Agreement and will no longer
be subject to the terms of this Agreement.
(d)
Other Shared Services . During the term of this
Agreement, the Shared Services Companies may provide additional
services to the FCP Companies pursuant to the terms of this
Agreement that are not specifically referenced in this
Section 2 or on the Schedules, provided that such additional
services are requested by FCP in writing, are consistent with
the types of services provided by the Shared Services Companies to
the Business prior to the Closing Date, and are described in a
Schedule executed by the parties and attached to and incorporated
into this Agreement.
3.
Standard of Performance
. For Shared Services provided directly by the
Shared Services Companies, the Shared Services Companies will
perform such Shared Services in a timely, competent and workmanlike
manner and in a nature and at levels Consistent With Past Practice;
provided, however, that if the Shared Services are of a kind that
the Shared Services Companies provide internally or to other Shared
Services Companies, and, following the Closing Date, the Shared
Services Companies provide such Shared Services in a manner or at a
level higher than such Shared Services were provided prior to the
Closing Date, such Shared Services Companies will in good faith
provide such Shared Services consistent with the manner or level at
which they are then providing such Shared Services.
4.
Relationship Managers
. Each of the Company and FCP shall appoint
a relationship manager who shall serve as its primary point of
contact in all matters relating to this Agreement (a “
Relationship
Manager ”). The Relationship Managers shall
participate in regular meetings to review the parties’
performance hereunder, to resolve any issues arising out of the
rights granted to and obligations undertaken by, the parties
hereunder, to prepare and execute revised and/or additional
Schedules for Shared Services, and otherwise to manage the
parties’ relationship under this Agreement.
5.
Confidentiality
.
(a)
Definition . “ Confidential
Information ” means all information disclosed by
a FCP Company or a Shared Services Company (the “
Discloser
”) to a Shared Services Company or a FCP Company,
respectively (the “ Recipient ”) (in
writing, orally or in any other form) that is designated, at or
before the time of disclosure, as
confidential. Confidential Information does not include
information or material that (i) is now, or hereafter becomes,
through no act or failure to act on the part of the Recipient,
generally known or available; (ii) is or was known by the
Recipient at or before the time such information or material was
received from the Discloser; (iii) is furnished to the
Recipient by a third party that is not under an obligation of
confidentiality to the Discloser with respect to such information
or material; or (iv) is independently developed by the
Recipient.
(b)
Restrictions on Use . The Recipient shall hold
Confidential Information in confidence and shall not disclose to
third parties or use such information for any purpose whatsoever
other than as necessary in order to fulfill its obligations or
exercise its rights under this Agreement. The Recipient
shall take all reasonable measures to protect the confidentiality
of the Discloser’s Confidential Information in a manner that
is at least protective as the measures it uses to maintain the
confidentiality of its own Confidential Information of similar
importance. Notwithstanding the foregoing, the Recipient
may disclose the Discloser’s Confidential
Information (i) to employees and consultants that have a need
to kno
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