<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For quarter ended Commission File No. 1-10151
September 30, 1995
THE CONTINUUM COMPANY, INC.
9500 Arboretum Boulevard
Austin, Texas 78759-6399
Telephone: (512) 345-5700
A Delaware Corporation I.R.S. Employer Identification
Number: 74-1609363
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) as been subject to such filing
requirements for the past 90 days. Yes X No __.
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest practical date.
As of October 24, 1995, there were 19,201,000 shares of the registrant's $.10
par value Common Stock outstanding.
1
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THE CONTINUUM COMPANY, INC.
10-Q September 30, 1995
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets - September 30, 1995
and March 31, 1995 ................................................... 3
Consolidated statements of operations - Three and six months
ended September 30, 1995 and 1994 .................................... 4
Condensed consolidated statements of cash flows - Three and
six months ended September 30, 1995 and 1994 ......................... 5
Notes to condensed consolidated financial statements -
September 30, 1995 ................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .......................................... 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................... 11
SIGNATURE ................................................................... 11
2
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<TABLE>
<CAPTION>
The Continuum Company, Inc.
Condensed Consolidated Balance Sheets
September 30, March 31,
1995 1995
------------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................ $ 25,016,000 $ 44,525,000
Receivables, net of allowance for doubtful accounts .................. 98,384,000 78,062,000
Other current assets ................................................. 16,663,000 14,721,000
--------------- ---------------
140,063,000 137,308,000
Property and equipment, net of depreciation ............................ 29,883,000 26,896,000
Goodwill, net of amortization .......................................... 22,636,000 15,995,000
Software systems, net of amortization .................................. 13,012,000 14,178,000
Other assets ........................................................... 9,976,000 5,323,000
-------------- ---------------
TOTAL ASSETS ........................................................... $ 215,570,000 $ 199,700,000
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................................... $ 19,165,000 $ 18,832,000
Deferred revenue ..................................................... 12,179,000 15,981,000
Accrued liabilities and other ........................................ 44,943,000 40,228,000
Current portion of long-term debt .................................... 863,000 822,000
--------------- ---------------
77,150,000 75,863,000
--------------- ---------------
Long-term debt ......................................................... 18,051,000 25,379,000
Other obligations ...................................................... 20,689,000 16,167,000
--------------- ---------------
38,740,000 41,546,000
--------------- ---------------
Stockholders' equity:
Common Stock, $.10 par value ......................................... 1,926,000 1,919,000
Capital in excess of par value ....................................... 123,640,000 122,279,000
Retained deficit ..................................................... (24,133,000) (39,870,000)
Other ................................................................ (1,753,000) (2,037,000)
--------------- ---------------
99,680,000 82,291,000
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................. $ 215,570,000 $ 199,700,000
=============== ================
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
</TABLE>
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<TABLE>
<CAPTION>
The Continuum Company, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
-------------------------------- -------------------------------
1995 1994 1995 1994
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUE:
Service revenues .......................... $ 91,858,000 $ 71,670,000 $ 180,159,000 $ 140,832,000
Software system licensing ................. 7,899,000 5,135,000 13,829,000 9,246,000
Interest income ........................... 205,000 88,000 543,000 130,000
------------- ------------- ------------- -------------
99,962,000 76,893,000 194,531,000 150,208,000
------------- ------------- ------------- -------------
EXPENSES:
Service expenses .......................... 70,253,000 53,993,000 137,744,000 105,604,000
Marketing and administration .............. 16,826,000 13,198,000 32,055,000 25,988,000
Interest expense .......................... 598,000 489,000 1,259,000 921,000
------------- ------------- ------------- ------------
87,677,000 67,680,000 171,058,000 132,513,000
------------- ------------- ------------- ------------
Income before income taxes .................. 12,285,000 9,213,000 23,473,000 17,695,000
Income tax provision ........................ 3,687,000 2,935,000 7,043,000 5,817,000
------------- ------------- ------------- -------------
Net income .................................. $ 8,598,000 $ 6,278,000 $ 16,430,000 $ 11,878,000
============= ============= ============= =============
Earnings per common share ................... $ 0.43 $ 0.33 $ 0.83 $ 0.63
============= ============= ============= =============
Average number of common shares and
common equivalent shares outstanding ...... 20,011,000 19,015,000 19,900,000 18,997,000
============= ============= ============= =============
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
</TABLE>
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<TABLE>
<CAPTION>
The Continuum Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
--------------------------- ----------------------------
1995 1994 1995 1994
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .................................................. $ 8,598,000 $ 6,278,000 $ 16,430,000 $ 11,878,000
Items included in income which do not affect cash:
Depreciation, amortization and other ..................... 3,705,000 2,769,000 7,099,000 5,434,000
Changes in operating assets and liabilities:
(Increase) decrease in receivables ....................... (2,111,000) 6,894,000 (19,161,000) 4,859,000
Increase in accounts payable ............................. 239,000 2,316,000 568,000 2,346,000
(Decrease) in deferred revenue ........................... (4,628,000) (1,040,000) (3,813,000) (3,416,000)
(Increase) in other net assets ........................... (1,270,000) (968,000) (5,081,000) (2,687,000)
------------- ------------- ------------- -------------
Net cash provided (used) by operating activities ............ 4,533,000 16,249,000 (3,958,000) 18,414,000
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, equipment and software ............... (3,397,000) (1,687,000) (7,266,000) (2,469,000)
Purchase of business, net of cash received .................. -- -- (2,453,000) --
------------- ------------- ------------- -------------
Net cash (used) by investing activities ..................... (3,397,000) (1,687,000) (9,719,000) (2,469,000)
------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Debt (payments) borrowings, net ............................. (7,070,000) 1,692,000 (7,274,000) 1,004,000
Common Stock transactions ................................... 1,191,000 1,092,000 1,425,000 2,604,000
------------- ------------- ------------- -------------
Net cash (used) provided by financing activities ............ (5,879,000) 2,784,000 (5,849,000) 3,608,000
------------- ------------- ------------- -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH ....................... (86,000) (105,000) 17,000 (248,000)
------------- ------------- ------------- -------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .............. (4,829,000) 17,241,000 (19,509,000) 19,305,000
Cash and cash equivalents at beginning of period .............. 29,845,000 12,728,000 44,525,000 10,664,000
------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................... $ 25,016,000 $ 29,969,000 $ 25,016,000 $ 29,969,000
============= ============= ============= =============
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
</TABLE>
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE (1) SUMMARY OF ACCOUNTING POLICIES
The condensed consolidated financial statements included herein have been
prepared by the Company without independent audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, the condensed consolidated financial statements include all
adjustments necessary to present fairly the information required to be set forth
therein and these adjustments were of a normal recurring nature. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full fiscal year. Certain footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes that the disclosures included herein
are adequate to make the information presented not misleading. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10-K annual report for the fiscal year ended March 31, 1995.
NOTE (2) EARNINGS PER SHARE
For the three and six months ended September 30, 1995 earnings per share are
computed using the weighted average number of shares outstanding adjusted for
incremental shares attributable to outstanding options, primarily unvested
employee stock options, to purchase Common Stock. For the three and six months
ended September 30, 1994 the effect of options were excluded due to
immateriality. The average number of common shares and common equivalent shares
outstanding are summarized as follows (000's):
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Average outstanding common shares ........ 19,166 19,015 19,150 18,997
Common equivalent shares ................. 845 -- 750 --
------ ------ ------ ------
Average number of common shares and
common equivalent shares outstanding .... 20,011 19,015 19,900 18,997
====== ====== ====== ======
</TABLE>
NOTE (3) ACQUISITIONS
On May 3, 1995, the Company acquired all of the outstanding shares of Ra Systems
for $10,823,000. A cash payment of $5,423,000 was remitted at closing and the
remainder is payable December 31, 1995. The acquisition was accounted for using
the purchase method and, accordingly, the operating results of Ra Systems have
been included in the consolidated financial statements from the date of
acquisition. Ra Systems' tangible assets, including cash of $2,970,000, were
recorded at their estimated fair value of $7,242,000 and Ra Systems' liabilities
were recorded at their estimated fair value of $3,965,000. The estimated excess
of $7,546,000 was assigned to goodwill. The acquisition did not have a material
impact on operations.
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NOTE (4) INCOME TAXES
For the three and six months ended September 30, 1995, the effective tax rate
was 30%, which is lower than the statutory rate primarily due to utilization of
tax net operating loss carry-forwards in foreign jurisdictions. The effective
tax rate for the three and six months ended September 30, 1994 was 32% and 34%,
respectively. Tax rates for fiscal 1994 approximated the statutory rate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1994.
For the three months ended September 30, 1995, the Company recorded net income
of $8,598,000 or $.43 per share compared to a net income of $6,278,000 or $.33
per share for the same quarter last year.
Revenue for the three months ended September 30, 1995 increased to $99,962,000
compared to $76,893,000 for the same period last year, an increase of 30%. North
American customers accounted for 48% of revenue for the three months ended
September 30, 1995, European customers accounted for 18% and Pacific Rim
customers accounted for 34%.
License revenue was $7,899,000 for the three months ended September 30, 1995
compared to $5,135,000 for the same quarter last year. Approximately 94% of the
product sales came from North American customers. License sales were primarily
derived from sales of COLOSSUS(TM), the Company's expert system for evaluating
bodily injury claims.
Service revenue for the quarter ended September 30, 1995 totaled $91,858,000, an
increase of 28% compared to a year ago. Over half of the service revenue growth
was from outsourcing customers. North American customers accounted for 44% of
service revenue for the three months ended September 30, 1995, European
customers accounted for 19% and Pacific Rim customers accounted for 37%. The
following table summarizes the increase in service revenue by region ($ in
millions):
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<TABLE>
<CAPTION>
Quarter ended Sep 95 vs Sep 94
----------------- increase (decrease)
Sep 30, Sep 30, -------------------
1995 1994 $ %
------- ------- ------- ------
<S> <C> <C> <C> <C>
Outsourcing Revenue
North America $ 22.7 $ 13.1 $ 9.6 73%
Europe 1.3 2.0 (0.7) (35%)
Pacific 11.8 9.7 2.1 22%
------ ------ -------
35.8 24.8 11.0 44%
====== ====== =======
Other Service Revenue
North America 17.4 13.8 3.6 26%
Europe 16.4 14.4 2.0 14%
Pacific 22.3 18.7 3.6 19%
------ ------ -------
56.1 46.9 9.2 20%
------ ------ -------
Total Service Revenue
North America 40.1 26.9 13.2 49%
Europe 17.7 16.4 1.3 8%
Pacific 34.1 28.4 5.7 20%
------ ------ -------
$ 91.9 $ 71.7 $ 20.2 28%
====== ====== =======
</TABLE>
Outsourcing revenues increased 44% to $35,800,000 compared to the same period
last year. The increase is attributed to new outsourcing agreements signed in
North America and Australia during the second half of fiscal 1995.
Other service revenue increased 20% to $56,100,000, including increases in all
regions. The increase in North American service revenue reflects an increased
demand for consulting and implementation services associated with
VANTAGE-ONE(R), the Company's life administration system, and increases in
utilization and support fees and services for the COLOSSUS product. The increase
in European service revenue of 14% to $16,400,000 is attributable to the
acquisition of Ra Systems on May 3, 1995. Continuum Ra is the leading provider
of systems to insurance brokers in the United Kingdom. The incremental revenues
generated by Ra were partially offset by declines in mainframe consulting
revenues. The increase in the Pacific region is attributable to an increased
demand for programming services in Australia.
Compared to a year earlier, service revenue increased $20,188,000 or 28%, and
service gross profit increased $3,928,000 or 22%. The decline in gross profit as
a percentage of revenue from 25% for the three months ended September 30, 1994
to 24% for the same period this year is primarily the result of increased
investments in the Company's products, start up costs associated with new
projects and a change in the mix of business.
8
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Marketing and administration expenses for the September 1995 quarter were
$16,826,000 or 17% of total revenue compared to a year ago when they were
$13,198,000 or 17% of total revenue. The increase in expense is primarily
attributable to marketing investments including worldwide outsourcing
initiatives.
The effective tax rate of 30% for the three months ended September 30, 1995 is
lower than the statutory rate due to the utilization of net operating loss
carry-forwards in foreign jurisdictions.
The average number of common shares and common equivalent shares outstanding was
20,011,000 for the September 1995 quarter, an increase of 996,000 shares
compared to a year ago. The increase results primarily from the inclusion of
common equivalent shares. The effect of employee stock options, mostly unvested,
are now reflected as common equivalent shares due to the recent appreciation in
the Company's share price. Prior to the June 1995 quarter, employee stock
options were excluded because of immateriality.
In summary, net income for the three months ended September 30, 1995 was
$8,598,000 compared to a net income of $6,278,000 for the same period last year.
The improved performance was due to an increase in license revenue, service
revenue and gross profit.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 1994.
For the six months ended September 30, 1995, the Company recorded net income of
$16,430,000 or $.83 per share compared to a net income of $11,878,000 or $.63
per share for the same quarter last year.
Revenue for the six months ended September 30, 1995 increased to $194,531,000
compared to $150,208,000 for the same period last year, an increase of 30%.
License revenue was $13,829,000 for the six months ended September 30, 1995
compared to $9,246,000 for the same period last year. Approximately 88% of the
product sales came from North American customers, while most of the remainder
came from European life insurance customers. License sales included sales of
COLOSSUS(TM), the Company's expert system for evaluating bodily injury claims,
and sales of Automated Work Distributor (AWD(R)), the Company's business
re-engineering workflow management system.
Service revenue for the six months ended September 30, 1995 totaled
$180,159,000, an increase of 28% compared to a year ago. Over half of the
service revenue growth was from outsourcing customers. The following table
summarizes the increase in service revenue by region ($ in millions):
9
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<TABLE>
<CAPTION>
Six months ended Sep 95 vs Sep 94
------------------- increase (decrease)
Sep 30, Sep 30, --------------------
1995 1994 $ %
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Outsourcing Revenue
North America $ 46.0 $ 26.4 $ 19.6 74%
Europe 2.9 3.7 (0.8) (22%)
Pacific 22.3 18.8 3.5 19%
------ ------ -------
71.2 48.9 22.3 46%
------ ------ -------
Other Service Revenue
North America 34.9 27.7 7.2 26%
Europe 32.3 27.8 4.5 16%
Pacific 41.8 36.5 5.3 15%
------ ------ -------
109.0 92.0 17.0 18%
------ ------ -------
Total Service Revenue
North America 80.9 54.1 26.8 50%
Europe 35.2 31.5 3.7 12%
Pacific 64.1 55.3 8.8 16%
------ ------ -------
$180.2 $140.9 $ 39.3 28%
====== ====== =======
</TABLE>
Outsourcing revenues increased 46% to $71,200,000 compared to the same period
last year. Other service revenue increased 18% to $109,000,000, including
increases in all regions. The increase in outsourcing and other service revenues
are attributable to the factors discussed above.
Compared to a year earlier, service revenue increased $39,327,000 or 28%, and
service gross profit increased $7,187,000 or 20%. The decline in gross profit as
a percentage of revenue from 25% for the six months ended September 30, 1994 to
24% for the same period this year is primarily attributable to the factors
discussed above.
Marketing and administration expenses for the six months ended September 30,
1995 were $32,055,000 or 16% of total revenue compared to a year ago when they
were $25,988,000 or 17% of total revenue. The improvement as a percent of
revenue results from the significant growth in the Company's revenues and
increased sales and marketing investments.
The effective tax rate of 30% for the six months ended September 30, 1995 was
lower than the statutory rate due to the utilization of net operating loss
carry-forwards in foreign jurisdictions.
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The average number of common shares and common equivalent shares outstanding was
19,900,000 for the six months ended September 30, 1995, an increase of 903,000
shares compared to a year ago due to the inclusion of common equivalent shares
as previously discussed.
In summary, net income for the six months ended September 30, 1995 was
$16,430,000 compared to a net income of $11,878,000 for the same period last
year. The improved performance was due to an increase in license revenue,
service revenue and gross profit.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended September 30, 1995 cash decreased $4,829,000 and
totaled $25,016,000. Cash requirements for the quarter included investments in
recent outsourcing contracts, as well as long-term debt reduction of
approximately $7,000,000.
The Company expects to meet its cash needs from cash generated by operating
activities. In addition, the Company has a revolving credit line for up to
$20,000,000.
The Company had no material commitments for capital expenditures as of September
30, 1995.
VANTAGE-ONE and COLOSSUS are trademarks of The Continuum Company, Inc. AWD is a
registered trademark of DST Systems, Inc.
11
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PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.9 DST/Continuum Processing Agreement dated October 1, 1993 by
and between the Registrant and DST Systems, Inc.
Exhibit 10.10 DST/Continuum AWD Distribution Agreement dated October 1, 1993
and between the Registrant and DST Systems, Inc.
(b) No reports on Form 8-K were filed with the Securities and Exchange
Commission by the Registrant for the quarter ended September 30, 1995.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: November 13, 1995 THE CONTINUUM COMPANY, INC.
John L. Westermann III
Vice President and Chief Financial Officer
12
EXHIBIT 10.9
DATA PROCESSING SERVICES AGREEMENT
This Agreement is made and entered into as of this 1st day of October,
1993, (the "Effective Date), by and between THE CONTINUUM COMPANY, INC., a
corporation organized and existing under the laws of the State of Delaware and
having a principal place of business at 9500 Arboretum Boulevard, Austin, Texas
78759, and DST SYSTEMS, INC., a corporation organized and existing under the
laws of the State of Missouri and having a principal place of business at 1055
Broadway, Kansas City, Missouri 64105 ("DST").
WHEREAS, DST operates a data processing facility at 7201 E. 64th Court,
Kansas City, Missouri (the "DST Data Center"), consisting of IBM 370 compatible
Equipment with MVS or VM or DOS/VSE Operating System Software and peripheral
equipment as used from time to time by DST in connection with such Equipment and
Operating System Software but excluding third party software purchased for or
supplied by Continuum, as hereinafter defined, or Continuum's Customers, as
hereinafter defined, which is not currently used by DST or Continuum in their
respective data centers (the "Data Center Configuration");
WHEREAS, Continuum desires to obtain from DST, and DST desires to
provide to Continuum for and on behalf of Continuum and its Customers, as
hereinafter defined, certain data processing services provided at the DST Data
Center;
WHEREAS, in connection with and in consideration of Continuum's
employing DST to provide and DST's providing such data processing services, DST
shall assume certain costs resulting from Continuum's closing of its data center
at Austin, Texas (the "Austin Data Center") and shall assist Continuum with the
orderly transition of data processing from the Austin Data Center to the DST
Data Center;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings specified:
1.01 The term "Application Software" shall mean programs aimed
at completing specific tasks for the computer user, such as accounting,
data base operation (including data base management systems), or word
processing.
1.02 [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
1.03 "Business", except when used in conjunction with the name
"DST", shall mean the provision of access to software or data
processing services to individuals and business entities in connection
with the offer, sale, administration, recordkeeping or accounting with
respect to insurance contracts and auxiliary or related investment
contracts so long as a component of Continuum's or Vantage's
A-1
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proprietary Application Software is being or will be utilized in
connection therewith. It shall include, without limitation, the
provision of data processing services to third parties on a remote
access basis, but shall not include licensing third parties to use
Continuum-owned software on such third party's own computer equipment
to process insurance and related investment contracts sold by such
third party and its subsidiaries. When used in connection with the name
"DST", "Business" shall mean the provision of data processing services
by DST, including both (a) the processing of Application Software and
generating of output in connection therewith and (b) the provision of
computer processing capabilities for the further enhancement and
development of DST's and its Customers' Application Software.
1.04 The term "Central Time" shall mean whatever time is then
current in Kansas City, Missouri.
1.05 "Continuum" shall mean The Continuum Company, Inc., a
Delaware corporation, as well as all corporations, partnerships, joint
ventures, or other business entities which Continuum owns or controls
more than fifty percent (50%) of the outstanding voting shares or
interests (each being a "Subsidiary" and collectively the
"Subsidiaries").
1.06 "Continuum Application Software" shall mean Continuum's
proprietary Application Software licensed or otherwise provided by
Continuum to companies engaged in the life insurance, property and
casualty insurance, and/or health insurance business (such business
referred to herein as "Insurance").
1.07 The term "Current Austin Business" shall mean the
Business conducted by Continuum on October 31, 1993 through utilization
of the Austin Data Center.
1.08 The term "Current Vantage Business" shall mean the
Business conducted by Vantage Computer Systems, Inc. on October 31,
1993 through utilization of the DST Data Center.
1.09 The term "Current Contractual Amount" shall mean the
capacity which Continuum has advised DST in writing under Section 2.04
hereof that Continuum will require DST to provide for the provision of
Data Processing Services to the Continuum Business including the
Vantage Business. Thus, it represents that number of MIPS which DST is
currently committed to provide to Continuum, and for which Continuum is
currently contractually obligated to pay.
1.10 The term "Customer" shall refer to an individual or
entity which has contracted with or utilizes the services of another
entity to obtain private label or service bureau processing services or
access to Application Software and data processing services necessary
for such Customer to conduct its business operations. In the context of
this agreement, the entity providing the services may be DST, Continuum
or Vantage, as hereinafter defined.
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1.11 The term "Data Processing Services" shall mean the
provision of access to computer processing units at the DST Data Center
configured in accordance with the Data Center Configuration and capable
of processing the Current Contractual Amount of MIPS (and any
increments as provided for herein): (a) to process Business of
Continuum for its Customers and to generate output using Application
Software (provided said Application Software is consistent with the
Data Center Configuration or any necessary Operating System Software in
excess thereof is separately purchased at Continuum's expense); (b) in
connection with developmental work on Continuum's proprietary software
or the development of Continuum's products and their derivatives; and
(c) in connection with Continuum's internal data processing needs.
1.12 Fungible MIPS:
(a) A "Fungible MIPS" shall mean one MIPS on an IBM
370 compatible computer processing unit using an MVS or VM or
DOS/VSE operating system or any operating system subsequently
hereto adopted by the DST Data Center in the general course of
DST's business in place of or in addition to those previously
enumerated, and peripheral equipment then used by DST in
connection with such equipment and such operating system
which, from the commencement to the completion of processing,
does not use or require more of any one variable resource than
is generally contemplated as being within the Baseline
Parameter.
(b) Exclusions. The term "Fungible MIPS" does not
include:
(i) Network and network items outbound of the
front end processors, channel extension equipment and LAN
bridges and routers except as otherwise provided in Section
5.02 hereof;
(ii) Disaster recovery costs in excess of
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT] per month
(normal tape backup and off site rotation of backup tapes is
not a part of disaster recovery and is included as a part of
Fungible MIPS);
(iii) Printers or printing;
(iv) Application Security Administration (some
systems security administration provided by DST);
(v) Shipping and mailing costs;
(vi) Costs incurred by Continuum in shutting down
Continuum's Customers' processing facilities; and
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(viii) Costs incurred to acquire equipment and
software required to process new Continuum or Vantage Business
(that is Business not in place on October 31, 1993) and
Continuum Customers' businesses, including additional
equipment and software costs required to serve such Customer
which does not fit the DST Data Center Configuration or is not
within the Baseline Parameter.
(ix) Data Base Administration.
1.13 "Insurance Customers" shall mean Customers of Continuum
engaged in the Insurance business.
1.14 "MIPS" shall refer to the number of instructions, in
millions, which a computer processing unit ("CPU") can process within
one second. Thus, "one MIPS" means that the CPU can process one million
instructions per second. The Gartner Ratings current at the time of
measurement will be used to determine the MIPS rating of a CPU.
1.15 The term "Operating System Software" shall mean computer
programs, unique to a specific hardware configuration, that, by
managing internal functions of a computer, provide a link between
physical hardware and Application Software.
1.16 The term "Transition Period" shall mean that length of
time commencing on the Effective Date required to transfer the Current
Austin Business to the DST Data Center.
1.17 The term "Vantage" refers to Vantage Computer Systems,
Inc. both as it existed prior to October 31, 1993 and as it exists
subsequent to the completion of Vantage Computer Systems, Inc.'s merger
with Continuum Acquisition, Inc. and the renaming of the surviving
corporation.
2. DATA PROCESSING SERVICES. During the term of this Agreement:
2.01 Use of DST Data Center.
(a) DST shall make available to Continuum, and
Continuum shall exclusively use, a dedicated portion of the
DST Data Center configured in accordance with the Data Center
Configuration as modified from time to time for the provision
of Data Processing Services: (i) in connection with
developmental work on Continuum's proprietary software or
development of Continuum's products and their derivatives; and
(ii) to process all of the recordkeeping, accounting and other
business processing of Continuum and its Insurance Customers
in North America capable of being processed in the Data Center
Configuration which, in the case of Continuum Customers,
involves a significant use of Continuum's Application Software
which Continuum has agreed, or in the future agrees, to
provide. Such business processing shall use Continuum
Application Software provided to DST by Continuum which is
compatible with the Data Center Configuration.
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(b) Notwithstanding the provisions of Section
2.01(a), Continuum shall not be required to use and DST shall
not be required to provide the DST Data Center [INFORMATION
OMITTED - CONFIDENTIAL TREATMENT]
(c) [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
(d) Continuum may, upon advance notice to DST also
use the DST Data Center to provide Continuum's internal
business data processing such as accounting.
2.02 Vantage Business. At and preceding the date hereof, DST
provided Data Processing Services with respect to insurance policy
recordkeeping and accounting for Vantage Computer Systems, Inc., a
company acquired by Continuum Acquisition, Inc. from DST on or shortly
before the date of this Agreement. DST shall continue to provide to
Vantage (or its successor) the Data Processing Services to which it
formerly provided under the terms and conditions of this Agreement for
the fees and charges set forth in Appendix C hereto. The existing
Service Agreement between DST and Vantage is hereby terminated and
superseded by this Agreement.
2.03 Current Austin Business. DST shall, utilizing the DST
Data Center, provide to Continuum and its Customers all of the
recordkeeping and Data Processing Services provided by the Austin Data
Center on October 31, 1993 to Continuum and its Customers, except for
such data processing and other functions of the Austin Data Center
which Continuum and DST jointly agree in writing that Continuum shall
retain. DST and Continuum shall cooperate in the closure of the Austin
Data Center and the transition of data processing services from the
Austin Data Center to the DST Data Center as described in Section 7
below.
2.04 Growth of Business.
(a) DST shall provide, and Continuum and its
Subsidiaries shall utilize the DST Data Center to provide
additional Data Processing Services required by Continuum.
Such additional Data Processing Services shall include: (i)
those which result from growth of the Current Vantage Business
and the Current Austin Business; (ii) subject to the
provisions of Section 2.01 hereof, new Continuum Business and
new Vantage Business arising from new software business or
processing for Insurance Customers of Continuum and data
processing business obtained by Continuum from Insurance
Customers, provided the requirements of the software systems
utilized in such business(es) are consistent with the Data
Center Configuration and the Customers conducting such
businesses then use or will [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] commence using Continuum's Application
Software; and (iii) such other data processing activities
which DST and Continuum from time to time jointly agree should
be a part of the services provided by DST pursuant to this
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Agreement. Where the requirements of software systems employed
by prospective Insurance Customers are not consistent with the
Data Center Configuration or such Customers do not use or
intend [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] to
commence to using Continuum Application Software, DST shall
not be required to provide Data Processing Services for such
Customers, but Continuum shall nevertheless use reasonable
efforts to advise DST of such prospective Customers and their
data processing requirements and DST may, by prompt notice to
Continuum, elect to provide such data processing upon
comparable terms and conditions as other third party providers
of data processing may then be offering to Continuum for such
data processing.
(b) In connection with the growth or expansion of
Continuum and Vantage Business, Continuum shall use its best
efforts to provide DST as much prior notice of its need for
Data Processing Services as possible and to keep DST apprised
of Continuum's prospects for expansion of its existing
Business and for acquisition of new Business and such new
Businesses' anticipated processing needs. DST shall at all
times, except when a Notice of Termination is pending,
maintain the ability to provide increases in the number of
MIPS available to Continuum for the conduct of its Business as
follows:
(i) DST shall supply to Continuum, upon thirty
(30) days prior written request by Continuum, an
increase in the MIPS over the then existing Current
Contractual Amount, up to the number of unused or
excess MIPS then available on the CPU's dedicated to
Continuum or which may otherwise be available at the
DST Data Center for Continuum's use ("Excess MIPS").
(ii) If Excess MIPS are not available and DST must
acquire additional equipment to meet a Continuum
request for additional MIPS, DST shall use reasonable
efforts to acquire such equipment promptly and in any
event within one hundred twenty (120) days of
Continuum's request. If DST acquires additional
equipment to meet a Continuum request for additional
MIPS, Continuum shall be required to pay for such
additional MIPS for a minimum period of six (6)
months after the additional MIPS are available to
Continuum.
(iii) If, to meet a Continuum request for
additional MIPS, DST must acquire additional
equipment within one hundred eighty (180) days of a
disposition of equipment as a result of an earlier
Continuum reduction of MIPS, and the per MIPS cost to
DST of the additional equipment is greater than the
per MIPS cost to DST of the equipment earlier
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disposed of (the "Per MIPS Spread"), Continuum shall
reimburse DST an amount equal to the Per MIPS Spread
times the lesser of (x) the number of MIPS of the
additional equipment acquired by DST and (y) the
number of MIPS of the equipment earlier disposed of
by DST.
(iv) Continuum may, subject to subsection
2.04(b)(ii), reduce the number of MIPS provided by
DST pursuant to this Agreement by written notice to
DST; provided, however, that Continuum shall continue
to pay for the number of MIPS subject to the
reduction until the earlier of (x) the date DST is
able to utilize such number of MIPS to meet other DST
Data Center requirements or (y) thirty (30) days from
the date DST receives such notice. At the time of any
reduction in MIPS pursuant to this subsection (iv)
DST shall advise Continuum if such reduction will
result in a disposition of equipment by DST, and
Continuum may, within five (5) business days of such
advice, elect that any number of MIPS it has reduced
pursuant to this subsection (iv) be held available
for Continuum's future use as soon as practical
following request by Continuum and in any event made
available within thirty (30) days after such request
("Standby MIPS"). Continuum shall pay DST for Standby
MIPS at a daily rate of [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] per Fungible MIPS, commencing
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT] from
the date DST receives notice of the MIPS reduction.
(v) Continuum may not have pending at the same
time a notice to add MIPS under Section 2.04(b)(i)
and a notice to reduce MIPS under Section
2.04(b)(iv).
2.05 File Access.
(a) Continuum shall have unrestricted access to all
Continuum Business files maintained on the computer equipment
at the DST Data Center in connection with DST's performance of
Data Processing Services for Continuum except (i) for periods
of emergency maintenance after notice to and consultation with
Continuum and (ii) during 12:01 a.m. Sunday Central Time
through 8:00 a.m. Sunday Central Time when DST may close
access to the DST Data Center to permit maintenance,
installation or testing of equipment and software. DST may
upon thirty (30) days written notice change the time of the
regular 8-hour maintenance period.
(b) DST may from time to time to permit maintenance,
installation or testing of equipment and software, and upon at
least seven (7) days prior written notice and consultation
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with Continuum, close the DST Data Center on any specific day
other than on regular work days. "Regular work days" shall be
Monday through Friday from 7:00 a.m. to 7:00 p.m. Central
Time, excluding Christmas, Thanksgiving Day, New Years Day,
Memorial Day, July Fourth, and Labor Day.
2.06 Service Levels. In providing the Data Processing
Services, DST agrees to meet the service levels set forth in Appendix B
attached hereto.
3. TERM. Unless terminated as provided in Section 10 below or by
agreement of the parties, this Agreement shall have an initial term of six (6)
years beginning on the Effective Date. Thereafter, this Agreement shall be
automatically renewed for successive one (1) year periods unless terminated by
either party pursuant to Section 10 hereof.
4. FEES AND PAYMENT.
4.01 Continuum agrees to pay to DST the fees, charges and
expenses for Data Processing Services set forth in Appendix C hereto
for the Existing Vantage Business, the Current Austin Business and any
new business obtained by Continuum (collectively the "Continuum
Business"). Continuum shall also reimburse DST for all out-of-pocket
expenses incurred by DST at the prior request of Continuum which are
not covered under Appendix C. All amounts payable to DST shall be due
within thirty (30) days of Continuum's receipt of DST's invoice.
4.02 Any sum which became due to DST hereunder after January
1, 1995 which is not paid within the period specified in Section 4.01
shall incur, and Continuum shall pay, a late payment charge at the rate
of one percent (1%) per month or part of a month, but in no event an
amount exceeding the maximum late payment charge allowed by applicable
law; provided, however, if Continuum notifies DST of a good faith
dispute within fifteen (15) days of receipt of an invoice from DST, and
DST agrees that a good faith dispute exists, no late payment charge
will accrue on the amount in dispute. If DST does not agree that a good
faith dispute exists it will promptly notify Continuum. If DST and
Continuum agree that a good faith dispute exists, Continuum shall
nevertheless pay when due that part of the invoiced amount not in
dispute.
5. EQUIPMENT AND DATA COMMUNICATION LINES.
5.01 Telecommunications and Datacommunications Equipment and
Lines. Except as otherwise stated in Sections 5.02 and 5.03 hereof,
Data Processing Services do not include equipment, devices, lines
charges, or other charges for the transmission or receipt of data or
voice transmissions to or from the DST Data Center. Continuum and its
Customers, at its or their own expense, will obtain all necessary
telephone and data communications equipment and supplemental telephone
and data communication services including, but not limited to, terminal
equipment compatible with the DST equipment and the DST Data Center,
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suitable dataset, and appropriate telephone and data communication line
service to the DST Data Center, if applicable. If requested by
Continuum, and if available to DST, DST shall acquire such equipment
for Continuum and bill Continuum the cost.
5.02 Management of Data Communications Network.
Notwithstanding Continuum's ultimate responsibility therefor, DST, on
behalf of Continuum and its Customers, shall manage the data
communications network insofar as it consists of lines which have been
ordered from the vendor by DST which access the DST Data Center. Such
management is included in the Per MIPS Charge paid by Continuum and
shall consist of assisting Continuum and its Customers to identify and
to obtain the appropriate assistance to resolve any problems pertaining
to such network.
5.03 Continuum-Only Datacommunications Network. DST shall
provide at no extra charge a datacommunications network from the DST
Data Center to Continuum's facility in Austin, Texas consisting of one
(1) T-1, one (1) pair of Timeplex Multiplexers, one (1) pair of Series
One COMPUTERM Channel Extenders, one (1) pair of CISCO Routers, four
(4) 3480 tape transports and two (2) 3420 tape transports, or
replacement equipment provided by DST which will provide comparable
functionality. Such equipment provided by DST shall remain the property
of DST and Continuum shall deinstall, package, and return such
equipment to DST at no charge to DST in a manner that will permit
continued Vendor maintenance, upon the expiration or termination of
this Agreement. All such DST-owned equipment on Continuum's premises
shall display a notice stating that it is the property of DST. Any
additional or extra equipment required by Continuum at Continuum's
location(s) in the future will be acquired at Continuum's expense in
accordance with the provisions of Section 5.01 hereof.
6. DOCUMENTATION, SOFTWARE AND PROPRIETARY RIGHTS.
6.01 DST Documentation. DST shall supply Continuum and any
Customers designated in writing by Continuum from time to time with all
relevant documents and procedures in use by DST (the "Documentation")
necessary to input and retrieve information and data into and out of
DST's facilities. Whenever such Documentation is changed, DST shall
promptly supply copies of the changes to Continuum. DST will give
Continuum advance notice of any material change in Documentation which
affects Continuum and its Customers and will consult with Continuum
respecting the impact of such changes. Continuum shall be responsible
for distributing such Documentation and changes to its Customers.
Continuum agrees that it and its Customers shall observe and comply
with the requirements of the Documentation.
6.02 Continuum Grant. Continuum shall supply DST with and
hereby grants to DST, at no charge, a restricted non-exclusive license
for the term of this Agreement to use Continuum Application Software,
relevant Continuum Documentation, and other procedures and software
code to the extent necessary for DST to perform its obligations
hereunder.
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7. TRANSITION OF CURRENT AUSTIN BUSINESS.
7.01 Austin Data Center. During the Transition Period:
(a) Continuum will retain control of the space
occupied, the equipment and software utilized and the
employees employed at the Austin Data Center and will continue
to operate the Austin Data Center through October 30, 1993.
All costs and expenses related to Austin Data Center remain
with Continuum through October 30, 1993, unless otherwise
agreed in writing between DST and Continuum; provided that, if
equipment and/or third party software is earlier transferred
to the DST Data Center, DST will at that time assume
responsibility for such equipment and/or software.
(b) If DST determines that it needs to locate DST
personnel at the Austin Data Center during the term of this
Agreement, Continuum shall provide reasonable facilities at
such site for DST's use without charge to DST.
(c) Except as the parties may otherwise agree,
Continuum shall cause the existing Austin Data Center
equipment leases, software leases and licenses (to the extent
Continuum's rights in such software are transferable) and
related maintenance agreements set forth in Appendix D to be
transferred to DST effective as of November 1, 1993.
7.02 Transfer of Portions of Data Processing Services.
(a) As functions or processing responsibilities are
transferred from the Austin Data Center to the DST Data
Center, DST shall assume responsibility therefor.
(b) DST shall not charge Continuum for Data
Processing Services provided by DST at the DST Data Center for
Current Austin Business (but not Existing Vantage Business
which continues to be charged pursuant to Appendix C) until
the earlier of (a) the date the transition of the Current
Austin Business to the DST Data Center is complete or (b) as
of opening of business on November 1, 1993.
(c) On November 1, 1993:
(i) DST shall assume all of the expenses of Austin
Data Center equipment and third party software listed
on Appendix D (including assuming all equipment
leases listed on Appendix D and purchasing
Continuum-owned equipment listed on Appendix D at
book value and paying personnel costs for those
Continuum personnel at Austin whom DST elects to
employ to provide the data processing services to
Continuum). Continuum shall transfer to DST all of
Continuum's rights in and to such equipment and
software (to the extent Continuum's rights in such
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software are transferable) unless other arrangements
are agreed to by DST and Continuum. Continuum hereby
agrees to execute any documentation necessary to
accomplish or evidence such transfer of ownership to
DST. DST shall purchase the equipment and software
listed on Appendix D (to the extent Continuum's
rights in such software are transferable) for
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
(ii) DST shall hire such of Continuum's current
Austin Data Center staff as DST desires to employ and
Continuum shall use its best efforts to cause any
persons selected to accept employment with DST. The
disposition of the remaining employees employed in
the Austin Data Center shall be at Continuum's sole
direction and expense.
(iii) Continuum shall be responsible for any
severance pay, accrued benefits and other costs and
expenses resulting from the termination by Continuum
of any Austin Data Center personnel, whether or not
employed by DST.
(iv) Continuum shall cooperate with DST and use
its best efforts and take all necessary steps to
assist DST to migrate the Austin Data Center data
processing to Kansas City as soon as practicable
after November 1, 1993. DST and Continuum shall each
use its best efforts to complete the transfer of the
Current Austin Business to the DST Data Center within
five (5) months from the Effective Date. (d) After
processing responsibilities are transferred to the
DST Data Center, DST shall be entitled to substitute
or to replace at its own expense (except as
hereinafter provided) any Operating System Software
utilized by Continuum to operate the Continuum
Application Software with software currently used by
DST or new software, provided that such replacement
software shall provide essentially the same functions
as the software being replaced. DST will consult in
advance with Continuum respecting such substitution
or replacement and, if such substitution or
replacement impacts Continuum's use of the DST Data
Center, DST will take reasonable steps to accommodate
Continuum's business needs. DST and Continuum agree
to work together to consolidate and update all
software at the DST Data Center where cost effective
for both parties.
7.03 Completion of Transition. When DST has completed the
transition of the Continuum Systems from the Austin Data Center to the
DST Data Center and disposed of all equipment it does not desire to
relocate to DST Data Center, DST will notify Continuum thereof.
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8. WARRANTIES.
8.01 DST Warranties. DST warrants that, in performing the Data
Processing Services:
(a) It will provide the Data Processing Services
described in this Agreement in a manner consistent with its
operation of the DST Data Center for its Customers other than
Continuum;
(b) Output will be consistent with the data and other
input supplied by Continuum and its Customers and the
Application Software supplied by Continuum which are used to
perform the Data Processing Services;
(c) DST is the lawful user of all Operating System
Software and Application Software (except Application Software
provided to DST by Continuum, Vantage or their Customers) used
in providing Data Processing Services hereunder; such
Operating System Software and Application Software has been
lawfully acquired by DST and DST has the right to utilize such
Operating System Software and such Application Software to
perform Continuum's processing;
(d) DST shall use the Application Software provided
by Continuum to provide services to Continuum and its
Customers and for no other purpose; and
(e) THE WARRANTIES STATED ABOVE IN THIS SECTION 8.01
ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES MADE BY
DST. DST DOES NOT MAKE AND HEREBY DISCLAIMS, AND CONTINUUM
HEREBY EXPRESSLY WAIVES, ALL OTHER WARRANTIES, EXPRESSED OR
IMPLIED. WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
(f) Except for software and files introduced or
provided to the DST Data Center by Continuum, Vantage or their
Customers, DST does not have actual knowledge of any viruses
or disabling devices in any of the software at the DST Data
Center utilized by Continuum, Vantage or its Customers, and
DST shall maintain commercially reasonable procedures to
protect against the introduction of such viruses or disabling
devices.
8.02 Continuum Warranties. Continuum warrants that:
(a) Continuum will be the lawful owner or user of all
software supplied by Continuum, Vantage or their Customers to
DST installed at the DST Data Center from time to time and
has, or will have before supplying such software to DST, or
installing such software at the DST Data Center, the right to
permit DST to use such software in the performance of this
Agreement, and DST's possession and use of such software will
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not violate or in any way infringe upon the rights of third
parties, including, but not limited to, property, contractual,
employment, trade secrets, proprietary information and
nondisclosure rights, or any trademark, copyright or patent
rights; and
(b) Each software program provided by Continuum,
Vantage or their Customers to DST hereunder, individually or
together, is self-contained, can be mounted and operated upon
DST's equipment, and Continuum has no actual knowledge that
any of such software programs contain no viruses or other
self-generating code or inconsistent or illogical direction
which could cause computer equipment to malfunction or perform
inefficiently and the operation thereof on DST's equipment
will not occasion, cause or result in any damage to DST's
equipment or DST's software programs. Continuum and Vantage
shall obtain appropriate representations and warranties from
their Customers that software provided by such Customers
contain no such viruses or other self-generating code or
inconsistent or illogical direction.
9. OBLIGATIONS OF PARTIES.
9.01 DST Obligations. DST agrees that it will comply in all
material respects with all applicable Federal, State and local laws and
regulations relating to the carrying out of the Data Processing
Services by DST.
9.02 Continuum Obligations. Continuum agrees that it will use
the Data Processing Services as provided by this Agreement, that it
shall use such Data Processing Services only for its own proper
business use in accordance with all applicable Federal, State and local
laws and regulations, and tariffs, that it shall use said Data
Processing Services in accordance with the conditions, rules and
regulations which may be established or specified by applicable laws,
regulations, or tariffs from time to time in order to ensure compliance
with such laws, regulations and tariffs, and that it shall not use said
Data Processing Services in any manner which might cause it or DST to
violate any laws, rules or regulations applicable to either of them.
10. TERMINATION.
10.01 Default. Each party has the right to terminate this
Agreement if the other party breaches or is in default of any material
obligation hereunder which default is incapable of cure or which, being
capable of cure, has not been cured within sixty (60) days after
receipt of notice of such default (or such additional cure period as
the nondefaulting party may authorize).
10.02 Acts of Insolvency. Either party may terminate this
Agreement by written notice to the other if the other party becomes
insolvent, makes a general assignment for the benefit of creditors,
files a voluntary petition or bankruptcy, suffers or permits the
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appointment of a receiver for its business or assets (and, if
involuntary, such receiver is not dismissed within thirty (30) days),
or becomes subject to any proceeding under any bankruptcy or insolvency
law (and such proceeding, if involuntary, is not dismissed within
thirty (30) days), whether domestic or foreign, or has wound up or
liquidated its business, voluntarily or otherwise.
10.03 Either party may terminate this Agreement effective upon
the expiration of the initial term or at any time thereafter by written
notice to the other at least [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT] prior to the effective date of termination.
10.04 Rights and Obligations of the Parties on Termination. In
the event that this Agreement expires or is terminated for any reason,
each party shall forthwith return to the other at no extra cost, or
certify in writing to the other the destruction of (if the other party
in writing instructs that such be destroyed), all data, materials and
other properties of the other party then in its possession. Prior to or
contemporaneous with the consummation of the exchange of the foregoing
properties, Continuum shall pay to DST all payments due for Data
Processing Services and all costs and expenses incurred by DST up to
the date of expiration or of termination of this Agreement.
11. CONFIDENTIALITY OF PROPRIETARY INFORMATION; SECURITY; PUBLICITY.
11.01 DST Ownership. DST does not convey nor does Continuum
obtain any right in the Operating System Software, data or materials,
including without limitation DST Documentation, utilized or provided by
DST in the ordinary course of business in the performance of this
Agreement, input materials and output materials, and the media upon
which they are located (including, without limitation, cards, tapes,
discs and other storage facilities used for the storage of application
software).
11.02 Continuum Ownership. All Continuum and Continuum
Customer data and records and application files, software, programs,
packages or systems (together with, but not limited to, their source
codes and related documentation and instructions), including without
limitation the Continuum Application Software and Continuum
Documentation, which have been provided to DST by Continuum (but not
including any software listed in Appendix D as to which Continuum has
transferred to DST all of its rights, title and interest ) in
connection with the performance of Data Processing Services hereunder,
and which may or may not be either confidential or proprietary, shall
be the property of Continuum.
11.03 Proprietary Information. Each party acknowledges and
agrees that any and all information emanating from the other's business
in any form, including software, computer programs, operating, source
and object codes, Documentation, Customer data, and any compilations of
otherwise public information, is "Confidential and Proprietary
Information" of the other party, and each party agrees that it will not
permit the duplication, use, or disclosure of any such Confidential and
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Proprietary Information to any person (other than its own employee who
must have such information for the performance of the obligations
hereunder), unless such duplication, use or disclosure is specifically
authorized in writing by an executive officer of the other party. Any
disclosure by a party to consultants or other third parties will be
made only if the recipient shall have executed an appropriate
confidentiality agreement except where the other party has consented to
disclosure without a confidentiality agreement. DST shall not be liable
for any delays in resolution of any issue where such delay is caused by
or arises out of DST's requiring a third party agent or representative
to execute a Confidentiality Agreement. Each party shall be responsible
for any unauthorized disclosure made by any of its employees,
representatives or agents, and each party shall take appropriate action
with respect to its employees, representatives or agents to ensure that
the obligation of non-use and nondisclosure of Confidential and
Proprietary Information under this Agreement can be fully satisfied.
For the purposes of this subsection, the term "Confidential and
Proprietary Information" is not meant to include any information which,
at the time of disclosure, is generally known by the public;
information disclosed to the other party by third parties having a
right to do so and who have not imposed upon the party obligations of
confidentiality in respect thereof; and information which is known to
the other party prior to the disclosure (excluding Vantage Confidential
and Proprietary Information known to DST at the effective date hereof).
The confidentiality and non-disclosure obligations of this Section
11.03 shall survive the expiration or termination of this Agreement.
11.04 Disclosure of the Other Party's Confidential
Information. In the event that either party is served with a subpoena
or any other order or request from a governmental body or any other
entity or person for any confidential information belonging to the
other party (including without limitation Continuum's computer-stored
or backup files and/or programs), the party subject to the request
shall, as soon as reasonably practicable, notify the other party of
such subpoena, order or request and shall not, without the other
party's prior written consent, accede to such subpoena, order or
request unless required to do so under applicable laws and regulations
or when otherwise necessary to avoid legal penalties, notwithstanding
the other party's efforts, if any, to contest such subpoena, order or
request.
11.05 File Security.
(a) DST will provide reasonable security provisions,
with capabilities at least equal to those provisions which DST
provides for its own confidential files, to protect
Continuum's computer-stored files and/or programs from
unauthorized access by third parties. DST shall use reasonable
efforts to provide an environment at the DST Data Center in
which Continuum can manage access security respecting
Continuum and Continuum Customer data and software programs.
Until such time as Continuum has a completely separate
processing environment at the DST Data Center, and thereafter
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to the extent Continuum or its Customers have access to data
and software programs other than Continuum and its Customers'
data and software programs, Continuum agrees to employ and
observe and cause its Customers to employ and observe all
security procedures provided by DST.
(b) DST will assign Continuum any necessary user
code(s), identification number(s) or code(s), user number(s),
or other special identifying or system features (hereinafter
"Continuum Identification Code(s)") as may be necessary to
ensure that access to DST's computer and/or other data
processing facilities chargeable to Continuum is confined to
Continuum, its Customers, and their authorized representatives
or agents. Continuum shall be responsible for any access by
Continuum, its Customers, and their agents and employees to
any DST or DST Customer data or software programs.
(c) Continuum shall take appropriate steps to protect
the use of such Continuum Identification Code(s), and DST will
provide all assistance reasonably required. Continuum shall be
responsible for and pay any costs or expenses incurred by DST
pertaining to: (i) changing Continuum Identification Code(s)
as necessary and (ii) for all charges or costs incurred under
or in connection with the establishment, maintenance and
administration of any Continuum Identification Code(s)
established in accordance with this section. It is understood
that Continuum assumes full responsibility for selection,
distribution and use of any code or passwords as may be
permitted or required by the particular service or Continuum
or Continuum Customer involved.
(d) Except as required by law, at the request or
direction of Continuum, or as required in the normal course of
providing the Data Processing Services to Continuum hereunder,
DST, will not (i) copy or endeavor to copy Continuum's or
Continuum Customer's Application Software, computer programs,
source or object codes and computer-stored files except as
backup media for data protection or storage purposes in
accordance with DST's standard security procedures, or (ii)
attempt to translate or convert Continuum's computer-stored
files and/or programs or any copies thereof from
machine-readable form to human-readable form.
12. NONCONFORMING SERVICES; REGENERATION OF DATA.
12.01 Nonconforming Services. With respect to those Data
Processing Services involving the processing or storage by DST's
equipment of data transmitted or furnished by Continuum or its
Customers, DST shall, at its own expense, promptly re-perform or
otherwise correct any nonconforming data or the products thereof which
are due to negligence, bad faith, or lack of due diligence on the part
of DST or its employees in the performance of such Data Processing
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Services; provided, however, that DST shall not be responsible in any
manner for any such nonconforming data which are caused in whole or in
part by inaccurate and incomplete or improper input data, or failure or
incomplete or improper performance by equipment not located at the DST
Data Center or incomplete or improper performance by programs or
software systems supplied by anyone other than DST. Failure by
Continuum or its Customers to give notice of nonconforming data within
five (5) business days after performance of Data Processing Services
resulting in non-conforming data shall constitute acceptance thereof
such that DST shall be entitled to charge Continuum for any services
which Continuum or its Customers thereafter request be re-performed.
Provided that DST effects such re-performance or correction promptly
after notice from Continuum, such re-performance or correction of
non-conforming data by DST is DST's sole obligation, responsibility and
liability for providing non-conforming data.
12.02 Regeneration of Data. Should Continuum's or its
Customer's data be lost or destroyed directly due to any failure of DST
to perform its obligations under this Agreement or negligence, bad
faith, or lack of due diligence of DST or any breach by DST of its
security obligations under this Agreement, DST will be responsible at
its own expense for the prompt regeneration of Continuum's or its
Customer's data, provided Continuum furnishes the information required.
Such regeneration of data by DST under this Section 12.02 is DST's sole
obligation, responsibility and liability for lost or destroyed data.
13. INDEMNIFICATION AND LIMITATIONS ON DAMAGES.
13.01 DST shall not be responsible to Continuum for, and
Continuum shall indemnify and hold DST harmless from and against, any
and all costs, expenses, losses, damages, charges, counsel fees,
payments and liability, which may be asserted against DST by any third
party or for which it may be liable, arising out of or attributable to:
(a) All actions of DST required to be taken by DST
pursuant to this Agreement provided that DST has properly
taken such actions under this Agreement, and has acted with
reasonable care, in good faith and with due diligence.
(b) Continuum and its Customers' failure to utilize
the control procedures set forth and described in any DST,
Continuum or, if applicable, Customer Documentation, or
Continuum or its Customers' failure to verify promptly reports
received through use of the Continuum System and DST Data
Center;
(c) DST's reasonable reliance on, or reasonable use
of, in performing its duties and obligations hereunder,
information, data, records and documents received by DST from
Continuum or its Customers;
(d) The reliance on, or the carrying out of, any
instructions or requests of Continuum or its Customers;
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(e) The offer or sale of any annuities, insurance
contracts or any other products by Continuum or its Customers
in violation of any requirement under any Federal or State
laws or regulations applicable thereto including without
limitation that such annuities, insurance contracts or other
products be registered with any Federal agency or department
or in such state or in violation of any stop order or other
determination or ruling by any Federal agency or department or
any State with respect to the offer or sale of such shares;
(f) Failure of Continuum to have any required
registration or license in any state to perform any services
for which Continuum in any way uses the Kansas City Data
Center or the services provided by DST hereunder; and
(g) Continuum's or its Customers' refusal or failure
to comply with the terms of this Agreement, or which arise out
of Continuum's or its Customers' negligence or misconduct or
which arise out of the breach of any representation or
warranty of Continuum hereunder. 13.02 Except for matters
which are the subject of Sections 12.01 and 12.02 where DST
has re-performed or regenerated data, DST shall be responsible
for and shall indemnify and hold Continuum harmless from and
against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or
attributable to DST's refusal or failure to comply with the
terms of this Agreement, or which arise out of DST's lack of
reasonable care, bad faith or wilful misconduct or which arise
out of the breach of any representation or warranty of DST
hereunder; provided, however, DST is not entitled to
indemnification therefor under this Agreement, and further
provided that, IN THE EVENT OF ANY BREACH OF OR DEFAULT UNDER
ANY PROVISION OF THIS AGREEMENT OR ACTION OR OMISSION BY DST
WHICH ALLEGEDLY GIVES RISE TO A CLAIM FOR INDEMNIFICATION OR
DAMAGES, DST'S LIABILITY WITH RESPECT THERETO, ARISING FROM OR
IN CONNECTION WITH ANY PROVISION OF THIS AGREEMENT, OR FROM
ANY SERVICES PROVIDED OR OMITTED TO BE PROVIDED UNDER THIS
AGREEMENT, OR ANY REPRESENTATIONS OR WARRANTIES MADE IN OR IN
CONNECTION WITH THIS AGREEMENT, WHETHER IN CONTRACT, OR IN
TORT, OR OTHERWISE, IS LIMITED TO, AND SHALL NOT IN THE
AGGREGATE DURING THE TERM OF THIS AGREEMENT EXCEED, THE
GREATER OF THE AMOUNTS PAID HEREUNDER BY CONTINUUM TO DST AS
FEES AND CHARGES, BUT NOT INCLUDING OUT-OF-POCKET EXPENSES,
DURING THE SIX (6) MONTHS IMMEDIATELY PRECEDING THE ASSERTION
OF SUCH CLAIM OR $7.2 MILLION.
13.03 Within ten (10) days after the receipt by a party (the
"Indemnified Party") of notice of any claim, determination, suit or
cause of action with respect to which any other party is obligated to
provide indemnification (the "Indemnifying Party") pursuant to this
Agreement, the Indemnified Party shall give the Indemnifying Party
written notice thereof and the Indemnifying Party shall be entitled to
assume control of the defense and the negotiations, if any, regarding
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settlement of this matter. If the Indemnifying Party assumes such
control, the Indemnified Party shall be entitled to participate in the
defense and negotiations of such matter at its own expense; if the
Indemnifying Party does not assume control of the defense and
negotiations, the Indemnified Party may conduct such defense and
negotiations and its reasonable costs and expenses shall be subject to
indemnification. The parties agree to cooperate in such negotiations,
defense or settlement and to give each other full access to any
information relevant thereto. The Indemnified Party shall not enter
into any settlement of such matter without the written consent of the
Indemnifying Party, and the Indemnifying Party shall not be obligated
to indemnify the Indemnified Party for any settlement entered into
without the written consent of the Indemnifying Party. If the consent
of the Indemnified Party is required to effectuate any settlement and
the Indemnified Party refuses to consent to any settlement negotiated
by the Indemnifying Party, then the liability of the Indemnifying Party
for losses arising out of or due to such matter, including litigation
costs and counsel fees, shall be limited to the amount of the rejected
proposed settlement.
13.04 Neither party shall be in default by reason of any
failure in performance of this Agreement in accordance with its terms
(other than a required payment of money) if such a failure arises out
of causes beyond the control and without the fault or negligence of
such party. Such causes may include, but are not restricted to, acts of
God or of a public enemy, acts of a government, fires, floods and
storms, epidemics, quarantine restrictions, strikes, freight embargoes,
interruption, loss or malfunction of, or inability to obtain utilities,
transportation, computer (hardware or software), or data transmission
or communication service, and other unusually severe weather, but in
every case the failure to perform must be beyond the reasonable control
and without fault or negligence by the party failing to perform (a
"Force Majeure Event"). In such event, the party who has been so
affected shall immediately give notice to the other party and shall use
its reasonable best efforts to resume performance. Upon receipt of such
notice, those obligations under this Agreement affected by the Force
Majeure Event shall be immediately suspended. The obligation of
Continuum to pay for any performance of DST suspended by this Section
13.04 shall likewise be suspended.
13.05 IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER OF
THE PARTIES HERETO HAVE ANY LIABILITY TO ANY PERSON, INCLUDING WITHOUT
LIMITATION THE OTHER PARTY, WITH RESPECT TO THIS AGREEMENT OR SUCH
PARTY'S OBLIGATIONS UNDER THIS AGREEMENT, FOR ANY PUNITIVE,
CONSEQUENTIAL, EXEMPLARY, INDIRECT, LOSS OF PROFITS OR OTHER SPECIAL
DAMAGES RESULTING FROM OR ARISING OUT OF OR DEFAULT IN THE PERFORMANCE
OF THEIR RESPECTIVE OBLIGATIONS OR ANY ACT OR FAILURE TO ACT OR BREACH
OF ANY REPRESENTATION OR WARRANTY HEREUNDER, EVEN IF ADVISED OF THE
POSSIBILITY THEREOF. Any amounts Continuum is required to pay as
damages to a Continuum Customer which resulted from a breach by DST of
this Agreement shall be considered direct and not indirect damages to
Continuum.
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13.06 DST SHALL NOT BE RESPONSIBLE TO ANY THIRD PARTY FOR ANY
REPRESENTATION, WARRANTY OR COVENANT THAT CONTINUUM OR ANY OF
CONTINUUM'S REPRESENTATIVES, EMPLOYEES OR AGENTS MAKES CONCERNING THE
CONTINUUM SOFTWARE AND SERVICES OR DST'S DATA PROCESSING CAPABILITY OR
THE DST DATA CENTER, AND CONTINUUM HEREBY INDEMNIFIES DST FROM AND
AGAINST ANY CLAIMS AGAINST DST BY THIRD PARTIES OR LIABILITIES OF DST
TO THIRD PARTIES ARISING FROM ANY SUCH REPRESENTATION, WARRANTY OR
COVENANT MADE BY CONTINUUM OR ANY CONTINUUM REPRESENTATIVE, EMPLOYEE OR
AGENT; PROVIDED, HOWEVER, THIS SECTION 13.06 SHALL NOT LIMIT DST'S
LIABILITY UNDER THIS AGREEMENT TO CONTINUUM FOR ANY BREACH BY DST OF
THIS AGREEMENT.
13.07 Limitation on Action. Any action of any kind by
Continuum against DST, or by DST against Continuum, arising as a result
of this Agreement must be commenced within eighteen (18) months from
the date the right, claim, demand, or cause of action shall first
accrue.
13.08 At any time DST may apply to a person indicated on the
Continuum's "Schedule of Authorized Personnel" (attached hereto as
Appendix E), for instructions with respect to any matter arising in
connection with this Agreement. DST shall not be liable for, and shall
be indemnified by Continuum against, any action taken or omitted by DST
in good faith in reliance upon such instructions.
14. TAXES. Continuum shall be responsible for the payment of all taxes
imposed as a result of this Agreement and its performance, except for any tax
based on DST's net income and except for taxes upon equipment, software or other
property owned or licensed by DST.
15. REVIEW RIGHTS. DST shall keep full, accurate and complete records
and accounts of all matters relating to the cost of operating the DST Data
Center and providing Data Processing Services hereunder (the "Costs") and the
calculation of the appropriate Baseline Parameter and cost per one (1) Fungible
MIPS with respect thereto which calculation shall be made annually for the
ensuing year. [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] Continuum or,
subject to their execution of DST's Confidentiality Agreement, its independent
accountants shall have the right to inspect and review such records and accounts
at all reasonable times for the purpose of verifying the correctness of DST's
computation of its Costs and the Baseline Parameter and for the purpose of any
other matters arising out of this Agreement. The cost of such review shall be
borne by Continuum.
16. APPLICABLE LAW. This Agreement shall be governed by the laws of the
state of Missouri (excluding that body of law applicable to choice of law).
17. INSURANCE. Each party shall insure against losses, claims, demands,
proceedings, damages, costs, charges and expenses for injuries or damage to any
person or property which are the result of the fault or negligence of such party
in connection with such party's performance under this Agreement, including
without limitation, workman's compensation, public liability, property damage
and automobile liability.
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18. ASSIGNMENT. Neither party shall assign, subcontract, transfer or
otherwise dispose of this Agreement, or any interest therein, or the whole or
any part of this Agreement, without the other party's prior written consent;
however, either party may assign, without the prior written consent of but with
notice to the other party, its rights and obligations under this Agreement in
whole or in part to a wholly-owned subsidiary without the consent of the other
party, provided that the assigning party shall remain the guarantor of, and
primarily liable for, any obligations, financial or otherwise, arising from this
Agreement.
19. DISPUTE RESOLUTION.
19.01 Project Managers. DST and Continuum shall each designate a
Project Manager who shall be the primary contact point within each company and
who together shall attempt to resolve any issues or disputes arising under this
Agreement. The Project Managers and others they deem appropriate shall meet
periodically (at least [monthly]) to review performance of the parties under
this Agreement. If any issue or dispute cannot be resolved by the Project
Managers, such issue or dispute shall be referred for resolution to the Chief
Executive Officers of DST and Continuum, or his designee (the Senior Executive
Officers).
19.02 Any dispute, controversy or claim arising out of or relating to
this Agreement or a breach hereof which cannot be resolved by the Project
Managers or Senior Executive Officers shall be finally settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association.
19.03 Unless otherwise agreed by the parties hereto, the arbitral panel
shall consist of three arbitrators, one to be appointed by each party hereto and
the third to be appointed by the two arbitrators appointed by the parties
hereto. In the event that a party fails to appoint an arbitrator within fifteen
calendar days after any such dispute, controversy or claim has been referred to
arbitration hereunder, then, in such event, the other party may request the
American Arbitration Association to appoint an arbitrator for the party failing
to make such appointment. In the event that the third arbitrator has not been
appointed within thirty calendar days after any such dispute, controversy or
claim has been referred to arbitration hereunder, then, in such event, either
party hereto may request the American Arbitration Association to appoint such
third arbitrator.
19.04 The arbitration proceedings shall be held in Kansas City,
Missouri. All parties hereto shall be entitled to representation by counsel, to
appear and present written and oral evidence and argument and to cross-examine
witnesses presented by the other party. The arbitral award shall be in writing
and the arbitral panel shall provide written reasons for its award. The award of
the arbitral panel shall be final and binding upon the parties hereto.
19.05 The provisions of this Section 19 shall survive and bind the
parties hereto, notwithstanding any expiration or termination of this Agreement.
The provisions of this Section 19 shall be severable and binding on the parties
hereto, notwithstanding that any other provision of this Agreement may be held
or declared to be invalid, illegal or unenforceable.
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19.06 Each party irrevocably and unconditionally consents to service of
process upon it in any proceeding brought pursuant to this Agreement hereof by
the mailing of a copy of any notice or pleadings by registered or certified
mail, postage prepaid, return receipt requested, to it at its address specified
in Section 20.1 hereof. The foregoing shall not limit the right of each party to
serve process in any other manner permitted by applicable law and shall not
limit the ability of either party DST to bring any such proceeding or to obtain
execution of any judgment or arbitration award rendered in any such proceeding
in any jurisdiction in which the other party or any of its property or assets
may be found.
19.07 Continuum specifically waives any claim of forum non conveniens
and specifically consents to jurisdiction and venue in any federal district
court located in Jackson County, Missouri, United States of America and in any
state court of Missouri located in Jackson County, United States of America, for
any action or proceeding instituted pursuant to this Agreement hereof.
20. MISCELLANEOUS.
20.01 All notices between the parties hereto which may be
required or permitted under this Agreement shall be in writing and
shall be sent by registered or certified mail, postage prepaid, return
receipt requested, or other generally accepted, national next-day
delivery service, to the parties at the addresses set forth below or to
such other address as the party to receive such communication has last
designated by notice sent to the other party in accordance with the
foregoing:
If to DST, to
DST Systems, Inc.
1055 Broadway, 9th Floor
Kansas City, Missouri 64105
Attn: President
With a copy to:
DST Systems, Inc.
1055 Broadway, 9th Floor
Kansas City, Missouri 64105
Attn: General Counsel
If to Continuum, to:
The Continuum Company, Inc.
9500 Arboretum Blvd.
Austin, Texas 78759
Attn: President
With a copy to:
The Continuum Company, Inc.
9500 Arboretum Blvd.
Austin, Texas 78759
Attn: General Counsel
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20.02 The failure or delay of either party hereto to require
performance by the other party hereto shall not affect the rights of
such party to require performance and to enforce its rights with
respect to such provision unless and until such performance has been
waived in writing by such party. Any waiver of a failure or delay in
performance hereunder shall be effective only in accordance with its
terms and may be restricted or conditioned in any way. No waiver of any
failure or delay in performance hereunder shall constitute waiver of a
continuance or reoccurrence of such failure or delay or of any other
failure or delay, except as provided in such waiver. The rights granted
to each party hereunder and any rights available to it at law or in
equity shall be cumulative and may be exercised in whole or in part
from time to time.
20.03 Continuum shall have no right, power or authority to
obligate DST in any way to any contract, term or condition not set
forth in this Agreement. There are not intended to be and there are no
third party beneficiaries to this Agreement.
20.04 This Agreement, including any and all appendices
attached hereto, each of which is incorporated herein by reference for
all purposes as if fully and expressly set forth herein, constitutes
the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof. There are no representations,
agreements, arrangements or understandings, oral or written between or
among the parties hereto relating to the subject matter of this
Agreement which are not fully expressed herein.
20.05 This Agreement cannot be modified or amended except by a
written agreement signed by each party hereto.
20.06 This Agreement may be executed in two counterparts and
each counterpart shall constitute an original of the Agreement but both
such counterparts shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and do each hereby warrant and represent that their respective
signatory whose signature appears below has been and is on the date of
this Agreement duly authorized by all necessary and appropriate
corporate action to execute this Agreement.
DST SYSTEMS, INC. THE CONTINUUM COMPANY, INC.
By: KENNETH V. HAGER By: W. MICHAEL LONG
Its: V.P. & Chief Financial Officer Its: Chief Executive Officer
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APPENDIX A
BASELINE CALCULATION MODEL
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
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APPENDIX B
WINCHESTER DATA CENTER SERVICE LEVELS FOR THE CONTINUUM COMPANY
DEFINITIONS
SYSTEMS: Defined to include an active Systems Control Program (SCP), a
processor complex, and configured input/output devices; it does not
include applications but is the platform that supports applications.
Systems includes the software, provided by DST, that is included in the
per-MIPS charge to Continuum.
DEVELOPMENT SYSTEMS: That part of Systems on which Continuum performs
program development work to support its customers. These systems do not
support production processing but do allow for client access during
times of education or marketing and certain stages of development.
PRODUCTION SYSTEMS: That part of Systems on which Continuum supports
production processes for its customers.
SYSTEMS AVAILABILITY: The period of time that the Systems are capable
of supporting applications. This is sometimes expressed as a
percentage:
Systems Scheduled - Systems Unscheduled
Hours per Month Outage Hours per Month
------------------------------------------- X 100%
System Scheduled Hours per Month
1. CHANGE MANAGEMENT
DST has responsibility for providing the weekly notification of all
scheduled changes affecting Continuum Development Systems and
Production Systems to the Continuum designated contact. DST will
provide plans for change to Continuum as soon as possible.
DEVELOPMENT SYSTEMS: All changes planned for Development Systems will
be presented to the Continuum staff via the established Change
Management process in place at Continuum. Continuum will
participate in determining the impact and risk associated with
planned changes and, where applicable, in planning the
implementation dates.
PRODUCTION SYSTEMS: All changes planned for Production Systems require
a minimum of ten (10) days notice prior to implementation. This
lead-time will facilitate Continuum's required notification of its
customers. These changes will be presented to Continuum production
staff and account teams via the established Change Management
process in place at Continuum. Continuum will participate in
determining the impact and risk associated with planned changes
and, where applicable, in planning the implementation dates.
Continuum can defer a change which has not been adequately tested
or if Continuum reasonably believes the processing of its
customer's workload is at risk.
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2. PROBLEM MANAGEMENT
DST will provide a method for logging and reporting problems which
occur within the scope of the Continuum Systems. All problems will
be assigned a severity level and the user reporting the problem
will be informed of that assignment. DST will provide Help Desk
telephone support twenty-four (24) hours per day, seven (7) days
per week, except for DST holidays. DST will place calls about
Production Systems on a higher priority than those about
Development Systems. DST will respond to Continuum's service calls
as follows:
SEVERITY LEVEL: 1
DEFINITION: A System is unavailable.
TIME FRAME FOR RESPONSE: Service Calls will be responded to
within [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] of
receipt. Resolution will begin promptly and continue until the
problem is resolved or circumvented.
SEVERITY LEVEL: 2
DEFINITION: System functionality is degraded causing disruption
to normal work flow.
TIME FRAME FOR RESPONSE: Service Calls will be responded to
within the same working day if the Service Call is received
prior to 3:00 P.M. Central Time, or by 9:00 A.M. of the next
working day if received after 3:00 P.M. Central Time.
Reasonable efforts will be made to resolve the problem within
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
SEVERITY LEVEL: 3
DEFINITION: Questions and non-critical problems.
TIME FRAME FOR RESPONSE: Service Calls are handled in "first
in, first out" order and will be responded to by the end of the
next business day. Reasonable efforts will be made to resolve
the problem within [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT]. Not all non-critical problems will be fixed if, in
DST's reasonable judgment, such problems do not materially
affect Continuum's use of the Systems.
3. RESOURCE REQUESTS
Resources include data storage (tape & DASD), software, CPU MIPS,
technical support for Continuum specific projects, network and any
other data center related items. DST will respond to all requests
within [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] of receipt,
excluding holidays and weekends, with an estimated availability of
resources. Continuum's designated contact will review responses to
resolve any cost issues.
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4. SYSTEM AVAILABILITY
DST will perform Systems maintenance, a necessity, during the time
period commencing at 12:01 AM Sunday and completing at 8:00 a.m.
Sunday. Continuum reserves the right to cancel a scheduled
preventative maintenance period based upon reasonable business
requirements, upon at least seven (7) days prior written notice and
consultation with DST.
DEVELOPMENT SYSTEMS: DST shall achieve [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] Systems Availability.
PRODUCTION SYSTEMS: DST shall achieve [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] Systems Availability.
5. SYSTEM PERFORMANCE
DST's responsibility for System Performance will be limited to
consulting for Continuum to help Continuum ensure that there are
sufficient system resources to meet Continuum's reasonable
performance requirements.
6. SUPPORT OF CONTINUUM'S CUSTOMERS
DST will provide reasonable efforts to help Continuum support
Continuum's customers and achieve Continuum's service level
commitments. DST's efforts will be directed toward helping
Continuum diagnose its own data processing problems and recommend
to Continuum solutions to those problems. Any programming or other
consulting work requested by Continuum and provided by DST shall be
separately billed to Continuum at DST's then current time and
materials rates.
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APPENDIX C
FEES AND CHARGES
1. Fees and Charges for Data Processing Services to Continuum
Group (subject to Section 2 below).
1.01 MIPS. DST shall provide Data Processing Services at an
annual price of [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]. The
monthly invoice shall reflect the foregoing charge times the then
applicable Current Contractual Amount divided by twelve (12). The
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT] shall change from time
to time in accordance with Section 1.03 hereof of this Appendix C.
1.02 Software Costs.
(a) Included in the [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT] set forth in Section 1.01 of this Appendix is the following
third party software:
(i) All third party software including IBM software
installed at the DST Data Center and used by Vantage on
September 30, 1993 as set forth on Appendix D and upgrades
because of change of computer size and replacements for such
software after September 30, 1993;
(ii) All third party software including IBM software
at Continuum's Austin, Texas data center (except only Supra)
on September 30, 1993, as listed on Appendix D and upgrades
because of change of computer size and replacements for such
software after September 30, 1993;
(b) New third party software required, including IBM software,
by Continuum after September 30, 1993 for its use or use of its
Customers and upgrade fees for such software and additional fees for
Supra, is not included in the Per MIPS Charge and all license and use
fees for such software shall be paid by Continuum. "New third party
software" shall include additional licenses of software described in
Section 1.02(a) above and additional fees under existing licenses of
such software which are required because Continuum, Vantage or a
Continuum Customer or other party designated by any of them is granted
use of or access to such software after September 30, 1993.
(c) All [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] for
periods after September 30, 1993 for all third party software described
in subsections (a) and (b) above shall be paid by DST and included in
the [INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
(d) All third party software costs and related maintenance
costs incurred by DST as described in subsections (a) and (c) above
shall be included in the calculation of the Baseline Parameter.
(e) If any of the third party software described in subsection
(b) above is obtained by Continuum on the basis of a license fee or use
charge which includes [INFORMATION OMITTED - CONFIDENTIAL TREATMENT],
Continuum shall provide DST with copies of such fee or charge invoices
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and evidence of payment by Continuum, and a reasonable allocation of
such fee or charge to [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
will be made by DST and such amount reimbursed to Continuum.
(f) If Continuum discontinues use of third party software,
amounts attributable to such discontinued software will continue to be
included in the calculation of the Baseline Parameter and in
Continuum's software usage until any fee payment obligations that DST
has incurred to obtain the right for Continuum to use such software are
satisfied and with respect to prepaid fees, the amortization of such
fees is completed.
1.03 [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
(a) [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
(b) [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
(c) [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
(d) [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
(e) DST's Termination Right. If, but for the [INFORMATION
OMITTED - CONFIDENTIAL TREATMENT] ceiling described in paragraph (c)
above, the [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] for
Continuum's use of the Data Center exceeds [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] for three consecutive months, DST may terminate
this Data Processing Services Agreement by written notice to Continuum,
with the effective date of termination being not earlier than nine
months after the date such termination notice is delivered (the "Notice
Period"). If DST has terminated under this Section 1.03, Continuum may,
upon sixty (60) days written notice, change the effective date of
termination to an earlier date in the Notice Period. If this Data
Processing Service Agreement is terminated pursuant to this Section
1.03, DST will provide reasonable assistance to Continuum to convert to
another data center at DST's then current time and material rates.
(f) [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
2. Cost of Services to Vantage Business.
2.01 Cost per Contract. The current fee on the Effective Date
of [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] for Data Processing Services
provided to Vantage with respect to Vantage and each Vantage Customer on the
Effective Date shall continue until December 31, 1994.
2.02 Development Costs. The [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] charge to Vantage for development use will continue
through December 31, 1994.
2.03 Prior to January 1, 1995, the charges for the Vantage
Business is set forth in Sections 2.01 and 2.02 of this Appendix C and all other
Continuum Business is charged at the [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT]. Commencing on January 1, 1995, the price for all Data Processing
Services including Continuum Business and Vantage Business shall be computed as
follows:
A-29
<PAGE>
(a) For the period from [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT], the charge will be [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT] for up to [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] for
the period from [INFORMATION OMITTED - CONFIDENTIAL TREATMENT], the
charge will be [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] for up to
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT], plus [INFORMATION
OMITTED - CONFIDENTIAL TREATMENT] for each of the next [INFORMATION
OMITTED - CONFIDENTIAL TREATMENT], and the [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] for all [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT] utilized by Continuum (including the Vantage development).
(b) Commencing [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
by Continuum (including the Vantage Business and development) will be
charged at the [INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
2.04 Other Vantage Charges. The additional charges described
in Section 3 of this Appendix C shall also be payable with respect to the
Vantage Business.
3. In addition to the fees payable by Continuum to DST pursuant to
Sections 1 and 2 of this Appendix C, Continuum shall pay the following
additional charges:
- Forms
- Postage (to be paid in advance if so requested) - Printing or
Mailing Services - Computer Hardware leased from or through DST
for use by Continuum, Vantage or Customers (other than Equipment
leased under a separate agreement)
- Telecommunications Equipment and communication lines leased by DST
on behalf of or for Continuum or its Customers excluding the data
communication network provided pursuant to Section 5.03
- Magnetic Tapes, Reels or Cartridges shipped and not returned
within ninety (90)days
- Magnetic Tape Handling Charges
- Microfiche/Microfilm
- Freight Charges
- Proxy Processing, if DST used - per proxy mailed - not including
postage see separate Proxy Fee Schedule)
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation
A-30
<PAGE>
- T.I.N. Certification (W-8 & W-9) (Postage associated with the
return envelope is included)
- Off-site Record Storage
- Second Site Disaster Backup Fee (per contract), if elected by
Continuum or the applicable Continuum Customer(subject to a $5,000
per month credit)
A-31
<PAGE>
EXHIBIT 1 TO APPENDIX C
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
A-32
<PAGE>
APPENDIX D
SOFTWARE LISTING
Pages 1 - 5 [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
A-33
<PAGE>
APPENDIX D CONTINUED
DATA CENTER ASSETS SOLD AS OF 10/31/93
EQUIPMENT -- PURCHASED
PROP # DESCRIPTION
EQ1808 3380 DIR ACCESS STORAGE DEVICE
EQ1674 CARTRIDGE RACKS
EQ1813 COMDISCO 01-SL31397099 PAY-OFF
EQ1847 COMDISCO-3380/AJ4 & 3380/BK4
EQ1714 CONTROL UNIT STACKER
EQ1911 CSI-(2) FIBER LINK CHANNELS
EQ1783 IBM 3174-01L
EQ1715 IBM 3151 MONITOR
EQ1853 IBM-3380 DIR ACCESS STORAGE
LH0298 LIBRARY STOR SHELVES
2565 MEDIA-EXTREME RACKS, ETC
EQ1716 IBM 3151 MONITOR
EQ1597 TAPE RACKS OPER (6)
EQ1588 TAPE RACKS OPERATIONS
EQ1575 TAPE RACKS OPERATIONS
EQUIPMENT -- LEASED
PROP # DESCRIPTION
EQ1967 COMDISCO 3390 AK4'S
EQ1968 COMDISCO 3390 J03
EQ1980 CSI - 3380
EQ1979 CSI - 3380
EQ1978 CSI - 3380
EQ1974 IBM BASE EXT
EQ1976 IBM BASE EXT
EQ1972 IBM BASE EXT
EQ1973 IBM BASE EXT
EQ1971 IBM BASE EXT
EQ1975 IBM BASE EXT
EQ1970 IBM BASE EXT
EQ2051 IBM CREDIT - 3090 500J/50J
EQ1969 IBM DASD
EQ1977 IBM DIR ACCESS STORAGE
A-34
<PAGE>
DATA CENTER ASSETS SOLD AS OF 10/31/93
PROGRAM AMORTIZATION
PROP # DESCRIPTION
SW0323 ALLEN SYS GRP-IMPACT CPU LICENSE
SW0269 ALTAI-SFTWR-ZEKE/ZEBB/MVS/ESA
SW0318 ALTAI-ZARA/MVS/ESA PERM LICENSE
SW0166 ASSEMBLER H ILC
SW0148 CMS/MVS TOOLKIT
SW0188 CSA ANALYZER/ESA-CANDLE CORP
SW0312 DYLAKOR INC-QUIKJOB OS 3090/500J
SW0251 ENHANCED SFTWR-ESP-SPELL UPGRADE
SW0270 GOAL SYS-FAVER FOR MVS-UPGRADE/5000
SW0210 IBM GRADUATED GRP 50 BASIC
SW0259 IBM-CACHE RMF REPORTER
SWO324 IBM-ICFRU-MVS SYSTEM CATALOG
SW0162 INTEREST/MVS/XA UPGRADE
SW0334 LEGENT-VM PERM LIC MULTI-IMAGE
SW0216 MOBIUS-INFOPAC TAPESAVER
SW0169 OS CICS DBUG-AID
SW0198 PROJECT WORKBENCH-ADVANCED 3.1
SW0135 QUICKJOB
SW0277 SYSTEMS CENTER-VM ARCHIVE
SW0200 VMARCHIVE.VMBACKUP.VMTAPE
SW0199 VMSPOOL - PERM LICENSE
VIASoft Existing Systems Workbench
MACRO 4 Words online/MVS
A-35
<PAGE>
LEASE/MAINT. AGREE OBLIGATIONS
DEPT. 812, 813, 814 AND 859
AS OF 10/31/93
# DEPT VENDOR DESCRIPTION
SOFTWARE #5026
814 ALLEN SYSTEMS MAINT FOR IBM 3090-500J
40 814 ALTAI SOFTWARE MAINT FOR ZEKE/MVS/ESA
41 814 ALTAI SOFTWARE MAINT FOR ZEBB/MVS/ESA
814 ALTAI SOFTWARE MAINT FOR ZARA/MVS/ESA
814 AXIOS FETCH MAINT
814 BMC SOFTWARE MAINT - POINTER CHCKER PLUS
1 814 BGS SYSTEMS BEST/1-MVS MAINT.
2 814 BGS SYSTEMS CAPTURE/MVS LEASE RENEWAL
3 814 BOOLE & BABBAGE MAINT OF COMPUTER SWARE PPE
4 814 CANDLE CORP. MAINT. OF OMEGAMON/MVS
4 814 CANDLE CORP. MAINT. OF DEXAN/MVS
4 814 CANDLE CORP. MAINT OF CSA ANALYZER
4 814 CANDLE CORP. MAINT OF OMEGAMON PERF PAC FOR CICS
4 814 CANDLE CORP. MAINT OF AF OPERATOR
5 814 CBL COMPUTE CBLVCAT MO. LICENSE FOR CPU 3090/500J
6 814 CBL COMPUTE SELCOPY MO. LICENSE FOR CPU 3090/500J
814 CHICAGO SOFT MAINT FOR CMS/MVS TOOLKIT
814 CHICAGO SOFT MAINT FOR J2
7 814 COMPUTER ASSOC. LICENSE FOR LIBRARIAN BASE MVS
8 814 COMPUTER ASSOC. LICENSE FOR ROSCOE MVS
9 814 COMPUTER ASSOC. MAINT FOR VERIFY MVS
10 814 COMPUTER ASSOC. MAINT FOR EASYTRIEVE PLUS MVS
12 814 COMPUTER ASSOC. MAINT FOR OPTIMIZER MVS
13 814 COMPUTER ASSOC. NINE/R+
14 814 COMPUTER ASSOC. DASDCHECK
15 814 COMPUTER ASSOC. INTERTEST W/XA-ESA
16 814 COMPUTER ASSOC. CULPRIT MVS
17 814 COMPUTER ASSOC. DISPATCH MVS
18 814 COMPUTER ASSOC. PANVALET CMS OPEION MVS
19 814 COMPUTER ASSOC. PANVALET MVS
814 COMPUTER ASSOC. TOP SECRET - VM
814 COMPUTER ASSOC. TOP SECRET - MVS
20 814 COMPUTERWARE CORP MAINT FOR ABEND-AID/MVS ON 1-3090/500J
21 814 COMPUTERWARE CORP MAINT FOR CICS ABEND-AID/MVS ON 1-3090/500J
22 814 COMPUTERWARE CORP MAINT FOR XPEDITER/TSO
A-36
<PAGE>
LEASE/MAINT. AGREE OBLIGATIONS
DEPTS. 812, 813, 814 AND 859
AS OF 10/31/93
# DEPT VENDOR DESCRIPTION
SOFTWARE #5026
814 EMPACT CPV TYPE SOFTWARE
814 ENHANCED SFTWR PRDESP SPELL
814 GOAL-SYS INSIGHT DB2
814 IBM MVS/VM, ETC.
814 IBM MVS/VM, ETC.
814 IBM MVS/VM, ETC.
910 IBM MVS/VM, ETC.
814 LANDMARK SYS CICS/MVS
27 814 LEGENT CORP MAINT FOR MULTI-IMAGE ALLOCATION
28 814 LEGENT CORP MAINT FOR MULTI-IMAGE CONSOLE
29 814 LEGENT CORP MAINT FOR MULTI-IMAGE INTEGRITY
814 LEGENT CORP FAVER/MVS ANNUAL MAINT
814 LEGENT CORP ASTEX/50
30 814 LEGENT CORP MULTI-IMAGE ALLOCATION/VM PERM LIC FEE
814 LEVI, RAY & SHOUP VTAM PRINTER SUPPORT
814 MACKINNEY ISPF VSAM UTILITY
814 MACKINNEY ICF LISTCAT
814 MACRO 4 WORDS ONLINE/MVS
31 814 MACRO 4, INC. LEASE FOR CPU 3090/070860
814 MERRILL MXG SOFTWARE SUPPORT
814 MICROTEMPUS TEMPUS LINK
32 814 NETEC INTERNAT'L MAINT FOR CICS DUMP DISPLAY FAC SWARE
814 PACE KOMMAND/DIRECT
814 PLATINUM RC/QUERY-MIGRATOR
33 814 SAS INSTITUTE LICENSE FOR OS SASC-R
814 SAS INSTITUTE SASC/GRAPH R/INSIGHT
814 SAS INSTITUTE OS SAS-R
814 SAS INSTITUTE OS SAS/GRAPH-R
814 SAS INSTITUTE OS SAS/STAT-R
814 SFTWR ENG PDSFAST/DRIVER
814 SFTWR ENG SAVRS
814 SFTWR ENG TRMS
42 814 STERLING SOFTWARE MAINT FOR VAM/VSAM
43 814 STERLING SOFTWARE MAINT FOR VAM/DS
814 STERLING SOFTWARE COMPAREX FOR MVS
53 814 STERLING SOFTWARE SYSTEM SUPPORT OF QUICKJOB SOFTWARE
44 814 STERLING SOFTWARE MAINT FOR DMS/OS BASIC SYSTEM
45 814 STERLING SOFTWARE MAINT FOR VSAM SUPPORT
A-37
<PAGE>
LEASE/MAINT. AGREE OBLIGATIONS
DEPTS. 812, 813, 814 AND 859
AS OF 10/31/93
# DEPT VENDOR DESCRIPTION
SOFTWARE #5026
46 814 STERLING SOFTWARE MAINT FOR VOLUME CONFIGURATOR
47 814 STERLING SOFTWARE MAINT TOP SECRET INTERFACE
48 814 STERLING SOFTWARE MAINT TSO/SPF INTERFACE
814 SYNCSORT SYNCSORT OS
814 SYNCSORT SYNCSORT CMS
49 814 SYSTEMS CENTER SOFTWARE SUPT FEES FOR IBM 3090-VMSPOOL
50 814 SYSTEMS CENTER SOFTWARE SUPT FEES FOR IBM 3090-VMBACKUP
51 814 SYSTEMS CENTER SOFTWARE SUPT FEES FOR IBM 3090-VMARCHIV
52 814 SYSTEMS CENTER SFTWR SUPT FEES FOR IBM 3090-VMTAPE/CMS
814 VM/CMS VM/CMAP ANNUAL MAINT
38 814 XEROX ANNUAL SWARE LIC FEE/GFDL/MVS HOST SW
850 DUN & BRADSTREET GL SYSTEM
850 DUN & BRADSTREET PR/PS:E MVS
A-38
<PAGE>
APPENDIX E
[SCHEDULE OF CONTINUUM AUTHORIZED PERSONNEL]
A-39
EXHIBIT 10.10
SOFTWARE LICENSE DISTRIBUTION AGREEMENT
THIS SOFTWARE LICENSE DISTRIBUTION AGREEMENT ("Agreement") is made and
entered into as of October 1, 1993 by and between DST SYSTEMS, INC., 1055
Broadway, Kansas City, Missouri 64105 a Missouri corporation ("DST") and THE
CONTINUUM COMPANY, INC. ("Continuum").
FOR AND in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings specified:
1.1 An "Affiliate" of DST, Continuum or an End User shall mean its
parent (a Person owning at least fifty-one percent (51%) of
it) or any Subsidiary of it or its Parent.
1.2 "Documentation" shall mean and include all media and
documentation developed or distributed by DST relating to the
operation, functionality, support and maintenance of the
Licensed Software, including but not limited to end-user
manuals, technical assistance manuals, flow charts, training
manuals and the like.
1.3 "End User" shall mean (a) a Person primarily engaged in the
business of (i) issuing, insuring or reinsuring life insurance
policies, (ii) issuing annuities as an insurance company,
(iii) administering life insurance company superannuation
programs, (iv) issuing, insuring or reinsuring property and
casualty insurance policies, and (v) issuing, insuring or
reinsuring health and/or accident insurance policies issued by
a company whose primary business (or whose ultimate parent's
primary business) is life insurance or issued by a company
listed on Schedule A-1 attached hereto, excluding in all
instances in clauses (i) through (v) above, independent agents
and agencies and (b) Affiliates of such companies whose
primary function is the providing of data processing services
to such companies.
1.4 "Continuum Marketing Area" shall mean worldwide.
1.5 "Licensed Software" shall mean the computer software system
known as Automated Work Distributor(TM) or AWD(R), as
described in SCHEDULE A-2 attached hereto.
1.6 "Person" shall mean an individual, corporation, partnership,
trust, association, entity or governmental authority.
1.7 A "Subsidiary" of DST, Continuum or an End User shall mean a
corporation, fifty-one percent (51%) or more of the capital
stock of which is owned by it directly or indirectly through
one or more subsidiaries and which is managed and controlled
by it.
B-1
<PAGE>
1.8 "System" shall mean collectively the Documentation and the
Licensed Software.
2. LICENSE GRANTED TO CONTINUUM
2.1 On the terms, and subject to the conditions, of this
Agreement, DST hereby grants to Continuum an exclusive
(subject to the other provisions of Section 2),
non-transferable and revocable license (the "License") during
the term of this Agreement to use in its own and its
Affiliates' businesses (including providing services to third
parties), and to demonstrate, market and sublicense the System
in object code form to End Users located in the Continuum
Marketing Area, to provide maintenance and other services
relating to the System to such End Users, and to create
derivative works based on the System.
2.2 To retain its exclusive right to market and sublicense the
System to End Users, Continuum shall be required to sell the
minimum number of sublicenses each year during the term of
this Agreement as is set forth on Schedule B attached hereto.
Continuum acknowledges and agrees that such minimum
requirements were established mutually by DST and Continuum
and represent performance standards that Continuum should be
capable of achieving using reasonable efforts.
2.3 In the event that Continuum fails at any time to meet the
minimum requirements with respect to any geographic area or
areas specified in Schedule B, DST may, immediately following
delivery of thirty (30) days written notice to Continuum if
such failure is not cured within such thirty (30) day period,
deem the license granted to Continuum pursuant to Section 2.1
of this Agreement to be non-exclusive with respect to such
geographic area or areas. DST shall then have the unlimited
right to market and license the System directly to End Users
in the geographic area where exclusivity has been terminated
and/or to appoint other distributors and licensing agents for
the System in the geographic area where exclusivity has been
terminated.
2.4 Notwithstanding the grant of exclusivity in Section 2.1, (a)
DST retains the exclusive right, directly or through its
Affiliates, to market and license the System to the End Users
in the Continuum Marketing Area set forth on SCHEDULE C, on
the terms and conditions set forth on SCHEDULE C, (b) the
Persons listed as "Current Distributors" on SCHEDULE C may, to
the extent set forth on SCHEDULE C, continue to distribute and
sublicense the System to End Users in the Continuum Marketing
Area for the term of their existing agreements with DST, and
(c) DST retains the right, directly or through its affiliates,
to market the System to End Users who have installed other
proprietary software of DST or its Affiliates or to whom DST
B-2
<PAGE>
or its affiliates propose to bundle the System with other
proprietary software of DST or its affiliates in the areas of
mutual fund and unit trust accounting and recordkeeping,
portfolio accounting, stock transfer and pension recordkeeping
and reporting. [INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
2.5 If DST or its affiliates licenses the System to an affiliate
of an End User or licenses the System as an integral part of
other software being provided to an End User (e.g. a unit
trust system) and, in either case, the End User or its
affiliate desires to expand its use of the System to include
an insurance line of business and DST grants a license for
such expanded use, such event would not be a violation of
Continuum's exclusive rights hereunder and DST would pay to
Continuum a commission of [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT]. If Continuum licenses the System to an End User
and such End User desires to expand its use of the System to
include non-insurance lines of business other than the mutual
fund business, Continuum, with prior written consent from DST
(executed by the DST representatives listed in Section 16.6),
may grant a separate license for each such other lines of
business, and the granting of such additional license by
Continuum would not be a violation by Continuum of its limited
marketing rights hereunder, and Continuum will pay to DST the
appropriate royalties pursuant to Section 5 for such
additional license. If DST licenses the System to a bank or
other financial institution for use in the superannuation line
of business, no amounts would be paid to Continuum; license of
the System for the superannuation line of business to other
non-insurance companies by DST may give rise to a payment to
Continuum if a prior agreement on such topic is entered
between DST and Continuum covering the country in which such
company is located. Continuum may market the System to other
than End Users only with the prior written approval of DST
which is specific as to the name of the company and for which
DST and Continuum have agreed to the amount of the royalty to
be paid to DST.
2.6 Continuum shall periodically (at least quarterly) review the
names of prospective End Users in the Continuum Marketing Area
and determine in good faith the name of any End User who has
indicated it did not want to sublicense from Continuum or who
Continuum believes would not sublicense from it, and Continuum
shall promptly provide such names or otherwise refer such End
Users to DST. DST will periodically (at least quarterly)
report to Continuum on DST's marketing activities with respect
to such referred End Users. If DST licenses the System to any
such referred End User within 12 months of such referral, DST
shall pay Continuum a referral fee of [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT], payable within thirty (30) days from
collection, and Continuum shall not otherwise be entitled to
any payment or compensation from DST hereunder with respect to
such End User. Upon request of DST from time to time,
Continuum shall review with DST prospective End Users
B-3
<PAGE>
identified by DST and discuss with DST Continuum's marketing
plans with respect to such End Users. If Continuum does not
intend to actively market the System to any of such
prospective End Users within the immediately following six (6)
months, DST and Continuum will use reasonable efforts to agree
on a plan for DST or DST and Continuum jointly to market the
System to such End Users.
3. RESTRICTIONS ON LICENSE GRANTED TO CONTINUUM
3.1 Continuum shall only sublicense the System to End Users for
the internal use of such End Users. Each sublicense granted by
Continuum shall only confer rights to use the System only in
the End User's business (but not as a service bureau);
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
3.2 Continuum shall be given access to the source code for the
System for purposes of providing maintenance and support to
the End User, but all sublicenses of the System granted by
Continuum shall be of object code only unless otherwise
specifically agreed by DST in writing on a case by case basis.
Except as contemplated by the escrow described in Section
16.12, Continuum shall not permit any sublicensee to have
access to the source code for the System without the express
written consent of the President or Chief Information Officer
of DST.
3.3 All sublicenses granted by Continuum shall contain at least
the terms and conditions attached hereto as SCHEDULE D (the
"Required Terms"), unless otherwise agreed in writing by DST;
provided, however, that Continuum may make, without DST's
agreement, non-material changes in wording or other changes
which may be more protective of Continuum and DST or more
restrictive on the End User (the "Permitted Changes").
Continuum shall be responsible for determining that sublicense
agreements with End Users comply with local law in the country
where such agreements are used by Continuum; provided,
however, that no change to comply with local law may be made
in the Required Terms other than Permitted Changes without the
written agreement of DST, which agreement may not be
unreasonably withheld. The agreement of DST to change the
Required Terms may be given by only the President, Chief
Information Officer or General Counsel of DST. Continuum
hereby holds DST harmless and indemnifies DST from any loss or
damages incurred by DST by reason of any change (other than
the Permitted Changes) in the Required Terms unless the change
is agreed to in writing by DST. The duration and other terms
and conditions of sublicense agreements with End Users shall
be determined by Continuum, provided that any such terms and
conditions may not be in conflict with the requirements and
limitations of this Agreement.
3.4 Continuum shall provide DST with copies of all sublicenses of
the System executed by Continuum within twenty (20) days of
the date of execution of each sublicense.
B-4
<PAGE>
4. RECOMMENDED SUBLICENSE PRICES
4.1 DST's current recommended prices for sublicenses of the System
in the Continuum Marketing Area are set forth in SCHEDULE E
attached hereto. Such recommended prices may be increased or
decreased annually at the discretion of DST provided, however,
that any such increase in such prices shall not exceed
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]. The limitation
on price increases in this Section 4.1 shall not apply to new
releases of the Licensed Software which include significant
changes in architecture or platform or to new versions of the
Licensed Software. Continuum shall be free to determine the
prices at which it will sublicense the System in the Continuum
Marketing Area.
5. ROYALTIES PAYABLE BY CONTINUUM
5.1 For use of the System by Continuum in its business, Continuum
shall pay DST royalties as set forth in SCHEDULE F-1 attached
hereto. For each sublicense of the System granted by
Continuum, Continuum shall pay DST royalties as set forth in
SCHEDULE F-2 attached hereto.
5.2 All royalties owed to DST hereunder shall be paid to DST in
U.S. Dollars within 30 days after receipt by Continuum of the
corresponding payment from the sublicensee; for example, if
the license fee payable to Continuum is payable in
installments, the royalty paid to DST will be in corresponding
installments. If the sublicense fees are paid to Continuum in
a foreign currency, the royalty payment to DST shall be based
on the foreign currency exchange rate to U.S. Dollars on the
date payment is received by Continuum. DST may elect as
respects any royalty payment to receive such royalty payment
in the currency received by Continuum in payment of its
license fee by its client.
5.3 Any sum due to either party from the other hereunder which is
not paid within the period specified in Section 5.2 hereof
shall incur a late payment fee at the rate of [INFORMATION
OMITTED - CONFIDENTIAL TREATMENT] per month but in no event to
exceed the maximum late payment charge allowed by applicable
law.
5.4 Any and all excise, stamp, sales, use, withholding, value
added, import or export duties, or other taxes or levies
(except only taxes imposed on the net income of DST or legally
required withholding attributable to royalty payments made to
DST) imposed by any governmental entity in the Continuum
Marketing Area (collectively, "Taxes") on any royalties,
maintenance or other payments by Continuum to DST and by DST
to Continuum under this Agreement shall be paid by Continuum.
Continuum agrees to indemnify DST against all claims against
DST in respect of any such taxes.
B-5
<PAGE>
6. OBLIGATIONS OF CONTINUUM
6.1 DST shall have no obligation to translate to another language
from English any text comprising screen displays, manuals, or
other documentation. If Continuum translates into a language
other than English the English language text comprising the
screen displays of the Licensed Software manuals, or other
documentation, Continuum shall supply copies of such
translations to DST without charge. DST shall provide to
Continuum without charge, any foreign language translations
which DST has made or which are available without cost to DST.
6.2 Continuum agrees that all translations of screen displays and
manuals prepared by Continuum constitute derivative works and
Continuum hereby assigns to DST any and all copyrights and
other proprietary rights which Continuum may acquire to such
translations. DST is and shall remain at all times the owner
of all proprietary rights in such translations; provided,
however, that Continuum shall be entitled to retain a license
to use such translations subject to the terms and conditions
of this Agreement.
6.3 Continuum shall use its reasonable efforts to actively and
diligently market and to solicit orders for the sublicensing
of the System in the Continuum Marketing Area.
6.4 Continuum shall provide suitably trained and qualified sales
and technical support staff capable of marketing, installing,
maintaining and supporting the Licensed Software.
6.5 Continuum shall comply in all material respects with all
applicable laws, rules, regulations or ordinances relating to
the marketing, and sublicensing of the System, including all
United States and other country export and import laws and
regulations. If there is any country into which Continuum does
not license its proprietary software because of an inability
to protect its proprietary rights in such country, or if there
is otherwise any country where either DST or Continuum
reasonably determines that the proprietary rights of DST in
the System can not be protected, Continuum shall not market,
sublicense or install the System for use in such countries.
6.6 Continuum shall provide DST with copies of all marketing and
promotional materials prepared by or on behalf of Continuum
with respect to the System as soon as practicable, but in any
event no more than sixty (60) days after preparation of such
materials. Receipt of such materials by DST shall not give
rise to any obligation by DST to review such materials for
accuracy or constitute any representation by DST as to the
accuracy of such materials. To the extent DST reviews such
materials and has actual knowledge of any inaccuracy in such
materials, it shall advise Continuum. Continuum shall
indemnify and hold harmless DST in respect of all liabilities,
B-6
<PAGE>
losses, claims and damages resulting from any misstatements,
errors or omissions in such materials (other than materials
provided by DST pursuant to Section 6.7 below), except only
inaccuracies in such materials of which DST has actual
knowledge and fails to advise Continuum of such inaccuracy.
6.7 DST shall make available to Continuum and licenses Continuum
to use any marketing materials developed by DST which
specifically pertain only to the System. DST MAKES NO
REPRESENTATION OR WARRANTY OF ACCURACY OR FITNESS OF ANY SUCH
MATERIALS FURNISHED TO CONTINUUM, AND CONTINUUM SHALL ASSUME
ALL RISKS AND OBLIGATIONS ASSOCIATED WITH USING ANY SUCH
MATERIALS PROVIDED.
6.8 Continuum shall submit to DST a quarterly report concerning
the marketing activities of Continuum containing details of
the number of prospects contacted, the number of presentations
made, the number of sublicenses expected during the next 90
days, and such other information concerning performance of
this Agreement as may from time to time be reasonably
requested by DST. Such reports shall be submitted within
thirty (30) days after the end of each calendar quarter.
6.9 Continuum shall maintain adequate sub-licensing records and
shall provide DST within thirty (30) days following the end of
each calendar quarter with a detailed report of the prior
quarter's sub-licensing transactions.
6.10 Continuum shall give DST prompt notice of any infringements of
DST's copyright or other intellectual property rights in the
System that come to Continuum's attention during the term of
this Agreement.
6.11 Continuum agrees to observe all requirements of the vendors of
third party software included by DST in the Licensed Software
("Third Party Software") which pertains to the distribution or
sublicensing of such Third Party Software. DST will provide
Continuum with copies of DST's license agreements with all of
such Third Party Software vendors.
7. OBLIGATIONS OF DST
7.1 Within thirty (30) days after the date of this Agreement, DST
shall deliver to Continuum one copy of the Licensed Software
in source and object code.
7.2 DST shall provide to Continuum such documentation and
technical information respecting the System as may reasonably
be required by Continuum in order to carry out Continuum's
obligations under this Agreement, and will provide Continuum
with updates, fixes, and enhancements to such materials from
time to time as developed and released by DST. DST will
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provide Continuum with such materials at least as soon as
provided to other distributors or generally released by DST to
users of the Licensed Software. DST will use reasonable
efforts to inform Continuum of technical developments
respecting the System prior to general release of such
information.
7.3 DST will make available without charge up to 28 days training
(in the aggregate) in the installation and operation of the
System for up to 6 employees of Continuum. An additional
twenty-eight (28) days of training shall be available without
charge upon each release of a new version of the Licensed
Software. Such training shall be held at DST 's location in
Kansas City, Missouri. Continuum shall pay for all expenses of
its employees who participate in such training.
8. CONSULTING, MAINTENANCE AND SUPPORT SERVICES
8.1 Continuum shall use its reasonable efforts to enter into an
Enhancement and Support Agreement with each sub-licensee
providing for the enhancement and support services set forth
on SCHEDULE G attached hereto. Recommended fees to be charged
by Continuum under Enhancement and Support Agreements are set
forth in SCHEDULE H attached hereto.
8.2 Continuum may elect by region (Europe, United Kingdom, Pacific
Rim, and all other countries) to provide to End Users either
(a) Level One support or (b) Level One and Level Two support,
as defined in Exhibit X attached hereto. If Continuum makes no
election, it shall be deemed to have elected to provide Level
One service only. In all instances, Continuum shall:
(a) install a copy of the current release of the standard
version of the System in a suitable compatible
environment to which Continuum has access; and
(b) designate a suitably trained and qualified employee
of Continuum as responsible for coordination of
support and maintenance services with DST's
personnel.
8.3 DST agrees to provide Continuum Level Three support,
consisting of enhancement and support services equivalent to
those provided by DST Systems to subscribers to its
enhancement and support program in the United States of
America, including those services listed on SCHEDULE G. If
Continuum does not elect to provide Level Two support to End
Users in a region, DST shall provide such support through
DST's existing facility location. In consideration of such
enhancements and support by DST, Continuum shall pay to DST in
respect of each Enhancement and Support Agreement entered into
by Continuum an annual royalty of [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT].
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8.4 DST shall provide such other or additional services as the
parties may from time to time mutually agree ("Consulting
Services") to Continuum or to sublicensees and/or prospective
sublicensees of the System which require such services. DST
shall bill Continuum for its fees and expenses incurred in
providing Consulting Services at billing rates as agreed to
from time to time by DST and Continuum. All invoices rendered
by DST to Continuum for Consulting Services shall be due and
payable within thirty (30) days of the relevant invoice. Any
amounts not paid by Continuum when due shall bear interest at
the rate of [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] per
month or, if lower, the maximum rate permitted by applicable
law.
9. INTELLECTUAL PROPERTY RIGHTS
9.1 The System and all copies, enhancements, modifications,
updates and other derivative versions thereof and derivative
works therefrom which include any of the System code or other
DST Confidential Information (as defined below) constitute
valuable and confidential trade secrets of DST and are
proprietary to DST. All applicable copyrights, trade secrets,
trademarks, patents and other intellectual and proprietary
rights in and to the System and all copies thereof are and
shall remain in DST. All aspects of the System, including
without limitation, all designs, engineering details,
algorithms, programs, methods of processing, specific design
and structure of individual programs and their interaction,
and the programming techniques employed therein shall remain
the sole and exclusive property of DST. IT IS EXPRESSLY
UNDERSTOOD THAT NO TITLE TO OR OWNERSHIP OF THE SYSTEM, OR ANY
PART THEREOF, IS HEREBY TRANSFERRED TO CONTINUUM OR ANY
SUBLICENSEE OF CONTINUUM.
9.2 The License herein granted by DST to Continuum shall include
DST's right to use the trademarks and/or service marks
"Automated Work Distributor"TM and "AWD"(R) (collectively, the
"Marks"). Continuum shall be entitled to use such Marks only
in connection with the marketing and sublicensing, as
applicable, of the System in the Continuum Marketing Area and
Continuum shall make no other use of the Marks. Subject to the
license rights herein granted by DST to Continuum to use such
Marks in connection with the marketing and sublicensing of the
System hereunder, the Marks are and shall remain the sole and
exclusive property of DST Systems. Upon the expiration or
termination of this Agreement Continuum shall cease all use of
the Marks. Continuum shall not at any time during or after the
term of this Agreement (i) claim any right, title or interest
in or to any Mark (whether registered, non-registered or
applied for), or (ii) undertake to copyright, trademark, trade
name or apply for a patent with respect to the System or any
portion thereof. Continuum recognizes that all or a part of
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the System may be copyrighted, trademarked or patented by DST
and agrees that any such act shall not cause or be construed
as causing the System or any portion thereof to be in the
public domain. Continuum agrees that it will not remove from
copies of the System, or any component thereof, any form of
copyright or other proprietary notice appearing on the System
or any component thereof.
9.3 Continuum acknowledges and agrees that the terms and
conditions of this Agreement, the System, and information
obtained by Continuum concerning the other software, software
applications, equipment configurations, and business of DST
(collectively the "DST Confidential Information") is
confidential and proprietary to DST and Continuum hereby
agrees to maintain the confidentiality of the DST Confidential
Information and not to disclose the DST Confidential
Information, or any part thereof, to any other person, firm or
corporation except to the extent reasonably required to
exercise its rights granted pursuant to Section 2.1 of this
Agreement. Continuum acknowledges that the disclosure of the
DST Confidential Information may give rise to an irreparable
injury to DST inadequately compensable in damages.
Accordingly, DST may seek (without the posting of any bond or
other security) injunctive relief against the breach of the
foregoing undertaking of confidentiality and nondisclosure, in
addition to any other legal remedies which may be available,
and Continuum consents to the obtaining of such injunctive
relief.
9.4 Continuum shall instruct those of its employees to whom
disclosure is made of any DST Confidential Information to
observe the confidentiality and non-disclosure obligation of
Continuum herein and shall have in effect with all such
employees agreements requiring their compliance with such
instructions. If Continuum discloses DST Confidential
Information to any other person permitted to receive such
information hereunder, Continuum shall require such person to
execute a confidentiality agreement substantially in the form
attached hereto as Exhibit Y.
9.5 The terms of this Article 9 shall survive the expiration or
termination of this Agreement.
10. WARRANTIES; DISCLAIMER; LIMITATION OF LIABILITY
10.1 DST warrants that: (a) it has all necessary power and
authority to enter into this Agreement; (b) it is the owner of
and has the right to license the System; and (c) to its
knowledge, the Licensed Software delivered to Continuum
hereunder contains no viruses or, unless advised to Continuum
in writing, no disabling devices. DST periodically uses
reasonable tests of the Licensed Software to determine the
presence of viruses and uses reasonable efforts to remove any
viruses disclosed by such tests. During the term of this
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Agreement DST warrants that the Licensed Software shall
perform in all material respects in accordance with the
Documentation provided to Continuum, provided Continuum has
not modified or altered the Licensed Software. DST's sole
obligation and liability under the preceding sentence is to
use prompt, reasonable efforts to correct any such failure to
perform.
10.2 THE WARRANTY STATED IN SECTION 10.1 ABOVE IS A LIMITED
WARRANTY AND IT IS THE ONLY WARRANTY MADE BY DST. OTHERWISE,
THE SYSTEM IS LICENSED ON AN "AS IS" BASIS ONLY, WITHOUT ANY
EXPRESS OR IMPLIED WARRANTY OF ANY KIND. ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
EXPRESSLY EXCLUDED.
10.3 EXCEPT FOR THE INDEMNITY PROVIDED BY SECTION 10.6 BELOW AND
EXCEPT FOR LIABILITY FOR PERSONAL INJURY OR DEATH ARISING FROM
ACTS OR OMISSIONS OF DST, ITS AGENTS OR EMPLOYEES,, DST'S
LIABILITY FOR ANY AND ALL LOSSES INCURRED BY CONTINUUM OR ANY
SUB-LICENSEE RESULTING FROM ANY CAUSE WHATSOEVER SHALL IN NO
EVENT EXCEED THE AMOUNT OF ROYALTIES PREVIOUSLY PAID BY
CONTINUUM TO DST UNDER THIS AGREEMENT. EXCEPT TO THE EXTENT
OTHERWISE PROVIDED BY SECTION 10.6 BELOW, IN NO EVENT SHALL
DST HAVE ANY LIABILITY FOR LOSS OF PROFITS, CONSEQUENTIAL,
INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES.
10.4 DST SHALL NOT BE RESPONSIBLE FOR ANY ERRORS OR DEFECTS IN ANY
LICENSED SOFTWARE WHICH HAS BEEN ENHANCED, MODIFIED, UPDATED,
ALTERED OR CHANGED IN ANY WAY BY OR ON BEHALF OF CONTINUUM OR
ANY END USER IF SUCH ERRORS OR DEFECTS RESULT FROM SUCH
ENHANCEMENT, MODIFICATION, UPDATE, ALTERATION, OR CHANGE.
10.5 DST SHALL NOT BE RESPONSIBLE FOR ANY WARRANTY THAT CONTINUUM
OR ANY OF CONTINUUM'S EMPLOYEES OR AGENTS MAKES CONCERNING THE
SYSTEM WHICH GOES BEYOND THE WARRANTIES MADE BY DST PURSUANT
TO SECTION 10.1, AND CONTINUUM HEREBY INDEMNIFIES DST FROM AND
AGAINST ANY CLAIMS OR LIABILITIES ASSERTED BY THIRD PARTIES
ARISING FROM ANY SUCH WARRANTY MADE BY CONTINUUM OR ANY
CONTINUUM EMPLOYEE OR AGENT.
10.6 DST will indemnify and hold Continuum and its Affiliates
harmless against, and DST will at its own expense defend any
action brought against any of them or claims asserted by End
Users against any of them to the extent such action or claim
is based upon any claim that any aspect of the System used
within the scope of this Agreement infringes any trademark,
patent, copyright, licenses or trade secrets; provided, that
DST is promptly notified in writing of any such claim; and
provided, further that DST shall have the exclusive right to
control such defense. In no event shall Continuum or any of
its Affiliates settle any such claim, lawsuit or proceeding
without DST's prior written approval. In the event of any such
claim, litigation or threat thereof, DST shall promptly notify
Continuum and DST may, in its sole and absolute discretion,
either:
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(a) Procure for Continuum, its Affiliates
and their sublicensees a right to continue to use
the System; or
(b) Replace or modify the System so as to
be non-infringing and provide equivalent
functionality; or
(c) (i) If such claim, litigation or threat
alleges infringement worldwide, terminate this
Agreement, require Continuum to terminate all
sublicenses granted hereunder, and refund to
Continuum the Royalties paid to DST by Continuum less
a reasonable amount attributable to Continuum's and
its sublicensee's use of the System prior to
termination based on a ten (10) year amortization
beginning on the date hereof as respects Continuum or
on the date of the sublicense as respects any
Continuum sublicensee; or
(ii) If such claim, litigation or
threat alleges infringement only in a specific
geographic region or regions, terminate this
Agreement as respects such region, require Continuum
to terminate all sublicenses granted hereunder in or
which are used in such region or regions, and refund
to Continuum [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT].
The foregoing states the entire liability and obligations of
DST with respect to infringement of any copyrights, patents,
licenses, or trade secrets by the System or any parts thereof.
11. NON-COMPETITION
11.1 During the term of this Agreement until such time as DST has
revoked Continuum's exclusivity pursuant to Section 2.3,
Continuum shall not act as a distributor or licensing
representative for any third party's software products which
may reasonably be considered to compete with the System
("Competing Products"). If DST revokes Continuum's exclusivity
pursuant to Section 2.3 only as to a specific geographic area
or areas, Continuum shall continue to be restricted from
acting as a distributor or licensing representative for
Competing Products in all areas where exclusivity has not been
revoked by DST.
If during the term of this Agreement Continuum were to develop
and market its own software product which may reasonably be
considered to compete with the System, the exclusivity of the
license granted to Continuum pursuant to Section 2.1 hereof
would terminate and thereafter Continuum's license would be
non-exclusive; provided, however, that the provisions of this
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<PAGE>
paragraph shall not apply (a) to Continuum's fulfilling its
existing commitments to provide its Business Process
Management Software or Continuum Workstation Platform Software
to those companies listed on Schedule I attached hereto, or
(b) marketing the Continuum IS/2 Product.
12. AUDIT RIGHTS
12.1 Continuum shall keep full, accurate and complete records and
accounts of all matters relating to the sublicensing of the
System (including the location of all copies of the Licensed
Software). DST or its authorized representatives shall have
the right to inspect and examine such records and accounts
annually upon reasonable notice to Continuum for the purpose
of verifying the correctness of royalties paid to DST and for
the purpose of any other matters arising out of this
Agreement. If non-DST personnel conduct the audit, they will
execute appropriate confidentiality and non-disclosure
agreements. The cost of such audit shall be borne by DST. If
there is a deficiency in payments to DST, then Continuum shall
promptly pay the amount of such deficiency to DST.
12.2 DST shall keep full, accurate and complete records and
accounts of all matters relating to licenses entered by it
which are subject to the payment of commissions, fees or
royalties by DST to Continuum hereunder. Continuum or its
authorized representatives shall have the right to inspect and
examine such records and accounts annually upon reasonable
notice to DST for the purpose of verifying the correctness of
amounts paid to Continuum and for the purpose of any other
matters arising out of this Agreement. If non-Continuum
personnel conduct the audit, they will execute appropriate
confidentiality and non-disclosure agreements. The cost of
such audit shall be borne by Continuum. If there is a
deficiency in payments to Continuum, then DST shall promptly
pay the amount of such deficiency to Continuum.
13. TERM AND TERMINATION
13.1 Unless terminated as provided in Sections 13.2 and 13.3 below
or by mutual written consent of the parties, this Agreement
shall continue in effect for an initial term expiring six
years after the date hereof and thereafter shall be
automatically renewed for successive one year terms unless
terminated by either party by written notice to the other at
least 90 days prior to the expiration of the initial term or
any renewal term hereof.
13.2 Either party may terminate this Agreement with immediate
effect by written notice to the other party if the other party
is in material breach of this Agreement and fails to cure such
breach within sixty (60) days of written notice of such
breach, unless such breach is incurable, in which event the
non-breaching party may immediately terminate this Agreement.
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<PAGE>
13.3 Either party may terminate this Agreement with immediate
effect by written notice to the other party in the event that:
(i) the other party shall commence a voluntary proceeding
seeking liquidation, reorganization or other relief
with respect to its debts under any bankruptcy,
insolvency or similar law for the relief of debtors now
or hereafter in effect, or seeking appointment of a
trustee, receiver, liquidator or other similar official
for it or any of its property, or shall consent to have
any such relief, or shall agree on a moratorium with
its creditors, or shall fail generally to pay its debts
as they become due, or shall take any action in
furtherance of any of the foregoing;
(ii) an involuntary case or other proceeding shall be
commenced against the other party seeking liquidation,
reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator or other
similar official over it or any of its property and
such involuntary case or other proceeding shall remain
undismissed for a period of sixty (60) days;
(iii) an order for relief shall be entered against the other
party under any bankruptcy or similar law now or
hereafter in effect;
(iv) the other party is unable, or admits in writing that it
is unable, to pay its debts as they mature;
(v) the other party shall be dissolved or its assets
liquidated;
(vi) any assignment or assumption of the other party's
rights and obligations under this Agreement other than
as permitted by Section 16.2 shall occur by act of the
other party or by operation of law (other than
reincorporation) or by act of any governmental entity
or agency in the Continuum Marketing Area (provided if
the assignment or assumption is the result of operation
of law or act of a governmental entity or agency, the
termination shall be effective only as respects the
geographic area affected); or
(vii) it becomes unlawful under the laws of any governmental
entity or agency for the other party to perform its
obligations hereunder or any enactment, modification or
change in the interpretation of the laws of any
governmental entity or agency in the Continuum
Marketing Area subsequent to the date first above
written interferes with or prohibits the full and
faithful performance by the other party of its
obligations hereunder, in which event the termination
shall apply only to the geographic area affected.
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<PAGE>
13.4 Upon the expiration or termination of this Agreement pursuant
to the terms hereof, Continuum shall:
(i) cease immediately use of the System for Continuum's
purposes and Continuum's granting of sublicenses of
the System except to the extent necessary to fulfill
obligations of Continuum (not assumed by DST pursuant
to Section 13.5 hereof) under then existing written
agreements;
(ii) discontinue immediately making any statements or
taking any actions that might cause third parties to
infer that any business relationship continues to
exist between the parties hereto and, where necessary
or advisable, inform third parties that Continuum no
longer has a business relationship with DST and is no
longer authorized to use the System or to sublicense
the right to use the System in the Continuum
Marketing Area.
(iii) within twenty calendar days after the expiration or
termination of this Agreement Continuum shall (a)
delete all copies of the Licensed Software from all
hardware and magnetic media in the possession of
Continuum and shall certify to DST in writing that such
deletion has taken place, and (b) shall return to DST
all Documentation in the possession of Continuum.
Notwithstanding the foregoing, Continuum shall be
entitled to retain a copy of the Licensed Software and
Documentation if necessary to fulfill obligations (not
assumed by DST pursuant to Section 13.5 hereof) to End
Users under the then current term of then existing
agreements, in which event Continuum shall delete
copies of the Licensed Software and return
Documentation to DST as provided above within twenty
(20) days after such obligations to End Users have been
fulfilled.
13.5 Upon the expiration or termination of this Agreement pursuant
to the terms hereof Continuum shall assign to DST at DST's
request all of Continuum' rights in all sublicenses granted
pursuant to this Agreement, provided that DST agrees to assume
all of Continuum's obligations under such sublicenses and to
indemnify Continuum for any breaches of such obligations by
DST after the effective date of such assignment. DST agrees
that, upon termination or expiration of this Agreement it will
offer enhancement and support services to all Continuum
sublicensees under the Agreement to the extent that, on the
standard terms and conditions as, DST offers such services to
DST's end user licensees of the System.
13.6 Notwithstanding the provisions of Section 13.4 and the first
sentence of Section 13.5, if this Agreement is terminated
pursuant to Section 13.1 and if DST and Continuum are unable
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<PAGE>
to agree upon the terms and conditions of a renewal or
extension of or substitution for this Agreement and if
Continuum is then in full compliance with the terms and
conditions of this Agreement and requests by written notice to
DST at least thirty (30) days prior to expiration or
termination of this Agreement that this Agreement be extended
perpetually (the "Extension"), then this Agreement shall be
extended with the following modifications and amendments:
(a) The license granted pursuant to Section 2.1 shall no
longer be exclusive;
(b) Continuum shall no longer have the minimum requirements
of Sections 2.2 and 2.3;
(c) Sections 2.5, 2.6, 7.2, 7.3, 8.2, 8.3, 11.1, 12.2 and
16.11 shall be deleted; and
(d) DST shall not be required to provide materials pursuant
to Section 6.7, but any materials voluntarily provided
by DST shall be subject to the second sentence of
Section 6.7.
Upon termination of this Agreement during the Extension, all of the
provisions of Section 13 except this Section 13.6 shall apply.
14. GOVERNING LAW
14.1 This Agreement shall be exclusively governed and interpreted
in accordance with the laws of the State of Missouri,
excluding any conflict of law rules requiring the application
of the laws of any other jurisdiction.
15. DISPUTE RESOLUTION
15.1 Any dispute, controversy or claim arising out of or relating
to this Agreement or a breach hereof shall be finally settled
by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association.
15.2 Unless otherwise agreed by the parties hereto, the arbitral
panel shall consist of three arbitrators, one to be appointed
by each party hereto and the third to be appointed by the two
arbitrators appointed by the parties hereto. In the event that
a party fails to appoint an arbitrator within fifteen calendar
days after any such dispute, controversy or claim has been
referred to arbitration hereunder, then, in such event, the
other party may request the American Arbitration Association
to appoint an arbitrator for the party failing to make such
appointment. In the event that the third arbitrator has not
been appointed within thirty calendar days after any such
dispute, controversy or claim has been referred to arbitration
hereunder, then, in such event, either party hereto may
request the American Arbitration Association to appoint such
third arbitrator.
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15.3 The arbitration proceedings shall be held in Kansas City,
Missouri. All parties hereto shall be entitled to
representation by counsel, to appear and present written and
oral evidence and argument and to cross-examine witnesses
presented by the other party. The arbitral award shall be in
writing and the arbitral panel shall provide written reasons
for its award. The award of the arbitral panel shall be final
and binding upon the parties hereto.
15.4 The provisions of this Article 15 shall survive and bind the
parties hereto, notwithstanding any expiration or termination
of this Agreement. The provisions of this Article 15 shall be
severable and binding on the parties hereto, notwithstanding
that any other provision of this Agreement may be held or
declared to be invalid, illegal or unenforceable.
15.5 Each party irrevocably and unconditionally consents to service
of process upon it in any proceeding brought pursuant to
Sections 9.3 or 15.1 hereof by the mailing of a copy of any
notice or pleadings by registered or certified mail, postage
prepaid, return receipt requested, to it at its address
specified in Section 16.1 hereof. The foregoing shall not
limit the right of each party to serve process in any other
manner permitted by applicable law and shall not limit the
ability of DST to bring any such proceeding or to obtain
execution of any judgment or arbitration award rendered in any
such proceeding in any jurisdiction in which Continuum or any
of its property or assets may be found.
15.6 Continuum specifically waives any claim of forum non
conveniens and specifically consents to jurisdiction and venue
in any federal district court located in Missouri, United
States of America and in any state court of Missouri, United
States of America, for any action or proceeding instituted
pursuant to Section 9.3 hereof.
16. MISCELLANEOUS
16.1 All notices and other communications between the parties
hereto which may be required or permitted under this Agreement
shall be in writing and shall be sent by registered or
certified mail, postage prepaid, return receipt requested, to
the parties at the addresses set forth below or to such other
address as the party to receive such communication has last
designated by notice sent to the other party in accordance
with the foregoing:
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If to DST, to
DST Systems, Inc.
1055 Broadway, 9th Floor
Kansas City, Missouri 64105
Attn: President
with a copy to:
General Counsel
1055 Broadway, 9th Fl.
Kansas City, MO 64105
If to Continuum, to:
The Continuum Company, Inc.
9500 Arboretum Blvd.
Austin, Texas 78759
Attn: President
with a copy to:
General Counsel
9500 Arboretum Blvd.
Austin, Texas 78759
16.2 (a) The parties acknowledge that This Agreement pertains to
technology and the rights granted by DST are personal to
Continuum. This Agreement or any interest herein may not be
assigned by Continuum in whole or in part without the prior
written consent of DST. Continuum shall have the right upon
written notice from time to time, to grant to any of its
Affiliates designated in such notice the right to exercise
any of Continuum's rights under Section 2.1 provided (a) the
source code for the Licensed Software may not be provided to
such Affiliate except to the extent necessary for the
Affiliate to provide maintenance to End Users, from regional
maintenance locations approved in writing by DST (which
approval will not be unreasonably withheld), (b) such
Affiliate shall be bound by and shall observe all of the
obligations of Continuum under this Agreement with respect
to any such sublicense, and (c) Continuum shall remain
responsible for all of its obligations hereunder with
respect to any such sublicenses and the conduct of any such
Affiliate with respect to any such sublicenses.
(b) This Agreement may not be assigned by DST without the prior
written consent of Continuum, which consent shall not be
unreasonably withheld; provided, that DST may assign this
Agreement to an Affiliate or in connection with a merger of
DST or a sale of substantially all of the assets of DST.
(c) Any assignment in violation of this Section 16.2 shall be
void.
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16.3 The failure or delay of either party hereto to require
performance by the other party hereto shall not affect the
rights of such party to require performance and to enforce
its rights with respect to such provision unless and until
such performance has been waived in writing by such party.
Any waiver of a failure or delay in performance hereunder
shall be effective only in accordance with its terms and may
be restricted or conditioned in any way. No waiver of any
failure or delay in performance hereunder shall constitute
waiver of a continuance or reoccurrence of such failure or
delay or of any other failure or delay, except as provided
in such waiver. The rights granted to each party hereunder
and any rights available to it at law or in equity shall be
cumulative and may be exercised in whole or in part from
time to time.
16.4 Neither party shall be in default by reason of any failure
in performance of this Agreement in accordance with its
terms (other than a required payment of money) if such a
failure arises out of causes beyond the control and without
the fault or negligence of such party. Such causes may
include, but are not restricted to, acts of God or of a
public enemy, acts of a government, fires, floods,
epidemics, quarantine restrictions, strikes, freight
embargoes and unusually severe weather, but in every case
the failure to perform must be beyond the control and
without fault or negligence by the party failing to perform.
16.5 The relationship between DST and Continuum shall be
construed solely as that of licensor and licensee. This
Agreement does not create a partnership, joint venture,
agency or similar type of relationship and this Agreement
shall not be construed as constituting either party as a
partner of the other or as creating any other form of legal
association that would impose liability upon one party for
the acts or omissions of the other. All rights not expressly
granted in this Agreement to Continuum are reserved to DST.
Continuum shall have no right, power or authority to
obligate DST in any way to any contract, term or condition
not set forth herein.
16.6 This Agreement, including any and all schedules referred to
herein and attached hereto, each of which is incorporated
herein by reference for all purposes as if fully and
expressly set forth herein, constitutes the entire
understanding and agreement between the parties hereto with
respect to the subject matter hereof. There are no
representations, agreements, arrangements or understandings,
oral or written between or among the parties hereto relating
to the subject matter of this Agreement which are not fully
expressed herein. [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT].
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16.7 Subject to Section 16.2 hereof, this Agreement shall be
binding upon and inure to the benefit of the parties hereto
and their respective successors in interest and permitted
assigns.
16.8 This Agreement cannot be modified or amended except by a
written agreement signed by each party hereto.
16.9 This Agreement may be executed in two counterparts and each
counterpart shall constitute an original of the Agreement
but both such counterparts shall together constitute one and
the same agreement.
16.10 If any provision of this Agreement is held invalid, illegal,
or unenforceable by a court or governmental agency in any
jurisdiction, the validity, legality, and enforceability of
the remaining provisions of this Agreement shall, with
respect to such jurisdiction, be unimpaired by such holding
and the invalid, illegal, or unenforceable provision shall
be replaced by a mutually acceptable provision as respects
such jurisdiction, which being valid, legal and enforceable,
comes closest to the intention of the parties underlying
such invalid, illegal, or unenforceable provision. If,
however, any of Sections 2.2, 2.3, 2.4, 3.1, 3.2, 3.3, 3.4,
9.1, 9.3, 10.1, 10.2, 10.3, 10.4, 13.4, 13.5, or 16.2 are
held invalid, illegal, or unenforceable in any jurisdiction
(and the parties do not promptly agree on a replacement
provision), DST may, upon thirty (30) days written notice to
Continuum, terminate this Agreement as respects such
jurisdiction.
16.11 If Continuum arranges for the sale of any equipment by or
through DST to an End User which is sublicensed to use the
System under this Agreement, DST shall pay to Continuum a
commission equal to [INFORMATION OMITTED - CONFIDENTIAL
TREATMENT].
16.12 [INFORMATION OMITTED - CONFIDENTIAL TREATMENT].
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
DST SYSTEMS, INC.
By: JAMES HORAN
Name: James Horan
Title: CIO
THE CONTINUUM COMPANY, INC.
By: W. MICHAEL LONG
Name: W. Michael Long
Title: Chief Executive Officer
B-20
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedule A-1 Health and/or Accident Insurance Companies
Schedule A-2 Licensed Software
Schedule B Requirements for Exclusivity
Schedule C Retained Marketing Rights; Distributors
Schedule D Required Sublicense Terms
Schedule E Recommended Sublicense Prices
Schedule F Royalties
Schedule G Enhancement and Support Services
Schedule H Recommended Fees for Enhancement and Support Services
Exhibit X Description of Level 1, Level 2, and Level 3 Support
Exhibit Y Third Party Confidentiality Agreement
Exhibit Z Master Escrow Agreement
B-21
<PAGE>
SCHEDULE A-1
CONTINUUM HEALTH CLIENTS
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-22
<PAGE>
SCHEDULE A-2
LICENSED SOFTWARE
The DST Automated Work Distributor(TM)(AWD(R)) System, which includes
the following components:
AWD/Client-Server (platform Independent)
- Image Inclusive
- Image Exclusive
- Image View Only
AWD/FAX
AWD/MIS
AWD/PRINT
AWD/SCAN
- Low
- Mid
- High
AWD/VIEW
AWD/LINK
CSW
Encorr
All future releases of AWD as identified in the published product availability
will also be included in the Licensed software and the software will be
available on any Platform that DST has published as supporting. Any additional
components provided to Continuum not in the published product plan will be
subject to agreement between DST and Continuum.
The Licensed Software shall also include enhancements and new versions of the
components listed above which may be delivered from time to time by DST to
Continuum.
B-23
<PAGE>
SCHEDULE B
REQUIREMENTS FOR EXCLUSIVITY
Continuum is required to execute sublicenses for the System (and pay
the required royalty to DST) with at least twenty (20) End Users, with an
aggregate of at least two thousand (2,000) work stations installed or for which
license revenue has been paid, prior to June 30, 1995, in order to retain
Continuum's exclusive right to market and sublicense the System to End Users
during the twelve (12) month period immediately following June 30, 1995.
Installations of AWD at [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] will
count in the number of End Users and work stations for the period ending June
30, 1995. For the twelve (12) months commencing July 1, 1995, and for each
twelve (12) month period thereafter (the "Measuring Periods"), Continuum must
execute sublicenses for the System (and pay the required royalty to DST) with at
least [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] new End Users, with an
aggregate of at least the number of additional workstations installed, or for
which license revenue has been paid, indicated below, in order to retain its
exclusive right to market and sublicense the System to End Users during the
twelve (12) month period immediately following each such Measuring Period:
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
In addition to the requirements in the preceding paragraph, the
sublicenses of the System executed by Continuum with End Users during the period
through June 30, 1995 must be geographically located as follows: At least
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT] sublicenses in North America; at
least [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] sublicenses in Europe; and
at least [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] sublicenses in other
countries. During Measuring Periods after June 30, 1995, of the [INFORMATION
OMITTED - CONFIDENTIAL TREATMENT] new End Users, at least [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT] sublicenses must be in North America; at least
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT] sublicenses in Europe; at least
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT] sublicenses in other countries;
and the remaining [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] sublicenses may
be in any country.
B-24
<PAGE>
SCHEDULE C
COMPANIES TO WHICH
MARKETING RIGHTS ARE RETAINED
A. NORTH AMERICA, CANADA AND SOUTH AFRICA
1. DST shall retain exclusive marketing rights to the following companies
throughout the term of this Agreement:
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
2. If either DST licenses or Continuum sublicenses the System to any of
the following companies throughout the term of this Agreement,
Continuum will receive [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
and DST will receive [INFORMATION OMITTED - CONFIDENTIAL TREATMENT] of
all System license fees and net margins on hardware received from such
companies during the term of this Agreement:
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B. EUROPE
1. DST shall retain exclusive marketing rights to the following companies
throughout the term of this Agreement:
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
2. DST shall retain exclusive marketing rights to the Companies listed
below in this Section B.2; provided, however, that DST's exclusive
marketing rights shall end on May 1, 1994 after which date either DST
or Continuum may market the System to such Companies; provided,
further, that if DST enters a license agreement for the System with any
such companies prior to May 1, 1994, DST shall pay Continuum a
commission as follows:
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
After May 1, 1994, DST will pay a commission of [INFORMATION OMITTED -
CONFIDENTIAL TREATMENT].
The Companies included under the terms of this Section B.2. are as
follows:
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-25
<PAGE>
CURRENT DISTRIBUTORS
1. [INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-26
<PAGE>
SCHEDULE D
REQUIRED SUBLICENSE TERMS
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-27
<PAGE>
SCHEDULE D-X
NONDISCLOSURE AGREEMENT
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-28
<PAGE>
SCHEDULE E
RECOMMENDED SUBLICENSE PRICES
See Attached Schedule.
The prices set forth in the attached Schedule may be modified for specific
geographic regions by written agreement of DST and Continuum executed by an
authorized person identified in Section 16.6.
B-29
<PAGE>
SCHEDULE E - CONTINUED
DST SYSTEMS, INC.
U.S. SOFTWARE PRICE SCHEDULE
(EFFECTIVE FEBRUARY 19, 1995)
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-30
<PAGE>
SCHEDULE F-1
CONTINUUM USE ROYALTIES
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-31
<PAGE>
SCHEDULE F-2
SUBLICENSE ROYALTIES
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-32
<PAGE>
SCHEDULE G-1
ENHANCEMENT AND SUPPORT SERVICES
Services to users included in the Enhancement and Support Agreement to be
provided by Continuum.
- Telephone hotline support to receive and log problems.
- All enhancements updates generally made available by DST under
its annual enhancement and support services program for the
applicable licensed products.
- Permanent program fixes as applicable.
- System and User Documentation update service for the original
set of manuals.
These services should generally be provided as set forth in the Automated Work
Distributor (AWD) Support Guide, Schedule G-2.
B-33
<PAGE>
SCHEDULE G-2
AUTOMATED WORK DISTRIBUTOR (AWD)
SUPPORT CENTER GUIDE
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-34
<PAGE>
SCHEDULE H
RECOMMENDED FEES FOR ENHANCEMENT AND SUPPORT SERVICES
The recommended fee for the provision of enhancement and support
services to a sublicensee is an annual fee of 18% of the aggregate of the then
current license fees for the System set forth on Schedule E, as revised from
time to time pursuant to the Agreement (taking into account the number of the
sublicensee's workstations using the System).
Such annual fee shall be payable annually, in advance. In the event a
sublicensee adds additional workstations using the System, the recommended fee
for enhancement and support services shall be increased accordingly.
The recommended fee may be increased by DST upon written notice to
Continuum; provided that such increase may not be more often than once each
twelve (12) months and the increase shall not be more than [INFORMATION OMITTED
- - CONFIDENTIAL TREATMENT].
B-35
<PAGE>
SCHEDULE I
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-36
<PAGE>
EXHIBIT X
DESCRIPTION OF LEVEL 1, LEVEL 2 AND LEVEL 3 SUPPORT
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-37
<PAGE>
EXHIBIT Y
FORM 1 - POTENTIAL SUBLICENSEES
CONFIDENTIALITY AGREEMENT
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-38
<PAGE>
EXHIBIT Y
FORM 2 - CONSULTANTS AND OTHER THIRD PARTIES
CONFIDENTIALITY AGREEMENT
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-39
<PAGE>
EXHIBIT Z
MASTER ESCROW AGREEMENT
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
[INFORMATION OMITTED - CONFIDENTIAL TREATMENT]
B-40
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 25,016,000
<SECURITIES> 0
<RECEIVABLES> 98,384,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 140,063,000
<PP&E> 80,965,000
<DEPRECIATION> 51,082,000
<TOTAL-ASSETS> 215,570,000
<CURRENT-LIABILITIES> 77,150,000
<BONDS> 0
<COMMON> 1,926,000
0
0
<OTHER-SE> 97,754,000
<TOTAL-LIABILITY-AND-EQUITY> 215,570,000
<SALES> 193,988,000
<TOTAL-REVENUES> 194,531,000
<CGS> 0
<TOTAL-COSTS> 169,799,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,259,000
<INCOME-PRETAX> 23,473,000
<INCOME-TAX> 7,043,000
<INCOME-CONTINUING> 16,430,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,430,000
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
</TABLE>
