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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Deleted In Their Entirety And Superseded, attached hereto,  that are no longer
applicable and are hereby deleted in their entirety and superseded by this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:
 

1.
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”.

2.
EDS Services.

(a)  
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”.

 
(b)
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.

 
(c)
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.

3.
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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4.  
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.

5.
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.

6.
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.

7.
Confidentiality.  EDS and FC will have the confidentiality obligations set forth
in Exhibit B.

8.
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.

9.   Ownership.

(a)  
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.

(b)  
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.

(c)  
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.

(d)  
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.

 
(e)
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.

 
(f)
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.

10.
Dispute Escalation and Resolution.

(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
30th 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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11.
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. 

12.
Indemnities.  EDS and FC will have the indemnity obligations set forth in
Exhibit D.

13.
Liability.

 
(a)
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 or, if 12
months have not elapsed since the effective date of such Work Order, an amount
equal to the charges paid by FC for the number of months that have
elapsed.   The liability of each Party to the other for all damages arising out
of or related to this Agreement and all Work Orders, 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 lesser of sum of $5,000,000.00 or the charges paid by FC to EDS under this
Agreement and all Work Orders for the 12 months preceding the last act or
omission giving rise to such liability or, if 12 months have not elapsed since
the Effective Date, an amount equal to the charges paid by FC for the number of
months that have elapsed (the “Aggregate Damages Limit”).

 

 
 

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(b)
Limitation on Other Damages.  In no event will the measure of damages payable by
either Party include, nor will either Party be liable for, any amounts for loss
of income, profit or savings or indirect, incidental, consequential, exemplary,
punitive or special damages of any Party, including third parties, even if such
Party has been advised of the possibility of such damages in advance, and all
such damages are expressly disclaimed.

 
(c)
Exceptions to Limitations.  The limitations set forth in Sections 13(a) and
13(b) will not apply to (i) the liability of either Party to the extent such
liability results from (A) that Party’s acts of intentional tortious conduct or
gross negligence in the performance or nonperformance of its obligations under
this Agreement or (B) that Party’s nonperformance of its payment obligations to
the other expressly set forth in this Agreement (including, with respect to FC,
FC’s obligation to make payments to EDS during the term of this Agreement as
required hereby, whether in the form of charges or for payment or reimbursement
of taxes, out-of-pocket expenses or pass-through expenses, and EDS’ lost profits
on such payments) or (ii) the tax-related liabilities of FC under Section 4  and
Exhibit D.

 
(d)
[Reserved]

 
(e)
Acknowledgement.  The Parties expressly acknowledge that the limitations and
exclusions set forth in this Section 13 have been the subject of active and
complete negotiation between the Parties and represent the Parties’ agreement
taking into account each Party’s level of risk associated with the performance
or nonperformance of its obligations under this Agreement and the payments and
other benefits to be derived by each Party pursuant to this Agreement.  The
provisions of this Section 13 will survive the expiration or termination of this
Agreement and each Work Order for any reason.

14.
Excused Performance.  Neither Party will be deemed to be in default hereunder,
or will be liable to the other, for failure to perform any of its non-monetary
obligations under this Agreement or any Work Order for any period and to the
extent that such failure results from any event or circumstance beyond that
Party’s reasonable control, including acts or omissions of the other Party or
third parties, natural disasters, health crises such as epidemics and pandemics,
riots, war, terroristic activity, civil disorder, court orders, acts or
regulations of governmental bodies, labor disputes or failures or fluctuations
in electrical power, heat, light, air conditioning or telecommunications
equipment or lines, or other equipment failure, and which it could not have
prevented by reasonable precautions or could not have remedied by the exercise
of reasonable efforts, provided that the exercise of such reasonable precautions
or reasonable efforts will not require the incurrence of any additional cost or
expense.

15.
Export Regulations.  This Agreement is expressly made subject to any United
States and other applicable laws, regulations, orders or other restrictions
regarding export from the United States or another country, and import into any
country, of computer hardware, software, technical data or other items, or
derivatives of such hardware, software, technical data or other
items.  Notwithstanding anything to the contrary in this Agreement, neither
Party will directly or indirectly export (or re-export) any computer hardware,
software, technical data or any other item provided to or by it for purposes of
this Agreement, or any derivative of the same, or permit the shipment of the
same:  (a) into (or to a national or resident of) Cuba, North Korea, Iran, Iraq,
Sudan, Syria or any other country to which the United States has embargoed
goods; (b) to anyone on the U.S. Treasury Department’s List of Specially
Designated Nationals, List of Specially Designated Terrorists or List of
Specially Designated Narcotics Traffickers, or the U.S. Commerce Department’s
Denied Parties List; or (c) to any person, country or destination for which the
United States

 

 
 

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or another country with jurisdiction, or any agency of the same, requires an
export license or other authorization for export without first having obtained
any such license or other authorization required.  FC will provide to EDS not
less than 10 days’ prior written notice in the event that any technical data,
hardware, software or other items provided by FC that will be used or accessed
by EDS in providing the EDS Services is controlled for export under the
International Traffic in Arms Regulations or other applicable laws (unless such
items are controlled for export under United States law only as ECCN EAR99) and,
if requested by EDS, will provide the ECCN classification of any such item, or
the similar classification as appropriate under other applicable law.  Unless
otherwise expressly agreed, FC will be the importer of record of any items for
which import is required for delivery of any portion of the EDS Services outside
the United States.  Each Party will reasonably cooperate with the other and will
provide to the other promptly upon request any end-user certificates, affidavits
regarding re-export or other certificates or documents as are reasonably
requested to obtain authorizations, consents, licenses and/or permits required
for any payment or any export or import of products or services under this
Agreement.  The provisions of this Section 15 will survive the expiration or
termination of this Agreement for any reason.

16.
Right to Engage in Other Activities.  FC acknowledges and agrees that EDS may
provide technology services for third parties at any EDS facility that EDS may
utilize from time to time for performing the EDS Services.  Subject to the
restrictions on the disclosure of confidential information set forth in Exhibit
B, nothing in this Agreement or any Work Order 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 EDS Services contemplated by this Agreement.

17.
Notices.  All notices under this Agreement and each Work Order will be in
writing and will be deemed to have been duly given if delivered personally or by
a nationally recognized courier service, faxed or mailed by registered or
certified national mail service, return receipt requested, postage prepaid, to
the Parties at the addresses set forth below.  All notices under this Agreement
and each Work Order that are addressed as provided in this Section 17, (a) if
delivered personally or by a nationally recognized courier service, will be
deemed given upon delivery, (b) if delivered by facsimile, will be deemed given
when confirmed and (c) if delivered by mail in the manner described above, will
be deemed given on the date received by the recipient as reflected on the return
receipt.  Either Party may change its address or designee for notification
purposes by giving notice to the other of the new address or designee and the
date upon which such change will become effective.

In the case of FC:

2200 West Parkway Blvd.
Salt Lake City, Utah 84119

Fax: (801) 817-8069
Attention:  Steve Young

With a copy to:

Franklin Covey
2200 West Parkway Blvd.
Salt Lake City, Utah 84119

 

 
 

--------------------------------------------------------------------------------

 

Fax:  (801) 817-8197
Attention:  Legal Service

and

In the case of EDS:

c/o Franklin Covey
2250 West Parkway Blvd.
Salt Lake City, Utah 84119
Fax: (801) 817-8069
Attention:  Joe Haynie or Franklin Covey Products EDS Account Executive

With a copy to:

Office of the General Counsel
5400 Legacy Drive
Plano, TX  75024
Fax:
Attention:  General Counsel

18.
Public Relations and Marketing References.  Each Party will coordinate with the
other regarding any media release, public announcement or similar disclosure
relating to this Agreement or any Work Order or its subject matter and will give
the other Party a reasonable opportunity to review and comment on the content of
such release, announcement or disclosure prior to its release.  This provision
does not alter the restrictions on the disclosure of confidential information
set forth in Exhibit B and, subject to Exhibit B, will not be construed so as to
delay or restrict either Party from disclosing any information required to be
disclosed in order to comply with any applicable laws, rules or
regulations.  Notwithstanding the foregoing but subject to any applicable laws,
rules or regulations, each Party will have the right to list the name of the
other Party, to make general references to the basic nature of the relationship
between the Parties under this Agreement and to describe generally the type of
services being provided by EDS to FC under this Agreement and each Work Order in
such Party’s promotional and marketing materials, in such Party’s oral or visual
presentations to third parties, in interviews conducted by the news media or
securities analysts and in or through any other available media channels,
including print, internet, radio, cable and broadcast mediums.

19.
Other.  Where agreement, approval, acceptance or consent of either Party is
required by this Agreement or any Work Order, such action will not be
unreasonably withheld, delayed or conditioned.  The Parties are independent
contractors, and neither this Agreement nor any Work Order will be construed as
constituting either Party as partner, joint venturer or fiduciary of the
other.  If any provision (other than a provision relating to any payment
obligation) of this Agreement or any Work Order or the application hereof or
thereof to any persons or circumstances is, to any extent, held invalid or
unenforceable, the remainder of this Agreement and each Work Order or the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable will not be affected thereby, and each
provision of this Agreement and each Work Order will be valid and enforceable to
the extent permitted by law.  The provisions of this Agreement will be given
equal weight regardless of the order in which they appear herein.  Nothing in
this Agreement or any Work Order may be relied upon or will benefit any party
other than EDS and FC.  This Agreement and each Work Order (a) will be governed
by the substantive laws of the State of

 

 
 

--------------------------------------------------------------------------------

 

Utah (without giving effect to any choice-of-law rules that may require the
application of the laws of another jurisdiction and subject to the last two
sentences of this Section 19), (b) will be binding on the Parties and their
successors and permitted assigns, (c) may not be assigned by either Party
without the prior written consent of the other (except that EDS will have the
right to perform the EDS Services itself and through its affiliates and to
subcontract to third parties portions of the EDS Services, so long as EDS
remains responsible for the obligations performed by any of its affiliates or
subcontractors to the same extent as if such obligations were performed by EDS)
and (d) may not be changed or modified orally, but only by a written amendment
or revision signed by the Parties.  This Agreement and each Work Order
(including any exhibits or attachments referred to herein or therein and
attached hereto or thereto, each of which is incorporated herein or therein, as
applicable, by this reference for all purposes) constitute, as of the effective
date of this Agreement or that Work Order, as applicable, the full and complete
statement of the agreement of the Parties with respect to the subject matter
hereof and thereof and supersede any previous or contemporaneous agreements,
understandings or communications, whether written or oral, relating to such
subject matter.

20
Audit Rights.

 
(a)
General.  Employees of FC and its auditors who are from time to time designated
by FC and who agree in writing to the security and confidentiality obligations
and procedures reasonably required by EDS will be provided with reasonable
access to any facility at which the Services are being performed to enable them
to conduct audits of EDS’ performance of the Services and other matters relevant
to this Agreement, including (i) verifying the accuracy of EDS’ charges to FC
and (ii) verifying that the Services are being provided in accordance with this
Agreement, including any Service Levels.

 
(b)
Procedures.  Such audits may be conducted once a year during reasonable business
hours; provided, however, that the Parties may agree to more frequent audits as
deemed reasonably necessary.  FC will provide EDS with prior written notice of
an audit.  EDS will cooperate in the audit, will make the information reasonably
required to conduct the audit available on a timely basis and will assist the
designated employees of FC or its auditors as reasonably necessary.  If FC
requests resources beyond those resources then assigned to the account team
under this Agreement who are able to provide reasonable assistance of a routine
nature in connection with such audit, such resources will be provided as
Additional Services.  EDS will retain records that support EDS’ performance of
the Services and other matters relevant to this Agreement in accordance with
EDS’ retention guidelines.  Notwithstanding anything to the contrary in this
Agreement, EDS will not be required to provide access to the proprietary data of
EDS or other EDS customers.  All information learned or exchanged in connection
with the conduct of an audit, as well as the results of any audit, is
confidential and will be subject to Section 7.

 
(c)
Results.  Following an audit, FC will conduct an exit conference with EDS to
discuss issues identified in the audit that pertain to EDS, and FC will give EDS
a copy of any portion of the audit report pertaining to EDS.  The Parties will
review each EDS audit issue and will determine (i) what, if any, actions will be
taken in response to such audit issues, when and by whom and (ii) which Party
will be responsible for the cost of taking the actions necessary to resolve such
issues.  Any such determination will be based on the following criteria:  (A)
who the owner of the original deficiency is; (B) who has contractual
responsibility for the improvement of internal controls; and (C) who owns the
standards against which the audit is done.  EDS will not be responsible for the
cost of an audit, except to the extent the audit expenses are incurred in
connection with a specific audit limited to EDS and the an original material
deficiency discovered in the audit is attributable

 

 
 

--------------------------------------------------------------------------------

 

to EDS, or otherwise agreed to in writing by the Parties.  For the purposes of
this Agreement a “material deficiency” is any discrepancy between charges billed
and actual billable charges of greater than five percent (5%).

In Witness Whereof, the Parties have duly executed and delivered this Agreement
by their duly authorized representatives as of the date first set forth above.

FRANKLIN COVEY CO
 
 
 
ELECTRONIC DATA SYSTEMS, LLP
By:
     /s/ Robert A. Whitman
 
By:
     /s/ Bjoern Peterson
Title:
Chairman and CEO
 
Title:
Regional Manager of Retail Industries
Printed Name:
Robert A. Whitman
 
Printed Name:
Bjoern Peterson
Address:
2200 West Parkway Blvd.
Salt Lake City, UT  84119
 
Address:
5400 Legacy Drive
Plano, TX  75024
Date:
   
Date:
 

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 1

DOCUMENTS FROM PRIOR AGREEMENT
DELETED IN THEIR ENTIRETY AND SUPERSEDED
BY GENERAL SERVICES AGREEMENT

Date:
4/1/2001
Original Agreement for Information Technology Services
Purpose:
 
Original IT Outsource
 
2.1
Employee Offerees
 
2.2
Key Positions
 
2.7(b)
Franklin Covey Competitors
 
3.2
Statement of Work
 
3.2(a)
Service Levels
 
3.2(b)
Responsibility Matrix
 
3.2(c)
Supported Locations
 
5
Maintenance Contracts
 
7
Supported Products
 
9.1(a)
Charges - Variable Monthly
 
9.1(b)
Charges - Baseline Monthly
 
9.5(a)
Tax Mapping
 
11.4
Termination for Convenience
 
13.8
Address for Notices
     
Date:
5/14/2001
Amendment and Re-Incorporation Agreement
Purpose:
 
Add ecommerce hosting to agreement
     
Date:
6/30/2001
Amendment #2 to IT Agreement
Purpose:
 
Extend term of IT services to CC & WH length
     
Date:
6/30/2001
Additional Services Addendum #1
Purpose:
 
Add Call Center & Warehouse Services
     
Date:
9/27/2002
Amendment and Re-Incorporation Agreement #2
Purpose:
 
Modifies pricing and SLAs on WH/CC
     
Date:
10/1/2002
Additional Services Addendum #3
Purpose:
 
Tech Support Call Center
     
Date:
1/12/2004
Addendum #4: Project Implementation Resolution
Purpose:
 
Resolve dispute re implementation
     
Date:
2/24/2004
Amend/Reincorp
Purpose:
 
Changes WH/CC Pricing

 
 

--------------------------------------------------------------------------------

 

Date:
10/1/2004
Amend/Reincorp #3
Purpose:
 
Include retail IT support
     
Date:
4/1/2006
Amendment No. 6
Purpose:
 
IT scope changes
     
Date:
2/21/2007
Amendment No. 7
Purpose:
 
Adjust fixed charges
     
Date:
7/23/2002
MOU-Retek/McHugh and Oracle 11i
Purpose:
 
Implementation of Oracle 11i
     
Date:
10/16/2002
MOU-Retek/McHugh and Oracle 11i
Purpose:
 
GS160 and Project extension
     
Date:
07/06/2008
Addendum #8
Purpose:
 
Acknowledgement Of the divestiture of a business unit of FC and elimination of
call center services to FC

 
 

--------------------------------------------------------------------------------

 

Exhibit A
Form of Work Order

AUTHORIZATION LETTER  NO. _______

This Work Order No. _______ will confirm the mutual understanding and agreement
of _______________ (“FC) and Electronic Data Systems, LLP ("EDS") as to the
terms and conditions pursuant to which EDS, itself and through its affiliates,
will perform the services and produce the deliverables described in this Work
Order No. _______.  All references to EDS in this Work Order No. _______ will be
deemed to include all such affiliates, and EDS and FC may be referred to herein
individually as a “Party” and together as the “Parties”.  The terms and
conditions of this Work Order No. _______ are as follows:

1.
This Work Order No. _______ is entered into by the Parties under the provisions
of that certain General Services Agreement, dated as of _______________,
_______, between FC and EDS (the “Agreement”), and, except as otherwise provided
in this Work Order No. _______, all provisions of the Agreement are applicable
to this Work Order No. _______.

2.
The term of this Work Order No. _______ will begin on _______________, _______,
and, unless earlier terminated as provided in the Agreement, will continue
through _______________, _______.  The term of this Work Order No. _______ may
be extended by mutual written agreement of the Parties.

3.
During the term of this Work Order No. _______, EDS will perform the services
and produce the deliverables described in Attachment 1.

4.
During the term of this Work Order No. _______, FC will, at its own cost and
expense, have the obligations to EDS also as described in Attachment 1.

5.
For the services performed and the deliverables produced by EDS under this Work
Order No. _______, FC will pay to EDS the charges described in Attachment 2, [as
such charges are adjusted from time to time as provided in Attachment 2].

6.           This Work Order No. _______ will also be subject to the additional
provisions set forth below.

 
[Include any additional provisions.]

7.
The amount of the Work Order Damages Limit for this Work Order No. _______ is
$_______________.

In Witness Whereof, the Parties have duly executed and delivered this Work Order
No. _______ by their duly authorized representatives as of _______________,
_______.

FRANKLIN COVEY CO.
 
ELECTRONIC DATA SYSTEMS, LLP
 
By:
   
By:
 
Title:
   
Title:
 
Printed Name:
   
Printed Name:
 
Address:
 
 
 
Address:
 
Date:
   
Date:
 

 
 

--------------------------------------------------------------------------------

 

Attachment 1
to
Work Order No. _______

EDS Services

[To be added.]

Add FC obligations/tasks as applicable

[See Import/Export Note in Section 2.]

 
 

--------------------------------------------------------------------------------

 

Attachment 2
to
Work Order No. _______

Charges

[To be added.]

 
 

--------------------------------------------------------------------------------

 

Exhibit A-1
Change Control Procedures

 
Either Party may request changes to the EDS Services in accordance with the
following requirements:

A-1-1.
Change Request.  A Party will notify the other Party’s primary representative
designated pursuant to Section 3 of this Agreement in writing of a requested
change and will include in such notice sufficient details of the change to
enable such other Party to evaluate it (the “Change Request”).

A-1-2.
Preliminary Estimate.  If EDS submits a Change Request to FC, it will include
with such Change Request an estimate (the “Preliminary Estimate”) of the time
and cost to make the requested change.  If FC submits a Change Request to EDS,
EDS will, within a reasonable period of time following the date of receipt of
the Change Request, provide FC with a Preliminary Estimate of the time and cost
to make the requested change.

A-1-3.
Response Period. Within the time frame specified by EDS in the Preliminary
Estimate (the “Response Period”), FC will notify EDS in writing whether or not
to proceed with the assessment of the Change Request.  If, within the Response
Period, FC notifies EDS in writing not to proceed, the Change Request will be
deemed withdrawn, and EDS will take no further action on it.  If EDS does not
receive any notice from FC within the Response Period, FC will be deemed to have
advised EDS not to proceed.

A-1-4.
Change Control Document.  If, within the Response Period, FC notifies EDS in
writing to proceed with the assessment of the Change Request, EDS will prepare a
document (the “Change Control Document”) in accordance with the Preliminary
Estimate which includes (i) a description of the change, (ii) the benefit of or
reason for the change, (iii) the issues or concerns with the change, (iv) the
priority of the change, (v) the modifications, additions and/or deletions that
need to be made to the affected Work Order in order to implement the change,
including the proposed increase or decrease in the charges to be paid by FC
thereunder, and (vi) the potential impact on the current nature and scope of the
EDS Services, including service levels and any project delivery schedules.

A-1-5.
Acceptance by EDS.  EDS will provide FC with the completed Change Control
Document, signed by EDS, which will constitute an offer by EDS to implement the
Change Request with all associated changes to the affected Work Order specified
in the Change Control Document.  Such offer will be irrevocable for five
business days following the date of receipt of the offer by FC.

A-1-6.
Acceptance by FC.  If FC accepts EDS’ offer by acknowledging such acceptance in
writing on the Change Control Document, the Change Control Document will become
an amendment to the affected Work Order and will be binding on both
Parties.  Each Change Control Document will be numbered sequentially per Work
Order and will be logged and tracked by EDS as part of the EDS Services.

 
 

--------------------------------------------------------------------------------

 

Exhibit B
Confidentiality

B-1.
Scope of Obligation.  Except as otherwise expressly provided in this Agreement,
EDS and FC each agrees that (a) all information communicated to it by the other
and identified as confidential, whether before or after the date hereof, (b) all
information identified as confidential to which it has access in connection with
the EDS Services, whether before or after the date hereof, and (c) this
Agreement and the Parties' rights and obligations hereunder, will be and will be
deemed to have been received in confidence and will be used only for purposes of
this Agreement, and each of EDS and FC agrees to use the same means as it uses
to protect its own confidential information, but in no event less than
reasonable means, to prevent the disclosure and to protect the confidentiality
thereof.   No such information will be disclosed by the recipient Party without
the prior written consent of the other Party; provided, however, that each Party
may disclose this Agreement and the other Party's confidential information to
those of the recipient Party's attorneys, auditors, insurers (if applicable),
subcontractors  and employees who have a need to have access to such information
in connection with their employment (or engagement, if applicable) by the
recipient Party, so long as the recipient Party advises each such attorney,
auditor, insurer, subcontractor and employee of the confidentiality obligations
set forth in this Exhibit B.  In any event, compliance by each of the persons
referenced in the preceding sentence with the confidentiality obligations set
forth in this Exhibit B will remain the responsibility of the Party employing or
engaging such persons.  Notwithstanding the foregoing, EDS may disclose this
Agreement and other confidential information to which it has access hereunder to
professional advisers, financial institutions and other third parties in
connection with any proposed transaction to provide financing related to this
Agreement or the obligations of EDS hereunder, so long as each of them execute a
confidentiality agreement containing terms and conditions no less restrictive
than those set forth in this Exhibit B.

B-2.
Exceptions.  The foregoing will not prevent either Party from disclosing or
using information (other than FC Personal Data) that belongs to such Party or
(i) is already known by the recipient Party without an obligation of
confidentiality other than under this Agreement, (ii) is publicly known or
becomes publicly known through no unauthorized act of the recipient Party, (iii)
is rightfully received from a third party, (iv) is independently developed
without use of the other Party's confidential information (v) is disclosed
without similar restrictions to a third party by the Party owning the
confidential information, or (vi) is disclosed to others in accordance with the
terms of prior written authorization of the disclosing Party.  If confidential
information is required to be disclosed pursuant to a requirement of a
governmental authority, such confidential information may be disclosed pursuant
to such requirement so long as the Party required to disclose the confidential
information, to the extent possible, provides the other Party with timely prior
notice of such requirement and coordinates with such other Party in an effort to
limit the nature and scope of such required disclosure.  In addition, and
notwithstanding anything to the contrary in this Agreement, each Party may
disclose to taxing authorities and to such Party’s representatives, outside
counsel and advisors, any confidential information that is required to be
disclosed in connection with such Party’s tax filings, reports, claims, audits
or litigation without prior notice to, or approval or consent of, the other
Party.  If confidential information is required to be disclosed in connection
with the conduct of any mediation or arbitration proceeding carried out pursuant
to Section 10 of this Agreement, such confidential information may be disclosed
pursuant to and in accordance with the approval and at the direction of the
mediator or arbitrators, as the case may be, conducting such proceeding.  In
addition, the results of any such mediation or arbitration are confidential and
will be subject to this Exhibit B.  Unless otherwise required by applicable law,
upon written request of the disclosing Party at the expiration or termination of
this Agreement and all Work Orders for any reason, all documented confidential
information (and all copies thereof) of the disclosing Party will be returned to
the disclosing Party or will be destroyed, with written certification thereof
being given to the disclosing Party.  The provisions of this Exhibit B will
survive the expiration or termination of this Agreement and each Work Order for
any reason.

 
 
 
 

--------------------------------------------------------------------------------

 

Exhibit C
Representations, Warranties and Additional Covenants

C-1.
Performance.  EDS represents and warrants that all EDS Services will be
performed in a professional manner by personnel with training and experience
appropriate to the responsibilities they are to perform.  Notwithstanding the
foregoing, (a) in all cases where EDS has committed to a specific service level
in an Work Order and where there is a conflict between that service level and a
service level obligation under this Section C-1, the specific service level will
apply, and (b) in all cases where EDS has not committed to a specific
performance standard for certain of the EDS Services, EDS will use reasonable
care in providing such EDS Services.

C-2.
[RESERVED]

C-3.
Authorization.  Each Party represents and warrants to the other that:

 
(a)
It is duly formed, validly existing and in good standing under the laws of its
jurisdiction of formation;

 
(b)
It has the requisite power and authority to execute, deliver and perform its
obligations under this Agreement;

 
(c)
It has obtained all licenses, authorizations, approvals, consents or permits
required to perform its obligations under this Agreement and each Work Order and
to grant access to the other Party to systems and information as provided in
this Agreement and each Work Order under all applicable federal, state,
provincial or local laws and under all applicable rules and regulations of all
authorities having jurisdiction over the EDS Services, except where the failure
of a Party to so obtain any such item is not material to such Party’s ability to
perform its obligations hereunder.

 
(d)
The execution, delivery and performance of this Agreement and each Work Order
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the requisite corporate action on the part of such
Party.

 
(e)
The execution, delivery and performance of this Agreement and each Work Order
will not constitute a violation of any judgment, order or decree, a material
default under any material contract by which it or any of its material assets
are bound or an event that would, with notice or lapse of time, or both,
constitute such a default.

C-4.
No Inducements.  EDS has not violated any FC policy made available to EDS
regarding the offering of inducements in connection with this Agreement or any
Work Order.

C-5.
Viruses.  Each Party will use commercially reasonable measures to screen any
software provided or made available by it to the other Party hereunder for the
purpose of avoiding the introduction of any “virus” or other computer software
routine or hardware components which are designed (i) to permit access or use by
third parties to the software of the other Party not authorized by this
Agreement, (ii) to disable or damage hardware or damage, erase or delay access
to software or data of the other Party or (iii) to perform any other similar
actions.  If a virus is found to have been introduced into FC’s systems or the
systems used to provide the EDS Services as a result of a breach of the
foregoing covenant, EDS will use commercially reasonable efforts, at no
additional charge, to reasonably assist FC (within the scope of the EDS
Services) (a) in eradicating the virus and reversing its effects and (b) to the
extent the virus causes a loss of data or operational efficiency as a result of
a breach of the foregoing covenant, in mitigating and reversing such losses.

 
 
 

--------------------------------------------------------------------------------

 

C-6.
Disabling Codes.  EDS will not, without informing FC’s representative, knowingly
insert into the software used by it hereunder any code or other device which
would have the effect of disabling, damaging, erasing, delaying or otherwise
shutting down all or any portion of the EDS Services or the hardware, software
or data used in providing the EDS Services.  EDS will not invoke such code or
other device at any time, including upon expiration or termination of this
Agreement for any reason, without FC’s prior written consent.

C-7.
Use of Software.  EDS has sufficient right, title and interest in and to all EDS
software provided by EDS and used in connection with the EDS Services.  FC’s
sole remedy for breach of this Section C-7 is through the indemnity set forth in
Section D-3.

C-8.
Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS EXHIBIT C OR THE
AGREEMENT TO WHICH THIS EXHIBIT C IS ATTACHED, EDS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE
MERCHANTABILITY, SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR
PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE, OF ANY SERVICE, SOFTWARE,
HARDWARE OR OTHER MATERIALS PROVIDED UNDER THIS AGREEMENT, OR  THAT THE
OPERATION OF ANY SUCH SERVICE, SOFTWARE, HARDWARE OR OTHER MATERIALS WILL BE
UNINTERRUPTED OR ERROR-FREE.

 
 

--------------------------------------------------------------------------------

 

Exhibit D
Indemnities

D-1.
Claims Relating to Space and Taxes.  Subject to Section 13 of this Agreement and
the procedures set forth below in Section D-6, EDS and FC each agrees to
indemnify and defend the other Party from any and all claims, actions, damages,
liabilities, costs and expenses, including reasonable attorneys’ fees and
expenses (collectively, “Losses”), arising out of, under or in connection with
(a) any third party claim for rent or utilities at any location where the
indemnitor is financially responsible under this Agreement for such rent or
utilities or (b) any third party claim for wages, benefits, third party fees,
taxes, assessments, duties, permits or other charges of any nature for which the
indemnitor is responsible under this Agreement, as well as penalties, interest,
fees or other expenses incurred by the indemnitor as a result of such items,
including taxes, not being paid at the time or in the manner required by
applicable law.

D-2.
Claims Relating to Personal Injury and Property Damage.

(a)  
Damage to Property of Parties.  EDS and FC each will be responsible for any and
all Losses, to their respective tangible personal or real property (whether
owned or leased), and each Party agrees to look only to its own insuring
arrangements (if any) with respect to such Losses.

(b)  
Personal Injury; Damage to Property of Third Parties.  EDS and FC each will be
responsible for Losses for the death of or personal injury to any person
(including any employee of either Party) and Losses for damages to any third
party’s tangible personal or real property (whether owned or leased), in
accordance with the law of the jurisdiction in which such Loss is alleged to
have occurred.  Subject to Section 13 of this Agreement and the procedures set
forth below in Section D-6, each Party will indemnify and defend the other Party
from any and all Losses arising out of, under or in connection with third party
claims for which the indemnitor is responsible under this Section D-2(b).

 
(c)
Waiver of Subrogation.  To the extent permitted at no additional cost, EDS and
FC waive all rights to recover against each other for any Loss to their
respective tangible personal property (whether owned or leased) from any cause
covered by insurance maintained by each of them, including their respective
deductibles or self-insured retentions.  EDS and FC will cause their respective
insurers to issue appropriate waivers of subrogation rights endorsements to all
property insurance policies maintained by each Party.  Each Party will give the
other written notice if a waiver of subrogation is unobtainable or obtainable
only at additional expense.  If the Party receiving such notice agrees to
reimburse the other Party for such additional expense, the other Party will
obtain such waiver of subrogation.  If a waiver is unobtainable or if a Party
elects not to pay the additional expense of a waiver, then neither Party nor
their insurers will waive such subrogation rights.

 
D-3.
Infringement Claims.

 
(a)
General.  Subject to Section 13 of this Agreement, the exclusions and
limitations set forth below in this Section D-3 and the procedures set forth
below in Section D-6, EDS and FC each agrees to defend the other Party against
any third party action to the extent that such action is based upon a claim that
the software (other than third party software) or confidential information
provided by the indemnitor, or any part thereof, (i) infringes a copyright
perfected under United States statute, (ii) infringes a patent granted under
United States law or (iii) constitutes an unlawful disclosure, use or
misappropriation of another party's trade secret.  The indemnitor will bear the
expense of such defense and pay any Losses that are attributable to such claim
finally awarded by a court of competent jurisdiction.

 
 
 
 

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(b)  
Exclusions.  The indemnitor will have no liability to the indemnitee hereunder
if (i) the claim of infringement is based upon the use of software provided by
the indemnitor hereunder in connection or in combination with equipment, devices
or software not supplied by the indemnitor or used in a manner for which the
software was not designed, (ii) the indemnitee modifies any software provided by
the indemnitor hereunder and such infringement would not have occurred but for
such modification, or uses the software in the practice of a patented process
and there would be no infringement in the absence of such practice, or (iii) the
claim of infringement arises out of the indemnitor's compliance with
specifications provided by the indemnitee and such infringement would not have
occurred but for such compliance.  In addition, EDS will only be liable to FC
for claims of infringement arising out of, under or in connection with, gross
negligence by EDS in the provision of help desk services, call center services
or automated attendant services involving computer telephony integration.

 
(c)
Additional Remedy.  If software or confidential information becomes the subject
of an infringement claim under this Section D-3, or in the indemnitor’s opinion
is likely to become the subject of such a claim, then, in addition to defending
the claim and paying any damages and attorneys’ fees as required above in this
Section D-3, the indemnitor may, at its option and in its sole discretion, (A)
replace or modify the software or confidential information to make it
noninfringing or cure any claimed misuse of another’s trade secret or (B)
procure for the indemnitee the right to continue using the software or
confidential information pursuant to this Agreement.  Any costs associated with
implementing either of the above alternatives will be borne by the indemnitor
but will be subject to Section 13 of this Agreement.  If neither alternative is
pursued by, or (if pursued) available to, the indemnitor, (x) the indemnitee
will return such software or confidential information to the indemnitor and (y)
if requested by the indemnitee in good faith, the Parties will negotiate,
pursuant to Section 10 of this Agreement but subject to Section 13 of this
Agreement, to reach a written agreement on what, if any, monetary damages (in
addition to the indemnitor’s obligation to defend the claim and pay any damages
and attorneys’ fees as required above in this Section D-3) are reasonably owed
by the indemnitor to the indemnitee as a result of the indemnitee no longer
having use of such software or confidential information.  The payment of any
such monetary damages will be the indemnitee’s sole and exclusive remedy for the
inability of the indemnitor to implement either of the above alternatives.

 
D-4.
Claims Relating to Internet Usage.  FC warrants that the publication of any
material delivered by or through it under this Agreement or any Work Order will
not violate the copyright laws of the United States or any other jurisdiction,
unlawfully infringe or interfere in any way with the literary property or rights
of another or contain libelous or indecent matter.  FC will indemnify and defend
EDS from any and all Losses, including those associated with claims for indirect
or contributory infringement, arising out of, under or in connection with any
third party claims relating to (i) content, whether of an editorial, advertising
or other nature, (ii) the provision, use, alteration or distribution thereof,
the accessibility thereto or the exchange of information over the Internet in
connection therewith, including copyright infringement, libel, indecency, false
light, misrepresentation, invasion of privacy or image or personality rights,
(iii) statements or other materials made or made available by readers of the
content or by persons to whom the content is linked at the request of FC or (iv)
the conduct of FC’s business.

D-5.
Procedures.  The indemnification obligations set forth in this Exhibit D will
not apply unless the Party claiming indemnification:  (a) notifies the other
promptly in writing of any matters in respect of which the indemnity may apply
and of which the notifying Party has knowledge, in order to allow the indemnitor
the opportunity to investigate and defend the matter; provided, however, that
the failure to so notify will only relieve the indemnitor of its obligations
under this Exhibit D if and to the extent that the indemnitor is prejudiced
thereby; and (b) gives the other Party full opportunity to control the response
thereto and the defense thereof, including any agreement relating to the
settlement thereof; provided, however, that the indemnitee will have the right
to participate in any legal proceeding to contest and defend a claim for

 
 
 
 

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indemnification involving a third party and to be represented by legal counsel
of its choosing, all at the indemnitee’s cost and expense.  However, if the
indemnitor fails to promptly assume the defense of the claim, the Party entitled
to indemnification may assume the defense at the indemnitor’s cost and
expense.  The indemnitor will not be responsible for any settlement or
compromise made without its consent, unless the indemnitee has tendered notice
and the indemnitor has then refused to assume and defend the claim and it is
later determined that the indemnitor was liable to assume and defend the
claim.  The indemnitee agrees to cooperate in good faith with the indemnitor at
the request and expense of the indemnitor.

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