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EXHIBIT 10.31
AMENDED AND RESTATED
MASTER OPERATING AGREEMENT
THIS AMENDED AND RESTATED MASTER OPERATING AGREEMENT (as amended, modified and
supplemented from time to time, this "Agreement"), dated as of January 1, 1997
(the "Adjustment Date"), is between Swiss Bank Corporation, a corporation
organized under the laws of Switzerland ("SBC Parent"), and Xxxxx Systems
Corporation, a Delaware corporation ("PSC Parent").
WITNESSETH:
WHEREAS, SBC Parent and PSC Parent entered into the Master Operating Agreement
(the "Original Agreement") dated as of January 1, 1996 (the "Original Agreement
Date");
WHEREAS, SBC Parent and PSC Parent now desire to amend and restate the Original
Agreement to read in its entirety as set forth herein;
WHEREAS, PSC Parent is in the business of providing information management
services, including data processing, voice and data communications, distributed
systems, workstation support, computer and communications procurement and
management, and related services;
WHEREAS, SBC Parent, through various direct and indirect subsidiaries,
divisions, and operating units, is in the business of providing a variety of
banking and financial services, including investment and commercial banking, on
a world-wide basis;
WHEREAS, it is expected by SBC Parent and PSC Parent that, from time to time
during the term of this Agreement, certain SBC Entities and PSC Entities (as
each term is hereinafter defined) will enter into EPI Agreements (as
hereinafter defined) that will identify specific information technology and
operational services to be provided by the applicable PSC Entity to the
applicable SBC Entity and the amounts to be paid for those services; and
WHEREAS, SBC Parent and PSC Parent desire to establish the standard terms and
conditions that will be applicable to each EPI Agreement and to document
certain other understandings and agreements between the parties;
NOW, THEREFORE, SBC Parent and PSC Parent hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement:
(a) "Affiliate" means, with respect to any Person:
(1) A Person that controls, is controlled by, or is under
common control with that Person. For the purposes of
this Section 1.1(a)(1) the term "control" means the
ability, whether exercised or unexercised, to direct
the management or policies of a Person, directly or
indirectly, whether by ownership of securities,
contract, arrangement, agreement, understanding or
otherwise;
(2) A corporation of which that Person has the power to
elect, directly or indirectly, more than fifty
percent (50%) of the directors either by virtue of
holding, directly or indirectly, a sufficient number
of the voting securities of that corporation or by
contract;
(3) A corporation in which that Person owns, directly or
indirectly, more than fifty percent (50%) of the
outstanding equity;
(4) An unincorporated entity which that Person has the
power, directly or indirectly, to bind, individually,
irrespective of whether other Persons also have the
power to bind that entity; or
(5) An unincorporated entity, over which that Person,
directly or indirectly, has more than fifty percent
(50%) of the voting power to bind that entity, or
the power to elect more than fifty percent (50%) of
the persons serving functions similar to that of
directors of a corporation.
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(b) "Change in Control" means the occurrence of any of the
following events, whether in one or a series of related
transactions: (a) the acquisition of at least fifty percent
(50%) of the then outstanding Class A Shares by any Person (or
twenty-five percent (25%) of the then outstanding Class A
Shares by any Person listed as such in the separate letter
executed by PSC and SBC, dated the Original Agreement Date,
which specifically references this definition), other than a
Xxxxx Family Member or Affiliate (including, on the date
hereof, HWGA, Ltd.) or a trust established for the benefit of
such Xxxxx Family Member or Affiliate, (b) the acquisition of
all or substantially all of the assets of the PSC Group, and
(c) any merger or consolidation of PSC Parent where PSC Parent
is not the surviving corporation, provided that the events
described in clause (b) or (c) of this definition will not be
deemed a Change in Control if more than fifty percent (50%) of
the then outstanding shares of capital stock of the acquiring
or surviving entity are owned by Persons who, immediately
prior to such event, owned more than fifty percent (50%) of
the then outstanding Class A Shares. In determining whether
the fifty percent (50%) and twenty-five percent (25%)
thresholds discussed above have been met, shares which are
subject to voting control by a Person or Persons acting under
a voting agreement (but not a revocable proxy) will be
counted, even though such shares may not be owned by such
Person.
(c) "Class A Shares" means the shares of Class A common stock, par
value $0.01 per share, of PSC Parent.
(d) "Confidential Information" means, with respect to each member
of the SBC Group and each member of the PSC Group, all
information, documentation, data, material or know-how
concerning or in any way relating to that member of the SBC
Group or that member of the PSC Group, respectively, or to its
respective businesses, customers or suppliers, that is
proprietary or was not on the Original Agreement Date in the
public domain, including, without limitation (a) with respect
to each member of the SBC Group, all SBC Data and all other
confidential, proprietary, trade secret or customer
information of that member of the SBC Group or its customers
and any other information of that member of the SBC Group or
its customers, including information that is not permitted to
be disclosed to third parties under national or local laws or
regulations, (b) with respect to each member of the PSC Group,
all costing, pricing and other proprietary information of that
member of the PSC Group, and (c) with respect to each party,
the terms of this Agreement and of each other Definitive
Agreement to which it is a party. Except to the extent that
local law provides otherwise, however, information will not be
"Confidential Information" of a party at any time after it (i)
has been developed independently by the other party without
using information obtained from the disclosing party which was
Confidential Information of the disclosing party at the time
it was used, (ii) has become publicly known (other than
through unauthorized disclosure), (iii) has been disclosed by
that party to a third party free of any obligation of
confidentiality, (iv) is already known to the other party
without an obligation of confidentiality to any Person, or (v)
has been rightfully received by a party free of any obligation
of confidentiality.
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(e) "Contracting Party" means (i) with respect to this Agreement,
SBC Parent or PSC Parent, and (ii) with respect to each EPI
Agreement, the SBC Entity receiving Services pursuant to that
EPI Agreement or, if SBC Parent signs that EPI Agreement, SBC
Parent, as signatory to that EPI Agreement on behalf of that
SBC Entity, and the PSC Entity providing Services pursuant to
that EPI Agreement or, if PSC Parent signs that EPI Agreement,
PSC Parent, as signatory to that EPI Agreement on behalf of
that PSC Entity.
(f) "Definitive Agreements" mean each of this Agreement, the SBC
Warburg EPI Agreement, the Master Project Agreement, the
Start-Up Agreement, the Master Agreement, the PSC Stock
Agreement and the Systor Stock Purchase Agreement (as defined
in the Master Agreement).
(g) "EPI" means all existing and future information technology
services provided by or on behalf of any SBC Entity that are
related to the Operational Management of that SBC Entity's
mainframe and other computers (including personal computers),
including peripheral equipment, and associated voice, data and
video communications network.
(h) "EPI Agreement" means any agreement, as provided for in
Section 3.2 hereof, that is entered into between a PSC Entity
and an SBC Entity for the provision of Services by that PSC
Entity to that SBC Entity.
(i) "Equipment" means, with respect to each EPI Agreement, all
computer-related and communications equipment owned or leased
by any member of the SBC Group, including without limitation
personal computers, modems, printers, mainframes, routers,
cabling and related equipment, required by the applicable PSC
Entity to provide the Services to the applicable SBC Entity
pursuant to that EPI Agreement.
(j) "HWGA, Ltd." means HWGA, Ltd., a Texas limited partnership,
and its successors and assigns.
(k) "Information Technology" means any combination of Systems,
Equipment, documentation and know-how relating to data
processing or other electronic functions.
(l) "IT Services" means the business of providing support to
end-users in the organization and maintenance of the
Information Technology employed by such end-users.
(m) "Licensed PSC Programs" has the meaning ascribed to that term
in Section 4.3 hereof.
(n) "Licensed SBC Systems" means, with respect to any EPI
Agreement, all SBC Systems used by a member of the SBC Group
prior to the effective date of that EPI Agreement (with
respect to the SBC Warburg EPI Agreement this date shall be
January 1, 1996 ) and necessary to provide the Operational
Management of
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the EPI of the applicable SBC Entity for which the applicable
PSC Entity is assuming responsibility thereunder (including
the SBC Systems listed in such EPI Agreement) and any Systems
(excluding PSC Systems) developed or obtained by or on behalf
of that SBC Entity after the effective date of that EPI
Agreement that perform functions supporting the Operational
Management of the EPI of that SBC Entity.
(o) "Master Agreement" means that certain Amended and Restated
Master Agreement, dated as of the Adjustment Date, between SBC
Parent and PSC Parent, relating to the transactions
contemplated by the Definitive Agreements, as amended,
modified or supplemented from time to time.
(p) "Master Project Agreement" has the meaning ascribed to that
term in the Master Agreement.
(q) "Operational Management" means responsibility for the
management of the provision, directly or through third
parties, of the people, assets and other resources, including,
without limitation, third party telecommunication and carrier
services and hardware and network maintenance services,
involved in advising on the setting of standards, and the
procurement, design and engineering, implementation, operation,
change management and on-going maintenance and support of
Information Technology related activities.
(r) "Xxxxx Family Member" means a member of the family of Xxxx
Xxxxx, an individual resident of the State of Texas, and any
direct descendants thereof, or by or through marriage.
(s) "Person" means an individual, corporation, partnership
(general or limited), joint venture, trust, estate, limited
liability company, government entity, or other legal entity or
organization.
(t) "Project Agreement" has the meaning ascribed to that term in
the Master Project Agreement.
(u) "PSC Group" means PSC Parent and each Affiliate of PSC Parent,
collectively.
(v) "PSC Entity" means any Affiliate, division, functional entity,
group, or department within the PSC Group (including PSC
Parent) which has been formed and exists as of the Adjustment
Date or will be formed and exist in the future.
(w) "PSC Stock Agreement" has the meaning ascribed to that term in
the Master Agreement.
(x) "PSC System" means any System or part thereof, which is owned
or licensed (other than pursuant to a license from a member of
the SBC Group) by a member of the PSC Group.
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(y) "Restricted Application Systems" means all SBC Systems other
than Licensed SBC Systems, but specifically including all
proprietary application Systems or other Systems that provide
business functionality as opposed to technical functionality.
(z) "SBC Xxxxxxx Division" means, collectively, the business units
of the SBC Group engaged in the business of institutional
asset management.
(ab) "SBC Data" means all information relating to any member of the
SBC Group (including any information relating to any
transaction to which that member of the SBC Group is a party)
or its customers that is contained in the data files of any
member of the SBC Group.
(ac) "SBC Entity" means any Affiliate, division, functional entity,
group, or department within the SBC Group (including SBC
Parent) which has been formed and exists as of the Adjustment
Date or will be formed and exist in the future.
(ad) "SBC Group" means SBC Parent and each Affiliate of SBC Parent,
collectively.
(ae) "SBC Private Banking Division" means, collectively, the
business units of the SBC Group engaged in the business of
asset management for clients who are natural persons.
(af) "SBC Systems" means the Systems (including, without
limitation, third party software) operated by or on behalf of
any member of the SBC Group on the Original Agreement Date and
other Systems (other than PSC Systems) that may be used by a
PSC Entity to provide Services pursuant to an EPI Agreement.
(ag) "SBC Warburg Division" means, collectively, and subject to
Section 2.4 hereof, (i) the business units of the SBC Group
engaged in the business of investment banking, excluding (A)
SBC Warburg Australia, (B) Xxxxxxx Warburg Inc., and (C) the
Guibergia Warburg group, and in any event including (ii) the
SBC Xxxxxxx Division and (iii) the SBC Private Banking
Division. SBC businesses outside of the business of
investment banking may be included in this definition upon
the mutual agreement in writing of PSC Parent and SBC Parent.
Any business unit, or portion thereof, included in the SBC
Warburg Division may be excluded from this definition upon the
mutual consent in writing of PSC Parent and SBC Parent.
(ah) "SBC Warburg EPI Agreement" has the meaning ascribed to that
term in the Master Agreement.
(ai) "Security Procedures" means, with respect to each EPI
Agreement, the written procedures and written undertakings
developed, maintained and updated by the applicable SBC Entity
addressing the scope of, and compliance procedures for, all
applicable regulations, whether governmental or imposed by any
regulator or exchange of which that SBC Entity is a member,
concerning the flow of SBC
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Data (but excluding restrictions on the ability of Persons to
trade in securities) and bank secrecy related to the SBC
Group, as those procedures and undertakings may be amended,
modified or supplemented by that SBC Entity from time to time.
(aj) "Service Levels" means the quantitative and qualitative
standards of performance applicable to the Services that may
be established from time to time in connection with unit
pricing and pursuant to each EPI Agreement and which are
called "Service Levels".
(ak) "Services" means, with respect to each EPI Agreement, the
services required for the Operational Management of the EPI of
the applicable SBC Entity and which are described as such in
that EPI Agreement.
(al) "Shares Termination Value" means, for purposes of Section 10.7
hereof, an amount to be calculated as follows:
(1) The Value (as defined below) of the Exercisable
Option Shares (whether or not exercised), the SBC
Warburg Purchased Shares and the SBC Domestic
Purchased Shares (each as defined in the PSC Stock
Agreement, and together, the "Stock Agreement
Shares") as of the date (the "Determination Date")
that the arbitration, judicial, or other legal
proceeding, as applicable, to resolve the applicable
claim commences.
(2) If any EPI Agreement has been terminated, the Stock
Agreement Shares, with respect to that terminated EPI
Agreement, will be calculated with reference to the
termination date of that EPI Agreement.
(3) "Value" means the sum of:
(a) The total number of Stock Agreement Shares
sold by all SBC Entities as of the
Determination Date to any Person that is not
an Affiliate of any SBC Entity, multiplied by
(i) the per share sales price paid to SBC
Entities for those Stock Agreement Shares
minus (ii) the purchase price for the Options
paid under Section 2.1(b) of the PSC Stock
Agreement, the Exercise Price, the SBC
Domestic Purchase Price or the SBC Warburg
Purchase Price (together, the "Acquisition
Price") applicable to such Stock Agreement
Shares under the PSC Stock Agreement, as the
case may be;
(b) The total number of Stock Agreement Shares
owned by all SBC Entities as of the
Determination Date, multiplied by (i) the
Fair Market Value of those owned Stock
Agreement Shares minus (ii) the Acquisition
Price applicable to those Stock Agreement
Shares; and
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(c) The total number of Stock Agreement Shares
sold by any SBC Entity to an Affiliate of any
SBC Entity as of the Determination Date,
multiplied by (i) the Fair Market Value of
such Stock Agreement Shares minus (ii) the
Acquisition Price applicable to those Stock
Agreement Shares.
(4) "Fair Market Value" has the meaning ascribed thereto
in Schedule A hereto.
(am) "Start-Up Agreement" has the meaning ascribed to that term in
the Master Agreement.
(an) "System" means a computer program with supporting system and
user documentation, including without limitation input and
output formats, program listings, narrative descriptions and
operating instructions, and includes the tangible media upon
which the program is recorded.
(ao) "Third Party Service Contracts" means those agreements to
which an SBC Entity is a party and pursuant to which that SBC
Entity is obligated to obtain from a Person, other than a
member of the PSC Group, services related to the Operational
Management of the EPI of an SBC Entity.
(ap) "Transitioned Employees" means, with respect to each EPI
Agreement, the employees of any SBC Entity that accept
employment with PSC pursuant to that EPI Agreement.
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ARTICLE II
AGREEMENT, TERM AND AUTHORITY
2.1 Scope of Agreement. Except as the Contracting Parties may otherwise
expressly agree in an EPI Agreement, this Agreement establishes the
standard terms and conditions that will be applicable to each EPI
Agreement.
2.2 Term. The term of this Agreement will commence on the Adjustment
Date, and will continue until terminated by the mutual agreement of
PSC Parent and SBC Parent or pursuant to Sections 8.1 through 8.9 or
10.7(a) hereof; provided, however, that this Agreement may be
terminated effective at any time on or after December 31, 2008 by
either of the parties hereto by giving at least sixty (60) days prior
written notice to the other party. Notwithstanding the termination of
this Agreement for any reason, any provisions of this Agreement that
have been incorporated by reference into any EPI Agreement entered
into prior to such termination will remain valid and binding
provisions of that EPI Agreement unless the Contracting Parties
thereto otherwise agree.
2.3 Authority. PSC Parent represents and agrees that as of the Adjustment
Date it has, and as of the effective date of each EPI Agreement it
will have, the authority to cause each PSC Entity to act with respect
to all applicable matters relating to this Agreement and any EPI
Agreement to which that PSC Entity is a Contracting Party, including
the giving or withholding of any approval, acceptance, consent,
notice, or other action required or permitted by this Agreement or
that EPI Agreement, and that it will be responsible for the
performance of all of the obligations of the members of the PSC Group
under each of the applicable EPI Agreements and for causing each
member of the PSC Group to comply with all applicable provisions of
each applicable EPI Agreement. SBC Parent represents and agrees that
as of the Adjustment Date it has, and as of the effective date of each
EPI Agreement it will have, the authority to cause each SBC Entity to
act with respect to all applicable matters relating to this Agreement
and any EPI Agreement to which that SBC Entity is a Contracting Party,
including the giving or withholding of any approval, acceptance,
consent, notice, or other action required or permitted by this
Agreement or that EPI Agreement, and that it will be responsible for
the performance of all obligations of the members of the SBC Group
under each EPI Agreement and for causing each member of the SBC Group
to comply with all applicable provisions of each applicable EPI
Agreement.
2.4 Major Changes:
(a) If at any time during the term of the SBC Warburg EPI
Agreement, and subject to the provisions of Section 8.7
hereof, a member or combination of members of the SBC Group
acquires, in a single transaction or series of related
transactions, any business, whether through acquisition of
securities, assets or otherwise that could reasonably be
expected to result in the revenue paid to the applicable PSC
Entity under the SBC Warburg EPI Agreement increasing, on an
annualized basis in the
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year of the transfer, by more than fifty percent (50%), if
that business were to become a part of the SBC Warburg
Division, then that business will not become part of the SBC
Warburg Division for purposes of this Agreement or the SBC
Warburg EPI Agreement.
(b) If at any time during the term of the SBC Warburg EPI
Agreement, a member or combination of members of the SBC Group
sells or otherwise disposes outside of the SBC Group, in a
single transaction or series of related transactions, of any
portion of its or their business that could reasonably be
expected to result in the revenue paid to the applicable PSC
Entity under that EPI Agreement decreasing, on an annualized
basis in the year of the transfer, by more than fifty percent
(50%), then SBC Parent will require (unless PSC Parent waives
the requirement as described in the last sentence of this
Section 2.4(b)) the purchaser of that business to assume the
applicable SBC Entity's obligations under the SBC Warburg EPI
Agreement that relate to the transferred business from the
date of the transfer and to continue to obtain from the
applicable PSC Entity the acquired business' requirements for
the Services in accordance with the terms and conditions of
the SBC Warburg EPI Agreement. The SBC Warburg EPI Agreement
will continue to apply to the business not so transferred.
Unless the purchaser of the transferred business has a credit
rating substantially equivalent to or better than, and a
shareholders' equity equal to or larger than, SBC Parent, the
PSC Group may, but will have no obligation to, provide
Services to the purchaser, and, if the PSC Group elects to not
provide Services to the purchaser, the purchaser will have no
obligation to assume any obligations under any EPI Agreement.
(c) If an event described in Section 2.4(a) or 2.4(b) shall occur,
the provisions of Section 4.4 of the Master Agreement shall
apply.
ARTICLE III
SERVICES
3.1 Services. It is the intention of SBC Parent and PSC Parent that an
EPI Agreement be entered into for any Services to be provided by any
member of the PSC Group to any member of the SBC Group.
3.2 Scope of EPI Agreement. Unless otherwise expressly provided in an EPI
Agreement, each EPI Agreement will provide that the applicable PSC
Entity will provide, and the applicable SBC Entity will obtain from
that PSC Entity, that SBC Entity's requirements for Operational
Management of the EPI of that SBC Entity.
3.3 Terms of EPI Agreements. Unless the Contracting Parties to an EPI
Agreement otherwise expressly agree in that EPI Agreement, each EPI
Agreement may:
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(a) Incorporate by reference the terms and conditions of this
Agreement identified for such purpose in that EPI Agreement.
(b) Designate the date as of which the provisions of that EPI
Agreement will be effective and the term or period of time
during which the applicable PSC Entity will provide the
Services pursuant to that EPI Agreement.
(c) Describe the obligations of the applicable PSC Entity pursuant
to that EPI Agreement, including the Services to be provided
by the PSC Entity pursuant to that EPI Agreement and any
Service Levels applicable to those Services.
(d) Describe the obligations of the applicable SBC Entity pursuant
to that EPI Agreement, including any obligations relating to
the provision of space, facilities, equipment, or other
support to be provided by the SBC Entity that are different
from, or in addition to, the resources and support to be
provided as described in this Agreement.
(e) Specify the applicable PSC Entity's charges and the method of
payment of those charges for the Services provided under that
EPI Agreement, as well as the methodology for any bonus
payments to the PSC Entity or credits to the SBC Entity.
(f) Include any other provisions deemed necessary or desirable by
the Contracting Parties to that EPI Agreement, including
provisions necessary to comply with local law or custom or
regulation or internal policies of the members of the SBC
Group.
3.4 Security Procedures. With respect to each EPI Agreement, the
applicable SBC Entity will be responsible for developing, maintaining
and updating the Security Procedures, the form and substance of which
will be determined by the applicable SBC Entity. The applicable SBC
Entity will be responsible for providing those Security Procedures,
including updates and modifications, to the applicable PSC Entity.
During the term of each EPI Agreement, the applicable PSC Entity will,
and will cause its employees to, comply, with respect to Services
provided to members of the SBC Group, with the Security Procedures
with which it has been provided by the applicable SBC Entity to the
extent that those Security Procedures are no more rigorous than
similar security procedures applicable to the members of the SBC
Group. The applicable PSC Entity will provide notice to the
applicable SBC Entity of any known instances of non-compliance with
the Security Procedures by that PSC Entity.
3.5 Export Matters. With respect to each EPI Agreement, the applicable
PSC Entity will be responsible for all non-banking related export
regulations with respect to PSC Systems, and the applicable SBC Entity
will be responsible for all non-banking related export regulations
with respect to SBC Systems (other than SBC Systems with respect to
which PSC is the purchaser).
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3.6 Other Regulatory Issues. No Contracting Party will be required to
commit an illegal act in connection with any EPI Agreement, and if an
EPI Agreement would require such an act, then that EPI Agreement will
be deemed amended by modifying the provisions to the extent necessary
to make it legal while preserving the economic benefits to each party,
or, if that is not possible, by substituting another provision that is
legal and enforceable and achieves the same objective.
3.7 Future EPI Agreements. SBC Parent and PSC Parent will negotiate in
good faith to execute an EPI Agreement, on or prior to December 31,
1998, having a term of ten (10) years and a similar scope and size to
the SBC Warburg EPI Agreement relating to SBC's private banking and
retail and commercial banking activities in Switzerland (the "SBC
Domestic Division"), which agreement will (i) include such terms and
conditions consistent with those set forth in the SBC Warburg EPI
Agreement as may be agreed upon by the parties thereto and (ii) state
that it is the definitive agreement referred to in this Section 3.7 (a
"Domestic Agreement"). SBC shall be considered to have negotiated in
good faith as provided above if, on or before December 31, 1999, SBC
Parent does not enter into a significant information technology
outsourcing or similar agreement with a third party that is not an
Affiliate of SBC Parent to provide services to the SBC Domestic
Division, but continues to provide those services internally.. The
obligation of the parties set forth in this Section 3.7 shall
terminate upon termination of the SBC Warburg EPI Agreement.
ARTICLE IV
SBC RESOURCES
4.1 SBC Systems.
(a) SBC Parent represents that one or more members of the SBC
Group has all rights in and to the SBC Systems necessary to
grant to the members of the PSC Group the rights described in
this Section 4.1. SBC Systems will be and remain the property
of the members of the SBC Group. With respect to the Licensed
SBC Systems required by a PSC Entity to provide the Services
under any EPI Agreement, including those Licensed SBC Systems
listed in the applicable EPI Agreement, SBC Parent hereby
grants to PSC Parent and the applicable PSC Entity the
non-exclusive right, at no charge to PSC Parent or the
applicable PSC Entity, to market, license, operate, copy,
modify or otherwise use those specified Licensed SBC Systems
in order to provide Services to the applicable SBC Entity
pursuant to that EPI Agreement, and to provide services to
other customers of members of the PSC Group and for the PSC
Group members' own internal use. PSC Parent acknowledges and
agrees that for purposes of using the Licensed SBC Systems for
third party customers of members of the PSC Group and for the
PSC Group members' own internal use, the license granted
pursuant to this Section 4.1(a) is granted on an "AS IS"
basis, and each member of the PSC Group will remove all
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indicia of any member of the SBC Group's interest in and
affiliation with the Licensed SBC System prior to using the
Licensed SBC System for third party customers of members of
the PSC Group.
(b) The members of the SBC Group, with the cooperation and
assistance of the members of the PSC Group, will use all
commercially reasonable efforts to obtain any consents from
third parties necessary for the applicable PSC Entity to
operate any Licensed SBC Systems as contemplated by this
Agreement. Upon the termination of the applicable EPI
Agreement, the members of the PSC Group may continue to use
the Licensed SBC Systems for the internal operations of the
members of the PSC Group and for customers of members of the
PSC Group, provided that:
(1) Except as otherwise necessary to utilize the Licensed
SBC Systems as authorized by this Agreement, no
member of the PSC Group will at any time allow the
Licensed SBC Systems, or any of the various
components thereof or any modifications thereto, to
be disclosed to third parties, sold, assigned, leased
or commercially exploited in any way, with or without
charge, by that member of the PSC Group or its
employees or agents or, except to the extent required
for normal operation of the Licensed SBC Systems, to
be copied or reproduced, in whole or in part, by any
person, firm or corporation, at any time.
(2) The members of the PSC Group agree that the Licensed
SBC Systems are the valuable property of one or more
members of the SBC Group, that violation in any
material respect of any provision of this Section 4.1
would cause the members of the SBC Group irreparable
injury for which they would have no adequate remedy
at law and, in addition to any and all other remedies
or rights the members of the SBC Group may have at
law or in equity, the members of the SBC Group will
be entitled to preliminary and other injunctive
relief against any such violation.
(c) During the term of this Agreement, no member of the SBC Group
may license the Licensed SBC Systems to any third party.
Notwithstanding the foregoing, however, the members of the SBC
Group may use the Licensed SBC Systems for their own internal
purposes and may provide the Licensed SBC Systems to clients
of members of the SBC Group as necessary in conjunction with
the SBC Group members' services to their clients.
(d) Notwithstanding the provisions of Section 4.1(a) hereof, no
member of the PSC Group may use the Restricted Application
Systems for its own internal purposes or for any of its
customers (other than a member of the SBC Group), unless PSC
Parent and SBC Parent agree that such use is in the best
interests of the parties and agree in writing upon a mutually
acceptable royalty structure.
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(e) Except as otherwise provided in an EPI Agreement, the PSC
Group will operate and the SBC Group will maintain the
Restricted Application Systems and related documentation. The
PSC Group will maintain the documentation of each Licensed SBC
System as long as that Licensed SBC System is being operated
and maintained by the PSC Group hereunder. The PSC Group will
not have access to the source code for the Restricted
Application Systems or system documentation therefor.
4.2 Rights in Developed Systems. Ownership and use rights in Systems and
modifications to Systems developed on or after the Original Agreement
Date will be as follows:
(a) Except as provided in Sections 4.2(b), 4.2(c), 4.2(d) and
4.2(e) below, the members of the PSC Group will own any
System, and any modifications to any System, developed on or
after the Original Agreement Date by the applicable PSC Entity
pursuant to this Agreement or any EPI Agreement, subject to
the SBC Group's rights in the underlying SBC System if an SBC
System was the basis for such modification.
(b) If PSC performs any software development project pursuant to
any EPI Agreement that is specifically requested, identified
in writing when requested as subject to this Section 4.2(b)
and agreed prior to such development by PSC and SBC to be
wholly financed by SBC, the copyright in the software
resulting from that project will be owned by SBC, and PSC will
be limited to using that software for SBC and PSC's internal
use except as provided in Section 4.2(f) below.
(c) Ownership of Restricted Applications Systems will remain with
SBC.
(d) Incidental infrastructure software programs developed by PSC
in the course of providing services pursuant to an EPI
Agreement will be owned by PSC unless the cost of development
exceeds $5,000,000 per individual program in a given Budget
Period (as defined in the SBC Warburg EPI Agreement), and is
wholly financed by SBC, in which case the copyright in such
program will be owned by SBC and the rights of PSC will be as
described in Section 4.2(b) above for a software development
project specifically requested and agreed by PSC and SBC to be
wholly financed by SBC.
(e) Notwithstanding anything to the contrary in Section 4.1 hereof
or this Section 4.2, material new Systems (that are not
Restricted Applications Systems or Developed SBC Systems)
custom developed for or on behalf of any member of the SBC
Group by any member of the PSC Group or its subcontractors
after the Original Agreement Date and for which at least fifty
percent (50%) of the development costs are provided by the
members of the SBC Group, will be owned by SBC Parent, and SBC
Parent will grant to members of the PSC Group the right, at no
charge to the members of the PSC Group, to market, license,
operate, copy, modify or otherwise
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use those SBC Systems on behalf of the members of the SBC
Group, for the internal use of the members of the PSC Group,
and for any other customer of any member of the PSC Group.
(f) Prior to the use by any PSC Entity of any Systems owned by SBC
as described in Sections 4.2(b), 4.2(c) or 4.2(d) (the
"Developed SBC Systems") for any customer of that PSC Entity
(other than a member of the SBC Group), that PSC Entity will
obtain the consent of the applicable SBC Entity based upon a
business case prepared by the PSC Entity for the applicable
SBC Entity's review and approval specifying (i) any capital
investment that will be required from that SBC Entity to
obtain any additional resources to provide services to the
customer of the PSC Group and, if so, any payments that will
be made to the applicable SBC Entity in connection with or
attributable to the use of the Developed SBC Systems; (ii) any
impact on the overall operating expenses of the Developed SBC
Systems; (iii) any impact the introduction of the third party
customer would have on existing Service Levels; and (iv) any
impact on the applicable PSC Entity's charges to the
applicable SBC Entity for the Services. The applicable PSC
Entity will also satisfy the applicable SBC Entity, in that
SBC Entity's sole discretion, that adequate Security
Procedures have been instituted to prevent disclosure of any
Confidential Information of the SBC Group to the third party
customer.
4.3 PSC Systems. PSC Parent represents that one or more members of the
PSC Group will have, at the time of the use of PSC Systems for
provision of the Services, all rights in and to the PSC Systems
necessary to use the PSC Systems that PSC elects to use on behalf of
members of the SBC Group and to license the PSC Systems to the members
of the SBC Group that PSC Parent is obligated to license pursuant to
this Section 4.3. PSC Systems will be and remain the property of PSC
Parent, and the members of the SBC Group will have no rights or
interests therein except as described herein. During the term of an
EPI Agreement, PSC Parent hereby grants to the applicable SBC Entity,
and that SBC Entity will be deemed to accept from PSC Parent, a
nonexclusive, nontransferable, paid up, royalty free license to access
any PSC System as necessary in connection with the Services that the
applicable PSC Entity is obligated to provide to the applicable SBC
Entity under such EPI Agreement, subject to PSC Parent's right to
grant such a license with respect to any PSC Systems licensed by PSC
Parent. PSC Parent, with the cooperation of SBC Parent, will use all
commercially reasonable efforts to obtain any third party consents
necessary for members of the SBC Group to access the PSC Systems as
contemplated by the preceding sentence. With respect to each EPI
Agreement, provided that the SBC Entity is not in breach of that EPI
Agreement and subject to PSC Parent's rights under any license
agreement for any PSC System licensed by PSC Parent, PSC Parent will
grant to that SBC Entity at the termination of that EPI Agreement
possession of two (2) copies of the source code, user documentation
and system documentation and a perpetual, nontransferable,
nonexclusive, paid up, royalty free license to use the application
software programs (including all related documentation) of any PSC
Systems then being used by the applicable PSC Entity in providing the
Services to the applicable SBC Entity (the "Licensed PSC Programs"),
subject to the following:
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(a) Except with the prior written consent of PSC Parent or to the
extent required by natural disaster or similar emergency, the
Licensed PSC Programs will not be operated, directly or
indirectly, (i) by persons other than employees of such SBC
Entity or a third party vendor providing services to any SBC
Entity, or (ii) on equipment that is not under the control of
any SBC Entity or a third party vendor providing services to
any SBC Entity.
(b) Except with the prior written consent of PSC Parent, the
Licensed PSC Programs may only be used for the internal
operations of the applicable SBC Entity.
(c) The SBC Entity will keep the Licensed PSC Programs
confidential, will not at any time allow the Licensed PSC
Programs, or any of the various components thereof or any
modifications thereto, to be disclosed to third parties, sold,
assigned, leased or commercially exploited or marketed in any
way, with or without charge, by the SBC Entity or its
employees or agents and, except to the extent required for
normal operation of the Licensed PSC Programs as permitted
herein, will not permit the Licensed PSC Programs to be copied
or reproduced, in whole or in part, by any Person, at any
time.
(d) The SBC Entity agrees that the Licensed Programs are the
valuable property of PSC Parent, that violation in any
material respect of any provision of this Section 4.3 would
cause PSC Parent irreparable injury for which it would have no
adequate remedy at law, and, in addition to any and all other
remedies or rights PSC Parent may have at law or in equity,
PSC Parent will be entitled to preliminary and other
injunctive relief against any such violation.
4.4 SBC Equipment.
(a) SBC Parent and PSC Parent acknowledge and agree that, except
for the rights granted to the applicable PSC Entity pursuant
to this Section 4.4, or as otherwise expressly agreed in an
EPI Agreement, all right, title and interest in and to the
Equipment is owned by and will continue to be owned by one or
more members of the SBC Group.
(b) During the term of each EPI Agreement and unless otherwise
provided for therein, the applicable SBC Entity will make
available to the applicable PSC Entity, for that PSC Entity's
use, at no charge except as provided in the last sentence of
this Section 4.4(b), all Equipment that is expressly
referenced in the applicable EPI Agreement as being provided
by the applicable SBC Entity to the applicable PSC Entity.
With respect to personal computers, modems, printers and
related personal Equipment used by Transitioned Employees
generally prior to the effective date of the applicable EPI
Agreement, the applicable PSC Entity will pay the applicable
SBC Entity for such use on a monthly basis for the
depreciation costs of that Equipment for that month until that
Equipment has been fully depreciated.
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(c) Prior to the use by any PSC Entity of the Equipment for any
customer of that PSC Entity (other than a member of the SBC
Group), that PSC Entity will obtain the consent of the
applicable SBC Entity based upon a business case prepared by
the PSC Entity for the applicable SBC Entity's review and
approval specifying (i) any capital investment that will be
required from that SBC Entity to obtain any additional
resources to provide services to the customer of the PSC Group
and, if so, any payments that will be made to the applicable
SBC Entity in connection with or attributable to the use of
the Equipment; (ii) any impact on the overall operating
expenses of the Equipment; (iii) any impact the introduction
of the third party customer would have on existing Service
Levels; and (iv) any impact on the applicable PSC Entity's
charges to the applicable SBC Entity for the Services. The
applicable PSC Entity will also satisfy the applicable SBC
Entity, in that SBC Entity's sole discretion, that adequate
Security Procedures have been instituted to prevent disclosure
of any Confidential Information of the SBC Group to the third
party customer.
4.5 Additional Equipment. Any additional Equipment (other than personal
computers, modems, printers and related personal Equipment used by PSC
personnel) which a PSC Entity elects to add in order to provide the
Services to an SBC Entity during the term of any EPI Agreement will be
purchased in accordance with the terms of that EPI Agreement.
4.6 SBC Facilities.
(a) Commencing on the effective date of each EPI Agreement, the
applicable SBC Entity will provide to the applicable PSC
Entity such space, office furnishings, janitorial service,
telephone service, utilities (including air conditioning) and
office-related equipment, supplies, and duplicating services
in such SBC Entity's premises as the applicable PSC Entity may
reasonably require to provide the Services to the applicable
SBC Entity pursuant to that EPI Agreement, including the
space, furnishings, and equipment utilized by the applicable
Transitioned Employees prior to the effective date of that EPI
Agreement (under all EPI Agreements collectively, the "SBC
Facilities"). The employees of the applicable PSC Entity will
have reasonable access to the applicable SBC Facilities
twenty-four (24) hours a day, seven (7) days a week and will,
at all times, comply with the applicable SBC Entity's
reasonable physical security procedures while on the premises
of the SBC Facilities. In addition, the applicable SBC Entity
will provide necessary storage space for backup data files and
will provide such additional storage space as may be required
by any change in retention schedules required by any
regulatory authority with jurisdiction over the applicable SBC
Entity's business.
(b) The applicable PSC Entity will pay the applicable SBC Entity
on a monthly basis for the SBC Facilities at that SBC Entity's
actual costs for those SBC Facilities, and the amounts of
those payments will be reimbursed by the applicable SBC Entity
to the applicable PSC Entity but will not be included, for
purposes of the applicable EPI Agreement, in PSC Costs (as
defined in that EPI Agreement).
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(c) Prior to relocating Services from any SBC Facility to any
other facility, the applicable PSC Entity will obtain the
consent of the applicable SBC Entity based upon a business
case prepared by the PSC Entity for the review and approval of
the SBC Entity, which approval will not be unreasonably
withheld.
4.5 PSC Facilities. Subject to the Security Procedures, a PSC Entity may
from time to time perform the Services pursuant to any EPI Agreement,
including processing of the applicable SBC Entity's data, in
facilities maintained by the PSC Group (under all EPI Agreements
collectively, "PSC Facilities") as that PSC Entity deems appropriate,
provided that the applicable SBC Entity must be and remain satisfied
that adequate Security Procedures have been implemented and are being
observed at the applicable PSC Facility.
4.6 Third Party Services Contracts.
(a) On or prior to the date each EPI Agreement (which for purposes
of this Section for the SBC Warburg EPI Agreement will be the
Original Agreement Date) is executed and again on or prior to
the effective date of that EPI Agreement, the applicable SBC
Entity will use reasonable efforts to provide the applicable
PSC Entity with a list of all Third Party Service Contracts
related to the Operational Management of the EPI of that SBC
Entity. The applicable PSC Entity will assume responsibility
for the applicable Third Party Service Contracts as of the
effective date of the applicable EPI Agreement and any other
Third Party Service Contract to which an entity that is
acquired and becomes part of the SBC Warburg Division is a
party or to which a member of the SBC Group may become a party
after the effective date of the applicable EPI Agreement as
the result of an acquisition of any entity that becomes part
of an SBC Entity. SBC Parent agrees that, until the
applicable PSC Entity assumes responsibility for any Third
Party Service Contract pursuant to an EPI Agreement, it will
manage all Third Party Service Contracts related to that EPI
Agreement to expire at the earliest reasonable opportunity
that does not result in a termination penalty.
(b) Commencing on the effective date of any EPI Agreement, unless
prohibited by the applicable Third Party Service Contract:
(1) The applicable SBC Entity will make available to the
applicable PSC Entity during the term thereof, at a
charge to that PSC Entity equal to the amounts such
SBC Entity is obligated to pay under such Third Party
Service Contracts, the services provided by third
parties pursuant to each Third Party Service Contract
and utilized by the applicable SBC Entity prior to
the effective date of that EPI Agreement in
performing the services and functions assumed by the
PSC Entity thereunder.
(2) The applicable PSC Entity will have administrative
and management responsibility for managing such third
party services to the same extent as if that PSC
Entity were the contracting party for such services
during the term
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of that EPI Agreement. The applicable SBC Entity
will retain sole authority to execute amendments to
the Third Party Service Contracts, but, unless that
SBC Entity and the applicable PSC Entity otherwise
agree, that SBC Entity will act to terminate those
Third Party Service Contracts at the earliest
available opportunity that does not result in a
termination penalty.
(3) Nothing in this Section 4.8 will require an SBC
Entity to make available to a PSC Entity the services
under a Third Party Services Contract, grant to the
applicable PSC Entity management or administrative
responsibility for third party services, or assign or
terminate a Third Party Services Contract if the
terms of the applicable Third Party Services Contract
prohibit the applicable SBC Entity from doing so, or
if the applicable SBC Entity would subject itself to
a penalty by doing so.
4.9 Transfer of Personnel. Unless otherwise provided in an EPI Agreement,
commencing on the effective date of each EPI Agreement (which for the
purposes of this Section for the SBC Warburg EPI Agreement will be
the Original Agreement Date), the applicable PSC Entity will offer
employment to all employees of the applicable SBC Entity identified in
that EPI Agreement in accordance with the transition plan described
therein and otherwise in accordance with the applicable PSC Entity's
normal employment policies. PSC agrees that each Transitioned
Employee will be offered a salary and benefits package that is
substantially comparable to the salary and benefits package received
by that Transitioned Employee prior to the effective date of that EPI
Agreement. Should a PSC Entity request that the applicable SBC Entity
continue to make payments to such employees after they are hired by
such PSC Entity, as an administrative convenience and until such
personnel can be integrated into the PSC payroll system, the
applicable SBC Entity will do so for a reasonable period not to
exceed three (3) months, subject to reimbursement therefor and
appropriate indemnification by the applicable PSC Entity. In such
event, the SBC Entity will be acting solely as the PSC Entity's agent
and the applicable PSC Entity will reimburse the applicable SBC Entity
for all wages paid and employer's contributions made by such SBC
Entity in connection therewith.
4.10 Resource Payments. The applicable PSC Entity will reimburse the
applicable SBC Entity pursuant to the applicable EPI Agreement for the
amounts due with respect to this Article IV by issuing to that SBC
Entity a credit against that SBC Entity's invoices for such amounts.
Any credit due to an SBC Entity pursuant to this Section 4.10 will be
given by the PSC Entity in the next succeeding month after the month
in which the credit is determined.
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ARTICLE V
SAFEGUARDING OF DATA AND AUDIT RIGHTS
5.1 SBC Data.
(a) The members of the SBC Group own and will continue to own all
right, title and interest in and to all SBC Data. Upon the
termination of this Agreement or of any EPI Agreement for any
reason or, with respect to any SBC Data, on such earlier date
as the applicable SBC Entity and the applicable PSC Entity
mutually determine that any of the same will no longer be
required by that PSC Entity in order to render Services to
such SBC Entity, such SBC Data will be either erased from the
data files maintained by each member of the PSC Group or, if
the applicable SBC Entity so elects, returned to such SBC
Entity. SBC Data may not be utilized by any member of the PSC
Group for any purpose except to provide Services to the
members of the SBC Group, nor may SBC Data or any part thereof
be disclosed, sold, assigned, leased or otherwise disposed of
to third parties by any member of the PSC Group or
commercially exploited by or on behalf of any member of the
PSC Group, or any of its employees or agents.
(b) The parties hereto acknowledge and agree that, in connection
with each EPI Agreement, unless the applicable SBC Entity is
satisfied that its security concerns are adequately addressed,
that EPI Agreement will provide that that SBC Entity will
retain exclusive supervisory control of the systems and
personnel required to ensure that the confidentiality and
secrecy of SBC Data will be maintained; provided that if that
EPI Agreement provides that such SBC Entity will retain
control over the systems and personnel, the members of the PSC
Group will be excused from its Service and Service Level
obligations to the extent that such retention by the SBC
Entity prevents, materially hinders or delays the members of
the PSC Group from providing the Services or meeting any
applicable Service Level as set forth in such EPI Agreement.
Without the consent of the applicable SBC Entity, Information
Technology related security-related functions or crypto codes
will not be shared by any member of the SBC Group with any
member of the PSC Group and only personnel of members of the
SBC Group will execute such functions.
(c) PSC Parent agrees that if any employee of any member of the
PSC Group who is providing Services to the SBC Group is
granted access by a member of the SBC Group to (i) any
facility at which customer or customer-related data of any
member of the SBC Group is located, or (ii) any Systems upon
which any customer or customer-related data of any member of
the SBC Group is contained, that employee will, upon the
request of the applicable member of the SBC Group, be required
to execute an agreement (and amendments to that agreement as
required to comply with this Section 5.1(c)) that contains
provisions requiring that employee to
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maintain the confidentiality of all customer or
customer-related data of any member of the SBC Group, which
provisions will be no more restrictive than the
confidentiality provisions contained in any agreement that the
members of the SBC Group generally require their employees,
contractors and agents with similar access to execute from
time to time.
5.2 Safeguarding SBC Data. With respect to, and under the terms and
conditions of, each EPI Agreement, the applicable PSC Entity will
establish and maintain safeguards against the destruction, loss or
alteration of SBC Data in the possession of any member of the PSC
Group which are no less rigorous than those in effect at the
applicable SBC Facilities as of the effective date of that EPI
Agreement. In the event that additional safeguards for SBC Data are
reasonably requested by the SBC Entity, the applicable PSC Entity will
provide those additional safeguards and that SBC Entity will pay that
PSC Entity therefor in accordance with the payment terms provided in
the applicable EPI Agreement. An SBC Entity will have the right to
establish backup security for data and to keep backup data and data
files in its possession if it so chooses; provided, however, that the
applicable PSC Entity will have access to such backup data and data
files as is reasonably required by that PSC Entity to provide the
Services. Each PSC Entity's access to such data and data files must
be consistent with the Security Procedures.
5.3 Physical Security for Facilities. With respect to, and under the
terms and conditions of, each EPI Agreement, the applicable PSC Entity
will perform all reasonably required security procedures at any place
where Services are performed by that PSC Entity. The procedures at
the SBC Facilities will be no less rigorous than those in effect there
as of the effective date of that EPI Agreement. The applicable SBC
Entity will provide all necessary security personnel and security
equipment at the SBC Facilities. Personnel of members of the PSC
Group will comply with the reasonable physical security procedures of
members of the SBC Group with respect to access to any SBC Facilities,
data and data files.
5.4 Audit Rights. The members of the SBC Group and/or its independent
auditors (who shall not be PSC Competitors (as defined in the Master
Agreement) or Affiliates of PSC Competitors, other than the reporting
auditors of the applicable member of the SBC Group), at no additional
expense to any member of the PSC Group, and upon ten (10) business
days' written notice to the applicable member of the PSC Group, will
have the right to conduct an operational audit pertaining to Services
rendered pursuant to this Agreement or any EPI Agreement, including
but not limited to having the members of the PSC Group process through
any system test data supplied by a member of the SBC Group or its
auditors, operate audit software on any System, download SBC Data to a
computer designated by the applicable member of the SBC Group or its
auditors, or conduct a System backup and disaster recovery audit. The
purpose of the operational audit will be to verify that each member of
the PSC Group is exercising reasonable data processing operational
procedures in its performance of the Services and confirm that each
member of the PSC Group is performing and observing its obligations
hereunder or under the applicable EPI Agreement. The report resulting
from each operational audit will be reviewed by the applicable SBC
Entity and the applicable PSC Entity and appropriate actions will be
taken
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based upon each such review. The members of the PSC Group will
provide to such auditors and inspectors any assistance that they
reasonably require, and the costs incurred by the members of the PSC
Group in connection with services rendered in connection with any such
audit or inspection will be included in the PSC Costs in accordance
with the terms of the applicable EPI Agreement.
5.5 Disaster Recovery. During the term of each EPI Agreement, the
applicable PSC Entity will maintain and continue to maintain
throughout the term of that EPI Agreement, an off-site disaster
recovery capability, including a disaster recovery plan, as mutually
agreed in connection with that EPI Agreement. In the event of a
disaster affecting the Services provided by the PSC Entity pursuant to
any EPI Agreement, the PSC Entity will implement the disaster recovery
plan applicable to that EPI Agreement. The costs incurred by the PSC
Entity in connection with any disaster recovery Services provided by
that PSC Entity as described in this Section 5.5 will be included in
the PSC Costs in accordance with the provisions of the applicable EPI
Agreement.
5.6 Regulatory Access. The parties agree that the records maintained and
produced under this Agreement and any EPI Agreement will at all times
be available for examination and audit by governmental agencies,
regulators or exchanges of which any member of the SBC Group is a
member having jurisdiction over the business of any member of the SBC
Group. Each party to this Agreement will notify the other party
promptly of any formal request by an authorized governmental agency,
regulator or exchange to examine records regarding any member of the
SBC Group that are maintained by any member of the PSC Group. Upon
the written request of any member of the SBC Group, the applicable
member of the PSC Group will provide any relevant assurances to such
agencies, regulators or exchanges and will subject itself to any
required examination or regulation, and the costs incurred by the
applicable member of the PSC Group for any services rendered in
connection with any such examination will be included in the PSC Costs
in accordance with the applicable EPI Agreement.
5.7 Viruses. Each party will use its reasonable efforts to ensure that no
viruses, worms or similar items ("Viruses") are introduced into any
System used under this Agreement or any EPI Agreement. If a Virus is
found in any such System, the applicable PSC Entity will, promptly
upon the discovery thereof, use its best efforts to eliminate such
Virus and ameliorate the effect thereof. If a Virus causes a loss of
operational efficiency or data, the applicable PSC Entity will
mitigate and restore such loss as quickly as feasible.
5.8 Disabling Code. No System provided by either any member of the SBC
Group or any member of the PSC Group will include, nor will any member
of the PSC Group or any member of the SBC Group introduce into any
System, any code with the purpose to disable or reduce the efficiency
of all or any portion of any System.
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ARTICLE VI
MANAGEMENT
6.1 Relationship Managers. Each party (an "Appointing Party") will
appoint an individual (a "Relationship Manager") who, until replaced
by the Appointing Party, will serve as that Appointing Party's
representative under this Agreement. Each Relationship Manager will
(i) have overall responsibility for managing and coordinating the
performance of the Appointing Party's obligations under this
Agreement, (ii) be authorized to act for and on behalf of the
Appointing Party with respect to all matters relating to this
Agreement, and (iii) work with the Operational Managers for the SBC
Entities or the PSC Entities, as applicable, to establish appropriate
uniform procedures for the Services to be provided by the members of
the PSC Group to the members of the SBC Group. Neither party will
reassign its Relationship Manager or cause its Relationship Manager to
no longer serve in that capacity without the other party's prior
consent, which consent will not be unreasonably withheld. Each party
further agrees that if its Relationship Manager ceases to be employed
by that party, or is reassigned, such party's Relationship Manager may
only be replaced with the consent of the other party, which consent
will not be unreasonably withheld.
6.2 Operational Managers. Each Contracting Party to an EPI Agreement will
appoint an individual (an "Operational Manager") who will serve as
that Contracting Party's representative under that EPI Agreement.
Each Operational Manager will (i) have overall responsibility for
managing and coordinating the performance of the Contracting Party's
obligations under that EPI Agreement and (ii) be authorized to act for
and on behalf of the Contracting Party with respect to all matters
relating to that EPI Agreement. No Contracting Party may reassign its
Operational Manager or cause its Operational Manager to no longer
serve in that capacity without the other Contracting Party's prior
consent, which consent will not be unreasonably withheld. Each
Contracting Party further agrees that if its Operational Manager
ceases to be employed by that Contracting Party, or is reassigned,
that Contracting Party's Operational Manager may only be replaced with
the other Contracting Party's consent, which consent will not be
unreasonably withheld.
6.3 Change Control Procedures. Within one hundred and eighty (180) days
after the effective date of each EPI Agreement and as part of the
Services provided by the applicable PSC Entity under that EPI
Agreement, that PSC Entity and the applicable SBC Entity will mutually
establish a written description of the change control procedures that
will be applicable to any Changes related to that EPI Agreement. For
the purpose of this Section 6.3, "Changes" are any changes to the
Systems, the Equipment or the Services that would materially alter the
functionality, Service Levels or technical environment of the Systems
or the Equipment, or the manner in which the Services are provided or
the composition of the Services. These change control procedures will
provide that, except for Changes made on a temporary basis to maintain
the continuity of the Services, the applicable SBC Entity and the
applicable PSC Entity will implement Changes only after consultation
and agreement between the applicable SBC Entity and the applicable PSC
Entity.
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6.4 Crisis Management Procedures. In connection with each EPI Agreement,
the applicable PSC Entity and the applicable SBC Entity will establish
a procedure for immediately escalating to a team of appropriate senior
level managers or officers, including the Relationship Manager for
each party, any significant technical problem that may arise from time
to time that, if not quickly resolved, could have a negative impact on
critical portions of that SBC Entity's business. This procedure will,
at a minimum, provide that in the event of a major service outage,
then:
(a) The production manager for the applicable PSC Entity, who will
be available on a seven (7) days a week, twenty-four (24)
hours a day basis will be notified of all details of the
outage. If that production manager is not able to implement a
plan to resolve the outage within two (2) hours of receipt of
notice, then;
(b) The crisis manager for the applicable PSC Entity and the
President of PSC Parent will be notified and a hot line will
be established to provide continuous information with respect
to the status of the outage and estimated time of repair. If
the outage is not resolved within two (2) hours of the crisis
manager being notified, then;
(c) A crisis management "SWAT" team, consisting of personnel of
the applicable PSC Entity and personnel of the applicable SBC
Entity, will be formed and the Chairman of PSC Parent will be
notified. Every hour on the hour, until the outage is
resolved, there will be bridged status report calls from the
"SWAT" team to key managers of the applicable PSC Entity and
the applicable SBC Entity and PSC Parent and SBC Parent.
ARTICLE VII
PERFORMANCE REVIEW AND DISPUTE RESOLUTION
7.1 Scope. The dispute resolution procedures specified in Sections 7.2 and
7.3 hereof will apply to all matters arising out of this Agreement and
each EPI Agreement that relate to technical matters such as Service
Levels and to the performance of Services. With respect to any other
dispute arising under this Agreement or any EPI Agreement, including,
without limitation, compliance by the members of the PSC Group with
the Security Procedures or the payment of PSC invoices, the applicable
Contracting Parties will have immediate recourse to the arbitration
provisions of Section 7.4 hereof. The parties agree that PSC Costs
(as defined in each EPI Agreement) will not include the fees and
charges of legal counsel (outside or internal) incurred in connection
with any enforcement action, formal dispute resolution procedure or
formal court or arbitration proceedings against an SBC Entity or in
connection with the determination of whether any such action,
procedure or proceeding should be initiated or defended.
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7.2 Performance Review. The Relationship Managers will meet as often as
either Relationship Manager reasonably requests to review the
performance of the PSC Group under this Agreement and each EPI
Agreement. Subject to the provisions of Section 7.1 hereof, in the
event of any dispute or disagreement between the parties hereto, upon
the written request of either party, each party will appoint an equal
number of designated officers, plus both Relationship Managers
(collectively, the "Special Resolution Committee"), whose task it will
be to meet for the purpose of endeavoring to resolve such dispute or
to negotiate for an adjustment to the relevant provisions of this
Agreement or the applicable EPI Agreement. The Special Resolution
Committee will meet as often as the parties reasonably deem necessary
in order to gather and furnish to the members of the Special
Resolution Committee all information with respect to the matter at
issue which either party believes to be appropriate and germane in
connection with its resolution. The Special Resolution Committee will
discuss the problem and/or negotiate in good faith in an effort to
resolve the dispute or renegotiate the applicable section or provision
without the necessity of any further proceeding relating thereto.
During the course of the negotiation, all reasonable requests made by
one party to the other for information relating to the dispute and the
resolution thereof will be honored. The specific format for such
discussions will be left to the discretion of the Special Resolution
Committee, but may include the preparation of agreed upon statements
of fact or written statements of position furnished to the other
party. No further proceedings for the resolution of any dispute may
be commenced until the earlier of (i) the date on which a majority of
the members of the Special Resolution Committee conclude in good faith
that an amicable resolution through continued negotiation of the
matter in issue does not appear likely, or (ii) thirty (30) days from
the date the dispute was submitted to the Special Resolution
Committee.
7.3 Escalation of Disputes. Subject to the provisions of Section 7.1
hereof, any dispute that is not resolved by the Special Resolution
Committee in accordance with the procedures described in Section 7.2
above will be escalated to the Chief Executive Officers of PSC Parent
and SBC Parent, who will each appoint one (1) corporate officer to
discuss the problem and negotiate in good faith to resolve the dispute
or controversy. The specific format for such discussions and
negotiations will be left to the discretion of the two (2) appointed
corporate officers. No further proceedings for the resolution of any
dispute may be commenced until the earlier of (i) the date on which
the two (2) appointed directors conclude in good faith that a
resolution to the dispute through continued negotiations is not
likely, or (ii) thirty (30) days from the date the dispute was
escalated to the Chief Executive Officers of PSC Parent and SBC
Parent.
7.4 Arbitration. Subject to Section 7.1 hereof, any dispute that is not
resolved through negotiation pursuant to Sections 7.2 or 7.3 hereof
will be settled exclusively by final and binding arbitration in
accordance with the following:
(a) Except as specified below or otherwise mutually agreed in
writing by the parties to the dispute, the arbitration will be
conducted in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association.
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(b) Any demand for arbitration or any counterclaim will specify in
reasonable detail the facts and legal grounds forming the
basis for the claimant's request for relief, and will include
a statement of the total amount of damages claimed, if any,
and any other remedy sought by the claimant.
(c) The arbitration will be conducted by an arbitration panel
consisting of three neutral arbitrators selected in accordance
with those Commercial Arbitration Rules. The arbitration will
be conducted in the English language.
(d) The arbitration proceedings will take place in New York.
(e) The arbitration panel may render awards of monetary damages,
direction to take or refrain from taking action, or both.
However, the arbitration panel may not award monetary damages
in excess of compensatory damages and will in no event award
any damages not permitted by Sections 10.6 and 10.7 hereof.
(f) The arbitration panel may, at its discretion, require any
party to the arbitration to reimburse any other party to the
arbitration for all or any part of the expenses of the
arbitration paid by the other party and the attorneys' fees
and other expenses reasonably incurred by the other party in
connection with the arbitration.
(g) Judgment upon the award rendered in the arbitration may be
entered in any court of competent jurisdiction.
(h) The parties will direct the arbitration panel to reach a
decision within one hundred and eighty (180) days of the date
on which the parties submit the dispute for resolution
pursuant to this Section 7.4.
7.5 Injunctive Relief. Nothing in this Article VII will prevent any
Contracting Party from immediately seeking injunctive or other
equitable relief, including termination under Article VIII hereof,
from any court having competent jurisdiction.
7.6 Continued Performance. Unless the applicable EPI Agreement has been
terminated in accordance with the provisions of Article VIII hereof,
the applicable PSC Entity will continue to provide the Services
contemplated by that EPI Agreement during any dispute resolution or
arbitration proceedings commenced pursuant to this Article VII,
provided that the applicable SBC Entity will continue to make payment
for those Services as provided in that EPI Agreement.
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ARTICLE VIII
TERMINATION
8.1 Termination for Cause. In the event that a Contracting Party
materially defaults in the performance of any of its duties or
obligations under this Agreement or under an EPI Agreement, which
default is not substantially cured within sixty (60) days after
written notice is given to the defaulting Contracting Party specifying
the default (or, with respect to any such default which cannot
reasonably be cured within such sixty (60) day period but is curable,
(x) if the defaulting Contracting Party fails to proceed within such
sixty (60) day period to commence curing the default and thereafter to
proceed with all due diligence to substantially cure the same, or (y)
if any such default referenced in clause (x) is not substantially
cured within one hundred twenty (120) days after the giving of such
written notice), then the non-defaulting Contracting Party may
terminate this Agreement and the applicable EPI Agreement on the date
specified in such notice of termination, which date will be no later
than one (1) year after the date on which that Contracting Party's
right to terminate this Agreement and the applicable EPI Agreement
arose.
8.2 Termination for Non-Payment. In the event that an SBC Contracting
Party defaults in the payment when due of any amount in excess of
$500,000 due to a PSC Contracting Party under any EPI Agreement, and
does not cure the default within thirty (30) days after being given
written notice of the default, then the applicable PSC Contracting
Party may, by giving written notice thereof to that SBC Contracting
Party, terminate the applicable EPI Agreement as of a date specified
in the notice of termination, which date will be no later than one (1)
year after the date on which that PSC Contracting Party's right to
terminate this Agreement or the applicable EPI Agreement arose.
8.3 Termination for Insolvency. In the event that a Contracting Party
(the "Insolvent Party") becomes or is declared insolvent or bankrupt,
is the subject of any proceedings relating to its liquidation,
insolvency or for the appointment of a receiver or similar officer for
it (which, in the case of involuntary proceedings, remains undismissed
for at least sixty (60) days), makes an assignment for the benefit of
all or substantially all of its creditors, or enters into an agreement
for the composition, extension, or readjustment of all or
substantially all of its obligations, then the other applicable
Contracting Party may, by giving written notice thereof to the
Insolvent Party, terminate this Agreement and each EPI Agreement as of
a date specified in such notice of termination. Neither this
Agreement nor any EPI Agreement may be terminated pursuant to this
Section 8.3 once the Insolvent Party ceases to be insolvent or be the
subject of a proceeding relating to its liquidation, insolvency or the
appointment of a receiver.
8.4 Termination for PSC Change in Control. In the event that a Change in
Control occurs in a single transaction or series of related
transactions, then the applicable SBC Entity will have the right to
terminate this Agreement and the applicable EPI Agreement, if such
Change in Control is reasonably likely to have a significant adverse
impact on the performance of or the charges for the Services generally
rendered by the applicable PSC Entities under all EPI
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Agreements or rendered by the applicable PSC Entity pursuant to that
EPI Agreement, by giving that PSC Entity at least ninety (90) days
prior written notice designating the termination date on which this
Agreement or that EPI Agreement will terminate if such Change in
Control has not been cured by such date; provided, however, that the
date specified in such termination notice will be no later than one
(1) year after the Change in Control occurred.
8.5 Termination for Change of Circumstances. The applicable SBC Entity
may terminate this Agreement and the applicable EPI Agreement in the
event that the members of the PSC Group cease generally to offer IT
Services (other than to existing customers with non-terminable
contracts) by giving at least sixty (60) days prior written notice to
the applicable PSC Entity specifying the date on which that SBC Entity
intends to terminate this Agreement and the applicable EPI Agreement,
which date will be no later than one (1) year after the date on which
the SBC Entity's right to terminate this Agreement or that EPI
Agreement arose.
8.6 Termination for Cross-Default. With respect to each EPI Agreement,
either Contracting Party may, by giving prior written notice to the
other, terminate that EPI Agreement in the event there has been a
termination (as a result of a breach by a PSC Entity or an SBC Entity,
as the case may be) of another EPI Agreement between a PSC Entity and
an SBC Entity or of an agreement between the other and a third entity,
in each case, with annual revenues at least equal to the annual
revenues from the EPI Agreement to be terminated. No EPI Agreement
may be terminated for such cross-default more than one (1) year after
the date on which the right to terminate pursuant to this Section 8.6
arose.
8.7 Termination for SBC Major Event. The applicable SBC Entity may, by
giving one hundred eighty (180) days' prior written notice to the
applicable PSC Entity, terminate this Agreement and the applicable EPI
Agreement in the event that SBC Parent is merged into, is acquired by
or acquires another significant entity (an "Acquiring Entity") with a
market value equal to at least fifty percent (50%) of SBC Parent's
market value which has a nonterminable significant exclusive
information technology services contract with annual revenues to the
other provider (the "Other IT Provider) of at least fifty percent
(50%) of the annual revenues to the members of the PSC Group from the
members of the SBC Group under all EPI Agreements, the absence of
which would have a material adverse effect on the combined entity and
the members of the SBC Group choose to contract with the Other IT
Provider for the work formerly performed by the members of the PSC
Group, provided that the parties agree that they will use their best
efforts to find a solution acceptable to both the members of the SBC
Group and the members of the PSC Group other than terminating an EPI
Agreement. If such Acquiring Entity has a nonterminable non-exclusive
contract with the Other IT Provider, the members of the SBC Group will
be permitted to continue such contract. Neither this Agreement nor
any EPI Agreement may be terminated for such event more than one year
after the date on which either party determines that a solution
acceptable to both parties as described above will not be found.
8.8 [Intentionally omitted.]
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8.9 Termination for Security Breach. The applicable SBC Entity may
terminate the applicable EPI Agreement if (i) the applicable PSC
Entity fails to cure, within ten (10) days after written notice is
given to it by the applicable SBC Entity, a curable breach of the
Security Procedures that has a material adverse effect on the business
or reputation of the members of the SBC Group, or (ii) the applicable
PSC Entity commits a non-curable breach of the Security Procedures
that has a material adverse effect on the business or reputation of
the members of the SBC Group and the applicable PSC Entity has not,
within thirty (30) days after written notice of the breach is given to
it by the applicable SBC Entity, implemented a plan to prevent a
substantially similar breach, except that if the non-curable breach
occurs on two additional occasions, the applicable SBC Entity may
terminate the EPI Agreement under which such breach arose.
8.10 Rights Upon Termination of EPI Agreements. Upon termination of any
EPI Agreement, and for a period of eighteen (18) months thereafter,
each Contracting Party thereto will have the following rights and
obligations:
(a) Commencing upon any notice of termination by any member of the
SBC Group pursuant to Sections 8.1, 8.3, 8.4, 8.5, 8.6, 8.7,
8.9 or 10.7(a) hereof or expiration of the term of that EPI
Agreement, the applicable PSC Entity will comply with the
applicable SBC Entity's reasonable directions, and will
provide to such SBC Entity any and all termination assistance
reasonably requested to allow the Services provided under that
EPI Agreement to continue and to facilitate the orderly
transfer of responsibility for performance of the Services to
the members of the SBC Group or a third party designated by
SBC Parent. The applicable SBC Entity will pay the applicable
PSC Entity for such assistance in accordance with the terms of
the applicable EPI Agreement. The termination assistance to
be provided in accordance with this Section 8.10 may include
the following:
(1) Continuing to perform, following the termination
date, any or all of the Services in accordance with
all applicable Service Levels then being performed by
that PSC Entity.
(2) Developing, together with that SBC Entity, a plan for
the orderly transition of the performance of the
Services from that PSC Entity to that SBC Entity or a
third party designated by SBC Parent.
(3) Providing reasonable training for personnel of that
SBC Entity or a third party designated by SBC Parent
in the performance of the Services then being
transitioned to that SBC Entity or a third party
designated by SBC Parent.
(4) Providing that SBC Entity the right to assume any
leases for Equipment leased by that PSC Entity or to
purchase from that PSC Entity Equipment owned by that
PSC Entity that is then dedicated to providing
Services for
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the SBC Entity pursuant to that EPI Agreement. If
that SBC Entity exercises this right, it will pay to
the applicable PSC Entity an amount equal to such PSC
Entity's net book value of the applicable Equipment
calculated in accordance with generally accepted
accounting principles.
(b) If, upon the expiration or termination of an EPI Agreement, a
PSC Entity is using any Equipment to provide services to a
third party customer of the PSC Group, such PSC Entity may
continue to use that Equipment in accordance with Section 4.4
hereof until such time as the PSC Entity can reasonably
transition to other equipment, but for no more than eighteen
(18) months after termination.
(c) Following the termination of an EPI Agreement, the applicable
member of the PSC Group and the applicable member of the SBC
Group will have the right to solicit for employment and employ
any of its former employees then employed by the other.
8.11 Escrow Upon Termination. If any EPI Agreement is terminated by an SBC
Contracting Party pursuant to the provisions of Sections 8.1, 8.4,
8.5, 8.6 or 8.9 hereof, PSC Parent will create an escrow in accordance
with the procedures described in Schedule A hereto.
ARTICLE IX
CONFIDENTIALITY
9.1 General Obligations. All Confidential Information relating to any
member of the SBC Group or the PSC Group will be held in confidence by
the other to the same extent and in at least the same manner as such
party protects its own confidential or proprietary information. No
member of the PSC Group or the SBC Group may disclose, publish,
release, transfer or otherwise make available Confidential Information
of the other party in any form to, or for the use or benefit of, any
Person without the other party's written consent. Each member of the
PSC Group and each member of the SBC Group will, however, be permitted
to disclose relevant aspects of the other party's Confidential
Information to its respective officers, agents, subcontractors and
employees and to the officers, agents, subcontractors and employees of
its Affiliates to the extent that such disclosure is reasonably
necessary for the performance of its duties and obligations under this
Agreement or any EPI Agreement; provided, however, that such party
will take all reasonable measures to ensure that Confidential
Information of the other party is not disclosed or duplicated in
contravention of the provisions of this Agreement or any EPI Agreement
by such officers, agents, subcontractors and employees. PSC Parent
agrees that it will cause each employee of each member of the PSC
Group providing Services to any member of the SBC Group to execute a
PSC Parent confidentiality agreement, which will require confidential
treatment of nonpublic information of and about customers of members
of the PSC Group (which shall include members of the SBC Group). Each
member of the PSC Group or of the SBC Group, as the case may be, may
disclose Confidential Information of the other party if required
pursuant to an order or
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requirement of a court, administrative agency or other governmental
body, regulator or exchange of which that SBC Entity is a member,
provided that the applicable member of the PSC Group or the SBC Group,
as the case may be, will (i) give the other party written notice of
such order or requirement as soon as practicable after it has
knowledge thereof and in any event prior to disclosure of the
Confidential Information, (ii) disclose no more Confidential
Information than is required by such order or requirement, and (iii)
seek confidential treatment from the court, administrative agency or
other governmental body for that Confidential Information. Nothing in
this Section 9.1 will prevent any Contracting Party from exercising
its rights pursuant to Sections 4.1, 4.2 and 4.3 hereof. Subject to
any obligation of any member of the PSC Group to continue to provide
termination assistance in accordance with Section 8.10 hereof and
subject to each party's rights under Sections 4.1, 4.2 and 4.3 hereof,
upon the termination of this Agreement or any EPI Agreement, the
members of the PSC Group or the SBC Group, as the case may be, will
return to the members of the SBC Group or the PSC Group, as the case
may be, and at the other's expense, any Confidential Information of
the other party then held by the members of the SBC Group or of the
PSC Group, as the case may be. The obligations of the members of PSC
Group under this Section 9.1 are in addition to any obligations it has
under Articles IV and V hereof and any obligations it has to comply
with the Security Procedures.
9.2 Unauthorized Acts. Each member of the PSC Group and each member of
the SBC Group will:
(a) Notify the other promptly of any material unauthorized
possession or use of the other's Confidential Information by
any Person which may become known to such party, if such
unauthorized possession arose as a result of the acts or
failures to act of the notifying party.
(b) Promptly furnish to the other full details of the unauthorized
possession or use, and use reasonable efforts to assist the
other in investigating or preventing the recurrence of any
unauthorized possession or use of Confidential Information.
(c) Use reasonable efforts to cooperate with the other in any
litigation and investigation against third parties deemed
necessary by the other to protect its Confidential
Information.
(d) Promptly use all reasonable efforts to prevent a recurrence of
any such unauthorized possession or use of Confidential
Information.
ARTICLE X
INDEMNITIES AND LIABILITY
10.1 Cross Indemnity. PSC Parent and SBC Parent each agree to indemnify,
defend and hold harmless the other and the other's Affiliates from any
and all claims, actions, losses,
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damages, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses, arising out of or relating to the death
or bodily injury of any agent, employee, customer, business invitee or
business visitor of the indemnitor or its Affiliates, or arising out
of or relating to loss of or damage to tangible real or tangible
personal property, to the extent that such claim, action, liability,
loss, damage, cost or expense was proximately caused by the
indemnifying party's tortious act or omission, or by those of its
agents or employees. For purposes of this Section 10.1, no
Transitioned Employee to whom any member of the SBC Group continues to
make payments pursuant to Section 4.9 hereof will be deemed to be an
employee of the SBC Group solely as a result of those payments.
10.2 Intellectual Property Indemnity.
(a) PSC Parent and SBC Parent each agree to indemnify, defend and
hold harmless the other and the other's Affiliates from any
and all claims, actions, damages, liabilities, costs and
expenses, including reasonable attorneys' fees and expenses,
arising out of any claims of infringement of any patent, or a
trade secret, or any copyright, trademark, service xxxx, trade
name or similar proprietary rights conferred by contract or by
common law or by any law of any applicable jurisdiction
alleged to have resulted from the use of Systems provided by
the indemnitor or its Affiliates under this Agreement or any
EPI Agreement; provided, however, that, subject to Section
10.5 hereof, this indemnity will not apply unless the party
claiming indemnification notifies the other promptly of any
matters in respect of which the foregoing indemnity may apply
and of which the notifying party has knowledge and gives the
other full opportunity to control the response thereto and the
defense thereof, including, without limitation, any agreement
relating to the settlement thereof.
(b) PSC Parent will indemnify, defend and hold harmless the
members of the SBC Group from any and all claims, actions,
damages, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses, arising out of any claims of
infringement of any patent, or a trade secret, or any
copyright, trademark, service xxxx, trade name or similar
proprietary rights conferred by contract or by common law or
by any law of any applicable jurisdiction resulting from use
of a Licensed SBC System provided by a member of the PSC
Group to a third party customer of the PSC Group (other than
members of the SBC Group) in accordance with the provisions of
Article IV of this Agreement.
10.3 SBC Indemnity. SBC Parent agrees to indemnify, defend and hold
harmless the members of the PSC Group from any and all claims,
actions, damages, losses, liabilities, costs and expenses, including
reasonable attorneys' fees and expenses, arising out of (i) any claims
for rent or utilities at any location where SBC is required to furnish
space and/or utilities to PSC pursuant to this Agreement or any EPI
Agreement, (ii) any claim arising in connection with the Equipment,
SBC Facilities, SBC Systems, Transitioned Personnel or the Third Party
Service Contracts, to the extent such claim under this subsection (ii)
arose on or prior to the effective date of the applicable EPI
Agreement, and (iii) any investigations,
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proceedings or other activities undertaken by any European fiscal
authority with respect to this Agreement or any EPI Agreement (except
as a result of the gross negligence or willful misconduct of a member
of the PSC Group).
10.4 VAT Indemnity.
(a) If, pursuant to this Agreement or any EPI Agreement:
(1) Any member of the PSC Group makes a supply or is
deemed or treated by applicable law or the practice
from time to time of any European fiscal authority to
make a supply to any member of the SBC Group, and
European VAT is chargeable in respect of such supply,
and as a result any member of the PSC Group is
required to account to any European fiscal authority
for such European VAT ("SBC Supply Vat"); or
(2) Either of PSC Parent, on the one hand, or any other
member of the PSC Group, on the other, makes or is
deemed or treated by applicable law or the practice
from time to time of any European fiscal authority to
make a supply to the other in connection with this
Agreement or any EPI Agreement, and European VAT
("Xxxxx Supply VAT") is payable in respect of such
supply;
then, SBC Parent will on demand pay to the applicable member
of the PSC Group a sum equal to the amount of the SBC Supply
VAT or the Xxxxx Supply VAT, as the case may be; provided,
that, in the latter case, SBC Parent's liability will not
extend to any Xxxxx Supply VAT for which PSC Parent or the
applicable member of the PSC Group, as the case may be, is
entitled to credit or repayment from any European fiscal
authority.
(b) Where PSC Parent or any member of the PSC Group obtains a
repayment or credit in respect of Xxxxx Supply VAT more than
one (1) month after the prescribed accounting period in which
that Xxxxx Supply VAT was incurred, SBC Parent will pay
interest to PSC Parent or the applicable member of the PSC
Group, as the case may be, from the date on which that Xxxxx
Supply VAT was incurred to and including the date on which the
repayment or credit is obtained. The interest shall accrue
from day to day at the PSC Interest Rate (as defined in the
SBC Warburg EPI Agreement), minus any interest paid by the
relevant authority in connection with the repayment or credit.
(c) For purposes of this Section 10.4, "European VAT" means value
added tax as provided for in the Value Added Tax Act 1994 (as
amended or re-enacted from time to time, the "Act") and
legislation supplemental thereto and any other tax (whether
imposed in the United Kingdom in substitution thereof or in
addition
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thereto or elsewhere) of a similar fiscal nature, and (except
as a result of the gross negligence or willful misconduct of a
member of the PSC Group) includes a reference to all fines,
penalties, surcharges and interest which may be assessed,
levied, charged or imposed pursuant to the Act and/or relevant
legislation.
10.5 Indemnification Procedures. With respect to third-party claims
subject to the indemnities set forth in this Article X, the indemnitee
will notify the indemnitor promptly of any matters in respect of which
the foregoing indemnities may apply and of which the indemnitee has
knowledge and will give the indemnitor full opportunity to control the
response thereto and the defense thereof, including, without
limitation, any agreement relating to the settlement thereof, provided
that the indemnitee will have the right to approve any settlement or
any decision not to defend. The indemnitee's failure to promptly give
notice will affect the indemnitor's obligation to indemnify the
indemnitee only to the extent that the indemnitor's rights are
prejudiced thereby. The indemnitee may participate, at its own
expense, in any defense and any settlement directly or through counsel
of its choice. If the indemnitor elects not to defend, the indemnitee
will have the right to defend or settle the claim as it may deem
appropriate, at the cost and expense of the indemnitor, which will
promptly reimburse the indemnitee for all such costs, expenses and
settlement amounts.
10.6 Consequential and Punitive Damages. In no event will either
Contracting Party be liable to the other under this Agreement or under
any EPI Agreement for indirect, incidental, consequential, reliance or
punitive damages, including, without limitation, damages for lost
profits (other than, to the extent recoverable under New York law in
appropriate judicial, arbitration or other legal proceedings, the lost
profits of any PSC Entity under this Agreement or any EPI Agreement,
provided, that the amount of any recovery for such lost profits shall
be deemed to be included within the scope of the maximum liability of
the SBC Group referred to in Section 10.7(ii)(B) hereof) or injury to
property or reputation regardless of the form of action, whether in
contract, indemnity, warranty, strict liability or tort (including
negligence) and regardless of whether such party has reason to know or
in fact knows of the possibility thereof.
10.7 Definition of Liability. All PSC Entities, in the aggregate, and all
SBC Entities, in the aggregate, will only be liable to the other under
this Agreement or any EPI Agreement for direct damages that arise
from:
(a) its gross negligence or willful misconduct and that for all
events, acts or omissions do not exceed, in the aggregate for
this Agreement and all EPI Agreements and for all PSC
Entities, $75,000,000, and for all SBC Entities, $75,000,000;
provided, that the amount of any recovery for gross negligence
or willful misconduct by any SBC Entity shall be deemed to be
included within the scope of the maximum liability of the SBC
Group referred to in Section 10.7(ii)(B); provided, further,
however, if at any time the PSC Entities have paid damages to
the SBC Entities aggregating at least $65,000,000, then PSC
Parent will have the option, within thirty (30) days of such
time, to provide written notice to SBC Parent that PSC Parent
has increased the
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aggregate limitation under this Section 10.7(a) by an amount
equal to the amount required to increase the aggregate
available liability amount back to $75,000,000. If PSC Parent
does not so increase the liability amount, SBC Parent will
have ninety (90) days to provide PSC Parent with written
notice that this Agreement and each EPI Agreement will
automatically terminate unless PSC Parent agrees, in writing,
to increase, and does so increase, the liability amount as
described above within fifteen (15) days of such written
notice. The procedure described above will be repeated each
time the aggregate remaining liability amount under this
Section 10.7(a) decreases to less than $10,000,000; and
(b) its negligence and that for all events, acts or omissions do
not exceed (i) the amount of insurance coverage maintained by
the liable SBC or PSC Entity, as the case may be, less (ii)
any amounts payable by that liable SBC or PSC Entity, as the
case may be, pursuant to Section 10.7(a) above; provided that
no amount will be due or payable to either the members of the
PSC Group or the members of the SBC Group, as the case may be,
under this Section 10.7(b) unless and until the liable party
is finally paid that amount by its insurance carrier. In the
event of any dispute between a SBC Entity and a PSC Entity
that is likely to give rise to a claim that would be subject
to the provisions of this Section 10.7(b), the liable party
will upon request of the other party exercise good faith in
determining whether and when to notify its insurance carrier
of the claim in order to preserve its ability to collect under
the applicable insurance policies with respect to that claim
and will comply with the claim handling procedures specified
by its applicable insurance policies.
The limitations set forth in this Section 10.7 will not apply (i) with
respect to either the members of the SBC Group or of the PSC Group to
the indemnity obligations under Section 10.2 hereof or the indemnity
obligations under Section 10.1 hereof that relate to personal injury,
and (ii) with respect to the members of the SBC Group, to (A) amounts
payable by the members of the SBC Group to the members of the PSC
Group for Services that have been provided under any EPI Agreement,
and (B) in the event of a breach or termination of this Agreement or
any EPI Agreement, direct damages recoverable under New York law and
any recoverable lost profits under New York law of any PSC Entity
under this Agreement or any EPI Agreement in respect of such breach or
termination, but in no event will the members of the SBC Group be
liable for any amounts described in this Section 10.7(ii)(B), which
exceed, in the aggregate for all such breaches and terminations under
this Agreement and all EPI Agreements for all members of the SBC
Group, $250,000,000 plus one-half (1/2) of the Shares Termination
Value, plus all amounts recoverable under Section 10.7(ii)(A) hereof.
10.8 Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
AN EPI AGREEMENT, NEITHER ANY MEMBER OF THE PSC GROUP NOR ANY MEMBER
OF THE SBC GROUP MAKES ANY, AND EACH SUCH MEMBER HEREBY DISCLAIMS ALL,
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF
MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE RELATING TO ANY
GOODS OR SERVICES PROVIDED PURSUANT TO THIS AGREEMENT OR ANY EPI
AGREEMENT.
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10.9 Risk of Loss. Subject to Section 10.7 hereof, during the term of each
EPI Agreement, the risk of loss for Equipment and Systems provided in
accordance with Article IV hereof or otherwise pursuant to any EPI
Agreement will remain with the owner of the applicable Equipment or
System.
ARTICLE XI
MISCELLANEOUS
11.1 Original Agreement. SBC Parent and PSC Parent each acknowledge and
agree that, notwithstanding anything to the contrary contained herein,
the terms of the Original Agreement will govern PSC Parent's and SBC
Parent's respective obligations thereunder with regard to any matters
that occurred prior to the Adjustment Date.
11.2 Binding Nature and Assignment. This Agreement and each EPI Agreement
will be binding on the applicable Contracting Party and their
respective successors and assigns, but no Contracting Party may, or
will have the power to, assign this Agreement without the prior
written consent of the other Contracting Party, except that the
applicable SBC Entity may assign those portions of an EPI Agreement
(including to an SBC Entity) necessary to comply with, and to the
extent required by, Section 2.4(b) hereof.
11.3 Hiring of Employees. Except as otherwise expressly provided herein,
each Contracting Party agrees that, during the term of the EPI
Agreement to which it is a party and for two (2) years thereafter,
neither it nor any of its Affiliates may, except with the prior
written consent of the other, offer employment to or employ any person
employed then or within the preceding twelve (12) months by the other
or any Affiliate of the other.
11.4 Notices. Whenever under this Agreement one party is required or
permitted to give notice to the other, such notice will be deemed
given when delivered by hand or when mailed by overnight mail, or
registered or certified mail, return receipt requested, postage
prepaid, and addressed as follows: In the case of PSC:
Xxxxx Systems Corporation
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Division President - Global Financial Services
Division
with a copy to:
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Xxxxx Systems Corporation
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
In the case of SBC:
Swiss Bank Corporation
Swiss Bankcenter
Europastrasse
CH-8152 Opfikon
Attention: Managing Director - Corporate Information
Technology.
with a copy to:
Swiss Bank Corporation
Legal Services SBC Group
Xxxxxxxxx 00-00
XX-0000 Xxxxx, Xxxxxxxxxxx
Attention: General Counsel
Either party hereto may from time to time change its address for
notification purposes by giving the other prior written notice of the
new address and the date upon which it will become effective.
11.5 Counterparts. This Agreement may be executed in several counterparts,
all of which taken together constitute one single agreement between
the Contracting Parties hereto and each EPI Agreement may be executed
in several counterparts, all of which taken together will constitute
one single agreement between the Contracting Parties thereto.
11.6 Headings. The article and section headings used herein and in each
EPI Agreement are for reference and convenience only and will not
enter into the interpretation hereof and thereof.
11.7 Relationship of Parties. Each PSC Entity, in furnishing services to
each SBC Entity hereunder or under any EPI Agreement, is acting only
as an independent contractor. No PSC Entity undertakes by this
Agreement or any EPI Agreement or otherwise to perform any obligation
of any SBC Entity, whether regulatory or contractual (excluding the
Third Party Service Contracts), or to assume any responsibility for
any SBC Entity's business or operations. Each PSC Entity has the sole
right and obligation to supervise, manage, contract, direct, procure,
perform or cause to be performed, all work to be performed by that PSC
Entity under the applicable EPI Agreement, unless otherwise provided
therein.
11.8 Approvals and Similar Actions. Where agreement, approval, acceptance,
consent or similar action by any Contracting Party to this Agreement
or any EPI Agreement is required by any provision of this Agreement or
that EPI Agreement (except with respect to the Security
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Procedures), such action will not be unreasonably delayed or withheld.
Each member of the PSC Group will be relieved of its obligation to
perform any Service or meet any Service Level to the extent that the
ability of such member of the PSC Group to perform those obligations
under this Agreement or any EPI Agreement is adversely affected by any
member of the SBC Group unreasonably withholding or delaying any
agreement, approval, consent or similar action on account of or with
respect to the Security Procedures, and each member of the SBC Group
hereby waives any right to terminate, or claim a breach of or default
under, this Agreement or any EPI Agreement on account of or with
respect to any failure by the applicable member of the PSC Group to so
perform.
11.9 Media Releases. All media releases, public announcements and public
disclosures by any member of the SBC Group or any member of the PSC
Group relating to this Agreement or the transactions contemplated
hereby, including, without limitation, promotional or marketing
material (but not including any announcement intended solely for
internal distribution within the SBC Group or the PSC Group, as the
case may be, or any disclosure required by legal, accounting or
regulatory requirements beyond the reasonable control of any member of
the SBC Group or the PSC Group, as the case may be, to the extent the
timing of any such disclosure reasonably prevents any coordination
with the other party) will be coordinated with and approved by the
other prior to the release thereof.
11.10 Force Majeure. Each Contracting Party will be excused from
performance hereunder and under any EPI Agreement for any period and
to the extent that it is prevented from performing, in whole or in
part, under this Agreement and under any EPI Agreement as a result of
delays caused by the other party or an act of God, war, civil
disturbance, court order, governmental actions, adverse weather
condition, labor dispute, third party nonperformance, or other cause
beyond its reasonable control, including failures or fluctuations in
electrical power, heat, light, or air conditioning, and such
nonperformance will not be a default hereunder or under any EPI
Agreement or grounds for termination hereof or thereof. If a PSC
Entity suspends performance of the Services under any EPI Agreement
pursuant to this Section 11.10 for a period of time greater than two
(2) consecutive days or four (4) days within any thirty (30) day
period for any reason, (a) the applicable SBC Entity's payment
obligations with respect to that portion of the Services that the
applicable PSC Entity has suspended performance of pursuant to this
Section 11.10 will also be suspended for an identical period of time,
(b) the applicable PSC Entity, or if that PSC Entity is unwilling or
unable, the applicable SBC Entity, may contract with a third party to
provide services in substitution of the suspended Services for the
period of the suspension, it being agreed that the applicable SBC
Entity will not be obligated to compensate that PSC Entity for
services that have been provided by a member of the SBC Group or such
third party during that period of suspension, except as otherwise
specifically provided in the EPI Agreement, and (c) the applicable
Contracting Parties agree to use commercially reasonable efforts and
to cooperate in good faith to resolve any issue that arises in
connection with a suspension of the provision of Services by the
applicable PSC Entity in accordance with this Section 11.10.
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11.11 Severability. If any provision of this Agreement or any EPI Agreement
is declared or found to be illegal, unenforceable or void, then the
applicable Contracting Parties will be relieved of all obligations
arising under such provision, but only to the extent that such
provision is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement and any applicable EPI
Agreement will be deemed amended by modifying such provision to the
extent necessary to make it legal and enforceable while preserving the
economic benefits of each party or, if that is not possible, by
substituting therefor another provision that is legal and enforceable
and achieves the same objective. If the remainder of this Agreement
and any applicable EPI Agreement will not be affected by such
declaration or finding and is capable of substantial performance in a
manner that would preserve each party's economic benefit, then each
provision not so affected will be enforced to the extent permitted by
law.
11.12 Waiver. No delay or omission by any Contracting Party hereto or to
any EPI Agreement to exercise any right or power hereunder or
thereunder will impair such right or power or be construed to be a
waiver thereof. A waiver by any Contracting Party hereto or to any
EPI Agreement of any of the covenants to be performed by the other or
any breach thereof will not be construed to be a waiver of any
succeeding breach thereof or of any other covenant herein or therein
contained. Except as otherwise provided in this Agreement or any EPI
Agreement, all remedies provided for in this Agreement and any EPI
Agreement will be cumulative (with respect to either this Agreement or
that EPI Agreement) and in addition to and not in lieu of any other
remedies available to either party at law, in equity or otherwise.
11.13 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement or any EPI Agreement, or because
of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement or any EPI
Agreement, the prevailing party will be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding,
in addition to any other relief to which it may be entitled.
11.14 Entire Agreement. Except as set forth in the Principal Agreements,
(as defined in the Master Agreement) this Agreement, including any
Schedules and agreements referred to herein and attached hereto, each
of which is incorporated herein for all purposes, constitutes,
together with any other written agreement or letter between SBC and
PSC dated the Adjustment Date or as of the Adjustment Date, or the
Original Agreement Date or as of the Original Agreement Date (not
including agreements or letters amended, restated or superseded as of
the Adjustment Date), that relates to this Agreement, the entire
agreement between the parties hereto with respect to the subject
matter hereof and there are no representations, understandings or
agreements, written or oral, relative hereto which are not fully
expressed herein. No change, waiver or discharge hereof will be valid
unless in writing and signed by an authorized representative of the
party against which such change, waiver, or discharge is sought to be
enforced.
11.15 Governing Law. This Agreement and each EPI Agreement will be governed
by and construed in accordance with the laws, other than choice of law
rules, of the State of New
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York; provided, however, that to the extent any claim or cause of
action is based upon a violation of the Security Procedures, such
claim or cause of action will be governed by the laws of the
jurisdiction whose bank secrecy laws are alleged to have been
violated.
11.16 Venue. Any arbitration proceeding regarding any dispute arising under
or related to this Agreement will take place in New York as described
in Section 7.4 hereof. Any judicial proceeding, referenced in Section
7.5 hereof, regarding any dispute arising under or related to this
Agreement or any EPI Agreement will be brought exclusively in the
courts of the State of New York, or in the United States District
Court for the Southern District of New York, and each party hereto
submits to the personal jurisdiction of such courts and hereby
irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or any EPI Agreement and waives any
claim or defense that party may have based on a lack of personal
jurisdiction or the doctrine of forum non conveniens. Notwithstanding
the foregoing, if any claim or cause of action seeking non-monetary
injunctive relief (and excluding damages) is brought regarding the
violation of the Security Procedures, such claim or cause of action
will be brought exclusively in the courts of Switzerland, and each
party hereto submits to the personal jurisdiction of such courts and
hereby irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement or any EPI Agreement and waives any
claim or defense that party may have based on a lack of personal
jurisdiction or the doctrine of forum non conveniens.
11.17 Survival. The provisions of Sections 4.1, 4.2, 4.3, 8.10 and 11.3,
and Articles IX and X shall survive any termination of this Agreement
or any EPI Agreement and the consummation of the transactions
contemplated hereby or thereby.
11.18 Expenses. Except as otherwise provided in this Agreement, each of SBC
and PSC will pay all of its own expenses relating to the negotiation,
execution and delivery of this Agreement (excluding any amendments,
modifications or supplements hereto), including without limitation,
the fees and expenses of its counsel, financial advisors and
accountants.
IN WITNESS WHEREOF, PSC Parent and SBC Parent have each caused this Agreement
to be signed and delivered by its duly authorized officer(s), all as of the
Adjustment Date.
XXXXX SYSTEMS CORPORATION SWISS BANK CORPORATION
By: By:
--------------------------------- --------------------------------
Title: Title:
------------------------------ --------------------------------
By:
--------------------------------
Title:
--------------------------------
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SCHEDULE A
ESCROW OF SHARES
If any EPI Agreement (the "Terminated EPI Agreement") is terminated by an SBC
Contracting Party pursuant to Sections 8.1, 8.4, 8.5, 8.6 or 8.9 of this
Agreement, then in order to secure the payment to any member of the SBC Group
by any member of the PSC Group of any damages for which that member of the PSC
Group is liable hereunder as a result of the failure by that member of the PSC
Group to perform its termination assistance obligations pursuant to this
Agreement or the applicable EPI Agreement:
1. PSC Parent will deposit into escrow a number of shares of Class A
Stock (the "Escrow Shares") equal to 90% (or, if the Terminated EPI
Agreement is the SBC Warburg EPI Agreement, 95%) of the number of
additional shares of Class B common stock, par value $.01 per share of
PSC (the "Class B Stock"), for which the options warrants or similar
rights (if any) would have become or remained exercisable under the
Terminated EPI Agreement had the Terminated EPI Agreement not been
terminated and instead remained in effect for its full stated term
plus the number of shares of Class B Stock that would have become
vested (if any) under the Terminated EPI Agreement had the Terminated
EPI Agreement not been terminated and instead remained in effect for
its full stated term.
2. If the Fair Market Value (as defined in paragraph 5 below) of the
Escrow Shares does not equal or exceed $50,000,000 and, prior to the
termination date of the Terminated EPI Agreement, Class A Shares have
been Publicly Traded, then PSC Parent will:
(a) Deposit into the escrow an amount either by deposit of cash,
additional Class A Shares or other valuables, with a value
(which, in the case of any such Class A Shares, will equal
Fair Market Value) up to the difference between the Fair
Market Value of the Escrow Shares and $50,000,000; and
(b) Provide other security in the form of a bond, guaranty or
other form of assurance reasonably acceptable to SBC Parent in
an amount equal to the difference between the Fair Market
Value of the Escrow Shares and $50,000,000 (less the value of
the property placed in escrow under paragraph (2)(a) above).
3. Notwithstanding anything to the contrary above, the Fair Market Value
of all the Escrow Shares, plus the value of the cash and other assets
placed in escrow by PSC Parent pursuant to Section 2(a) above and the
amount of other security and assurances provided by PSC Parent
pursuant to Section 2(b) above, with respect to all EPI Agreements,
may never exceed, in the aggregate, $50,000,000 (valued on the date of
deposit into escrow).
4. The Escrow Shares and other amounts held in escrow and any other
security and assurances provided by PSC Parent (collectively, the
"Security") will be released in accordance with the following:
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(a) The applicable PSC Contracting Party will notify the
applicable SBC Contracting Party when that PSC Contracting
Party believes it has performed the termination assistance
services that it was obligated to perform within the first 18
months after termination of the Terminated EPI Agreement (the
"Required Termination Assistance").
(b) If that SBC Contracting Party agrees that the applicable PSC
Contracting Party did so perform the Required Termination
Assistance, or if that SBC Contracting Party fails to notify
the applicable PSC Contracting Party of any deficiency in its
performance of the Required Termination Assistance within ten
days after receiving notification from that PSC Contracting
Party pursuant to Section 4(a) above, the Security, including
any interest thereon, will be released to PSC Parent.
(c) If that SBC Contracting Party does not agree that the
applicable PSC Contracting Party has performed the Required
Termination Assistance, that SBC Contracting Party will
provide the PSC Contracting Party with written notice
specifying the services that the SBC Contracting Party
believes the applicable PSC Contracting Party was obligated
to, and did not, perform, and provide that PSC Contracting
Party with ten working days to cure the failure to perform. If
that PSC Contracting Party has not cured the default within
the ten working day cure period, then the parties will submit
the dispute to arbitration in accordance with Section 7.4 of
this Agreement.
(d) The arbitration panel will be directed by each party to first
determine the maximum amount of damages that the PSC
Contracting Party can reasonably expect to be liable for as a
result of those services that the applicable SBC Contracting
Party reasonably claims the PSC Contracting Party has failed
to perform. The difference, if any, between that amount and
the total value of the Security, including any interest
thereon, will be released to PSC Parent. The remainder of the
Security will be retained in the escrow until such time as the
arbitration panel reaches a resolution, at which point the
remainder of the Security, including any interest thereon,
will be allocated between the PSC Group and the SBC Group as
the arbitration panel determines; provided that the Class A
Shares may only be released from escrow for sale by SBC to the
extent such release and sale are permissible under the Bank
Holding Company Act of 1956, as amended.
5. For purposes of this Schedule A:
(a) "Average Market Value" means the average of the Closing Price
for the security in question for the thirty (30) Trading Days
immediately preceding the date of termination of the
Terminated EPI Agreement.
(b) "Closing Price" means, as to any security:
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(1) If the primary market for the security in question is
a national securities exchange registered under the
Securities Exchange Act of 1934, as amended, the
Nasdaq National Market or another market or quotation
system in which last sale transactions are reported
on a contemporaneous basis, the last reported sales
price, regular way, of such security for such day,
or, if there has not been a sale on such Trading Day,
the highest closing or last bid quotation therefor on
such Trading Day (excluding, in any case, any price
that is not the result of bona fide arm's length
trading); or
(2) If the primary market for such security is not an
exchange or quotation system in which last sale
transactions are contemporaneously reported, the
highest closing or last bona fide bid or asked
quotation by disinterested Persons in the
over-the-counter market on such Trading Day as
reported by the National Association of Securities
Dealers through its Automated Quotation System or its
successor or such other generally accepted source of
publicly reported bid quotations as SBC and PSC
designate.
(c) "Fair Market Value" means:
(1) As to securities regularly traded in the organized
securities markets, the Average Market Value; and
(2) As to all securities not regularly traded in the
securities markets, the fair market value of such
securities as determined as set forth below. For a
period of thirty (30) days after the termination date
of the Terminated EPI Agreement (the "Negotiation
Period"), PSC and SBC each agrees to negotiate in
good faith to reach agreement upon the fair market
value of such securities, as of the termination date
of the Terminated EPI Agreement. In the event that
the parties are unable to agree upon the fair market
value of such securities by the end of the
Negotiation Period, then the fair market value of
such securities will be determined for purposes of
this Schedule A by an independent appraiser mutually
acceptable to SBC and PSC (the "Appraiser") whose
appraisal will be conclusive and binding on the
parties. For such purposes, fair market value will
be calculated without premium for control or discount
for minority interests, illiquidity, or restrictions
on transfer. The costs of the Appraiser will be
borne by SBC and PSC equally.
(d) "Trading Day" means any business day in which the securities
in question are tradeable on stock exchanges, in the
over-the-counter markets or otherwise.
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