Outsourcing Services Agreement

EXECUTION COPY


CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED. THE FOLLOWING MARK "**" INDICATES THE APPLICABLE PLACES IN THIS DOCUMENT WHERE CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


OUTSOURCING SERVICES AGREEMENT


THIS OUTSOURCING SERVICES AGREEMENT is made as of July 1, 2000 by and between Information Resources, Inc., a Delaware corporation ("IRI"), and Mosaic InfoForce, L.P., a limited partnership organized under the laws of the State of Delaware ("NewCo").


WITNESSETH:


WHEREAS, IRI conducts InfoScan Causal Collection Services, InfoForce Recurring Audit Collection Services and InfoForce Custom Audit Collection Services (each as defined below) related to its business of providing information and value added insights related to consumer purchasing behavior and attitudes through a combination of data, software and analytical processes, to client companies that market and sell to consumers and to related service providers;


WHEREAS, the Board of Directors of IRI has determined that it is in the best interest of IRI and its stockholders to discontinue conducting such services and to enter into a joint venture with Mosaic Group Inc., a corporation organized under the laws of the Province of Ontario ("MGI"), through NewCo, pursuant to which NewCo will provide such services to IRI on the terms and conditions set forth in this Agreement; and


WHEREAS, this Agreement is entered into pursuant to the Co-operation Agreement of even date herewith between MGI and IRI (the "Co-operation Agreement");


NOW, THEREFORE, in consideration of the mutual covenants and agreements made herein, the parties hereto agree as follows:


ARTICLE I
DEFINITIONS


Section 1.01. Definitions. As used in this Agreement, the following terms will have the meanings set forth below, applicable both to the singular and the plural forms of the terms described.


"AAA" has the meaning ascribed thereto in Section 7.02.


"Accounting Referee" has the meaning ascribed thereto in Section 2.09.


"Actual Cost of Services" has the meaning ascribed thereto in Section 3.04.


2


"Additional Cost Reductions" has the meaning ascribed thereto in Section 2.09


"Additional Initial Term Services" has the meaning ascribed thereto in Section 2.04.


"Additional Subsequent Year Services" has the meaning ascribed thereto in Section 2.08.


"Additional Volume Initial Term Services" has the meaning ascribed thereto in Section 2.03.


"Additional Volume Subsequent Year Services" has the meaning ascribed thereto in Section 2.07.


"Affiliate" of any Person means any Person directly or indirectly controlling, controlled by, or under common control with such other Person. The term "control" means the ownership of more than fifty percent (50%) of the outstanding equity securities or equivalent interests of any Person.


"Agreement" means this Outsourcing Services Agreement, as amended and supplemented from time to time in accordance with its terms.


"Allocable Cost Certificate" has the meaning ascribed thereto in Section 2.06.


"Allocable Costs" means Central Office Costs, Executive Costs, Field Management Costs and Other Field Expenses.


"Alternative Remedies" has the meaning ascribed thereto in Section 7.02.


"Amended and Restated Limited Partnership Agreement" means the amended and restated limited partnership agreement by and among Mosaic InfoForce GP Holding Co, Inc., Mosaic InfoForce LP Holding Co, Inc. and IRI.


"Applicable Subsequent Year Service Charges" has the meaning ascribed thereto in Section 2.06.


"Audited Financial Statements" has the meaning ascribed thereto in Section 3.04.


"Budget" has the meaning ascribed thereto in Section 2.01.


"Budgeted Cost of Services" has the meaning ascribed thereto in Section 3.04.


"Business Plan Acquisitions" has the meaning ascribed thereto in Section 2.06.


2 3
"Call Right" has the meaning ascribed thereto in the Amended and Restated Limited Partnership Agreement.


"Causal Data Cure Period" has the meaning ascribed thereto in Section 7.02.


"Causal Data Defective Service" has the meaning ascribed thereto in Section 7.02.


"Central Office Costs" has the meaning ascribed thereto in the Budget.


"Confidential Information" has the meaning ascribed thereto in Section 10.04.


"Cost Reduction Certificate" has the meaning ascribed thereto in Section 2.09.


"Cost Reduction Date" has the meaning ascribed thereto in Section 2.09.


"Cost Reduction Period" has the meaning ascribed thereto in Section 2.09.


"Cost Reductions" has the meaning ascribed thereto in Section 2.09.


"Cure Periods" has the meaning ascribed thereto in Section 7.02.


"Custom Audit Cure Period" has the meaning ascribed thereto in Section 7.02.


"Custom Audit Defective Service" has the meaning ascribed thereto in Section 7.02.


"Data Challenge" means a question regarding the validity of data collected by NewCo.


"Data Challenge Report" has the meaning ascribed thereto in Section 2.12.


"Defective Service" has the meaning ascribed thereto in Section 7.02.


"Delayed Cost Reduction Certificate" has the meaning ascribed thereto in Section 2.09.


"Delayed Payment Period" has the meaning ascribed thereto in Section 3.03.


"Delivery Date" has the meaning ascribed thereto in Section 2.06.


"Designated Employee" means the Designated IRI Employees and the Designated NewCo Employees.


"Designated IRI Employee" means David Rosenblatt, Executive Vice President of IRI, or if Mr. Rosenblatt is no longer employed by IRI in such capacity, his successor.


3 4


"Designated NewCo Employee" means Michael Britton, Executive Vice President of Operations of NewCo, or if Mr. Britton is no longer employed by NewCo in such capacity, his successor.


"Disclosing Party" has the meaning ascribed thereto in Section 10.04.


"E&Y" has the meaning ascribed thereto in Section 3.04.


"EBIT" means earnings before interest and taxes.


"Event of Force Majeure" has the meaning ascribed thereto in Section 2.11.


"Executive Costs" has the meaning ascribed thereto in the Budget.


"Expedited Procedures" has the meaning ascribed thereto in Section 7.02.


"Field Management Costs" has the meaning ascribed thereto in the Budget.


"Financial Statements" has the meaning ascribed thereto in Section 3.04.


"Following Twelve Month Period" has the meaning ascribed thereto in Section 2.06.


"Future IRI Relevant Technology" has the meaning ascribed thereto in Section 5.02.


"Future NewCo Relevant Technology" has the meaning ascribed thereto in Section 5.02.


"Group Hire Agreement" has the meaning ascribed thereto in the Co-operation Agreement.


"InfoForce Business" means that segment of IRI's business which consists of providing audit services to clients pursuant to contract-specific, fee-based arrangements with such clients and pursuant to which InfoForce Recurring Audit Collection Service and/or InfoForce Custom Audit Collection Service services are provided.


"InfoForce Custom Audit Collection Service" has the meaning ascribed thereto in the Budget.


"InfoForce Custom Audit Data" has the meaning ascribed thereto in the Budget.


"InfoForce Recurring Audit Collection Service" has the meaning ascribed thereto in the Budget.


"InfoForce Recurring Audit Data" has the meaning ascribed thereto in the Budget.


4 5


"InfoScan Causal Collection Service" has the meaning ascribed thereto in the Budget.


"InfoScan Causal Data" has the meaning ascribed thereto in the Budget.


"Initial Term" has the meaning ascribed thereto in Section 2.01.


"Initial Term Service Charges" has the meaning ascribed thereto in Section 3.01.


"Initial Term Services" has the meaning ascribed thereto in Section 2.01.


"Interim Period" has the meaning ascribed thereto in Section 3.04.


"Interim Period Variation Analysis" has the meaning ascribed thereto in Section 3.04.


"Interim Period Variation Certificate" has the meaning ascribed thereto in Section 3.04.


"Interim Unaudited Financial Statements" has the meaning ascribed thereto in Section 3.04.


"IRI Data" has the meaning ascribed thereto in Section 2.13.


"IRI Indemnified Person" has the meaning ascribed thereto in Section 7.03.


"IRI's Relevant Technology" has the meaning ascribed thereto in Section 5.01.


"IRI Usage Agreement" has the meaning ascribed thereto in the Co-operation Agreement.


"JV" means the joint venture between MGI and IRI in the form of a limited partnership established under the laws of the State of Delaware and having the name "Mosaic InfoForce."


"Losses" has the meaning ascribed thereto in Section 7.02.


"More Favorable Services" has the meaning ascribed thereto in Section 2.06.


"NewCo's Relevant Technology" has the meaning ascribed thereto in Section 5.01.


"Other Field Expenses" has the meaning ascribed thereto in the Budget.


"Operative Documents" has the meaning ascribed thereto in the U.S. Co-operation Agreement.


"Percentage Interest" has the meaning ascribed thereto in the Amended and Restated Limited Partnership Agreement.


5 6


"Person" means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, government (and any department or agency thereof) or other entity.


"Prior Twelve Month Period" has the meaning ascribed thereto in Section 2.06.


"Receiving Party" has the meaning ascribed thereto in Section 10.04.


"Recipient Party" has the meaning ascribed thereto in Section 4.01.


"Recurring Audit Cure Period" has the meaning ascribed thereto in Section 7.02.


"Recurring Audit Defective Service" has the meaning ascribed thereto in Section 7.02.


"Reinvestment Proposal" has the meaning ascribed thereto in Section 3.04.


"Relevant Technology" has the meaning ascribed thereto in Section 5.01


"Remaining Term" has the meaning ascribed thereto in Section 2.06.


"Requesting Party" has the meaning ascribed thereto in Section 4.01.


"Service Level Agreement" has the meaning ascribed thereto in Section 2.01.


"Services" has the meaning ascribed thereto in Section 2.06.


"Six Month Period" has the meaning ascribed thereto in Section 3.04.


"Six Month Period Variation Analysis" has the meaning ascribed thereto in Section 3.04.


"Six Month Period Variation Certificate" has the meaning ascribed thereto in Section 3.04.


"Stores" means the locations from which InfoScan Causal Data, InfoForce Recurring Audit Data and/or InfoForce Custom Audit Data is collected.


"Subsequent Year Requirements Proposal" has the meaning ascribed thereto in Section 2.06.


"Subsequent Year Requirements Proposals" has the meaning ascribed thereto in Section 2.06.


"Subsequent Year Service Charge" has the meaning ascribed thereto in Section 2.06.


6 7


"Subsequent Year Service Charges" has the meaning ascribed thereto in Section 2.06.


"Subsequent Year Service Level Agreement" has the meaning ascribed thereto in Section 2.06.


"Subsequent Year Service Level Agreements" has the meaning ascribed thereto in Section 2.06.


"Subsequent Year Services" has the meaning ascribed thereto in Section 2.06.


"Subsidiary" means, as to any Person, any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled directly or indirectly by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof.


"Term" has the meaning ascribed thereto in Section 9.01.


"Threshold Amount" has the meaning ascribed thereto in Section 7.02.


"Transition Services Agreement" has the meaning ascribed thereto in Section 2.09.


"Twelve Month Period" has the meaning ascribed thereto in Section 3.04.


"Twelve Month Period Variation Analysis" has the meaning ascribed thereto in Section 3.04.


"Twelve Month Period Variation Certificate" has the meaning ascribed thereto in Section 3.04.


"Variation Analysis" has the meaning ascribed thereto in Section 3.04.


"Variation Certificate" has the meaning ascribed thereto in Section 3.04.


"Year 2000 Audited Financial Statements" has the meaning ascribed thereto in Section 3.04.


"Year 2001 Audited Financial Statements" has the meaning ascribed thereto in Section 3.04.


Section 1.02. Internal References. Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement and references to the parties shall mean the parties to this Agreement.


7 8


ARTICLE II
PROVISION OF SERVICES


Section 2.01. Provision of Services During the Initial Term. On the terms and subject to the conditions set forth in this Agreement and in consideration of the Initial Term Service Charges (defined below), NewCo agrees to provide to IRI the services (the "Initial Term Services") described in the budget for NewCo for the period beginning July 1, 2000 and ending June 30, 2003 mutually agreed to by the parties hereto (the "Budget"), which Initial Term Services shall be provided from the date of this Agreement through and including December 31, 2001 (the "Initial Term"). Subject to the provisions of Section 2.02 below or unless otherwise specifically agreed by IRI and NewCo through their respective Designated Employees in accordance with the provisions of Article IV hereof, the Initial Term Services to be provided by NewCo hereunder shall be provided to IRI at the service levels set forth in Exhibit A hereto (the "Service Level Agreement") and in the volumes set forth in the Budget.


Section 2.02. Adjustment to Service Level Agreement. (a) On or before September 30, 2000, IRI shall deliver to NewCo its documented market-specific, historical service levels. Following receipt of IRI's documented market-specific, historical service levels the parties shall amend the Service Level Agreement to include market-specific service levels and NewCo shall thereafter provide the Initial Term Services to IRI at the service levels, including the market-specific service levels, included in such amended Service Level Agreement. During the period from October 1, 2000 through December 31, 2000, the parties shall review jointly (through their respective Designated Employees) the market-specific service levels included in the amended Service Level Agreement, based upon (a) IRI's documented market-specific, historical service levels during the period beginning June 28, 1999 and ending June 25, 2000 and (b) the collection methodology of NewCo during the period beginning October 1, 2000 and ending December 31, 2000. If the parties determine through such review that the underlying market-specific, historical service levels upon which the amended Service Level Agreement was based were lower than the market-specific service levels set forth in the amended Service Level Agreement, then the amended Service Level Agreement immediately (and no later than five (5) business days following determination of any such inaccuracy) shall be revised to reflect such lower service levels and NewCo shall thereafter provide the Initial Term Services to IRI at the new service levels in such revised Service Level Agreement. Any disagreement between the parties regarding this Section 2.02(a) shall be settled in accordance with Section 4.03 hereof.


(b) During the period from July 1, 2000 through December 31, 2000, the parties hereto shall review jointly (through their respective Designated Employees) the service levels set forth in the Service Level Agreement, based upon (a) IRI's documented historical service levels during the period beginning June 28, 1999 and ending June 25, 2000 and (b) the collection methodology of NewCo during the period beginning July 1, 2000 and ending December 31, 2000. If the parties determine through such review that the underlying historical service levels upon which the Service Level Agreement was based were lower than the service levels set forth in the Service Level Agreement, then the Service Level Agreement immediately (and no later than five (5) business days following determination of any such inaccuracy) shall be amended to reflect


8 9


such lower service levels and NewCo shall thereafter provide the Initial Term Services to IRI at the new services levels in such amended Service Level Agreement. Any disagreement between the parties regarding this Section 2.02(b) shall be settled in accordance with the provisions of Section 4.03 hereof.


Section 2.03. Increases in Volume of Services During Initial Term. In addition to the volume of Initial Term Services to be provided by NewCo to IRI pursuant to Section 2.01 hereof as set forth in the Budget, if requested by IRI pursuant to written notice to the Designated NewCo Employee of at least (a) four (4) weeks with regard to an increase of less than ten percent (10%), (b) eight (8) weeks with regard to an increase of ten percent (10%) or greater, up to and including twenty percent (20%) and (c) twelve (12) weeks with regard to an increase greater than twenty percent (20%), prior to the date on which IRI wishes to increase such volume, and to the extent that IRI and NewCo (through their respective Designated Employees) may mutually agree in writing, NewCo shall provide increased volumes of the Services to IRI during the Initial Term (the "Additional Volume Initial Term Services"). Subject to Section 2.02 above or unless otherwise specifically agreed to by IRI and NewCo in accordance with the provisions of Article IV hereof, any Additional Volume Initial Term Services shall be provided to IRI at the service levels set forth in the Service Level Agreement. The service charges for any such Additional Volume Initial Term Services shall be paid in accordance with the provisions of Section 3.04 hereof.


Section 2.04. Additional Services During Initial Term. In addition to the Initial Term Services and Additional Volume Initial Term Services, if any, to be provided by NewCo to IRI pursuant to Sections 2.01 and 2.03 hereof, if requested by IRI pursuant to written notice to the Designated NewCo Employee and to the extent that IRI and NewCo (through their respective Designated Employees in accordance with Article IV hereof) may mutually agree in writing, NewCo shall provide additional services (including Services not included in the Budget) to IRI during the Initial Term (the "Additional Initial Term Services"). The timing for the commencement of the provision by NewCo of any such Additional Initial Term Services, volume, scope and nature of any such Additional Initial Term Services, as well as the term, service charges, service levels and other terms and conditions applicable thereto, shall be commercially reasonable and mutually agreed in writing by IRI and NewCo (through their respective Designated Employees in accordance with Article IV hereof). The service charges for any such Additional Initial Term Services shall be paid in accordance with the provisions of Section 3.04 hereof.


Section 2.05. [**]


Section 2.06. Provisions of Services During the Remaining Term. (a) The remaining term of this Agreement shall begin on January 1, 2002 and shall end upon the expiration or earlier termination of this Agreement in accordance with Article IX hereof (the "Remaining Term").


9 10


(b) On or before October 31 (the "Delivery Date") of each year beginning October 31, 2001, IRI shall provide to NewCo, a subsequent year service requirements proposal (each a "Subsequent Year Requirements Proposal," and together with all such proposals delivered during the Remaining Term, the "Subsequent Year Requirements Proposals") and service level agreement (each a "Subsequent Year Service Level Agreement," and together with all such service level agreements delivered during the Remaining Term, the "Subsequent Year Service Level Agreements") for the twelve month period beginning the January 1 following the applicable Delivery Date. The services (including any Additional Volume Subsequent Year Services and Additional Subsequent Year Services (each as defined below)) rendered by NewCo to IRI during the Remaining Term are hereafter referred to as the "Subsequent Year Services" and, collectively with the Initial Term Services, the Additional Volume Initial Term Services and the Additional Initial Term Services, the "Services."


(c) Within thirty (30) days following receipt of the applicable proposed Subsequent Year Requirements Proposal and Subsequent Year Service Level Agreement from IRI, NewCo shall provide to IRI its proposed service charges for the Subsequent Year Services requested by IRI to be provided during the applicable twelve month period (the "Subsequent Year Service Charge," and together with all service charges during the Remaining Term, the "Subsequent Year Service Charges"). Upon receipt of such Subsequent Year Service Charge proposal from NewCo, NewCo and IRI shall promptly use their respective best efforts to negotiate (through their respective Designated Employees in accordance with Article IV hereof) the volume, scope and nature of such Subsequent Year Services, as well as the Subsequent Year Service Charges and other terms and conditions applicable to such Subsequent Year Services; provided, however, that if during the prior twelve-month period NewCo enters into an agreement (whether written or oral) to provide services to any customer, other than IRI, that provides for less than an [**] margin to NewCo after allocating Central Office Costs and Executive Costs pro-rata across all of the services provided by NewCo based on the revenues generated by such services (the "More Favorable Services"), the Subsequent Year Service Charges in effect during the year in which NewCo enters into such agreement to provide More Favorable Services (the "Applicable Subsequent Year Service Charges"), shall be promptly (but in no event later than thirty (30) days following the execution of such agreement to provide More Favorable Services) adjusted as necessary so that the Applicable Subsequent Year Service Charges are no less favorable to IRI than those associated with the More Favorable Services for the twelve-month period during which NewCo provides such More Favorable Services. Thereafter, such adjustment shall similarly be made to the Subsequent Year Service Charges for each Following Twelve Month Period (as hereinafter defined) for so long as NewCo continues to provide such More Favorable Services.


(d) In addition, in negotiating the Subsequent Year Service Charges, the parties agree to use their commercially reasonable best efforts to ensure that:


(i) NewCo maintains at least a [**] margin (which margin shall include IRI's InfoForce Business) on the Subsequent Year Services to be provided by NewCo during each of the twelve month periods following the Initial Term; provided, however, that if the Percentage


10 11


Interest in the JV held by IRI decreases from the Percentage Interest set forth on Exhibit A to the Amended and Restated Limited Partnership Agreement on the date hereof, such [**] margin shall be adjusted so that no more than an [**] margin is allocable to the Percentage Interests in the JV held by MGI;


(ii) Subsequent Year Service Charges are established on an activity-based, rather than a time and materials-based, model;


(iii) Except as provided in the second sentence of this Section 2.06(d)(iii) and Section 2.06(e), for each twelve month period during the Remaining Term (each a "Following Twelve Month Period"), NewCo's (A) Central Office Costs and Executive Costs are allocated pro rata across all services outlined in the business plan and/or budget for NewCo based on the revenues projected in such business plan and/or budget to be generated by NewCo from such services, and (B) NewCo's Field Management Costs and Other Field Expenses are allocated across the services projected to use the resources included in such Field Management Costs and/or Other Field Expenses as specifically outlined in the business plan and/or budget based on the revenues projected to be generated from such services in such business plan and/or budget, in each case including (1) revenues attributable to acquisitions completed in the immediately preceding twelve month period (the "Prior Twelve Month Period") and (2) revenues attributable to acquisitions included in the business plan and/or budget for the applicable Following Twelve Month Period; provided, however, that revenues attributable to such acquisitions shall not be included in the allocation until each such acquisition is consummated, at which time the parties agree to promptly (but in no event later than thirty (30) days after consummation of such acquisition) adjust the Subsequent Year Service Charges for the Following Twelve Month Period during which such acquisition was consummated to reflect a reallocation of Central Office Costs and Executive Costs and, if applicable, Field Management Costs and Other Field Expenses (on a pro rata basis, based on the number of calendar days remaining in the applicable Following Twelve Month Period beginning with the date following the of consummation of each such acquisition and ending on the last day of such Following Twelve Month Period). If the business plan and/or budget for the Prior Twelve Month Period included potential acquisitions (the "Business Plan Acquisitions") that were not completed during such Prior Twelve Month Period, the Subsequent Year Service Charges for the applicable Following Twelve Month Period shall reflect an allocation of costs established by multiplying NewCo's Central Office Costs and Executive Costs by two (2) and allocating this total amount, pro rata based on revenues generated or projected, as the case may be, across the greater of (A) the actual revenues generated by NewCo during the applicable Prior Twelve Month Period or (B) the revenues projected ...