Exhibit 10.16
SOFTWARE MAINTENANCE AND ENHANCEMENT AGREEMENT
THIS SOFTWARE MAINTENANCE AND ENHANCEMENT AGREEMENT (this "Agreement") is
dated as of December 31, 1996 ("Effective Date") by and between True North
Communications Inc. ("TNC"), and TN Technologies Holding Inc. ("TNT"), and
describes the terms and conditions pursuant to which TNT shall maintain, support
and enhance certain Software (as defined below).
WHEREAS, the parties have entered into an Intellectual Property Agreement
(as defined below) for the licensing of certain software from TNT to TNC; and
WHEREAS, TNC wishes TNT to perform certain support and enhancement service
related to such software and related technology, and TNT wishes to perform such
services, both under the terms and conditions stated herein;
NOW, THEREFORE, in consideration of the covenants and conditions set forth
herein, the parties agree as follows:
1. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the
following meanings:
1.1 "Documentation" means any instruction manuals or other materials
regarding the use of the Software.
1.2 "Intellectual Property Agreement" means the agreement relating to
the Software entered into between the parties as of December 31, 1996.
1.3 "Maintenance and Support" means the services described in
Sections 2 and 3.
1.4 "Servers" means the servers of TNC's local area Intranet and any
technology embodied therein.
1.5 "Software" means the computer software programs licensed to TNC
pursuant to the Intellectual Property Agreement and specified in Attachment A.
1.6 "Update" means a release or version of the Software containing
functional enhancements, extensions, error corrections or fixes that are
generally made available without charge (other than media and handling charges)
by TNT, and shall include the source code embodied in such functional
enhancements, extensions, error corrections or fixes.
2. MAINTENANCE AND SUPPORT. Maintenance and Support shall include the
following services:
2.1 Authorized Contact. TNT shall supply a coordinator to be located
at TNC corporate headquarters in Chicago, who will be the primary contact
between the TNC authorized contact described in Section 4.1 and the TNT
technical staff. The responsibilities of this coordinator are set forth in
Attachment B.
2.2 Error Corrections. TNT shall use commercially reasonable efforts
to correct all reproducible errors in the Software in a manner commensurate with
the severity of the error.
2.3 Reports. No more than thirty (30) days after the end of each
calendar quarter, TNT shall provide TNC a report of time and resources that have
been devoted to Maintenance and Support during such quarter.
2.4 System Management. TNT shall work with TNC to manage the
Software by performing daily systems operations and management, including
routine backup procedures, monitoring of Software performance, and assessment of
the ability of the Software to meet TNC's information processing needs, at a
level commensurate with the level at which TNT or its predecessor was providing
such services prior to the Effective Date.
2.5 Training. TNT shall coordinate the initial and annual training
of Information Systems support staff of TNC. Such training shall be in the form
of a one-day "train the trainer" workshop to be conducted at TNC's premises.
2.6 Installation. Subject to Section 7.4, TNT shall perform the
installation of the Software on the Servers, including any related configuration
of the Servers or other TNC equipment related to the Software, at no additional
charge.
2.7 Third Party Software. TNT shall procure for TNC licenses for the
Netscape server and Netscape client (browser) software presently used by the
Servers ("Netscape Software"). Such Netscape Software license will cover up to
two thousand (2,000) seats and ten (10) servers. TNT shall provide first tier
technical support to TNC regarding the use of the Netscape Software. TNT shall
procure from Netscape, or such other third party as TNT deems suitable, related
software maintenance and support agreements to provide TNT with second-tier
support for such usage by TNC.
2.8 Second Tier Support. TNT will provide second-tier technical
support directly to Information Systems support staff designated by TNC as
technical contacts. Hours for such support shall be 9 a.m. to 5 p.m., Central
Standard Time.
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3. UPDATES AND ADDITIONAL SOFTWARE. Maintenance Services shall include
the following:
3.1 Updates. TNT will provide Updates to TNC at no additional
charge.
3.2 Enhancement. TNT shall monitor the developing technologies
applicable to the Software, and evaluate their performance, reliability and
applicability to the Software. TNT shall report to TNC's authorized contact
described in Section 4.1 periodically on such developing technologies, and
discuss with TNC the possible applicability of such technologies to the
Software. When and if TNT determines, in its sole discretion, that these
technologies would enhance the operation of the Software, TNT shall make
commercially reasonable efforts to integrate such technologies into the
Software; provided, however, that TNT shall add significant enhancements of
functionality only with TNC's prior approval. TNT will use commercially
reasonable efforts to perform enhancements reasonably requested by TNC in a
reasonably timely fashion.
3.3 Expansion. TNT shall cooperate with TNC to expand the
availability of the Software throughout any TNC locations, as requested by TNC.
TNT shall cooperate with TNC to expand and refine the Software, including
without limitation the addition of menu items, information sections, and
integration of agency/location specific areas, addition of new technologies
such as streaming video, audio or other multi-media capabilities as they become
available and desired by TNC.
3.4 Documentation. TNT shall provide Documentation in connection
with any Updates that add significant functionality to the Software.
3.5 Quarterly Reports. Within thirty (30) days of the end of each
calendar quarter, TNT shall provide a report to TNC of operating expenses and
capitalized costs in connection with the maintenance and enhancement of the
Software, as well as reimbursable expenses, fees charged pursuant to Section
7.4, and any other fees payable by TNC for products or services other than
Maintenance Services. Upon TNC's reasonable request, TNT shall provide
supporting documentation for such reports, at TNT's expense.
4. TNC RESPONSIBILITIES.
4.1 Authorized Contact. TNC will appoint a key contact for all
development and operational issues. This key contact will be responsible for
coordinating all communications between TNC and TNT for Maintenance Services.
Such contact shall have authorization to grant the approvals required on behalf
of TNC in this Agreement.
4.2 TNC Assistance. TNC agrees to provide TNT reasonable access to
all necessary personnel to answer questions about any problems reported by TNC
regarding the Software or Servers.
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4.3 Notification. TNC agrees to provide TNT with a reasonably
detailed description in writing of any reported problem or error to the degree
necessary to permit confirmation or reproduction thereof by TNT.
4.4 Installation of Error Corrections and New Releases. TNC shall
implement promptly all Updates or other new versions of the Software provided by
TNT under this Agreement.
4.5 First Tier Support. First tier technical support to TNC's
customers will be solely the responsibility of TNC.
4.6 Reporting. Within ten (10) days of the end of each calendar
quarter, TNC shall manage and report to TNT the number of users of the Software
during such month. Such reports are intended to help TNT determine commercial
application licensing and support issues.
4.7 Additional Software and Services. Any additional software
licenses for Netscape Software or technical resources to upgrade the Netscape
Software or other third party applications beyond that set forth in Section 2.7
will be solely the responsibility of TNC. Any additional technical resources or
software upgrades for commercial applications in addition to the Software will
be solely the responsibility of TNC.
5. EXCLUSIONS.
5.1 Eligibility of Software. Maintenance and Support will not
include services requested as a result of, or with respect to, the following
(except to the extent caused by TNT), and any services requested as a result
thereof will be billed to TNC at a rate of two hundred forty percent (240%) of
the applicable hourly fee, pay, wage, or salary of the employee performing such
services, plus out-of-pocket expenses associated therewith; provided, however,
that if such services are performed by a consultant of TNT, such rate shall be
one hundred twenty percent (120%) of the applicable hourly fee of such
consultant:
(a) accident; unusual physical, electrical or electromagnetic
stress; neglect; misuse; failure of electric power, air conditioning or humidity
control; failure of rotation media not furnished by TNT; operation of the
Software with other media not meeting or not maintained in accordance with the
manufacturer's specifications; or causes other than ordinary use;
(b) improper installation by TNC or use of the Software that
deviates from any operating procedures communicated in writing by TNT;
(c) modification, alteration or addition or attempted
modification, alteration or addition of the Software undertaken by persons other
than TNT or TNT's authorized representatives; or
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(d) computer programs created by TNC or any third party that are
not supplied or approved by TNT; or
(c) TNC's failure to implement all releases and updates to the
Software which are issued to TNC by TNT;
(f) changes to the operating system or physical, hardware or
software environment which adversely affect the Software and are not approved or
authorized by TNT in writing; or
(g) use of the Software in conjunction with products not
supplied or approved by TNT.
5.2 Current and Previous Release. Maintenance and Support shall not
include support for any but the most current release of Software and the
previous release of the Software.
6. TERM AND TERMINATION
6.1 Term. TNT's duties under this Agreement shall commence on the
Effective Date and continue for a term of one (1) year, and shall renew
automatically each year unless either party notifies the other of its intent not
to renew at least sixty (60) days prior to the renewal date.
6.2 Termination for Breach. If either party breaches a material
provision of this Agreement and fails to cure such breach within thirty (30)
days after receiving written notice of the breach, the other party shall have
the right to terminate this Agreement at any time.
6.3 Termination of License. Notwithstanding any provisions of this
Agreement, the provision herein shall terminate and TNT's obligations hereunder
shall expire upon the termination of the license of the Software to TNC under
the Intellectual Property Agreement.
6.4 Survival. The provisions of Sections 1, 6, 8, 9, 10 and 11 shall
survive termination of this Agreement.
7. PAYMENT TERMS AND TAXES.
7.1. Fees. TNC agrees to pay TNT, quarterly in advance, software
maintenance and support fees as set forth in Attachment C of this Agreement
("Maintenance and Support Fee"). Fees for any special services must be approved
by TNC in advance, and will be in addition to the annual Maintenance and Support
Fee and will be charged at TNT's then current rates for such services. TNT may
change the Maintenance and Support Fee upon written notice no less than ninety
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(90) days prior to the renewal date.
7.2 Payment. TNT shall invoice TNC for all amounts on or after the
annual renewal date. Payment terms shall be net thirty (30) days. Any amount due
TNT under this Agreement not received by TNT by the date due shall be subject to
a service charge of one and one half percent (1.5%) per month, or the maximum
charge permitted by law, whichever is less.
7.3 Taxes. Maintenance and Support Fees do not include any taxes,
duties or charges of any kind (including without limitation any withholding
taxes) imposed by any federal, state, local or other governmental entity for
products or services provided under this Agreement, excluding only taxes based
solely on TNT's net income. If any such taxes are found at any time to be
payable, TNC shall pay such taxes, unless TNC provides TNT with a valid tax
exemption certificate authorized by the appropriate taxing authority.
7.4 Additional Fees. The following items and services shall not be
included in Maintenance Services. In the event TNC wishes to obtain such items
or services, or additional items or services, TNC may request TNT to provide
such items or services on a time and materials basis at TNT's then-current
rates.
(a) Travel Expenses. Any reasonable travel expenses of TNT
personnel in support of any task relating to the Software or Servers, including
without limitation any additional expenses for expedited travel to comply with
urgent requests for support by TNT. TNC shall pay TNT for the actual,
out-of-pocket costs of such travel expenses. Upon TNC's request, TNT shall
provide copies of supporting documentation for such expenses.
(b) Additional Hardware and Software. Any costs associated with
Server hardware, supplemental Server or client software, or operating systems
required to support the Servers or Software that are approved in advance by TNC.
TNC shall pay TNT for the actual, out-of-pocket costs of such items.
(c) Connectivity. Any local area or metropolitan or wide area
network or other connectivity fees that may be required to support the Software.
TNC shall pay TNT for the actual, out-of-pocket costs of such items.
8. Confidentiality. All information disclosed under this Agreement shall
be subject to the terms and conditions of Section 8 of the Intellectual Property
Agreement.
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9. WARRANTY AND DISCLAIMER. TNT will use all reasonable commercial
efforts to provide the support requested by TNC under this Agreement in a
professional and workmanlike manner, but TNT cannot guaranty that every question
or problem raised by TNC will be resolved. OTHER THAN IN THE PRECEDING SENTENCE,
TNT MAKES NO WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10. LIMITATION OF LIABILITY.
10.1 TNT'S LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE FEES
RECEIVED BY TNT FROM TNC UNDER THIS AGREEMENT.
10.2 IN NO EVENT SHALL TNT HAVE ANY LIABILITY FOR ANY SPECIAL,
INDIRECT, OR CONSEQUENTIAL DAMAGES INCLUDING, WITHOUT LIMITATION, DAMAGES FOR
LOST PROFITS, LOSS OF DATA OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR
SERVICES, ARISING IN ANY WAY OUT OF THIS AGREEMENT UNDER ANY CAUSE OF ACTION,
WHETHER OR NOT TNT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF
ANY LIMITED REMEDY.
11. Miscellaneous
11.1 Force Majeure. Neither party will incur any liability to the
other party on account of any loss or damage resulting from any delay or failure
to perform all or any part of this Agreement if such delay or failure is caused,
in whole or in part, by events, occurrences, or causes beyond the control and
without negligence of the parties. Such events, occurences, or causes will
include, without limitation, acts of God, strikes, lockouts, riots, acts of
war, earthquake, fire and explosions, but the inability to meet financial
obligations is expressly excluded.
11.2 Waiver. Any waiver of the provisions of this Agreement or of a
party's rights or remedies under this Agreement must be in writing to be
effective. Failure, neglect, or delay by a party to enforce the provisions of
this Agreement or its rights or remedies at any time, will not be construed and
will not be deemed to be a waiver of such party's rights under this Agreement
and will not in any way affect the validity of the whole or any part of this
Agreement or prejudice such party's right to take subsequent action.
11.3 Severability. If any term, condition, or provision in this
Agreement is found to be invalid, unlawful or unenforceable to any extent, the
parties shall endeavor in good faith to agree to such amendments that will
preserve, as far as possible, the intentions expressed in this Agreement. If
the parties fail to agree on such an amendment, such invalid term, condition or
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provision will be severed from the remaining terms, conditions and provisions,
which will continue to be valid and enforceable to the fullest extent permitted
by law.
11.4 Integration. This Agreement (including the Attachments and any
addenda hereto signed by both parties) contains the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
previous communications, representations, understandings and agreements, either
oral or written, between the parties with respect to said subject matter. This
Agreement may not be amended, except by a writing signed by both parties.
11.5 Conflicting Terms. No terms, provisions or conditions of any
purchase order, acknowledgement or other business form that TNC may use in
connection with this Agreement or the performance of the terms hereof will have
any effect on the rights, duties or obligations of the paries under, or
otherwise modify, this Agreement, regardless of any failure of TNT to object to
such terms, provisions or conditions.
11.6 Export Controls. TNC may not export or re-export the Software
without the prior written consent of TNT and without the appropriate United
States and foreign government licenses.
11.7 Non-Waiver. No exercise or enforcement by either party of any
right or remedy under this Agreement will preclude the enforcement by such party
of any other right or remedy under this Agreement or that such party is entitled
by law to enforce.
11.8 Governing Law. This Agreement will be interpreted and construed
in accordance with the laws of the State of Illinois and the United States of
America, without regard to conflict of law principles.
11.9 Dispute Resolution.
(a) Any dispute, controversy or claim arising in connection with
this Agreement, shall be settled by binding arbitration if so requested by any
party hereto pursuant to paragraph (b) below. The arbitration shall be
conducted by three arbitrators, who shall be appointed pursuant to the rules of
the American Arbitration Association (the "AAA"). The arbitration shall be held
in Chicago, Illinois and shall be conducted in accordance with the commercial
arbitration rules of the AAA, except that the rules set forth in this Section
11.9 shall govern such arbitration to the extent they conflict with the rules of
the AAA.
(b) Upon written notice by a party to the other parties of a
request for arbitration hereunder, the parties shall use their commercially
reasonable efforts to cause the arbitration to be conducted in an expeditious
manner. All other procedural matters shall be within the discretion of the
arbitrators. In the event a party fails to comply with the procedures in any
arbitration in a manner deemed material by the arbitrators, the arbitrators
shall fix a reasonable period of time for compliance and, if the party does not
comply within said period, a remedy deemed
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just by the arbitrators, including an award of default, may be imposed.
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(c) The determination of the arbitrators shall be final and
binding on the parties. Judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction. The parties shall each be
responsible for their own expenses in connection with such arbitration,
including without limitation, counsel fees and fees of experts; provided,
however, that the parties shall share equally in the expense of the arbitrators
and of the AAA.
AGREED: AGREED:
TNT TNC
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(Signature) (Signature)
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(Name) (Name)
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(Title) (Title)
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(Date) (Date)
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ATTACHMENT A
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SOFTWARE
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Knowledge Network
SCJNet
K-C Net
ATTACHMENT B
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Co-ordinator Responsibilities
Act as the primary informational resource for the Software.
Oversee the daily operation of the Software as well as promote and ▇▇▇▇▇▇
its use within TNC. Coordinate training of the system's users and its content
providers.
Continually evaluate the success of the Software and assist in the
implementation of enhancements to the Software to ensure its continued
effectiveness and successful use within TNC.
Assist in the coordination and project management of any future
enhancement or expansion projects.
Report to the Intranet Technologies Systems Manager, TNT, Chicago.
This position is currently held by ▇▇▇ ▇▇▇▇▇▇.
ATTACHMENT C
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Maintenance and Support Fees
The annual maintenance fee for the first year from the Effective Date shall be
$1.7 million, payable in four equal installments in advance for each calendar
quarter on January 1, April 1, July 1, and October 1, 1997.
On approximately August 1, 1997, TNT shall provide TNC with a report detailing
cumulative operating expenses for the six month period ended June 30, 1997, less
any portions thereof paid directly by TNC related to the software (but not
including software amortization costs). If the amount so calculated differs from
$850,000 by more than 10%, the parties shall meet in good faith to re-negotiate
the maintenance fees for July 1, 1997 through December 31, 1997, with such fees
being applied retroactively to July 1, 1997. If the parties cannot agree on a
maintenance fee, the maintenance fee for such period shall remain at the annual
rate of $1.7 million.
