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EXHIBIT 10.6
"Confidential Treatment"
Kellwood Company File No. 1-7340
Exhibit 10.6 to Form 10-K
This copy of the Agreement for Services between Kellwood Company and Electronic
Data Systems Corporation is being filed pursuant to the requirements of Item 14
of Form 10-K and Item 601 of Regulation S-K
AGREEMENT
FOR
SERVICES
BETWEEN
KELLWOOD COMPANY
AND
ELECTRONIC DATA SYSTEMS CORPORATION
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AGREEMENT
FOR
SERVICES
THIS AGREEMENT FOR SERVICES, dated as of June 21, 1996 (the "Agreement")
is between Kellwood Company, a Missouri corporation, ("Kellwood") and
Electronic Data Systems Corporation, a Delaware corporation ("EDS"). Kellwood
and EDS agree as follows:
ARTICLE I. AGREEMENT, TERM AND DEFINITIONS
1.1 Agreement. During the Term, EDS will supply to Kellwood, and
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Kellwood will purchase from EDS, Kellwood's requirements for
those services described in this Agreement, all upon and subject
to the terms and conditions specified in this Agreement.
1.2 Term of Agreement. The term of this Agreement will begin on
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July 1, 1996 (the "Effective Date") and continue until the eighth
year anniversary of the Effective Date. The date on which this
Agreement expires due to passage of time is referred to in this
Agreement as the "Expiration Date". This Agreement may be
terminated prior to the Expiration Date in accordance with
Article X. The terms and conditions of this Agreement will
govern the period of the Exit Transition (as defined in Section
10.4).
1.3 Defined Terms. As used in this Agreement, the following terms
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have the meanings set forth below.
(a) "Access" means the enjoyment of physical and legal use and
operation of Software in order for EDS to provide Services.
(b) "EDS Software" means any Software which is owned by EDS (and not
proprietary to any other party) and operated by EDS in connection
with the performance of Services.
(c) "EDS-Vendor Software" means any Software which is proprietary to
any party other than EDS or Kellwood and which is licensed to EDS.
EDS-Vendor Software is identified on Schedule 1.3(c).
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(d) "Kellwood Software" means any Software which is owned by Kellwood
(and not proprietary to any other party) and which is to be
operated by or on behalf of Kellwood. Kellwood Software is
identified on Schedule 1.3(d), in accordance with information
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and schedules provided by Kellwood and refined by EDS.
(e) "Kellwood-Vendor Software" means any Software which is proprietary
to any party other than Kellwood or EDS and which is licensed to
Kellwood. Kellwood-Vendor Software is identified on
Schedule 1.3(e), in accordance with information and schedules
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provided by Kellwood and refined by EDS.
(f) "Services" means the services provided by EDS under Article III.
(g) "Software" means computer programs together with input and output
formats, program listings, narrative descriptions, operating
instructions, and supporting documentation and shall include the
tangible media upon which such programs and documentation are
recorded. Except as otherwise provided in this agreement,
Software includes any enhancements, translations, modifications,
updates, new releases, and other changes.
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(h) "Statement of Work" or "SOW" means that document attached to this
Agreement as Schedule 3.1, in which obligations of EDS and
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Kellwood are set forth in detail.
Other capitalized terms used in this Agreement are defined in the
Agreement from time to time.
ARTICLE II. PERSONNEL AND MANAGEMENT
2.1 Management. During the term of this Agreement, to enable EDS to
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perform the Services, EDS and Kellwood will each dedicate sufficient
personnel to carry out its obligations under this Agreement and will
perform those obligations on a timely basis. Account Management will be
provided as described in Schedule 3.1, Statement of Work, at Section
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1.6.
2.2 Executive Steering Committee. On or before the Effective Date, EDS
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and Kellwood will each give the other written notice of the names of three
members of their respective management staff (inclusive of the EDS
Relationship Executive and the Kellwood Representative), and those six
people will serve on an executive steering committee (the "Executive
Steering Committee"). Kellwood will designate one of its members on
the Executive Steering Committee to act as the chairman of the
Executive Steering Committee. The Executive Steering Committee will be
responsible for (i) generally overseeing the performance of each
party's obligations under this Agreement, (ii) making strategic
decisions for Kellwood in respect of [confidential treatment requested]
for information technology, and (iii) ensuring that EDS is given the
consistent support and environment to use EDS' methodologies to improve
Kellwood's information technology. Kellwood and EDS each may from time
to time replace the members of its management staff serving on the
Executive Steering Committee with other members of its management
staff, except that the EDS Relationship Executive and the Kellwood
Representative will be members of the Executive Steering Committee
throughout the Term. Kellwood and EDS may mutually agree to increase
or decrease the size of the Executive Steering Committee or to change
the qualifications of who may serve on the Executive Steering
Committee.
2.3 Meetings. Within 30 days after the Effective Date, the parties will
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mutually determine an appropriate set of periodic meetings to be held
by representatives of Kellwood and EDS. At a minimum, these meetings
will include the following:
(a) A monthly meeting among operational personnel to discuss ongoing
issues relating generally to daily performance and planned or
anticipated activities and changes; and
(b) A quarterly Executive Steering Committee meeting to review the
performance report, the project schedule report, the changes
report, and such other matters as appropriate.
2.4 Transition of Kellwood Personnel.
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(a) On or prior to the Effective Date, EDS will offer employment,
effective the start of business on the Effective Date, to the IS
employees of Kellwood identified in Schedule 2.4 ("Transition of
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Kellwood Personnel") at the respective compensation levels set
forth in that Schedule and in accordance with EDS' normal
employment policies.
(b) Kellwood has not and will not make any representation, promise, or
other communication, whether written or oral, to the
Transitionable Employees regarding employment with EDS, or the
employment benefits, plans, or practices of EDS without obtaining
the prior written consent of EDS. Any "stay" bonus offered to a
Transitionable Employee by Kellwood will be the financial
responsibility of Kellwood.
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2.5 Financial Responsibility for EDS Personnel. EDS will pay for
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personnel expenses, including wages, of its employees performing the
Services.
2.6 Hiring of Employees. During the Term and for a period of 12 months
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thereafter, Kellwood will not solicit, directly or indirectly, for
employment or employ any employee of EDS involved in the performance of
EDS Services under this Agreement, without the prior written consent of
EDS; [confidential treatment requested].
2.7 Consents. EDS has acquired prior to the Effective Date any consents,
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including third-party consents, which it may be required by any party,
including third parties, to obtain with respect to this Agreement or its
obligations under this Agreement. Kellwood will use reasonable best
efforts to acquire prior to the Effective Date any consents, including
third-party consents, which it may be required by any party, including
third parties, to obtain with respect to this Agreement or its
obligations under this Agreement and, with respect to any such consents
which are not acquired prior to the Effective Date, will acquire such
consents as soon thereafter as possible. Each party will, during the
term of this Agreement, acquire any further such consents which may be
required. When approval, agreement, permission, acceptance, consent or
similar action by either EDS or Kellwood is required by any provision of
this Agreement, such action will not be unreasonably delayed or
withheld.
ARTICLE III. SERVICES TO BE PERFORMED BY EDS
3.1 EDS Services. During the term of this Agreement EDS will provide to
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Kellwood the Services described in the Statement of Work attached as
Schedule 3.1 to this Agreement.
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3.2 Additional Services. EDS will provide Kellwood such additional
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services as Kellwood and EDS agree, on terms mutually agreed upon by EDS
and Kellwood in writing (when agreed, "Additional Services"). EDS and
Kellwood will enter into separate task orders (when signed by both
parties, a "Task Order"), which will be governed as Services by the
terms and conditions of this Agreement.
(a) EDS will provide Kellwood a proposal for performing additional
services including a description of and charges for the scope of
work. Kellwood may accept or reject an EDS proposal in its sole
discretion. If Kellwood accepts an EDS proposal, the parties will
negotiate in good faith to agree upon a task order describing the
services, applicable payments and resources, and any additional
terms and conditions.
(b) If Kellwood rejects an EDS proposal, Kellwood will offer EDS the
right of first refusal as described in Section 4.4. If EDS elects
not to exercise that right of first refusal, Kellwood may elect to
perform the services using its employees or outside contractors,
upon written permission of EDS to the extent that such services
involve EDS Equipment, EDS Software or EDS-Vendor Software, so
long as the services do not impair EDS' ability to perform its
obligations under this Agreement. In accordance with Section 2.7,
such permission will not be withheld unreasonably. For a third
party to obtain the right to Access EDS Software, the third-party
will be required to enter into a non-disclosure and non-
competition agreement with EDS. EDS will cooperate with Kellwood
and its employees and/or contractors to permit the performance of
additional services by Kellwood employees or contractors. If such
cooperation requires EDS resources beyond those otherwise provided
for the Monthly Charge (as defined in Section 8.1), the assistance
will be provided as Additional Services, for an additional charge.
3.3 Capacity Requirements. Those Kellwood business units as of the
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Effective Date which are included in the scope of this Agreement are set
forth on Schedule 3.3 ("Kellwood Business Units"). Services to be
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provided under the Statement of Work will account for reasonable
aggregate Kellwood business growth of [confidential treatment requested]
as of the Effective Date, with no individual Kellwood Business Unit
growth greater than
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[confidential treatment requested] those services. Capacity demand
increase caused by growth of a Kellwood Business Unit greater than
[confidential treatment requested] will be significant and may require a
Change Request (ref. Section 8.3) or Task Order (ref. Section 3.2), as
appropriate.
ARTICLE IV. KELLWOOD OBLIGATIONS
4.1 Facilities and Related Services. At each of its facilities where EDS
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personnel are performing Services, Kellwood will provide EDS with space
comparable to that of Kellwood staff of the same reporting level,
including a conference or other room suitable for a training room,
telephone and office-related equipment, supplies, and parking as EDS
requires in connection with performance of the Services. Kellwood will
provide premises security services in Kellwood's premises and will give
EDS access to such premises 24 hours a day, seven days a week.
Kellwood represents and warrants to, and agrees with, EDS that all
facilities provided by Kellwood under this Agreement (i) are and will
be free of health and safety hazards, (ii) comply with and will be
maintained in compliance with all applicable local, state, and federal
laws, including, but not limited to, the Americans with Disability Act,
and (iii) meet and will meet such reasonable operational, environmental,
and safety requirements as EDS may communicate from time to time to
Kellwood for the proper operation and maintenance of the Services.
4.2 Kellwood Operational Obligations. Kellwood will establish, in
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coordination with EDS, appropriate data processing priorities for
Kellwood. Kellwood will cooperate with EDS by making available, as
reasonably requested by EDS, such facilities, management decisions,
personnel, information, approvals, and acceptances so that EDS may
timely perform Services. Kellwood acknowledges that the performance of
Services by EDS requires the support and cooperation of Kellwood,
including as described in the Statement of Work. Kellwood will
establish measures which will be carefully designed to reinforce
desired outcomes, to help ensure that the Kellwood organization focuses
on and achieves results associated with the services described in this
Agreement.
4.3 Kellwood Financial Obligations. Kellwood will retain responsibility
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and pay all costs and expenses including without limitation depreciation
or installment payments as applicable, insurance, maintenance and taxes,
in order for EDS to perform the Services, its expenses for items such
as [confidential treatment requested] (each, a "Kellwood Retained
Expense"). Within 120 days after the Effective Date, Kellwood and EDS
will identify Kellwood Retained Expenses and attach that list to this
Agreement as Schedule 4.3. EDS will assist Kellwood in managing
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Kellwood Retained Expenses. In addition to Kellwood Retained Expenses
and any other financial responsibilities of Kellwood expressly provided
in this Agreement, Kellwood will pay all costs and expenses related to
each item which is to be provided by Kellwood hereto and for which the
[confidential treatment requested] the items set forth in Section 4.1.
4.4 Right of First Refusal. During the term of this Agreement, Kellwood
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hereby grants to EDS a right of first refusal to provide services
similar to those described in the SOW that are not expressly provided
for by this Agreement before obtaining such services from a
third-party. During the first three contract years, this right of
first refusal will apply to services similar to those set forth in
Schedule 3.1, the SOW. From July 1, 1999 throughout the term of this
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Agreement, the right of refusal will apply only to information
technology-related services such as those set out in Sections 1 and 2.4 of
the SOW, including areas such as those identified in Sections 1 and 2.4.2
which are not included as of the Effective Date. Kellwood and EDS will
work together in the Request for Proposal process, and EDS will bid at the
same time as third-party bidders. In connection with such right of
first refusal, Kellwood will provide EDS with information relating to
the request by Kellwood for those services (including, but not limited
to, information regarding the time period within which the third party
offered to provide the services and the price at which such services
were offered). Prior to advising Kellwood whether EDS will exercise
right of first refusal, EDS will be permitted the same amount of time
to review such information and material as the third-party was provided
to prepare its offer. EDS may exercise such right of first refusal if
(i) EDS offers to provide such services within the same time period as
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that proposed by the third-party, and (ii) EDS offers such
services at the same price as, or a better price than, that of the
third-party. If EDS exercises this right of first refusal, Kellwood
will obtain those services from EDS, and, if EDS does not exercise such
right of first refusal, Kellwood may obtain the services from the
third-party. If Kellwood obtains such services from a third-party, any
Software provided by such third-party that will be operated by EDS must
conform to, and be compatible with, the then-current operating
environment in the facilities from which EDS is providing Services and
must be compliant with any applicable EDS operating standards,
confidentiality standards and procedures. In addition, Kellwood will
ensure that any third-party-provided services or Software will not (a)
interfere with the ability of EDS to provide Services or Additional
Services or (b) increase the costs of EDS associated with such
provision of Services and Additional Services.
ARTICLE V. EQUIPMENT AND RELATED AGREEMENTS
5.1 Kellwood-Owned Equipment. During the Term, Kellwood will furnish to
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EDS, for EDS' use at no charge, the equipment owned by Kellwood that is
listed on the attached Schedule 5.1 in accordance with information
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and schedules provided by Kellwood and refined by EDS (the "Kellwood-Owned
Equipment"), which Kellwood-Owned Equipment will remain the property of
Kellwood and a Kellwood Retained Expense.
5.2 Kellwood-Leased Equipment. During the term of this Agreement,
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Kellwood will furnish to EDS, for EDS' use at no charge, the equipment
leased by Kellwood that is listed on the attached Schedule 5.2 in
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accordance with information and schedules provided by Kellwood and refined
by EDS (the "Kellwood-Leased Equipment"). Kellwood-Leased Equipment is a
Kellwood Retained Expense.
5.3 Third-Party Approvals. Kellwood will take all actions reasonably
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necessary to obtain any consents, approvals, or authorizations from
third parties necessary for EDS to lawfully access, operate, and use
(at or from any location where Services are to be provided) the
Kellwood-Owned Equipment and the Kellwood-Leased Equipment, including
without limitation the payment of all costs and expenses associated
therewith. Kellwood hereby appoints EDS as its single point of contact
for all matters pertaining to the Kellwood-Owned Equipment and the
Kellwood-Leased Equipment and will promptly notify all appropriate
third parties of such appointment. The Kellwood Representative may at
any time exercise control over EDS' actions with respect to such third
parties.
5.4 Return of Kellwood Equipment. Upon the expiration or termination of
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this Agreement, EDS will return each item of Kellwood-Owned Equipment
and Kellwood-Leased Equipment to Kellwood in substantially the same
condition it was in when initially provided to EDS, reasonable wear and
tear excepted.
5.5 Provision of EDS Equipment. "EDS Equipment" means equipment owned or
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leased by EDS. Such equipment will be identified on Schedule 5.5.
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Notwithstanding the location of the EDS Equipment at a Kellwood
facility or failure to list any item of EDS Equipment on Schedule 5.5,
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all right, title and interest in and to any EDS Equipment will be and
remain in EDS, and Kellwood will have no interest in that EDS
Equipment.
(a) Use of EDS Equipment by EDS Employees. The Relationship
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Executive may provide EDS Equipment for use by EDS employees on
behalf of Kellwood, [confidential treatment requested].
(b) Provision of EDS Equipment to Kellwood. EDS may, upon mutual
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agreement with Kellwood as to equipment and charges (if any),
provide to Kellwood certain EDS Equipment at mutually agreed
location(s). Kellwood, with the advice of EDS, will prepare and
maintain, at Kellwood's cost and expense, any Kellwood facility in
which the EDS Equipment will be installed in accordance with the
manufacturers' specifications and all applicable codes, statutes,
regulations and standards.
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(c) Installation of EDS Equipment. EDS will arrange for, and will
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determine the mode of, the transportation and installation of each
item of EDS Equipment to such location(s) as may be mutually
agreed to by the parties. In the event that Kellwood relocates
any Kellwood facility in which EDS Equipment may be installed,
Kellwood will be responsible for the relocation costs of the EDS
Equipment.
(d) Maintenance of EDS Equipment. EDS will be responsible for
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maintenance of all EDS Equipment after installation at a Kellwood
location; provided, however, that Kellwood will be responsible for
all costs and expenses of repair or replacement to correct any
damage to EDS Equipment or any part thereof (reasonable wear and
tear excepted) caused by Kellwood, its employees, or its agents or
invitees (exclusive of EDS).
5.6 Return of EDS Equipment. Upon the expiration or any termination of
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this Agreement, Kellwood will make the EDS Equipment at any Kellwood
facility available to EDS for pickup; provided, however, that if at
expiration or termination Kellwood is not delinquent in its payments to
EDS under this Agreement, Kellwood may elect to purchase any and all of
the EDS Equipment then located at the Kellwood location(s) from EDS
"WHERE IS" and "AS IS" [confidential treatment requested]. Such right
to purchase will expire (a) if it is not exercised by Kellwood or (b)
if full payment is not received by EDS, in either case, prior to the
date of expiration or termination of this Agreement. EDS will execute
a xxxx of sale in a form reasonably satisfactory to the parties in
connection with such purchase. Kellwood will expressly assume any ad
valorem property and other taxes and expenses that may be assessed or
payable against the EDS Equipment after title passes to Kellwood. Any
item of EDS Equipment not purchased by Kellwood pursuant to this
Section will be returned to EDS in substantially the same condition it
was in when initially provided to Kellwood, reasonable wear and tear
excepted.
5.7 Kellwood Maintenance Agreements. Kellwood will retain all of
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Kellwood's right, title and interest in and to the agreements listed in
Schedule 5.7 (the "Kellwood Maintenance Agreements") relating to the
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maintenance of Kellwood-Owned Equipment and Kellwood-Leased Equipment.
EDS will manage the administration of the Kellwood Maintenance Agreements.
Kellwood represents and warrants to EDS that, as of the Effective Date,
(i) it is not (and, to its knowledge, the provider of the maintenance
services is not) in default in any material respect under any of the
Kellwood Maintenance Agreements and (ii) it will deliver to EDS full
and complete copies of the Kellwood Maintenance Agreements (including
any amendments thereto) prior to the Effective Date.
5.8 Further Assurances. Kellwood and EDS agree to execute and deliver
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such other instruments and documents as either party reasonably requests
to evidence or effect the transactions contemplated by this Article. Upon
EDS' request and at EDS' expense, Kellwood agrees to execute UCC-1
filing statements for EDS Equipment, solely for notice purposes.
ARTICLE VI. SOFTWARE
6.1 Kellwood Software. Kellwood Software will remain Kellwood's property
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and a Kellwood Retained Expense, and EDS will have no ownership
interests or other rights in the Kellwood Software, except as provided
in this Section. Kellwood grants to EDS the right to Access Kellwood
Software to provide the Services, without charge to EDS, and will pay
all costs and expenses associated with obtaining that right. The
Kellwood Software will be made available to EDS in such form and on
such media as EDS may reasonably request, together with existing
documentation and other materials.
6.2 Kellwood-Vendor Software. On or before the date EDS will begin to
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access such Software, Kellwood will obtain all consents necessary to
permit EDS to Access the Kellwood-Vendor Software, in writing, and will
pay all costs and expenses associated therewith, if any. Kellwood will
provide written evidence of such
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consents to EDS upon EDS' request. The Kellwood-Vendor Software will be
made available to EDS in such form and on such media as EDS may
reasonably request, together with appropriate documentation and other
materials. Kellwood-Vendor Software is a Kellwood Retained Expense,
and during the term of this Agreement, Kellwood will pay all required
license, installation, maintenance and upgrade fees with respect to the
Kellwood-Vendor Software. Nothing contained in this Agreement will
require either party to violate the proprietary rights of any
third-party in any Software.
6.3 EDS Software. Software proprietary to EDS which EDS may bring to
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Kellwood as EDS Software will remain EDS' property and Kellwood will
have no rights or interests in that EDS Software except that if
Kellwood requests in writing at least six months prior to the
Expiration Date, and Kellwood agrees [confidential treatment
requested], EDS shall grant to Kellwood a perpetual, nontransferable,
nonexclusive license to use, after the Expiration Date, any application
software programs (including existing documentation and source code
required for maintenance) of any EDS Software then being used by EDS in
rendering services to Kellwood (for purposes of this Section, the
"Licensed EDS Programs"), subject to Kellwood and EDS entering into an
agreement, in form and substance reasonably satisfactory to EDS and
Kellwood, containing such terms and conditions as may be appropriate
including, without limitation, the following terms and conditions to
protect the confidentiality of the Licensed EDS Programs:
(a) Operators. Except with the prior written consent of EDS, which
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consent will not be unreasonably withheld, or to the extent
required by natural disaster or similar emergency, the Licensed
EDS Programs will not be operated, directly or indirectly, (i) by
persons other than bona fide employees of Kellwood, or (ii) on
equipment that is not under the control of Kellwood. In the
event Kellwood enters into an agreement with a third-party
service provider for provision of services which require Access
to the Licensed Programs, EDS will consent to Access for that
provider to perform services for Kellwood upon that third-party
service provider's executing with EDS a non-disclosure and
non-compete agreement satisfactory to EDS.
(b) Kellwood Work. Except with the prior written consent of EDS,
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which consent will not be unreasonably withheld, only Kellwood
work will be processed utilizing the Licensed EDS Programs. EDS
understands that Kellwood desires to communicate electronically
with vendors, customers and business partners and that such
communication may involve EDS Software and Licensed EDS Programs.
EDS and Kellwood will develop terms and conditions upon which
such vendors, customers and business partners will be provided
Access to EDS Software during the term of this Agreement and,
upon expiration or termination of this Agreement, to Licensed EDS
Programs. All Kellwood vendors, customers and business partners
will have to execute such terms and conditions prior to being
provided Access to EDS Software or Licensed EDS Programs. When
those terms and conditions are developed, a copy will be attached
to this Agreement as Schedule 6.3, ("Third-Party Access to EDS
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Software or Licensed EDS Programs").
(c) Confidentiality. Kellwood will keep the Licensed EDS Programs
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confidential, will not at any time allow the Licensed EDS
Programs, or any of their various components or any
modifications, to be disclosed to any party, or sold, licensed,
assigned, leased or commercially exploited or marketed in any
way, with or without charge, by Kellwood or its employees or
agents and, except to the extent required for normal operation of
the Licensed EDS Programs as permitted by this Agreement in the
day to day business operations of Kellwood, Kellwood will not
permit the Licensed EDS Programs to be copied or reproduced, in
whole or in part, by any party at any time.
(d) Irreparable Harm. Kellwood acknowledges that the Licensed EDS
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Programs are the valuable property of EDS, that violation in any
material respect of any provision of the terms of this Agreement
would cause EDS irreparable injury for which it would have no
adequate remedy at law and that EDS shall be entitled to
preliminary and other injunctive relief against any such
violation.
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Such injunctive relief shall be in addition to, and in no way in
limitation of, any and all other remedies or rights which EDS
shall have at law or in equity.
Kellwood understands that any such Licensed EDS Program will be provided
to Kellwood upon expiration of this Agreement "WHERE IS" and "AS IS"
without ongoing software support or maintenance.
If Kellwood desires EDS to grant use of any EDS Software during the term
of this Agreement to process data for one or more of its vendors,
customers or business partners, EDS will estimate the impact of such
processing upon the then-current Kellwood environment. This estimate
and due diligence will involve determination of capacity demand,
resource level requirements, and impact on EDS' ability to provide
Services to Kellwood as required under this Agreement. If due diligence
pursuant to a Kellwood request for EDS' consent to processing data for a
Kellwood vendor, customer or business partner indicates that additional
capacity or resources will be required to support such processing, EDS
will provide written consent contingent upon [confidential treatment
requested].
6.4 EDS-Vendor Software. EDS will obtain all consents necessary to permit
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EDS and Kellwood to Access the EDS-Vendor Software during the term of
this Agreement and will pay all costs and expenses associated
therewith. During the term of this Agreement, EDS will pay all
required license, installation, maintenance and upgrade fees with
respect to the EDS-Vendor Software.
6.5 EDS Development Tools. EDS will retain all right, title and interest
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in and to any and all Software, software development tools, know how,
methodologies, processes, technologies or algorithms used in providing
the Services and the Additional Services which are based upon trade
secrets or proprietary information of EDS or are otherwise owned or
licensed by EDS.
6.6 Software Development Services. If at any time during the term of this
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Agreement, Kellwood requests, or EDS proposes and Kellwood agrees, that
EDS develop Software to be used in Kellwood's business, or that EDS
upgrades or enhances any existing Kellwood Software, EDS Software,
Kellwood-Vendor Software or EDS-Vendor Software, or that EDS implements
any third-party software applications, then the parties will use the
then-current EDS methodology and procedures unless otherwise agreed in
the particular Task Order. Kellwood acknowledges that the obligations
of EDS to perform the development, modifications and enhancements will
be dependent upon Kellwood's performance of those obligations described
in this Section and in the applicable Task Order. From time to time as
may be necessary, Kellwood will provide EDS with access to those
employees and customers of Kellwood, including management personnel and
Software users, from whom EDS requires information.
(a) Approval Procedures.
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(i) For Phases other than the Testing Phase. A joint EDS and
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Kellwood team will be created for each project. That joint
team will develop a project plan requiring key checkpoints.
Once the joint team has reached concurrence as to each
checkpoint, the team will present that portion of the
project to Kellwood for approval. To the extent that any
portion of any phase (other than the testing phase) of the
then-current EDS methodology or a particular project plan
requires approval by Kellwood beyond the project team level,
EDS will at the time of delivery of such portion state in
writing a reasonable period of time (in no case to be less
than 10 business days) (the "Review Period") within which
such portion shall be approved by Kellwood or rejected, in
writing. If Kellwood does not reject or approve in writing
within the Review Period, the deliverable or product in
question shall be deemed approved, unless Kellwood and EDS
have agreed in advance that a software development service
is a major project and will require actual written approval
by Kellwood. If any deliverable or product is rejected,
Kellwood shall state in writing the specific reasons for
rejection, and EDS shall make the appropriate changes and
redeliver the revised deliverable or product, again stating
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in writing the appropriate Review Period, which may in many
instances be a shorter period of time than was designated as
the initial Review Period. Work on any subsequent phase
will not commence until the deliverables for the prior phase
have been approved in writing or deemed approved.
(ii) For the Testing Phase. On completion of the testing phase
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of the then-current EDS methodology and within ten working
days thereafter (or such other period as the parties may
agree), Kellwood will:
(A) accept the Developed Software by providing EDS
with written notice of such acceptance, if the
Developed Software substantially conforms to the
testing requirements, or
(B) reject the Developed Software, if the Developed
Software does not substantially conform to the
testing requirements, by providing EDS with
written notice of such rejection which specifies
the manner in which Kellwood believes that the
Developed Software does not conform.
(b) Warranty to Conform to Business and Technical Design Document.
-------------------------------------------------------------
EDS warrants that the portions of the Developed Software
developed by EDS will substantially conform to the business
and technical design document [confidential treatment
requested]of that Developed Software. Kellwood and EDS will
identify any Developed Software that will not be utilized in
a production environment during [confidential treatment
requested] following its implementation and will agree upon
a reasonable start date for [confidential treatment
requested].
(i) Remedy. The parties expressly acknowledge and agree that
------
notwithstanding anything to the contrary in this Agreement,
Kellwood's sole and exclusive remedy for any breach of the
warranty set forth in this Section will be the correction by
EDS of any defects of the Developed Software that cause it
not to substantially conform to the applicable business and
technical design document or, at EDS' sole discretion, the
refund by EDS to Kellwood of the charges paid for its
development. [confidential treatment requested] EDS will
provide, at no charge to Kellwood, such corrections to the
Developed Software as may be necessary to make it
substantially conform to the Business and Technical Design
Document, provided that Kellwood provides, or causes to be
provided to EDS, (i) access, in a timely manner, to the
Developed Software and associated equipment necessary for
EDS to complete such work and (ii) the information specified
in this Section. Kellwood will notify EDS in writing of any
defects in the Developed Software that cause it not to
substantially conform to the applicable business and
technical design document and will provide EDS with adequate
information to identify the circumstances in which such
nonconformance is discovered. EDS will correct such
nonconformance and furnish Kellwood with revised or updated
Developed Software documentation reflecting any corrections
made to the Developed Software pursuant to this Section.
(ii) Exceptions. Should Kellwood or any party other than EDS
----------
or its agents perform maintenance on, or make any
modifications or enhancements to, the Developed Software, the
warranty described in this Section will automatically be void.
If the nonconformance arises as a result of Kellwood's act or
omission or the malfunction of any equipment,
Kellwood-supplied Software or third-party software, EDS will
be entitled to compensation based upon EDS' then-standard
commercial rates for all efforts by EDS to diagnose and
repair any such non-conformance.
9
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6.7 Developed Software. "Developed Software" means all Software developed
------------------
by EDS, EDS agents or EDS subcontractors pursuant to this Agreement.
(a) Developed Software [confidential treatment requested]. Prior to
-----------------------------------------------------
commencement of developing any Developed Software, Kellwood and
EDS will execute a Change Request (ref. Section 8.3) or Task Order
(ref. Section 3.2), as appropriate, [confidential treatment
requested].
(b) Grant of License. As to Developed Software [confidential
----------------
treatment requested], EDS will grant to Kellwood an irrevocable,
perpetual, world-wide, royalty-free, nonexclusive license to both
object code and source code of the Developed Software, effective
as of the date of its implementation; provided, however, that
except with the prior written consent of EDS, which consent will
not be unreasonably withheld, or to the extent required by natural
disaster or similar emergency, the Developed Software will not be
operated, directly or indirectly, (i) by persons other than
bona fide employees of Kellwood, or (ii) on equipment that is not
under the control of Kellwood. In the event Kellwood enters into
an agreement with a third-party service provider for provision of
services which require Access to the Developed Software, EDS will
consent to Access for that provider to perform services for
Kellwood upon that third-party service provider's executing with
EDS a non-disclosure and non-compete agreement satisfactory to
EDS. Kellwood agrees that, except with the prior written consent
of EDS as described in sub-Section 6.7(c), only Kellwood work
shall be processed utilizing Developed Software. Kellwood agrees
that it will keep the Developed Software confidential, will not at
any time allow the Developed Software, or any of the various
components thereof or any modifications thereto, to be disclosed
to any party, or to be sold, licensed, assigned, leased or
commercially exploited or marketed in any way, with or without
charge, by Kellwood or its employees or agents and, except to the
extent required for normal operation of the Developed Software as
permitted in this Agreement in the day to day business operations
of Kellwood, will not permit the Developed Software to be copied
or reproduced, in whole or in part, by any party at any time.
(c) Use of Kellwood License to Process Data for Kellwood Vendor,
-----------------------------------------------------------
Customer or Business Partner. If Kellwood desires to use the
----------------------------
license granted in sub-Section 6.7(b) to process data for one or
more of its vendors, customers or business partners, EDS will
estimate the impact of such processing upon the then-current
Kellwood environment. This estimate and due diligence will
involve determination of capacity demand, resource level
requirements, and impact on EDS' ability to provide Services to
Kellwood as required under this Agreement. If due diligence
pursuant to a Kellwood request for EDS' consent to processing data
for a Kellwood vendor, customer or business partner indicates that
additional capacity or resources will be required to support such
processing, EDS will provide written consent contingent upon
Kellwood and EDS carrying out Additional Services to support such
processing.
(d) EDS' Provision of Services. If Kellwood's processing of its
--------------------------
vendors', customers' or business partners' data, whether using
Developed Software or Kellwood Software, substantially interferes
with EDS' ability to provide Services, the consequences of that
interference on EDS performance will not be a cause for
termination of this Agreement.
6.8 Residual Knowledge and Independent Development. Notwithstanding
----------------------------------------------
anything in this Agreement to the contrary, either party shall be free
to use the ideas, concepts, or know-how developed by it during the
performance of Services that are in non-tangible form and may be
retained by its employees. Each party retains all right, title and
interest in and to any and all Software, software development tools,
know how, methodologies, processes, technologies or algorithms used to
perform under this Agreement which are based upon its trade secrets or
its proprietary information or otherwise owned or licensed by it.
Notwithstanding anything in this Agreement to the contrary, either
party may acquire, license, market, distribute, develop for
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itself or others, or have others develop for it, similar technology
performing the same or similar functions as the technology contemplated
by this Agreement.
ARTICLE VII. CONFIDENTIALITY, SECURITY AND AUDIT RIGHTS
7.1 Kellwood's Data. Information relating to Kellwood or its customers
---------------
contained in Kellwood's data files ("Kellwood's Data") is the exclusive
property of Kellwood. EDS is authorized to have access to and make use
of Kellwood's Data as appropriate for the performance by EDS of its
obligations under this Agreement. Upon the termination or expiration
of this Agreement, EDS will return to Kellwood all of Kellwood's Data
in EDS' then existing machine-readable format and media. Kellwood will
provide written instruction to EDS as to disposition of that data. EDS
will not use Kellwood's Data for any purpose other than providing the
Services or Additional Services.
7.2 Facilities Security. EDS will comply with the written security
-------------------
procedures that are in effect at the Kellwood premises on the Effective
Date. EDS will also institute such additional security procedures at
the Kellwood premises as Kellwood reasonably requests as an Additional
Service. Kellwood will provide all necessary security personnel and
related equipment at the Kellwood premises. Except (a) as is necessary
in the conduct of Kellwood's business, including Kellwood's compliance
hereunder, and (b) as is necessary to comply with the rights of third
parties, without the prior consent of EDS no employee, agent,
contractor or invitee of Kellwood will operate or assist in operating
equipment or Software to be used by EDS under this Agreement or enter
any room where any such equipment or Software is located.
7.3 Audit Rights. EDS will provide Kellwood auditors and inspectors that
------------
Kellwood designates in writing with access to Kellwood facilities where
EDS is performing Services, including but not limited to the corporate
data center, for the purpose of performing audits or inspections of
Kellwood's business. EDS will provide reasonable assistance of a
routine nature to such auditors and inspectors, and EDS will provide
additional assistance as an Additional Service.
ARTICLE VIII. PAYMENTS TO EDS
8.1 Charges for Services.
--------------------
(a) Base Services and the IBS Program for Change. In consideration
--------------------------------------------
for the performance by EDS of the Base Services and the IBS
Program for Change described in the SOW, Kellwood will make
payments to EDS as set forth in Schedule 8.1(a), "Estimated
---------------
Monthly Charges." Each such payment will be a "Monthly Charge."
(b) Shared Savings. EDS is investing in this relationship with
--------------
Kellwood by providing its resources and the resources of its
subsidiary A.T. Xxxxxxx in performing Services for the Supplier
Management and the Warehousing/Distribution/Logistics Programs for
Change. EDS is risking compensation for those Services upon
Kellwood's achieving and sharing savings as described in this sub-
Section. For purposes of this Agreement:
* "FY" means the 52-week fiscal year used to report Kellwood's
annual financial results ending April 30.
* "FY 1" means that partial fiscal year from the Effective Date
through April 30, 1997.
* "FY 2" means May 1, 1997 through April 30, 1998.
* "FY 3" means May 1, 1998 through April 30, 1999.
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(i) Realized Savings. Kellwood and EDS will measure realized
----------------
savings [confidential treatment requested] in the areas of
(i) supplier management, (ii)
warehousing/distribution/logistics, and (iii) [confidential
treatment requested] (the "Realized Savings"). Realized
Savings are actual savings achieved after the Effective
Date. [confidential treatment requested]. Realized
Savings will be calculated monthly and paid out on the 30th
of each May, August, November and February [confidential
treatment requested]. It is the intention of the parties
that Realized Savings be paid out as follows.
(ii) Savings Realized During FYs 1, 2 and 3. [confidential
--------------------------------------
treatment requested]. Thereafter through FY 3, Kellwood and
EDS will share as follows:
[confidential treatment requested] [confidential treatment requested]
In excess of: Up to: To Kellwood To EDS
------------ ----- ----------- ------
$[confidential treatment requested] [confidential treatment requested]
$[confidential treatment requested] [confidential treatment requested]
$[confidential treatment requested] [confidential treatment requested]
(iv) [confidential treatment requested]. The monthly
amount [confidential treatment requested] during the
remaining term of the Agreement in [confidential treatment
requested] will be determined by [confidential treatment
requested] the cumulative Realized Savings for FYs 1, 2 and
3 as follows:
The monthly charge, if any, will be based on [confidential
treatment requested]:
[confidential treatment requested] [confidential treatment requested]
(in Millions)
$[confidential treatment requested] [confidential treatment requested]
$[confidential treatment requested] [confidential treatment requested]
$[confidential treatment requested] [confidential treatment requested]
If [confidential treatment requested], then, contingent upon
EDS continuing to provide Services under this Agreement,
beginning with May, 1999, each month during the term
Kellwood will pay EDS an amount equal to [confidential
treatment requested].
(v) Measurement of Savings. For effective measurement of
----------------------
savings in the area of supplier management, Kellwood and EDS
will:
[confidential treatment requested], and
Establish a firm date as the starting point for the
initiative, represented by [confidential treatment
requested], and count all improvements after that date as a
result of the sourcing effort.
For measurement in the areas of
warehousing/distribution/logistics and [confidential
treatment requested], Kellwood and EDS will [confidential
treatment requested] on an ongoing basis.
(vi) Commitment. As set forth in Section 4.2, Kellwood will
----------
establish measures which will be carefully designed to
reinforce desired outcomes, to help ensure that the
Kellwood organization focuses on and achieves results
associated with the services described in this Agreement.
8.2 Charges for Additional Services. Charges for Additional Services will
-------------------------------
be as set forth in the applicable Task Order.
12
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8.3 Change Requests. [confidential treatment requested] and will be
---------------
addressed in change orders using a mutually agreeable change control
process, [confidential treatment requested].
8.4 Reimbursable Expenses. Travel expenses incurred by EDS in support of
---------------------
[confidential treatment requested]. Kellwood will pay, or reimburse EDS
for, [confidential treatment requested] expenses incurred by EDS with
Kellwood's specific approval.
8.5 Cost of Living Adjustment.
-------------------------
(a) Adjustment. "CPI" means the Consumer Price Index for all Urban
----------
Consumers, U.S. City Average, for All Items (1982-84 = 100), as
published in the Bureau of Labor Statistics of the Department of
Labor. [confidential treatment requested] The CPI as of the
[confidential treatment requested] anniversary of the Effective
Date, July 1, [confidential treatment requested], will be the
"Initial Base Index." If the CPI shall on the [confidential
treatment requested] anniversary or any subsequent anniversary of
the Effective Date (each, a "Current Index") be higher than the
Initial Base Index or the highest CPI at any previous anniversary
of the Effective Date after July 1, [confidential treatment
requested] (such highest CPI, the "Base Index"), then, effective
as of such anniversary, [confidential treatment requested] under
this Agreement attributable to the period following such
anniversary date [confidential treatment requested], as
previously adjusted pursuant to this Section, shall be increased
[confidential treatment requested] that the Current Index
increased from the Base Index. If on the third or any subsequent
anniversary of the Effective Date the Current Index shall exceed
the Base Index by greater than [confidential treatment requested]
percentage points, then Kellwood and EDS will agree upon a
reasonable resolution with regard to the percentage point(s) by
which the increase exceeded [confidential treatment requested]
percentage points.
(b) Change of Index. In the event that the Bureau of Labor
---------------
Statistics should stop publishing the CPI or should substantially
change the content or format thereof, EDS and Kellwood
shall substitute therefor another comparable measure
published by a mutually acceptable source; provided,
however, that if such change is merely to redefine the base
year for the CPI from 1982-84 to some other year, the
parties shall continue to use the CPI but shall, if
necessary, convert either the Base Index or the Current
Index to the same basis as the other by multiplying such
index by the appropriate conversion factor.
8.6 Time of Payment. Any sum due EDS under this Agreement or which a time
---------------
for payment is not otherwise specified will be due and payable 30 days
from the EDS invoice date. Any sum due EDS under this Agreement that
is not paid when due shall bear interest from its due date until paid
at the lesser of (a) [confidential treatment requested] percent per
annum more than the prime rate established from time to time by
Citibank, New York N.A., or (b) the maximum rate of interest allowed by
applicable law.
8.7 Taxes. Kellwood will be responsible for payment of taxes on services
-----
under this Agreement, and if those taxes are paid by EDS, Kellwood
shall pay to EDS, amounts equal to any taxes, however designated or
levied, based upon EDS' charges, or upon this Agreement or the
Software, services or items provided under this Agreement by EDS, or
their use, including state and local sales, use, privilege or excise
taxes based on gross revenue, and any taxes or amounts in lieu thereof
paid or payable by EDS in respect of the foregoing, exclusive, however,
of franchise taxes and taxes based on net income of EDS.
8.8 Verification of Costs. The terms set forth in this Agreement are
---------------------
based upon information furnished by Kellwood to EDS. Kellwood believes
that such information is accurate and complete. However, if any such
information should prove to be inaccurate or incomplete in any material
respect, EDS and Kellwood will make appropriate adjustments to the
provisions hereof including without limitation the charges for Services
provided by EDS.
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ARTICLE IX. DISPUTE RESOLUTION
9.1 Annual Quality Review. At least annually, EDS and Kellwood will meet
---------------------
to review the performance of their obligations under this Agreement.
9.2 Performance Review. During the course of the long-term relationship
------------------
provided for in this Agreement, disputes, controversies or claims may
arise between the parties. The parties intend that the EDS
Relationship Executive and the Kellwood Representative resolve a
dispute, controversy or claim. In addition, to minimize the expense to
and impact on each party of formally resolving such disputes,
controversies and claims, the Executive Steering Committee will meet
regularly to review the performance of each party of its obligations
under this Agreement. If the parties are unable to resolve a dispute,
controversy or claim through this process, then upon the written
request of either party, each party will appoint an officer whose task
it will be to meet for the purpose of resolving the dispute,
controversy or claim. Such officers will discuss the dispute,
controversy or claim and negotiate a resolution in good faith, without
the necessity of any formal proceeding relating thereto. No formal
proceedings for the resolution of such dispute, controversy or claim
may be commenced until either or both of the appointed officers
conclude in good faith that amicable resolution through continued
negotiation of the matter is not likely. Except where clearly
prevented by the area in dispute, both parties agree to continue
performing their respective obligations under this Agreement while the
dispute is being resolved unless and until such obligations are
terminated or expire in accordance with the provisions of this
Agreement.
9.3 Arbitration.
-----------
(a) Procedures. Any dispute, controversy or claim arising out of or
----------
related to this Agreement, or the creation, validity,
interpretation, breach or termination of this Agreement, that the
parties are unable to resolve through informal discussions or
negotiations pursuant to Section 9.2 will be submitted to binding
arbitration using the following procedure:
(i) The arbitration will be held in St. Louis (if initiated by
Kellwood) or Dallas (if initiated by EDS) before a panel of
three arbitrators. Either party may demand arbitration in
writing, by serving on the other party a statement of the
dispute, controversy or claim, and the facts relating or
giving rise thereto, in reasonable detail, and the name of
the arbitrator selected by it.
(ii) Within 30 days after such demand, the other party will name
its arbitrator, and the two arbitrators named by the parties
will, within 60 days after such demand, select the third
arbitrator.
(iii) The arbitration will be governed by the Commercial
Arbitration Rules of the American Arbitration Association
(the "AAA"), except as expressly provided in this Section.
However, the arbitration will be administered by any
organization mutually agreed upon by the parties. If the
parties are unable to agree upon the organization to
administer the arbitration, it will be administered by the
AAA. The arbitrators may not amend or disregard any
provision of this Section.
(iv) The arbitrators will allow such discovery as is appropriate
to the purposes of arbitration in accomplishing fair,
speedy and cost effective resolution of disputes. The
arbitrators will reference the rules of evidence of the
Federal Rules of Civil Procedure then in effect in setting
the scope and direction of such discovery. The arbitrators
will not be required to make findings of fact or render
opinions of law.
(v) The decision of and award rendered by the arbitrators will
be final and binding on the parties. Judgment on the award
may be entered in and enforced by any court of competent
jurisdiction.
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(b) Enforcement. Other than those matters involving injunctive
-----------
relief as a remedy, or any action necessary to enforce the award
of the arbitrators, the provisions of this Section are a
complete defense to any suit, action or other proceeding
instituted in any court or before any administrative
tribunal with respect to any dispute, controversy or claim
arising out of or related to this Agreement or the
creation, validity, interpretation, breach or termination
of this Agreement. The provisions of this Section will
survive the expiration or termination of this Agreement for
any reason. Nothing in this Section prevents the parties
from exercising the termination rights set forth in this
Agreement.
(c) Services during Arbitration. Unless EDS is bringing an action
---------------------------
under this Section for nonpayment by Company, EDS will
continue to provide the Services, and Company shall
continue to make payments to EDS, in accordance with this
Agreement during the arbitration proceedings.
9.4 Performance During Negotiations or Arbitration. Where there is a
----------------------------------------------
dispute between the parties which is the subject of negotiations as
contemplated by Section 9.2 or is the subject of arbitration
proceedings as contemplated by Section 9.3, both parties shall continue
to perform their obligations under this Agreement during such
negotiations or arbitration proceedings.
9.5 Escrow of Disputed Payments. In accordance with Section 9.4 Kellwood
----------------------------
will continue to pay EDS all undisputed sums during negotiations or
arbitration. Any fees, charges or other amounts which are the subject
of any dispute between Kellwood and EDS shall be deposited by the party
owing such amounts into an escrow account at a bank reasonably
acceptable to Kellwood and EDS pending resolution of the underlying
dispute with interest to accrue on the corpus and to be allocated to
the party or parties ultimately entitled to all or any part of the
corpus.
ARTICLE X. TERMINATION
10.1 Termination for Cause. If either party materially defaults in the
---------------------
performance of any of its obligations (except for a default by Kellwood
in its obligation to pay EDS) under this Agreement, which default shall
not be substantially cured within [confidential treatment requested]
days after written notice is given to the defaulting party specifying
the default, or, with respect to any default which cannot reasonably be
cured within [confidential treatment requested] days, if the defaulting
party fails to proceed within [confidential treatment requested] days
to commence curing said default and thereafter to proceed with all due
diligence to substantially cure that default, then the party not in
default, by giving written notice to the defaulting party, may
terminate this Agreement as of a date specified in the notice of
termination.
10.2 Termination for Nonpayment. If Kellwood defaults in the payment when
--------------------------
due of any undisputed amount due to EDS and does not cure such default
within [confidential treatment requested] days after being given
written notice of such default, then EDS, by giving written notice
thereof to Kellwood, may terminate this Agreement as of a date
specified in such notice of termination.
10.3 Termination for Insolvency. Subject to the provisions of Title 11,
--------------------------
United States Code, if either party becomes or is declared insolvent or
bankrupt, is the subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a receiver or similar
officer for it, makes an assignment for the benefit of all or
substantially all of its creditors, or enters into an agreement for the
composition, extension, or readjustment of all or substantially all of
its obligations, then the other party, by giving written notice to such
party, may terminate this Agreement as of a date specified in such
notice of termination.
10.4 Exit Transition Services.
------------------------
(a) Services. In connection with the termination of this Agreement
--------
at the Expiration Date or by Kellwood pursuant to Section 10.1 or
10.3, EDS will comply with Kellwood's reasonable directions to cause
the orderly transition and migration to Kellwood from EDS of all
Services and Additional Services then being performed by EDS (the
"Exit Transition"). Kellwood, its employees, and agents
15
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will cooperate in good faith with EDS in connection with EDS'
obligations under this Section and Kellwood will perform its
obligations under the Transition Plan (as defined below).
(i) EDS and Kellwood will work together to develop a transition
plan (the "Transition Plan") setting forth the respective
tasks to be accomplished by each party in connection with
the orderly transition and a schedule pursuant to which the
tasks are to be completed.
(ii) EDS will determine with Kellwood the level of training
appropriate for Kellwood employees who will be assuming
responsibility for operation of the Software following the
Exit Transition and [confidential treatment requested].
(iii) Kellwood will have the right to [confidential treatment
requested]. With EDS' consent Kellwood will have the right
to [confidential treatment requested] on the date of
termination.
To the extent EDS can accomplish the Exit Transition services with
its resources at Kellwood facilities as of the date of
expiration or termination, there will be no additional
charge to Kellwood. If additional resources are required
to provide the Exit Transition services, EDS will provide
those services at then-current commercial rates.
(b) Continued Payment of Charges. For so long as this Agreement
----------------------------
remains in effect and during the Exit Transition, Kellwood will
pay EDS the charges set forth in Article VIII and elsewhere in
this Agreement.
ARTICLE XI. WARRANTIES, INDEMNITIES AND LIABILITY
11.1 Warranty and Disclaimer
-----------------------
(a) In all cases where EDS has not committed to a specific performance
standard, EDS will provide the Services in accordance with
industry practices and standards generally applicable for such
Services at the time the Services are rendered.
(b) While EDS is primarily providing services to Kellwood under this
Agreement, EDS may from time to time provide certain hardware,
Software and other items as an incidental part of the Services.
With the exception of manufacturers' or licensors' warranties
which EDS is able to pass through for Kellwood's benefit, such
hardware, Software and other items are provided on an "AS IS"
basis without warranty. In all cases where EDS has not committed
to a specific performance standard, EDS will use reasonable care
in providing services.
(c) EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT, EDS
MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, REGARDING ANY MATTER, INCLUDING THE
MERCHANTABILITY, SUITABILITY, ORIGINALITY, FITNESS FOR
A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED
FROM THE USE OF ANY HARDWARE, SOFTWARE OR OTHER ITEMS
PROVIDED UNDER THIS AGREEMENT.
11.2 Cross Indemnification.
---------------------
(a) EDS and KELLWOOD each shall be responsible for damages to their
respective tangible personal or real property (whether owned or
leased), and each party agrees to look only to its own insuring
arrangement (if any) with respect to such damages, unless such
damages have been caused by the reckless misconduct of the other
party.
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(b) EDS and KELLWOOD each shall be responsible for claims for the
death of or personal injury to any person (including any employee
of either party), and claims for damages to any third party's
tangible personal or real property (whether owned or leased), in
accordance with the common law of the jurisdiction in which such
claim occurred. Each party shall indemnify, defend and hold
harmless the other party from any and all claims, actions,
damages, liabilities, costs and expenses, including without
limitation, reasonable attorneys' fees and expenses, arising out
of claims for which the indemnitor is responsible under the
preceding sentence.
11.3 Infringement Indemnity. For purposes of this Section, "Licensed
----------------------
Program" means the Software that one party ("Indemnitor") licenses to
the other party ("Indemnitee") or to which Indemnitor provides
Indemnitee Access. Each party will defend any action brought or
threatened against the other party to the extent that such action is
based on a claim that a Licensed Program, used within the scope of the
rights granted in this Agreement, (i) infringes a copyright enforceable
in the United States, (ii) infringes a United States patent, or (iii)
constitutes misappropriation or unlawful disclosure or use of another
party's trade secret under United States law. Indemnitor will bear the
expense of such defense and pay any damages and attorneys' fees finally
awarded by a court of competent jurisdiction which are attributable to
such claim, provided that Indemnitee notifies Indemnitor promptly in
writing of the claim and that Indemnitee allows Indemnitor to fully
direct the defense or settlement of such claim. Indemnitor shall not
be responsible for any settlement or compromise made without its
consent. Should the Licensed Program become, or in Indemnitor's
opinion be likely to become, the subject of a claim of infringement of
a copyright or patent, Indemnitor will, at its option, attempt to
procure for Indemnitee the right to continue using the Licensed
Program, or replace or modify the Licensed Program to make its use
hereunder non-infringing. If neither option is reasonably available in
Indemnitor's judgment, then (i) at Indemnitor's request, Indemnitee
shall return the Licensed Program to Indemnitor and (ii) the rights
granted to the other party in such Licensed Program hereunder shall
terminate. Indemnitor shall have no liability to Indemnitee hereunder
if any claim of infringement is based upon the use of the Licensed
Program delivered hereunder in connection or in combination with
equipment, devices or software not supplied by Indemnitor under this
Agreement or used in a manner for which the Licensed Program was not
designed. Moreover, Indemnitor shall have no liability if Indemnitee
modifies any Licensed Program provided by Indemnitor under this
Agreement and such infringement would not have occurred but for such
modification, or uses the Licensed Program in the practice of a
patented process and there would be no infringement in the absence of
such practice, or such claim arises out of Indemnitor's compliance with
specifications provided by Indemnitee to Indemnitor and such
infringement would not have occurred but for such compliance. This
Section states Indemnitor's entire obligation to Indemnitee regarding
infringement.
11.4 Indemnification of EDS for Certain Third-Party Claims. Without
-----------------------------------------------------
limiting EDS' liability to Kellwood for nonperformance under this
Agreement, each of the parties acknowledge and agree that by entering into
and performing its obligations under this Agreement, EDS will not assume
and should not be exposed to the business and operational risks
associated with Kellwood's business. Therefore Kellwood agrees to
indemnify, defend and hold EDS harmless, from any and all damages,
liabilities, costs, and expenses, including without limitation,
reasonable attorneys' fees and expenses, arising out of, under or in
connection with any claim, demand, charge, action, cause of action or
other proceeding relating to Kellwood's conduct of Kellwood's business,
including without limitation, the acquisition and use by Kellwood of
the products, Services and Additional Services to be provided by EDS
under this Agreement.
11.5 Indemnification Procedures.
--------------------------
(a) Notice and Control. The indemnification obligations set forth
------------------
in this Article shall not apply unless the party claiming
indemnification:
(i) Notifies the other promptly of any matters in respect of
which the indemnity may apply and of which the notifying
party has knowledge, in order to allow the indemnitor the
opportunity to investigate and defend the matter; provided
that, the failure to so notify shall only relieve the
indemnitor of its obligations under this Article if and to
the extent that the indemnitor is prejudiced thereby; and
17
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(ii) Gives the other party full opportunity to control the
response thereto and the defense thereof, including,
without limitation, any agreement relating to the
settlement thereof; provided that, the indemnitee will have
the right to participate in any legal proceeding to contest
and defend a claim for indemnification involving a
third-party and to be represented by legal counsel of its
choosing, all at the indemnitee's cost and expense.
(b) Settlement. The indemnitor shall not be responsible for any
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settlement or compromise made without its consent. The indemnitee
agrees to cooperate in good faith with the indemnitor at the
request and expense of the indemnitor.
11.6 Limitation of Liability. In the event EDS shall be held liable to
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Kellwood, for any matter arising out of, under, or in connection with
this Agreement, whether based on an action or claim in contract,
equity, negligence, tortuous misconduct or otherwise, the amount of
damages recoverable against EDS for all events, acts or omissions shall
not exceed in the aggregate [confidential treatment requested] (i)
[confidential treatment requested] or (ii) the total amount of the
charges paid by Kellwood to EDS under this Agreement (excluding
payments for taxes or reimbursable expenses) during the [confidential
treatment requested] during Which payments were made immediately
preceding the date the first such claim or action arose. In no event
will the measure of damages payable by EDS include, nor will EDS be
liable for, any amounts for loss of income, profit or savings or
indirect, incidental, consequential, or punitive damages of any party,
including third parties. The provisions of this Section will survive
the term or termination of this Agreement for any reason.
11.7 Contractual Statute of Limitations. No claim and demand for
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arbitration or cause of action which arose out of an event or events which
occurred more than two years prior to the filing of a demand for
arbitration or suit alleging a claim or cause of action may be asserted by
either party against the other party.
11.8 Acknowledgment. EDS and Kellwood each acknowledge that the
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limitations and exclusions contained in this Article have been the subject
of active and complete negotiation between the parties and represent the
parties' agreement based upon the level of risk to EDS and Kellwood
associated with their respective obligations under this Agreement and
the payments to be made to EDS under this Agreement.
ARTICLE XII. MISCELLANEOUS
12.1 Right of EDS to Engage in Other Activities. Nothing in this Agreement
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will impair EDS' right to acquire, license, market, distribute, develop
for itself or others or have others develop for EDS similar technology
performing the same or similar functions as the technology, Services
and Additional Services contemplated by this Agreement.
12.2 Binding Nature and Assignment. This Agreement shall be binding on the
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parties hereto and their respective successors and assigns. Neither
party may, nor shall have the power to, assign this Agreement without
the prior written consent of the other party, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, EDS will have
the right to subcontract all or any portion of the Services or the
Additional Services; provided, however, that no such subcontract will
relieve EDS of any of its obligations under this Agreement. Any
purported assignment not made in accordance with this Section shall be
null and void.
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12.3 Notices. Wherever under this Agreement one party is required or
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permitted to give written notice to the other, such notice shall be
deemed given the third day after its mailing by one party first class
mail, postage prepaid, to the other party addressed as follows:
In the case of EDS: with a copy to:
Electronic Data Systems Corporation Electronic Data Systems Corporation
000 Xxxxx Xxxxx, 0xx Xxxxx 0000 Xxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000 H3-3A-05
Attention: Vice-President, Xxxxx, Xxxxx 00000-0000
Textile and Apparel Division Attention: General Counsel
In the case of Kellwood: with a copy to:
Kellwood Company Kellwood Company
000 Xxxxxxxx Xxxxxxx 000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: President Attention: General Counsel
Any writing which may be mailed pursuant to the foregoing may also be
delivered by hand or sent by telecopier and shall be effective when
received by the addressee. Either party may from time to time specify
as its address for purposes of this Agreement any other address upon
giving ten days prior written notice thereof to the other party.
12.4 Counterparts. This Agreement may be executed in several counterparts,
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all of which taken together shall constitute one single agreement
between the parties hereto.
12.5 Headings. The Article and Section headings and the table of contents
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used in this Agreement are for reference and convenience only and shall
not enter into the interpretation hereof.
12.6 Relationship of Parties. EDS, in furnishing Services and Additional
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Services to Kellwood under this Agreement, is acting only as an
independent contractor and under no circumstances will EDS be deemed to
be in any relationship with Kellwood carrying with it fiduciary or
trust responsibilities, whether through partnership or otherwise. EDS
does not undertake by this Agreement or otherwise to perform any
obligation of Kellwood, whether regulatory or contractual, or to assume
any responsibility for Kellwood's business or operations. EDS has the
sole right and obligation to supervise, manage, contract, direct,
procure, perform or cause to be performed, all work to be performed by
EDS under this Agreement unless otherwise provided in this Agreement.
12.7 Force Majeure. Each party shall be excused from performance under
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this Agreement (other than performance of obligations to make payment) for
any period and to the extent that it is prevented from performing
pursuant hereto, in whole or in part, as a result of delays caused by
the other or third parties or an act of God, war, civil disturbance,
court order, labor dispute, or other cause beyond its reasonable
control, including failures or fluctuations in electrical power, heat,
light, air conditioning or telecommunications equipment, and such
nonperformance shall not be a default under this Agreement or a ground
for termination hereof.
12.8 Severability. If any term or provision (other than a term or
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provision relating to any payment obligation) of this Agreement or the
application thereof to any person or circumstances shall, to any
extent, be held invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the
extent permitted by law.
12.9 Waiver. No delay or omission by either party hereto to exercise any
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right or power under this Agreement shall impair such right or power or
be construed to be a waiver thereof. A waiver by either of the parties
hereto of any of the covenants to be performed by the other or any
breach thereof shall not be construed to be a waiver of any succeeding
breach thereof or of any other covenant in this Agreement contained. All
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remedies provided for in this Agreement shall be cumulative and in
addition to and not in lieu of any other remedies available to either
party at law, in equity or otherwise.
12.10 Attorneys' Fees. If any legal action or other proceeding is brought
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for the enforcement of an award under this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees and expenses
and other costs incurred in that action or proceeding, in addition to
any other relief to which it may be entitled.
12.11 Media Releases. All media releases, public announcements and public
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disclosures by Kellwood or EDS relating to this Agreement or its
subject matter, including without limitation promotional or marketing
material (but not including any announcement intended solely for
internal distribution at Kellwood or EDS, as the case may be, or any
disclosure required by legal, accounting or regulatory requirements
beyond the reasonable control of Kellwood or EDS, as the case may be)
shall be coordinated with and approved by Kellwood and EDS prior to the
release thereof.
12.12 No Third-Party Beneficiary. Nothing in this Agreement may be relied
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upon or shall benefit any party other than the parties hereto.
12.13 Compliance with Laws. Each party will comply with laws applicable to
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its business, including governmental regulations, and will obtain any
approvals necessary for performing its obligations under this Agreement.
12.14 Governing Law. This Agreement is made under and shall be governed by
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and construed in accordance with the laws of the State of Texas, without
giving effect to principles of conflict of laws.
12.15 Termination of Previous Agreement. The parties by this reference
---------------------------------
terminate that certain letter dated March 20, 1996 between Kellwood and
EDS and supersede its provisions in every respect by this Agreement.
12.16 Entire Agreement. This Agreement, including any Schedules or Exhibits
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referred to in this Agreement and attached hereto, each of which is
incorporated in this Agreement for all purposes, constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and there are no representations, understandings or agreements
relating to this Agreement which are not fully expressed in this
Agreement. No amendment, modification, waiver or discharge hereof shall
be valid unless in writing and signed by an authorized representative of
the party against which such amendment, modification, waiver or
discharge is sought to be enforced.
IN WITNESS WHEREOF, EDS and Kellwood have each caused this Agreement to
be signed and delivered by its duly authorized representative, all as of the
Effective Date.
KELLWOOD COMPANY ELECTRONIC DATA SYSTEMS
CORPORATION
By: /s/ Xxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxx
Name: XXX X.XXXXX Name: XXXXXX X. XXXXXXX
Title: PRESIDENT - C.O.O. Title: VICE PRESIDENT
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