Exhibit 10.7
Confidential Treatment has been granted with respect to portions of the
agreement indicated with an asterisk [*]. A complete copy of this agreement,
including the redacted terms, has been separately filed with the Securities and
Exchange Commission.
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement is between Trilogy Software, Inc. (TSI), a
Delaware corporation, and xxXxxxx.xxx, Inc. (PCO), a Delaware corporation,
effective July 1, 1998.
BACKGROUND
PCO is a subsidiary of TSI, and TSI has provided management services to PCO or
its predecessors. Because TSI's ownership of PCO may be reduced, the Parties
wish to state formally the terms on which certain management services will
continue to be rendered by TSI to PCO.
AGREEMENT
The Parties agree as follows:
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
Various terms used in this Agreement are defined in the Definitional Appendix;
the defined terms used in this Agreement begin with a capital letter. Various
interpretative matters for this Agreement are also set forth in the Definitional
Appendix. The Definitional Appendix is an integral part of this Agreement.
ARTICLE 2 - TERM
2.1 Stated Term. This Agreement commences on the Effective Date and will
continue in effect until 11:59 p.m. on June 30, 1999 unless terminated
earlier by one or both of the Parties in accordance with Article 13.
2.2 Renewal. The parties may consent to successive one-year renewal terms by
following this procedure: If PCO wishes to renew the term of this
Agreement, it shall Notify TSI of that intention by March 30, 1999 and
the same date of each subsequent year. If TSI wishes to concur with that
renewal, it shall Notify PCO of that concurrence by April 30 of that
year. If no Notice of intent to renew or no concurrence is given, this
Agreement will Expire when the then current term Expires.
2.3 Transition Assistance. For up to 180 days after Expiration, TSI shall
comply with PCO's reasonable requests for assistance in engaging or
training another Person or Persons to provide, and for records and other
information relating to, the Services rendered by TSI immediately
preceding that Expiration. PCO shall reimburse and pay TSI's Transition
Expenses in accordance with invoices submitted to PCO by TSI. Articles 8
and 18 shall apply in this situation as though this Agreement had not
Expired. TSI may cease providing transition assistance, immediately upon
Notice to PCO, if PCO has not paid the amount described in a Nonpayment
Notice by the tenth Business Day after the Nonpayment Notice was given.
If the records or other information provided by TSI are Confidential
Information, Article 10 shall also apply as though this Agreement had not
Expired.
ARTICLE 3 - SERVICES
3.1 Schedules. TSI shall render, and PCO shall pay for, the Mandatory
Services and, to the extent not discontinued in accordance with this
Agreement, the Optional Services during the effectiveness of this
Agreement. The Services are described on the Schedules, which are an
integral part of this Agreement. The Services described on Schedules I
through IV are Mandatory Services; the Services described on the other
Schedules are Optional Services. Neither party may unilaterally change
any Service or separate any one or more of the Tasks that constitute a
Service.
3.2 Standard of Care. TSI shall use the same care in rendering the Services
as it uses in rendering services to TSI itself and the other subsidiaries
of TSI. Further, TSI's care in rendering the Services shall be at least
equal to the care that it has used in providing each Service to PCO or
its predecessors before the Effective Date.
3.3 Manner and Place of Performance. TSI shall render each Service in
accordance with any terms (including any time period) described on the
corresponding Schedule or any applicable SLA, though TSI has full
discretion about how to render each Service as that Service is so
described. TSI is not obligated to render any Service or Task in the same
manner (such as using the same personnel or other assets of TSI) as it
previously rendered that Service or Task, whether before or after the
Effective Date. Each Service will be performed at TSI's offices or the
other place or places it was rendered most recently before the Effective
Date, except as described in the corresponding Schedule or Subcontracted
in accordance with this Agreement. PCO shall afford access to its
premises as necessary or reasonably appropriate to permit a Service or
Task to be rendered.
3.4 Recipients of Services. The Services shall be rendered solely to, or for
the direct benefit of, PCO. PCO may not assign, license, or otherwise
transfer or provide, whether for or without consideration, any right to
any Service, in whole or in party, to any
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Person. PCO may, however, provide any other Person (whether for or
without consideration) any product or information of PCO resulting or
derived from any Service or Task, to the extent not prohibited by Article
10.
3.5 Subcontracting Services. TSI has Subcontracted certain of the Services,
in whole or in part, before the Effective Date; the Schedules indicate
those Services that are Subcontracted and the corresponding
Subcontractors as of the Effective Date. PCO consents to that
Subcontracting and those Effective Date Service Subcontracts and
Subcontractors. TSI's subcontracting after the Effective Date, however,
is subject to these terms:
(a) TSI may, without any consent or approval of PCO,
(i) Subcontract any Service, in whole or in part, to any Person,
including any Affiliate of TSI,
(ii) amend any Service Subcontract, or
(iii) cease to Subcontract any Service, in whole or in part.
(b) PCO shall have no indemnification obligation under Section 14.4(b)
regarding any Service Subcontract, other than an Effective Date
Service Subcontract, entered into by TSI without PCO's Reasonable
Consent. Also, if TSI, without PCO's Reasonable Consent, enters into
any amendment to
(i) an Effective Date Service Subcontract, or
(ii) any other Service Subcontract to which PCO had given its
Reasonable Consent,
PCO shall be liable under Section 14.4(b) only for any Damages of
TSI or any of its Indemnified Agents that would have resulted
without that amendment; that is, PCO shall not be liable under
Section 14.4(b) for any increase in Damages that results from an
amendment of that kind.
TSI shall remain responsible for the rendering to PCO of any Service
that is Subcontracted, in whole or in part. Also, except as
described in Section 14.4(b), TSI shall be solely responsible for
its obligations to the Subcontractor (including any applicable
Subcontract Termination Penalty) under each Service Subcontract.
3.6 Information Regarding Services. Each Party shall make available to the
other Party any information required or reasonably requested by that
other Party regarding the performance of any Service and shall be
responsible for timely providing that information and for the accuracy
and completeness of that information. But a Party shall not be liable for
not providing any information that is subject to a confidentiality
obligation owed by it to a Person other than an Affiliate of it or the
other Party. A Party shall not be liable for any impairment of any
Service caused by its not receiving information, either timely or at all,
or by its receiving inaccurate or incomplete information from the other
Party that is required or reasonably requested regarding that Service.
3.7 Legal Services. The Service described in one of the Schedules as "legal
services" consists of TSI's making the Legal Staff available for
engagement by PCO for their legal matters. The engagement, services, or
withdrawal of any of the Legal Staff regarding a particular legal matter
for PCO, as well as certain of the Prices for those legal services, are
governed by and subject to the Legal Staff's professional or ethical
obligations.
3.8 Warranty Disclaimer. TSI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, REGARDING ANY SERVICE OR TASK OTHER THAN AS STATED IN THIS
AGREEMENT. TSI SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
REGARDING THE SERVICES.
ARTICLE 4 - SERVICE LEVEL
4.1 Continuation of Level. TSI shall provide substantially the same Level of
each Service, and each Task, as it provided to PCO before the Effective
Date, except as otherwise agreed in accordance with this Agreement.
4.2 The Level of any Service may be changed by the Parties' agreement, so long
as that agreement is in writing and includes a mutually acceptable
corresponding Price for the changed Level of Service. A change in the
Level of a Service shall be effective pursuant to such subsequent
agreement.
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ARTICLE 5 - DISCONTINUE OF OPTIONAL SERVICES
5.1 Procedure. Either Party may discontinue or terminate any Optional Service
by providing ninety (90) days prior written Notice
A Notice of discontinuance may refer to more than one Optional Service.
Only an entire Optional Service may be discontinued; none of the Tasks
that constitute an Optional Service may be separately discontinued
without the Parties' agreement (which may be stated in the corresponding
Schedule). Any Optional Service that is the subject of a Notice of
discontinuance shall continue to be rendered by TSI until the effective
date of the discontinuance, and PCO shall pay for that Optional Service
rendered until that date. A Party may not unilaterally rescind its Notice
of discontinuance.
5.2 Service Level and Price of Discontinued Services. Until the date of its
discontinuance, an Optional Service that is the subject of a Notice of
discontinuance shall be rendered at the same Level and for the same Price
as in effect immediately preceding the Notice of discontinuance.
5.3 Impossible Optional Services. If either Party reasonably determines that
the discontinuance of any Optional Service would make it functionally
impossible to continue any other Optional Service, in whole or in part,
that Party shall promptly Notify the other of that determination. Any
Optional Service that so becomes functionally impossible to render shall
be deemed discontinued effective upon the date of discontinuance of the
Optional Service or Optional Services that caused that impossibility.
5.4 Transition Assistance. For up to 180 days after the effective date of
discontinuance of an Optional Service, TSI shall comply with PCO's
reasonable requests for assistance in PCO's engaging or training another
Person or Persons to provide, and for records and other information
relating to, that discontinued Optional Service. If TSI discontinues that
Optional Service, it shall comply with those requests at its own expense.
If PCO discontinues that Optional Service, it shall pay for TSI's
compliance with those requests by
(a) reimbursing TSI all of its resulting reasonable out-of-pocket
expenses, and
(b) paying TSI for the resulting time or activities of TSI's personnel as
follows:
(i) if the activities of those personnel are or were part of a Use-
based Service, then at the Price then in effect, or most
recently paid (if that Optional Service has been discontinued),
for that Use-based Service, or
(ii) if the activities of those personnel are or were part of a
Fixed-price Service, then that portion of the Price then in
effect, or most recently paid (if that Optional Service was
discontinued), for that Fixed-price Service corresponding to
the transition activities' portion of all activities that
constituted that Fixed-price Service for the time covered by
that Price.
Invoicing and payment for transition assistance shall be in
accordance with Article 8. TSI may cease providing transition
assistance, immediately upon Notice to PCO, if PCO has not paid the
amount described in a Nonpayment Notice by the tenth Business Day
after the Nonpayment Notice was given.
5.5 Reinstatement of Discontinued Service. Neither Party may unilaterally
reinstate any Optional Service that has been discontinued under this
Agreement.
ARTICLE 6 - SERVICES OBTAINED FROM OTHERS
6.1 Mandatory Services. PCO may not perform itself or obtain from any Person
other than TSI or any Subcontractor any service or services to supplement
or substitute for all or any portion of a Mandatory Service, except as
permitted by the corresponding Schedule. This does not prohibit PCO (or
TSI), however from performing for itself or obtaining from any other
Person all or any portion of a Mandatory Service to the extent permitted
by Section 15.4. Notwithstanding the foregoing, PCO may obtain from any
Person other than TSI or any Subcontractor any service or services to
substitute for all of a Mandatory Service however PCO's obligation to pay
TSI for Service fees associated with such Mandatory Service shall not
terminate until expiration of the applicable term.
6.2 Upon Discontinuance. PCO need not obtain TSI's consent to or approval of
PCO's performing itself or obtaining from any other Person, upon and
after the discontinuance of any Optional Service, any service or services
that substitute for the Optional Service that has been discontinued.
6.3 Before Discontinuance. Before the discontinuance of any Optional Service:
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(a) PCO need not obtain TSI's consent to or approval of PCO's performing
itself or obtaining from any other Person any service or services to
supplement or substitute for all or any portion of
(i) a Fixed-price Service, so long as PCO continues to pay for the
Fixed-price Service in accordance with this Agreement,
including the corresponding Schedule,
(ii) a Use-based Service to the extent that the decrease in that
Service obtained from TSI in each month does not exceed 25% of
the average monthly invoiced amount for that Service for the
preceding three months for which TSI has submitted an invoice
for that Service (with the calculation of that average to
exclude any credit given to PCO related to any other Service
in any monthly invoice), or
(iii) any Optional Service to the extent permitted by Section 15.4.
(b) TSI's reasonable Consent shall be required for PCO's performing
itself or obtaining from any other Person any service or services to
supplement all or any portion of any Use-based Service in any
circumstances other than as described in Section 6.3(a)(ii).
ARTICLE 7 - PRICES
7.1 Cost Allocation. In determining Prices, TSI's cost allocations to PCO
shall be determined on a consistent basis with TSI's cost allocations to
TSI's other subsidiaries or Business Units.
7.2 Annual Pricing. The price payable by PCO for each Service shall be
established annually by this procedure:
(a) TSI shall submit to PCO by April 1 a Price Proposal for each Service
then in effect, except for any Significant Optional Service that
will be discontinued in accordance with a Notice of discontinuance.
TSI shall propose the Price for each Service assuming a continuation
of the Level of that Service, unless the Parties have agreed to, a
Level Change for that Service.
(b) PCO shall respond in writing to the Price Proposal for each Service
by May 1.
(c) To the extent that PCO does not accept or agree with a Price
Proposal, the Parties shall negotiate in good faith to reach
agreement on the Price for that Service by June 1. The Parties'
agreement by June 1 on the Price of any Use-based Service shall also
include an estimated annual amount for that Service.
(d) If by June 1 the Parties do not agree on the Price at which any
Optional Service shall continue to be rendered (without any change
in Level) and neither Party gives a Notice of discontinuance of that
Optional Service, the Price for that Optional Service shall continue
to be the Price then in effect.
7.3 Disagreement on Mandatory Service Pricing. If the Parties do not agree by
June 1 on the Price at which any Mandatory Service shall be rendered, the
Dispute shall be resolved by the Dispute Resolution Procedure. Pending
resolution of that Dispute, the Price for that Mandatory Service shall
continue to be the Price in effect on May 30. The Price determined by
resolution of that Dispute shall be deemed effective July 1 as though the
Parties had agreed to it as of the preceding June 1. Accordingly:
(a) Any excess amount paid by PCO shall be credited (without interest)
to the next invoice or invoices for any Service or Services payable
by PCO after the date of resolution, or to the extent full credit
cannot be given to invoiced amounts payable within thirty (30) days
after the date of resolution, paid (without interest) by TSI by wire
transfer of immediately available funds to an account or accounts
designated by PCO; or
(b) any amount due to TSI shall be paid (without interest) within thirty
(30) days after the date of resolution by wire transfer of
immediately available funds to an account or accounts designated by
TSI.
7.4 Annual Price Effectiveness. The Price for each Service agreed or
determined as of June 1 of each year will be effective for that Service
for the succeeding calendar year, unless changed to correspond to a
change in the Level of that Service in accordance with Article 4.
ARTICLE 8 - PAYMENT
8.1 Invoices. TSI shall submit to PCO monthly one or more invoices for the
Services. Each invoice shall indicate for each PCO Business Unit:
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(a) The amount charged for each Service covered by that invoice;
(b) if the Service is a Use-based Service, the calculation of the invoiced
amount or the basis on which that amount was determined, and
(c) if that invoice includes any credit or offset for PCO, the amount and
purpose of that credit or offset.
Each invoice should also indicate the sales, use, or similar taxes being
collected on each Service, or part of a Service, that TSI believes to be so
taxable. An invoice may cover more than one Service.
8.2 Payment. PCO shall pay the amount of each invoice within thirty (30) days
after the date of that invoice. PCO shall pay the invoiced amount even if
PCO disputes all or a portion of that amount, unless TSI has agreed on or
before the due date to accept a different amount.
8.3 Method of Payment. PCO shall pay TSI by wire transfer of immediately
available funds to an account or accounts designated by TSI. All payments
shall be made in United States currency.
8.4 Interest. TSI may charge interest on any past due invoiced amount at the
annual rate of 18% (or, if lower, the highest lawful rate) from the due
date until paid in full with accrued interest. Any payment of interest
only is not a cure or TSI's sole remedy for nonpayment of any invoiced
amount that is due.
8.5 Nonpayment Notice. If TSI does not receive the full payment of any invoice
(and has not agreed to accept a different amount), it may give PCO a
Nonpayment Notice. PCO shall pay the amount described in the Nonpayment
Notice by the tenth Business Day after that Nonpayment Notice is given.
8.6 Dispute of Invoice. Except as described in the last sentence of this
Section 8.6, PCO may dispute the amount of any invoice for up to ninety
(90) days after the date of that invoice; if no Notice of that Dispute is
given within those ninety (90) days, the invoiced amount shall be deemed
agreed to by PCO. The Notice of a Dispute of any invoice shall describe
the basis for that Dispute and specify the Service and the PCO Business
Unit to which that Dispute relates. A Dispute of any invoice (except as
described in the last sentence of this Section 8.6) shall be resolved by
the Dispute Resolution Procedure. If it is determined by resolution of
that Dispute that PCO has paid any excess amount in response to the
invoice, that amount shall be credited (without interest) to the next
invoice or invoices payable by PCO after the date of resolution, or to
the extent full credit cannot be given to invoiced amounts payable within
thirty (30) days after the date of resolution, paid (without interest) by
TSI by wire transfer of immediately available funds to an account or
accounts designated by PCO. Under this Section 8.6, PCO may dispute only
the invoiced amount and the particular calculation thereof, and not the
previously established basis for the established Price for any invoiced
Service. Any Dispute regarding the application to any Service (in whole
or in part) of any invoiced sales, use, or similar taxes is subject to
Section 17.2(b) instead of this Section 8.6.
ARTICLE 9 - RECORDS
9.1 Record Keeping. Each party shall create and maintain accurate records
regarding the Services rendered and the amounts charged and paid or
received under this Agreement. TSI's records shall include information
regarding the determination of amounts charged or invoiced to PCO for Use-
based Services and information regarding the determination of the cost or
the cost allocation for each Service rendered. Each Party's records
regarding;
(a) the Services rendered, and at the Level rendered, as of the
Effective Date shall be of substantially the same kinds as that
Party has created and maintained regarding those Services before the
Effective Date, and
(b) the Services, or the Level of Services, as changed after the
Effective Date in accordance with this Agreement shall be of the
kinds that are reasonable, and consistent with the other business
records created and maintained by that Party, regarding services
like those Services at those Levels.
Each Party shall create and maintain those records with the same degree of
completeness and care as it maintains its other similar business records.
Each Party shall maintain those records for the time or times required by
applicable law or regulation, except that a Party shall, upon request of
the other Party, maintain any of those records for a longer time if the
requesting Party pays the additional expenses incurred in complying with
that request.
9.2 Examination. Each Party shall be entitled to examine, through its
authorized representatives or agents and at its own expense, the records
that the other Party is required to maintain under this Agreement. This
examination right may be exercised only by three Business Days' prior
Notice to the other Party, and the examination may be made only during
the other Party's normal business
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hours or at any other reasonable time or times to which the other Party
may consent. An examination shall be performed in a manner that does not
unreasonably disrupt the other Party's normal business operations. This
examination right will continue:
(a) for two years after Expiration or the termination of this Agreement;
and
(b) thereafter, as long as necessary to enable a Party to respond to any
Third-Party Claim or to a request or order issued by a court or
another Governmental Authority.
The Party conducting an examination may make and take away copies of any or
all of the other Party's records being examined.
ARTICLE 10 - CONFIDENTIAL INFORMATION
10.1 Confidential Information. Each Party shall keep confidential the
following information which is "Confidential Information" whether
acquired by it under or in connection with this Agreement or obtained in
connection with the relationship of TSI and PCO or its predecessors
regarding management services rendered before the Effective Date:
(a) Information relating to the other Party's business, financial
condition or performance, or operations that the other Party treats
as confidential or proprietary.
(b) Copies of records and other information obtained from a Party's
examination of the other Party's records under Section 9.2.
(c) The terms and performance of, any breach under, or any Dispute
regarding this Agreement.
(d) The Parties' conduct, decisions, documents, and negotiations as
part of, and the status of, any Dispute resolution proceedings
under the Dispute Resolution Procedure.
(e) Any information, business plan, concept, idea, know-how, process,
technique, program, design, formula, algorithm or work-in-process,
any engineering, manufacturing, marketing, technical, financial,
data, or sales information, or any information regarding suppliers,
customers, employees, investors, or business operations, and any
other information or materials, whether in written, or graphic, or
any other form or that is disclosed orally, or electronically, or
otherwise which is learned or disclosed in the course of
discussions, studies, or other work undertaken between the parties.
(f) Without limiting the generality of the foregoing, Confidential
Information shall include all information and materials disclosed
orally or in any other form, regarding TSI's software products or
software product development, including, but not limited to, the
configuration techniques, data classification techniques, user
interface, applications programming interfaces, data modeling and
management techniques, data structures, and other information of or
relating to TSI's software products or derived from testing or other
use thereof.
(g) Any other information, whether in a tangible medium or oral and
whether proprietary to the other Party or not, that is marked or
clearly identified by the other Party as confidential or
proprietary.
Neither Party may use any of the other Party's Confidential Information
other than as required to perform its obligations or exercise its rights
and remedies, including as part of the resolution of any Dispute, under
this Agreement.
10.2 Excluded Information. A Party has no obligation under this Article 10
regarding any information, including information that would otherwise by
Confidential Information, to the extent that the information:
(a) is or becomes publicly available or available in the industry other
than as a result of any breach of this Agreement or any other duty
of that Party;
(b) is or becomes available to that Party from a source that, to that
Party's knowledge, is lawfully in possession of that information and
is not subject to a duty of confidentiality, whether to the other
Party or another Person, violated by that disclosure; or
(c) is independently developed by employees of the receiving Party who
had access to the disclosing Party's Confidential Information.
10.3 Standard of Care. Each Party shall use the same degree of care in
maintaining the confidentiality and restricting the use of the other
Party's Confidential Information as that Party uses with respect to its
own proprietary or confidential information, and in no event less than
reasonable care.
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10.4 Permitted Disclosures. A Party may disclose Confidential Information to
its officers, directors, agents, or employees as necessary to give
effect to this Agreement. Each Party shall inform each of these Persons
to whom any Confidential Information is communicated of the obligations
regarding that information under this Article 10 and impose on that
Person, via signed agreement, the obligation to comply with this Article
10 regarding the Confidential Information. Each Party shall be
responsible for any breach of that Party's obligations under this
Article 10 by its officers, directors, agents, or employees.
10.5 Required Disclosures. Each Party may disclose Confidential Information in
response to a request for disclosure by a court or another Governmental
Authority, including a subpoena, court order, or audit-related request
by a taxing authority, if that Party:
(a) promptly notifies the other Party of the terms and the
circumstances of that request;
(b) consults with the other Party, and cooperates with the other Party's
reasonable requests, to resist or narrow that request;
(c) furnishes only information that, according to written advice (which
need not be a legal opinion) of its legal counsel, that Party is
legally compelled to disclose; and
(d) uses its Reasonable Efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded the
information disclosed.
A Party need not comply with these conditions to disclosure, however, to
the extent that the request or order of the Governmental Authority in
effect prohibits that compliance. A Party may also disclose Confidential
Information without complying with these conditions to the extent that
the Party is otherwise legally obligated to do so (for example, to comply
with applicable securities laws), as confirmed by advice of competent and
knowledgeable counsel. Further, a Party may also disclose Confidential
Information, without complying with these conditions, in connection with
a tax audit if the disclosure is to representatives of a taxing
authority, or in connection with a tax contest if that Party uses its
Reasonable Efforts to assure that confidential treatment will be accorded
the information disclosed.
10.6 Title to Information. The Confidential Information of a Party disclosed
by it to the other Party under this Agreement shall remain the property
of the disclosing Party; nothing in this Agreement grants or conveys to
the other Party any ownership or other proprietary rights in any of that
Confidential Information.
10.7 Survival; Return. The obligations under this Article 10 shall continue on
and after Expiration or the termination of this Agreement. Upon request
of the disclosing Party upon or after Expiration or the termination of
this Agreement, the other Party shall return or, if requested by the
disclosing Party, destroy the Confidential Information of the disclosing
Party that it holds. The requested return or destruction shall include
removal or deletion of Confidential Information from all data bases and
magnetic media of the other Party.
ARTICLE 11 - PARTIES' RELATIONSHIP
11.1 Independent. The Parties are independent; each has sole authority and
control of the manner of, and is responsible for, its performance of
this Agreement. This Agreement does not create or evidence a partnership
or joint venture between the Parties. Neither Party may create or incur
any liability or obligation for or on behalf of the other Party, except
as described in this Agreement. This Agreement does not restrict TSI
from providing or rendering any services, including services like the
Services, to any other Person; nothing in this Agreement, however, gives
TSI the right to provide or render any services in violation of any
other agreement entered into by the Parties.
11.2 Employees. Except as described in Section 14.4 (b) or Section 14.4 (c)
or, for the purposes of this Agreement:
(a) each Party is solely responsible for its own employees or agents,
including the actions or omissions and the compensation of those
employees and agents, and
(b) neither Party has any authority with respect to any of the other
Party's employees or agents.
11.3 Authority and Enforceability. Each Party warrants to the other Party
that:
(a) it has the requisite corporate authority to enter into and perform
this Agreement;
(b) its execution, delivery, and performance of this Agreement have
been duly authorized by all requisite corporate action on its
behalf;
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(c) this Agreement is enforceable against it; and
(d) it has obtained all consents or approvals of Governmental
Authorities and other Persons that are conditions to its entering
this Agreement.
11.4 Third-Party Consents. Each Party shall be responsible for obtaining and
maintaining any licenses, permits, consents, or approvals of
Governmental Authorities and other Persons necessary or appropriate for
it to perform its obligations under this Agreement.
11.5 Third-Party-Related Arrangements. The Parties also have certain
arrangements and agreements relating to certain of the Services provided
by an Effective Date Service Subcontract or provided directly by TSI but
involving an agreement with a third party. The Parties currently expect
that the matters or issues addressed - by those arrangements or agreements
will need to continue to be addressed whether in the same or in a
different manner - upon Expiration or the termination of this Agreement or
the discontinuance of certain Optional Services. Hence, before and upon
any of those events, each Party shall use its Reasonable Efforts to
change, renegotiate, replace, sever, or assign, as the Parties mutually
agree, those arrangements or agreements as necessary to so address those
matters or issues and to equitable allocate to the respective Parties - in
accordance with their respective assets and businesses - the benefits and
the obligations of those arrangements or agreements upon and after the
occurrence of any of those events.
11.6 Further Assurances. Each Party shall take such actions, upon request of
the other Party and in addition to the actions specified in this
Agreement, as may be necessary or reasonably appropriate to implement or
give effect to this Agreement.
ARTICLE 12 - PARTIES' REPRESENTATIVES
12.1 Representatives' Authority. Each Party has authorized its Representative
to conduct discussions and negotiations, make and communicate decisions,
frame and pose questions or issues, and resolve Disputes on behalf of
that Party relating to this Agreement. Though one Party's employees or
agents other than its Representative may also take actions of the kinds
described in the preceding sentence with the other Party's employees or
agents other than its Representative, matters that require more formal
discussions or negotiations between Parties shall be addressed through
and by the Representatives. Each Party and its Representative are
entitled to rely on the actions and decisions of the other Party's
Representative relating to this Agreement.
12.2 Designation. TSI designates its Controller as TSI's Representative, and
PCO designates its Controller as PCO's Representative, upon and after
the Effective Date until changed by the designating Party. A Party may
change its Representative by Notice to the other Party. A Party may rely
on and deal with the Person who is designated as the other Party's
Representative until any Notice of change is given by the other Party.
ARTICLE 13 - TERMINATION
13.1 Termination Events. This Agreement may be terminated, without liability
to the Party terminating:
(a) By either Party upon thirty (30) days' Notice to the other, at any
time upon or after the Parties cease to be Affiliates.
(b) By a Party, immediately upon Notice to the other Party, if:
(i) that other Party makes a general assignment of all or
substantially all of its assets for the benefit of its
creditors;
(ii) that other Party applies for, consents to, or acquiesces in
the appointment of a receiver, trustee, custodian, or
liquidator for its business or all or substantially all of its
assets.
(iii) that other Party files, or consents to or acquiesces in, a
petition seeking relief or reorganization under any
bankruptcy or insolvency laws; or
(iv) a petition seeking relief or reorganization under any
bankruptcy or insolvency laws is filed against that other
Party and is not dismissed within ninety (90) days after it
was filed.
(c) By a Party, immediately upon Notice to the other Party, if that
other Party's material breach of this Agreement continues uncured or
uncorrected for thirty (30) days after both the nature of that
breach and the necessary cure or correction has been agreed upon by
the Parties or otherwise determined by the Dispute Resolution
Procedure. But if:
8
(i) the Parties agree or it is determined by the Dispute Resolution
Procedure that the material breach is not capable of being
cured or corrected, the termination shall be effective
immediately upon Notice, without any cure period; or
(ii) the breaching Party (A) reasonably requires longer than thirty
(30) days to cure or correct - such as when the applicable
Service Subcontract permits the Subcontractor longer than
thirty (30) days to cure or correct - and (B) Notifies the non-
breaching Party of the circumstances, then the cure period
shall be extended for the reasonable time so required, so long
as during that time the breaching Party diligently acts to
effect that cure or correction. Unless otherwise agreed in
writing by the Parties, no cure period extension shall exceed
ninety (90) days.
A non-breaching Party's exercise of the remedy described in this
Section 13.1(c) shall be conditioned upon its giving a Breach Notice
to the other Party.
(d) By TSI, immediately upon Notice to PCO, if PCO has not paid the amount
described in a Nonpayment Notice by the tenth Business Day after that
Nonpayment Notice was given.
A Party may not terminate this Agreement if the event or circumstance
described above in this Section 13.1, upon which that Party would rely in
so terminating, was caused by that Party's breach of this Agreement.
13.2 Nonexclusive. The termination rights under Section 13.1(c) and 13.1(d)
are not exclusive of any other right or remedy of a non-breaching Party
granted in this Agreement.
13.3 Consequences of Termination. Upon termination of this Agreement:
(a) Under Section 13.1(a) or Section 13.1(e) or by PCO under Section
13.1(c)
(i) During the Transition Period TSI shall continue to render, and
PCO shall pay for, each Service reasonably requested by PCO
until terminated by either Party in accordance with Sections
13.3(a)(ii) and 13.3(a)(iii). Except as stated in Section
13.3(a)(ii), the terms of this Agreement shall continue to
apply during the Transition Period as though no termination of
this Agreement had occurred.
(ii) The Level of each Service rendered, and the Price for each
Service, during the Transition Period shall be the same as in
effect immediately preceding the Termination Date. Article 5
shall not apply during the Transition Period. During the
Transition Period, any Service (including a Mandatory
Service), but not any one or more of the Tasks separately,
may be terminated by (A) PCO, for any reason, by sixty (60)
days' Notice to TSI, or (B) TSI, if PCO has not paid the
amount described in a Nonpayment Notice by the tenth Business
Day after the Nonpayment Notice was given. Any Service that
is the subject of a Notice of termination shall continue to
be rendered by TSI until the effective date of that
termination, and PCO shall pay for that Service rendered
through that date. Neither Party may unilaterally rescind a
Notice of termination.
(iii) If either Party reasonably determines that the termination of
any Service during the Transition Period would make it
functionally impossible to continue any other Service during
the Transition Period, that Party shall promptly Notify the
other Party of that determination; any Service that so becomes
functionally impossible to render shall be deemed terminated
effective upon the date of termination of the Service that
caused that impossibility. Neither Party may unilaterally
reinstate any Service that has been terminated as of the
Termination Date or during the Transition Period.
(b) Under Section 13.1(b), then during the Transition Period, TSI shall
comply with PCO's reasonable requests for assistance in PCO's
engaging or training another Person or Persons to provide, and for
records and other information relating to, each Service in effect
immediately preceding the Termination Date. If TSI terminates this
Agreement, PCO shall reimburse and pay TSI's Transition Expenses in
accordance with invoices submitted to PCO by TSI. Articles 8 and 18
shall not apply in this situation as though this Agreement had not
been terminated. When PCO is obligated to reimburse and pay TSI's
Transition Expenses, TSI may cease providing transition assistance,
immediately upon Notice to PCO, if PCO has not paid the amount
described in a Nonpayment Notice by the tenth Business Day after the
Nonpayment Notice was given. If the records or other information
provided by TSI are Confidential Information, Article 10 shall also
apply as though this Agreement had not been terminated.
(c) Under Section 13.1(d) or by TSI under Section 13.1(c), then TSI
shall have no obligation to provide any continued Services or
transition assistance as described above in this Section 13.3.
9
13.4 Survival of Rights and Obligations. No rights or obligations of either
Party that expressly or implied are to remain in effect in order to
give effect to this Agreement shall be impaired by Expiration or the
termination of this Agreement, and those rights and obligations shall
remain in effect.
ARTICLE 14 - LIABILITY AND REMEDIES
14.1 Warranties. Each Party's warranties in this Agreement are made solely to
and for the benefit of the other Party and, to the extent described in
this Agreement, PCO. No Person other than a Party may make a claim based
on the other Party's warranties under this Agreement; any claim by PCO
shall be made by PCO.
14.2 Nonconforming Services. PCO shall promptly Notify TSI of any Deficiency
in any Service or Task, whether rendered by TSI or a subcontractor. To the
extent TSI agrees, or it is otherwise determined by the Dispute
Resolution procedure, that a Service or Task was or is a Nonconforming
Service, TSI shall use its Reasonable Efforts promptly to cure or
correct, or cause its Subcontractor to cure or correct, the Deficiency to
the extent it may then be cured or corrected.
(a) If the Deficiency was, or was the result of, TSI's or a
Subcontractor's negligence or PCO's negligence, TSI shall not be
responsible or liable for any resulting Damages of PCO.
(b) If the Deficiency was, or was the result of, TSI's or a
Subcontractor's gross negligence (including recklessness) or willful
misconduct, TSI shall be responsible or liable for PCO's resulting
Damages in an amount up to:
(i) if TSI's liability is determined (by the Parties' agreement or
the Dispute Resolution Procedure) after the calendar year in
which the Deficiency occurred, the aggregate amount received by
TSI for the Nonconforming Service for the calendar year in
which the Deficiency occurred;
(ii) if TSI's liability is determined during the calendar year in
which the Deficiency occurred and the Nonconforming Service is
a Fixed-price Service, the annual Price for the Nonconforming
Service for that calendar year; or
(iii) if TSI's liability is determined during the calendar year in
which the Deficiency occurred and the Nonconforming Service is
a Use-based Service, the greater of (A) the estimated annual
amount for that Service for that calendar year and (B) the
aggregate amount received by TSI to the date the liability is
determined, annualized for that calendar year.
The annual limit on TSI's liability described above in this Section
14.2(b) is not cumulative from year to year. If there is more than
one Deficiency in a single Service for which TSI is responsible or
liable for Damages and TSI's liability for those Deficiencies is
determined in the same calendar year, TSI's responsibility or
liability for Damages resulting from all of those Deficiencies shall
be subject to the applicable annual limit on liability described
above in this Section 14.2(b).
14.3 Actual Damages. Neither Party shall be liable under or relating in any
manner to this Agreement for any losses or damages other than Damages,
even if a Party has been advised of the possibility of losses or damages
of that kind and regardless of the form of the Proceedings or the theory
of liability, whether based on contract, warranty, tort (including
negligence and strict liability), infringement, or misappropriation.
14.4 Indemnities for Certain Breaches and Other Matters. The following shall
apply to any breach of, and certain other Damages relating to, this
Agreement, other than a Deficiency for which TSI has no liability for
Damages under Section 14.2(a) or a nonpayment by PCO of any amount
relating to an invoice:
(a) Subject to the limits on liability described in Section 14.2(b), if
that Section is applicable, each Party shall indemnify the other
Party against all Damages of the Indemnified Party, or any of its
Indemnified Agents, resulting from or relating to:
(i) any breach of this Agreement, including breach of nay warranty
in this Agreement, by the Indemnifying Party;
(ii) any Proceedings relating to a breach of this Agreement by the
Indemnifying Party; and
(iii) the actions or omissions of the Indemnifying Party's employees
or agents under or in connection with this Agreement, except
as described in Sections 14.4(b) and 14.4(c).
(b) PCO shall also indemnify TSI against all Damages of TSI or any of
its Indemnified Agents, including any Subcontract Termination
Penalty, under or relating to any Service Subcontract - other than as
described in Section 3.5(b) - resulting from:
10
(i) any violation by PCO of any obligation imposed on it under that
Service Subcontract;
(ii) the actions or omissions of PCO's employees or agents under or
in connection with that Service Subcontract;
(iii) PCO's discontinuance of any Optional Service that TSI renders,
in whole or in part, by that Service Subcontract, even if
permitted by Article 5; or
(iv) PCO's performing itself or obtaining from any Person other
than TSI or its Subcontractor any service or services to
supplement or substitute for any Optional Service that TSI
renders, in whole or in part, by that Service Subcontract,
even if permitted by Section 6.3.
(c) PCO shall also indemnify TSI against all Damages of TSI or any of its
Indemnified Agents resulting from or relating to:
(i) the actions or omissions of any of the Legal Staff that are
directed by PCO within the scope of that lawyer's or
paralegal's engagement for any legal matter of PCO; or
(ii) any sales, use, or similar taxes (however described)
applicable to any of the Services, in whole or in part, that
are assessed or levied against or paid by TSI.
(d) The indemnification obligations in Sections 14.4(a), 14.4(b) and
14.4(c) shall be extinguished to the extent that the Damages of the
other Party, or any of its Indemnified Agents for whom or which the
other Party is seeking indemnification, were caused by the gross
negligence (including recklessness) or willful misconduct of the
Person for whom or which indemnification is sought. THE ORDINARY
NEGLIGENCE OF A PERSON OR THE JOINT OR CONCURRENT ORDINARY
NEGLIGENCE OF PERSONS SHALL NOT PRECLUDE THAT PERSON OR ANY OF THOSE
PERSONS FROM RECEIVING THE BENEFITS OF INDEMNIFICATION UNDER THIS
AGREEMENT.
(e) If an Indemnification Claim is not based on a Third-Party Claim, the
Indemnified Party shall give an Indemnification Claim Notice
promptly after the event constituting the basis for the
Indemnification Claim; its failure to do so, however, shall relieve
the Indemnifying Party of its indemnification obligations only to
the extent the Indemnifying Party is actually prejudiced by that
failure. If the Indemnified Party gives an Indemnification Claim
Notice regarding an Indemnification Claim not based on a Third-Party
Claim, the Indemnifying Party shall Notify the Indemnified Party
within the Indemnification Response Period whether the Indemnifying
Party disputes all or any portion of the Indemnification Claim. If
the Indemnifying Party does not give that dispute Notice or agrees
to accept liability for all or a portion of the Indemnification
Claim, the Indemnification Claim, or the agreed portion of that
Indemnification Claim, shall be the Indemnifying Party's liability.
Otherwise, the Indemnification Claim shall be deemed a Dispute to be
resolved by the Dispute Resolution Procedure.
(f) If an Indemnification Claim is based on a Third-party Claim:
(i) The Indemnified Party shall give an Indemnification Claim
Notice promptly after it receives the Third-Party Claim.
(ii) The Indemnifying Party shall be entitle to defend the Third-
Party Claim, with its chosen counsel and at its own expense,
if (A) the Third-Party Claim seeks only monetary relief,
against the Indemnified Party, and (B) the Indemnifying Party
elects to assume, and diligently conducts, that defense. The
Indemnifying Party's election to defend shall be given by
Notice to the Indemnified Party within the Indemnification
Response Period. If the Indemnifying Party conducts the
defense, the Indemnified Party may participate in that defense
with its own counsel and at its own expense.
(iii) If the Indemnifying Party does not elect to defend the Third-
Party Claim by Notice within the Indemnification Response
Period, or if the Indemnifying Party does not diligently
conduct the defense, the Indemnified Party shall be entitled,
upon further Notice to the Indemnifying Party, to defend the
Third-Party Claim on behalf of, and for the account and risk
of, the Indemnifying Party (if it is determined that the
Indemnifying Party has an indemnification obligation regarding
that Indemnification Claim). In this circumstance, the
Indemnifying Party may participate in the defense with its own
counsel and at its own expense.
(iv) If there is a conflict of interest that makes it inappropriate
for the same counsel to represent the Indemnifying Party and
the Indemnified Party in defending the Third-Party Claim, the
Indemnifying Party shall pay for separate counsel for the
Indemnified Party.
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(v) The Indemnifying Party defending a Third-Party Claim may
compromise, settle, or resolve that Third-Party Claim without
the Indemnified Party's consent if the compromise, settlement,
or resolution involves only the payment of money by the
Indemnifying Party (whether on its own behalf or behalf of the
Indemnified Party) and the third-party claimant provides the
Indemnified Party a release from all liability regarding the
Third-Party Claim. Otherwise, the Indemnifying Party may not
compromise, settle, or resolve the Third-Party Claim without
the Indemnified Party's Reasonable Consent.
(vi) The Indemnifying Party and the Indemnified Party shall
cooperate with all reasonable requests of the other in
defending any Third-Party Claim.
14.5 Time for Claims. PCO may make a claim against TSI for the cure or
correction of any Deficiency only within two years after the Deficiency
occurred; any Deficiency shall be deemed to have occurred when the
particular Nonconforming Service was rendered. A Party may make an
Indemnification Claim
(a) not based on a Third-Party Claim, only within 2 years after the
breach o other event constituting the basis for that Indemnification
Claim occurred, even if not discovered until after that second
anniversary, or
(b) based on a Third-Party Claim, at any time.
14.6 Offset. A Party entitled to any payment due from the other Party under
this Agreement may offset all or any portion of the amount of that
payment against any payment that is due from it to the other Party under
this Agreement.
14.7 Equitable Relief. To the extent that monetary relief is not of sufficient
remedy for any breach of this Agreement, or upon any breach or impending
breach of Article 10, the non-breaching Party shall be entitled to
injunctive relief as a remedy for that breach or impending breach by the
other Party, in addition to any other remedies granted to the non-
breaching Party in this Agreement. That injunctive relief shall be sought
through arbitration in accordance with the Dispute Resolution Procedure,
except as permitted by Section B.4(b) of the Dispute Resolution Appendix.
14.8 Exclusive Remedies. Except for the termination right stated in Article 13
and the relief described in Sections 15.4 and 17.2(b) and in the Dispute
Resolution Procedure, the remedies described in this Article 14 are the
exclusive rights and remedies of a Party regarding any breach of this
Agreement or any other matter that may be the subject of an
Indemnification Claim.
14.9 Waiver of Remedies. No forbearance, delay, or indulgence by either Party
in enforcing this Agreement - within the applicable time limits stated in
this Agreement - shall prejudice the rights or remedies of that Party. No
waiver of a Party's rights or remedies regarding a particular breach of
this Agreement constitutes a waiver of those rights or remedies, or any
other rights or remedies, regarding any other or any subsequent breach of
this Agreement.
14.10 Cumulative Remedies. A Party's election to pursue a right or remedy
granted in this Agreement upon the other Party's breach of this
Agreement shall not preclude the non-breaching Party from pursuing other
rights or remedies granted to that Party in this Agreement that are
applicable to that breach under this Agreement.
14.11 Survival. The rights, remedies, and obligations under this Article 14
shall continue on and after Expiration or the termination of this
Agreement.
ARTICLE 15 - FORCE MAJEURE
15.1 No Breach or Liability. No delay or failure of a Party to perform any of
its obligations, other than payment obligations, under this Agreement
due to causes beyond its reasonable control shall constitute a breach of
this Agreement or render that Party liable for that delay or failure.
Causes beyond a Party's reasonable control include:
(a) events or circumstances that the Party, using its Reasonable
Efforts, is unable to prevent or overcome;
(b) as to TSI, causes also beyond the reasonable control of the Person
to whom or which TSI has Subcontracted the affected Service or Task
in accordance with this Agreement; and
(c) labor disputes, strikes, or other similar disturbances; acts of
God; utilities or communications failures; acts of the public
enemy; and riots, insurrections, sabotage, or vandalism.
12
15.2 Notice of Excusable Delay or Failure. If a Party anticipates any
excusable delay or failure under Section 15.1, it shall promptly Notify
the other Party of the anticipated delay or failure, the anticipated
effect of that delay or failure, and any actions that are being or are
to be taken to alleviate or overcome the cause of the delay or failure.
15.3 Efforts to Overcome. If a Party is claiming an excusable delay or failure
under Section 15.1, it shall use its Reasonable Efforts to alleviate or
overcome the cause of the delay or failure as soon as practicable.
15.4 Extended Delay or Failure. If an excusable delay or failure continues for
more than thirty (30) consecutive days, the Party entitled to the
benefit of the affected obligation may perform itself or obtain from any
other Person the obligation to which that Party is entitled (and that
Party shall Notify the other Party of this election). In the event TSI
is the party unable to perform hereunder, PCO's Notification to TSI may,
if clearly provided therein, serve as termination notice for the Service
which TSI has been unable to perform. Such termination shall relieve TSI
from all further duties to perform such terminated Service and shall
relieve PCO from the obligation to pay for any such Services performed
after such Notice of termination.
ARTICLE 16 - DISPUTE RESOLUTION MATTERS
16.1 General Procedures. Except as otherwise stated in this Agreement, the
Parties shall resolve all Disputes in accordance with the Dispute
Resolution Procedure. Nevertheless, if any Person other than the Parties
(a) has initiated a lawsuit or other Proceedings against or involving
either or both of the Parties in which a Dispute will be resolved,
or
(b) is a necessary participant in any Proceedings to resolve a Dispute
and cannot be joined by either or both of the Parties in an
arbitration of that Dispute under Section B.3 of the Dispute
Resolution Appendix,
so that (in either case) the Dispute Resolution Procedure is or will be
ineffective, then the Parties need not use or follow the Dispute
Resolution Procedure to resolve that Dispute - though the submission to
jurisdiction in Section B.5 of the Dispute Resolution Appendix shall
apply if necessary.
16.2 Continued Performance. The Parties shall continue performing their
respective obligations under this Agreement while a Dispute is being
resolved.
16.3 Parties' Agreement. Nothing in this Article 16 or the Dispute Resolution
Procedure prevents the Parties from resolving any Dispute by mutual
agreement at any time.
ARTICLE 17 - EXPENSES AND TAXES
17.1 Expenses. Each Party shall be solely responsible for its costs and
expenses incurred in performing its obligations and exercising its
rights and remedies under this Agreement, except as otherwise provided
in this Agreement.
17.2 Taxes. The Parties shall be responsible for tax payments or liabilities
relating to this Agreement as follows:
(a) Each Party shall be responsible for its income and franchise taxes
and for all other taxes (however described) based on its own income
or earnings.
(b) PCO shall be responsible for all sales, use, and similar taxes
(however described) applicable to the Services, in whole or in
part. This obligation includes PCO's paying the sales taxes
identified in TSI's invoices submitted to PCO for the Services.
(i) If PCO claims an exemption or exclusion from taxes of this
kind, it shall deliver to TSI a certificate or letter stating
PCO's good-faith belief that a Service is not, in whole or in
part, subject to those taxes. Whether or nor PCO delivers that
certificate or letter, however, it shall indemnify TSI, in
accordance with Section 14.4(c)(iv), against any taxes of this
kind assessed or levied against, or paid by, TSI and any other
related Damages of TSI.
(ii) if TSI receives an assessment from a taxing authority
covering taxes for which PCO is responsible under this
Section 17.2(b), TSI shall Notify PCO of the assessment and,
at PCO's request, timely contest the assessment. If payment
to the taxing authority is required by law as a condition to
protest, PCO shall timely furnish TSI the required amount for
that payment.
(iii) If PCO believes it has overpaid taxes to TSI for any of the
Services (in whole or in part), PCO may require TSI to file a
claim for a refund at PCO's expense. If permitted by law, TSI
may assign any right to a refund directly to
13
PCO instead of filing a refund claim. Any refund of taxes
(including any interest) received by TSI under this Section
17.2(b)(iii) shall be promptly forwarded to PCO.
(iv) Before TSI is required to pursue any action requested by PCO
under this Section 17.2(b), TSI may at any time require PCO
to deliver a letter of advice from outside counsel (selected
by PCO) stating that PCO's tax position is reasonable.
(v) Except as stated in the next sentence, any Dispute between
the Parties regarding the application of any taxes of this
kind to any Service (in whole or in part) shall be resolved
by the Dispute Resolution Procedure. Any Dispute as to the
amount of tax (if any) owed to a taxing authority, including
a Dispute between a Party and the taxing authority, need not
be resolved by the Dispute Resolution Procedure, but may be
resolved by any appropriate administrative or legal procedure
available to a Party or the Parties under this Agreement
apart from the Dispute Resolution Procedure.
(c) Each Party shall be responsible for all real property, personal
property, and other taxes (however described) based on its owned or
leased property, whether real or personal.
(d) Each Party shall be responsible for all employment-related taxes
(however described) regarding its own employees.
Each Party shall cooperate with any reasonable request of the other Party
to restructure any Service, in whole or in part, or to take any other
reasonable action to avoid or minimize any duplicate taxes that might be
imposed; the requesting Party shall bear in the expenses of the other
Party's compliance.
ARTICLE 18 - COMMUNICATIONS
18.1 Form. Each notice (including a Nonpayment Notice, an Indemnification
Claim Notice, and a Breach Notice), request, response, demand, claim,
and other communication required or permitted under this Agreement shall
be in writing and shall be transmitted, delivered, or sent by:
(a) personal delivery,
(b) courier or messenger service, whether overnight or same-day,
(c) prepaid telecopy or facsimile, or
(d) certified United States mail, with postage prepaid and return receipt
requested,
in any case addressed to the other Party at the address or number for that
Party set forth in Section 18.2, or at such other address or number as the
recipient has designated by Notice to the other Party in accordance with
this Article 18.
18.2 Addresses. The Parties shall transmit, deliver, or send communications as
follows.
(a) If to TSI: Trilogy Software, Inc.
0000 Xxxx Xxxxxxxxx Xx.
Xxxxxx, XX 00000
512/425-3100
Attention: Controller
(b) If to PCO: xxXxxxx.xxx, Inc.
0000 Xxxxx xx xxx Xxxx
Xxxxxx, XX 00000
512/684-1100
Attention: Controller
18.3 Effectiveness. Each communication transmitted, delivered, or sent:
(a) in person, by courier or messenger service, or by certified United
States mail, postage prepaid and return receipt requested, shall be
deemed given, received, and effective on the date delivered to or
refused by the intended recipient (with the return receipt or the
equivalent record of the courier or messenger being deemed
conclusive evidence of delivery or refusal); or
14
(b) by telecopy or facsimile transmission shall be deemed given,
received, and effective on the date of actual receipt (with the
confirmation of transmission being deemed conclusive evidence of
such receipt, except where the intended recipient has promptly
notified the other Party that the transmission is illegible).
Nevertheless, if the date of delivery or transmission is not a Business
Day, or if the delivery or transmission is after 5:00 p.m. on a Business
Day, the communication shall be deemed given, received, and effective on
the next Business Day.
ARTICLE 19 - ASSIGNMENT
Neither Party may assign any of its rights or delegate any of its duties or
obligations under this Agreement without the other Party's Consent; this
prohibition of assignment and delegation shall include any assignment and
delegation by operation of law (such as merger or consolidation). Any attempted
assignment or delegation without the other Party's Consent shall be void and
without effect. The two preceding sentences do not, however, preclude TSI from
Subcontracting.
ARTICLE 20 - AMENDMENT AND WAIVER
This Agreement may be amended or modified, and any provision of this Agreement
may be discharged or waived, only by a document signed by the Party against
which the amendment, modification, discharge, or waiver is sought to be
enforced.
ARTICLE 21 - INTEGRATION
This Agreement constitutes the Parties' entire agreement on this subject; it
replaces and supersedes any prior agreement or understanding of the Parties,
whether written or oral, on this subject not expressed or referred to in this
Agreement.
ARTICLE 22 - SEVERABILITY
If any part of this Agreement is for any reason found to be unenforceable, all
other parts of this Agreement nevertheless remain enforceable.
ARTICLE 23 - SUCCESSORS
This Agreement binds and inures to the benefit of the Parties and their
respective legal representatives, permitted successors, and permitted assigns.
ARTICLE 24 - GOVERNING LAW
This Agreement shall be interpreted or construed under Texas law. Likewise, the
validity and performance of this Agreement shall be enforced, and all issues
relating to this Agreement shall be resolved, under Texas law. Each Party
consents to the exclusive personal jurisdiction and venue of the courts, state
and federal, located in Xxxxxx County, Texas.
ARTICLE 25 - COUNTERPARTS
This Agreement may be signed in any number of counterparts, with the same effect
as if all signatories had signed the same document. All counterparts shall be
construed together to constitute one, and the same, document.
Agreed to By:
TRILOGY SOFTWARE, INC. XXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxxx X. Xxxxx
----------------------------- -----------------------------
(Signature) (Signature)
Xxxxxx X. Xxxxxxxx Xxxxxxxxx X. Xxxxx
-------------------------------- --------------------------------
(Name typed or printed) (Name typed or printed)
-------------------------------- --------------------------------
(Title) (Title)
-------------------------------- --------------------------------
(Date) (Date)
15
DEFINITIONAL APPENDIX
TO MANAGEMENT SERVICES AGREEMENT
A. Defined Terms. In the Agreement, the following terms have the corresponding
meanings:
"AFFILIATE": A Person that directly or indirectly through one or more
intermediaries' Controls, is Controlled by, or is under common Control with
another Person.
"AGREEMENT": The Management Services Agreement between TSI and PCO
(including the Definitional Appendix, the Dispute Resolution Appendix, and
the Schedules), as may be amended or supplemented from time to time in
accordance with its terms.
"ARBITRATION RULES": The Rules for Commercial Arbitration of the American
Arbitration Association in effect at the time of an arbitration in
accordance with the Dispute Resolution Procedure.
"BREACH NOTICE": A Party's Notice to the other Party alleging a breach of
the Agreement (other than PCO's nonpayment of any amount related to an
invoice) by the other Party, which describes the alleged breach, to the
extent known by the notifying Party, and any particular cure or correction
requested by the notifying Party.
"BUSINESS DAY": Any Monday through Friday, excluding the holidays observed
by TSI.
"CONFIDENTIAL INFORMATION": Information subject to a duty of confidence
and a restriction on use imposed on one or both Parties under Article 10.
"CONTROL": The right to exercise, directly or indirectly, more than 50% of
the voting power attributable to the equity interests in an entity.
("controlling" and "Controlled" have correlative meanings.)
"CONSENT": The prior written consent of a Party (in any capacity) in its
sole discretion.
"DAMAGES": Losses, claims, obligations, demands, assessments, fines and
penalties (whether civil or criminal), liabilities, expenses and costs
(including reasonable fees and disbursements of legal counsel and
accountants), bodily and other personal injuries, damage to tangible
property, and other damages, of any kind or nature, actually suffered or
incurred by a Person. "Damages":
1. consists only of actual damages;
2. excludes any lost profits, lost income, or lost savings and any
punitive, exemplary, consequential, indirect, special, or incidental
damages (however described), even if the possibility of those losses
or damages was known; and
3. includes (except as may be reduced in accordance with the next
sentence) all fines, penalties, and interest paid or payable to any
Governmental Authority.
If PCO has Damages, for which TSI is liable, consisting of fines,
penalties, and interest paid or payable to a Governmental Authority
corresponding to any tax not timely paid, then those "Damages" shall be
reduced by an amount equal to interest, at the annual rate of 5%, accrued
on that tax from the due date until that tax is paid; for the avoidance of
doubt, in this situation "Damages" shall not include any tax for which PCO
would otherwise be liable to the Governmental Authority. Also for the
avoidance of doubt, the "Damages" of a Person shall include any lost
profits, lost income, or lost savings and any punitive, exemplary,
consequential, indirect, special, or incidental damages (however described)
awarded against that Person in favor or another Person asserting a Third-
Party Claim against that Person.
16
"DEFICIENCY": TSI's failure in rendering a Service or Task to satisfy the
applicable standard of care stated in the Agreement or to render it at the
applicable Level established under the Agreement. ("Deficient" has the
correlative meaning).
"DEFINITIONAL APPENDIX": This Definitional Appendix to Management Services
Agreement, containing definitions and interpretive matters for, as an
integral part of, the Agreement.
"DISPUTE": Any dispute, disagreement, claim, or controversy arising in
connection with or relating to the Agreement, or the validity,
interpretation, performance, breach, or termination of the Agreement,
including any claim of breach of representation or warranty or of
nonperformance and any claim regarding bodily or other personal injury
damage to tangible property.
"DISPUTE RESOLUTION APPENDIX": The Dispute Resolution Appendix to
Management Services Agreement, containing the Dispute Resolution Procedure
for, as an integral party of, the Agreement.
"DISPUTE RESOLUTION PROCEDURE": The procedure or process by which a
Dispute shall be resolved in the Dispute Resolution Appendix.
"EFFECTIVE DATE": July 1, 1998, the date on which the Agreement becomes
effective.
"EFFECTIVE DATE SERVICE SUBCONTRACT": A Service Subcontract in effect on
the Effective Date.
"EXPIRATION": The expiration of the term of the Agreement as stated in,
and as may be renewed under, Article 2, without regard to any period of
transition assistance. For the avoidance of doubt, "Expiration" does not
include a termination of the Agreement under Section 13.1. ("Expire" and
"Expired" have correlative meanings.)
"FIXED-PRICE SERVICE": A Service the Price for which is a fixed or
nonvariable amount, other than a fixed rate.
"GOVERNMENTAL AUTHORITY": Any federal, state, local, or foreign government
or governmental, quasi-governmental, administrative, or regulatory
authority, agency, body, or entity, including any court of other tribunal.
"INDEMNIFICATION CLAIM": A claim or demand of a Party, on its behalf or on
behalf of one or more of its Indemnified Agents, for Indemnification under
Section 14.4.
"INDEMNIFICATION CLAIM NOTICE": A Notice from the Indemnified Party
describing an Indemnification Claim and the amount or the estimated amount
of that Indemnification Claim to the extent then feasible (though that
estimate shall not be determinative of the final amount of that
Indemnification Claim).
"INDEMNIFICATION RESPONSE PERIOD": The 30 days after an Indemnification
Claim Notice is given during which the Indemnifying Party may investigate
and determine its responsibility or liability for an Indemnification Claim
and, if relating to a Third-Party Claim, Notify the Indemnified Party of
the Indemnifying party's election to defend that Third-Party Claim.
"INDEMNIFIED AGENTS": Collectively, the officers, directors, employees,
and agents of a Party.
17
"INDEMNIFIED PARTY": A Party entitled to or seeking indemnification, on
its own behalf or on behalf of one or more of its Indemnified Agents, under
Section 14.4.
"INDEMNIFYING PARTY": A Party that has or is alleged to have an obligation
to indemnify the other Party in response to an Indemnification Claim.
"LEGAL STAFF": Legal personnel that TSI employs or otherwise engages.
"LEVEL": The scope, timelines, or quantity of a Service of Task or the
location, intensity, or frequency at or with which a Service or Task is or
is to be rendered.
"MANDATORY SERVICE": A Service that shall be rendered and paid for, and
may not be unilaterally discontinued under Article 5 by either Party,
during the effectiveness of the Agreement.
"NONCONFORMING SERVICE:" A Service or Task that, as agreed by the Parties
or otherwise determined by the Dispute Resolution Procedure, was or is
Deficient.
"NONPAYMENT NOTICE": A Notice from TSI to PCO that describes an amount
related to an invoice to PCO that TSI has not received when due, which
shall:
1. constitute a demand for payment of the described amount; and
2. state that either termination of the Agreement or cessation of
transition assistance, whichever is applicable, by TSI may result of
the described amount is not paid by the tenth Business Day after that
Notice is given.
"NOTICE": A written communication complying with Article 18. ("Notify"
has the correlative meaning.)
"OPTIONAL SERVICE": A Service that may be unilaterally discontinued by
either Party in accordance with the Agreement.
"PARTIES": Collectively, TSI and PCO. ("Party" means either TSI or PCO.)
"PERSON": An individual; a corporation, partnership, trust, association,
or entity of any kind or nature; or a Governmental Authority.
"PCO": xxXxxxx.xxx, Inc., a Delaware Corporation, offices at 0000 Xxxxx xx
xxx Xxxx, Xxxxxx, XX 00000.
"PCO BUSINESS UNIT": A segment or part of PCO's business that PCO treats,
for purposes of its business and not solely for the Agreement, as a
separate unit.
"PCO'S REPRESENTATIVE": The individual agent or representative designated
by PCO to be PCO's formal liaison with or representative to TSI for matters
relating to the Agreement, having the (non-exclusive) authority and
responsibility described in the Agreement.
"PRICE": The amount or rate, in either case whether fixed or variable and
however measured, charged to PCO for a Service, as agreed by the Parties.
"PRICE PROPOSAL": A written proposal or estimate of the Price for a
Service at a particular Level (or, if applicable, at each Level), together
with a description of the basis on which the proposed or estimated Price
was determined or calculated by TSI (including, to the extent applicable,
the allocation methodology, allocation drivers, and margin).
18
"PROCEEDINGS": Any action, suit, claim, investigation, demand, audit, or
other proceedings by or before any Governmental Authority or any
arbitration proceedings.
"REASONABLE CONSENT": The prior written consent of a Party (in any
capacity), which may not be unreasonably withheld or delayed.
"REASONABLE EFFORTS": The efforts of a Party that are commercially
reasonable under the circumstances, which do not require a Party to
institute or prosecute any Proceedings or to pay any Person other than that
Party's representatives or agents, including (only as to TSI)
Subcontractors.
"REPRESENTATIVES": Collectively, TSI's Representative and PCO's
Representative.
"SLA": A written agreement or understanding between TSI and PCO
describing, or otherwise stating terms regarding, the Level at which a
Service, in whole or in party, will be rendered. An SLA regarding a
Service, in whole or in part, may be entered into by or directly with one
or more of TSI's departments rendering that Service or that part of the
Service. An SLA entered into on or after the Effective Date
1. may be a separate document or part of another document, such as a Price
Proposal that is accepted by PCO,
2. may be a Schedule or part of a Schedule, and
3. shall be signed by TSI and PCO.
"SCHEDULE": A Schedule to the Agreement that describes a Service, the
basis of the Price for that Service, the annual Price for that Service for
all of 1998, any Subcontractor performing all or a portion of that Service,
and the location or locations at which that Service is to be rendered if
not at TSI's offices or Subcontracted.
"SERVICE": An individual management service, to be rendered by TSI under
the Agreement, that is described as a "Service" in a Schedule. A Service
may also be described in a Schedule by all or a portion of its constituent
Tasks.
"SERVICE SUBCONTRACT": An agreement or arrangement, oral or written, under
which a Subcontractor is to render or perform any Service or Task on TSI's
behalf or in TSI's stead.
"SIGNIFICANT OPTIONAL SERVICE": An Optional Service the Price for which
exceeds, or the Parties agree will exceed, $1 million in any calendar year
(assuming no discontinuance of that Service).
"SUBCONTRACT": TSI's entering into a Service Subcontract.
("Subcontracted" and "Subcontracting" have correlative meanings).
"SUBCONTRACT TERMINATION PENALTY": An obligation described in, as part of
the terms of, a Service Subcontract to pay the Subcontractor a charge,
fine, penalty, or other amount upon the termination or partial termination
of that Service Subcontract, including any return to the Subcontractor of
any equipment or goods held under that Service Subcontract.
"SUBCONTRACTOR": A Person, other than an employee of TSI, who or which
enters into a Service Subcontract with TSI.
"TASK": Any one of the group of processes, procedures, or services that is
described in a Schedule as constituting, or included in, a Service.
19
"TERMINATION DATE": The date on which the Agreement is terminated in
accordance with Section 13.1, without regard to any Transition Period.
"THIRD-PARTY CLAIM": A claim of liability asserted against either Party by
a Person other than the other Party or either Party's Indemnified Agents.
"TRANSITION PERIOD": The maximum 180-day period after the Termination Date
during which TSI shall, as PCO reasonably requests, render one or more
Services in accordance with Section 13.3(a) or provide transition
assistance in accordance with Section 13.3(b).
"TSI": Trilogy Software, Inc., a Delaware Corporation, offices at 0000
Xxxx Xxxxxxxxx Xx., Xxxxxx, XX 00000.
"TSI BUSINESS UNIT": A segment or part of TSI's business that TSI treats,
for purposes of its business and not solely for the Agreement, as a
separate unit.
"TSI's REPRESENTATIVE": The individual agent or representative designated
by TSI to be TSI's formal liaison with or representative to PCO for matters
relating to the Agreement, having the (non-exclusive) authority and
responsibility described in the Agreement.
"TSI's TRANSITION EXPENSES": The sum of the following, incurred in or
resulting from TSI's compliance with requests for transition assistance for
up to 180 days after Expiration or during the Transition period (as the
case may be):
1. All of TSI's reasonable out-of-pocket expenses, and
2. the time or activities of TSI's personnel as follows: (a) if the
activities of those personnel were part of a Use-based Service before
Expiration or the termination of the Agreement, at the Price most
recently paid for that Use-based Service before Expiration or
termination, or (b) if the activities of those personnel were part of
a Fixed-price Service before Expiration or the termination of the
Agreement, an amount equal to that portion of the Price most recently
paid for that Fixed-price Service before Expiration or termination
corresponding to the transition activities' portion of all activities
that constituted that Fixed-price Service, for the time covered by
that Price, before Expiration or termination.
"USE-BASED SERVICE": A Service the Price for which is variable; or a
Service the Price for which is a fixed rate, but the amount due for that
Service is determined by or based upon, at least in part, the extent of the
actual use of TSI's personnel or other assets.
B. Interpretative Matters. The Agreement is the result of the Parties'
negotiations, and no provision of the Agreement shall be construed for or
against either Party because of the authorship of that provision. In the
interpretation of the Agreement, except where the context otherwise
requires:
1. "including" or "include" does not denote or apply any limitation;
2. "or" has the inclusive meaning "and/or";
3. "$" refers to United States dollars;
4. the singular includes the plural, and vice versa, and each gender
includes each of the others;
5. captions or headings are only for reference and are not to be
considered in interpreting the Agreement;
20
6. "Article" and "Section" refer to an Article and Section,
respectively, or the Agreement, unless otherwise stated in the
Agreement;
7. an event to occur, an action to be performed, or a condition to be
satisfied "by" or "as of" a stated date in the Agreement shall occur
or be effective or satisfied no later than 5:00 p.m. on that date;
and
8. each reference to a time of day in the Agreement is to local time in
Austin, Texas, and "midnight" begins a day.
21
DISPUTE RESOLUTION APPENDIX
TO MANAGEMENT SERVICES AGREEMENT
A. Defined Terms. Various terms used in this Dispute Resolution Appendix,
which begin with a capital letter, are defined in the Definitional
Appendix to Management Services Agreement. In addition, the following
terms used only in this Dispute Resolution Appendix have the corresponding
meanings:
"COMPLEX DISPUTE LIST": The "Complex Dispute List," or if that list is not
then maintained by the American Arbitration Association, another list of
individuals having similar qualifications maintained by the American
Arbitration Association.
"INITIAL EXECUTIVE REVIEW COMMITTEE": A committee consisting of the
Managing Director of Financial Planning of TSI, the Vice President and
Controller of PCO, and the Managing Director of Corporation Development of
Trilogy, Inc.
"SECOND EXECUTIVE REVIEW COMMITTEE": A committee consisting of the Vice
President and Controller of TSI and the Senior Vice President and Chief
Financial Officer of PCO.
"QUALIFICATIONS": Inclusion in the Complex Dispute List of having
extensive knowledge or experience, or both, regarding management services
similar to the Service or Services that are the subject of the Dispute.
The interpretative matters set forth in the Definitional Appendix also
apply to this Dispute Resolution Appendix.
B. Dispute Resolution Procedure.
1. General Procedure. Except as otherwise stated in the Agreement, the
Parties shall resolve all Disputes in accordance with this procedure:
(a) Each Party shall instruct its Representative to promptly
negotiate in good faith with the other Party's Representative to
resolve the Dispute.
(b) If the Representatives do not resolve the Dispute within ten
Business Days (or such longer period as the Representatives may
agree) after the date of referral of the Dispute to them, the
Dispute shall be referred (by either or both of the
Representatives) to the Initial Executive Review Committee for
resolution.
(c) If the Initial Executive Review Committee does not resolve the
Dispute within ten Business Days (or such longer period as that
Committee may agree) from the date of referral to it, the Dispute
shall be referred (by that Committee or any of its members) to
the Second Executive Review Committee for resolution.
(d) If the Second Executive Review Committee does not resolve the
Dispute within ten Business Days (or such longer period as that
Committee may agree) after the date of referral to it, either
Party may submit the Dispute for resolution by the Parties'
Presidents, who may submit the Dispute to non-binding mediation
in accordance with Section B.2 of this Dispute Resolution
Appendix.
(e) If the Dispute is not resolved by the parties' Presidents (if
submitted to them) and is not submitted to or resolved by
mediation, then either Party may submit the Dispute to binding
arbitration in accordance with Section B.3 of this Dispute
Resolution Appendix.
22
A referral under any of Sections B.1(a), B.1(b), and B.1(c) of this
Dispute Resolution Appendix shall be made by written notice to the
Persons designated in the applicable Section or Sections. That notice
shall be in a form described in the Agreement or an electronic mail
message and addressed to each Person at his office address or
electronic mail address; each notice shall be given and effective as
described in the Agreement or, in the case of electronic mail, upon
actual receipt. The date of referral is the last date that notice is
given to all of the Persons to whom the Dispute must have been
referred.
2. Mediation. The mediation of an unresolved Dispute shall be conducted in
this manner:
(a) Either Party may submit the Dispute to mediation by giving notice
of mediation to the other Party. The Parties shall attempt to
agree upon and appoint a sole mediator who has the Qualifications
promptly after that notice is given.
(b) If the Parties are unable to agree upon a mediator within ten
days after the date the Dispute is submitted to mediation, either
Party may request the Dallas office of the American Arbitration
Association to appoint a mediator who has the Qualifications. The
mediator so appointed shall be deemed to have the Qualifications
and to be accepted by the Parties.
(c) The mediation shall be conducted in the Austin metropolitan area
at a place and a time agreed by the Parties with the mediator, or
if the Parties cannot agree, as designated by the mediator. The
mediation shall be held within 20 days after the mediator is
appointed.
(d) If either Party has substantial need for information from the
other Party in order to prepare for the mediation, the Parties
shall attempt to agree on procedures for the formal exchange of
information; if the Parties cannot agree, the mediator's
determination shall be effective.
(e) Each Party shall be represented in the mediation by at least its
Representative or another natural Person with authority to settle
the Dispute on behalf of that Party and, if desired by that
Party, by counsel for that Party. The parties' representatives in
the mediation shall continue with the mediation as long as the
mediator requests.
(f) The mediation shall be subject to Chapter 154 of Title 7 of the
Texas Civil Practice and Remedies Code.
(g) Unless otherwise agreed by the parties, each Party shall pay one-
half of the mediator's fees and expenses and shall bear all of
its own expenses in connection with the mediation. Neither Party
may employ or use the mediator as a witness, consultant, expert,
or counsel regarding the Dispute or any related matters.
3. Arbitration. The arbitration of an unresolved Dispute shall be
conducted in this manner:
(a) Either Party may begin arbitration by filing a demand for
arbitration in accordance with the Arbitration Rules. The Parties
shall attempt to agree upon and appoint a panel of three
arbitrators promptly after that demand is filed. Each of those
arbitrators must have the Qualifications, and at least one of
those arbitrators must be included in the Complex Dispute List
(unless no list of that kind is then maintained).
(b) If the parties are unable to agree upon any or all of the
arbitrators within ten days after the demand for arbitration was
filed (and do not agree to an extension
23
of that ten-day period), either Party may request the Austin
office of the American Arbitration Association to appoint the
arbitrator or arbitrators, who have the Qualifications (and at
least one of whom must be included in the Complex Dispute List,
unless no list of that kind is then maintained), necessary to
complete the panel in accordance with the Arbitration Rules. Each
arbitrator so appointed shall be deemed to have the
Qualifications and to be accepted by the parties as part of the
panel.
(c) The arbitration shall be conducted in the Austin metropolitan
area at a place and a time agreed by the Parties with the panel,
or if the Parties cannot agree, as designated by the panel. The
panel may, however, call and conduct hearings and meetings at
such other places as the Parties may agree or as the panel may,
on the motion of one Party, determine to be necessary to obtain
significant testimony or evidence.
(d) The Parties shall attempt to agree upon the scope and nature of
any discovery for the arbitration. If the Parties do not agree,
the panel may authorize any and all forms of discovery, including
depositions, interrogatories, and document production, upon a
showing of particularized need that the requested discovery is
likely to lead to material evidence needed to resolve the Dispute
and is not excessive in scope, timing, or cost.
(e) The arbitration shall be subject to the Federal Arbitration Act
and conducted in accordance with the Arbitration Rules to the
extent they do not conflict with this Section B.3 of this Dispute
Resolution Appendix. The Parties and the panel may, however,
agree to vary the provisions of this Section B.3 of this Dispute
Resolution Appendix or the matters otherwise governed by the
Arbitration Rules.
(f) The panel has no power to:
(i) rule upon or grant any extension, renewal, or continuance of
the Agreement;
(ii) award remedies or relief either expressly prohibited by the
Agreement or under circumstances not permitted by the
Agreement; or
(iii) grant provisional or temporary injunctive relief before
rendering the final decision or award.
(g) Unless the Parties otherwise agree, all Disputes regarding or
related to the same topic or event that are subject to
arbitration at one time shall be consolidated in a single
arbitration proceeding.
(h) A Party or other Person involved in an arbitration under this
Section B.3 may join in that arbitration any Person other than a
Party if
(i) the Person to be joined agrees to resolve the particular
dispute or controversy in accordance with this Section B.3
and the other provisions of this Dispute Resolution
Appendix applicable to arbitration; and
(ii) the panel determines, upon application of the Person
seeking joinder, that the joinder of that other person will
promote the efficiency, expedition, and consistency of the
result of the arbitration and will not unfairly prejudice
any other party to the arbitration.
24
(i) The arbitration hearing shall be held within thirty (30) days
after the appointment of the panel. Upon request of either Party,
the panel shall arrange for a transcribed record of the
arbitration hearing, to be made available to both Parties.
(j) The panel's final decision or award shall be made within thirty
(30) days after the hearing. That final decision or award shall
be made by unanimous or majority vote or consent of the
arbitrators constituting the panel, and shall be deemed issued at
the place of arbitration. The panel shall issue a reasoned
written final decision or award based on the Agreement and Texas
law; the panel may not act according to equity and conscience or
as an amicable compounder or apply the law merchant.
(k) The panel's final decision or award may include:
(i) recovery of Damages to the extent permitted by the
Agreement; or
(ii) injunctive relief in response to any actual or threatened
breach of the Agreement or any other actual or threatened
action or omission of a Party under or in connection with
the Agreement.
(l) The panel's final decision or award shall be final and binding
upon the Parties, and judgment upon that decision or award may be
entered in any court having jurisdiction over either or both of
the Parties or their respective assets. The Parties specifically
waive any right they may have to apply or appeal to any court for
relief from the preceding sentence or from any decision of the
panel made, or any question of law arising, before the final
decision or award. If any decision by the panel is vacated for
any reason, the Parties shall submit that Dispute to a new
arbitration in accordance with this Section B.3.
(m) Each Party shall pay one-half of the arbitrators' fees and
expenses, and shall bear all of its own expenses in connection
with the arbitration. The panel has the authority, however, to
award recovery of all costs and fees (including attorneys' fees,
administrative fees and the panel's fees and expenses) to the
prevailing Party in the arbitration.
4. Recourse to Courts. Nothing in the Dispute Resolution Procedure
limits the right of either Party to apply to a court or other tribunal
having jurisdiction to:
(a) enforce the Dispute Resolution Procedure, including the agreement
to arbitrate in this Dispute Resolution Appendix;
(b) seek provisional or temporary injunctive relief, in response to
an actual or impending breach of Article 10 of the Agreement or
otherwise so as to avoid irreparable damage or maintain the
status quo, until a final arbitration decision or award is
rendered or the Dispute is otherwise resolved; or
(c) challenge or vacate any final arbitration decision or award that
does not comport with Section B.3 of this Dispute Resolution
Appendix.
5. Submission to Jurisdiction. Each Party irrevocably submits to the
jurisdiction of the federal courts of the United States and the state
courts of Texas located in Tarrant County, Texas. Each Party waives
any defense or challenge to that jurisdiction based on lack of
personal jurisdiction, improper venue, or inconvenience of forum.
25
6. Confidentiality. The proceedings of all negotiations, mediations, and
arbitrations as part of the Dispute Resolution Procedure shall be
privately conducted. The Parties shall keep confidential all conduct,
negotiations, documents, decisions, and awards in connection with
those proceedings under the Dispute Resolution Procedure.
26
SCHEDULE 1 ACCOUNTING/FINANCE/ADMINISTRATIVE
1. TAX SERVICES (MANDATORY)
A) Tax Administration Service (Mandatory)
DESCRIPTION OF SERVICE: Tax Administration is defined as tax research and
planning and tax return preparation in compliance with tax statutes and
regulations. Tax Administration related to US federal and state income tax
planning and compliance will be a Mandatory Service. All other Tax
Administration Services will be Optional Services and are described below.
The Tasks to be performed under Tax Administration Service (Mandatory)
include, without limitation:
1) U.S. federal and state income tax compliance
(i) tax return preparation and tax payment processing
(ii) representation on audits and contests
(iii) management of development of tax and accounting systems to
minimize compliance costs
2) U.S. federal and state income tax accounting and reporting
(i) income tax account analysis
(ii) tax provision accounting
3) U.S. federal and state income tax planning and projects
(i) research and planning to assess impact of taxes on operations and
on proposed transactions
(ii) legislative and regulatory monitoring
B) Tax Administration Services (Mandatory)
DESCRIPTION OF SERVICES: Tax Administration other than Tax Administration
(Mandatory) as described above. Tax Administration Services (Mandatory)
includes the following tax Services.
1) Sales/use, excise, property, and other transaction taxes
(i) Tax return preparation and property tax rendition filling
(ii) Tax payment processing
(iii) Audits and contests
(iv) Research and planning
(v) Monitor legislation and regulations effecting the business
(vi) Tax accounting
2) International
(i) Manage tax return preparation and VAT collection calculations
(ii) Foreign audits and contests
(iii) Research and planning
(iv) Monitor legislation and regulations effecting the business
(v) Tax accounting
3) Systems development
(i) Develop design specifications for the new financial and logistics
systems to automate the tax functions
(ii) Assisting in the developments of semi-automated accounting systems.
(iii) Maintenance and modifications of tax systems
BASIS FOR PRICE: [*]
2. ACCOUNTING SERVICES (MANDATORY)
A) Payroll Production Service (Mandatory)
27
DESCRIPTION OF SERVICE: Responsible for the calculation and distribution of
payroll checks and incentive compensation checks. The Tasks to be performed
consist of:
1) Regular Checks - Processing of regular paychecks on a semi-monthly basis
2) Remote Checks - Processing of remote or supplemental paychecks for
adjustments
3) Gross Pay Adjustments to be completed during the next regular pay period
4) Garnishments
5) Stop Payments for lost or stolen paychecks
6) Bonuses and Special Payments Processing of special payments that
require development changes.
B) Payroll Tax Accounting Service (Mandatory)
DESCRIPTION OF SERVICE: The Tasks to be performed by the TSI Payroll Tax
Accounting Department will consist of:
1) Payroll Taxes - Charges for the collection, remittance and accounting
for payroll taxes and other moneys collected from employee paychecks.
The cost is driven by the number of payroll checks that are processed
in one calendar year.
2) Payroll Tax Reporting - Charges for reporting for Federal and State
withholding and unemployment taxes. The costs are driven by the number
of states worked.
3) Unemployment taxes - Charges for processing all claims for unemployment
accounts in each state, and the rates assigned by the States.
4) Payroll Tax Year End - Charges for the year end production of annual
wage and tax statements. The cost is driven by the number of W-2s
issued in one calendar year, and the number of states worked.
C) Payroll Customer Service (Mandatory)
DESCRIPTION OF SERVICE: The Tasks to be performed by the TSI Payroll
Customer Service Department will consist of:
1) Employment Verification - Completion of the wage and employment
information requested by lending institutions.
2) W-2 Reissues
3) Employment Receivables - The administrative and collection of balances
from employees for advances, uniforms, and salary overpayments, check
distribution special handling.
BASIS FOR PRICE: [*]
3. ADMINISTRATIVE SERVICES (OPTIONAL)
DESCRIPTION OF SERVICES: The Administrative Services to be performed by TSI
will consist of:
1) Hardware Purchasing: TSI performs all of the hardware purchasing for
PCO. The purchasing employee enters all materials in the Purchasing
Order database and orders equipment after approval from PCO
management. The purchase is billed directly to PCO, however, TSI
provides the service.
2) Shipping/Receiving: After equipment is ordered, it is then shipped to
TSI. TSI receives it, matches it to the Purchase Order, tags it and
records in a fixed spreadsheet. TSI then couriers it to PCO. PCO gets
their own mail, however, TSI gets PCO's equipment. TSI provides all
inter-company mail and provides the courier service for getting
equipment to PCO.
28
3) Fixed Asset Tracking: Currently, TSI is tagging all PCO equipment.
There is a TSI employee that updates all fixed assets and maintains
the database.
4) Software Purchasing and License Tracking: TSI maintains a database to
track all software licenses for employees and machines of PCO.
5) Purchase Order Database Administration: TSI maintains this database.
This involves watching for management approvals and assigning a
purchase order number.
6) Security: TSI owns the host equipment for the access control system.
Access cards were paid for by TSI and are maintained by TSI
7) Travel: TSI houses and pays for travel consultants. PCO gets a
discount based on volume.
8) Facilities: All facilities are handled by PCO.
9) Real Estate Planner: TSI has an exclusive contract with a broker but
PCO utilizes the broker. This has no cost, but it prevents the Planner
from working for TSI.
10) Notes Database Administration: TSI could create the following databases
for PCO by copying what TSI has already paid to have created: purchase
order db, timesheet db, software db, fixed asset db, HR db,
intellectual property db, contract & management dbs.
11) Communications: Specialist spends one day per week at PCO for moves and
changes. Emergencies are handled as necessary.
12) Volume Pricing: PCO is given volume pricing due to TSI's name on many
accounts. A few examples are: Xxxxxxx, American Airlines, Continental,
Microage, Computer City, Avnet, AT&T.
13) Shuttle Services: Shuttle service moving employees between TSI space,
PCO space and the church overflow parking is paid by TSI.
14) Network Administration: TSI provides network administration for all of
PCO.
BASIS FOR PRICE: [*]
4. TREASURY/FINANCE SERVICES (MANDATORY)
A) Banking Services (Mandatory)
DESCRIPTION OF SERVICE: The TSI Treasury Department shall provide PCO and
its subsidiaries, and PCO shall use and shall cause its subsidiaries to
use, centralized cash management services provided by the TSI Treasury
Department which are substantially the same as the cash management
services provided by TSI to PCO and its subsidiaries immediately prior to
the Effective Date. The Tasks to be performed by the TSI Treasury
Department will consist of:
1) Cash Management Strategies
(i) optimize the utilization of the daily cash activity
(ii) maintain separate bank accounts for PCO and, in connection
therewith, open and close bank accounts, as required.
(iii) design, develop and implement enhanced, practical, cost-
efficient cash management processes.
(iv) negotiate for new improved bank services
(v) review bank services and fees
2) Cash Mobilization
(i) initiate properly approved wire transfers
(ii) collect all available bank account balances
(iii) fund all disbursements accounts
(iv) coordinate daily with Trilogy, Inc. Investment Services for all
cash excess/shortfalls
(v) generate, as needed, advance to and/or from TSI
3) Coordination of Letters of Credit
4) Pass-Through expense of banking service charges
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5) Cash Investment - transfer excess cash to Trilogy, Inc. Investment
Services, which will invest such cash in a manner consistent with the
investment objectives utilized by Trilogy, Inc. Investment Services for
Trilogy, Inc. and its subsidiaries as of the date of this Agreement.
B) Corporate Finance Service (Mandatory)
DESCRIPTION OF SERVICE: The Tasks to be performed by the TSI Treasury
Department will consist of:
1) Coordination of Financing Decisions
2) Risk Assessment and Management
3) Financing Administration
BASIS FOR PRICE: [*]
5) AUDIT SERVICES (OPTIONAL)
DESCRIPTION OF SERVICE: Conducting internal audits and coordinating external
audit functions.
BASIS FOR PRICE: The Audit Services will be provided for a Use-based fee.
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SCHEDULE 2 HUMAN RESOURCES SERVICES
HUMAN RESOURCES SERVICES (OPTIONAL)
DESCRIPTION OF SERVICES: TSI Human Resources Department is responsible for
performing the following Services (and not merely Tasks) for PCO.
A) All Benefits
B) Cafeteria Plan
C) 401(K)
D) EAP
E) HRIS
F) Immigration Services
G) New Hire Process
H) Offer letter preparation/Review
I) Managing Employee Information and Documentation
J) Managing Employee Performance and Termination
K) Compensating Employees and Job Leveling
L) Bonus/Commission Programs
M) Providing Retirement Benefits
N) Training Management
O) Stock Option Plan Management
P) Providing and Managing Workers Compensation
Q) Developing Admin/Interpreting Corporate Policy
R) Admin Travel Policy
S) Evaluating Employees and their Performance/Progress
T) Relocating Employees
U) Providing Management Corporate Insurance Programs
BASIS FOR PRICE: [*]
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SCHEDULE 3 LEGAL SERVICES
LEGAL SERVICES (OPTIONAL)
DESCRIPTION OF SERVICES: Tasks will consist of the rendering professional
legal services for matters in the following areas:
A) Corporate Law
(i) Contract Review and Preparation
(ii) Mergers and Acquisitions
(iii) Corporate Registrations
(iv) Corporate Securities law compliance
(v) Real Estate
(vi) Bankruptcy
(vii) Intellectual Properties
(viii) Customs
B) Corporate Finance
(i) Public Financing
(ii) Private Financing
(iii) SEC Regulations
C) Litigation Support
BASIS FOR PRICE: [*]
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SCHEDULE 4 RECRUITING SERVICES
RECRUITING SERVICES (MANDATORY)
DESCRIPTION OF SERVICES: TSI will conduct all of the campus interviews,
handle all follow up correspondence and will oversee the entire hiring
process. It will be the responsibility of PCO to have necessary personnel
available for onsite interviews once the candidates have been chosen.
BASIS FOR PRICE: [*]
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SCHEDULE 5 TRILOGY UNIVERSITY SERVICES
TRILOGY UNIVERSITY SERVICES (MANDATORY)
DESCRIPTION OF SERVICES: TSI will provide employee training through the
Trilogy University (TU) program.
BASIS FOR PRICE: [*]
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SCHEDULE 6 PCORDER CUSTOMER TRAINING SERVICES
PCORDER CUSTOMER TRAINING SERVICE (OPTIONAL)
DESCRIPTION OF SERVICES: TSI will provide training for PCO customers
BASIS FOR PRICE: [*]
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SCHEDULE 7
TOTAL FEES FOR TERM 7/1/98 THROUGH 6/30/99
Service Person(s)
Tax Services: [*]
Accounting Services: [*]
Administrative Services: [*]
Treasury/Finance Services [*]
Human Resources Services [*]
Legal Services [*]
Total: [*] Persons
Total Billed: [*]
Annual Fee: $[*]
or
Monthly Fee: $[*]
Recruiting Services, Trilogy University Services, and pcOrder Customer Training
Services to be billed separately.
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