ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") is made and
entered into by and between Homestead Village Incorporated, a Maryland
corporation ("the Company"), and SCGroup Incorporated, a Texas corporation
("SCGroup"). This Agreement shall supersede and replace the Administrative
Services Agreement executed by the parties on January 1, 1999 upon expiration of
that earlier agreement on December 31, 1999.
WHEREAS, the Company wishes to purchase from SCGroup certain
administrative services designed to assist the Company in the cost-efficient
management of the Company's administrative and business affairs in the manner
and pursuant to terms and conditions as more specifically described herein; and
WHEREAS, SCGroup desires to provide or cause to be provided those
services requested by the Company under such terms and conditions; and
WHEREAS, SCGroup will perform similar administrative services for other
entities (collectively "SCGroup Clients") which may vary from time to time.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Services
1.1 Scope of Services. The specific services to be provided by
SCGroup to the Company (each a "Service" and collectively the "Services") are
and shall be described in Schedule A.
1.2 Selection of Services.
(a) On or before September 15 of each calendar
year, SCGroup shall deliver to the Company a list of (i) the services (other
than Risk Management services) to be offered by SCGroup during the succeeding
calendar year, (ii) the charges and performance standards associated with such
services, and (iii) any additional or different terms and conditions applicable
to such service offerings. Thereafter, on or before September 30, the Company
shall notify SCGroup in writing of the services it wishes to purchase during the
succeeding calendar year; provided that, if the Company fails to respond by such
date, it shall be deemed to have selected the same Services purchased by such
Company during the then current calendar year.
(b) With respect to Risk Management services, SCGroup
shall deliver a description of such services offered for the fiscal year
beginning each July 1, together with the terms, charges and performance
standards for such services on or prior to June 1 of each year. On or before
June 15, the Company shall notify SCGroup in writing whether the Company wishes
to purchase Risk Management services from SCGroup; provided that if the Company
fails to respond by June 15, the Company shall be deemed to have (i) purchased
Risk Management services, if the Company purchased such services for the then
current fiscal year or (ii) declined to purchase such services if the Company
did not purchase such services for the then current fiscal year. After the
Company selects or is deemed to have selected the Risk Management services for
the succeeding fiscal year, the scope of such services may not be expanded,
reduced or otherwise modified by the Company without the written consent of
SCGroup.
(c) On or before November 30, SCGroup shall prepare a
Schedule A describing the specific Services to be provided to the Company during
the succeeding calendar year. SCGroup also shall revise Schedules B, C, D and E
on or before that date to reflect the charges, performance standards and other
terms and conditions applicable to such Services. After the Company selects or
is deemed to have selected the Services to be provided during the succeeding
calendar year, the scope of such Services may not be expanded, reduced or
otherwise modified by the Company without the written consent of SCGroup.
1.3 Access, Information, Cooperation and Assistance. The
Company will provide SCGroup with all access, Company information, cooperation
and assistance necessary for SCGroup to perform the Services in accordance with
this Agreement.
1.4 Increases in Volume of Service. If the Company completes a
transaction, such as the acquisition of a new business unit, that will result in
an increase of twenty-five (25%) percent or more in the volume of services to be
delivered in any service category (e.g., Disbursements, Cash Management,
Corporate Tax) as designated on Schedule A, the Company shall promptly notify
SCGroup of such change. SCGroup shall exercise commercially reasonable efforts
to accommodate and deliver the increased volume of services as soon as
practicable and, in any event, within 90 days of its receipt of notice of such
increased volume.
1.5 Subcontracting. SCGroup may delegate and subcontract some
or all of its obligations under this Agreement to one or more third parties. If
SCGroup does so, it will remain responsible for the performance of all
obligations performed by such subcontractors to the same extent as if such
obligations were performed by SCGroup employees.
Section 2. Charges.
2.1 Charges. The charges to be paid by the Company to SCGroup
for the Services to be performed by SCGroup in any calendar year shall be set
forth in Schedule B ("Charges"). Unless otherwise agreed, such Charges shall be
subject to modification only in accordance with Sections 1.2 or 1.4. Unless
otherwise agreed, the Charges paid by the Company in each service category in
any calendar year shall equal at least seventy-five (75%) percent of the Charges
paid by the Company in the same service category during the preceding calendar
year. For any service category in which the Company paid no Charges during the
preceding year, the Charges shall equal at least seventy-five (75%) percent of
the Charges that would have been paid by the Company in the then current
calendar year based on the volume estimates agreed upon by the parties. In
either event, if the Charges in any service category fail to reach the
applicable minimum, the Company shall pay the shortfall to SCGroup on or before
January 15 of the succeeding calendar year.
2.2 Pass-Through Expenses. Pass-through expenses are listed in
Schedule C. Unless otherwise agreed by the parties, pass-through expenses shall
be paid by the Company directly. SCGroup will promptly provide the Company with
the original third-party invoice for such expenses, together with a statement
that SCGroup has reviewed and validated the invoiced charges. SCGroup will
highlight any charges that appear to be inappropriate and will work with the
Company to reconcile all bills with the third-party suppliers.
2.3 Retained Expenses. The Company shall retain financial
responsibility for those functions and expense items shown as retained expenses
in Schedule D. The Company will be billed directly by third parties for such
services. The Company agrees to pay such expenses in a timely manner and in the
ordinary course of business.
2.4 Extra Services. Any services requested by the Company beyond those set forth
in Schedule A will be performed in accordance with mutually agreed terms,
conditions and charges.
2.5 Payment for Services.
(a) At the beginning of each calendar month, SCGroup shall
invoice the Company for the Charges specified in Schedule B for the
Services received by the Company during the preceding month. Such
Charges shall be payable in full within 20 days of receipt of such
invoice by the Company. Any past due amounts shall be subject to a late
payment fee equal to the Xxxxx Fargo Bank N.A. prime lending rate plus
2 percent on the past due balance or the maximum rate allowable by law,
whichever is less. The Company shall cause payment to be received by
SCGroup at SCGroup's offices at 0000 Xxxxxx Xxxxxx Xxxxxx, Xx Xxxx,
Xxxxx 00000, or by wire transfer in accordance with the wire
instructions provided from time to time to the Company in writing by
SCGroup.
(b) The Company shall provide SCGroup with prompt written
notification of any disputed Charges prior to the payment date of such
Charges. The notification shall provide a description of the specific
reasons for the dispute. No payment may be withheld for undisputed
Charges.
2.6 Taxes.
(a) Each party will pay any real estate or personal property
taxes on property it owns or leases, franchise and privilege taxes on
its business, and taxes based on its net income or gross receipts.
(b) SCGroup will pay all sales, use, excise, value-added,
services, consumption, and other taxes and duties payable by SCGroup on
any goods or services used or consumed by SCGroup in providing the
Services where the tax is imposed on SCGroup's acquisition or use of
such goods or services and the amount of tax is measured by SCGroup's
costs in acquiring such goods or services.
(c) In the case of any sales, use, excise, value-added,
services, consumption, or other tax that is assessed on the provision
of the Services as a whole, or on any particular hardware, software, or
Service received by the Company from SCGroup, the Company will pay such
taxes.
(d) The Parties agree to fully 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.
Section 3. Term. The term of this Agreement shall commence on January
1, 2000 and, unless terminated earlier in accordance with Section 10, shall end
on December 31, 2002 (the "Initial Term"). Absent written notice of non-renewal
as provided in this Section 3, this Agreement shall be automatically renewed for
successive one-year terms (each, a "Renewal Term") upon the expiration of the
Initial Term and each Renewal Term. Notice of non-renewal, if given, shall be
given in writing by either party hereto not less than ninety (90) calendar days
before the expiration of the Initial Term or any Renewal Term.
Section 4. Audit of Services. At any time during regular business hours
and as often as reasonably requested by the Company's officers, SCGroup shall
permit the Company or its authorized representatives to examine and make copies
and abstracts from the records and books of SCGroup for the purpose of auditing
the performance and Charges of SCGroup under the terms of this Agreement;
provided, that all costs and expenses of such inspection shall be borne by the
Company and provided further that the Company shall have no right and shall not
make copies of abstracts of any SCGroup Materials (as defined in Section 9.2).
Section 5. Company Data. Data obtained by SCGroup from the Company in
connection with the performance of any Services ("Company Data") is and shall
remain the exclusive property of the Company. SCGroup is authorized to have
access to and make use of the Company Data as necessary and appropriate for the
performance by or for SCGroup of its obligations under this Agreement. Upon the
termination or expiration of this Agreement, SCGroup will return to the Company
all Company Data then in its possession. SCGroup will not use Company Data for
any purpose other than for providing the Services.
Section 6. Confidentiality. Except as otherwise provided in this
Agreement, SCGroup and the Company each agree that all information communicated
to it by the other, whether before or after the effective date of this
Agreement, will be received in strict confidence, will be used only for purposes
of this Agreement, and will not be disclosed by the recipient party without the
prior written consent of the other party. Each party agrees to use the same
means it uses to protect its own Confidential Information, but in any event not
less than reasonable means, to prevent the disclosure of such information to
outside parties. However, neither party will be prevented from disclosing
information to its counsel or regular public accountants, or from disclosing
information which belongs to such party, or is (a) already known by the
recipient party without an obligation of confidentiality; (b) publicly known or
becomes publicly known through no unauthorized act of the recipient party; (c)
rightfully received from a third party; (d) independently developed without use
of the other party's confidential information; (e) disclosed without similar
restrictions to a third party by the party owning the confidential information;
or (f) required to be disclosed pursuant to a requirement of a governmental
agency or legal requirement if the disclosing party provides the other party
with notice of this requirement prior to disclosure.
Section 7. Performance Standards
7.1 Service Levels. SC Group shall exercise commercially
reasonable efforts to perform the Services in accordance with the service levels
set forth in Schedule E. To the extent any service level is determined by the
parties to be unattainable using commercially reasonable efforts, SCGroup will
identify the level of service which is reasonably attainable, the modifications
or changes necessary to attain the higher service level and the costs associated
with such modifications or changes. The parties will meet as necessary to
evaluate and revise the service levels. SCGroup will measure the quality and
quantity of the Services actually delivered by SCGroup. The data obtained by
SCGroup will be one of the bases for evaluating and possibly revising Schedule
E. All such revisions must be agreed to by the Company and SCGroup. If
requested, the Company will provide copies of relevant information in its
possession to SCGroup to assist in any review or revision of the service levels.
7.2 Failure to Attain Service Levels. If SCGroup fails to
attain any service level, SCGroup will (i) promptly investigate the cause of the
problem; (ii) prepare a report identifying the cause of the problem and
recommending solutions; and (iii) use commercially reasonable efforts to correct
the problem and to begin meeting the service levels as soon as practicable.
Section 8. Prevention of Performance. SCGroup shall not be determined
to be in violation of this Agreement if it is prevented from performing any
Services hereunder, in whole or in part, by the acts or omissions of the Company
or a third party or for any other reason beyond its reasonable control,
including without limitation acts of God, nature or public enemy, war, civil
disturbance, labor dispute, failure or fluctuation in electrical power, heat,
light, air conditioning or telecommunication service, or limitations of law,
regulations or rules of the Federal, state or local government or of any agency
thereof.
Section 9. Software and Other Intellectual Property.
9.1 Company Materials. To the extent the Company
possesses any ownership, license or other right (including any patent,
copyright, trademark, trade secret or other proprietary right) in any software,
equipment, data, information, process or material ("Company Materials"), it
shall retain such right or interest and, except as provided in this Section,
SCGroup shall not acquire any right or interest in such Company Materials
pursuant to this Agreement. The Company hereby grants to SCGroup, without
charge, the limited nonexclusive nontransferable right to access and use Company
Materials during the term of this Agreement as and to the extent necessary for
the performance of the Services.
9.2 SCGroup Materials. To the extent SCGroup possesses any
ownership, license or other right (including any patent, copyright, trademark,
trade secret or other proprietary right) in any software, equipment, data,
information, process or material ("SCGroup Materials") used in providing the
Services, it shall retain such right or interest and the Company shall not
acquire any right or interest in such SCGroup Materials pursuant to this
Agreement.
9.3 Intellectual Property Rights. If, in the course of
providing Services under this Agreement, the Company requests and SCGroup agrees
to develop any Software, process or other material to the specification of the
Company, not being SCGroup Materials or an enhancement of SCGroup Materials, and
the Company pays all of the Charges associated with such development ("Work
Product"), then all legal and beneficial ownership rights therein (including all
patent, copyright, trademark, trade secret or other proprietary rights) shall
belong to the Company. SCGroup hereby assigns to the Company all right, title
and interest that arises in SCGroup with respect to such Work Product, including
all the patent, copyright, trademark, trade secret or other proprietary rights
related thereto, and SCGroup agrees to take all reasonable steps and execute all
documents necessary to perfect title to such Work Product in the Company.
SCGroup shall be permitted to access and use such Software, process or other
material as and to the extent necessary for the provision of the Services.
9.4 SCGroup Ownership Rights. Except as provided for in
Section 9.3 above, all patent, copyright, trademark, trade secret or other
proprietary rights in any Software, process or other material created by
SCGroup, its employees or agents and all legal and beneficial rights therein
shall belong to SCGroup.
Section 10. Termination.
10.1 Termination for Cause. Either party may terminate this
Agreement, in whole or in part, by giving written notice to the other party, if
such other party materially breaches any of its duties or obligations set forth
herein and fails to cure such breach within thirty (30) days of written notice
of such breach. If less than all Services are terminated, the parties will
equitably adjust the Charges to be paid by the Company hereunder for the
remaining Services.
10.2 Terminate for Insolvency. Either party may terminate this
Agreement, upon written notice to the other party, if such other party (a) files
for bankruptcy; (b) becomes or is declared insolvent (c) is the subject of any
proceedings related to its liquidation or insolvency or the appointment of a
receiver or similar officer; (d) makes an assignment for the benefit of all or
substantially all of its creditors; or (e) enters into an agreement for the
composition, extension, or readjustment of substantially all of its obligations.
SECTION 11. DISCLAIMER AND LIMITATION OF LIABILITY AND INTELLECTUAL
PROPERTY CLAIMS BETWEEN PARTIES.
11.1 DISCLAIMER. EXCEPT AS SPECIFICALLY STATED IN THIS
AGREEMENT, NEITHER SCGROUP NOR THE COMPANY MAKES ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE
MERCHANTABILITY, SUITABILITY, ORIGINALITY, TITLE, OR FITNESS FOR A PARTICULAR
USE OR PURPOSE.
11.2 LIMITATION OF LIABILITY. IN NO EVENT SHALL A PARTY BE
LIABLE FOR INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. Additionally,
the total aggregate liability of either party for claims asserted by the other
party under or in connection with this Agreement, regardless of the form of the
action or the theory of recovery, shall be limited to the total Charges paid by
the Company to SCGroup during the 12 months preceding the event which is the
subject of the claim (the "Liability Cap"); provided, however, that the
Liability Cap shall not apply with respect to (i) claims that are the subject of
the indemnification provisions set forth herein, or (ii) any failure to pay
Charges due and owing to SCGroup under this Agreement.
Section 12. Indemnification.
12.1 By SCGroup. SCGroup shall indemnify, defend and hold
harmless the Company and its officers, directors, employees, agents, successors,
and assigns from any and all Losses attributable to third party claims arising
from willful misconduct or gross negligence by SCGroup in the performance of its
obligations under this Agreement.
12.2 By the Company. Except as provided in Section 12.1, the
Company shall indemnify, defend and hold harmless SCGroup and its officers,
directors, employees, agents, successors, and assigns from any and all Losses
attributable to third party claims arising under or in connection with this
Agreement.
Section 13. Relationship of the Parties.
13.1 Independent Contractor Status. SCGroup is an Independent
Contractor. This Agreement will not be construed as creating any partnership,
agency relationship or other form of legal association that would impose
liability upon one party for the other party's actions or failure to act. Nor
will this Agreement be construed as providing either party with the right, power
or authority (express or implied) to create any duty for, or obligation of, the
other party.
13.2 Responsibility for Employees. Each party will be
responsible for the management, direction and control of its employees and other
agents. All SCGroup employees used in performing SCGroup's obligations under
this contract shall be employed solely and exclusively by SCGroup, and all
Company employees used in performing the Company's obligations under this
Agreement shall be employed solely and exclusively by the Company. Thus, SCGroup
and the Company shall not be considered a joint or single employer of any
employee.
13.3 SCGroup Control of Services. Except where this Agreement
expressly provides that SCGroup will perform certain identified Services as
agent for the Company, the Services will be under the control, management and
supervision of SCGroup.
Section 14. Notices.
14.1 Manner of Delivery. Each notice, demand, request,
consent, report, approval or communication (each a "Notice") which is or may
be required to be given by either party to the other party in connection with
this Agreement and the transactions contemplated hereby, shall be in writing,
and given by telecopy, personal delivery, receipted delivery service, or by
certified mail, return receipt requested, prepaid and properly addressed to
the party to be served.
14.2 Addresses. Notices shall be addressed as follows:
If to the Company:
Homestead Village Incorporated
0000 Xxxxxx Xxxxxx Xxxxxx
Xx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
If to SCGroup:
SCGroup Incorporated
0000 Xxxxxx Xxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
14.3 Effective Date of Notice. Notices shall be effective on
the date sent via telecopy, the date delivered personally or by receipted
delivery service, or three (3) days after the date mailed.
14.4 Change of Address. Each party may designate by notice to
the others in writing, given in the foregoing manner, a new address to which
any notice may thereafter be so given, served or sent.
Section 15. Entire Agreement. This Agreement, together with the
Schedules hereto, constitutes and sets forth the entire agreement and
understanding of the parties pertaining to the subject matter hereof, and no
prior or contemporaneous written or oral agreements, understandings,
undertakings, negotiations, promises, discussions, warranties or covenants not
specifically referred to or contained herein or attached hereto shall be valid
and enforceable. No supplement, modification, termination in whole or in part,
or waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provision hereof (whether or not similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section 16. Priority. If there is any apparent conflict or
inconsistency between the provisions set forth in this Agreement, and the
provisions set forth in any schedule, exhibit, attachment or supplement
attached hereto, to the extent possible such provisions will be interpreted in
a manner so as to make them consistent. If it is not possible to interpret
such provisions consistently, the provisions set forth in the body of this
Agreement will prevail.
Section 17. No Third Party Beneficiaries. The parties do not
intend, nor will any clause of this Agreement be interpreted to create, for
any third party any obligation to or benefit from the Company or SCGroup.
Section 18. Survival. All provisions of this Agreement which
contemplate performance or observance following the expiration or earlier
termination of this Agreement, will survive any such expiration or earlier
termination. Additionally, all provisions of this Agreement will survive the
expiration or earlier termination of this Agreement to the fullest extent
necessary to give the parties the full benefit of the bargain expressed
herein.
Section 19. Consents and Approvals. Where agreement, approval,
permission, acceptance, consent or similar action by either party is required
by any provision of this Agreement, such action will not be unreasonably
delayed, conditioned or withheld.
Section 20. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, each of their respective
successors and permitted assigns, but may not be assigned by either party
without the prior written consent of the other party, and no other persons
shall have or derive any right, benefit or obligation hereunder.
Section 21. Headings. The headings and titles of the various
paragraphs of this Agreement are inserted merely for the purpose of
convenience, and do not expressly or by implication limit, define, extend or
affect the meaning or interpretation of this Agreement or the specific terms
or text of the paragraph so designated.
Section 22. Governing Law. This Agreement shall be governed
in all respects, whether as to validity, construction, capacity,
performance or otherwise, by the laws of the State of Texas.
Section 23. Severability. If any provision of this Agreement shall be
held invalid by a court with jurisdiction over the parties to this Agreement,
then and in that event such provision shall be deleted from the Agreement,
which shall then be construed to give effect to the remaining provisions
thereof. If any one or more of the provisions contained in this Agreement or
in any other instrument referred to herein shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, then in that event, to
the maximum extent permitted by law, such invalidity, illegality or
enforceability shall not affect any other provisions of this Agreement or any
other such instrument.
Section 24. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but
all of which taken together shall be considered one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HOMESTEAD VILLAGE INCORPORATED
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Managing Director
SCGROUP INCORPORATED
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Managing Director
