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EXHIBIT 10.5
INFORMATION TECHNOLOGY SERVICES AGREEMENT
THIS INFORMATION TECHNOLOGY SERVICES AGREEMENT ("Agreement") dated as
of July 19, 1999, is entered into by SHOPKO STORES, INC., a Wisconsin
corporation ("ShopKo"), and PROVANTAGE HEALTH SERVICES, INC., a Delaware
corporation ("ProVantage").
RECITALS
WHEREAS, ShopKo, through its indirect, wholly-owned subsidiary
ProVantage, provides health benefit management and health information technology
products and services to the health care industry (the "ProVantage Business");
and
WHEREAS, this Agreement is entered into in conjunction with an initial
public offering of ProVantage's Class A common stock, $.01 par value per share
(the "ProVantage IPO"); and
WHEREAS, after the ProVantage IPO, ProVantage will continue to need
certain information technology services, products and support to be provided by
ShopKo to ProVantage with respect to the operation of the ProVantage Business
for a period of time from and after the Closing Date (as hereafter defined); and
WHEREAS, the parties desire to enter into an agreement to provide for
such services.
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the indicated
meanings:
"Affiliate" means, with respect to a specified Person, any Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the specified Person.
"Base Fee" means the amount identified on Exhibit A attached hereto.
The Base Fee shall be paid for the Services described hereunder, exclusive of
any Service Upgrades.
"Closing Date" means the date the ProVantage IPO is consummated.
"Data" means all data used in the ProVantage Business, whether owned by
ProVantage or by a ProVantage customer, which is provided to ShopKo in
connection with the Services.
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"FTE" means the equivalent of a full time employee. For purposes of
this Agreement, an FTE shall be equal to 154 work hours per month.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization, limited liability company or other business
entity.
"ProVantage Confidential Information" means Data and other confidential
data provided by ProVantage or ProVantage's customers to ShopKo in accordance
with this Agreement; and any information with respect to ProVantage's
information systems operations, including without limitation all information
with respect to the ProVantage Hardware and the ProVantage Software.
"ProVantage Hardware" means the computer equipment and
telecommunications equipment owned or leased by ProVantage from time to time
during the term of this Agreement and used by ShopKo to provide the Services to
ProVantage.
"ProVantage Software" means the software owned or licensed by
ProVantage from time to time during the term of this Agreement and used by
ShopKo to provide the Services to ProVantage.
"Services" means those data processing and related information
technology services to be conducted by ShopKo on behalf of ProVantage as set
forth on Exhibit B attached hereto, and as the same may be amended and revised
from time to time.
"ShopKo Confidential Information" means any and all information with
respect to ShopKo's information systems operations, including without limitation
all information with respect to the ShopKo Hardware and the ShopKo Software.
"ShopKo Hardware" means the computer equipment and telecommunications
equipment owned or leased by ShopKo from time to time during the term of this
Agreement and used to provide the Services to ProVantage. The current ShopKo
Hardware is identified on Exhibit A attached hereto.
"ShopKo I.S. Employees" means the computer operators, operating systems
technicians, help desk staff, end user support staff, LAN administrators,
telecom analysts and other individuals who are employed or contracted by ShopKo
and who are made available to provide the Services to ProVantage. The number of
ShopKo I.S. Employees in the various areas who will provide Services hereunder
for and in consideration of the Base Fee are identified on Exhibit A attached
hereto.
"ShopKo Software" means the software owned or licensed by ShopKo from
time to time during the term of this Agreement and used to provide the Services
to ProVantage. The current ShopKo Software is identified on Exhibit A attached
hereto.
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"Transition Period" means the 180 day period following the date on
which (i) this Agreement expires or is terminated, or (ii) any of the Services
are terminated pursuant to Section 15.1(c) of this Agreement.
ARTICLE II
TERM
The initial term of this Agreement shall commence on the Closing Date
and, except as otherwise provided below, continue until January 31, 2001. This
Agreement shall be renewed automatically thereafter for successive one-year
terms unless either ProVantage or ShopKo elects not to renew this Agreement by
giving the other party written notice of its intention not to renew the
Agreement not less than one hundred eighty (180) days prior to the end of the
then current term. Either party may terminate any specified Service under the
prior notice provision in Section 15.1(c).
ARTICLE III
SERVICES
Section 3.1. Provision of Services. In consideration of the Base Fee,
ShopKo agrees to provide to ProVantage the Services during the term of this
Agreement. The entire Base Fee shall be charged regardless of whether all of the
Services have been utilized in any given period.
Section 3.2 Hardware and Software. In providing the Services to
ProVantage, ShopKo shall utilize the ProVantage Hardware, ShopKo Hardware,
ProVantage Software, and ShopKo Software to the same extent such hardware and
the software have been utilized prior to the date of this Agreement; provided,
however, that ShopKo may provide the Services with different or additional
computer equipment and/or software.
Section 3.3 ShopKo I.S. Employees. ShopKo shall make the ShopKo I.S.
Employees available to provide the Services to ProVantage to the same extent
such employees were made available to ProVantage prior to the date of this
Agreement provided, however, that ShopKo shall only be required to provide the
number of FTEs of each of these ShopKo I.S. Employees as set forth on Exhibit A.
ShopKo and ProVantage acknowledge that the employees constituting the "ShopKo
I.S. Employees" are likely to change from time to time, and that at certain
times it is possible that staffing shortages may exist. ProVantage acknowledges
that some of the ShopKo I.S. employees may be independent contractors or
subcontractors.
Section 3.4. Access. ProVantage shall provide ShopKo and its employees
and agents access to ProVantage's facilities as necessary to provide ProVantage
with the Services. ShopKo shall provide ProVantage and its employees and agents
access to ShopKo's facilities on a basis consistent with past practices.
Section 3.5. Modifications, Upgrades, etc. The parties acknowledge that
modifications, upgrades, and additions to the ShopKo Hardware, the ProVantage
Hardware, the ShopKo Software and the ProVantage Software and additional ShopKo
I.S. Employees may be necessary
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to adequately service the ProVantage Business due to additional customers, new
services, acquisitions, technological changes, competitive pressures or
otherwise (collectively, "Service Upgrades"). Charges for Service Upgrades are
not included in the Base Fee. The parties agree to negotiate in good faith
regarding any Service Upgrades. It is the intention of the parties that to the
extent practicable, ShopKo will use reasonable efforts to provide ProVantage
with any reasonable Service Upgrades requested by ProVantage, and that the
parties will negotiate reasonable fees, reimbursement rates or other charges to
adequately compensate ShopKo for the Service Upgrades. The rates and fees listed
on Exhibit A as components of the Base Fee were derived as incremental costs to
ShopKo only, and many of these rates and fees do not reflect capitalization, or
other amortization allocation of significant initial investments made by ShopKo.
Accordingly, rates and fees for Service Upgrades could vary significantly from
those set forth on Exhibit A.
Unless otherwise expressly agreed by ProVantage and ShopKo, ProVantage
shall have sole financial responsibility for any modifications, upgrades or
additions to the ProVantage Hardware and the ProVantage Software.
Section 3.6. Subsidiaries. The parties hereto agree that (i) the
Services to be provided to ProVantage under this Agreement will, at ProVantage's
request, be provided to subsidiaries of ProVantage and (ii) ShopKo may satisfy
its obligation to provide or procure the Services hereunder by causing one or
more of its subsidiaries to provide or procure such Services. With respect to
Services provided to, or procured on behalf of, any subsidiary of ProVantage,
(i) ProVantage agrees to pay on behalf of such subsidiary all amounts payable by
or in respect of such Services and (ii) references in this Agreement to
ProVantage shall be deemed to include such subsidiary.
ARTICLE IV
PERFORMANCE
Section 4.1. Standard of Performance; Remedies; Consequential Damages.
In performing its obligations under this Agreement, ShopKo represents that it
will use the same standard of care and good faith as it uses in performing
services for its own account. ShopKo agrees to exercise reasonable diligence to
correct errors or deficiencies in the Services provided by it hereunder. EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SHOPKO MAKES NO REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ARISING OUT OF THIS AGREEMENT AND THE SERVICES TO BE PROVIDED
HEREUNDER. The sole remedy of ProVantage for any claim relating to the
performance or nonperformance of the Services shall be a refund by ShopKo to
ProVantage of any charges or fees paid for the applicable Services. In addition,
in no event shall either party be liable to the other for special, punitive,
incidental or consequential damages arising out of this Agreement.
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Section 4.2. Annual and Interim Reviews. On or about the first
anniversary of the Closing Date and annually thereafter until termination,
ShopKo and ProVantage agree that they will review the scope and pricing of the
Services being provided as of the applicable annual review date. Interim reviews
may also be scheduled by either party upon providing 30 days advance written
notice. Each such review and any resulting amendment of the Services and the
fees therefor will be undertaken in good faith and with as much advance
notification, lead time and discussion as is reasonable under the circumstances,
in the spirit of providing appropriate services to ProVantage at a fair cost and
without undue burden to ShopKo. Accordingly, before any termination or
significant alteration of the scope of Services is made, the parties shall take
into account all elements of cost, inconvenience and other direct and indirect
impact on both parties of terminating or altering the Services. Consent to
terminate or alter the scope of the Services will not be unreasonably withheld
by either party.
ARTICLE V
SUBCONTRACTING
Section 5.1. Subcontractors. ShopKo may hire or engage one or more
subcontractors to perform any or all of its obligations under this Agreement.
ShopKo shall promptly notify ProVantage of its intent to enter into any
subcontract. ShopKo is responsible for monitoring and managing the performance
of all subcontractors. ShopKo shall require such subcontractors, as a condition
to their engagement, to agree to be bound by the provisions substantially
identical to those included in this Agreement. Subject to Section 4.1 hereof,
ShopKo shall in all cases remain primarily responsible for all obligations
undertaken by it in this Agreement with respect to the scope, quality and nature
of the Services provided to ProVantage. If, as the result of ShopKo's
subcontracting any Service, the performance of that Service falls below the
level of ShopKo's previous actual, typical performance, then ShopKo shall work
with the subcontractor to restore the performance of that Service to such
previous actual, typical performance level. Even if an inadequacy in a
subcontractor's performance does not amount to a breach of this Agreement or
inadequate performance, if ProVantage is dissatisfied with the performance of
any subcontractor, ProVantage shall promptly notify ShopKo and ShopKo and
ProVantage shall discuss means to resolve ProVantage's dissatisfaction.
ARTICLE VI
FEES
Section 6.1. Payment. ProVantage agrees that in consideration of the
Services described in this Agreement, ProVantage shall pay ShopKo the Base Fee
as amended and revised from time to time by mutual agreement. ProVantage shall
also pay ShopKo for all Service Upgrades in accordance with agreed upon rates
and fees. In addition, ProVantage shall reimburse ShopKo for all direct and
identifiable costs and third-party disbursements incurred by ShopKo in
performing the Services, provided ProVantage has approved any such costs and
disbursements in advance. In the event that any Services are terminated during a
fiscal year, payments shall be made for such Services through the effective date
of cancellation, said payments to be a pro rata
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portion of the charges for such Services. ProVantage shall also pay ShopKo for
any pre-approved costs or disbursements, plus costs associated with ShopKo
Hardware or ShopKo Software purchases or other long-term commitments or
investments made by ShopKo in reliance upon this Agreement, provided ProVantage
has approved any such costs, commitments or investments in advance. The parties
acknowledge that no such costs, commitments or investments exist as of the date
of this Agreement.
Section 6.2. Payments For Third Party Software Upon Disaffiliation. If
ProVantage and ShopKo cease to be Affiliates, ProVantage shall pay such license
fees, and any applicable or related taxes, for the Software as are required by
the third party to enable ShopKo to continue to provide the Services.
ARTICLE VII
INVOICES AND PAYMENT
Section 7.1. Billing and Payment. ProVantage shall pay the Base Fee for
Services rendered within each month during the term of this Agreement within
thirty (30) calendar days after the end of each such month. No invoices for the
Base Fee shall be sent, and no backup documentation shall be required for the
Services included in the Base Fee.
The fees for Service Upgrades shall be invoiced monthly by the
thirtieth (30th) calendar day of the calendar month next following the calendar
month in which the Service Upgrades were performed. Such invoices shall specify
the value of Service Upgrades determined in accordance with the agreed upon
arrangements, and shall be accompanied by supporting detail, and shall be due
and payable thirty (30) days from receipt thereof.
ARTICLE VIII
TRANSFER AND PROPERTY TAXES
Section 8.1. Allocation Of Responsibility For Certain Taxes. ProVantage
will reimburse ShopKo for all sales, use or excise taxes levied on amounts
payable by ProVantage to ShopKo pursuant to this Agreement, provided that
ProVantage shall not be responsible for remittance of such taxes to applicable
tax authorities. ProVantage shall not be responsible for any ad valorem, income,
franchise, privilege, value added or occupational taxes of ShopKo. ShopKo shall
cooperate with ProVantage's efforts to identify taxable and nontaxable portions
of amounts payable pursuant to this Agreement (including segregation of such
portions on invoices) and to obtain refunds of taxes paid, where appropriate.
ProVantage may furnish ShopKo with certificates or other evidence supporting
applicable exemptions from sales, use or excise taxation.
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ARTICLE IX
OWNERSHIP OF DATA
Section 9.1. Ownership Of Data. The Data is the exclusive property of
ProVantage or its customers. Any data about which there is an ambiguity as to
ownership shall be treated as Data and subject to the provisions of this
Agreement until its ownership is resolved. This Agreement does not purport to
address the ownership of any data other than Data.
Section 9.2. Use of Data. ShopKo shall use the Data only in providing
Services pursuant to this Agreement. Except as otherwise expressly agreed in
writing, ShopKo shall not and shall not attempt to sell, license, provide,
disclose, use, pledge, hypothecate, and/or in any other way transfer the Data.
All such attempts shall be void and without legal effect. ShopKo may use the
Data for such other purposes as ProVantage and ShopKo may agree in writing.
Section 9.3. Risk of Data Loss. When Data is in ShopKo's possession or
under ShopKo's control and an event occurs that prevents or hinders the access
to or reliable use of such data, ShopKo shall use reasonable efforts to cure and
re-create or restore such data as promptly as practicable.
Section 9.4. Data Security. ShopKo shall maintain safeguards for
protecting against the loss and disclosure of the Data no less rigorous than
such safeguards as are in effect on the Closing Date. ShopKo acknowledges that
as a holder or recipient of health care claims information, ProVantage is and
shall continue to be subject to special restrictions regarding the treatment and
handling of the data. ShopKo agrees to comply with all reasonable requests made
by ProVantage in this regard, provided that any incremental costs incurred by
ShopKo associated with such requests shall be billed to ProVantage as costs of
Service Upgrades.
Section 9.5. Media Containing Data. As between ProVantage and ShopKo,
ProVantage is the exclusive owner of all Data recorded on any media irrespective
of which party owns the media.
ARTICLE X
SOFTWARE PROTECTION
Section 10.1. Protection of Software Rights Against Third Parties. If
either party to this Agreement shall become aware of any infringement or
misappropriation by any third party of the intellectual property rights of the
other party, it shall promptly give notice to the other party of such
infringement or misappropriation. The owner of such intellectual property may,
at its expense, institute suit against such third party, and the other party
shall fully cooperate with the owner to enjoin such infringement or
misappropriation and if reasonably necessary, shall, if requested, join with the
owner as a party to any action brought by the owner for such purpose. The owner
shall bear all expenses connected with such suit, provided, however, that if the
other party desires to retain its own counsel, it shall do so at its own cost
and expense. Each party hereby agrees to defend, indemnify and hold harmless the
other party for any costs, losses, or
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expenses related to any claim of infringement or misappropriation of the
indemnifying party's intellectual property.
ARTICLE XI
SOFTWARE OWNERSHIP
Section 11.1. Software Ownership. ShopKo acknowledges that is has no
ownership interest in the ProVantage Software. ProVantage acknowledges that it
has no ownership interest in the ShopKo Software. If during the term of this
Agreement ShopKo or ProVantage develops, purchases or licenses software which is
utilized by ShopKo to provide the Services to ProVantage, such software shall be
the property of ShopKo or ProVantage, respectively and shall be considered
"ShopKo Software" or "ProVantage Software", respectively for purposes of this
Agreement unless ShopKo and ProVantage agree otherwise in writing.
ARTICLE XII
CONFIDENTIAL INFORMATION
Section 12.1. Confidential Information. Except as otherwise provided in
this Agreement, the ProVantage Confidential Information and the ShopKo
Confidential Information (collectively, the "Confidential Information") is
proprietary to ProVantage and ShopKo, respectively, and may not be used by the
other party hereto except to carry out the parties' respective obligations under
this Agreement.
Section 12.2. Excluded Information. Information is not considered
Confidential Information to the extent that such information:
(a) is or becomes publicly available other than as a result
of any breach of this Agreement;
(b) is or becomes available to a party from a source that, to
that party's knowledge, is lawfully in possession of that information
and is not subject to a duty of confidentiality, which is violated by
that disclosure; or
(c) is independently developed without reference to the
Confidential Information.
Section 12.3. Standard Of Care. Except as otherwise set herein, each
party shall use at least the same degree of care in maintaining the
confidentiality of the other party's Confidential Information as is normally
used with respect to its own proprietary or confidential information.
Section 12.4. Permitted Disclosures. Either party may disclose
Confidential Information to its respective employees or agents, on a
need-to-know basis, in order to fulfill its obligations under this Agreement.
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Section 12.5. Required Disclosures. Either party may disclose
Confidential Information in response to a request for disclosure by a court or
another governmental authority, including a subpoena, court order, or
audit-related request by a taxing authority. Either party may also make
disclosures of Confidential Information as may be required under applicable
securities laws or the rules and regulations of each party's respective stock
exchange. Prior to any disclosure of Confidential Information pursuant to this
Section, however, the disclosing party shall make a good faith attempt to notify
the other party in advance to allow the non-disclosing party the opportunity to
seek a protective order or other injunctive relief.
Section 12.6. Confidentiality And Third Parties. If ShopKo engages a
subcontractor to perform any of its obligations under this Agreement and such
subcontractor has access to ProVantage Confidential Information, ShopKo shall
advise such subcontractor of the confidentiality requirements of this Agreement.
Section 12.7. Irreparable Harm. The parties acknowledge that any
disclosure or misappropriation of Confidential Information in violation of this
Agreement could cause irreparable harm, the amount of which may be extremely
difficult to estimate, thus making any remedy at law or in damages inadequate.
Each party therefore agrees that the other party shall have the right to apply
to any court of competent jurisdiction for a temporary or provisional order
restraining any breach or impending breach of this Article XII. This right shall
be in addition to any other remedy available under this Agreement.
ARTICLE XIII
KEY EMPLOYEES
Section 13.1 Employees. During the term of this Agreement and for a
period of two years thereafter:
(a) neither ProVantage nor any of its direct or indirect
subsidiaries (whether now owned or hereafter acquired) shall solicit
for hire any employees of ShopKo or any of ShopKo's direct or indirect
subsidiaries (other than ProVantage and its subsidiaries), and
(b) neither ShopKo nor any of its direct or indirect
subsidiaries (other than ProVantage and its subsidiaries) shall solicit
for hire any employees of ProVantage or any of its direct or indirect
subsidiaries.
This covenant may be waived only with the prior written consent of the other
party.
Nothing in this Article XIII shall be deemed or construed to prevent
solicitation, recruitment or hiring of any employee of the other party who first
initiates contact with the soliciting, recruiting or hiring party, provided that
neither party shall engage in any activity intended to encourage the other
party's employees to initiate such contact. General advertisements shall not be
deemed violative of this restriction.
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ARTICLE XIV
FORCE MAJEURE AND DISASTER RECOVERY
Section 14.1. Force Majeure. Each party shall be excused for failure to
perform any part of this Agreement due to events beyond its control, including
but not limited to fire, storm, flood, earthquake, explosion, accident, riots
and other civil disturbances, sabotage, strikes or other labor disturbances,
injunctions, transportation embargoes or delays, failure of performance of third
parties necessary for the parties' performance under this Agreement (other than
third parties engaged by ShopKo pursuant to Article V), or the laws or
regulations of the federal, state or local government or breach or agency
thereof; provided, however, no force majeure event shall excuse the obligation
of the party claiming the benefit of a force majeure event from paying the
applicable fees for any services provided by the other party.
ARTICLE XV
TERMINATION
Section 15.1. Termination. This Agreement and the scope of the
Services may be reduced, suspended, or terminated as follows:
(a) Either party hereto may terminate this Agreement
immediately upon written notice to the other party (i) in the event of
the other party's voluntary bankruptcy or insolvency, (ii) in the event
that the other party shall make an assignment for the benefit of
creditors, or (iii) in the event that a petition shall have been filed
against the other party under a bankruptcy law, a corporate
reorganization law or any other law for relief of debtors (or other law
similar in purpose or effect).
(b) If either party hereto (the "Defaulting Party") shall fail
adequately to perform in any material respect any of its material
obligations under this Agreement, whether voluntarily or involuntarily
or as a result of any law or regulation or otherwise, the other party
hereto shall have the option to terminate this Agreement upon sixty
(60) days' written notice (which shall be reduced to thirty (30) days'
written notice in the event of a failure to make payment in accordance
with the terms hereof) to the Defaulting Party specifying the respects
in which the Defaulting Party has so failed to perform its obligations
under this Agreement, unless during such period the Defaulting Party
shall have substantially remedied the default therein specified.
(c) Either party may, at any time prior to the expiration of
this Agreement or any extension thereof, terminate any of the Services
upon one hundred twenty (120) days' prior written notice from the party
desiring such termination. For purposes of this Section 15.1(c),
Services may only be terminated to the extent such Services can
reasonably be discontinued without additional cost to ShopKo. If this
Agreement is terminated by ProVantage pursuant to this Section 15.1(c),
ProVantage shall reimburse ShopKo for any costs associated with ShopKo
Hardware or ShopKo Software purchases
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or other long-term commitments made by ShopKo in reliance upon the
existence of this Agreement. Additionally, ProVantage shall be
responsible for all costs related to any commitments made by ShopKo
with respect to all previously agreed upon Service Upgrades.
ARTICLE XVI
TRANSITION ASSISTANCE; SURVIVAL
Section 16.1. Transition Assistance By ShopKo. Upon expiration or
termination of this Agreement for any reason whatsoever, or upon termination of
any of the Services pursuant to Section 15.1(c) above, ProVantage and ShopKo
agree that ShopKo shall provide assistance to ProVantage to obtain services to
replace the affected Services in accordance with this Section 16.1.
A. During the Transition Period, ShopKo shall provide to
ProVantage all assistance reasonably requested by ProVantage to allow
the Services to continue without interruption or adverse effect and to
facilitate the orderly transfer of responsibility for the Services.
Services provided during the Transition Period will be provided by
ShopKo at the rates then in effect pursuant to this Agreement.
B. ShopKo may provide transition assistance after the
Transition Period at market rates. ShopKo shall endeavor to utilize any
existing ShopKo resources and personnel to provide this assistance and
the services in Subsection C below, to the extent reasonably possible.
If the assistance requires resources in addition to those regularly
used in the daily performance of Services, ProVantage will pay ShopKo
for such assistance on a time and materials basis.
C. Upon expiration or termination of this Agreement or with
respect to any particular Data, on such earlier date that the same
shall be no longer required by ShopKo in order for it to render the
Services hereunder, such Data shall be, at ProVantage's election and
expense, (i) erased from the data files maintained by ShopKo, or (ii)
returned to ProVantage by ShopKo in a form reasonably requested by
ProVantage.
Section 16.2. Survival. Articles IX, X, XI, XII and XVI of this
Agreement shall survive the termination or expiration of this Agreement.
ARTICLE XVII
AUDITING RIGHTS
Section 17.1. Operational Audit. ProVantage and its representatives, at
ProVantage's expense and upon reasonable notice to ShopKo, shall have the right
to conduct an audit of ShopKo's operations used in providing the Services (i) on
an annual basis and (ii) more frequently as reasonably requested by ProVantage
to the extent that such audit will not unreasonably disrupt the operations of
ShopKo, in order to verify that ShopKo is exercising
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reasonable operational procedures in accordance with the customary standards of
the health benefit management and healthcare information technology industries
in its performance of the Services. ShopKo will provide ProVantage and its
representatives access to the ShopKo facilities at which ShopKo is performing
the Services, to ShopKo's personnel engaged in performing the Services, to
existing Data and work product located at ShopKo facilities and to reasonably
related documentation. ShopKo will provide to ProVantage and its representatives
any assistance that they reasonably require in connection therewith at no
additional charge to ProVantage, provided, however, that ProVantage shall pay
ShopKo, at rates then in effect pursuant to this Agreement, for any technical
resources and application development time used by ShopKo and any other
reasonable additional costs of ShopKo necessary for the audit and not otherwise
provided to ProVantage hereunder.
Section 17.2. Record-Keeping Audits of Charges. ShopKo shall maintain
complete and accurate books, records and accounts to support and document all
charges to ProVantage for Service Upgrades. ShopKo shall retain such records for
three (3) years after creation, or for such longer period as required to comply
with government requirements, as directed in writing by ProVantage. ShopKo shall
permit ProVantage or its representatives access to ShopKo's facilities to
perform an audit of ShopKo's records to the extent necessary to verify ShopKo's
charges billed to ProVantage (i) on an annual basis and (ii) more frequently as
reasonably requested by ProVantage if and to the extent that such audit will not
unreasonably disrupt the operations of ShopKo.
ARTICLE XVIII
NOTICES AND OTHER COMMUNICATIONS
Section 18.1. Notice. Any notice, request, designation, direction,
demand, election, acceptance or other communication shall be in writing and
shall be effective and deemed to have been given when it is (i) mailed postage
prepaid, by certified first class mail, return receipt requested, addressed to a
party and received by such party; (ii) hand or courier delivered; or (iii) sent
by telecopy with receipt confirmed, as follows:
If to ShopKo,
ShopKo Stores, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Information Officer
cc: General Counsel
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If to ProVantage,
ProVantage, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Information Officer
cc: Legal Department
Any party may from time to time designate another address to which
notice or other communication shall be addressed or delivered to such party and
such new designation shall be effective on the later of (i) the date specified
in the notice or (ii) receipt of such notice by the intended recipient.
ARTICLE XIX
MISCELLANEOUS PROVISIONS
Section 19.1. Independent Parties. ShopKo shall perform the Services
hereunder as an independent contractor. Nothing in this Agreement shall
constitute or be deemed to constitute a partnership or joint venture between the
parties hereto, constitute or be deemed to constitute any party as the agent or
employee of the other party for any purpose whatsoever and neither party shall
have authority or power to bind the other or to contract in the name of, or
create a liability against, the other in any way or for any purpose. Each party
shall be responsible for any injury or death to its own employees, including all
workers' compensation claims or liabilities resulting therefrom, and each such
party shall remain responsible for reporting its income and paying its own
taxes.
Section 19.2. Assignment. Except as otherwise provided in this Section
19.2, neither party may assign any of its rights or delegate any of its duties
or obligations under this Agreement without the other party's consent.
ProVantage may assign its rights and delegate its duties and obligations under
this Agreement as a whole or as part of the sale or transfer of all or
substantially all of its assets and business, including by merger or
consolidation, to a Person (i) that assumes and has the ability to perform
ProVantage's duties and obligations under this Agreement; and (ii) the core or a
principal part of the business of which is not competitive with the core or a
principal part of the business of ShopKo. ShopKo may assign its rights and
delegate its duties and obligations under this Agreement as a whole or as part
of the sale or transfer of all or substantially all of its assets and business
involved in any manner in providing Services, including by merger or
consolidation, to a Person (a) that assumes and has the ability to perform
ShopKo's duties and obligations under this Agreement; and (b) the core or a
principal part of the business of which is not competitive with the core or a
principal part of the business of ProVantage. Any attempted assignment or
delegation of any rights, duties, or obligations in violation of this Section
19.2 shall be void and without effect. Nothing in this Section 19.2, however,
precludes ShopKo from subcontracting the performance of any of the Services as
13
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permitted by this Agreement or precludes ProVantage from extending the right to
receive the Services to its Affiliates.
Section 19.3. Amendment And Waiver. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties, or in the case of a waiver, by the party waiving compliance. Any waiver
by either party hereto of any condition, or of the breach of any provision or
term in any one or more instances shall not be deemed to be nor construed as a
further or continuing waiver of any such condition, or of the breach of any
other provision or term of this Agreement.
Section 19.4. Integration. This Agreement supersedes any and all
prior or contemporaneous oral agreements or understandings between the parties
regarding the subject matter of this Agreement.
Section 19.5. Severability. If any term or condition of this
Agreement shall be held invalid in any respect, such invalidity shall not affect
the validity of any other term or condition hereof.
Section 19.6. Successors. This Agreement binds and inures to the
benefit of the parties and their respective legal representatives, successors,
and permitted assigns.
Section 19.7. Applicable Law. This Agreement shall be construed under
the laws of the State of Wisconsin and the rights and obligations of the parties
shall be determined under the substantive law of Wisconsin, without giving
effect to Wisconsin's conflict of law rules or principles.
Section 19.8. Reasonableness. As concerns every provision of this
Agreement, ShopKo and ProVantage agree to act reasonably and in good faith
unless a provision expressly states that ProVantage or ShopKo may act in its
sole discretion.
Section 19.9. Counterparts. This Agreement may be executed in two
counterparts, each of which shall constitute an original, and both of which,
when taken together, shall constitute one and the same instrument.
Section 19.10. Further Assurances. Each party shall take such actions,
upon request of the other party and in addition to the actions specified in this
Agreement, as may be necessary or reasonably appropriate to implement or give
effect to this Agreement.
Section 19.11. No Third Party Beneficiaries. Each of the provisions of
this Agreement is for the sole and exclusive benefit of the parties hereto
respectively, as their interests may appear, and shall not be deemed for the
benefit of any other person or entity or group of persons or entities.
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Section 19.12. Construction. Descriptive headings to sections and
paragraphs are for convenience only and shall not control or affect the meaning
or construction of any provisions in this Agreement.
Section 19.13. Look-Back. The parties acknowledge that the intent of
this Agreement is to accurately capture the scope and nature of the information
technology services being performed as of the date hereof, so that such services
may continue uninterrupted for the term of this Agreement. Both parties have
made a good faith attempt to identify all of the information technology services
provided to ProVantage by ShopKo. If, however, it is later determined that the
parties unintentionally omitted a description of services or charges erefor,
both parties shall negotiate in good faith to amend this Agreement to include
such services and charges, and charges and credits for such additional services
shall be retroactive back to the commencement date of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties as of the date first written
above.
SHOPKO STORES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Senior Vice President
PROVANTAGE HEALTH SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and
Chief Operating Officer
15
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EXHIBIT A
Base Fee
MONTHLY ANNUAL
FEE IN $'S FEE IN $'S
---------- ----------
ShopKo IS Employees
Job Category FTE
Telecommunications 0.50 2,684 32,213
Technical Services - MVS 0.15 930 11,165
Technical Services - RS/6000 SP 0.50 3,253 39,041
Technical Services - AS/400 2.00 9,375 112,503
Technical Services - Internet/Intranet 0.50 3,253 39,041
Technical Services - Security 0.30 1,287 15,439
Production Control & Operations 0.75 2,198 26,372
Help Desk 0.25 698 8,372
End User Service Analyst 1.50 7,360 88,320
---------------------------------------------------------------------------------------------------------------------------
TOTAL SHOPKO IS EMPLOYEES 31,038 372,466
-------- ---------
ShopKo Hardware Description
---------------------------------------------------------------------------------------------------------------------------
IBM RS/6000 43P External Firewall 4 44
IBM RS/6000 E20 Primary public webserver 4 44
IBM RS/6000 360 Internal Firewall 4 44
IBM RS/6000 360 Internal ACEServer 56 678
Nortel Option 81C GO/ProVantage-North telephone system 56 667
Centigram Series 6 Model 640 GO/ProVantage-North voice mail system 35 417
MultiLink System 70 Audio conference bridge 69 833
Cisco 7000 Client router 1,333 16,000
Cisco 2501 GO Internet router 1 10
Cisco 7513 Core router 192 2,300
IBM 0000-X00 Xxxxxxxxx 156 1,878
Proliant 1600 Netware file server 42 500
---------------------------------------------------------------------------------------------------------------------------
TOTAL SHOPKO HARDWARE $ 1,951 $ 23,415
-------- ---------
ShopKo Software
---------------------------------------------------------------------------------------------------------------------------
Computer Associates
- CA-Prevail/XP-Jobtrac remote AIX - SP2 9 102
- CA-Prevail/XP-Jobtrac remote AIX - 370 0 6
- CA-View VTAM interface 1 17
- CA-View - ERO option 3 40
- CA-Deliver MVS 11 134
- CA-Deliver VTAM interface 1 17
- CA-View MVS 7 87
VPS
- VPS base 5 58
- VPS VMCF/VTAM 1 14
- VPS Report Browse 2 19
- VPS PC 0 6
- VPS/TCPIP 3 33
Oracle
- Oracle DB 3,750 45,000
- Oracle 7.1 development 4 45
Others
- Security Dynamics - Secur-id 47 563
-Xxxxxx 280 3,360
-Integral 33 394
-Ab initio 41 495
-SQL Backtrac 482 5,781
-MicroStrategy DSS Agent/Server/Web 2,667 32,000
-IBM Operating System Software 353 4,230
-Groupwise 2,479 29,750
-Netware 4,083 49,000
---------------------------------------------------------------------------------------------------------------------------
TOTAL SHOPKO SOFTWARE $ 14,263 $ 171,151
-------- ---------
Other Services
---------------------------------------------------------------------------------------------------------------------------
Tape Vaulting 210 2,520
I.S. Disaster Recovery Service 5,100 61,200
AIX Support line 3,333 40,000
---------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER SERVICES $ 8,643 $ 103,720
-------- ---------
---------------------------------------------------------------------------------------------------------------------------
BASE FEE $ 55,895 $ 670,752
===========================================================================================================================
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EXHIBIT B
Operating, Monitoring, And Communicating The Status Of Systems
- Monitor claims processing
- 1st shift daily sign on to AS/400 and AMS to verify communication
- Ping ProVantage benefits, 1st shift each day
- Verify ProVantage mail order programs are running
- Track disk usage
- Tack system up time
- Verify on-line systems are up
- Execute production schedule for ProVmed, ProVRx and other HIT systems
- Operate Data Center hardware
- Operate BBS for ProVantage
Administering Information, Systems, And Services
- Maintain shrink wrapped/turnkey applications
- Maintain AS/400 & OS/400
- Maintain DOS with VPS-PC
- Maintain Openview
- Work with vendors to apply fixes to OS and turnkey software
- Maintain long distance dialing plan and access codes
- Loaner PC checkout/administration
- Loaner pager checkout/administration
- Loaner cell phone checkout/administration
- Administer operations inventory IS equipment
- Order, distribute, and maintain calling cards
- Crystal information administration
- Provide call detail reporting on request
- Track and verify accuracy of Telecom xxxxxxxx
- Track software licenses
- Report/audit calling card usage
- Voice system administration
- Maintain NOS Novell
- Maintain OS/390
- Maintain Windows NT-NOS
- Maintain AIX Unix
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- Maintain BBS for ProVantage
- Maintain SNA software, VTAM, NCP, and SNA/server
Securing Information Assets
- Backup file servers
- Tape library administration
- Restore files
- Manage firewalls
- Security setup
- Audit security access to data and systems
- Protect data access control
- User ID administration
- Performance of Y2K Activities substantially as outlined and detailed in
ShopKo's and ProVantage's respective Year 2000 Charters
- Maintain disaster recovery capability in accordance with past practices,
but in no event less reliable than those disaster recovery capabilities
in place to protect ShopKo's own systems.
Tracking, Escalating, And Resolving IT Problems
- 2nd level support for ProVantage Support Desk
- Trouble shoot remote client access
- Support ProVantage mail services IVR
- Troubleshoot communications problems
- Support ProVantage vision IVR
- Respond to on-call pages and calls
- Identify production problems, escalate or fix
- Support all IS hardware in all locations. Assume responsibility until
problems are resolved. (All equipment whether in-house supported or
contracted)
- Trouble shoot hardware/software problems
Managing IS Fixed Assets
- Dispose of obsolete equipment
- Manage UPS and dual power feed
- Dispose of hardware
Installing And Maintaining Equipment
- Install data communication facilities
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- Install voice communication facilities
- Install data communication equipment
- Install voice communication equipment
- Install Routers
- Install file servers
- Install Data Center equipment
- Install firewall
- Install Internet/Intranet
- Install shrink-wrapped turnkey applications
- Install AS/400, AIX Unix, OS/390, and other OS utilities or software
packages as needed
- Order printers, file servers, workstations, software, data center
supplies, paging service and equipment, and cellular service and
equipment
- Order data communication equipment
- Order data communication facilities
- Order voice communication facilities
- Order voice communication equipment
- VPS administration setup printers
- Define terminals, printers to system software
- Manage technical hardware/software for optimal use
- Maintain paging service and equipment
- Maintain cellular service and equipment
- Maintain wiring
- Maintain voice equipment
- Maintain data communications equipment
- File server maintenance
- Maintain data center environmental equipment
- Maintain firewall
Planning For System Capacity Growth And Technological Change
- Capacity planning for voice network
- Capacity planning for data network
- Recommend capacity or configurations of hardware/software to
applications and business
Defining And Engineering Information Technology Platforms
- Consult with applications development on design and implementation of
software
- Provide solutions to business
- Specify and voice communication facilities
20
- Specify voice communication equipment
- Design technical architectures
- Design Intranet/Internet
- Specify data communications equipment
- Specify data communications facilities
