EX-10.JJ
MASTER SERVICES AGREEMENT
MASTER SERVICES AGREEMENT
between each of
SAFETY-KLEEN SERVICES, INC.,
ELECTRONIC DATA SYSTEMS CORPORATION
and
EDS INFORMATION SERVICES L.L.C.
April 26, 2002
TABLE OF CONTENTS
Article IA. Condition Precedent, Background and Objectives..................5
1.A.1 Condition Precedent..........................................5
1.A.2 Background...................................................5
1.A.3 Objectives...................................................7
1.A.4 Construction.................................................8
Article I. Relationship Management............................................8
1.1 EDS Client Delivery Executive................................8
1.2 SK Representative............................................9
1.3 Steering Committee...........................................9
1.4 Meetings.....................................................9
1.5 Reports.....................................................10
1.6 Technology Strategy and Process Improvement Plan............10
1.7 Quality Assurance and Improvement Programs..................12
1.8 Productivity and Management Tools...........................12
1.9 Procedures Manual...........................................12
1.10 Change Control..............................................13
1.11 Software Development Methodologies..........................14
Article II. Personnel......................................................15
2.1 [Intentionally Left Blank.].................................15
2.2 Personnel...................................................15
2.3 Use of Subcontractors.......................................17
2.4 Hiring of Employees.........................................19
Article III. Services.......................................................19
3.1 Term; Renewal...............................................19
3.2 Services....................................................19
3.3 Performance Metrics.........................................21
3.4 SAS 70, SAS 80 and GAAP.....................................22
3.5 Former Affiliates...........................................22
3.6 Changes in amount of Services; Cooperation..................23
3.7 Extraordinary Events........................................24
3.8 Third Party Software........................................26
3.9 Third-Party Products and Services...........................27
3.10 Gain Sharing................................................27
3.11 Additional Services.........................................27
3.12 System Change...............................................29
3.13 Benchmarking................................................29
3.14 Executive Balanced Scorecard................................29
3.15 Reliance on Instructions....................................31
3.16 Licenses and Permits........................................31
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3.17 Changes in Law and Regulations..............................31
3.18 Dedicated Logical and Operating Environments................31
3.19 Non-Competition.............................................32
3.20 Management of Possible Conflict of Interest.................32
Article IV. SK's Role......................................................32
4.1 SK's Role...................................................32
Article V. Equipment, Leases, Licenses, Maintenance.......................32
5.1 Use of SK-Owned Equipment and SK-Leased Equipment...........32
5.2 Use of SK Software and SK-Vendor Software...................33
5.3 Software ...................................................33
5.4 Equipment...................................................33
5.5 Consents; Further Assurances................................34
5.6 Additional Items of Property................................34
Article VI. Warranties and Additional Covenants............................34
6.1 Warranties and Additional Covenants.........................34
6.2 Disclaimer of Warranties....................................38
Article VII. Proprietary Rights.............................................38
7.1 Software Definitions........................................38
7.2 EDS Software................................................39
7.3 EDS-Vendor Software.........................................40
7.4 SK Software.................................................40
7.5 SK-Vendor Software..........................................40
7.6 Developed Software..........................................40
7.7 Other Deliverables..........................................42
7.8 EDS Development Tools; Residual Technology..................42
7.9 Further Assurances..........................................42
7.10 Limitation..................................................43
7.11 Residual Knowledge..........................................43
7.12 Documentation...............................................43
7.13 Cooperation Upon Divestiture................................43
7.14 Escrow Software.............................................43
Article VIII. Data, Confidentiality and Audit Rights......................44
8.1 Data of SK..................................................44
8.2 Safeguarding Data and Backup................................44
8.3 Privacy Laws................................................45
8.4 Confidentiality.............................................45
8.5 Audits. ...................................................49
Article IX. Payments.......................................................51
9.1 Charges for Services........................................51
9.2 Travel and Travel-Related Expenses..........................52
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9.3 Other Out-of-Pocket Expenses................................52
9.4 Administrative Expenses.....................................52
9.5 Certain Expenses............................................52
9.6 Charges for Additional Services.............................52
9.7 Annual Adjustment to Charges................................53
9.8 Time of Payment; Disputed Amounts...........................53
9.9 Accountability..............................................53
9.10 Set-Off.................................................... 53
9.11 Taxes.......................................................53
Article X. Dispute Resolution.............................................55
10.1 Informal Dispute Resolution.................................55
10.2 Litigation..................................................57
10.3 Continued Performance.......................................57
10.4 Governing Law...............................................58
Article XI. Termination....................................................58
11.1 Termination for Cause.......................................58
11.2 Termination for Convenience.................................59
11.3 Additional Grounds for Termination..........................59
11.4 Extension of Termination Effective Date.....................60
11.5 Termination/Expiration Assistance...........................60
11.6 SK Failure to Perform.......................................62
Article XII. Indemnities and Liability......................................63
12.1 Indemnity by EDS............................................63
12.2 Indemnity by SK.............................................64
12.3 Additional Indemnities......................................64
12.4 Infringement................................................65
12.5 Indemnification Procedures..................................65
12.6 Subrogation.................................................66
12.7 Liability Restrictions......................................67
12.8 Waiver of Jury Trial........................................66
Article XIII. Insurance; Disaster Recovery................................68
13.1 Insurance...................................................68
13.2 Disaster Recovery...........................................69
Article XIV. Miscellaneous...............................................69
14.1 Right to Engage in Other Activities.........................69
14.2 Independent Contractors.....................................69
14.3 Entire Agreement; Survival..................................70
14.4 Amendments; Waiver..........................................70
14.5 Binding Nature; Assignment..................................70
14.6 Export Regulations..........................................70
14.7 Approvals and Similar Actions. .............................71
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14.8 Notices.....................................................71
14.9 Excused Performance.........................................72
14.10 Public Relations and Marketing References...................73
14.11 Certain Construction Rules..................................73
14.12 Third Party Beneficiaries...................................74
14.13 Covenant Against Pledging...................................74
14.14 Entire Agreement........................................... 74
Schedules
Schedule of Definitions
Schedule 1.5 - Reports
Schedule 1.10 - Change Control Procedures
Schedule 2.2(a) - Key Positions
Schedule 2.2(b) - Steering Committee
Schedule 2.2(a)(iv) - SK Competitors
Schedule 2.3 - Authorized Subcontractors
Schedule 3.2 - Services
Schedule 3.2(b) - SK Affiliates
Schedule 3.3(a) - Service Levels
Schedule 3.18 - Dedicated Logical and Operating Environments
Schedule 3.19 - Non-competition
Schedule 4.1 - SK's Role
Schedule 5.1 - SK-Owned Equipment and SK-Leased Equipment
Schedule 5.3 - Software
Schedule 5.4 - Equipment
Schedule 7.1(a) - EDS Software
Schedule 7.1(b) - EDS-Vendor Software
Schedule 7.1(c) - SK Software
Schedule 7.1(d) - SK-Vendor Software
Schedule 7.2 - Other Restrictions on Use
Schedule 9.1 - Charges
Schedule 9.7 - Annual Adjustment to Charges
Schedule 11.2 - Termination for Convenience
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MASTER SERVICES AGREEMENT
THIS MASTER SERVICES AGREEMENT, dated as of April 26, 2002 (the
"Agreement"), is between each of Safety-Kleen Services, Inc., a Delaware
corporation (which includes the reorganized Safety-Kleen Services, Inc. when
applicable) ("SK"), Electronic Data Systems Corporation, a Delaware corporation
("EDS"), and EDS Information Services L.L.C., a Delaware limited liability
company ("EIS").
ARTICLE IA. CONDITION PRECEDENT, BACKGROUND AND OBJECTIVES.
-----------------------------------------------
1A.1 CONDITION PRECEDENT.
--------------------
SK is a debtor-in-possession in a Chapter 11 reorganization case
pending in the United States Bankruptcy Court for the District of
Delaware, Case No. 00-2303 (PJW) (the "Bankruptcy Case"). SK will use
all reasonable efforts to have the Agreement and the applicable
Schedules approved by an order entered in the Bankruptcy Case which
order shall have become final and non-appealable (the "Final Order").
Notwithstanding anything in this Agreement to the contrary, SK and EDS
agree that this signed Agreement shall only become effective as of that
date the order approving the Agreement and the applicable Schedules
shall have become a Final Order (such date shall be the "Effective
Date" as used herein). Until the Effective Date, except as provided in
the Letter of Intent effective as of January 15, 2002, between each of
SK, EDS and EIS, as amended (the "Letter of Intent"), neither Party
shall have any obligation or liability to the other. In the event such
order does not become a Final Order, this Agreement shall never become
effective. The Parties mutually agree that neither Party shall waive
any of its rights under this Section, either by its actions or
otherwise, unless such waiver is expressly made in a writing
referencing this Section and signed by the Parties. SK agrees that it
shall not propose nor consent to a plan of reorganization that 1) fails
to provide for the effectiveness and binding nature of all the terms of
the Agreement after confirmation of the plan, and 2) fails to assume
the Agreement and all its terms.
1A.2 BACKGROUND.
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This Agreement is being made and entered into with reference to the
following:
(a) SK is a leading provider of secure, cost-effective waste
treatment, recycling and disposal services that reduce the
environmental risk to their customers and preserve and protect
the Earth's natural resources. SK delivers a comprehensive
range of sophisticated treatment, recycling and disposal
services in the industry. This allows SK to serve virtually
every industrial region coast-to-coast in both the United
States and Canada, and to be a single-source provider for
companies looking to manage costs by reducing their number of
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suppliers. SK focuses on both large-scale industrial disposal
and cleanup for medium to large customers, and small-scale
disposal for tens of thousands of smaller customers.
(b) SK desires to enter into an arrangement to have a qualified
and experienced service provider install various financial
software for SK and for such service provider to assist SK in
improving various of its processes. Accordingly, SK has
solicited proposals for the performance of such functions by
issuance of a Request for Proposal for SK ("RFP").
(c) EDS is a well-known provider of information technology
services. EDS has the skills, qualifications and experience
necessary to perform and manage the services requested by SK
in the RFP in an efficient, cost-effective and controlled
manner, with a high degree of quality and responsiveness, and
it has performed similar services for other customers.
(d) EDS has extensive experience in working creatively with
companies dealing with the complexities and challenges of
bankruptcy proceedings.
(e) EDS has indicated to SK that it envisions a relationship with
SK that transcends the traditional client-vendor structure to
achieve a business relationship based on shared vision, shared
goals and objectives, cultural synergy, and a commitment to
outstanding customer service.
(f) In response to the RFP, EDS has submitted a proposal to
provide the services requested by SK in the RFP. In reliance
upon the foregoing, and after examination of competitive
proposals submitted to SK by EDS and other providers, SK has
selected EDS to provide the services covered by this Agreement
to SK. This Agreement documents the terms and conditions under
which SK agrees to purchase, and EDS agrees to provide, such
services.
(g) The obligations of EDS set forth in this Agreement will be
performed by EDS, itself and through its direct and indirect
wholly-owned subsidiaries, including EIS. All references to
EDS in this Agreement will be deemed to include all such
subsidiaries, and EDS and SK may be referred to in this
Agreement individually as a "Party" and together as the
"Parties".
(h) The Parties hereto hereby acknowledge and agree that this
Agreement is being entered into in order for services to be
provided by EDS to SK's Yellow Business (which term shall mean
the part of the business of SK that is as of the Effective
Date referred to by SK as the Yellow Business, which generally
provides cleaner services for parts and other specialized
services to automotive repair, commercial and manufacturing
customers.) and it is not intended for services to be provided
to SK's Blue Business (which term shall mean the part of the
business of SK that is as of the Effective Date referred to by
SK as the
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Blue Business, which generally provides hazardous and
non-hazardous waste collection, treatment, recycling, disposal
and destruction of hazardous and non-hazardous waste);
provided, however, that certain services provided hereunder
may be provided for a limited time on a limited basis to SK's
Blue Business if such services are provided as a part of, and
ancillary to, services being provided to SK's Yellow Business.
Under no circumstances, will the sale of SK's Blue Business
constitute a breach of this Agreement or provide EDS or SK a
right to terminate this Agreement.
1A.3 OBJECTIVES.
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SK and EDS have agreed upon certain goals and objectives for this
Agreement, including the following:
(a) Streamlining SK's financial processes to achieve near term
results and maximize the benefits of its planned financial
software deployment;
(b) Reduction in current and future operational costs to a
competitive, open-market level;
(c) Realization of improvement in operational processes and costs
during the term of the Agreement;
(d) Achievement of improved quality and service levels which will
meet sound practices for both value and customer satisfaction;
(e) Expansion of access to skills and resources to support its
existing technical environment and growth into newer
technologies;
(f) Permitting SK to focus on its core competencies and strategic
planning and integration of new technologies and business
opportunities;
(g) Obtaining better information technology management and
practices;
(h) A flexible and highly responsive contractual relationship to
meet SK's changing requirements and business environment;
(i) Variable pricing of certain Services to enable SK to implement
a consumption-based expense structure where actual demand
drives actual costs;
(j) Transfer to EDS of the responsibility for providing the
Services;
(k) A valued relationship with EDS whereby EDS remains
knowledgeable and an active participant in SK's business
industry and remains committed to the business success of SK;
and
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(l) Obtaining the benefits that EDS can bring in leveraging other
strategic partners and vendors to ensure that SK benefits from
such relationships.
1A.4 CONSTRUCTION.
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(a) The provisions of this Article 1A are intended to be a general
introduction to this Agreement and are not intended to expand
the scope of the Parties' obligations under this Agreement or
to alter the plain meaning of the terms and conditions of this
Agreement. However, to the extent the terms and conditions of
this Agreement do not address a particular circumstance or are
otherwise unclear or ambiguous, such terms and conditions are
to be interpreted and construed so as to give effect to the
provisions in this Article 1A.
(b) Terms other than those defined in the Agreement shall be given
their plain English meaning, and those terms, acronyms and
phrases known in the information technology services industry
shall be interpreted in accordance with their generally known
meanings. Unless the context otherwise requires, words
importing the singular include the plural and vice-versa.
(c) References to "Article," "Section," "Subsection," "Schedule"
or "Attachment" shall be references to an Article, Section,
Subsection, Schedule or Attachment of the Agreement,
respectively, unless otherwise specifically stated.
(d) The headings in the Agreement are intended to be for reference
purposes only and shall in no way be construed to modify or
restrict any of the terms or provisions of the Agreement.
(e) For convenience of reference, the Schedule of Definitions
attached hereto sets forth the capitalized terms that are used
in this Agreement and identifies the sections hereof in which
the definitions for such terms appear.
(f) The term "Agreement" includes all Schedules and Attachments
hereto.
ARTICLE I. RELATIONSHIP MANAGEMENT
----------------------------------
1.1 EDS CLIENT DELIVERY EXECUTIVE. During the term of this Agreement, EDS
will provide an individual who will be primarily dedicated to SK's
account and who will maintain an office at SK's facilities located in
Columbia, SC or such other SK headquarters location as may be agreed by
the parties (the "EDS Client Delivery Executive"). The EDS Client
Delivery Executive (a) will be acceptable to SK, in SK's sole
discretion, (b) will be the primary contact for SK in dealing with EDS
under this Agreement, (c) will have overall responsibility for managing
and coordinating the delivery of the Services, (d) will meet regularly
with the SK Representative and (e) will have the power and authority to
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make decisions with respect to actions to be taken by EDS in the
ordinary course of day-to-day management of SK's account in accordance
with this Agreement. The initial EDS Client Delivery Executive shall be
the individual set forth on Schedule 2.2(a).
1.2 SK REPRESENTATIVE. During the term of this Agreement, SK will designate
a senior level individual who will be authorized to act as SK's primary
contact for EDS in dealing with SK under this Agreement and who will
have the power and authority to make decisions with respect to actions
to be taken by SK under this Agreement (the "SK Representative"). The
SK Representative may designate in writing a reasonable number of
additional SK employees to be points of contact for EDS with respect to
particular matters of expertise relating to this Agreement.
1.3 STEERING COMMITTEE. EDS and SK will provide the other with the names of
two and three members, respectively, of their respective management
staff (inclusive of the EDS Client Delivery Executive and the SK
Representative) who will serve on a steering committee (the "Steering
Committee"), with the chairman of the Steering Committee being
designated by SK from one of its committee members. The titles and
experience of the EDS representatives shall be reasonably acceptable to
SK. The Steering Committee will be responsible for (a) generally
overseeing the performance of each Party's obligations under this
Agreement and (b) making, and providing continuity for making,
strategic decisions for SK with respect to the establishment,
prioritization, budgeting and implementation of SK's existing and
future plans for information technology and business process
improvement, including its use of the Services. The initial members of
the Steering Committee are set forth on Schedule 2.2(b). SK may change
its representatives on the Steering Committee from time to time upon
written notice to EDS. Except for the EDS Client Delivery Executive,
EDS may change its representative or representatives on the Steering
Committee from time to time upon written notice to SK. In addition, the
Parties may mutually agree to increase or decrease the size, purpose or
composition of the Steering Committee in an effort for EDS to better
provide, and for SK to better utilize, the Services. The location of
the Steering Committee meetings will alternate between a mutually
acceptable SK location and a mutually acceptable EDS location. Upon
SK's reasonable request, the EDS representatives shall attend any such
meetings in person. Each Party will bear the costs of its participation
in such meetings. The Steering Committee shall have no authority to
modify the Agreement.
1.4 MEETINGS. Within ten (10) days of the Effective Date, the Steering
Committee will determine an appropriate set of periodic meetings to be
held by them or other representatives of the Parties involved with the
performance of the Services and the procedures to be followed for such
meetings, including the preparation of agenda and minutes. EDS shall
permit the inclusion on the agenda for a particular meeting of any
ideas that SK desires to have included. At a minimum, the meetings will
consist of an annual Steering Committee meeting to conduct a quality
review of the Services and quarterly Steering Committee meetings to
discuss, among other things, the strategic objectives of the Parties
and to engage in long-range planning.
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1.5 REPORTS. Within 30 days after the Effective Date, the parties shall
agree upon an appropriate set of periodic reports to be issued by EDS
to SK, in addition to those listed on Schedule 1.5, including reports
addressing performance, financial matters, utilization and status
reports. Such reports shall be issued at the frequency and contain the
level of detail reasonably requested by SK. Unless otherwise requested
by requested by SK such reports shall be no less comprehensive and be
issued no less frequently than the reports received by SK before the
Effective Date. EDS shall provide SK with suggested formats for such
reports, for SK's review and approval. As one such report, EDS shall
provide a monthly performance report, which shall be delivered to SK
within fifteen (15) days after the end of each calendar month,
describing EDS' performance of the services in the preceding month
(such report the "Monthly Performance Report"). The Monthly Performance
Report shall:
(a) separately address EDS' performance in each area of the
Services;
(b) for each area of the Services, assess the degree to which EDS
has attained or failed to attain the pertinent objectives in
that area, including measurements with respect to the Service
Levels;
(c) explain deviations from the Service Levels and include a plan
for corrective action where appropriate;
(d) describe the status of any projects, problem resolution
efforts, and other initiatives;
(e) set forth a record of all material Equipment and Software
changes that pertain to the Services and describe planned
changes during the upcoming month that may affect the
Services;
(f) set forth the utilization of resources for the month and
report on utilization trends and statistics; and
(g) include such documentation and other information as SK may
reasonably request to verify compliance with the Agreement.
1.6 TECHNOLOGY STRATEGY AND PROCESS IMPROVEMENT PLAN.
-------------------------------------------------
The Parties shall jointly prepare an annual technology strategy and
process improvement plan in accordance with the provisions of this
Section (such plan the "Technology and Process Improvement Plan"). The
Technology and Process Improvement Plan shall address the information
technology requirements of SK's current and future technologies and
activities, and shall include recommended goals and actions for EDS and
SK to take during the current year and the next three (3) years based
upon SK's business needs and overall IT and business process strategy.
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Each Technology and Process Improvement Plan after the first shall
review and assess the immediately preceding Technology and Process
Improvement Plan. The Technology and Process Improvement Plan shall
consist of a three-year plan and annual implementation plans as
described below.
(a) THREE-YEAR PLAN. The Technology and Process Improvement Plan
shall include a comprehensive assessment and strategic
analysis of SK's then-current information technology systems,
services and business processes for the next three (3) years,
including, but not limited to, an assessment of the
appropriate direction for such systems, services and processes
in light of SK's business priorities and strategies,
competitive market forces and SK's business process
improvement strategy (to the extent such business information
is provided by SK to EDS). The plan shall include a specific
identification of proposed business process improvements,
proposed software and hardware strategies and direction, a
cost projection, a cost/benefit analysis of any proposed
changes, potential price performance improvement
opportunities, a description of the types of personnel skill
and abilities needed to respond to any recommended changes or
upgrades in processes or technology, a general plan and a
projected time schedule for developing and achieving the
recommended elements, and references to appropriate
information services operations platforms that support service
level requirements and exploit industry trends in production
capabilities. The Technology and Process Improvement Plan
shall also address any issues arising from or relating to
refresh issues regarding hardware and software.
(b) ANNUAL IMPLEMENTATION PLAN. As necessary to support the
overall objectives and directions of the three-year plan, the
annual implementation plan shall provide specific guidance as
to the information services and business process requirements,
projects, and plans for the upcoming year, including details
on operations. The annual implementation plan shall include a
summary review of EDS' performance of the Services in the year
then concluding, and shall make updates and revisions of the
long-term plan as appropriate if the Term is extended. An
annual implementation plan shall be prepared for each year of
the Agreement.
(c) DRAFTING RESPONSIBILITY. EDS shall submit to SK a draft of the
Technology and Process Improvement Plan for SK's review and
approval which draft shall have been developed with assistance
from key business users from SK. EDS shall submit the final
Technology and Process Improvement Plan within thirty (30)
days of receiving SK's comments. The draft of the Technology
and Process Improvement Plan for the first year shall be
provided within six (6) months of the Effective Date. EDS
shall recommend modifications to the Technology and Process
Improvement Plan as it deems appropriate, and shall revise the
Technology and Process Improvement Plan as requested and
approved by SK. Subject to the terms of the Agreement, EDS
will be
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responsive to SK's initial and future technology requirements,
including those associated with the Services, and any
transformation of such Services related to new SK business
strategies.
(d) The Technology and Process Improvement Plan shall be
administered by a Technology and Process Improvement Committee
that shall be composed of four representatives of SK and three
representatives of EDS. This Committee shall meet at least
quarterly and shall report to the Steering Committee.
(e) Notwithstanding anything in this Agreement to the contrary, SK
will retain all strategic decision-making regarding its use of
technology and business processes.
1.7 QUALITY ASSURANCE AND IMPROVEMENT PROGRAMS. EDS, as part of its total
quality management process, shall provide continuous quality assurance
and quality improvement through (a) the identification and application
of proven techniques, tools and sound business practices from other
installations within its operations that would benefit SK either
operationally or financially, and (b) the implementation of programs,
practices and measures designed at a minimum to ensure that the
Services are performed in accordance with the Agreement and to improve
the Service Levels. Such measurement and monitoring shall permit
reporting at a level of detail sufficient to verify compliance with the
Service Levels, and shall be subject to audit by SK. EDS shall provide
SK with information and reasonable access to such tools and procedures
upon request for purposes of verification.
1.8 PRODUCTIVITY AND MANAGEMENT TOOLS. EDS shall utilize project management
tools, productivity aids and project management systems as reasonably
necessary to perform the Services. EDS shall use project management
tools in all major projects and employ a regular reporting mechanism to
identify project tasks, present current status reports, and identify
potential bottlenecks and problems.
1.9 PROCEDURES MANUAL.
------------------
Within 30 days of the Effective Date, the parties shall agree as to the
general scope and format, including table of contents, of a draft
procedures manual (the "Procedures Manual") and shall agree as to when
the initial draft of the Procedures Manual will be delivered by EDS to
SK for its comments and review. The parties expect that the Procedures
Manual will, at a minimum:
(i) Describe how EDS shall perform and deliver the Services under
the Agreement by functional workgroup and the documentation
(e.g. operations manuals, user guides, specifications) that
provide further details of such activities.
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(ii) Describe the activities EDS proposes to undertake in order to
provide the Services, including those direction, supervision,
monitoring, staffing, reporting, planning and oversight
activities normally undertaken by service providers that
provide services of the type EDS shall provide under the
Agreement.
(iii) Include descriptions of the acceptance testing and quality
assurance procedures approved by SK, EDS' problem management
and escalation procedures, and the other standards and
procedures of EDS pertinent to SK's interaction with EDS in
obtaining the Services.
The Procedures Manual shall be suitable for use by SK to reasonably
understand the Services.
(b) Following SK's review of the draft Procedures Manual, EDS
shall incorporate reasonable comments or suggestions of SK and
shall finalize the Procedures Manual within forty-five (45)
calendar days of EDS' receipt of SK's final written comments
or suggestions. The final Procedures Manual shall be subject
to the approval of SK which approval shall not be unreasonably
withheld. The parties acknowledge and agree that the
Procedures Manual will be an evolving document with changes
being made to it from time to time. In this regard, EDS shall
periodically propose updates to (i) the Procedures Manual to
reflect changes in the operations or procedures described
therein, and (ii) Schedules 5.3, 5.4, 7.1(a)-(d) to reflect
changes to the Equipment and Software being used to provide
the Services. Proposed updates of the Procedures Manual shall
be provided to SK for review, comment, and approval; proposed
updates to such Schedules shall be subject to Section 14.4 of
the Agreement. EDS shall perform the Services in accordance
with the Procedures Manual. In the event of a conflict between
the provisions of the Agreement and the Procedures Manual, the
provisions of the Agreement shall control unless the Parties
expressly agree otherwise and such agreement is set forth in
the relevant portion of the Procedures Manual.
1.10 CHANGE CONTROL.
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(a) EDS shall comply with the following change control
requirements with respect to the general operations of the
Services:
(i) Prior to using any new Software or new Equipment to
provide the Services, EDS shall have verified that
the item has been properly installed, is operating in
accordance with its specifications, and is performing
its intended functions in a reliable manner. In the
event a change is related to SK Software, SK shall
have the responsibility for change control management
of such Software and coordinating with EDS as
reasonably necessary.
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(ii) EDS shall not take an action or make a decision that
may have an adverse effect on SK or that that may
have an adverse effect on the function or performance
of, or may decrease the resource efficiency of, the
Services, including implementing changes in
technology or equipment and software configuration,
without first obtaining SK's approval (which approval
SK may withhold for any change that may have an
adverse affect on SK or the Services in its sole
discretion). EDS may make temporary changes required
by an emergency if it has been unable to contact an
appropriate SK manager to obtain such approval after
making reasonable efforts. EDS shall document and
promptly report such emergency changes to SK.
(iii) EDS shall move programs from development and test
environments to production environments in a
controlled and documented manner, so that no
unauthorized changes are introduced into the
programs.
(iv) EDS shall make no changes to the software purchased
by SK without the prior written approval of SK.
(b) With respect to the provision of Services, EDS shall not miss
time schedules, expand the scope of work, exceed billable hour
estimates or otherwise modify or not meet any provision of a
Statement of Work without prior written approval of SK. The
prior written approval of SK shall be obtained through the
change control process set forth on Schedule 1.10.
(c) Within sixty (60) calendar days after the Effective Date, EDS
shall prepare and provide to SK change control procedures
detailing (i) how EDS will comply with the requirements set
forth in Subsection (a) of this Section; (ii) any modification
EDS would propose to the procedure set forth on Schedule 1.10;
and (iii) how it will otherwise control changes to the
Services (such procedures collectively the "Change Control
Procedures"). The Change Control Procedures shall reflect a
sound-practices change management process for the SK
environments and shall address, at a minimum, the
establishment of (i) appropriate communications between
affected parties (e.g., affected parties within SK), (ii) an
approved back-out plan for each change; (iii) documented
estimates of the impact of each change; (iv) a high degree of
success through test plans and testing; and (v) reporting on,
measurement of and analysis of the changes implemented. The
Change Control Procedures may not modify or change the scope
of Services to be provided under, or any other terms or
conditions of, the Agreement. The Change Control Procedures
shall be provided to SK for review, comment and approval, and
reasonable comments or suggestions of SK shall be incorporated
into the Change Control Procedures. EDS shall perform the
Services in accordance with the Change Control Procedures.
1.11 SOFTWARE DEVELOPMENT METHODOLOGIES. EDS and SK will jointly implement
and utilize written software development methodologies in connection
with the performance of their respective obligations under this
Agreement. EDS may modify or replace such
14
development methodologies at any time after consulting with
the SK Representative, except that such modified or
replacement methodologies may not increase or otherwise alter
in any material respect SK's obligations under this Agreement
or adversely affect EDS' performance under this Agreement
without the prior written consent of SK.
ARTICLE II. PERSONNEL
---------
2.1 [INTENTIONALLY LEFT BLANK.]
2.2 PERSONNEL.
----------
(a) KEY EDS POSITIONS.
------------------
(i) "Key EDS Positions" shall be the positions set forth
as such in Schedule 2.2(a). EDS shall cause each of
the personnel filling the Key EDS Positions to devote
all necessary time and effort to the provision of
Services for the period specified in Section
2.2(a)(iii). Personnel filling Key EDS Positions
shall have meaningful compensation incentives that
may only be earned as a result of SK customer
satisfaction. SK and EDS may mutually agree from time
to time to change the positions designated as Key EDS
Positions under this Agreement, provided that the
number of Key EDS Positions shall not exceed the
number of Key EDS Positions specified in Schedule
2.2(a) as of the Effective Date, unless the Parties
mutually agree otherwise.
(ii) Either SK or EDS may propose that a particular EDS
employee fill a Key EDS Position. Before assigning an
individual to a Key EDS Position, whether as an
initial assignment or a subsequent assignment, EDS
shall notify SK of the proposed assignment, shall
introduce the individual to appropriate SK
representatives (and, upon request, provide such
representatives with the opportunity to interview the
individual) and shall provide SK with a resume and
other information about the individual reasonably
requested by SK. If SK in good faith objects to the
proposed assignment, the Parties shall attempt to
resolve SK's concerns on a mutually agreeable basis.
(iii) The personnel approved as of the Effective Date to
fill the Key EDS Positions are listed in Schedule
2.2(a). Personnel filling Key EDS Positions may not
be transferred or reassigned until a suitable
replacement proposed by EDS has been approved by SK.
With respect to the Key EDS Positions (including the
EDS Client Delivery Executive), during the first
twelve (12) months following their assignment
(including the assignment of any replacement), EDS
may not, without SK's prior written approval of the
replacement, transfer or reassign a person filling
any such Key EDS Position unless (A) the
15
provision of the applicable Category of Services has
been completed; or (B) the employee (1) resigns or is
unable to work due to his or her death or disability,
(2) accepts transfer or reassignment for advancement
opportunities that are reasonably supportable to SK
or (3) requests transfer or accepts reassignment for
personal reasons which would reasonably cause the
employee to seek relief from the SK assignment.
(iv) EDS shall not assign a person that filled a Key EDS
Position to a project involving the companies listed
on Schedule 2.2(a)(iv) and their affiliates (an "SK
Competitor") until one year has elapsed from when
such individual ceased providing services for SK.
(b) QUALIFICATIONS, RETENTION AND REPLACEMENT OF EDS PERSONNEL.
-----------------------------------------------------------
(i) EDS shall assign an adequate number of personnel to
perform the Services. Each person that EDS assigns to
perform the Services shall be properly educated,
skilled, trained and qualified for the Services he or
she is to perform.
(ii) In the event that SK determines in good faith that
the continued assignment to the SK account of any of
the EDS Personnel is not in the best interests of SK,
then SK shall provide the EDS Client Delivery
Executive written notice to that effect, describing
SK's specific concerns with the applicable EDS
Personnel. Promptly after receipt of such notice, EDS
shall have a reasonable period of time (not to exceed
ten (10) business days) in which to investigate the
matters stated in such notice, discuss its findings
with SK and resolve any problems with such EDS
Personnel on a basis mutually agreeable to EDS and
SK.
(c) ACCOUNT TURNOVER.
-----------------
SK and EDS both agree that it is in their best interests to
keep the turnover rate of the EDS personnel performing the
Services to a reasonably low level. Accordingly, the Parties
agree as follows:
(i) If at any time EDS intends to replace any EDS
Personnel performing the Services, EDS shall take all
necessary steps to ensure that there is adequate
knowledge transfer between the individual being
replaced and the newly-assigned individual. Any
replacement technology or management personnel shall
possess a level of ability, education, skills,
training, and qualifications at least similar to the
departing personnel they are replacing. SK shall not
be charged for any transition costs related to such
turn over, including the educating of the new person
regarding SK and the Services.
16
(ii) Upon SK's request, EDS shall provide, at its own
expense, data concerning its turnover rate regarding
the SK account. At SK's request, EDS shall meet with
SK to discuss such turnover rate and mutually
determine what reasonable steps EDS could take to
minimize EDS' turnover rate in the future.
(iii) In any event, notwithstanding transfer or turnover of
personnel, EDS remains obligated to perform the
Services without degradation and in accordance with
the Agreement.
(d) CONDUCT OF EDS PERSONNEL. While performing Services for SK,
EDS, its employees, and agents shall (1) comply with
reasonable requests, standard rules and regulations of SK
regarding personal and professional conduct generally
applicable to any such SK service location and (2) otherwise
conduct themselves in a businesslike manner. In the event SK
determines in good faith that a particular employee, or agent
is not conducting himself or herself in accordance with this
Section, SK may provide EDS with notice and documentation, if
any, in respect of such conduct. Upon receipt of such notice,
EDS shall promptly (1) investigate the matter and take
appropriate action that may include (a)(i) removing him or her
from the project staff, (ii) providing SK with prompt notice
of such removal, and (iii) replacing him or her with a
similarly qualified individual; or (b) take other appropriate
action to prevent a reoccurrence. In the event there are
repeated violations of this Section by a particular employee
or agent, EDS shall promptly remove him or her from the
project staff.
(e) MOVEMENT OF SK HEADQUARTERS. In the event SK moves its
corporate headquarters from Columbia, South Carolina, then
notwithstanding any other provision of this Agreement, EDS may
propose alternative personnel to perform various functions
under this Agreement and SK will not unreasonably object to
such alternate personnel.
2.3 USE OF SUBCONTRACTORS.
(a) The Services will be performed by EDS, itself and through its
direct and indirect wholly-owned subsidiaries, including EIS.
Subject to Subsection (b) of this Section, except as and to
the extent SK may agree otherwise in writing, EDS shall not
subcontract its obligations under the Agreement except as
follows:
(i) Prior to entering into a subcontract with a third
party, EDS shall give SK reasonable prior written
notice specifying the components of the Services
affected, the scope of the proposed subcontract, and
the identity and qualifications of the proposed
subcontractor. SK shall have the right to approve or
disapprove proposed subcontractors. Subject to EDS'
timely provision of the foregoing information to SK,
SK shall be
17
deemed to have accepted such delegation or
subcontract or change that is the subject of the
notification by EDS to SK, if SK has not notified EDS
in writing of its good faith objections to such
delegation or subcontract on or before the
twenty-first (21st) day after receipt of such notice
from EDS. Any such subcontractors approved by SK
under this Section are "Authorized Subcontractors."
Authorized Subcontractors approved by SK as of the
Effective Date are set forth as such in Schedule 2.3.
SK also shall have the right during the Term to
revoke its prior approval of a subcontractor upon
reasonable notice to EDS and direct EDS to replace
such subcontractor if the subcontractor's performance
is materially deficient, good faith doubts exist
concerning the subcontractor's ability to render
future performance because of changes in the
subcontractor's ownership, management, financial
condition, or otherwise, or there have been material
misrepresentations by or concerning the
subcontractor.
(ii) EDS shall include in its subcontracts as flowdown
provisions, provisions substantially similar to those
in Sections 8.1, 8.2, 8.4 and 8.5 of the Agreement,
as well as any other provisions that are reasonably
necessary for EDS to fulfill its obligations under
the Agreement.
(b) EDS may, in the ordinary course of business and without SK
approval, subcontract for third party services or products
where such third party services or products:
(i) are not dedicated to SK;
(ii) are not material to a particular function
constituting a part of the Services, and
(iii) do not result in a material change in the way EDS
conducts its business;
provided, however, that such subcontract does not adversely
affect SK whether in performance of or charges for the
Services or otherwise. If SK expresses concerns to EDS about a
subcontract covered by this Subsection (b) of this Section,
EDS shall discuss such concerns with SK and work in good faith
to resolve SK's concerns on a mutually acceptable basis.
(c) EDS shall not insert in any subcontract any provision the
effect of which would be to limit the ability of a
subcontractor to contract directly with SK.
(d) EDS shall remain responsible for obligations, services and
functions performed by EDS affiliates and subcontractors to
the same extent as if such obligations,
18
services and functions were performed by EDS employees and for
purposes of the Agreement such work shall be deemed work
performed by EDS. EDS shall not be relieved of its obligations
due to any subcontractor's failure to perform. EDS shall be
SK's sole point of contact regarding the Services, including
with respect to payment. EDS shall not disclose SK
Confidential Information to a subcontractor unless and until
such subcontractor has agreed in writing to protect the
confidentiality of such Confidential Information in a manner
equivalent to that required of EDS under the Agreement.
(e) EDS shall continue to use the existing third party providers
designated as such in Schedule 2.3. Upon making a
determination that continued use of any of such third party
providers is not in the best interests of SK, subject to prior
written consent by SK, EDS may eliminate such provider or
diminish such provider's level of effort.
(f) Notwithstanding any provision of this Section to the contrary,
EDS cannot subcontract more than 49% of the work (in terms of
the total annual average cost of the Services) under this
Agreement, without the prior written consent of SK; unless
this is caused by action taken by SK. EDS shall use reasonable
efforts to inform SK of an action contemplated to be taken or
taken by SK will cause or causes EDS to not comply with this
requirement.
2.4 HIRING OF EMPLOYEES. During the term of this Agreement and for a period
of 12 months thereafter, neither Party will solicit, directly or
indirectly, for employment or employ any employee of the other Party
who is or was actively involved in the performance, consumption or
evaluation of the Services without the prior written consent of the
other. Notwithstanding the foregoing, the Parties acknowledge and agree
that this Agreement will not prohibit (a) any executive search or
similar business controlled by EDS or by any of its affiliates from
engaging in its business in the ordinary course in a manner consistent
with past practices on behalf of clients other than EDS or (b)
solicitations or hiring through advertising or other publications of
general circulation.
ARTICLE III. SERVICES
--------
3.1 TERM; RENEWAL. Unless terminated earlier in accordance with the
provisions of this Agreement, the term of this Agreement (the "Term")
will commence on the Effective Date, as approved by the Bankruptcy
Court, and will expire on April 30, 2007 (the "Expiration Date"). Upon
giving written notice to EDS no less than three (3) months prior to the
then-existing expiration date of the Agreement, SK shall have the
right, at its sole option and discretion, to extend the Term for up to
one (1) year on the terms and conditions then in effect.
3.2 SERVICES.
---------
19
(a) During the term of this Agreement, EDS will provide to SK, and
SK will obtain from EDS, the services generally described in
SCHEDULE 3.2 and as more fully set forth in mutually
acceptable written statements of work (the "Services"). These
Services include various categories of services, the
categories of which are set forth on Schedule 3.2 (the
"Categories of Services"). The written statements of work will
be in substantially the form of EXHIBIT A to SCHEDULE 3.2 and
signed by the parties (the "Statement of Work"). Each
Statement of Work will include (a) an ATTACHMENT A-1 which
will describe the services that EDS will perform and the
deliverables that EDS will produce thereunder, (b) an
ATTACHMENT A-2 which will describe SK's role, if any, in
connection with such services and deliverables and (c) an
ATTACHMENT A-3 which will describe the charges to be paid by
SK to EDS in consideration for such services and deliverables.
Each Statement of Work will be numbered sequentially beginning
with the number one and, when executed by the parties, will be
attached hereto and made a part hereof for all purposes. In
the event of any express conflict or inconsistency between the
provisions of a Statement of Work and the provisions of this
Agreement, the provisions of the Statement of Work will govern
and control with respect to the interpretation of that
Statement of Work; PROVIDED, HOWEVER, that the provisions of
the Statement of Work will be so construed to give effect to
the applicable provisions of this Agreement to the fullest
extent possible. The Services and any Additional Services are
collectively referred to in this Agreement as the "Services".
(b) As of the Effective Date, EDS shall provide the Services to
(i) SK (including SK business units), (ii) SK's Affiliates,
and (iii) indirectly to the suppliers, clients, customers or
trading partners of SK or SK's Affiliates where the Services
are ancillary to SK or an SK-Affiliate service which provides
value to the SK or SK-Affiliate supplier, client, customer or
trading partner. In this regard, EDS shall not be required to
directly provide the Services to the suppliers, clients,
customers or trading partners of SK or SK's Affiliates. For
purposes of the Agreement, Services provided to the entities
referenced in this Section shall be deemed to be Services
provided to SK. Notwithstanding the foregoing, SK shall have
the right to specify, in its absolute and sole discretion,
which of the entities described in subsections (ii) and (iii)
shall receive the Services (whether directly in subsection
(ii) or indirectly in subsection (iii)). For purposes of this
Agreement, Affiliate shall mean any corporation, partnership,
or other entity that is in or under the direct or indirect
control of a party hereto or of another Affiliate of such
party, or any successor to all or substantially all the
business of a party hereto or of an Affiliate of such party,
and, for this purpose, "control" shall exist whenever there is
an ownership, profits, voting, or similar interest (including
any right or option to obtain such an interest) representing
at least fifty percent (50%) of the total interests of the
pertinent entity then outstanding (treating as outstanding any
interests obtainable by a party or the relevant Affiliate
pursuant to the exercise of the aforementioned rights or
options). In addition, SK Affiliates shall include those
entities that although they do not meet the
20
definition of "Affiliate" are listed on Schedule 3.2(b). The
initial listing of SK Affiliates is attached hereto as
Schedule 3.2(b).
3.3 PERFORMANCE METRICS.
--------------------
(a) SERVICE LEVELS. EDS shall perform the Services at least at the
same level and with at least the same degree of accuracy,
quality, completeness, timeliness, responsiveness and
efficiency as provided prior to the Effective Date by or on
behalf of SK. In addition, SCHEDULE 3.3(a) sets forth certain
Service Levels mechanisms that will be used to measure and/or
improve EDS' performance of the Services under this Agreement
(the "Service Levels"). If the Services provided pursuant to
this Agreement are changed, modified or enhanced (including
through the provision of Additional Services), the Parties
will review the Service Levels then in effect and will in good
faith mutually determine whether such Service Levels should be
adjusted and whether additional Service Levels should be
implemented.
(b) FAILURE TO PERFORM.
(i) If EDS fails to meet any Service Level, then EDS
shall (i) promptly perform a root-cause analysis to
identify the cause of such failure, (ii) provide a
report to SK in accordance with Section 1.5, and
(iii) if appropriate, take action to avoid such
failure in the future and begin to meet the Service
Level as promptly as practicable. The determination
of whether action may be appropriate under clause
(iii) above will take into account, among other
factors, the causes of such failure, the cost/benefit
analysis associated with such action and whether the
failure reflects a declining performance trend in
such Service Level. Performance trends with respect
to expected Service Levels will be determined based
upon a review of applicable performance data over the
prior, rolling 12-month period.
(ii) If EDS fails to meet any Service Level with respect
to which a Service Level Credit (as defined in
Schedule 3.3(a)) applies, SK may elect, in lieu of
receiving liquidated damages in the form of a Service
Level Credit (which, if elected, will constitute the
sole and exclusive monetary remedy of SK for such
failure), to pursue such other remedies as may be
available at law or in equity against EDS, subject to
the terms and conditions of this Agreement. If SK
elects to receive a Service Level Credit, EDS shall
provide such credit against the immediately
succeeding payments that become due to EDS under this
Agreement, all in accordance with Schedule 3.3(a). If
any Service Level Credit remains outstanding upon the
expiration or termination of this Agreement and no
Service charges remain payable, EDS shall pay
21
SK such remaining amount in cash within 30 days after
such expiration or termination.
(c) PERIODIC REVIEW; ANNUAL IMPROVEMENT. From time to time, but no
less often than annually, SK and EDS shall review the Service
Levels and make adjustments to them as appropriate to reflect
improved performance capabilities associated with advances in
the technology and methods used to perform the Services and
the continuing development and evolving priorities of SK. The
Parties expect that the Service Levels will become more
favorable to SK over time.
(d) CUSTOMER SATISFACTION. No later than the 12-month anniversary
of the Effective Date and on an annual basis thereafter during
the term, EDS shall conduct a satisfaction survey using a
mutually agreed upon survey to capture SK perceptions with
respect of the delivery of the Services. EDS shall provide the
survey and proposed distribution list to the SK Representative
for his or her review and approval. The individuals set forth
in EDS' proposed distribution list shall be a representative
sample of SK end users of the Services and senior management
of end users. EDS shall provide SK with the results of such
survey. Promptly thereafter, the Parties shall jointly review
such results and identify any areas of customer
dissatisfaction. EDS shall prepare a remedial plan to remedy
the causes of any recurring or significant customer
dissatisfaction.
3.4 SAS 70, SAS 80 AND GAAP. At SK's request, the Services related to
information technology and business process outsourcing may be
subjected to a periodic SAS 70 (or similar) review by an independent
auditor. SK will be entitled to a copy of any such report. If SK
requests such audit, then such audit shall be at SK's expense. Any
changes the Parties agree to make, as a result of the review, will be
subject to the Change Control Process. If there are specific documents
related to SAS 80 (or a similar pronouncement) that SK believes require
special retention consideration, SK will identify those documents and
the special requirements to EDS. The parties will reasonably cooperate
in identifying variances from the EDS records retention policy. Any
modifications to the records retention program will be subject to the
Change Control Process.
In addition to the above, when performing the Services, EDS will work
and cooperate with SK, under SK's direction, to design, develop, and
modify systems that will facilitate SK's compliance with generally
accepted accounting principles, general accepted auditing standards,
and any applicable tax requirements.
3.5 FORMER AFFILIATES. In the event that SK relinquishes Control of an SK
Affiliate or business unit after the Effective Date such that the
entity is no longer a part of SK or an SK Affiliate (such entity a
"Former Affiliate"), then upon SK's request, EDS shall continue to
provide the Services to such SK Affiliate or business unit after the
date
22
such entity becomes a Former Affiliate for the duration of the Term
without any adjustment to pricing under this Agreement (except for any
demonstrable additional costs that EDS shall incur, if any, in order to
provide the Services to a Former Affiliate); provided, however, that
the Former Affiliate agrees in writing to abide by the terms and
conditions of the Agreement. SK agrees to provide EDS with notice of
any such relinquishment as soon as practicable. SK shall (1) remain the
single point-of-contact with EDS with respect to those Services
provided to a Former Affiliate, and, (ii) remain obligated to perform
its payment obligations under the Agreement with respect to those
Services provided to a Former Affiliate. For purposes of the Agreement,
Services provided to a Former Affiliate shall be deemed to be Services
provided to SK. If at anytime SK requests that EDS enter into a direct
agreement with the Former Affiliate and relieve SK of the foregoing
continuing obligations with respect to such Former Affiliate, EDS
agrees to negotiate with such Former Affiliate in good faith for the
services provided.
3.6 CHANGES IN AMOUNT OF SERVICES; COOPERATION.
-------------------------------------------
(a) Notwithstanding anything to the contrary contained in the
Agreement, SK shall have the right, at any time and from time
to time, to increase or decrease its demand for the Services.
(b) SK and each SK Affiliate has as of the Effective Date and
thereafter will have the right to perform itself, or retain
third parties to perform, any Category of Service; provided,
however, that SK, the SK Affiliate or third party must perform
the whole Category of Service and not just a part. To the
extent SK or a SK Affiliate decides to perform any Category of
Service itself, or retains third parties to do so, and SK or
such Affiliate continues to receive any Services hereunder,
EDS shall, in support of the transition to SK, the SK
Affiliate, or such third party, cooperate with SK, such SK
Affiliate or any such third party, which cooperation shall
include:
(i) Providing reasonable access to the facilities being
used to provide the Services as necessary for SK or a
third party to perform;
(ii) Providing reasonable access to the Equipment and
Software (to the extent permitted under any
underlying agreements with third parties); and
(iii) Providing such information regarding the operating
environment, system constraints and other operating
parameters as a person with reasonable commercial
skills and expertise would find reasonably necessary
for SK or a third party to perform its work.
(iv) In connection with the above, EDS shall have the
right to reasonably restrict access to some or all of
its Confidential Information if
23
disclosure of such Confidential Information would, in
EDS' reasonable good faith determination, cause
material harm to EDS' competitive position. Such
restrictions may include (i) the imposition of
reasonable data and physical security and other
applicable standards and procedures, (ii) the
execution of appropriate confidentiality and
non-solicitation agreements, (iii) the reasonable
scheduling of computer time and access to other
resources to be furnished by EDS pursuant to this
Agreement, (iv) the restriction of access to EDS
proprietary information from direct competitors of
EDS; and (v) the restriction of access to EDS
proprietary information to individuals with a
specific need to know the information being provided.
(v) If EDS' cooperation with SK or any third party
performing work as described in this Section would
cause EDS to expend additional resources that EDS
would not otherwise have expended, EDS shall provide
SK with prior written notice of the nature and extent
of such additional resources that EDS shall be
required to provide. If the Parties cannot reasonably
arrange to avoid such additional reasonable and
necessary resources, such mutually agreed upon
resources will be charged to SK at the professional
services rates. The Parties further agree that if in
EDS' reasonable, good faith determination, a third
party's activities or omissions affect EDS' ability
to meet the Service Levels or otherwise provide the
Services in accordance with this Agreement, EDS will
provide prior written notice to SK of such
determination. The Parties will cooperate to
determine and verify whether such effect is caused by
a third party supplier, the extent of such effect,
and how to ameliorate any such effect. EDS shall work
with SK to prevent or circumvent such problems or
delays.
(vi) In the event SK retains a third party pursuant to
this Section to perform services, functions,
activities, tasks or responsibilities that are within
the scope of the Services, the Parties agree that the
charges and rates under this Agreement shall be
equitably adjusted to reflect resources no longer
required by EDS to perform those services, functions,
activities, tasks or responsibilities provided by
such third party.
3.7 EXTRAORDINARY EVENTS.
----------------------
(a) An "Extraordinary Event" shall mean a circumstance in which an
event or discrete set of events has occurred or is planned
with respect to the business of SK that results or will result
in a change in the scope, nature or volume of the services
that will be required from EDS, and which is expected to cause
the average monthly amount of chargeable resource usage in any
Category of Service to increase or decrease by twenty percent
(20%) or more for thc foreseeable future. Examples of the
kinds of events that might cause such substantial changes are:
24
(i) additions, deletions or other changes to locations
where SK or its customers or suppliers operate;
(ii) additions, deletions or other changes to the services
provided by SK, SK's products or the markets served
by SK;
(iii) additions or deletions of entities or SK Affiliates
to whom the Services are provided;
(iv) a SK-approved change in the technology platform or
platforms applicable to the Services (e.g., change
from mainframe-based systems to distributed or
Worldwide Web-based systems);
(v) mergers, acquisitions, or divestitures of SK;
(vi) changes in the method of service delivery, or changes
in operational priorities; or
(vii) changes in market priorities.
Notwithstanding the foregoing, the Parties specifically acknowledge and
agree that the sale of SK's Blue Business shall not be deemed to be an
Extraordinary Event hereunder and shall be excluded entirely from the
provisions of this Section 3.7.
(b) Either Party may notify the other of any event or discrete set
of events which it believes constitutes an Extraordinary
Event. In the case of an Extraordinary Event, EDS' charges
shall be adjusted in accordance with the following:
(i) EDS and SK shall mutually determine on a reasonable
basis those resources no longer required by EDS to
provide the Services ("Targeted Resource Reductions")
and the costs (including appropriate indirect and
overhead costs) and profit that can be eliminated or
reduced as and when the Targeted Resource Reductions
are eliminated (the "Targeted Cost Reductions").
(ii) EDS and SK shall mutually determine on a reasonable
basis those new or modified resources now required by
EDS to provide the Services ("Targeted Resource
Additions") and the costs (including appropriate
indirect and overhead costs and a reasonable profit)
that would be incurred as and when the Targeted
Resource Additions are placed in service (the
"Targeted Cost Increases").
(iii) Immediately upon determination of the Targeted
Resource Reductions, EDS shall proceed to eliminate
the Targeted Resource Reductions as quickly as
reasonably feasible, but in no more than one (1)
year.
25
Immediately upon determination of the Targeted
Resource Additions, EDS will proceed to deploy the
Targeted Resource Additions as necessary.
(iv) As the Targeted Resource Reductions are eliminated,
the Monthly Charges shall be reduced by the full
amount of the Targeted Cost Reductions applicable to
the Targeted Resource Reductions as such Targeted
Cost Reductions are so eliminated. As the Targeted
Resource Additions are placed into service, the
Monthly Charges will be increased by the full amount
of the Targeted Cost Increases applicable to the
Targeted Resource Additions as such Targeted Cost
Increases are added.
(v) If within sixty (60) days following notice under this
Subsection (b), the Parties have not agreed upon an
appropriate adjustment to charges, then at the
initiative of either Party the issue shall be treated
as a dispute under Article 10.
3.8 THIRD PARTY SOFTWARE.
---------------------
(a) With respect to any software utilized to provide the Services,
EDS shall use reasonable commercial efforts to secure a
license that is either (a) in EDS' name and transferable to
SK, at no additional cost, as agreed to by the parties, upon
the expiration or termination of any Service under this
Agreement or (b) in SK's name, as agreed to by the parties,
with EDS having the right to have access to and use such
software to the extent contemplated by this Agreement.
Additionally, EDS shall use all reasonable commercial efforts
to have included in each such license the right for SK, as
agreed to by the parties, and EDS to attend all user group
meetings offered by the software vendor.
(b) With respect to all Software used in providing the Services,
except for the SK Software and SK-Vendor Software, EDS shall
keep in full force and effect maintenance and support
agreements relating to such software that are transferable to
SK at no charge (other than the assumption of ongoing payment
obligations). If, with respect to any Software used in
providing the Services, except for the SK Software and
SK-Vendor Software, EDS is at any time unable to do what is
required by the preceding sentence, then EDS shall so notify
SK, and, at SK's request, shall obtain other Software to
provide such Services with respect to which EDS can meet the
requirements of this Section. Any such change of Software
shall be made in accordance with the Change Control
Procedures.
26
3.9 THIRD-PARTY PRODUCTS AND SERVICES.
----------------------------------
In the event that SK desires to procure any products or services beyond
that which EDS is obligated to provide as part of the Services, then
upon request of SK, EDS will quote SK a price for such products and
services that reflect (a) the existing volume of business between SK
and EDS, and (b) the benefit of any volume purchasing discounts
available to EDS from third party suppliers. Upon the request of SK,
EDS will provide from time to time a listing by categories of expenses
that SK is incurring for which EDS has such discount arrangements.
3.10 GAIN SHARING.
-------------
EDS will identify, on a regular basis, gain sharing opportunities to SK
as well as respond to gain sharing opportunities in accordance with
gain sharing principles and procedures mutually agreed to by EDS and SK
prior to the Effective Date.
3.11 ADDITIONAL SERVICES.
--------------------
In the event that SK needs the performance of functions of a type
provided under this Agreement that are materially different from, and
in addition to, the Services (any such functions collectively
"Additional Services"), the Parties' obligations with respect to such
Additional Services shall be as follows:
(a) To the extent that such additional functions require
additional resources for which a pricing metric exists under
the Agreement, the additional functions shall be priced in
accordance with such pricing metric subject to Subsection (f)
of this Section, and shall be considered "Services" and shall
be subject to the provisions of the Agreement.
(b) To the extent that such additional functions require
additional resources for which a pricing metric does not exist
under the Agreement, then the following procedure shall apply:
(i) If the Additional Services are estimated to be a
$1,000,000 or less and SK reasonably believes that
EDS can perform such Additional Services, then SK
shall not generally bid the work but rather shall
request a bid from EDS only. EDS shall quote SK a
fair and reasonable charge for such Additional
Services within 10 business days that takes into
account the existing volume of business between SK
and EDS, including the cost of the components of
production that are priced as part of the Agreement.
If EDS' bid is competitive, then EDS' bid shall be
accepted. If, in SK's reasonable judgement, EDS' bid
is not competitive, then SK shall have the right, but
not the obligation, to bid the work in accordance
with the processes established in Section
3.11(b)(ii).
27
(ii) If the Additional Services are estimated to be more
than a $1,000,000 and SK reasonably believes that EDS
can perform such Additional Services, then SK shall
obtain a bid from EDS. EDS shall quote SK a fair and
reasonable charge for such Additional Services within
thirty days, or if bids are solicited from third
parties ,within the time frame provided in such bid
request, that takes into account the existing volume
of business between SK and EDS, including the cost of
the components of production that are priced as part
of the Agreement. SK may also, but is not required
to, at the same time solicit and receive bids in good
faith from reputable third parties to perform such
Additional Services. If EDS' bid for comparable
services is within the lesser of (A) 10% or (B)
$500,000, of the lowest bid then EDS' bid shall be
accepted. If EDS' bid for comparable services is not
within the lesser of (A) 10% or (B) $500,000,of the
lowest bid then SK shall so notify EDS, and EDS shall
have 10 days to respond with a revised bid. If such
revised bid for comparable services is within the
lesser of (A) 10% or (B) $500,000, of the lowest bid
then EDS' bid shall be accepted. If such revised bid
is not within the lesser of (A) 10% or (B)
$500,000,of the lowest bid then SK may accept the
alternative bid. If SK elects a third party to
provide such services in accordance with this
process, then the Parties shall work together to
coordinate the provision of such third party services
through the Change Control Process.
(c) If SK elects to have EDS perform such Additional Services,
then the Parties shall enter into a Statement of Work, if
appropriate, and/or the charges under the Agreement shall be
adjusted, if and to the extent appropriate, to reflect such
functions, and such Additional Services shall be deemed
"Services" and shall be subject to the provisions of the
Agreement.
(d) SK agrees that it will give good faith consideration under the
circumstances to any proposal of EDS in light of the ongoing
relationship between SK and EDS at that time.
(e) The Parties anticipate that the Services will evolve and be
supplemented, modified, enhanced or replaced over time to keep
pace with technological advancements and improvements in the
methods of delivering services, and the Parties acknowledge
that these will not be deemed to result in functions
materially different from and in addition to the Services.
(f) If SK's request for Additional Services pursuant to this
Section includes a request for EDS to correspondingly reduce
or eliminate Services it is providing, then such Additional
Services will be considered "Replacement Services." In such
event, the Parties shall determine the resources and expenses
required to provide the Replacement Services, including
implementation and ongoing support, and the reduction in
resources and
28
expenses related to the Services being replaced. The net
increase or decrease in resources and expenses will be the
basis on which EDS shall quote a price to SK for Replacement
Services.
3.12 SYSTEM CHANGE.
--------------
(a) Each time, if any and subject to other provisions of this
Agreement, that EDS, without the consent of SK, makes a
material change in the operating environment in which EDS is
operating Software (other than those changes specifically
requested by SK) (each such change a "System Change"), EDS
shall perform a comparison, at a reasonable and mutually
agreed level of detail, between the amount of resources
required by that Software to perform a representative sample
of the processing then currently being performed for SK
immediately prior to the System Change and immediately after
the System Change.
(b) SK shall not be required to pay for increased resource usage
due to a System Change. If, following a System Change, EDS
contends that increased resource usage is from increased SK
use and not from the System Change, SK shall only be required
to pay for increased usage as and to the extent EDS
demonstrates to SK that increased usage is not due to the
System Change and is due to SK usage. Any such demonstration
shall utilize the same representative sample as used in the
comparison above.
3.13 BENCHMARKING.
-------------
SK will have the right beginning on the first anniversary of the
Effective Date, no more than once annually, to obtain the services of a
mutually agreed upon third-party to benchmark the cost and performance
of all services, giving due consideration to the total scope of
services being performed against standards satisfied by well managed
operations performing similar to the services and under similar
environments, to the extent available information permits
("Benchmarking"). SK will bear the cost and expense of Benchmarking.
Each party will be provided the opportunity to review and comment on
the results. Based upon the final results of such benchmarking EDS will
cooperate with SK to investigate variances, if any and to rectify based
upon a course of action and respond to any performance deficiencies or
cost differences by material adjustment in the pricing and service
level/services schedule within 30 days after presentation of results.
Should EDS fail to agree with any change variance, SK has the option of
sourcing the affected services to a third-party and reducing the amount
of core services arising from the variance as a result.
3.14 EXECUTIVE BALANCED SCORECARD.
(a) OVERVIEW The Service Excellence Dashboard is a proprietary,
Web-based tool EDS uses to nurture, monitor and develop client
relationships and provide real-
29
time performance data for those services that EDS provides. SK
specific performance concerns stay highly visible to EDS
executives and issues are addressed quickly.
(b) DASHBOARD FUNCTIONS.
--------------------
The EDS Service Excellence Dashboard provides the following
functions described below.
(i) VOICE OF THE CLIENT PROGRAM. SK can provide real-time
performance feedback using E.client, EDS' online
surveying tool. In addition to E.client direct
surveys, the Voice of the Client program includes
one-on-one interviews between an independent
representative from the Service Excellence team.
Interviews focus on EDS' performance, deliverables
and service quality as well as any disappointments,
expectations and future objectives.
(ii) CLIENT DASHBOARD. The Client Dashboard will allow SK
to access their own private, customized view of EDS'
internal performance management tool. The Client
Dashboard provides unfiltered, round-the-clock access
to performance information about their account. EDS
will notify SK as to when this feature will be
activated for SK.
(iii) SERVICE PERFORMANCE INDICATORS. The Service
Excellence Dashboard reports objective,
quantitative performance standards based on industry
and client input for certain EDS offerings. Service
performance indicators are standardized,
quantitative measures such as network
availability, response time and on-time project
completion.
(c) INDICATORS. In the establishment of the Balanced Scorecard,
----------
(i) A "Green" indicator means that EDS is meeting or
exceeding SK expectations. No action is required.
(ii) A "Yellow +" indicator means that EDS is performing
below SK expectations in a non-critical area; action
plan in place.
(iii) A "Yellow" indicator means that EDS is performing
below SK expectations in a critical area; action plan
in place.
(iv) A "Yellow -" indicator means that EDS is performing
below SK expectations in a critical area; problem
diagnosis in place.
(v) A "Red" indicator means that EDS is performing below
SK expectations
30
Should SK's indicator become Yellow, extended EDS support teams are
alerted and proactively offer assistance. Should SK's indicator become
Red, a rapid response process is initiated to accelerate resolution.
3.15 RELIANCE ON INSTRUCTIONS. In performing its obligations under this
Agreement, EDS will be entitled to rely upon any routine instructions,
authorizations, approvals or other information provided to EDS by the
SK Representative or, as to areas of competency specifically identified
by the SK Representative, by any other SK personnel identified by the
SK Representative, from time to time, as having authority to provide
the same on behalf of SK in such person's area of competency.
3.16 LICENSES AND PERMITS.
---------------------
As part of the Services, EDS is responsible for obtaining all necessary
governmental licenses, consents, approvals, permits, and authorizations
required by applicable laws and regulations that are required to be
obtained in order to perform the Services or to consummate the
transactions contemplated by this Agreement. SK shall assist EDS in
identifying what the necessary governmental licenses, consents,
approvals, permits and authorizations may be. EDS shall have financial
responsibility for, and shall pay, all fees and taxes associated with
obtaining such governmental licenses, consents, approvals, permits and
authorizations. SK shall reasonably cooperate with and assist EDS in
obtaining any such licenses, consents, approvals, permits, and
authorizations. SK shall be responsible for obtaining all licenses,
consents, approvals, permits, and authorizations required by applicable
laws and regulations for SK to conduct its business, and which are not
directly related to the Services.
3.17 CHANGES IN LAW AND REGULATIONS.
-------------------------------
Each party shall identify and notify the other party of changes in
applicable laws and regulations and, as part of the Services, EDS shall
identify the impact of such changes on its ability to perform and
deliver the Services. EDS, after consultation with SK, shall promptly
make any modifications to the Services as are reasonably necessary to
perform and deliver the Services in accordance with the Service Levels
as a result of such changes. EDS shall be responsible for, and shall
pay for, the cost of any such modification relating to EDS' business.
To the extent not included in the Services, SK shall pay for the cost
of any such modification relating to SK's businesses. All such
modifications shall be effected through the Change Control Procedures.
3.18 DEDICATED LOGICAL AND OPERATING ENVIRONMENTS.
---------------------------------------------
Except as approved in advance by SK, as part of the Services, EDS shall
provide the Services set forth on Schedule 3.18 using logical and/or
operating environments dedicated solely to SK, as specified on Schedule
3.18. EDS may propose from time to time during the Term for SK's prior
approval, that SK share the same logical and/or operating environment
that is dedicated solely to supporting SK with other customers of
31
EDS. EDS shall provide to SK, for SK's approval, a detailed proposal
for such shared environment, including benefits, savings or risks to SK
during the Term.
3.19 NON-COMPETITION.
----------------
Upon the Effective Date, EDS agrees to comply with the non-competition
provision set forth on Schedule 3.19.
3.20 MANAGEMENT OF POSSIBLE CONFLICT OF INTEREST. The Services under this
Agreement contemplate that there will be a degree of managed
interaction between the business processing outsourcing functions being
delivered by EDS and/with the application and service delivery
functions through the traditional SAP and operational systems support
groups. The Parties agree that it is imperative that the independence
of these two business functions while delivering services to SK, on
SK's behalf, remain independent and that all change management and
fee-based relationship changes are both managed and approved by
appropriate SK personnel prior to interaction between the two business
functions. This independent function must be certified annually through
representations made to the Steering Committee by the EDS program
office/cross functional team. The gain sharing methodology which is
contemplated by Section 3.10 of this Agreement will be the primary
facility to deliver a single EDS perspective of the operational
approach for reliance between the two outsourcing business functions.
Through the change management process and the contract compliance ___
function, a defined procedure for dealing with transactions which
affect the cost as it relates to the delivery of services resulting
from any event, design, practice change, system change or business
event would be dealt with and controlled on an independent, objective
basis between the two business functions.
ARTICLE IV. SK'S ROLE
---------
4.1 SK's ROLE. During the term of this Agreement and in connection with
EDS' performance of its obligations hereunder, SK will, at its own cost
and expense, have the obligations to EDS, and retain the
responsibilities, described in Schedule 4.1.
ARTICLE V. EQUIPMENT, LEASES, LICENSES, MAINTENANCE
---------------------------------------------------
CONTRACTS AND ADDITIONAL PROPERTY
---------------------------------
5.1 USE OF SK-OWNED EQUIPMENT AND SK-LEASED EQUIPMENT. During the term of
this Agreement, SK will allow, or will obtain the right to allow, EDS
(and any subcontractors of EDS engaged in accordance with this
Agreement) to access at no charge (a) the equipment owned by SK and
listed in Schedule 5.1 (the "SK-Owned Equipment") and (b) subject to SK
having obtained any required consents, the equipment leased by SK and
listed in Schedule 5.1 (the "SK-Leased Equipment"). For purposes of
this Agreement, the term "Access" means the enjoyment of physical and
legal use of a specified item of property to the extent, and only the
extent, necessary for EDS to perform the Services. SK will pay all
costs and expenses with respect to the SK-Owned
32
Equipment and the SK-Leased Equipment, including depreciation (if
applicable), insurance and taxes. SK represents and warrants to EDS
that (a) it is not (and, to its knowledge, the lessor is not) in
default in any material respect under any of the leases applicable to
the SK-Leased Equipment and (b) SK has delivered to EDS complete copies
of those lease terms and conditions relating to the use and operation
of the SK-Leased Equipment (including all amendments thereto) as in
effect on the Effective Date. EDS agrees that it will use the SK-Leased
Equipment in a manner consistent with such terms and conditions. SK
agrees not to allow any of such terms and conditions to be amended in
any material respect without the prior written consent of EDS.
5.2 USE OF SK SOFTWARE AND SK-VENDOR SOFTWARE. During the term of this
Agreement, SK will allow, or will obtain the right to allow, EDS (and
any subcontractors of EDS engaged in accordance with this Agreement) to
Access at no charge (a) the SK Software and (b) subject to SK having
obtained any required consents, the SK-Vendor Software. SK will pay all
costs and expenses with respect to the SK Software and the SK-Vendor
Software. SK represents and warrants to EDS that (a) it is not (and, to
its knowledge, the licensor is not) in default in any material respect
under any of the licenses applicable to the SK-Vendor Software and (b)
SK has delivered to EDS complete copies of those license terms and
conditions relating to the use and operation of the SK-Vendor Software
(including all amendments thereto) as in effect on the Effective Date.
EDS agrees that it will access the SK-Vendor Software in a manner
consistent with such terms and conditions. SK agrees not to allow any
of such terms and conditions to be amended in any material respect
without the prior written consent of EDS.
5.3 SOFTWARE. EDS shall list all software used to provide the Services,
other than the SK Software and SK-Vendor Software, on Schedule 5.3.
Except for Article VII, the term "Software" shall mean all software
(including the SK Software and SK Vendor Software) used to provide the
Services. Unless otherwise provided in an applicable Statement of Work,
EDS shall be responsible for all costs associated with all Software and
related agreements, except for SK Software and SK Vendor Software. EDS
covenants that it is either the owner of, or authorized to use, the
Software (other than SK Software or SK-Vendor) that is utilized or will
be utilized in connection with the Services.
5.4 EQUIPMENT. EDS shall list all equipment used to provide the Services,
other than the SK-Owned Equipment and SK-Leased Equipment on Schedule
5.4. All equipment being used to provide the Services (including the
SK-Owned Equipment and SK-Leased Equipment) is referred to herein as
the "Equipment". Unless otherwise provided in an applicable Statement
of Work, EDS shall be responsible for all costs associated with all
Equipment and related agreements, except for SK Owned Equipment and SK
Leased Equipment. With respect to any leased Equipment, EDS shall use
reasonable commercial efforts to secure a lease that is either (a) in
EDS' name and transferable to SK, at no additional cost, as agreed to
by the parties, upon the expiration or termination of any Service under
this Agreement or (b) in SK's name, as agreed to by the parties, with
EDS having the right to have access to and use such Equipment to the
extent
33
contemplated by this Agreement. With respect to all Equipment used in
providing the Services, except for the SK-Owned Equipment and SK-leased
Equipment, EDS shall keep in full force and effect maintenance and
support agreements relating to such equipment that are transferable to
SK at no charge (other than the assumption of ongoing payment
obligations). If, with respect to any Equipment used in providing the
Services, except for the SK-Owned Equipment and SK-Leased Equipment,
EDS is at any time unable to do what is required by the preceding
sentence, then EDS shall so notify SK, and, at SK's request, shall
obtain other Equipment to provide such Services with respect to which
EDS can meet the requirements of this Section. Any such change of
Equipment shall be made in accordance with the Change Control
Procedures.
5.5 CONSENTS; FURTHER ASSURANCES. EDS and SK will work with and assist one
another to obtain the consents required for the transactions
contemplated by this Article V. For those consents that are not
addressed in this Article V on the Effective Date, the parties shall
mutually agree who is to pay transfer, upgrade or other fees as are
necessary to obtain a required consent. If a required consent is not
obtained, (a) unless and until such required consent is obtained, EDS
will determine and adopt, subject to SK's prior written consent, such
alternative approaches as are necessary and sufficient to perform the
Services without such required consent and (b) the Parties will
mutually agree in writing on any appropriate adjustments to this
Agreement, whether with respect to the scope of the Services, the
Service Levels, EDS' charges or otherwise. In addition, EDS and SK
agree to execute and deliver such other instruments and documents as
either Party reasonably requests to evidence or effect the transactions
contemplated by this Article V.
5.6 ADDITIONAL ITEMS OF PROPERTY. If, due to new or changed circumstances
after the Effective Date, any additional items of property, whether in
the form of equipment, software or otherwise, are required by EDS to
perform the Services or otherwise to meet its obligations hereunder,
whether in addition to or in replacement of any then existing property,
EDS will inform SK and, with SK's prior written consent, will obtain
such additional items and will provide them to SK on such other terms
and conditions as the Parties mutually agree and in accordance with the
Change Control Process. If SK, on its own, decides to acquire any
additional items of property for use in SK's information technology
environment that relate to or impact the Services, whether in addition
to or in replacement of any then existing property, SK will consult and
work with EDS in accordance with the Change Control Process.
ARTICLE VI. WARRANTIES AND ADDITIONAL COVENANTS
-----------------------------------
6.1 WARRANTIES AND ADDITIONAL COVENANTS.
------------------------------------
(a) PERFORMANCE. EDS represents and warrants that the Services
will be rendered with promptness and diligence and will be
executed in a workmanlike manner, in accordance with the
practices and professional standards used in well managed
operations performing services similar to the Services. EDS
34
covenants that it will use adequate numbers of qualified
individuals with suitable training, education, experience, and
skill to perform the Services. EDS covenants that it shall use
efficiently the resources necessary to provide the Services.
EDS further covenants that it shall perform the Services in a
cost-efficient manner consistent with the required level of
quality and performance.
(b) QUALIFICATIONS. EDS covenants that it has the necessary
skills, qualifications and experience to provide the Services
contemplated under this Agreement, Schedules or any Statement
of Works to this Agreement.
(c) WORK. EDS represents and warrants that the deliverables
delivered hereunder will conform to the specifications.
(d) AUTHORITY, PERMITS AND APPROVALS. Each Party covenants that it
has the authority to enter into the Agreement and to perform
its respective obligations under the Agreement and that it has
all consents, permits, and approvals required to perform such
obligations.
(e) COMPLIANCE WITH LAWS. Each Party covenants that it will
perform its obligations under the Agreement and any Statement
of Works under the Agreement in compliance with applicable
laws, regulations, ordinances, and codes. In the event a Party
is notified that it is not in compliance with such laws,
regulations, ordinances, and codes, and such noncompliance
materially affects the rights or obligations of the other
Party under this Agreement, the noncomplying Party shall
provide notice to the other Party describing such
noncompliance and anticipated corrective actions.
(f) VIRUSES. Each Party will use commercially reasonable measures
to screen any software provided or made available by it to the
other Party hereunder for the purpose of avoiding the
introduction of any "virus" or other computer software routine
or hardware components which are designed (i) to permit access
or use by third parties to the software of the other Party not
authorized by this Agreement, (ii) to disable or damage
hardware or damage, erase or delay access to software or data
of the other Party or (iii) to perform any other similar
actions. If a Virus is found to have been introduced into a
Party's systems, the other Party will (at no additional
charge) (a) reasonably assist such Party in eradicating the
Virus and reducing the effects of the Virus, and (b) if the
Virus causes a loss of operational efficiency or loss of data,
assist such Party to the same extent to mitigate and restore
such losses.
(g) DISABLING CODES. EDS will not, without informing the SK
Representative, knowingly insert into the software used by it
hereunder any code or other device which would have the effect
of disabling, damaging, erasing, delaying or otherwise
shutting down all or any portion of the Services or the
hardware,
35
software or data used in providing the Services. EDS will not invoke
such code or other device at any time, including upon expiration or
termination of this Agreement for any reason, without SK's prior
written consent.
(h) PASS-THROUGH WARRANTIES AND INDEMNITIES. EDS agrees that it
will, without limitation of any of SK's other rights or
remedies under this Agreement, pass through to SK any rights
it obtains under warranties and indemnities given by its third
party subcontractors or suppliers in connection with any
services, software, equipment or other products provided by
EDS pursuant to this Agreement to the extent permitted by the
applicable subcontractors or suppliers. If pass-through
warranties and indemnities reasonably acceptable to SK are not
available from a particular subcontractor or supplier, EDS
will discuss the matter with SK prior to engaging the
particular subcontractor or supplier, and the Parties will
mutually determine to either accept the terms available from
such subcontractor or supplier, in which case EDS will enforce
the applicable warranty or indemnity on behalf of SK as
provided below, or deal with another vendor of comparable
services, software, equipment or other products that will
provide warranties and indemnities reasonably acceptable to
SK. In the event of a third party software or equipment
nonconformance, EDS will coordinate with, and be the point of
contact for resolution of the problem through, the applicable
vendor and, upon becoming aware of a problem, will notify such
vendor and will use commercially reasonable efforts to cause
such vendor to promptly repair or replace the nonconforming
item in accordance with such vendor's warranty. If any
warranties or indemnities may not be passed through, EDS
agrees that it will, upon the request of SK, take reasonable
action to enforce any applicable warranty or indemnity, which
is enforceable by EDS in its own name. However, EDS will have
no obligation to resort to litigation or other formal dispute
resolution procedures to enforce any such warranty or
indemnity unless EDS chooses to do so and SK agrees to
reimburse EDS for all reasonable costs and expenses incurred
in connection with any litigation or formal dispute
resolution, including reasonable attorneys' fees and expenses.
Notwithstanding anything in this Section to the contrary, EDS
shall have the obligations, responsibilities and liabilities
regarding subcontractors as set forth in Section 2.3.
(i) SOFTWARE DEVELOPMENT. For a period of 180 days following
acceptance of any Developed Software (as defined in Section
7.1(e)) in accordance with the approval procedures adopted by
the Parties, EDS warrants that each item of Developed Software
will conform in all material respects to the written technical
specifications agreed to by the Parties in accordance with the
software development methodologies adopted by the Parties. As
soon as reasonably practicable after discovery by SK or EDS of
a failure of the Developed Software to so conform (a
"Nonconformance"), SK or EDS, as applicable, will deliver to
the other a statement and supporting documentation describing
in reasonable detail the alleged Nonconformance. EDS will use
all commercially reasonable efforts to investigate and correct
such Nonconformance. The methods and
36
techniques for correcting Nonconformances will be at the sole
discretion of EDS. The foregoing warranty will not extend to
any Nonconformances caused (i) by any change or modification
to software without EDS' prior written consent or (ii) by SK
operating software otherwise than (x) in accordance with the
applicable documentation, (y) for the purpose for which it was
designed or (z) on hardware not recommended, supplied or
approved by EDS. Furthermore, if, after undertaking all
commercially reasonable efforts to remedy a breach by EDS of
the foregoing warranty, EDS, in the exercise of its reasonable
business judgment, determines that any repair, adjustment,
modification or replacement is not feasible, or in the event
that the Developed Software subsequent to all repairs,
adjustments, modifications and replacements continues to fail
to meet the foregoing warranty, EDS will refund to SK, in a
manner and on a schedule agreed to by the Parties and as SK's
sole and exclusive remedy for such failure, an amount equal to
the charges actually paid by SK to EDS for the Developed
Software that has failed to meet the foregoing warranty.
Notwithstanding the other provisions of this Section 6.1(i),
upon the written request of SK, EDS will use commercially
reasonable efforts to correct an alleged Nonconformance for
which EDS is not otherwise responsible hereunder because it is
caused of the factors listed above and, to the extent that
such correction cannot be performed within the scope of the
Services, such correction will be paid for by SK at EDS' then
current commercial billing rates for the technical and
programming personnel and other materials utilized by EDS.
(j) INDUCEMENTS. EDS covenants to SK that it has not violated and
will not violate any applicable laws or regulations or any SK
policies of which EDS has been given notice regarding the
offering of unlawful inducements in connection with the
Agreement. If at any time during the Term of the Agreement, SK
determines that the foregoing representation or warranty is
inaccurate, then, in addition to any other rights SK may have
at law or in equity, SK will have the right to terminate the
Agreement for cause without affording EDS an opportunity to
cure.
(k) NO HIDDEN COSTS.
----------------
EDS covenants that:
(i) all costs to be charged to SK in connection with EDS'
performance of the Services are expressly identified
in the Agreement, and
(ii) EDS is unaware of any costs (as direct charges or
otherwise) that SK will incur in connection with EDS'
performance of the Services that are not expressly
set forth in the Agreement.
(l) YEAR 2000 COMPLIANCE. With respect to Year 2000, EDS agrees
that only original work created by EDS and delivered by EDS to
SK under this Agreement
37
or Statement of Works under this Agreement will store, compare
and display dates after January 1, 2000 correctly. For third
party hardware and software provided by EDS under this
Agreement, EDS will use its commercially reasonable efforts to
request and obtain such third party's certification that each
item of hardware or software provided under this Agreement
will be Year 2000 compliant. If any such certification is not
available then EDS shall obtain the consent of SK in writing
prior to utilizing such item of hardware or software. Further,
should any such third party certification be proven incorrect,
EDS will use commercially reasonable efforts to work with the
third party to correct such certification, or SK may request
and work with EDS to select a replacement product if desired.
EDS and SK agree to negotiate in good faith any license fees
or other charges associated with the selection and
implementation of such an alternative product.
6.2 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
SECTION 6.1 AND ARTICLE V, 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 INFORMATION
TECHNOLOGY SERVICE, SOFTWARE, HARDWARE OR OTHER MATERIALS PROVIDED
UNDER THIS AGREEMENT, OR THAT THE OPERATION OF ANY SUCH SERVICE,
SOFTWARE, HARDWARE OR OTHER MATERIALS WILL BE UNINTERRUPTED OR
ERROR-FREE.
ARTICLE VII. PROPRIETARY RIGHTS
------------------
7.1 SOFTWARE DEFINITIONS. For purposes of this Agreement:
--------------------
(a) EDS SOFTWARE. The term "EDS Software" means any Software that
is owned or developed by or on behalf of EDS before the
Effective Date, or is acquired or developed by or on behalf of
EDS after the Effective Date without reference to or use of
the intellectual property of SK or any vendor of the SK-Vendor
Software. The EDS Software that is expected, as of the
Effective Date, to be used initially by EDS in performing the
Services is listed in Schedule 7.1(a).
(b) EDS-VENDOR SOFTWARE. The term "EDS-Vendor Software" means any
Software that is proprietary to any party other than EDS or SK
and is licensed to EDS. The EDS-Vendor Software that is
expected, as of the Effective Date, to be used initially by
EDS in performing the Services is listed in Schedule 7.1(b).
(c) SK SOFTWARE. The term "SK Software" means any Software that is
owned or developed by or on behalf of SK before the Effective
Date, or is acquired or developed by or on behalf of SK (other
than by EDS) after the Effective Date without reference to or
use of the intellectual property of EDS. The SK Software
38
that is expected, as of the Effective Date, to be used
initially by EDS in performing the Services is listed in
Schedule 7.1(c).
(d) SK-VENDOR SOFTWARE. The term "SK-Vendor Software" means any
Software that is proprietary to any party other than SK or EDS
and is licensed to SK that is to be used in performing the
Services. The SK-Vendor Software that is expected, as of the
Effective Date, to be used initially by EDS in performing the
Services is listed in Schedule 7.1(d).
(e) DEVELOPED SOFTWARE. The term "Developed Software" means any
Software that is developed and delivered by EDS under this
Agreement, and paid for by SK, (i) including any Software
Changes made by EDS to SK Software or SK-Vendor Software as
part of the Services, but (ii) excluding (A) any Software
Changes made to EDS Software or EDS-Vendor Software, (B) any
EDS Software or EDS Development Tools that are used in
developing, modifying or enhancing any Developed Software
hereunder and (C) any Residual Technology.
(f) OTHER DELIVERABLES. The term "Other Deliverables" means those
tangible, viewable items other than Software that are
developed and delivered by EDS under this Agreement, and paid
for by SK.
(g) EDS DEVELOPMENT TOOLS; EDS RESIDUAL TECHNOLOGY. The term "EDS
Development Tools" means all know-how, intellectual property,
methodologies, processes, technologies, algorithms, software
or development tools used in performing the Services which (i)
are based on trade secrets or proprietary information of EDS,
(ii) are developed or created by or on behalf of EDS without
reference to or use of the intellectual property of SK or
(iii) are otherwise owned or licensed by EDS. The term
"Residual Technology" means the ideas, concepts,
methodologies, processes and know-how which are developed or
created by EDS in the course of performing the Services and
may be retained by EDS' employees in intangible form.
(h) SOFTWARE. The term "Software", as only used in the terms that
are defined in this SECTION 7.1, means computer programs,
together with input and output formats, source and object
codes, program listings, data models, flow charts, outlines,
narrative descriptions, operating instructions and supporting
documentation, and includes the tangible media upon which such
programs and documentation are recorded, including all
authorized reproductions of such programs. Except as otherwise
expressly provided in this Agreement, Software includes any
corrections, enhancements, translations, modifications,
updates, new releases, new versions and other changes
(collectively, "Software Changes").
7.2 EDS SOFTWARE. All EDS Software, including all Software Changes made
thereto, will be and remain EDS' property, and SK will have no rights
or interest therein. However, EDS hereby grants to SK a perpetual
(subject to compliance with the terms on Schedule
39
7.2), nonexclusive license to use, after the Expiration Date or the
effective date of termination, whichever is applicable, the object code
and source code form of any application software programs, including
existing documentation, of the EDS Software (if any) then being used by
EDS in performing the Services solely for the purpose of SK (or any
applicable third party provider assuming the obligations of EDS
hereunder) performing the services previously performed by EDS
hereunder (the "Licensed Programs"); provided, however, that no source
code license shall be granted with respect to any development tools
that are part of the EDS Software. Notwithstanding anything to the
contrary in this Agreement, such license will not include the right to
use any Software Changes with respect to the EDS Software other than
those in use at the time the license is effective.
7.3 EDS-VENDOR SOFTWARE. All EDS-Vendor Software will be and remain the
property of the applicable third party vendor(s), and, as between EDS
and SK, any Software Changes made by EDS thereto will be owned by EDS.
EDS will obtain all consents necessary to permit EDS (and any
subcontractors of EDS engaged in accordance with this Agreement) to
Access the EDS-Vendor Software in connection with the performance of
the Services 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.
7.4 SK SOFTWARE. All SK Software, excluding any Software Changes made by
EDS thereto as part of the Services (which will be Developed Software
and will be owned as set forth in Section 7.6), will be and remain SK's
property. The SK Software will be made available to EDS in such form
and on such media as EDS may reasonably request, together with
appropriate documentation.
7.5 SK-VENDOR SOFTWARE. All SK-Vendor Software, excluding any Software
Changes made by EDS thereto as part of the Services (which will be
Developed Software and, subject to any SK-Vendor rights or
restrictions, will be owned as set forth in SECTION 7.6), will be and
remain the property of the applicable third party vendor(s). The
SK-Vendor Software will be made available to EDS in such form and on
such media as EDS may reasonably request. During the term of this
Agreement, SK will pay all appropriate required license, installation,
maintenance and upgrade fees with respect to the SK-Vendor Software.
7.6 DEVELOPED SOFTWARE.
-------------------
(a) GENERAL. SK will own the copyright in and to all Developed
Software, except as noted in SECTION 7.6(b). Such Copyright
shall give SK all rights to use, copy, modify, maintain,
create derivative works from, and license, sell, publish, or
otherwise transfer the Developed Software for any business
purpose of SK. EDS agrees that any patentable invention or
idea disclosed to EDS in SK's confidential information or in
SK's specifications belongs to SK and nothing herein affects
such rights. The rights in the Developed Software owned by SK
shall be
40
regarded as a work made for hire and any such rights shall,
upon execution, be owned solely, completely and exclusively by
SK. Such rights that may not be considered a work made for
hire shall be deemed assigned and transferred completely and
exclusively by EDS to SK by virtue of the execution of EDS of
this Agreement and EDS waives any rights or claims to such
rights. SK hereby grants to EDS (and any subcontractors of EDS
engaged in accordance with this Agreement) a royalty-free,
nontransferable, nonexclusive license during the term of this
Agreement to use, copy, maintain, modify, enhance and create
derivative works of the Developed Software for the benefit of
SK. If any EDS Software or EDS Development Tools used in
developing, modifying or enhancing the Developed Software
hereunder are embedded in or required for the use of such
Developed Software, EDS hereby grants to SK a perpetual
(subject to compliance with this sentence), royalty-free,
nonexclusive license to use such embedded EDS Software and EDS
Development Tools solely in connection with the internal use
and exploitation by SK, its Affiliates and other permitted
parties hereunder (such as former Affiliates and any
applicable third-party provider assuming the obligations of
EDS hereunder) of such Developed Software and only so long as
such EDS Software and EDS Development Tools remain embedded in
or are required for the use of such Developed Software. EDS
agrees to use all reasonable efforts to document in writing to
SK any EDS Software or EDS Development Tools embedded in or
required for the use of the Developed Software. As between SK
and EDS, EDS will own all intellectual property rights in or
related to the Developed Software other than the copyright
ownership rights and other than SK's ownership of patentable
ideas or inventions disclosed to EDS in SK's confidential
information or SK's specifications granted to SK pursuant to
this Section 7.6(a).
(b) REPEATABLE, REUSABLE COMPONENTS. Notwithstanding Section
7.6(a), if EDS uses, in developing, modifying or enhancing any
Developed Software, any repeatable processes or reusable
forms, templates or output, EDS will own all intellectual
property rights in or related to all Developed Software
resulting from such use. However, SK will own, and will have
the right and license to load, execute, display, store and
otherwise use, the object code and source code copy of such
Developed Software (including the EDS Development Tools that
are used in developing, modifying or enhancing such Developed
Software and become, and remain, embedded therein or are
required for the use thereof) provided by EDS to SK hereunder
for such purpose; provided, however, that no source code
license shall be granted with respect to any development tools
that are part of the Developed Software. Delivery of such
object code and source code copy will occur promptly after
payment by SK to EDS therefor in accordance with this
Agreement, with EDS (and any subcontractors of EDS engaged in
accordance with this Agreement) retaining the right to Access
such copy during the term of this Agreement. The right and
license granted to SK in this Section 7.6(b) will be perpetual
and nonexclusive.
41
7.2 OTHER DELIVERABLES.
-------------------
SK will own the copyright in and to all Other Deliverables. Such
Copyright shall give SK all rights to use, copy, modify, maintain,
create derivative works from, and license, sell, publish, or otherwise
transfer the Other Deliverables for any business purpose of SK. EDS
agrees that any patentable invention or idea disclosed to EDS in SK's
confidential information or in SK's specifications belongs to SK and
nothing herein affects such rights. The rights in the Other
Deliverables owned by SK shall be regarded as a work made for hire and
any such rights shall, upon execution, be owned solely, completely and
exclusively by SK. Such rights that may not be considered a work made
for hire shall be deemed assigned and transferred completely and
exclusively by EDS to SK by virtue of the execution of EDS of this
Agreement and EDS waives any rights or claims to such rights. SK hereby
grants to EDS a royalty-free, nontransferable, nonexclusive license
during the term of this Agreement to use, copy, maintain, modify,
enhance and create derivative works of the Other Deliverables. If any
EDS Software or EDS Development Tools used in developing, modifying or
enhancing the Other Deliverables hereunder are embedded in or otherwise
required to use such Other Deliverables, EDS hereby grants to SK a
perpetual, royalty-free, nonexclusive license to use such EDS Software
and EDS Development Tools in connection with the exploitation of the
Other Deliverables for its business purposes. EDS agrees to use all
reasonable efforts to document in writing to SK any EDS Software or EDS
Development Tools embedded in or required for the use of the Other
Deliverables. EDS will own all intellectual property rights in or
related to the Other Deliverables other than the copyright ownership
rights and other than SK's ownership of patentable ideas or inventions
disclosed to EDS in SK's confidential information or SK's
specifications granted to SK pursuant to this Section 7.7.
7.8 EDS DEVELOPMENT TOOLS; RESIDUAL TECHNOLOGY. Notwithstanding anything to
the contrary in this Agreement, EDS will retain all right, title and
interest in and to, and will be free to use, (a) the EDS Development
Tools and (b) subject to the confidentiality obligations set forth in
Section 8.4 and any SK-Vendor rights or restrictions, the Residual
Technology. The Parties acknowledge and agree that EDS' right, title
and interest in and to the Residual Technology constitute substantial
rights in the technology developed as a result of the Services
performed under this Agreement. No licenses will be deemed to have been
granted by either Party to any of its patents, trade secrets,
trademarks or copyrights, except as otherwise expressly provided in
this Agreement. Nothing in this Agreement will require EDS or SK to
violate the proprietary rights of any third party in any software or
otherwise.
7.9 FURTHER ASSURANCES. EDS and SK agree to execute and deliver, at no
additional cost to the delivering party, such other instruments and
documents as either Party reasonably requests to evidence or effect the
transactions contemplated by this ARTICLE VII. EDS will provide SK,
upon expiration or termination of this Agreement for any reason or upon
SK's reasonable request, with sufficient documentation and source code
to fully utilize all Developed Software and Other Deliverables the
copyright or other ownership
42
rights to which will be owned by SK pursuant to SECTION 7.6(a), SECTION
7.7 and SECTION 7.8, respectively. EDS agrees that it will not file or
disclose any patentable invention it may independently create in the
course of providing the Services hereunder. The provisions of this
Article VII will survive the expiration or termination of this
Agreement for any reason.
7.10 LIMITATION. Notwithstanding any other provision of this Agreement, SK
and EDS shall not be deemed to have granted any intellectual property
rights to the other that would violate their respective agreements with
third parties, including, but not limited to, provisions in such
agreements relating to ownership of software changes.
7.11 RESIDUAL KNOWLEDGE. Nothing contained in the Agreement shall restrict
either Party from the use of any general information technology ideas,
concepts, know-how and techniques relating to the Services which either
Party, individually or jointly, develops or discloses under the
Agreement, provided that in doing so such Party does not breach its
obligations under Section 8.4 or infringe the intellectual property
rights of the other Party or third parties who have licensed or
provided materials to the other Party.
7.12 DOCUMENTATION. All documentation, written materials, work papers,
configurations, manuals (including the Procedures Manual and the Change
Control Procedures), and other work product prepared by or on behalf of
EDS or EDS Agents in connection with providing the Services shall be
made available to SK on a non-exclusive basis. All documentation with
respect to SK Software and SK-Vendor Software shall be and will remain
the property of SK.
7.13 COOPERATION UPON DIVESTITURE. In the event of a divestiture of any
business or business unit of SK, EDS shall cooperate with SK with
respect to, and shall not unreasonably withhold or delay consent to,
EDS' transfer of any license or right to use Software to the buyer or
any other person or entity obtaining the business or business unit.
7.14 ESCROW SOFTWARE. Upon the request of SK at any time during the Term and
at the expense of SK, EDS shall deposit with a third-party escrow agent
reasonably selected by SK and reasonably acceptable to EDS, a fully
executable copy of the Software then being used by EDS to provide
Services for SK, including all related documentation (including the
related source code, if normally provided by the third party vendor)
and databases, and shall thereafter regularly update such deposit on a
weekly or other mutually agreeable basis. Any such deposit shall be
pursuant to a written escrow agreement among the escrow agent, SK, and
EDS that requires that the escrow agent keep the deposited material
confidential and not disclose it to anyone or use it for any purpose,
except that SK may withdraw the deposited material from escrow if and
when SK delivers to the escrow agent, with a copy to EDS, a
certification that EDS is then obligated, but has failed, to deliver to
SK a copy of the deposited material. EDS shall inform SK of any
consents from third parties that are required in order for SK to
withdraw the deposited material from escrow or make any use thereof. SK
shall have
43
full responsibility for obtaining any such consents. With respect to
any such software placed into escrow, SK shall have the right, but not
the obligation, to verify by any appropriate method that such software
is complete and operational.
ARTICLE VIII. DATA, CONFIDENTIALITY AND AUDIT RIGHTS
--------------------------------------
8.1 DATA OF SK. As between EDS and SK, information of or relating to SK or
its customers (the "SK Data") is confidential, will be subject to
SECTION 8.4 and will be and remain the property of SK. EDS (and any
subcontractors of EDS engaged in accordance with this Agreement) is
hereby authorized to have access to and to make use of the SK Data for
the term of this Agreement as is appropriate for the performance by EDS
of its obligations hereunder. Upon expiration or termination of this
Agreement for any reason, subject to any record retention requirements
of EDS, EDS will, at SK's expense, return to SK all of the SK Data in
EDS' possession and in EDS' then existing machine-readable format and
media. EDS will not use the SK Data for any purpose other than
providing the Services.
8.2 SAFEGUARDING DATA AND BACKUP.
-----------------------------
(a) EDS will maintain safeguards against the destruction, loss or
alteration of the SK Data in the possession of EDS which are
consistent with those written procedures established and in
use by SK as of the Effective Date and provided to EDS. To the
extent that any such procedures have not been established or
are not as stringent, EDS will maintain safeguards that are no
less rigorous than those maintained by EDS for its own
information of a similar nature. SK either by itself or
through a third party, will have the right to establish backup
security for the SK Data and to keep backup data and data
files in its possession if it so chooses; provided, however,
that EDS will have access to such backup data and data files
as is reasonably required by EDS.
(b) Without limiting the generality of Section 8.2(a) above:
(i) EDS or its personnel shall not attempt to access, or
allow access to, any data, files or programs within
the information systems environment to which they are
not entitled under the Agreement. If such access is
attained, EDS shall immediately report such incident
to SK, describe in detail any accessed materials and
return to SK any copied or removed materials.
(ii) EDS shall institute sound systems security measures
with respect to any shared processing environment and
with respect to the access and controls it affords to
its employees, Affiliates and EDS Personnel
(including the employees of such Affiliates and EDS
Personnel) to guard against, identify and promptly
terminate the unauthorized access, alteration or
destruction of Software and SK Data.
44
(c) EDS shall provide backup of SK Data in accordance with
procedures mutually agreed to in the applicable Statement of
Work.
8.3 PRIVACY LAWS. The Parties acknowledge and agree that SK will be and
remain the controller of the SK Data for purposes of all applicable
laws relating to data privacy, transborder data flow and data
protection (collectively, the "Privacy Laws"), and nothing in this
Agreement will restrict or limit in any way SK's rights or obligations
as owner and/or controller of the SK Data for such purposes. The
Parties also acknowledge and agree that EDS may have certain
responsibilities prescribed by applicable Privacy Laws as a processor
of the SK Data, and EDS hereby acknowledges such responsibilities to
the extent required thereby for processors of data and agrees that such
responsibilities will be considered as a part of the Services to be
provided by EDS under this Agreement; PROVIDED, HOWEVEr, that in the
event that Privacy Laws to which the activities contemplated by this
Agreement are subject are modified, EDS will work with SK in an effort
to continue to comply with such Privacy Laws, as so modified, but to
the extent that such modifications expand the scope of the activities
previously undertaken by EDS pursuant to this SECTION 8.3, EDS will, at
SK's reasonable request, provide such additional activities as
Additional Services.
8.4 CONFIDENTIALITY.
----------------
(a) CONFIDENTIAL INFORMATION. EDS and SK each acknowledge that
they may be furnished with, receive, or otherwise have access
to information of or concerning the other Party which such
Party considers to be confidential, proprietary, a trade
secret or otherwise restricted including, marketing philosophy
and objectives, competitive advantages and disadvantages,
technological developments, proprietary software and systems
and SK Data. Each Party agrees that all such information,
documentation and all related material (hereinafter referred
to as "Confidential Information") obtained by it, its
directors, officers and employees, consultants, agents and
representatives, and any third parties with which it
contracts, is, and shall be considered, confidential and
proprietary to the Party hereto to which such Confidential
information relates. The terms of the Agreement shall be
deemed Confidential information.
(b) (i) In the case of SK, Confidential Information also shall
include:
(A) all specifications, designs, documents, corres-
pondence, documentation, data, and other materials
and work products to the extent prepared by EDS,
EDS' Affiliates or Authorized Subcontractors
exclusively for SK or SK's Affiliates in the
course of performing the Services;
(B) all information concerning the operations, affairs
and businesses of SK, the financial affairs of SK,
and the relations of SK with
45
its customers, employees and service providers
(including customer lists, customer information,
account information, consumer markets and other
information regarding SK's business planning,
operations, or marketing activities);
(C) SK-Vendor Software licensed by SK or a SK
Affiliate;
(D) SK Software;
(E) SK Data or other information or data stored on
magnetic media or otherwise, and obtained,
received, transmitted, processed, stored,
archived, or maintained by EDS under the
Agreement; and
(F) all business processes, methodologies and other
similar information of SK.
(collectively, the "SK Confidential Information").
(ii) In the case of EDS, Confidential Information shall
also include:
(A) all information concerning the operations, affairs
and businesses of EDS, the financial affairs of
EDS, and the relations of EDS with its customers,
employees and service providers (including
customer lists, customer information, account
information, consumer markets and other
information regarding SK's business planning,
operations, or marketing activities);
(B) EDS-Vendor Software licensed by EDS;
(C) EDS Software; and
(D) all business processes, methodologies and other
similar information of EDS.
(collectively, the "EDS Confidential Information").
(c) OBLIGATIONS.
(i) Each Party's Confidential information shall remain
the property of that Party except as expressly
provided otherwise by the other provisions of the
Agreement. SK and EDS shall each use at least the
same degree of care, but in any event no less than a
reasonable degree of care, to prevent disclosing to
third parties the Confidential information of the
other as it employs to avoid unauthorized disclosure,
publication or dissemination of its own information
of a similar nature; provided that a
46
Party may disclose such information to entities
performing services required hereunder where (i) use
of such entity is authorized under the Agreement,
(ii) such disclosure is necessary to permit such
entity to perform its duties hereunder or use the
Services, and (iii) such entity agrees in writing to
assume the obligations described in this Section. Any
disclosure to such entity shall be under the terms
and conditions as provided in this Section.
(ii) Confidential Information of a Party shall not be
utilized by the other Party for any purpose other
than that of rendering or using the Services under
this Agreement. Neither Party shall possess or assert
any lien or other right against or to the
Confidential Information of the other Party. No
Confidential Information, or any part thereof, shall
be sold, assigned, leased, or otherwise disposed of
to third parties by either Party or commercially
exploited by or on behalf of a Party, its employees
or agents.
(iii) As requested by either Party during the Term or upon
expiration or any termination of the Agreement, such
Party shall either return in a form reasonably
requested by the other Party or destroy, as such
Party may direct, all material (including all copies)
in any medium that contains, refers to, or relates to
such Party's Confidential information.
(iv) Each Party shall take reasonable steps to ensure that
its employees, consultants, agents, subcontractors or
representatives comply with these confidentiality
provisions.
(d) EXCLUSIONS.
(i) Section 8.4 shall not apply to any particular
information that EDS or SK can demonstrate (i) was,
at the time of disclosure to it, lawfully in the
public domain; (ii) after disclosure to it, is
published or otherwise lawfully becomes part of the
public domain through no fault of the receiving
Party; (iii) without a breach of duty owed to the
disclosing party, was in the possession of the
receiving Party at the time of disclosure to it, (iv)
was received after disclosure to it from a third
party who had a lawful right to disclose such
information to it without any obligation to restrict
its further use or disclosure; or (v) was
independently developed by the receiving Party
without reference to Confidential Information of the
furnishing Party. In addition, a Party shall not be
considered to have breached its obligations by
disclosing Confidential Information of the other
Party as required to satisfy any legal requirement of
a competent government body provided that,
immediately upon receiving any such request and to
the extent that it may legally do so, such Party
advises the other Party promptly and prior to making
such disclosure in order that the other Party may
47
interpose an objection to such disclosure, take
action to assure confidential handling of the
Confidential Information, or take such other action
as it deems appropriate to protect the Confidential
Information.
(ii) Either Party may disclose the terms and conditions of
the Agreement to third parties that (i) have
expressed a bona fide interest in consummating a
significant financing, merger or acquisition
transaction between such third parties and the
disclosing Party, (ii) have a reasonable ability
(financial and otherwise) to consummate such
transaction, and (iii) have executed a nondisclosure
agreement that (A) includes within its scope the
terms and conditions of the Agreement, (B) limits
distribution to those with a need to know in
connection with such transaction, and (C) allows use
only in connection with the transaction. Each Party
shall endeavor to delay the disclosure of the terms
and conditions of the Agreement until the status of
discussions concerning such transaction warrants such
disclosure.
(iii) In addition, notwithstanding any other provision of
this Agreement, EDS acknowledges that SK intends to
file a motion with the United States Bankruptcy Court
for the District of Delaware (the "Motion") seeking
authority to enter into this Agreement. This Motion
will contain summary pricing information and other
information regarding this Agreement. EDS consents to
SK attaching as an Exhibit to the Motion a copy of
this Agreement; provided, however, that copies of the
Schedules will not be attached due to their sensitive
and proprietary nature. EDS consents to SK providing
the Schedules to the Agent for the pre- and post
petition secured lenders and the members of the
Official Committee of Unsecured Creditors (the
"Creditors Committee") appointed in SK's chapter 11
proceedings. EDS further consents to the Agent and
the Creditor's Committee sharing the Schedules with
their counsel and other advisors as necessary.
(e) LOSS OF CONFIDENTIAL INFORMATION.
---------------------------------
In the event of any unauthorized disclosure or loss of, or
inability to account for, any Confidential Information of the
furnishing Party by the Party to whom such information was
disclosed, upon becoming aware of such event the receiving
Party shall promptly, at its own expense (a) notify the
furnishing Party in writing; (b) take such actions as
reasonably requested by the furnishing Party, and (c)
otherwise cooperate with the furnishing Party to minimize the
adverse effects to the furnishing Party of such event and any
damage resulting from such event.
(f) NO IMPLIED RIGHTS.
------------------
48
Nothing contained in this Section shall be construed as
obligating a Party to disclose its Confidential information to
the other Party, or as granting to or conferring on a Party,
expressly or impliedly, any rights or license to the
Confidential Information of the other Party.
(g) SURVIVAL.
---------
This Section shall survive the expiration or termination of
the Agreement for a period equal to the longer of
(i) three years after the later of (i) expiration or
termination of the Agreement, and (ii) the conclusion
of the provision of Termination/Expiration Assistance
pursuant to Section 11.5 of the Agreement; and
(ii) the period that EDS is required to maintain and
provide access to records, documents and other
information pursuant to Section 8.5(d) of the
Agreement;
provided, however, that with respect to any Confidential
Information that constitutes a trade secret under applicable
law such period of time shall be indefinite for so long as
such Confidential Information remains a trade secret.
8.5 AUDITS.
-------
(a) EDS shall maintain a complete audit trail of all financial and
non-financial transactions resulting from the Agreement. Upon
five (5) business days advance notice (unless a governmental
agency requires that less notice be allowed in a particular
circumstance), subject to Section 8.5(b), EDS shall provide to
SK, its auditors (including internal audit staff and external
auditors), inspectors, regulators and other SK representatives
as SK may from time to time designate in writing, direct
necessary access at all reasonable times to any Equipment,
Software, EDS Personnel, SK Facilities, parts of the EDS
Facilities from which EDS is providing the Services and to
data, books and records relating to the Services for the
purpose of performing audits, inspections or compliance
reviews of either EDS or any of its subcontractors to:
(i) verify the accuracy of charges and invoices;
(ii) verify the integrity of SK Data and examine the
systems that process, store, support and transmit
that data; and
(iii) examine EDS' performance of the Services including,
to the extent applicable to the Services performed by
EDS and to the charges therefor,
49
performing audits (i) of practices and procedures,
(ii) of hardware and Software systems, (iii) of
general controls and security practices and
procedures, (iv) of disaster recovery and back-up
procedures, (v) of the efficiency and costs of EDS in
performing the Services (but only to the extent
affecting charges for, or timing of, Services
hereunder), or (vi) necessary to enable SK to meet
applicable regulatory requirements.
EDS shall provide to such auditors, inspectors, regulators,
and other SK representatives such assistance as they
reasonably require, including installing and operating audit
software. EDS shall cooperate fully with SK or its designees
in connection with audit functions and with regard to
examinations by regulatory authorities. SK agrees to cause its
auditors and representatives to comply with EDS' reasonable
requirements regarding operations, standards and security, as
well as confidentiality and non-solicitation agreements. SK
shall not retain a direct competitor of EDS in the provision
of information technology outsourcing services as SK's outside
auditor. Notwithstanding anything to the contrary in this
Agreement, EDS will not be required to provide access to the
proprietary data of EDS that does not relate to the SK
engagement or other EDS customers.
(b) LIMITATION ON SK AUDITS. Notwithstanding anything in this
Section 8.5 to the contrary, SK shall only have the right to
conduct an audit of EDS once a year to evaluate EDS'
performance hereunder for purposes of the business
relationship between EDS and SK.
(c) AUDIT FOLLOW-UP.
----------------
(i) Promptly following any audit or examination (whether
performed by or on behalf of SK, EDS or any
regulatory authority), SK shall conduct (in the case
of an internal audit), or request its external
auditors or examiners to conduct, an exit conference
with EDS to obtain factual concurrence with issues
identified in the review. If an audit reveals that
EDS has overcharged or undercharged SK, EDS or SK, as
the case may be, will promptly pay the other Party
the amount of such overcharge or undercharge.
Notwithstanding the above, SK shall have no
obligation to pay for any undercharges that should
have been invoiced by EDS more than ninety (90) days
prior to the discovery of the undercharge. EDS shall
make available promptly to SK the results of any
review or audit conducted by EDS, its Affiliates, or
their contractors, agents or representatives
(including internal and external auditors), relating
to EDS' operating practices and procedures to the
extent relevant to the Services or SK.
(ii) EDS and SK shall meet to review each audit report
promptly after the issuance thereof and to mutually
agree upon the appropriate manner, if any, in which
to respond to the changes suggested by the audit
report.
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Notwithstanding the foregoing, in the event that an
audit reveals that a problem exists or that EDS is
not complying with its obligations under the
Agreement, EDS shall promptly propose an appropriate
response, prepare a project plan, gain approval from
SK to implement such plan, implement necessary
corrective changes in accordance with the project
plan, and take such other actions as are reasonably
necessary to correct such problem or non-compliance.
SK and EDS agree to develop operating procedures for
the sharing of audit and regulatory findings and
reports related to EDS' operating practices and
procedures produced by auditors or regulators of
either Party.
(d) RECORDS RETENTION.
------------------
Until the latest of (a) three (3) years after expiration or
termination of the Agreement, (b) the date that all pending
matters relating to the Agreement (e.g., disputes) are closed,
and (c) the date that EDS is no longer required to meet EDS's
records retention policy as such policy may be adjusted from
time to time, EDS will maintain and provide access upon
request to records, documents and other information required
to meet SK's audit rights under the Agreement (including
complete and accurate records of and supporting documentation
for, the amounts billable to, credits applicable to and
payments made by SK under the Agreement).
ARTICLE IX. PAYMENTS
--------
9.1 CHARGES FOR SERVICES. In consideration for the performance of the
Services, SK will pay to EDS the charges set forth in SCHEDULE 9.1 OR
ANY APPLICABLE STATEMENT OF WORKS, plus any and all applicable taxes
and other amounts described in this ARTICLE IX. SK agrees that all
amounts owing to EDS pursuant to the Agreement shall be treated as
administrative expenses of SK and the Safety-Kleen Estate pursuant to
11 U.S.C. Sections 503(b)(1) and 507(a)(1). EDS will invoice SK for
such charges on a monthly basis in advance, with each invoice setting
forth the estimated charges related to the following month. The first
such invoice will reflect any amounts outstanding from the Services
provided under the Letter of Intent. After the initial invoice, the
monthly invoice will reflect the amount for the estimated Services,
adjusted by any over or underpayment from the preceding month's
payment. Provided SK has met its payment obligations in a timely
manner, six (6) months after confirmation of SK's reorganization plan,
EDS will adjust its invoicing method to invoice for charges on a
monthly basis in 9.1 arrears. EDS either will include on each such
invoice, or will ▇▇▇▇ SK separately for, the taxes for which SK is
responsible hereunder. EDS shall provide invoices with sufficient
detail as reasonably requested by SK in order for SK to understand the
charges and manage them, to compare and track the charges to budget and
project plans, to permit reconciliation of the fees charged, to enable
SK to properly allocate and charge business units and customers for
such services and to address any other reasonable needs of SK.
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9.2 TRAVEL AND TRAVEL-RELATED EXPENSES. SK will pay, or reimburse EDS for,
the reasonable travel and travel-related expenses incurred by EDS, in
accordance with SK's standard travel reimbursement guidelines, in
connection with EDS' performance of its obligations under this
Agreement. SK has provided EDS with a written copy of such
reimbursement guidelines as in effect on the Effective Date and will
forward to EDS a written copy of each amendment thereto on or prior to
the date on which such amendment becomes effective. Time spent by EDS
personnel during travel will only be billed at 50% of the actual time
traveled. SK may book directly, at SK's expense, all travel
arrangements with airlines, hotels and rental cars for EDS personnel.
For those travel and travel-related expenses that are initially paid
for by EDS and are subject to reimbursement by SK, EDS will invoice SK
separately for all such expenses, which invoice will be sent by EDS to
SK after EDS incurs such expenses and will contain an itemized listing
of the applicable expenses. EDS and SK will work and cooperate with one
another to minimize travel expenses to the extent appropriate. In
addition, in special circumstances, such as the possible significant
travel that may be involved with Statement of Work 7, the Parties will
negotiate in good faith appropriate terms regarding such travel to
attempt to minimize these expenses to the extent practical.
9.3 OTHER OUT-OF-POCKET EXPENSES. SK will pay, or reimburse EDS for, the
reasonable out-of-pocket expenses, other than travel and travel-related
expenses covered by Section 9.2, incurred by EDS, with the prior
written consent of SK, in connection with EDS' performance of its
obligations under this Agreement, including any purchases by EDS on
behalf of SK of additional items of property in accordance with SK's
request as provided in Section 5.6. EDS will invoice SK separately for
all such out-of-pocket expenses, which invoice will be sent by EDS to
SK after EDS incurs such expenses and will contain an itemized listing
of the applicable expenses.
9.4 ADMINISTRATIVE EXPENSES. Notwithstanding anything in the Agreement to
the contrary, EDS shall not ▇▇▇▇ SK for, and SK shall not be required
to pay, for any expenses that are not directly attributable to the
Services being delivered hereunder, such as negotiations of the
Agreement and any related documents, preparation of Statement of Work
or proposals, EDS sales activities, internal EDS meetings, preparation
of time sheets and bills, and EDS personnel performance reviews.
9.5 CERTAIN EXPENSES. In the event the parties agree that EDS shall
receive, review, process and administer various bills for which SK is
obligated to pay, EDS shall review and process such bills on a timely
basis so that they are provided by EDS to SK for SK's timely payment.
In connection with any such bills, EDS shall answer any questions SK
may reasonably have regarding such bills and shall otherwise reasonably
assist SK with such bills. To the extent a discount or other financial
advantage exists for prompt payment of a ▇▇▇▇, EDS shall provide this
▇▇▇▇ to SK in a timely fashion such that SK may acting in the ordinary
course obtain the benefit of such prompt payment.
9.6 CHARGES FOR ADDITIONAL SERVICES. In consideration for any agreement by
EDS to provide Additional Services, SK will pay to EDS (a) the amounts
mutually agreed to in writing
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by EDS and SK for the Additional Services, (b) any and all appropriate
taxes and (c) the out-of-pocket expenses incurred by EDS (in accordance
with SECTION 9.2 or SECTION 9.3, whichever is applicable) in connection
with the performance by EDS of the Additional Services.
9.7 ANNUAL ADJUSTMENT TO CHARGES. The charges set forth in SCHEDULE 9.1 or
applicable Statement of Works will be subject to the adjustments
described in SCHEDULE 9.7.
9.8 TIME OF PAYMENT; DISPUTED AMOUNTS. Except as otherwise expressly
provided in this Agreement, any amount due to EDS under this Agreement
and not disputed in good faith by SK (as provided below) will be due
and payable on the 15th day following the date of invoice from EDS. All
amounts will be payable to EDS by ACH or Wire Transfer, in accordance
with payment instructions provided by EDS from time to time, so as in
each case to constitute immediately available funds by 12 noon, Plano,
Texas time, on the payment date no matter what the method of payment.
Any amount not paid when due will bear interest until paid at a rate of
interest equal to the lesser of (a) the prime rate established from
time to time by Citibank of New York plus two percent or (b) the
maximum rate of interest allowed by applicable law. If any portion of a
variable amount due to EDS under this Agreement is subject to a bona
fide dispute between the Parties, SK will pay to EDS on the date such
amount is due all amounts not disputed in good faith by SK. Within 10
days of SK's receipt of the invoice on which a disputed amount appears,
SK will notify EDS in writing of the specific items in dispute, will
describe in detail SK's reason for disputing each such item and will
deposit such disputed amount into an escrow account. Within 10 days of
EDS' receipt of such notice, the Parties will negotiate in good faith
pursuant to the provisions of ARTICLE X to reach settlement on any
items that are the subject of such dispute. If SK does not notify EDS
of any items in dispute within such 10-day period of time, SK will be
deemed to have approved and accepted such invoice.
9.9 ACCOUNTABILITY. EDS shall maintain complete and accurate records of and
supporting documentation for the amounts billable to and payments made
by SK hereunder, in accordance with generally accepted accounting
principles applied on a consistent basis. EDS agrees to provide SK with
documentation and other information with respect to each invoice as may
be reasonably requested by SK to verify the accuracy of such invoice
and compliance with the provisions of the Agreement. In addition, SK
and its authorized agents and representatives shall have access to such
records for purposes of audit.
9.10 SET-OFF. With respect to any amount to be paid by SK hereunder, SK may
set off against such amount any amount that EDS is obligated to pay or
credit SK, under the Agreement.
9.11 TAXES. The Parties' respective responsibilities for taxes arising under
or in connection with this Agreement shall be as follows:
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(a) Each Party shall be responsible for any personal property
taxes on property it owns or leases, for franchise and
privilege taxes on its business, and for taxes based on its
net income or entity level gross receipts.
(b) EDS shall be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes and duties
payable by EDS on any goods or services, other than those
goods or services that comprise out-of-pocket expenses payable
by SK to EDS pursuant to the Agreement, that are purchased and
used by EDS in providing the Services where the tax is imposed
on EDS' acquisition or use of such goods or services and the
amount of tax is measured by EDS' costs in acquiring such
goods or services.
(c) SK shall be responsible for any sales, use, excise,
value-added, services, consumption, or other tax that is
assessed on the provision of the Services as a whole, or any
particular service received by SK from EDS under this
Agreement.
(d) In the event that a sales, use, excise, value added, services,
consumption, or other tax is assessed on the provision of any
of the Services, the Parties shall work together to segregate
the payments under this Agreement into three (3) payment
streams:
(i) those for taxable Services;
(ii) those in which EDS functions merely as a payment
agent for SK in receiving goods. supplies, or
services (including leasing and licensing
arrangements); and
(iii) those for other nontaxable Services.
(e) The Parties agree to cooperate with each other to enable each
to more accurately determine its own tax liability and to
minimize such liability to the extent legally permissible.
EDS' invoices shall separately state the amounts of any taxes
EDS is collecting from SK. Each Party shall provide and make
available to the other any resale certificates. information
regarding out-of-state or out-of-country sales or use of
equipment, materials or services, and other exemption
certificates or information reasonably requested by the other
Party.
(f) If any claim is made or liability asserted by notice to or
commencement of proceedings against EDS (or any of its
affiliates) for any taxes as to which SK has a payment
obligation pursuant to this SECTION 9.11, EDS will notify SK
of such claim or liability in writing and will furnish SK with
copies of the claim or notice of liability and all other
applicable writings received from the applicable taxing
authority. EDS' failure to so notify or furnish such copies to
SK will not operate to relieve SK of its obligation to
indemnify EDS under this Agreement;
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unless SK is materially and adversely prejudiced specifically
by such failure to provide notice. Upon the receipt of such
notice, SK and EDS shall promptly negotiate in good faith as
to the appropriate approach to handle such claim. The
provisions of this Section 9.11 will survive the expiration or
termination of this Agreement for any reason.
(g) If SK determines that EDS has charged and SK has paid any tax
under this Section 9.11 in error and SK cannot seek a refund
of the taxes paid directly from the taxing authority, EDS will
assist SK in obtaining a refund if (i) requested by SK, (ii) a
good faith, reasonable basis (as defined in Section
6662(d)(2)(B)(ii)(II) of the Internal Revenue Code of 1986, as
amended) exists for such refund and (iii) EDS determines that
such refund will not result in an adverse impact to EDS (or
any of its affiliates).
ARTICLE X. DISPUTE RESOLUTION
-------------------
Any dispute between the Parties arising out of or relating to the Agreement,
including with respect to the interpretation of any provision of the Agreement
and with respect to the performance by EDS or SK, shall be resolved as provided
in this Article.
10.1 INFORMAL DISPUTE RESOLUTION.
----------------------------
Prior to the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their dispute informally, as
follows:
(a) Upon the written request of a Party, each Party shall appoint
a designated representative, whose task it will be to meet for
the purpose of endeavoring to resolve such dispute.
(i) The designated representatives shall meet within ten
(10) business days of such written request to discuss
the problem and attempt to resolve the dispute
without the necessity of any formal proceeding. Each
Party shall furnish all information with respect to
the matter in issue which the Parties believe to be
appropriate and germane in connection with its
resolution.
(ii) During the course of discussion, all reasonable
requests made by one Party to another for
nonprivileged information, reasonably related to this
Agreement, shall be honored in order that each of the
Parties may be fully advised of the other's position.
(iii) The specific format for the discussions shall be left
to the discretion of the designated representatives.
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(b) If no resolution of the dispute occurs at this meeting, the
two officers shall, within ten (10) business days of said
meeting, refer the matter to the next highest level of senior
management for each Party (the "Senior Executives"), which
Senior Executives shall have the authority to settle the
dispute. The referring representatives shall promptly prepare
and exchange memoranda stating the issues in dispute and each
other's position on the merits, summarizing the negotiations
which have taken place and attaching relevant documents.
(i) The Senior Executives shall meet as soon as
practicable, but in no event later than ten (10)
business days after the matter has been referred to
them, the initial meeting occurring at a location to
be selected by the parties. Subsequent meetings, if
required, shall be rotated between each Senior
Executive's place of business or at any other
mutually agreeable location. If the Senior Executives
are unable to resolve the dispute within thirty (30)
days of their receipt of the matter for resolution,
and either or both are unwilling to continue
negotiations, such dispute may be referred to formal
proceedings.
(ii) In the event both Parties mutually agree in writing,
(A) the dispute may be referred to non-binding
mediation in accordance with the Commercial
Mediation Rules of the American Arbitration
Association ("AAA"). Mediation shall be held
in a neutral location to be determined by the
Parties. If the Parties are unable to agree
upon a neutral site, the mediation will be
held in Delaware.
(B) The dispute shall be referred to non-binding
mediation before one (1) mediator selected
from a panel of persons experienced and
knowledgeable in the computer industry. The
mediator shall apply the laws of the state of
the principal offices of the Party requesting
mediation. Each Party shall bear its own
expenses and the parties shall equally share
the filing and other administrative fees of
the AAA and the expenses of the mediator.
Prior to the initiation of mediation, the
aggrieved Party will give the other Party at
least thirty (30) days written notice
describing the claim and amount as to which
it intends to initiate action.
(C) The Parties, their representatives and
participants and the mediator shall hold the
existence, content and result of the
mediation in confidence, except to the
limited extent necessary to enforce a final
settlement agreement.
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(D) In the event the non-binding mediation is
unsuccessful to resolve the dispute, each
Party may pursue any and all remedies
available to it at law and in equity.
(c) This Section shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal
proceedings earlier to avoid the expiration of any applicable
limitations period, or to preserve a superior position with
respect to other creditors, or as provided in Section 10.2(a)
of the Agreement.
10.2 LITIGATION.
-----------
(a) IMMEDIATE INJUNCTIVE RELIEF. The Parties agree that disputes,
controversies or claims between them shall not be subject to
the provisions of Section 10.1 where a Party makes a good
faith determination that a breach of the terms of this
Agreement by the other Party is such that a temporary
restraining order or other injunctive relief is the only
appropriate and adequate remedy. If a Party files a pleading
with a court seeking immediate injunctive relief and this
pleading is challenged by the other Party and the injunctive
relief sought is not awarded in substantial part, the Party
filing the pleading seeking immediate injunctive relief shall
pay all of the costs and attorneys' fees of the Party
successfully challenging the pleading.
(b) JURISDICTION.
-------------
(i) Subject to Subsection (ii) of this Subsection (b),
the Parties consent to the exclusive jurisdiction of
the United States Bankruptcy Court for the District
of Delaware, or if such court does not have
jurisdiction, the United States District Court for
the State of Delaware, or if such court does not have
jurisdiction, the state court with the appropriate
subject matter jurisdiction in Wilmington, Delaware,
for all litigation which may be brought with respect
to the terms of, and the transactions and
relationships contemplated by, the Agreement.
( ii) The Parties further consent to the jurisdiction of
any state court located within a district which
encompasses assets of a Party against which a
judgment has been rendered for the enforcement of
such judgment or award against the assets of such
Party.
10.3 CONTINUED PERFORMANCE.
----------------------
Each Party agrees to continue performing its obligations under the
Agreement while any dispute is being resolved except to the extent the
issue in dispute precludes performance (dispute over payment shall not
be deemed to preclude performance).
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10.4 GOVERNING LAW.
--------------
The Agreement and performance under it shall be governed by and
construed in accordance with the laws of State of Delaware, without
regard to its choice of law principles.
ARTICLE XI. TERMINATION
-----------
11.1 TERMINATION FOR CAUSE.
----------------------
(a) In the event that EDS:
(i) commits a material breach of the Agreement, which
breach is not cured within thirty (30) days after
notice of breach from SK to EDS;
(ii) commits a material breach of the Agreement which is
not capable of being cured within thirty (30) days
and fails to (i) proceed promptly and diligently to
correct the breach, (ii) develop within thirty (30)
days following written notice of breach from SK a
complete plan for curing the breach, and (iii) cure
the breach within sixty (60) days of notice thereof;
(iii) commits a material breach of the Agreement that is
not subject to cure with due diligence within sixty
(60) days of written notice thereof; or
(iv) commits numerous breaches of its duties or
obligations which collectively have a significant,
adverse effect upon the Services or constitute a
material breach of the Agreement; provided, however,
that SK gives written notice of such breaches and EDS
has failed to immediately cure such breaches;
provided, further however, if such breaches are cured
and any such breach reoccurs (whether material or
not) then SK may immediately terminate this Agreement
as provided below without a further right to cure by
EDS:
then SK may by giving written notice to EDS, terminate the
Agreement without charge to SK, in whole or in part, as of a
date specified in the notice of termination. If SK chooses to
terminate the Agreement in part, the charges payable under
this Agreement will be equitably adjusted to reflect those
Services that are terminated.
(b) In the event that SK:
(i) fails to pay EDS when due undisputed charges under
the Agreement within thirty days of written notice
from EDS of the failure to make such payment;
58
(ii) commits a material breach of a provision of the
Agreement regarding EDS Confidential Information or
Intellectual Property Rights which is not capable of
being cured within thirty (30) days and fails to
(A) proceed promptly and diligently to correct
the breach
(B) develop within thirty (30) days following
written notice of breach from EDS a complete
plan for curing the breach, and
(C) cure the breach within sixty (60) days of
notice thereof
EDS may, by giving written notice to SK terminate the Agreement as of a date
specified in such notice of termination.
11.2 TERMINATION FOR CONVENIENCE. SK may terminate this Agreement for
convenience and without cause at any time by giving EDS at least six
(6) months prior written notice designating the termination date and
paying to EDS on the effective date of termination the applicable
termination for convenience charge specified in Schedule 11.2. In the
event that a purported termination for cause by SK under Section 11.1
is determined by a competent authority not to be properly a termination
for cause, then such termination by SK shall be deemed to be a
termination for convenience under this Section 11.2. EDS shall reduce
the applicable termination for convenience charge in Schedule 11.2 by
any costs assumed by SK, including the amount of any assets purchased
by SK, the book value of any assets re-deployed, or the disposition
proceeds of the remainder of the assets.
11.3 ADDITIONAL GROUNDS FOR TERMINATION.
-----------------------------------
(a) EDS may, at its sole option and without prior Notice,
terminate the Agreement and any outstanding Statement of Works
in the occurrence of any one or more of the following:
(i) The existing Chapter 11 case of Safety-Kleen Corp.,
Safety-Kleen Services, Inc. or Safety-Kleen Systems,
Inc. are converted to a Chapter 7 case;
(ii) A plan of reorganization is confirmed in the case,
but the plan does not become "effective"; or
(iii) A plan of reorganization is confirmed in the case,
but the plan is not "substantially consummated".
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(b) In addition, once SK's plan of reorganization has become
effective, and SK emerges from bankruptcy ("Reorganized SK"),
if any one or more of the following occurs:
(i) A bankruptcy case under Chapter 7 or Chapter 11 of
the United States Code is commenced by or against
Reorganized SK or any of its subsidiaries, divisions,
or affiliates and an order of relief is entered and
not dismissed within 60 days;
(ii) A receiver, custodian, or trustee, not elected by or
consented to by Reorganized SK's Board of Directors
is appointed or takes control over substantially all
of Reorganized SK's property or Reorganized SK
itself; or
(iii) Reorganized SK makes an "assignment for the benefit
of creditors" under applicable state statutory or
common law; provided, however, this subparagraph is
not intended to cover transfers made pursuant to
Reorganized SK's confirmed plan of reorganization;
then EDS may, at its sole option and without prior Notice, terminate the
Agreement and any outstanding Statement of Works.
(c) EDS may also, at its sole option and with 30 days prior
written notice, terminate the Agreement and any outstanding
Statements of Work in accordance with Section 14.5.
11.4 EXTENSION OF TERMINATION EFFECTIVE DATE.
----------------------------------------
SK may extend the effective date of termination of this Agreement one
or more times as it elects, at its sole discretion, provided that the
total of all such extensions shall not exceed twelve (12) months
following the original effective date of termination. The period of any
such extension shall not be less than one hundred eighty (180) days;
provided, however, SK may extend the period for less than 180 days if
SK agrees to pay EDS' demonstrable out-of-pocket expenses incurred by
EDS as a result of such shorter extension. EDS shall receive at least
sixty days notice of the extension. In such event, the Services shall
be provided pursuant to and on the terms and conditions set forth in
the Agreement.
11.5 TERMINATION/EXPIRATION ASSISTANCE.
(a) Commencing six (6) months prior to expiration of this
Agreement or on such earlier date as SK may request, or
commencing upon any notice of termination or of non-renewal of
this Agreement (including notice based upon default by SK),
and continuing through the effective date of expiration, or,
if applicable, through the effective date of termination of
the Agreement, EDS shall provide
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to SK, or at SK's request to SK's designee, the reasonable
termination/expiration assistance requested by SK to
facilitate the orderly transfer of the Services to SK or its
designee ("Termination/Expiration Assistance").
Termination/Expiration Assistance shall include the following:
(i) SK or SK's designee shall be permitted to undertake,
without interference from EDS, to hire any of the
Transitioned Employees. EDS will provide SK
reasonable access to such employees for interviews
and recruitment and will not interfere with SK's
efforts to employ such personnel. EDS shall waive its
rights, if any, under contracts with such personnel
restricting the ability of such personnel to be
recruited or hired by SK.
(ii) If SK is entitled pursuant to this Agreement to a
sublicense or other right to use any Software owned
by EDS and utilized in performing the Services, EDS
shall provide such sublicense or other right, to the
extent such license is not already provided
hereunder.
(iii) EDS shall proceed promptly, upon SK's request, to
transfer some or all of the agreements regarding the
Software that may be transferred to SK as
contemplated by Section 3.8.
(iv) At SK's request EDS shall: (A) proceed promptly, upon
SK's request to transfer some or all of the
agreements regarding the Equipment that may be
transferred to SK as contemplated by Section 5.4; and
(B) sell to SK or its designee, at book value, the
Equipment owned by EDS that was used exclusively in
providing the Services as of such date. EDS shall
also provide all user and other documentation
relevant to such Equipment which is in EDS'
possession. SK will assume responsibility under any
maintenance agreements for such Equipment to the
extent such responsibilities relate to periods after
the date of termination or expiration of the
Agreement.
(v) EDS shall assist SK in obtaining any necessary rights
to any third party services then being utilized by
EDS in the performance of the Services including
services being provided through third party service
contracts on Equipment and Software, that are not
covered by Sections 3.8 or 5.4. EDS will be entitled
to retain the right to utilize any such third party
services in connection with the performance of
services for any other EDS customer.
(vi) SK shall reimburse EDS if EDS has paid the charges
and other amounts due under contracts or licenses in
subsections (ii) - (v) assigned to SK where such
charges are attributable to periods after the date of
termination.
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(b) For a period of twelve (12) months following the effective
date of termination or expiration under other provisions of
the Agreement, EDS shall provide, at SK's request, any or all
of the Services being performed by EDS prior to such effective
date, including any of the Services described in Subsection
(a) of this Section. To the extent EDS is to perform Services
under this Subsection (b), the provisions of the Agreement
shall be applicable as such provisions would have been
applicable to such Services prior to such effective date, and
the charges for such Termination/Expiration Assistance shall
be the then-current charges applicable to the Services being
provided under this Subsection. The period of any such
post-termination Services shall not be less than one hundred
eighty (180) days; provided, however, SK may extend the period
for less than 180 days if SK agrees to pay EDS' demonstrable
out-of-pocket expenses for additional Software license fees
incurred by EDS as a result of such shorter extension. EDS
shall receive at least sixty days notice of the extension.
This Subsection (b) shall survive termination or expiration of
the Agreement.
(c) In the event this Agreement is terminated by EDS in accordance
with Section 11.1(b), SK shall be required to prepay the
estimated applicable charges monthly in advance for such
Termination/Expiration Assistance and post-termination
Services. Following each month the Parties will true-up any
over/under payments made and refund/pay such overage/underage
within fifteen (15) business days.
(d) If any Termination/Expiration Assistance provided by EDS
requires the utilization of additional resources that EDS
would not otherwise use in the performance of the Agreement,
SK will pay EDS for such usage at the professional services
rates and in the manner set forth in the Agreement. If the
Termination/Expiration Assistance requires EDS to incur costs
that EDS would not otherwise incur in the performance of the
Services under this Agreement, then EDS shall notify SK of the
identity and scope of the activities requiring that EDS incur
such costs and the projected amount of the charges that will
be payable by SK for the performance of such assistance. Upon
SK's authorization, EDS shallperform the assistance and
invoice SK for such charges. Within thirty (30) business days
after the date of the invoice SK shall pay EDS for authorized,
additional charges incurred to provide such assistance to SK.
If EDS is being paid in advance in accordance with Section
11.5(c), then these amounts payable under this subsection (d)
shall also be paid in advance in a similar fashion with the
accompanying true-up.
11.6 SK FAILURE TO PERFORM. SK's (or any third party acting under the
control of SK) failure to perform any of its responsibilities set forth
in the Agreement (other than as provided in Subsection 11.1(b) of the
Agreement) shall not be deemed to be grounds for termination by EDS;
provided, however, that EDS' nonperformance of its obligations under
the Agreement shall be excused if and to the extent (a) such EDS
nonperformance results from SK's failure to perform its
responsibilities, and (b) EDS
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provides SK with reasonable notice of such nonperformance and uses
commercially reasonable efforts to perform notwithstanding SK's failure
to perform (with SK reimbursing EDS for its additional out-of-pocket
Expenses for such efforts).
ARTICLE XII. INDEMNITIES AND LIABILITY
-------------------------
12.1 INDEMNITY BY EDS. EDS agrees to indemnify, defend and hold harmless SK
and its Affiliates and their respective officers, directors, employees,
agents, successors, and assigns, from any and all losses, liabilities,
damages and claims (including taxes), and related costs and expenses
(including reasonable attorneys' fees and expenses) (the "Losses")
arising from, in connection with, or based on allegations of, any of
the following:
(a) any claim for a penalty, interest or other charge imposed by a
taxing authority assessed against SK which are the obligations
of EDS under the Agreement (except with respect to actual
taxes, if any, that are payable by SK under this Agreement);
(b) EDS' failure to perform any duties or obligations to be
performed on or after the Effective Date by EDS under third
party software licenses or third party service contracts,
including but not limited to, SK's contract with SAP. However,
EDS will have no obligation with respect to any Losses to the
extent arising out of or in connection with claims for
copyright infringement and/or breach of Software licenses or
third party service contracts related to the Services (i) to
the extent resulting from a failure to obtain a required
consent for SK provided third party software, (ii) committed
by SK, Affiliates and subcontractors other than as a result of
EDS' failing to perform its obligations under the Agreement or
(iii) to the extent arising out of or resulting from SK's
failing to perform its obligations under this Agreement;
(c) Any claim of a third party subcontractor of EDS relating to or
arising out of the provision of the Services; and
(d) Subject to the procedures set forth in Section 12.5, and the
exceptions contained in this Section 12.1(d),any claim of
infringement of any United States patent, trademark, trade
secret, copyright or other proprietary right, alleged to have
occurred because of Software (other than third party software)
or Confidential Information provided by EDS. EDS will have no
liability to SK hereunder if (i) the claim of infringement is
based upon the use of software provided by EDS hereunder in
connection or in combination with equipment, devices or
software not supplied by EDS or used in a manner for which the
software was not designed, (ii) SK modifies any software
provided by EDS hereunder and such infringement would not have
occurred bur for such modification, or SK, on its own, uses
the software in the practice of a patented process and there
would be no infringement in the absence of such practice, or
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(iii) the claim of infringement arises out of EDS' compliance
with specifications provided by SK and such infringement would
not have occurred but for such compliance.
12.2 INDEMNITY BY SK. SK agrees to indemnify, defend and hold harmless EDS
and its Affiliates and their respective officers, directors, employees,
agents, successors, and assigns, from any and all Losses arising from,
in connection with, or based on allegations of, any of the following:
(a) SK's failure to pay rent or utilities at any SK facility
location where SK is required to furnish space or utilities to
EDS pursuant to the Agreement;
(b) Subject to the procedures set forth in Section 12.5, and the
exceptions contained in this Section 12.2(b), any claim of
infringement of any United States patent, trademark, trade
secret, copyright or other proprietary right, alleged to have
occurred because of Software (other than third party software)
or Confidential Information provided by SK. SK will have no
liability to EDS hereunder if (i) the claim of infringement is
based upon the use of software provided by SK hereunder in
connection or in combination with equipment, devices or
software not supplied by SK or used in a manner for which the
software was not designed, (ii) EDS modifies any software
provided by SK hereunder and such infringement would not have
occurred but for such modification, or EDS, on its own, uses
the software in the practice of a patented process and there
would be no infringement in the absence of such practice, or
(iii) the claim of infringement arises out of SK's compliance
with specifications provided by EDS and such infringement
would not have occurred but for such compliance;
(c) Any claim for a penalty, interest or other charges imposed by
a taxing authority assessed against SK which are the
obligations of SK under the Agreement (except with respect to
actual taxes, if any, that are payable by EDS under the
Agreement).
12.3 ADDITIONAL INDEMNITIES. EDS and SK each agree to indemnify, defend and
hold harmless the other, and its Affiliates, officers, directors,
employees, agents, successors, and assigns, from any and all Losses and
threatened Losses arising from, in connection with, or based on
allegations of, any of the following:
(a) the death or bodily injury of any agent, employee, customer,
business invitee, or business visitor or other person caused
by the tortious conduct of the indemnitor, the Affiliates of
the indemnitor or subcontractors of the indemnitor and its
Affiliates;
(b) any claim for personal injury or property damage caused by a
Party, its Affiliates, its employees, agents or
subcontractors; or
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(c) any fines or claims resulting from a violation of any law,
regulation or other governmental obligation of a Party.
Each Party 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 their own insuring arrangements (if any)
with respect to such Losses. EDS and SK waive all rights to recover
against each other for any Losses caused by damage to their respective
tangible personal property (whether owned or leased) or real property
from any cause covered by insurance maintained by each of them,
including their respective deductibles or self-insured retentions. EDS
and SK will cause their respective insurers to issue appropriate
waivers of subrogation rights endorsements to all property insurance
policies maintained by each Party.
12.4 INFRINGEMENT.
-------------
(a) If any EDS Software, third party software licensed directly by
EDS (which shall not include EDS assumed Software licenses
from SK) or Equipment (except for Equipment provided to EDS by
SK, whether purchased or assumed) used to provide the Services
becomes, or in EDS' reasonable opinion is likely to become,
the subject of an infringement or misappropriation claim or
proceeding, EDS shall, in addition to indemnifying SK as
provided in this Article 12 and to the other rights SK may
have under this Agreement, promptly at EDS' expense use
commercially reasonable efforts to secure the right to
continue using the item or replace or modify the item to make
it non-infringing, provided that any such replacement or
modification will not degrade the performance or quality of
the affected component of the Services. In the event neither
of such actions can be accomplished by EDS, and only in such
event, EDS shall remove the item from the Services and EDS'
charges shall be equitably adjusted to reflect such removal.
(b) If any SK Software, or third party software licensed directly
by SK used to provide the Services becomes, or in SK's
reasonable opinion is likely to become, the subject of an
infringement or misappropriation claim or proceeding, SK
shall, in addition to indemnifying EDS as provided in this
Article 12 and to the other rights EDS may have under this
Agreement, promptly at SK's expense use commercially
reasonable efforts to secure the right to continue using the
item or replace or modify the item in accordance with the
Change Control Process.
12.5 INDEMNIFICATION PROCEDURES
--------------------------
With respect to third-party claims, including claims regarding
infringement, the following procedures shall apply:
65
(a) NOTICE. Promptly after receipt by any entity entitled to
indemnification under Sections 12.1 through 12.3 of notice of
the commencement or threatened commencement of any civil,
criminal, administrative, or investigative action or
proceeding involving a claim in respect of which the
indemnitee will seek indemnification pursuant to any such
Section, the indemnitee shall promptly notify the indemnitor
of such claim in writing. No failure to so notify an
indemnitor shall relieve it of its obligations under this
Agreement except to the extent that it can demonstrate damages
attributable to such failure. Within fifteen (15) days
following receipt of written notice from the indemnitee
relating to any claim, but no later than ten (10) days before
the date on which any response to a complaint or summons is
due or such lesser period as is reasonable given the nature of
the Claim and the notice and response time permitted by law or
the facts and circumstances, the indemnitor shall notify the
indemnitee in writing if the indemnitor elects to assume
control of the defense and settlement of that claim (a "Notice
of Election"). The indemnitee agrees to cooperate in good
faith with the indemnitor at the request and expense of
indemnitor.
(b) PROCEDURE FOLLOWING NOTICE OF ELECTION. If the indemnitor
delivers a Notice of Election relating to any claim within the
required notice period, the indemnitor shall be entitled to
have sole control over the defense and settlement of such
claim; provided that (i) the indemnitee shall be entitled to
participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim,
and (ii) the indemnitor shall obtain the prior written
approval of the indemnitee before entering into any settlement
of such claim or ceasing to defend against such claim. After
the indemnitor has delivered a Notice of Election relating to
any claim in accordance with the preceding paragraph, the
indemnitor shall not be liable to the indemnitee for any legal
expenses incurred by the indemnitee in connection with the
defense of that claim. In addition, the indemnitor shall not
be required to indemnify the indemnitee for any amount paid or
payable by the indemnitee in the settlement of any claim for
which the indemnitor has delivered a timely Notice of Election
if such amount was agreed to without the written consent of
the indemnitor.
(c) PROCEDURE WHERE NO NOTICE OF ELECTION IS DELIVERED. If the
indemnitor does not deliver a Notice of Election relating to
any claim within the required notice period, the indemnitee
shall have the right to defend the claim in such manner as it
may deem appropriate, at the cost and expense of the
indemnitor. The indemnitor shall promptly reimburse the
indemnitee for all such costs and expenses.
12.6 SUBROGATION. In the event that an indemnitor shall be obligated to
indemnify an indemnitee pursuant to Sections 12.1 through 12.3, the
indemnitor shall, upon payment of such indemnity in full, except as
provided in Section 12.3, be subrogated
66
to all rights of the indemnitee with respect to the claims to which
such indemnification relates.
12.7 LIABILITY RESTRICTIONS.
-----------------------
(a) Subject to Subsection 12.7(c) below, each Party's total
liability to the other, whether in contract or in tort
(including breach of warranty, negligence and strict liability
in tort) shall be limited to and will not exceed in the
aggregate an amount equal to $12,000,000.
(b) SUBJECT TO SUBSECTION 12.7(C) BELOW, NEITHER PARTY SHALL BE
LIABLE FOR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST
INCOME OR LOST REVENUE WHETHER BASED IN CONTRACT, TORT OR ANY
OTHER THEORY.
(c) The limitations set forth in Subsections (a) and (b) of this
Section shall not apply with respect to:
(i) Losses occasioned by the intentional tortious
conduct, willful misconduct or gross negligence of a
Party; or
(ii) Losses caused by claims that are the subject of
indemnification pursuant to Sections 12.1(a), Section
12.1(d), 12.2(b),or 12.2(c).
(d) DUTY TO MITIGATE. Each Party has a duty to mitigate the
damages that would otherwise be recoverable from the other
pursuant to this Agreement by taking appropriate and
reasonable actions to reduce or limit the amount of such
damages.
(e) CONTRACTUAL STATUTE OF LIMITATIONS. No claim and demand for
mediation or 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 mediation or arbitration or suit
alleging a claim or cause of action may be asserted by either
Party against the other.
(f) ACKNOWLEDGMENT. The Parties expressly acknowledge that the
limitations and exclusions set forth in this Section have been
the subject of active and complete negotiation between the
Parties and represent the Parties' agreement taking into
account each Party's level of risk associated with the
performance or nonperformance of its obligations under this
Agreement and the payments and other benefits to be derived by
each Party pursuant to this Agreement. The
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provisions of this Section will survive the expiration or
termination of this Agreement for any reason.
(g) RISK OF BUSINESS; INDEMNIFICATION. SK acknowledges and agrees
that in running its business it faces business risk separate
and apart from its systems but for which its systems provide
the operational platform. SK acknowledges and agrees that EDS
is not assuming and should not be exposed to these general
business risks associated with SK's business, and SK shall
indemnify and defend EDS from any and all third party Losses
arising out of these general business risks.
12.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE XIII. INSURANCE; DISASTER RECOVERY
----------------------------
13.1 INSURANCE. EDS will carry, at its expense, complete and comprehensive
insurance in the following minimum amounts and types:
(a) Comprehensive general liability coverage in the minimum amount
of $2,000,000 each occurrence and $2,000,000 annual aggregate,
including a Broad Form General Liability Endorsement and Broad
Form Property Damage Extension;
(b) Worker's compensation insurance providing statutory benefits;
(c) Employers' liability insurance in the minimum amount of
$100,000, $500,000, $100,000;
(d) Owned or non-owned automobile liability insurance in the
minimum amount of $1,000,000 each accident;
(e) Umbrella liability coverage in the minimum amount of
$10,000,000 each occurrence and annual aggregate;
(f) Employee dishonesty and computer fraud coverage for loss
arising out of or in connection with any fraudulent or
dishonest acts committed by the employees of EDS, acting alone
or in collusion with others, including the property and funds
of others in their care, custody or control, in a minimum
amount of ten million dollars ($10,000,000) per occurrence;
however, Losses otherwise payable to SK hereunder will be
reduced by 50% for any covered Losses that involve the
dishonesty of the employees of both EDS and SK; and
(g) Professional liability claims with a minimum amount of
$10,000,000 each loss.
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The foregoing insurance coverages shall be primary and non-contributing with
respect to any other insurance or self insurance which may be maintained by SK,
and the policies in (a), (d) and (e) above shall name SK as an additional
insured and the policies in (f) and (g) above shall name SK as a loss payee to
the extent of SK's insurable interest. EDS shall cause its insurers to issue
certificates of insurance evidencing that the coverages required under this
Agreement are maintained in force and that not less than thirty (30) days
written notice shall be given to SK prior to any material modification,
cancellation or non-renewal of the policies. The insurers selected by EDS shall
have an A.M. Best rating of A- or better, Class VII or better, or if such
ratings are no longer available, with a comparable rating from a recognized
insurance rating agency. EDS shall assure that Authorized Subcontractors, if
any, maintain insurance coverage as specified in this Article. With the
exception of any policies required to be maintained by law, EDS shall maintain
the insurance policies listed above so long as the policies are reasonably
available. If any such policy, in EDS' reasonable judgement is no longer
reasonably available, then EDS and SK shall mutually negotiate in good faith a
reasonably acceptable alternative.
The obligation of EDS to provide the insurance specified herein shall not
increase in any way any obligation or liability of EDS provided elsewhere in
this Agreement.
13.2 DISASTER RECOVERY. EDS shall provide a disaster recovery plan in
accordance with the procedures mutually agreed to in the applicable
Statements of Work.
ARTICLE XIV. MISCELLANEOUS
-------------
14.1 RIGHT TO ENGAGE IN OTHER ACTIVITIES. SK acknowledges and agrees that
EDS may provide information technology services for third parties at
any EDS facility that EDS may utilize from time to time for performing
the Services. Subject to the restrictions set forth in Sections
2.2(a)(iv) and 3.19, and the restrictions on the use of data and the
disclosure of confidential information set forth in ARTICLE VIII, or as
otherwise provided in this Agreement nothing in this Agreement will
impair EDS' right to acquire, license, market, distribute, develop for
itself or others or have others develop for EDS similar technology
performing the same or similar functions as the technology and Services
contemplated by this Agreement.
14.2 INDEPENDENT CONTRACTORS. The Parties are independent contractors, and
this Agreement will not be construed as constituting either Party as
partner, joint venturer or fiduciary of the other, as creating any
other form of legal association that would impose liability on one
Party for the act or failure to act of the other or as providing either
Party with the right, power or authority (express or implied) to create
any duty or obligation of the other. Except as otherwise expressly
provided in this Agreement, each Party has the sole right and
obligation to supervise, manage, contract, direct, procure, perform or
cause to be performed all work to be performed by it pursuant to this
Agreement.
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14.3 ENTIRE AGREEMENT; SURVIVAL. This Agreement (including the Schedules
attached hereto, each of which is incorporated into this Agreement by
this reference) constitutes the full and complete statement of the
agreement of the Parties with respect to the subject matter hereof and
supersedes any previous or contemporaneous agreements, understandings
or communications, whether written or oral, relating to such subject
matter. The expiration or termination of this Agreement for any reason
will not release either Party from any liabilities or obligations set
forth herein which (a) the Parties have expressly agreed will survive
any such expiration or termination or (b) remain to be performed or by
their nature would be intended to be applicable following any such
expiration or termination.
14.4 AMENDMENTS; WAIVER. Changes or modifications to this Agreement may not
be made orally or through a course of dealing, but only by a written
amendment or revision signed by the Parties. Any terms and conditions
varying from this Agreement on any order, invoice or other notification
from either Party are not binding on the other unless specifically
accepted by the other. Unless otherwise expressly provided in this
Agreement, neither a delay or omission by either Party to exercise, nor
a course of dealing with respect to, any right or power under this
Agreement will be construed to be a waiver thereof. No waiver of any
breach of any provision of this Agreement will constitute a waiver of
any prior, concurrent or subsequent breach of the same or any other
provision hereof.
14.5 BINDING NATURE; ASSIGNMENT. This Agreement will be binding on the
Parties and their successors and permitted assigns (it being understood
and agreed that nothing contained in this Agreement is intended to
confer upon any party other than EDS and SK any rights, benefits or
remedies of any kind or character whatsoever under or by reason of this
Agreement). Except as otherwise expressly provided in SECTION 2.3,
neither Party may, nor will it have the power to, assign this
Agreement, or any part hereof, without the consent of the other, which
consent will not be unreasonably withheld. If the SK Yellow Business is
sold, then EDS may in its sole discretion choose to exercise its
termination rights with respect to any remaining portion of the
business of SK that is not sold under Section 11.3(c) and provide SK
with the Termination/Expiration Assistance (as described in Section
11.5).
14.6 EXPORT REGULATIONS. This Agreement is expressly made subject to any
United States government laws, regulations, orders or other
restrictions regarding export from the United States of computer
hardware, software, technical data or derivatives of such hardware,
software or technical data. Notwithstanding anything to the contrary in
this Agreement, SK will not directly or indirectly export (or reexport)
any computer hardware, software, technical data or derivatives of such
hardware, software or technical data, or permit the shipment of same:
(a) into (or to a national or resident of) Cuba, North Korea, Iran,
Iraq, Libya, Syria or any other country to which the United States has
embargoed goods; (b) to anyone on the U.S. Treasury Department's List
of Specially Designated Nationals, List of Specially Designated
Terrorists or List of Specially Designated Narcotics Traffickers, or
the U.S. Commerce Department's Denied Parties List; or (c) to any
country or destination for which the United States government
70
or a United States governmental agency requires an export license or
other approval for export without first having obtained such license or
other approval. Each Party will reasonably cooperate with the other and
will provide to the other promptly upon request any end-user
certificates, affidavits regarding reexport or other certificates or
documents as are reasonably requested to obtain approvals, consents,
licenses and/or permits required for any payment or any export or
import of products or services under this Agreement. The provisions of
this Section 14.6 will survive the expiration or termination of this
Agreement for any reason.
14.7 APPROVALS AND SIMILAR ACTIONS. Except as otherwise expressly provided
in this Agreement, where agreement, approval, acceptance, consent or
similar action is required of either Party by any provision of this
Agreement, such action will not be unreasonably withheld or delayed. An
approval or consent given by a Party under this Agreement will not
relieve the other Party from responsibility for complying with the
requirements of this Agreement, nor will it be construed as a waiver of
any rights under this Agreement, except as and to the extent otherwise
expressly provided in such approval or consent.
14.8 NOTICES. Except as otherwise expressly provided in this Agreement, all
notices under this Agreement will be in writing and will be deemed to
have been duly given if delivered personally or by a nationally
recognized courier service, faxed or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the Parties at the
following addresses:
If to SK:
Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a Copy to:
General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to EDS:
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇,▇▇▇▇▇ ▇▇▇▇▇
With a Copy to:
General Counsel
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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All notices under this Agreement that are addressed as
provided in this Section 14.8, (a) if delivered personally or
by a nationally recognized courier service, will be deemed
given upon delivery, (b) if delivered by facsimile, will be
deemed given when confirmed and (c) if delivered by mail in
the manner described above, will be deemed given on the fifth
business day after the day it is deposited in a regular
depository of the United States mail. Either Party from time
to time may change its address or designee for notification
purposes by giving the other Party notice of the new address
or designee and the date upon which such change will become
effective.
14.9 EXCUSED PERFORMANCE.
--------------------
(a )No Party shall be liable for any default or delay in the
performance of its obligations under the Agreement if and to
the extent such default or delay is caused, directly or
indirectly, by fire, flood, earthquake, elements of nature or
acts of God, riots, civil disorders, rebellions or revolutions
in any country, or any other (a) cause beyond the reasonable
control of such Party; provided, however, that the
non-performing Party is without fault in causing such default
or delay, and such default or delay could not have been
prevented by reasonable precautions and cannot reasonably be
circumvented by the non-performing Party through the use of
alternate sources, workaround plans or other means (including
with respect to EDS by EDS meeting its obligations for
performing disaster recovery Services as described in the
Agreement) (any event for which a Party is not liable for
default or delay in the performance of its obligations under
this Subsection (a) (a "Force Majeure Event").
(b) In the event of a Force Majeure Event, the non-performing
Party shall be excused from further performance or observance
of the obligation(s) so affected for as long as such
circumstances prevail and such Party continues to use its
commercially reasonable efforts to recommence performance or
observance whenever and to whatever extent possible without
delay. Any Party so delayed in its performance shall
immediately notify the Party to whom performance is due by
telephone (to be confirmed in writing within two (2) calendar
days of the inception of such delay) and describe at a
reasonable level of detail the circumstances causing such
delay. Whenever a Force Majeure Event causes EDS to allocate
limited resources between or among EDS' customers, SK shall
receive at least the same priority in respect to such
allocation as any of EDS' other customers receiving
substantially similar services.
(c) If any Force Majeure Event substantially prevents, hinders, or
delays performance of the Services necessary for the
performance of SK functions reasonably identified by SK as
critical for more than five (5) consecutive days, then at SK's
option:
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(i) SK may procure such Services from an alternate
source, and EDS will directly and timely pay the
difference between the full amount charged by such
alternate source for the provision of such Services
to SK and the charges due EDS under this Agreement
had a Force Majeure Event not taken place, until such
time as EDS is able to restore the Services and meet
the Service Levels (unless the Services or this
Agreement is terminated earlier by SK pursuant to
(ii) or (iii) below), but in no event for more than
one hundred eighty (180) days; or
(ii) SK may terminate any portion of the Services so
affected at no charge and the charges payable under
the Agreement shall be equitably adjusted to reflect
those terminated Services.
14.10 PUBLIC RELATIONS AND MARKETING REFERENCES. Each Party will coordinate
with the other regarding any media release, public announcement or
similar disclosure relating to this Agreement or its subject matter and
will give the other Party a reasonable opportunity to review and
comment on the content of such release, announcement or disclosure
prior to its release. This provision does not alter the restrictions on
the disclosure of confidential information set forth in Section 8.4
and, subject to SECTION 8.4, will not be construed so as to delay or
restrict either Party from disclosing any information required to be
disclosed in order to comply with any applicable laws, rules or
regulations. In addition, the Parties acknowledge and agree that the
filing in the Bankruptcy Court contemplated by Section 1A.1 will be
made by SK. Notwithstanding the foregoing but subject to any applicable
laws, rules or regulations, each Party will have the right to list the
name of the other Party, to make general references to the basic nature
of the relationship between the Parties under this Agreement and to
describe generally the type of services being provided by EDS to SK
under this Agreement in such Party's promotional and marketing
materials, in such Party's oral or visual presentations to third
parties, in interviews conducted by the news media or securities
analysts and in or through any other available media channels,
including print, Internet, radio, cable and broadcast mediums.
14.11 CERTAIN CONSTRUCTION RULES. All references to days, months or years are
references to calendar days, months or years. To the extent that the
provisions of this Agreement and the Schedules are inconsistent, to the
extent possible such provisions will be interpreted so as to make them
consistent, and if that is not possible, the provisions of the
Schedules will prevail. If any provision of this Agreement is held to
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be
affected or impaired, and such provision will be deemed to be restated
to reflect the original intentions of the Parties as nearly as possible
in accordance with applicable law. The Parties agree that this
Agreement is an executory contract as contemplated by 11 U.S.C. Section
365. In performing its obligations under this Agreement, neither Party
will be required to undertake any activity that would conflict with the
requirements of any applicable law, rule, regulation, interpretation,
judgment, order or injunction of any governmental authority. This
Agreement may be executed in multiple counterparts, each of which will
be deemed an original and all of which taken
73
together will constitute one instrument. The Parties acknowledge and
agree that each has been represented by legal counsel of its choice
throughout the negotiation and drafting of this Agreement, that each
has participated in the drafting hereof and that this Agreement will
not be construed in favor of or against either Party solely on the
basis of a Party's drafting or participation in the drafting of any
portion of this Agreement.
14.12 THIRD PARTY BENEFICIARIES. This Agreement is entered into solely
between, and may be enforced only by, SK and EDS. The Agreement shall
not be deemed to create any rights in third parties, including
suppliers and customers of a Party, or to create any obligations of a
Party to any such third parties. This Section 14.12 shall not, however,
affect EDS' obligation to provide the Services to entities other than
SK and SK Affiliates as set forth in, and subject to, Section 3.2.
14.13 COVENANT AGAINST PLEDGING. EDS agrees that, without the prior written
consent of SK, it shall not assign, transfer, pledge, hypothecate or
otherwise encumber its rights to receive payments from SK under the
Agreement for any reason whatsoever.
14.14 ENTIRE AGREEMENT. This Agreement is the entire agreement between the
Parties with respect to its subject matter, and there are no other
representations, understandings, or agreements between the Parties
relative to such subject matter. Upon the effectiveness of this
Agreement, the Letter of Intent shall terminate and be of no further
force and effect as of May 3,2002.Upon the effectiveness of this
Agreement, the terms of all of the services provided by EDS under the
Letter of Intent shall be governed by this Agreement.
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IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement
by their duly authorized representatives as of the Effective Date.
SAFETY-KLEEN SERVICES, INC. ELECTRONIC DATA SYSTEMS
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇
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Title: Director Title: President, IS, NE
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Date: 4/24/02 Date: 4/26/02
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EDS INFORMATION SERVICES L.L.C.
By: /s/ ▇▇▇ ▇▇▇▇▇
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Title: Presidsent, IS, NE
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Date: 4/26/02
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75
SCHEDULE OF DEFINITIONS
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Defined Term Location of Definition
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Access Section 5.1
Additional Services Section 3.11
Affiliate Section 3.2(b)
Agreement Section 1A.4(f)
Authorized Subcontractors Section 2.3(a)(i)
Bankruptcy Case Section 1A.1
Benchmarking Section 3.13
Blue Business Section 1A.2(h)
Categories of Services Section 3.2(a)
Change Control Procedures Section 1.10(c)
Confidential Information Section 8.4(a)
Developed Software Section 7.1(e)
ECI Schedule 9.7
ECI Adjustable Charges Schedule 9.7
ECI Base Index Schedule 9.7
ECI Current Index Schedule 9.7
EDS Introduction
EDS Client Delivery Executive Section 1.1
EDS Confidential Information Section 8.4(b)(ii)
EDS Development Tools Section 7.1(g)
EDS Software Section 7.1(a)
11.2 - 1
EDS-Vendor Software Section 7.1(b)
Effective Date Section 1A.1
EIS Introduction
Expiration Date Section 3.1
Extraordinary Event Section 3.7(a)
Final Order Section 1A.1
Force Majeure Event Section 14.9(a)
Former Affiliate Section 3.5
Key EDS Positions Section 2.2(a)(i)
Letter of Intent Section 1A.1
Losses Section 12.1
Monthly Performance Report Section 1.5
Nonconformance Section 6.1(i)
Other Deliverables Section 7.1(f)
Party/Parties Section 1A.2(g)
Privacy Laws Section 8.3
Procedures Manual Section 1.9
Residual Technology Section 7.1(g)
Service Levels Section 3.3(a)
Services Section 3.2(a)
Software Section 5.3
Software Section 7.1(h)
Steering Committee Section 1.3
11.2 - 2
System Change Section 3.12
Targeted Cost Increases Section 3.7(b)(ii)
Targeted Cost Reductions Section 3.7(b)(i)
Targeted Resource Additions Section 3.7(b)(ii)
Targeted Resource Reductions Section 3.7(b)(i)
Technology and Process Improvement Plan Section 1.6
Termination/Expiration Assistance Section 11.5(a)
Transitioned Employees Section 2.1
SK Introduction
SK Competitor Section 2.2(a)(iv)
SK Confidential Information Section 8.4(b)(i)
SK Data Section 8.1
SK-Leased Equipment Section 5.1
SK-Owned Equipment Section 5.1
SK Representative Section 1.2
SK Software Section 7.1(c)
SK-Vendor Software Section 7.1(d)
Statement of Work Section 3.2(a)
Yellow Business Section 1A.2(h)
11.2 - 3
THE SCHEDULES AND EXHIBITS
THERETO ARE CONFIDENTIAL AND WERE
INTENTIONALLY REDACTED FROM THE
MASTER SERVICES AGREEMENT
