EXHIBIT 10.3
MANAGEMENT SERVICES AGREEMENT
BETWEEN
ELECTRONIC DATA SYSTEMS CORPORATION
AND
UNIGRAPHICS SOLUTIONS INC.
MANAGEMENT SERVICES AGREEMENT
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INTERPRETATION
ARTICLE 2
TERM
2.1 Stated Term........................................................... 1
2.2 Renewal............................................................... 1
2.3 Transition Assistance................................................. 1
ARTICLE 3
SERVICES
3.1 Management and Other Services......................................... 2
3.2 Standard of Care...................................................... 2
3.3 Manner and Place of Performance....................................... 2
3.4 Recipients of Services................................................ 2
3.5 Subcontracting Services............................................... 2
3.6 Information Regarding Services........................................ 2
3.7 Legal Services........................................................ 3
3.8 Warranty Disclaimer................................................... 3
ARTICLE 4
SERVICE LEVEL
4.1 Continuation of Level................................................. 3
4.2 Mid-year Changes in Level............................................. 3
4.3 Procedure for Level Change............................................ 3
ARTICLE 5
DISCONTINUANCE OF OPTIONAL SERVICES
5.1 Procedure............................................................. 3
5.2 Service Level and Price of Discontinued Services...................... 4
5.3 Impossible Optional Services.......................................... 4
5.4 Transition Assistance................................................. 4
5.5 Reinstatement of Discontinued Service................................. 4
5.6 Change in Internal Systems............................................ 4
ARTICLE 6
SERVICES OBTAINED FROM OTHERS
6.1 Mandatory Services.................................................... 4
6.2 Upon Discontinuance................................................... 4
6.3 Before Discontinuance................................................. 5
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ARTICLE 7
SERVICE AND MANAGEMENT FEES
7.1 Cost Determination for Services....................................... 5
7.2 Annual Pricing for Services........................................... 5
7.3 Disagreement on Mandatory Service Pricing............................. 5
7.4 Annual Service Price Effectiveness.................................... 6
7.5 Fixed Management Services Fee......................................... 6
ARTICLE 8
PAYMENT
8.1 Invoices.............................................................. 6
8.2 Payment............................................................... 6
8.3 Method of Payment..................................................... 7
8.4 Interest.............................................................. 7
8.5 Nonpayment Notice..................................................... 7
8.6 Payment for IB Services............................................... 7
8.7 Dispute of Invoice or IB Payment Notice............................... 7
ARTICLE 9
RECORDS
9.1 Record Keeping........................................................ 7
9.2 Examination........................................................... 7
ARTICLE 10
CONFIDENTIAL INFORMATION
10.1 Confidential Information.............................................. 8
10.2 Excluded Information.................................................. 8
10.3 Standard of Care...................................................... 8
10.4 Permitted Disclosures................................................. 8
10.5 Required Disclosures.................................................. 8
10.6 Title to Information.................................................. 9
10.7 Survival; Return...................................................... 9
ARTICLE 11
PARTIES' RELATIONSHIP
11.1 Independent........................................................... 9
11.2 Employees............................................................. 9
11.3 Authority and Enforceability.......................................... 9
11.4 Third-Party Consents.................................................. 9
11.5 Further Assurances.................................................... 9
ARTICLE 12
PARTIES' REPRESENTATIVES
12.1 Representatives' Authority............................................10
12.2 Designation...........................................................10
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ARTICLE 13
TERMINATION
13.1 Termination Events....................................................10
13.2 Nonexclusive..........................................................10
13.3 Consequences of Termination...........................................10
13.4 Survival of Rights and Obligations....................................11
ARTICLE 14
LIABILITY AND REMEDIES
14.1 Warranties............................................................11
14.2 Nonconforming Services................................................11
14.3 Actual Damages........................................................12
14.4 Indemnities for Certain Breaches and Other Matters....................12
14.5 Time for Claims.......................................................13
14.6 Offset................................................................14
14.7 Equitable Relief......................................................14
14.8 Exclusive Remedies....................................................14
14.9 Waiver of Remedies....................................................14
14.10 Cumulative Remedies...................................................14
14.11 Survival..............................................................14
ARTICLE 15
FORCE MAJEURE
15.1 No Breach or Liability................................................14
15.2 Notice of Excusable Delay or Failure..................................14
15.3 Efforts to Overcome...................................................14
15.4 Extended Delay or Failure.............................................14
ARTICLE 16
DISPUTE RESOLUTION MATTERS
16.1 General Procedure.....................................................15
16.2 Continued Performance.................................................15
16.3 Parties' Agreement....................................................15
ARTICLE 17
EXPENSES AND TAXES
17.1 Expenses..............................................................15
17.2 Taxes.................................................................15
ARTICLE 18
MISCELLANEOUS
18.1 Notices...............................................................16
18.2 Assignment............................................................17
18.3 Amendment and Waiver..................................................17
18.4 Integration...........................................................17
18.5 Severability..........................................................17
18.6 Successors............................................................17
18.7 Governing Law.........................................................17
18.8 Counterparts..........................................................17
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ATTACHMENTS:
DEFINITIONAL APPENDIX
DISPUTE RESOLUTION APPENDIX
SCHEDULES OF SERVICES
iv
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement is between Electronic Data Systems
Corporation, a Delaware corporation, and Unigraphics Solutions Inc., a Delaware
corporation, effective on January 1, 1998.
BACKGROUND
Effective as of January 1, 1998, EDS is transferring the business and
assets which comprised its Unigraphics division to USI, a wholly-owned
subsidiary of EDS. In anticipation of EDS' ownership interest in USI being
reduced, the Parties wish to set forth the terms on which certain management
services will be rendered by EDS to USI and its subsidiaries.
AGREEMENT
The Parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Various terms used in this Agreement are defined in the Definitional
Appendix; the defined terms used in this Agreement begin with a capital letter.
Various interpretative matters for this Agreement are also set forth in the
Definitional Appendix. The Definitional Appendix is an integral part of this
Agreement.
ARTICLE 2
TERM
2.1 Stated Term. This Agreement commences on the Effective Date and will
continue in effect until 11:59 p.m., Central Time, on December 31, 2002, unless
terminated earlier by one or both of the Parties in accordance with Article 13.
2.2 Renewal. The Parties may consent to successive one-year renewal terms
by following this procedure: If USI wishes to renew the term of this Agreement,
it shall Notify EDS of that intention by September 30, 2002 and the same date of
each subsequent year. If EDS wishes to concur with that renewal, it shall Notify
USI of that concurrence by October 31 of that year. If no Notice of intent to
renew or no concurrence is given, this Agreement will Expire when the then
current term expires.
2.3 Transition Assistance. For up to 180 days after Expiration, EDS shall
comply with USI's reasonable requests for assistance in engaging or training
another Person or Persons to provide, and for records and other information
relating to, the Services rendered by EDS immediately preceding that Expiration.
USI shall reimburse and pay EDS' Transition Expenses in accordance with invoices
submitted to USI by EDS. Articles 8 and 18 shall apply in this situation as
though this Agreement had not Expired. EDS may cease providing transition
assistance, immediately upon Notice to USI, if USI has not paid the amount
described in a Nonpayment Notice by the tenth Business Day after the Nonpayment
Notice was given. If the records or other information provided by EDS are
Confidential Information, Article 10 shall also apply as though this Agreement
had not Expired.
ARTICLE 3
SERVICES
3.1 Management and Other Services. EDS shall render, and USI shall pay
for, the Mandatory Services and, to the extent not discontinued in accordance
with this Agreement, the Optional Services and the IB Services during the
effectiveness of this Agreement. The Services are described on the Schedules,
which are an integral part of this Agreement. The Services described on
Schedules I and II are Mandatory Services; the Services described on Schedules
III through XII are Optional Services; and the Services described on Schedule
XIII are the IB Services. Neither Party may unilaterally change any Mandatory
Service or Optional Service or separate any one or more of the Tasks that
constitute such a Service. In addition to the Services described on Schedules I
through XII, during the effectiveness of this Agreement, EDS' management shall
be available to management of USI to provide management and financial advisory
services.
3.2 Standard of Care. EDS shall use the same care in rendering the
Services as it uses in rendering services to itself and to its other
subsidiaries.
3.3 Manner and Place of Performance. EDS shall render each Mandatory
Service and Optional Service in accordance with any terms (including any time
period) described on the corresponding Schedule or any applicable SLA, though
EDS has full discretion about how and where to render each Service as that
Service is so described. EDS is not obligated to render any Service or Task in
the same manner (such as using the same personnel or other assets of EDS) as it
previously rendered that Service or Task, whether before or after the Effective
Date. USI and the USI Companies shall afford access to their respective premises
as necessary or reasonably appropriate to permit a Service or Task to be
rendered.
3.4 Recipients of Services. The Services shall be rendered solely to, or
for the direct benefit of, USI and the USI Companies. Neither USI nor any USI
Company may assign, license, or otherwise transfer or provide, whether for or
without consideration, any right to any Service, in whole or in part, to any
Person other than USI or any USI Company. USI or any USI Company may, however,
provide any other Person (whether for or without consideration) any product or
information of USI or any USI Company resulting or derived from any Service or
Task, to the extent not prohibited by Article 10.
3.5 Subcontracting Services. EDS has Subcontracted certain of the
Services, in whole or in part, before the Effective Date. USI consents to that
Subcontracting and those Effective Date Service Subcontracts and Subcontractors.
EDS' Subcontracting after the Effective Date, however, is subject to these
terms:
(a) EDS may, without any consent or approval of USI, (i) Subcontract any
Service, in whole or in part, to any Person, including any Affiliate of EDS,
(ii) amend any Service Subcontract, or (iii) cease to Subcontract any Service,
in whole or in part.
(b) USI shall have no indemnification obligation under Section 14.4(b)
regarding any Service Subcontract, other than an Effective Date Service
Subcontract, entered into by EDS without USI's Reasonable Consent. Also, if
EDS, without USI's Reasonable Consent, enters into any amendment to (i) an
Effective Date Service Subcontract or (ii) any other Service Subcontract to
which USI had given its Reasonable Consent, USI shall be liable under Section
14.4(b) only for any Damages of EDS or any of its Indemnified Agents that would
have resulted without that amendment; that is, USI shall not be liable under
Section 14.4(b) for any increase in Damages that results from an amendment of
that kind. EDS shall remain responsible for the rendering to USI of any Service
that is Subcontracted, in whole or in part. Also, except as described in
Section 14.4(b), EDS shall be solely responsible for its obligations to the
Subcontractor (including any applicable Subcontract Termination Penalty) under
each Service Subcontract.
3.6 Information Regarding Services. Each Party shall make available to the
other Party any information required or reasonably requested by that other Party
regarding the performance of any Service and shall be responsible for timely
providing that information and for the accuracy and completeness of that
information. But a Party shall not be liable for not providing any information
that is subject to a confidentiality obligation owed by it to a Person other
than an Affiliate of it or the other Party. A Party shall not be liable for any
impairment of any Service caused by its not
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receiving information, either timely or at all, or by its receiving inaccurate
or incomplete information from the other Party that is required or reasonably
requested regarding that Service.
3.7 Legal Services. The Service described in one of the Schedules as
"legal services" consists of EDS' making the Legal Staff available for
engagement by USI and the USI Companies for their legal matters. The engagement,
services, or withdrawal of any of the Legal Staff regarding a particular legal
matter for USI or any of the USI Companies, as well as certain of the Prices for
those legal services, are governed by and subject to the Legal Staff's
professional or ethical obligations.
3.8 Warranty Disclaimer. EDS MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, REGARDING ANY SERVICE OR TASK OTHER THAN AS STATED IN THIS
AGREEMENT. EDS SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING
THE SERVICES.
ARTICLE 4
SERVICE LEVEL
4.1 Continuation of Level. EDS shall provide substantially the same Level
of each Mandatory Service and Optional Service, and each Task, as it provided to
the Unigraphics division of EDS before the Effective Date, except as otherwise
agreed in accordance with this Agreement.
4.2 Mid-year Changes in Level. The Level of any Service may be changed
annually by the Parties' agreement, so long as that agreement includes a
mutually acceptable corresponding Price for the changed Level of Service. A
change in the Level of a Service shall be effective only on and after July 1 if
the Parties agree, and enter into an SLA for that Service, by the preceding
April 1 in accordance with Section 4.3. A change in the Level of any one or more
Tasks that constitute a Service shall be deemed a change in the Level of that
Service. Seasonal or other normal fluctuations in a Service or Task shall not be
deemed a change in the Level of that Service.
4.3 Procedure for Level Change. If the Parties agree by April 1 that there
should be a Level Change, EDS shall submit to USI a corresponding Price Proposal
for that Service by the following May 1. Otherwise:
(a) If EDS proposes, by Notice to USI by April 1, a Level Change,
EDS shall concurrently submit to USI a corresponding Price Proposal for
that service for the following July through December; USI shall then
respond in writing by the May 1 following the submission of that proposal.
(b) If USI proposes, by Notice to EDS by April 1, a Level Change,
EDS shall respond in writing by the following May 1. To the extent that EDS
agrees with the proposed change, its response shall include a revised Price
Proposal for that Service for the following July through December
reflecting a Level Change to which EDS would agree.
ARTICLE 5
DISCONTINUANCE OF OPTIONAL SERVICES
5.1 Procedure. Either Party may discontinue or terminate annually any
Optional Service, commencing effective January 1, 1999 for the Legal Services
described on Schedule VIII and effective January 1, 2000 for all other Optional
Services, by five months' Notice to the other Party. A Notice of discontinuance
shall be given by August 1 to discontinue an Optional Service effective at
midnight on the following December 31 (i.e., a Notice of discontinuance with
respect to an Optional Service to be terminated effective January 1, 2000 must
be given by August 1, 1999). A Notice of discontinuance may refer to more than
one Optional Service. Only an entire Optional Service may be discontinued; none
of the Tasks that constitute an Optional Service may be separately discontinued
without the Parties' agreement (which may be stated in the corresponding
Schedule). Any Optional Service that is the subject of a Notice of
discontinuance shall continue to be rendered by EDS until the effective date of
the discontinuance (i.e., January 1),
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and USI shall pay for that Optional Service rendered until that date. A Party
may not unilaterally rescind its Notice of discontinuance.
5.2 Service Level and Price of Discontinued Services. Until the date of
its discontinuance, an Optional Service that is the subject of a Notice of
discontinuance shall be rendered at the same Level and for the same Price as in
effect immediately preceding the Notice of discontinuance.
5.3 Impossible Optional Services. If either Party reasonably determines
that the discontinuance of any Optional Service would make it functionally
impossible to continue any other Optional Service, in whole or in part, that
Party shall promptly Notify the other of that determination. Any Optional
Service that so becomes functionally impossible to render shall be deemed
discontinued effective upon the date of discontinuance of the Optional Service
or Optional Services that caused that impossibility.
5.4 Transition Assistance. For up to 180 days after the effective date of
discontinuance of an Optional Service, EDS shall comply with USI's reasonable
requests for assistance in USI's engaging or training another Person or Persons
to provide, and for records and other information relating to, that discontinued
Optional Service, at USI's expense. USI shall pay for EDS' compliance with those
requests by:
(a) reimbursing EDS all of its resulting out-of-pocket expenses; and
(b) paying EDS for the resulting time or activities of EDS' personnel as
follows:
(i) if the activities of those personnel are or were part of a Use-
based Service, then at the Price then in effect, or most recently paid (if
that Optional Service has been discontinued), for that Use-based Service,
or
(ii) if the activities of those personnel are or were part of a Fixed-
price Service, then that portion of the Price then in effect, or most
recently paid (if that Optional Service was discontinued), for that Fixed-
price Service corresponding to the transition activities' portion of all
activities that constituted that Fixed-price Service for the time covered
by that Price.
Invoicing and payment for transition assistance shall be in accordance with
Article 8. EDS may cease providing transition assistance, immediately upon
Notice to USI, if USI has not paid the amount described in a Nonpayment Notice
by the tenth Business Day after the Nonpayment Notice was given.
5.5 Reinstatement of Discontinued Service. Neither Party may unilaterally
reinstate any Optional Service that has been discontinued under this Agreement.
5.6 Change in Internal Systems. In the event that either Party shall make
a significant change to its internal systems, or adopt new systems, so that it
would be functionally impossible for EDS to render an Optional Service, and such
Optional Service is not yet terminable pursuant to Section 5.1 hereof and/or it
is impracticable to modify the Level of Service pursuant to Article 4 hereof,
the Parties shall negotiate in good faith to reach agreement as to the terms
under which such Optional Service may nevertheless be modified or discontinued.
ARTICLE 6
SERVICES OBTAINED FROM OTHERS
6.1 Mandatory Services. USI may not perform itself or obtain from any
Person other than EDS or any Subcontractor any service or services to supplement
or substitute for all or any portion of a Mandatory Service.
6.2 Upon Discontinuance. USI need not obtain EDS' consent to or approval
of USI's performing itself or obtaining from any other Person, upon and after
the discontinuance of any Optional Service, any service or services that
substitute for the Optional Service that has been discontinued.
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6.3 Before Discontinuance. Before the discontinuance of any Optional
Service:
(a) USI need not obtain EDS' consent to or approval of USI's performing
itself or obtaining from any other Person any service or services to supplement
or substitute for all or any portion of
(i) a Fixed-price Service, so long as USI continues to pay for the
Fixed-price Service in accordance with this Agreement, including the
corresponding Schedule;
(ii) a Use-based Service other than any travel or aviation related
Service to the extent that the decrease in that Service obtained from EDS
in each month does not exceed 10% of the average monthly invoiced amount
for that Service for the preceding three months for which EDS has submitted
an invoice for that Service (with the calculation of that average to
exclude any credit given to USI related to any other Service in any monthly
invoice);
(iii) any Use-based travel or aviation related Service; or
(iv) any Optional Service to the extent permitted by Section 15.4.
(b) EDS' Reasonable Consent shall be required for USI's performing itself
or obtaining from any other Person any service or services to supplement all or
any portion of any Use-based Service in any circumstance other than as described
in Section 6.3(a)(ii).
ARTICLE 7
SERVICE AND MANAGEMENT FEES
7.1 Cost Determination for Services. Prices for Mandatory Services and
Optional Services shall be determined based on EDS' reasonable determination of
its cost of providing such Services. Prices for IB Services shall be the same as
the prices charged by EDS to its business units for such services. The price for
Management Services is set forth in Section 7.5 hereof.
7.2 Annual Pricing for Services. The Price payable by USI for each
Mandatory Service and Optional Service shall be established annually by this
procedure:
(a) EDS shall submit to USI by November 1 a Price Proposal for each
Mandatory Service and Optional Service then in effect, except for any Optional
Service that will be discontinued effective by the following January 1 in
accordance with a Notice of discontinuance given by the preceding August 1. EDS
shall propose the Price for each Mandatory Service and Optional Service assuming
a continuation of the Level of that Service since the preceding January 1,
unless the Parties have agreed to, or EDS is proposing, a Level Change for that
Service in accordance with Section 4.3.
(b) USI shall respond in writing to the Price Proposal for each Mandatory
Service and Optional Service by December 1.
(c) To the extent that USI does not accept or agree with a Price Proposal,
the Parties shall negotiate in good faith to reach agreement on the Price for
that Service by December 15. The Parties' agreement by December 15 on the Price
of any Use-based Service shall also include an estimated annual amount for that
Service.
(d) If by December 15 the Parties do not agree on the Price at which any
Optional Service shall continue to be rendered (without any change in Level) and
neither Party gives a Notice of discontinuance of that Optional Service, the
Price for that Optional Service shall continue to be the Price then in effect.
7.3 Disagreement on Mandatory Service Pricing. If the Parties do not agree
by December 15 on the Price at which any Mandatory Service shall be rendered,
the Dispute shall be resolved by the Dispute Resolution Procedure. Pending
resolution of that Dispute, the Price for that Mandatory Service shall continue
to be the Price in effect on
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December 15. The Price determined by resolution of that Dispute shall be deemed
effective January 1 as though the Parties had agreed to it as of the preceding
December 15. Accordingly, (a) any excess amount paid by USI shall be credited
(without interest) to the next invoice or invoices for any Service or Services
payable by USI after the date of resolution, or to the extent full credit cannot
be given to invoiced amounts payable within 30 days after the date of
resolution, paid (without interest) by EDS by wire transfer of immediately
available funds to an account or accounts designated by USI; or (b) any amount
due to EDS shall be paid (without interest) within 30 days after the date of
resolution by wire transfer of immediately available funds to an account or
accounts designated by EDS.
7.4 Annual Service Price Effectiveness. The Price for each Mandatory
Service and Optional Service agreed or determined as of December 1 of each year
will be effective for that Service for the succeeding calendar year, unless
changed to correspond to a change in the Level of that Service in accordance
with Article 4.
7.5 Fixed Management Services Fee. During the term of this Agreement, USI
shall pay to EDS a Management Fee for the Management Services equal to .5% (one-
half of one percent) of the Consolidated USI Revenues. The Management Fee shall
not be adjusted during the term of this Agreement. The Management Fee shall be
payable monthly, subject to adjustment as set forth in this Section 7.5. The
Management Fee set forth on each monthly invoice shall be determined based on
the Consolidated USI Revenues for the most recently completed fiscal quarter of
USI (or, if financial information regarding the most recently completed fiscal
quarter is not available to EDS at the time an invoice is prepared, the next
prior fiscal quarter) and shall assume that revenues were recognized equally
during each of the three months comprising such fiscal quarter. Accordingly:
(a) Any excess Management Fee paid by USI with respect to the three months
comprising a fiscal quarter shall be credited (without interest) to the next
invoice delivered to USI following the determination of the Consolidated USI
Revenues for that fiscal quarter, or to the extent full credit cannot be given
to invoiced amounts payable within 30 days after the date of such determination,
paid (without interest) by EDS by wire transfer of immediately available funds
to an account or accounts designated by USI; or
(b) any shortfall in the Management Fee paid by USI with respect to the
three months comprising a fiscal quarter shall be paid (without interest) within
30 days after the date of the determination of the Consolidated USI Revenues for
that fiscal quarter by wire transfer of immediately available funds to an
account or accounts designated by EDS.
ARTICLE 8
PAYMENT
8.1 Invoices. EDS shall submit to USI monthly one or more invoices for the
Mandatory Services, Optional Services and Management Fee. Each invoice shall
indicate:
(a) The amount charged for each Mandatory Service and Optional Service
covered by that invoice;
(b) if the Service is a Use-based Service, the calculation of the invoiced
amount or the basis on which that amount was determined;
(c) the Management Fee to be set forth on such monthly invoice determined
in accordance with Section 7.5 above; and
(d) if that invoice includes any credit or offset for USI, the amount and
purpose of that credit or offset.
Each invoice should also indicate the sales, use, or similar taxes being
collected on each Service, or part of a Service, that EDS believes to be so
taxable. An invoice may cover more than one Service.
8.2 Payment. USI shall pay the amount of each invoice within 30 days after
the date of that invoice. Such payment may be made through the transfer of funds
from USI to EDS on EDS' general ledger. USI shall pay the
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invoiced amount even if USI disputes all or a portion of that amount, unless EDS
has agreed on or before the due date to accept a different amount.
8.3 Method of Payment. USI shall pay EDS by wire transfer of immediately
available funds to an account or accounts designated by EDS. All payments shall
be made in United States currency.
8.4 Interest. EDS may charge interest on any past due invoiced amount at
the annual rate of 18% (or, if lower, the highest lawful rate) from the due date
until paid in full with accrued interest. Any payment of interest only is not a
cure or EDS' sole remedy for nonpayment of any invoiced amount that is due.
8.5 Nonpayment Notice. If EDS does not receive the full payment of any
invoice (and has not agreed to accept a different amount), it may give USI a
Nonpayment Notice. USI shall pay the amount described in the Nonpayment Notice
by the tenth Business Day after that Nonpayment Notice is given.
8.6 Payment for IB Services. Payment for IB Services shall not be made
through the invoice process described above in this Article 8 but shall be made
through the transfer of funds from USI to EDS on EDS' general ledger. USI will
be notified of such transfer in accordance with the procedures then in place for
notification of other EDS business units of intercompany charges.
8.7 Dispute of Invoice or IB Payment Notice. Except as described in the
last sentence of this Section 8.7, USI may dispute the amount of any invoice or
IB Payment Notice for up to 90 days after the date of that invoice or IB Payment
Notice; if no Notice of that Dispute is given within those 90 days, the billed
amount shall be deemed agreed to by USI. The Notice of a Dispute of any invoice
or IB Payment Notice shall describe the basis for that Dispute and specify the
Service and the USI Business Unit to which that Dispute relates. A Dispute of
any invoice or IB Payment Notice (except as described in the last sentence of
this Section 8.7) shall be resolved by the Dispute Resolution Procedure. If it
is determined by resolution of that Dispute that USI has paid any excess amount
in response to the invoice or IB Payment Notice, that amount shall be credited
(without interest) to the next invoice or invoices payable by USI after the date
of resolution, or to the extent full credit cannot be given to invoiced amounts
payable within 30 days after the date of resolution, paid (without interest) by
EDS by wire transfer of immediately available funds to an account or accounts
designated by USI. Under this Section 8.7, USI may dispute only the invoiced
amount and the particular calculation thereof, and not the previously
established basis for the established Price for any invoiced Service. Any
Dispute regarding the application to any Service (in whole or in part) of any
invoiced sales, use, or similar taxes is subject to Section 17.2(b) instead of
this Section 8.7.
ARTICLE 9
RECORDS
9.1 Record Keeping. Each Party shall create and maintain accurate records
regarding the Services rendered and the amounts charged and paid or received
under this Agreement. EDS' records shall include information regarding the
determination of amounts charged or invoiced to USI for Use-based Services and
information regarding the determination of the cost or the cost allocation for
each Service rendered. Each Party's records regarding (a) the Services rendered,
and at the Level rendered, as of the Effective Date shall be of substantially
the same kinds as that Party has created and maintained regarding those Services
before the Effective Date, and (b) the Services, or the Level of Services, as
changed after the Effective Date in accordance with this Agreement shall be of
the kinds that are reasonable, and consistent with the other business records
created and maintained by that Party, regarding services like those Services at
those Levels. Each Party shall create and maintain those records with the same
degree of completeness and care as it maintains its other similar business
records. Each Party shall maintain those records for the time or times required
by applicable law or regulation, except that a Party shall, upon request of the
other Party, maintain any of those records for a longer time if the requesting
Party pays the additional expenses incurred in complying with that request.
9.2 Examination. Each Party shall be entitled to examine, through its
authorized representatives or agents and at its own expense, the records that
the other Party is required to maintain under this Agreement. This examination
right may be exercised only by three Business Days' prior Notice to the other
Party, and the examination may be made
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only during the other Party's normal business hours or at any other reasonable
time or times to which the other Party may consent. An examination shall be
performed in a manner that does not unreasonably disrupt the other Party's
normal business operations. This examination right will continue: (a) for two
years after Expiration or the termination of this Agreement; and (b) thereafter,
as long as necessary to enable a Party to respond to any Third-Party Claim or to
a request or order issued by a court or another Governmental Authority. The
Party conducting an examination may make and take away copies of any or all of
the other Party's records being examined.
ARTICLE 10
CONFIDENTIAL INFORMATION
10.1 Confidential Information. Each Party shall keep confidential the
following information (the "Confidential Information") whether acquired by it
under or in connection with this Agreement or obtained in connection with the
relationship of EDS and USI or its subsidiaries regarding management services
rendered before the Effective Date:
(a) Information relating to the other Party's business, financial
condition or performance, or operations that the other Party treats as
confidential or proprietary.
(b) Copies of records and other information obtained from a Party's
examination of the other Party's records under Section 9.2.
(c) The terms and performance of, any breach under, or any Dispute
regarding this Agreement.
(d) The Parties' conduct, decisions, documents, and negotiations as part
of, and the status of, any Dispute resolution proceedings under the Dispute
Resolution Procedure.
(e) Any other information, whether in a tangible medium or oral and
whether proprietary to the other Party or not, that is marked or clearly
identified by the other Party as confidential or proprietary.
Neither Party may use any of the other Party's Confidential Information
other than as required to perform its obligations or exercise its rights and
remedies, including as part of the resolution of any Dispute, under this
Agreement. Each USI Company and EDS Company has the same rights and benefits,
and the same duties and obligations, as USI and EDS, respectively, has (as a
"Party") in this Article 10.
10.2 Excluded Information. A Party has no obligation under this Article 10
regarding any information, including information that would otherwise be
Confidential Information, to the extent that the information (a) is or becomes
publicly available or available in the industry other than as a result of any
breach of this Agreement or any other duty of that Party or (b) is or becomes
available to that Party from a source that, to that Party's knowledge, is
lawfully in possession of that information and is not subject to a duty of
confidentiality, whether to the other Party or another Person, violated by that
disclosure.
10.3 Standard of Care. Each Party shall use the same degree of care in
maintaining the confidentiality and restricting the use of the other Party's
Confidential Information as that Party uses with respect to its own proprietary
or confidential information, and in no event less than reasonable care.
10.4 Permitted Disclosures. A Party may disclose Confidential Information
to its officers, directors, agents, or employees as necessary to give effect to
this Agreement. Each Party shall inform each of those Persons to whom any
Confidential Information is communicated of the obligations regarding that
information under this Article 10 and impose on that Person the obligation to
comply with this Article 10 regarding the Confidential Information. Each Party
shall be responsible for any breach of that Party's obligations under this
Article 10 by its officers, directors, agents, or employees.
10.5 Required Disclosures. Each Party may disclose Confidential Information
in response to a request for disclosure by a court or another Governmental
Authority, including a subpoena, court order, or audit-related request by
8
a taxing authority, if that Party: (a) promptly notifies the other Party of the
terms and the circumstances of that request; (b) consults with the other Party,
and cooperates with the other Party's reasonable requests, to resist or narrow
that request; (c) furnishes only information that, according to written advice
(which need not be a legal opinion) of its legal counsel, that Party is legally
compelled to disclose; and (d) uses its Reasonable Efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded the
information disclosed. A Party need not comply with these conditions to
disclosure, however, to the extent that the request or order of the Governmental
Authority in effect prohibits that compliance. A Party may also disclose
Confidential Information without complying with these conditions to the extent
that the Party is otherwise legally obligated to do so (for example, to comply
with applicable securities laws), as confirmed by advice of competent and
knowledgeable counsel. Further, a Party may also disclose Confidential
Information, without complying with these conditions, in connection with a tax
audit if the disclosure is to representatives of a taxing authority, or in
connection with a tax contest if that Party uses its Reasonable Efforts to
assure that confidential treatment will be accorded the information disclosed.
10.6 Title to Information. The Confidential Information of a Party
disclosed by it to the other Party under this Agreement shall remain the
property of the disclosing Party; nothing in this Agreement, other than in this
Article 10, grants or conveys to the other Party any ownership or other rights
in any of that Confidential Information.
10.7 Survival; Return. The obligations under this Article 10 shall continue
on and after Expiration or the termination of this Agreement. Upon request of
the disclosing Party upon or after Expiration or the termination of this
Agreement, the other Party shall return or, if requested by the disclosing
Party, destroy the Confidential Information of the disclosing Party that it
holds. The requested return or destruction (a) shall include removal or deletion
of Confidential Information from all data bases and magnetic media of the other
Party and (b) need not be effected to the extent that it would be impractical or
unduly burdensome to effect.
ARTICLE 11
PARTIES' RELATIONSHIP
11.1 Independent. The Parties are independent; each has sole authority and
control of the manner of, and is responsible for, its performance of this
Agreement. This Agreement does not create or evidence a partnership or joint
venture between the Parties. Neither Party may create or incur any liability or
obligation for or on behalf of the other Party, except as described in this
Agreement. This Agreement does not restrict EDS from providing or rendering any
services, including services like the Services, to any other Person.
11.2 Employees. Except as described in Section 14.4(b) or Section 14.4(c),
for the purposes of this Agreement each Party is solely responsible for its own
employees or agents, including the actions or omissions and the compensation of
those employees and agents, and neither Party has any authority with respect to
any of the other Party's employees or agents.
11.3 Authority and Enforceability. Each Party warrants to the other Party
that: (a) it has the requisite corporate authority to enter into and perform
this Agreement; (b) its execution, delivery, and performance of this Agreement
have been duly authorized by all requisite corporate action on its behalf; (c)
this Agreement is enforceable against it; and (d) it has obtained all consents
or approvals of Governmental Authorities and other Persons that are conditions
to its entering into this Agreement.
11.4 Third-Party Consents. Each Party shall be responsible for obtaining
and maintaining any licenses, permits, consents, or approvals of Governmental
Authorities and other Persons necessary or appropriate for it to perform its
obligations under this Agreement.
11.5 Further Assurances. Each Party shall take such actions, upon request
of the other Party and in addition to the actions specified in this Agreement,
as may be necessary or reasonably appropriate to implement or give effect to
this Agreement.
9
ARTICLE 12
PARTIES' REPRESENTATIVES
12.1 Representatives' Authority. Each Party has authorized its
Representative to conduct discussions and negotiations, make and communicate
decisions, frame and pose questions or issues, and resolve Disputes on behalf of
that Party relating to this Agreement. Though one Party's employees or agents
other than its Representative may also take actions of the kinds described in
the preceding sentence with the other Party's employees or agents other than its
Representative, matters that require more formal discussions or negotiations
between Parties shall be addressed through and by the Representatives. Each
Party and its Representative are entitled to rely on the actions and decisions
of the other Party's Representative relating to this Agreement.
12.2 Designation. EDS designates its Manager - Corporate Financial Analysis
as EDS' Representative, and USI designates its Chief Financial Officer as USI's
Representative, upon and after the Effective Date until changed by the
designating Party. A Party may change its Representative by Notice to the other
Party. A Party may rely on and deal with the Person who is designated as the
other Party's Representative until any Notice of change is given by the other
Party.
ARTICLE 13
TERMINATION
13.1 Termination Events. This Agreement may be terminated, without
liability to the Party terminating:
(a) By either Party, upon 30 days' Notice to the other, at any time upon
or after the Parties cease to be Affiliates.
(b) By a Party, immediately upon Notice to the other Party, if: (i) that
other Party makes a general assignment of all or substantially all of its assets
for the benefit of its creditors; (ii) that other Party applies for, consents
to, or acquiesces in the appointment of a receiver, trustee, custodian, or
liquidator for its business or all or substantially all of its assets; (iii)
that other Party files, or consents to or acquiesces in, a petition seeking
relief or reorganization under any bankruptcy or insolvency laws; or (iv) a
petition seeking relief or reorganization under any bankruptcy or insolvency
laws is filed against that other Party and is not dismissed within 90 days after
it was filed.
(c) By a Party, immediately upon Notice to the other Party, if that other
Party's material breach of this Agreement continues uncured or uncorrected for
30 days after both the nature of that breach and the necessary cure or
correction has been agreed upon by the Parties or otherwise determined by the
Dispute Resolution Procedure. But if: (i) the Parties agree or it is determined
by the Dispute Resolution Procedure that the material breach is not capable of
being cured or corrected, the termination shall be effective immediately upon
Notice, without any cure period; or (ii) the breaching Party (A) reasonably
requires longer than 30 days to cure or correct (such as when an applicable
Service Subcontract permits the Subcontractor longer than 30 days to cure or
correct) and (B) Notifies the non-breaching Party of the circumstances, then the
cure period shall be extended for the reasonable time so required, so long as
during that time the breaching Party diligently acts to effect that cure or
correction. A non-breaching Party's exercise of the remedy described in this
Section 13.1(c) shall be conditioned upon its giving a Breach Notice to the
other Party.
(d) By EDS, immediately upon Notice to USI, if USI has not paid the amount
described in a Nonpayment Notice by the tenth Business Day after that Nonpayment
Notice was given.
A Party may not terminate this Agreement if the event or circumstance
described above in this Section 13.1 upon which that Party would rely in so
terminating was caused by that Party's breach of this Agreement.
13.2 Nonexclusive. The termination rights under Sections 13.1(c) and
13.1(d) are not exclusive of any other right or remedy of a non-breaching Party
granted in this Agreement.
13.3 Consequences of Termination. Upon termination of this Agreement:
10
(a) Under Section 13.1(a) or by USI under Section 13.1(c):
(i) During the Transition Period EDS shall continue to render,
and USI shall pay for, each Service reasonably requested by USI until
terminated by either Party in accordance with Sections 13.3(a)(ii) and
13.3(a)(iii). Except as stated in Section 13.3(a)(ii), the terms of this
Agreement shall continue to apply during the Transition Period as though no
termination of this Agreement had occurred.
(ii) The Level of each Service rendered, and the Price for each
Service, during the Transition Period shall be the same as in effect
immediately preceding the Termination Date. Article 5 shall not apply
during the Transition Period. During the Transition Period, any Service
(including a Mandatory Service), but not any one or more of the Tasks
separately, may be terminated by (A) USI, for any reason, by 60 days'
Notice to EDS, or (B) EDS, if USI has not paid the amount described in a
Nonpayment Notice by the tenth Business Day after the Nonpayment Notice was
given. Any Service that is the subject of a Notice of termination shall
continue to be rendered by EDS until the effective date of that
termination, and USI shall pay for that Service rendered through that date.
Neither Party may unilaterally rescind a Notice of termination.
(iii) If either Party reasonably determines that the termination of
any Service during the Transition Period would make it functionally
impossible to continue any other Service during the Transition Period, that
Party shall promptly Notify the other Party of that determination; any
Service that so becomes functionally impossible to render shall be deemed
terminated effective upon the date of termination of the Service that
caused that impossibility. Neither Party may unilaterally reinstate any
Service that has been terminated as of the Termination Date or during the
Transition Period.
(b) Under Section 13.1(b), then during the Transition Period EDS shall
comply with USI's reasonable requests for assistance in USI's engaging or
training another Person or Persons to provide, and for records and other
information relating to, each Service in effect immediately preceding the
Termination Date. If USI terminates this Agreement, EDS shall comply with those
requests at its own expense. If EDS terminates this Agreement, USI shall
reimburse and pay EDS' Transition Expenses in accordance with invoices submitted
to USI by EDS. Articles 8 and 18 shall apply in this situation as though this
Agreement had not been terminated. When USI is obligated to reimburse and pay
EDS' Transition Expenses, EDS may cease providing transition assistance,
immediately upon Notice to USI, if USI has not paid the amount described in a
Nonpayment Notice by the tenth Business Day after the Nonpayment Notice was
given. If the records or other information provided by EDS are Confidential
Information, Article 10 shall also apply as though this Agreement had not been
terminated.
(c) Under Section 13.1(d) or by EDS under Section 13.1(c), then EDS shall
have no obligation to provide any continued Services or transition assistance as
described above in this Section 13.3.
13.4 Survival of Rights and Obligations. No rights or obligations of either
Party that expressly or impliedly are to remain in effect in order to give
effect to this Agreement shall be impaired by Expiration or the termination of
this Agreement, and those rights and obligations shall remain in effect.
ARTICLE 14
LIABILITY AND REMEDIES
14.1 Warranties. Each Party's warranties in this Agreement are made solely
to and for the benefit of the other Party. No Person other than a Party may make
a claim based on the other Party's warranties under this Agreement.
14.2 Nonconforming Services. USI shall promptly Notify EDS of any
Deficiency in any Service or Task, whether rendered by EDS or a Subcontractor.
To the extent EDS agrees, or it is otherwise determined by the Dispute
Resolution Procedure, that a Service or Task was or is a Nonconforming Service,
EDS shall use its Reasonable Efforts promptly to cure or correct, or cause to be
cured or corrected, the Deficiency to the extent it may then be cured or
corrected.
11
(a) If the Deficiency was, or was the result of, EDS' or a Subcontractor's
negligence, EDS shall not be responsible or liable for any resulting Damages of
USI.
(b) If the Deficiency was, or was the result of, EDS' or a Subcontractor's
gross negligence (including recklessness) or willful misconduct, EDS shall be
responsible or liable for USI's resulting Damages in an amount up to: (i) if
EDS' liability is determined (by the Parties' agreement or the Dispute
Resolution Procedure) after the calendar year in which the Deficiency occurred,
the aggregate amount received by EDS for the Nonconforming Service for the
calendar year in which the Deficiency occurred; (ii) if EDS' liability is
determined during the calendar year in which the Deficiency occurred and the
Nonconforming Service is a Fixed-price Service, the annual Price for the
Nonconforming Service for that calendar year; or (iii) if EDS' liability is
determined during the calendar year in which the Deficiency occurred and the
Nonconforming Service is a Use-based Service, the greater of (A) the estimated
annual amount for that Service for that calendar year and (B) the aggregate
amount received by EDS to the date the liability is determined, annualized for
that calendar year. The annual limit on EDS' liability described above in this
Section 14.2(b) is not cumulative from year to year. If there is more than one
Deficiency in a single Service for which EDS is responsible or liable for
Damages and EDS' liability for those Deficiencies is determined in the same
calendar year, EDS' responsibility or liability for Damages resulting from all
of those Deficiencies shall be subject to the applicable annual limit on
liability described above in this Section 14.2(b).
14.3 Actual Damages. Neither Party shall be liable under or relating in any
manner to this Agreement for any losses or damages other than Damages, even if a
Party has been advised of the possibility of losses or damages of that kind and
regardless of the form of the Proceedings or the theory of liability, whether
based on contract, warranty, tort (including negligence and strict liability),
infringement, or misappropriation.
14.4 Indemnities for Certain Breaches and Other Matters. The following
shall apply to any breach of, and certain other Damages relating to, this
Agreement, other than a Deficiency for which EDS has no liability for Damages
under Section 14.2(a) or a nonpayment by USI of any amount relating to an
invoice:
(a) Subject to the limits on liability described in Section 14.2(b), if
that Section is applicable, each Party shall indemnify the other Party against
all Damages of the Indemnified Party, or any of its Indemnified Agents,
resulting from or relating to: (i) any breach of this Agreement, including a
breach of any warranty in this Agreement, by the Indemnifying Party; (ii) any
Proceedings relating to a breach of this Agreement by the Indemnifying Party;
and (iii) the actions or omissions of the Indemnifying Party's employees or
agents under or in connection with this Agreement, except as described in
Sections 14.4(b) and 14.4(c).
(b) USI shall also indemnify EDS against all Damages of EDS or any of its
Indemnified Agents, including any Subcontract Termination Penalty, under or
relating to any Service Subcontract, other than as described in Section 3.5(b),
resulting from: (i) any violation by USI of any obligation imposed on it under
that Service Subcontract; (ii) the actions or omissions of USI's employees or
agents under or in connection with that Service Subcontract; (iii) USI's
discontinuance of any Optional Service that EDS renders, in whole or in part, by
that Service Subcontract, even if permitted by Article 5; (iv) USI's performing
itself or obtaining from any Person other than EDS or its Subcontractor any
service or services to supplement or substitute for any Optional Service that
EDS renders, in whole or in part, by that Service Subcontract, even if permitted
by Section 6.3; (v) Expiration; or (vi) the termination of this Agreement other
than a termination by USI under Section 13.1(b) or Section 13.1(c).
(c) USI shall also indemnify EDS against all Damages of EDS or any of its
Indemnified Agents resulting from or relating to: (i) the actions or omissions
of any of the Legal Staff that are directed by USI or any USI Company within the
scope of that lawyer's or paralegal's engagement for any legal matter of USI or
any USI Company; or (ii) any sales, use, consumption, value-added,
telecommunications, gross receipts or similar taxes (however described),
including any related interest and penalties, applicable to any of the Services,
in whole or in part, that are assessed or levied against or paid by EDS or an
EDS Company.
(d) The indemnification obligations in Sections 14.4(a), 14.4(b), and
14.4(c) shall be extinguished to the extent that the Damages of the other Party,
or any of its Indemnified Agents for whom or which the other Party is seeking
indemnification, were caused by the gross negligence or willful misconduct of
the Person for whom or which indemnification is sought. THE INDEMNIFICATION
PROVISIONS IN SECTIONS 14.4(a), 14.4(b), AND 14.4(c)
12
EXPRESS THE PARTIES' INTENT THAT A PERSON BE INDEMNIFIED AGAINST ITS OWN
ORDINARY NEGLIGENCE, OR THE RESULTS OF THAT ORDINARY NEGLIGENCE, UNDER THIS
AGREEMENT.
(e) If an Indemnification Claim is not based on a Third-Party Claim, the
Indemnified Party shall give an Indemnification Claim Notice promptly after the
event constituting the basis for the Indemnification Claim; its failure to do
so, however, shall relieve the Indemnifying Party of its indemnification
obligations only to the extent the Indemnifying Party is actually prejudiced by
that failure. If the Indemnified Party gives an Indemnification Claim Notice
regarding an Indemnification Claim not based on a Third-Party Claim, the
Indemnifying Party shall Notify the Indemnified Party within the Indemnification
Response Period whether the Indemnifying Party disputes all or any portion of
the Indemnification Claim. If the Indemnifying Party does not give that dispute
Notice or agrees to accept liability for all or a portion of the Indemnification
Claim, the Indemnification Claim, or the agreed portion of that Indemnification
Claim, shall be the Indemnifying Party's liability. Otherwise, the
Indemnification Claim shall be deemed a Dispute to be resolved by the Dispute
Resolution Procedure.
(f) If an Indemnification Claim is based on a Third-Party Claim:
(i) The Indemnified Party shall give an Indemnification Claim
Notice promptly after it receives the Third-Party Claim. The failure of an
Indemnified Party to timely give an Indemnification Claim Notice shall
relieve the Indemnifying Party of its indemnification obligations only to
the extent the Indemnifying Party is actually prejudiced by that failure.
(ii) The Indemnifying Party shall be entitled to defend the Third-
Party Claim, with its chosen counsel and at its own expense, if (A) the
Third-Party Claim seeks only monetary relief, and not an injunction or
other equitable relief, against the Indemnified Party, and (B) the
Indemnifying Party elects to assume, and diligently conducts, that defense.
The Indemnifying Party's election to defend shall be given by Notice to the
Indemnified Party within the Indemnification Response Period. If the
Indemnifying Party conducts the defense, the Indemnified Party may
participate in that defense with its own counsel and at its own expense.
(iii) If the Indemnifying Party does not elect to defend the Third-
Party Claim by Notice within the Indemnification Response Period, or if the
Indemnifying Party does not diligently conduct the defense, the Indemnified
Party shall be entitled, upon further Notice to the Indemnifying Party, to
defend the Third-Party Claim on behalf of, and for the account and risk of,
the Indemnifying Party (if it is determined that the Indemnifying Party has
an indemnification obligation regarding that Indemnification Claim). In
this circumstance, the Indemnifying Party may participate in the defense
with its own counsel and at its own expense.
(iv) If there is a conflict of interest that makes it inappropriate
for the same counsel to represent the Indemnifying Party and the
Indemnified Party in defending the Third-Party Claim, the Indemnifying
Party shall pay for separate counsel for the Indemnified Party.
(v) The Indemnifying Party defending a Third-Party Claim may
compromise, settle, or resolve that Third-Party Claim without the
Indemnified Party's consent if the compromise, settlement, or resolution
involves only the payment of money by the Indemnifying Party (whether on
its own behalf or behalf of the Indemnified Party) and the third-party
claimant provides the Indemnified Party a release from all liability
regarding the Third-Party Claim. Otherwise, the Indemnifying Party may not
compromise, settle, or resolve the Third-Party Claim without the
Indemnified Party's Reasonable Consent.
(vi) The Indemnifying Party and the Indemnified Party shall
cooperate with all reasonable requests of the other in defending any Third-
Party Claim.
14.5 Time for Claims. USI may make a claim against EDS for the cure or
correction of any Deficiency only within one year after the Deficiency occurred.
Any Deficiency shall be deemed to have occurred when the particular
Nonconforming Service was rendered. A Party may make an Indemnification Claim:
(a) not based on a Third-Party Claim, only within one year after the breach or
other event constituting the basis for that Indemnification
13
Claim occurred, even if not discovered until after that first anniversary, or
(b) based on a Third-Party Claim, at any time.
14.6 Offset. A Party entitled to any payment due from the other Party
under this Agreement may offset all or any portion of the amount of that payment
against any payment that is due from it to the other Party under this Agreement.
14.7 Equitable Relief. To the extent that monetary relief is not a
sufficient remedy for any breach of this Agreement, or upon any breach or
impending breach of Article 10, the non-breaching Party shall be entitled to
injunctive relief as a remedy for that breach or impending breach by the other
Party, in addition to any other remedies granted to the non-breaching Party in
this Agreement. That injunctive relief shall be sought through arbitration in
accordance with the Dispute Resolution Procedure, except as permitted by Section
B.4(b) of the Dispute Resolution Appendix.
14.8 Exclusive Remedies. Except for the termination right stated in
Article 13 and the relief described in Sections 15.4 and 17.2(b) and in the
Dispute Resolution Procedure, the remedies described in this Article 14 are the
exclusive rights and remedies of a Party regarding any breach of this Agreement
or any other matter that may be the subject of an Indemnification Claim.
14.9 Waiver of Remedies. No forbearance, delay, or indulgence by either
Party in enforcing this Agreement, within the applicable time limits stated in
this Agreement, shall prejudice the rights or remedies of that Party. No waiver
of a Party's rights or remedies regarding a particular breach of this Agreement
constitutes a waiver of those rights or remedies, or any other rights or
remedies, regarding any other or any subsequent breach of this Agreement.
14.10 Cumulative Remedies. A Party's election to pursue a right or remedy
granted in this Agreement upon the other Party's breach of this Agreement shall
not preclude the non-breaching Party from pursuing other rights or remedies
granted to that Party in this Agreement that are applicable to that breach under
this Agreement.
14.11 Survival. The rights, remedies, and obligations under this Article
14 shall continue on and after Expiration or the termination of this Agreement.
ARTICLE 15
FORCE MAJEURE
15.1 No Breach or Liability. No delay or failure of a Party to perform
any of its obligations, other than payment obligations, under this Agreement due
to causes beyond its reasonable control shall constitute a breach of this
Agreement or render that Party liable for that delay or failure. Causes beyond a
Party's reasonable control include: (a) events or circumstances that the Party,
using its Reasonable Efforts, is unable to prevent or overcome; (b) as to EDS,
causes also beyond the reasonable control of the Person to whom or which EDS has
Subcontracted the affected Service or Task in accordance with this Agreement;
and (c) labor disputes, strikes, or other similar disturbances; acts of God;
utilities or communications failures; acts of the public enemy; and riots,
insurrections, sabotage, or vandalism.
15.2 Notice of Excusable Delay or Failure. If a Party anticipates any
excusable delay or failure under Section 15.1, it shall promptly Notify the
other Party of the anticipated delay or failure, the anticipated effect of that
delay or failure, and any actions that are being or are to be taken to alleviate
or overcome the cause of the delay or failure.
15.3 Efforts to Overcome. If a Party is claiming an excusable delay or
failure under Section 15.1, it shall use its Reasonable Efforts to alleviate or
overcome the cause of the delay or failure as soon as practicable.
15.4 Extended Delay or Failure. If an excusable delay or failure
continues for more than 30 consecutive days, the Party entitled to the benefit
of the affected obligation may perform itself or obtain from any other Person
the obligation to which that Party is entitled (and that Party shall Notify the
other Party of this election).
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ARTICLE 16
DISPUTE RESOLUTION MATTERS
16.1 General Procedure. Except as otherwise stated in this Agreement, the
Parties shall resolve all Disputes in accordance with the Dispute Resolution
Procedure. Nevertheless, if any Person other than the Parties and their
Affiliates
(a) has initiated a lawsuit or other Proceedings against or involving
either or both of the Parties in which a Dispute will be resolved, or
(b) is a necessary participant in any Proceedings to resolve a Dispute
and cannot be joined by either or both of the Parties in an arbitration of that
Dispute under Section B.3 of the Dispute Resolution Appendix,
so that (in either case) the Dispute Resolution Procedure is or will be
ineffective, then the Parties need not use or follow the Dispute Resolution
Procedure to resolve that Dispute, although the submission to jurisdiction in
Section B.5 of the Dispute Resolution Appendix shall apply if necessary.
16.2 Continued Performance. The Parties shall continue performing their
respective obligations under this Agreement while a Dispute is being resolved.
16.3 Parties' Agreement. Nothing in this Article 16 or the Dispute
Resolution Procedure prevents the Parties from resolving any Dispute by mutual
agreement at any time.
ARTICLE 17
EXPENSES AND TAXES
17.1 Expenses. Each Party shall be solely responsible for its costs and
expenses incurred in performing its obligations and exercising its rights and
remedies under this Agreement, except as otherwise provided in this Agreement.
17.2 Taxes. The Parties shall be responsible and liable for tax payments
or liabilities relating to this Agreement as follows:
(a) Each Party shall be responsible and liable for its income and
franchise taxes and for all other taxes (however described) based on its own
income or earnings.
(b) USI shall be responsible for all sales, use, consumption, value-
added, telecommunications, gross receipts and similar taxes (however described)
applicable to the Services, in whole or in part. This obligation includes USI's
paying the taxes identified in EDS' invoices submitted to USI for the Services.
(i) If USI claims an exemption or exclusion from taxes of this
kind, it shall deliver to EDS a certificate or letter stating USI's good-
faith belief, which is supported by a reasonable interpretation of existing
law, that a Service is not, in whole or in part, subject to those taxes.
Whether or not USI delivers that certificate or letter, however, it shall
indemnify EDS, in accordance with Section 14.4(c)(ii), against any taxes of
this kind assessed or levied against, or paid by, EDS or an EDS Company and
any other related Damages of EDS or an EDS Company.
(ii) If EDS receives an assessment from a taxing authority
covering taxes for which USI is responsible under this Section 17.2(b), EDS
shall Notify USI of the assessment and, at USI's request, timely contest
the assessment. If payment to the taxing authority is required by law as a
condition to protest, USI shall timely furnish EDS the required amount for
that payment. USI shall pay and shall indemnify EDS and its
15
Affiliates (other than USI and the USI Companies) against all costs and
expenses incurred in contesting such assessment.
(iii) If USI believes it has overpaid taxes to EDS for any of the
Services (in whole or in part), USI may require EDS to file a claim for a
refund at USI's expense. If permitted by law, EDS may assign any right to
a refund directly to USI instead of filing a refund claim. Any refund of
taxes (including any interest) received by EDS under this Section
17.2(b)(iii) shall be promptly forwarded to USI.
(iv) Before EDS is required to pursue any action requested by USI
under this Section 17.2(b), EDS may at any time require USI to deliver an
opinion from outside counsel (which is selected by USI and acceptable to
EDS) stating that USI's tax position is reasonable.
(v) Notwithstanding anything to the contrary herein, EDS may in
its sole discretion waive the right to be indemnified for the taxes
described in this Section 17.2(b), in which case EDS shall have no
obligation to contest any assessment or pursue any refund claim with
respect to such taxes.
(c) Each Party shall be responsible and liable for all real property,
personal property, and other taxes (however described) based on its owned or
leased property, whether real or personal.
(d) Each Party shall be responsible and liable for all employment-
related taxes (however described) regarding its own employees.
ARTICLE 18
MISCELLANEOUS
18.1 Notices. Each notice (including a Nonpayment Notice, an
Indemnification Claim Notice, and a Breach Notice), request, response, demand,
claim, and other communication required or permitted under this Agreement shall
be in writing and shall be transmitted, delivered, or sent by: personal
delivery; courier or messenger service, whether overnight or same-day; prepaid
telecopy or facsimile; or certified United States mail, with postage prepaid and
return receipt requested, in any case addressed to the other Party at the
address or number for that Party set forth in Section 18.1, or at such other
address or number as the recipient has designated by Notice to the other Party
in accordance with this Section 18.1. The Parties shall transmit, deliver, or
send communications as follows:
(a) If to EDS: Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx, Xxxx Xxxx X0-0X-00
Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Manager - Corporate Financial Analysis
with a copy to: Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx, Xxxx Xxxx X0-0X-00
Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
(b) If to USI: Unigraphics Solutions Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
Each communication transmitted, delivered, or sent in person, by courier or
messenger service, or by certified United States mail, postage prepaid and
return receipt requested, shall be deemed given, received, and effective on the
date delivered to or refused by the intended recipient (with the return receipt
or the equivalent record of the courier or
16
messenger being deemed conclusive evidence of delivery or refusal). Each
communication transmitted by telecopy or facsimile transmission shall be deemed
given, received, and effective on the date of actual receipt (with the
confirmation of transmission being deemed conclusive evidence of such receipt,
except where the intended recipient has promptly notified the other Party that
the transmission is illegible). Nevertheless, if the date of delivery or
transmission is not a Business Day, or if the delivery or transmission is after
5:00 p.m. on a Business Day, the communication shall be deemed given, received,
and effective on the next Business Day.
18.2 Assignment. Neither Party may assign any of its rights or delegate
any of its duties or obligations under this Agreement without the other Party's
Consent. This prohibition of assignment and delegation shall include any
assignment and delegation by operation of law (such as merger or consolidation).
Any attempted assignment or delegation without the other Party's Consent shall
be void and without effect. The two preceding sentences do not, however,
preclude EDS from Subcontracting or USI from extending the benefits of the
Services to the USI Companies as permitted by Article 3.
18.3 Amendment and Waiver. This Agreement may be amended or modified, and
any provision of this Agreement may be discharged or waived, only by a document
signed by the Party against which the amendment, modification, discharge, or
waiver is sought to be enforced.
18.4 Integration. This Agreement constitutes the Parties' entire
agreement on this subject; it replaces and supersedes any prior agreement or
understanding of the Parties, whether written or oral, on this subject not
expressed or referred to in this Agreement.
18.5 Severability. If any part of this Agreement is for any reason found
to be unenforceable, all other parts of this Agreement nevertheless remain
enforceable.
18.6 Successors. This Agreement binds and inures to the benefit of the
Parties and their respective legal representatives, successors, and permitted
assigns.
18.7 Governing Law. This Agreement shall be interpreted or construed
under Texas law. Likewise, the validity and performance of this Agreement shall
be enforced, and all issues relating to this Agreement shall be resolved, under
Texas law.
18.8 Counterparts. This Agreement may be signed in any number of
counterparts, with the same effect as if all signatories had signed the same
document. All counterparts shall be construed together to constitute one, and
the same, document.
17
IN WITNESS WHEREOF, the parties have caused this Master Services Agreement
to be executed as of the day and year first above written.
ELECTRONIC DATA SYSTEMS
CORPORATION
By: /S/ D. Xxxxxxx Xxxxxxxxxxx
-------------------------------------------
Name: D. Xxxxxxx Xxxxxxxxxxx
Title: Senior Vice President
UNIGRAPHICS SOLUTIONS INC.
By: /S/ Xxxx Xxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxx
Title: President
18
DEFINITIONAL APPENDIX
TO MANAGEMENT SERVICES AGREEMENT
A. DEFINED TERMS. In the Agreement, the following terms have the
corresponding meanings:
"AFFILIATE": A Person that directly or indirectly through one or more
intermediaries Controls, is Controlled by, or is under common Control with
another Person.
"AGREEMENT": The Management Services Agreement between EDS and USI
(including the Definitional Appendix, the Dispute Resolution Appendix, and the
Schedules), as may be amended or supplemented from time to time in accordance
with its terms.
"ARBITRATION RULES": The Rules for Commercial Arbitration of the American
Arbitration Association in effect at the time of an arbitration in accordance
with the Dispute Resolution Procedure.
"BREACH NOTICE": A Party's Notice to the other Party alleging a breach of
the Agreement (other than USI's nonpayment of any amount related to an invoice)
by the other Party, which describes the alleged breach, to the extent known by
the notifying Party, and any particular cure or correction requested by the
notifying Party.
"BUSINESS DAY": Any Monday through Friday, excluding any such day on which
banks are authorized to be closed in Dallas, Texas.
"CONFIDENTIAL INFORMATION": Information subject to a duty of confidence and
a restriction on use imposed on one or both Parties under Article 10.
"CONTROL": The right to exercise, directly or indirectly, more than 50% of
the voting power attributable to the equity interests in an entity.
("Controlling" and "Controlled" have correlative meanings.)
"CONSENT": The prior written consent of a Party (in any capacity) in its
sole discretion.
"CONSOLIDATED USI REVENUES": The total revenues of USI and its subsidiaries
on a consolidated basis.
"CREDIT AGREEMENT": The Credit Agreement dated effective as of January 1,
1998 between EDS and USI.
"DAMAGES": Losses, claims, obligations, demands, assessments, fines and
penalties (whether civil or criminal), liabilities, expenses and costs
(including reasonable fees and disbursements of legal counsel and accountants),
bodily and other personal injuries, damage to tangible property, and other
damages, of any kind or nature, actually suffered or incurred by a Person.
"Damages": (a) consists only of actual damages; (b) excludes any lost profits,
lost income, or lost savings and any punitive, exemplary, consequential,
indirect, special, or incidental damages (however described), even if the
possibility of those losses or damages was known; and (c) includes (except as
may be reduced in accordance with the next sentence) all fines, penalties, and
interest paid or payable to any Governmental Authority. If USI has Damages, for
which EDS is liable, consisting of fines, penalties, and interest paid or
payable to a Governmental Authority corresponding to any tax not timely paid,
then those "Damages" shall be reduced by an amount equal to interest, at the
annual rate of 5%, accrued on that tax from the due date until that tax is paid;
for the avoidance of doubt, in this situation "Damages" shall not include any
tax for which USI would otherwise be liable to the Governmental Authority.
"DEFICIENCY": EDS' failure in rendering a Service or Task to satisfy the
applicable standard of care stated in the Agreement or to render it at the
applicable Level established under the Agreement. ("Deficient" has the
correlative meaning.)
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"DEFINITIONAL APPENDIX": This Definitional Appendix to Management Services
Agreement, containing definitions and interpretive matters for, as an integral
part of, the Agreement.
"DISPUTE": Any dispute, disagreement, claim, or controversy arising in
connection with or relating to the Agreement, or the validity, interpretation,
performance, breach, or termination of the Agreement, including any claim of
breach of representation or warranty or of nonperformance and any claim
regarding bodily or other personal injury or damage to tangible property.
"DISPUTE RESOLUTION APPENDIX": The Dispute Resolution Appendix to
Management Services Agreement, containing the Dispute Resolution Procedure for,
as an integral part of, the Agreement.
"DISPUTE RESOLUTION PROCEDURE": The procedure or process by which a Dispute
shall be resolved (except as otherwise stated in the Agreement) as described in
the Dispute Resolution Appendix.
"EDS": Electronic Data Systems Corporation, a Delaware corporation.
"EDS COMPANY": Any entity over which EDS has Control, other than USI and
any USI Company.
"EDS' REPRESENTATIVE": The individual agent or representative designated by
EDS to be EDS' formal liaison with or representative to USI for matters relating
to the Agreement, having the (non-exclusive) authority and responsibility
described in the Agreement.
"EDS' TRANSITION EXPENSES": The sum of the following, incurred in or
resulting from EDS' compliance with requests for transition assistance for up to
180 days after Expiration or during the Transition Period (as the case may be):
1. All of EDS' reasonable out-of-pocket expenses, and
2. the time or activities of EDS' personnel as follows: (a) if the
activities of those personnel were part of a Use-based Service before Expiration
or the termination of the Agreement, at the Price most recently paid for that
Use-based Service before Expiration or termination, or (b) if the activities of
those personnel were part of a Fixed-price Service before Expiration or the
termination of the Agreement, an amount equal to that portion of the Price most
recently paid for that Fixed-price Service before Expiration or termination
corresponding to the transition activities' portion of all activities that
constituted that Fixed-price Service, for the time covered by that Price, before
Expiration or termination.
"EFFECTIVE DATE": January 1, 1998, the date on which the Agreement becomes
effective.
"EFFECTIVE DATE SERVICE SUBCONTRACT": A Service Subcontract in effect on
the Effective Date.
"EXPIRATION": The expiration of the term of the Agreement as stated in, and
as may be renewed under, Article 2, without regard to any period of transition
assistance. For the avoidance of doubt, "Expiration" does not include a
termination of the Agreement under Section 13.1. ("Expire" and "Expired" have
correlative meanings.)
"FIXED-PRICE SERVICE": A Service the Price for which is a fixed or
nonvariable amount, other than a fixed rate.
"GOVERNMENTAL AUTHORITY": Any federal, state, local, or foreign government
or governmental, quasi-governmental, administrative, or regulatory authority,
agency, body, or entity, including any court or other tribunal.
"IB PAYMENT NOTICE": A notice delivered by EDS to USI of the charge applied
to USI's general ledger account for IB Services rendered by EDS in accordance
with the notice procedures then in place for similar notices to EDS business
units.
20
"IB SERVICES": A Service that may be provided at any time during the
effectiveness of this Agreement on an as needed basis the payment for which
shall be made in accordance with an adjustment to the intercompany account
balance under the Credit Agreement or an International Credit Agreement, as the
case may be.
"INDEMNIFICATION CLAIM": A claim or demand of a Party, on its behalf or on
behalf of one or more of its Indemnified Agents, for indemnification under
Section 14.4.
"INDEMNIFICATION CLAIM NOTICE": A Notice from the Indemnified Party
describing an Indemnification Claim and the amount or the estimated amount of
that Indemnification Claim to the extent then feasible (though that estimate
shall not be determinative of the final amount of that Indemnification Claim).
"INDEMNIFICATION RESPONSE PERIOD": The 30 days after an Indemnification
Claim Notice is given during which the Indemnifying Party may investigate and
determine its responsibility or liability for an Indemnification Claim and, if
relating to a Third-Party Claim, Notify the Indemnified Party of the
Indemnifying Party's election to defend that Third-Party Claim.
"INDEMNIFIED AGENTS": Collectively, the officers, directors, employees, and
agents of a Party and, as to USI, the USI Companies and their respective
officers, directors, employees, and agents.
"INDEMNIFIED PARTY": A Party entitled to or seeking indemnification, on its
own behalf or on behalf of one or more of its Indemnified Agents, under Section
14.4.
"INDEMNIFYING PARTY": A Party that has or is alleged to have an obligation
to indemnify the other Party in response to an Indemnification Claim.
"INTERNATIONAL CREDIT AGREEMENT": A Credit Agreement between EDS Finance
PLC and a non-U.S. USI Company.
"LEGAL STAFF": Legal personnel that EDS employs or otherwise engages.
"LEVEL": The scope, timeliness, or quantity of a Service or Task or the
location, intensity, or frequency at or with which a Service or Task is or is to
be rendered.
"LEVEL CHANGE": A change in the Level of a Service to be effective at 12:01
a.m., Central Time, on July 1.
"MANAGEMENT FEE": The fixed annual fee equal to .5% of Consolidated USI
Revenues payable by USI to EDS pursuant to this Agreement in respect of
management and financial advisory services in addition to the Mandatory
Services, Optional Services and IB Services.
"MANDATORY SERVICE": A Service that shall be rendered and paid for, and may
not be unilaterally discontinued under Article 5 by either Party, during the
effectiveness of the Agreement.
"NONCONFORMING SERVICE": A Service or Task that, as agreed by the Parties
or otherwise determined by the Dispute Resolution Procedure, was or is
Deficient.
"NONPAYMENT NOTICE": A Notice from EDS to USI that describes an amount
related to an invoice to USI that EDS has not received when due, which shall:
1. constitute a demand for payment of the described amount; and
2. state that either termination of the Agreement or cessation of
transition assistance, whichever is applicable, by EDS may result if the
described amount is not paid by the tenth Business Day after that Notice is
given.
"NOTICE": A written communication complying with Article 18. ("Notify" has
the correlative meaning.)
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"OPTIONAL SERVICE": A Service that may be unilaterally discontinued by
either Party in accordance with the Agreement.
"PARTIES": Collectively, EDS and USI. ("Party" means either EDS or USI.)
"PERSON": An individual; a corporation, partnership, trust, association, or
entity of any kind or nature; or a Governmental Authority.
"PRICE": The amount or rate, in either case whether fixed or variable and
however measured, charged to USI for a Service, as agreed by the Parties.
"PRICE PROPOSAL": A written proposal or estimate of the Price for a Service
at a particular Level (or, if applicable, at each Level), together with a
description of the basis on which the proposed or estimated Price was determined
or calculated by EDS (including, to the extent applicable, the allocation
methodology, allocation drivers, and margin).
"PROCEEDINGS": Any action, suit, claim, investigation, demand, audit, or
other proceedings by or before any Governmental Authority or any arbitration
proceedings.
"REASONABLE CONSENT": The prior written consent of a Party (in any
capacity), which may not be unreasonably withheld or delayed.
"REASONABLE EFFORTS": The efforts of a Party that are commercially
reasonable under the circumstances, which do not require a Party to institute or
prosecute any Proceedings or to pay any Person other than that Party's
representatives or agents, including (only as to EDS) Subcontractors.
"REPRESENTATIVES": Collectively, EDS' Representative and USI's
Representative.
"SLA": A written agreement or understanding between EDS and USI or any USI
Company describing, or otherwise stating terms regarding, the Level at which a
Service, in whole or in part, will be rendered. An SLA regarding a Service, in
whole or in part, may be entered into by or directly with one or more of EDS'
units rendering that Service or that part of the Service. An SLA entered into on
or after the Effective Date: (a) may be a separate document or part of another
document, such as a Price Proposal that is accepted by USI, (b) may be a
Schedule or part of a Schedule, and (c) shall be signed by EDS and USI.
"SCHEDULE": A Schedule to the Agreement that describes a Service, the basis
of the Price for that Service, the annual Price for that Service for all of
1998, and the location or locations at which that Service is to be rendered if
not at EDS' offices or Subcontracted.
"SERVICE": An individual management service, to be rendered by EDS under
the Agreement, that is described as a "Service" in a Schedule. A Service may
also be described in a Schedule by all or a portion of its constituent Tasks.
"SERVICE SUBCONTRACT": An agreement or arrangement, oral or written, under
which a Subcontractor is to render or perform any Service or Task on EDS' behalf
or in EDS' stead.
"SUBCONTRACT": EDS' entering into a Service Subcontract. ("Subcontracted"
and "Subcontracting" have correlative meanings.)
"SUBCONTRACT TERMINATION PENALTY": An obligation described in, as part of
the terms of, a Service Subcontract to pay the Subcontractor a charge, fine,
penalty, or other amount upon the termination or partial termination of that
Service Subcontract, including any return to the Subcontractor of any equipment
or goods held under that Service Subcontract.
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"SUBCONTRACTOR": A Person, other than an employee of EDS, who or which
enters into a Service Subcontract with EDS.
"TASK": Any one of the group of processes, procedures, or services that is
described in a Schedule as constituting, or included in, a Service.
"TERMINATION DATE": The date on which the Agreement is terminated in
accordance with Section 13.1, without regard to any Transition Period.
"THIRD-PARTY CLAIM": A claim of liability asserted against either Party by
a Person other than the other Party or either Party's Indemnified Agents.
"TRANSITION PERIOD": The maximum 180-day period after the Termination Date
during which EDS shall, as USI reasonably requests, render one or more Services
in accordance with Section 13.3(a) or provide transition assistance in
accordance with Section 13.3(b).
"USE-BASED SERVICE": A Service the Price for which is variable; or a
Service the Price for which is a fixed rate, but the amount due for that Service
is determined by or based upon, at least in part, the extent of the actual use
of EDS' personnel or other assets.
"USI": Unigraphics Solutions Inc., a Delaware corporation.
"USI COMPANY": Any entity over which USI has Control.
"USI'S REPRESENTATIVE": The individual agent or representative designated
by USI to be USI's formal liaison with or representative to EDS for matters
relating to the Agreement, having the (non-exclusive) authority and
responsibility described in the Agreement.
B. INTERPRETATIVE MATTERS. The Agreement is the result of the Parties'
negotiations, and no provision of the Agreement shall be construed for or
against either Party because of the authorship of that provision. In the
interpretation of the Agreement, except where the context otherwise requires:
1. "including" or "include" does not denote or apply any limitation;
2. "or" has the inclusive meaning "and/or";
3. "$" refers to United States dollars;
4. the singular includes the plural, and vice versa, and each gender
includes each of the others;
5. captions or headings are only for reference and are not to be
considered in interpreting the Agreement;
6. "Article" and "Section" refer to an Article and Section, respectively,
of the Agreement, unless otherwise stated in the Agreement;
7. an event to occur, an action to be performed, or a condition to be
satisfied "by" or "as of" a stated date in the Agreement shall occur or be
effective or satisfied no later than 5:00 p.m. on that date; and
8. each reference to a time of day in the Agreement is to local time in
Dallas, Texas, and "midnight" begins a day.
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DISPUTE RESOLUTION APPENDIX
TO MANAGEMENT SERVICES AGREEMENT
A. DEFINED TERMS. Various terms used in this Dispute Resolution Appendix,
which begin with a capital letter, are defined in the Definitional Appendix to
Management Services Agreement. In addition, the following terms used only in
this Dispute Resolution Appendix have the corresponding meanings:
"COMPLEX DISPUTE LIST': The "Complex Dispute List," or if that list is not
then maintained by the American Arbitration Association, another list of
individuals having similar qualifications maintained by the American Arbitration
Association.
"INITIAL EXECUTIVE REVIEW COMMITTEE": A committee consisting of the Manager
- Corporate Financial Analysis of EDS and the Controller of USI.
"QUALIFICATIONS": Inclusion in the Complex Dispute List or having extensive
knowledge or experience, or both, regarding management services similar to the
Service or Services that are the subject of the Dispute.
"SECOND EXECUTIVE REVIEW COMMITTEE": A committee consisting of the Vice
President and Controller of EDS and the Chief Financial Officer of USI.
"THIRD EXECUTIVE REVIEW COMMITTEE": A committee consisting of the President
of USI and an Executive Vice President or Senior Vice President of EDS
designated by either the Chief Executive Officer, President or Vice Chairman of
EDS.
The interpretative matters set forth in the Definitional Appendix also
apply to this Dispute Resolution Appendix.
B. DISPUTE RESOLUTION PROCEDURE.
1. General Procedure. Except as otherwise stated in the Agreement, the
Parties shall resolve all Disputes in accordance with this procedure:
(a) Each Party shall instruct its Representative to promptly
negotiate in good faith with the other Party's Representative to resolve
the Dispute.
(b) If the Representatives do not resolve the Dispute within ten
Business Days (or such longer period as the Representatives may agree)
after the date of referral of the Dispute to them, the Dispute shall be
referred (by either or both of the Representatives) to the Initial
Executive Review Committee for resolution.
(c) If the Initial Executive Review Committee does not resolve the
Dispute within ten Business Days (or such longer period as that Committee
may agree) from the date of referral to it, the Dispute shall be referred
(by that Committee or any of its members) to the Second Executive Review
Committee for resolution.
(d) If the Second Executive Review Committee does not resolve the
Dispute within ten Business Days (or such longer period as that Committee
may agree) after the date of referral to it, either Party may submit the
Dispute for resolution by the Third Executive Review Committee, who may
submit the Dispute to non-binding mediation in accordance with Section B.2
of this Dispute Resolution Appendix.
(e) If the Dispute is not resolved by the Third Executive Review
Committee (if submitted to them) and is not submitted to or resolved by
mediation, then either Party may submit the Dispute to binding arbitration
in accordance with Section B.3 of this Dispute Resolution Appendix (which,
except as provided in Section 4 of this Dispute Resolution Appendix, shall
be the sole means available for resolution of the Dispute).
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A referral under any of Sections B.1(a), B.1(b), and B.1(c) of this Dispute
Resolution Appendix shall be made by written notice to the Persons designated in
the applicable Section or Sections. That notice shall be in a form described in
the Agreement or an electronic mail message and addressed to each Person at his
office address or electronic mail address; each notice shall be given and
effective as described in the Agreement or, in the case of electronic mail, upon
actual receipt. The date of referral is the last date that notice is given to
all of the Persons to whom the Dispute must have been referred.
2. Mediation. The mediation of an unresolved Dispute shall be conducted
in this manner:
(a) Either Party may submit the Dispute to mediation by giving
notice of mediation to the other Party. The Parties shall attempt to agree
upon and appoint a sole mediator who has the Qualifications promptly after
that notice is given.
(b) If the Parties are unable to agree upon a mediator within ten
days after the date the Dispute is submitted to mediation, either Party may
request the Dallas office of the American Arbitration Association to
appoint a mediator who has the Qualifications. The mediator so appointed
shall be deemed to have the Qualifications and to be accepted by the
Parties.
(c) The mediation shall be conducted in the Dallas metropolitan area
at a place and a time agreed by the Parties with the mediator, or if the
Parties cannot agree, as designated by the mediator. The mediation shall
be held within 20 days after the mediator is appointed.
(d) If either Party has substantial need for information from the
other Party in order to prepare for the mediation, the Parties shall
attempt to agree on procedures for the formal exchange of information; if
the Parties cannot agree, the mediator's determination shall be final.
(e) Each Party shall be represented in the mediation by at least its
Representative or another natural Person with authority to settle the
Dispute on behalf of that Party and, if desired by that Party, by counsel
for that Party. The Parties' representatives in the mediation shall
continue with the mediation as long as the mediator requests.
(f) The mediation shall be subject to Chapter 154 of Title 7 of the
Texas Civil Practice and Remedies Code.
(g) Unless otherwise agreed by the Parties, each Party shall pay
one-half of the mediator's fees and expenses and shall bear all of its own
expenses in connection with the mediation. Neither Party may employ or use
the mediator as a witness, consultant, expert, or counsel regarding the
Dispute or any related matters.
3. Arbitration. The arbitration of an unresolved Dispute shall be
conducted in this manner:
(a) Either Party may begin arbitration by filing a demand for
arbitration in accordance with the Arbitration Rules. The Parties shall
attempt to agree upon and appoint a panel of three arbitrators promptly
after that demand is filed. Each of those arbitrators must have the
Qualifications, and at least one of those arbitrators must be included in
the Complex Dispute List (unless no list of that kind is then maintained).
(b) If the Parties are unable to agree upon any or all of the
arbitrators within ten days after the demand for arbitration was filed (and
do not agree to an extension of that ten-day period), either Party may
request the Dallas office of the American Arbitration Association to
appoint the arbitrator or arbitrators, who have the Qualifications (and at
least one of whom must be included in the Complex Dispute List, unless no
list of that kind is then maintained), necessary to complete the panel in
accordance with the Arbitration Rules. Each arbitrator so appointed shall
be deemed to have the Qualifications and to be accepted by the Parties as
part of the panel.
(c) The arbitration shall be conducted in the Dallas metropolitan
area at a place and a time agreed by the Parties with the panel, or if the
Parties cannot agree, as designated by the panel. The panel may, however,
25
call and conduct hearings and meetings at such other places as the Parties
may agree or as the panel may, on the motion of one Party, determine to be
necessary to obtain significant testimony or evidence.
(d) The Parties shall attempt to agree upon the scope and nature of
any discovery for the arbitration. If the Parties do not agree, the panel
may authorize discovery in accordance with the Federal Rules of Civil
Procedure upon a showing of particularized need that the requested
discovery is likely to lead to material evidence needed to resolve the
Dispute and is not excessive in scope, timing, or cost.
(e) The arbitration shall be subject to the Federal Arbitration Act
and conducted in accordance with the Arbitration Rules to the extent they
do not conflict with this Section B.3 of this Dispute Resolution Appendix.
The Parties and the panel may, however, agree to vary the provisions of
this Section B.3 of this Dispute Resolution Appendix or the matters
otherwise governed by the Arbitration Rules.
(f) The panel has no power to:
(i) rule upon or grant any extension, renewal, or continuance
of the Agreement;
(ii) award remedies or relief either expressly prohibited by
the Agreement or under circumstances not permitted by the Agreement;
or
(iii) grant provisional or temporary injunctive relief before
rendering the final decision or award.
(g) Unless the Parties otherwise agree, all Disputes regarding or
related to the same topic or event that are subject to arbitration at one
time shall be consolidated in a single arbitration proceeding.
(h) A Party or other Person involved in an arbitration under this
Section B.3 may join in that arbitration any Person other than a Party if
(i) the Person to be joined agrees to resolve the particular
dispute or controversy in accordance with this Section B.3 and the
other provisions of this Dispute Resolution Appendix applicable to
arbitration; and
(ii) the panel determines, upon application of the Person
seeking joinder, that the joinder of that other Person will promote
the efficiency, expedition, and consistency of the result of the
arbitration and will not unfairly prejudice any other party to the
arbitration.
(i) The arbitration hearing shall be held within 30 days after the
appointment of the panel. Upon request of either Party, the panel shall
arrange for a transcribed record of the arbitration hearing, to be made
available to both Parties.
(j) The panel's final decision or award shall be made within 30 days
after the hearing. That final decision or award shall be made by unanimous
or majority vote or consent of the arbitrators constituting the panel, and
shall be deemed issued at the place of arbitration. The panel shall issue
a reasoned written final decision or award based on the Agreement and Texas
law; the panel may not act according to equity and conscience.
(k) The panel's final decision or award may include: (i) recovery of
Damages to the extent permitted by the Agreement or (ii) injunctive relief
in response to any actual or threatened breach of the Agreement or any
other actual or threatened action or omission of a Party under or in
connection with the Agreement.
(l) The panel's final decision or award shall be final and binding
upon the Parties, and judgment upon that decision or award may be entered
in any court having jurisdiction over either or both of the Parties or
their respective assets. The Parties specifically waive any right they may
have to apply or appeal to any court for relief from the preceding sentence
or from any decision of the panel made, or any question of law arising,
26
before the final decision or award. If any decision by the panel is
vacated for any reason, the Parties shall submit that Dispute to a new
arbitration in accordance with this Section B.3.
(m) Each Party shall pay one-half of the arbitrators' fees and
expenses, and shall bear all of its own expenses in connection with the
arbitration. The panel has the authority, however, to award recovery of
all costs and fees (including attorneys' fees, administrative fees and the
panel's fees and expenses) to the prevailing Party in the arbitration.
4. Recourse to Courts. Nothing in the Dispute Resolution Procedure limits
the right of either Party to apply to a court or other tribunal having
jurisdiction to:
(a) enforce the Dispute Resolution Procedure, including the agreement
to arbitrate in this Dispute Resolution Appendix;
(b) seek provisional or temporary injunctive relief, in response to
an actual or impending breach of Article 10 of the Agreement or otherwise
so as to avoid irreparable damage or maintain the status quo, until a final
arbitration decision or award is rendered or the Dispute is otherwise
resolved; or
(c) challenge or vacate any final arbitration decision or award that
does not comport with Section B.3 of this Dispute Resolution Appendix.
5. Submission to Jurisdiction. Each Party irrevocably submits to the
jurisdiction of the federal courts of the United States and the state courts of
Texas located in Collin County, Texas. Each Party waives any defense or
challenge to that jurisdiction based on lack of personal jurisdiction, improper
venue, or inconvenience of forum.
6. Confidentiality. The proceedings of all negotiations, mediations, and
arbitrations as part of the Dispute Resolution Procedure shall be privately
conducted. The Parties shall keep confidential all conduct, negotiations,
documents, decisions, and awards in connection with those proceedings under the
Dispute Resolution Procedure.
27
SCHEDULE OF SERVICES
APPENDIX TO MANAGEMENT SERVICES AGREEMENT
MANDATORY SERVICES
SCHEDULE I.................................................................. 2
TAX ADMINISTRATION AND TAX RELATED SERVICES................................. 2
SCHEDULE II................................................................. 5
TREASURY SUPPORT............................................................ 5
OPTIONAL SERVICES
SCHEDULE III................................................................ 7
ADMINISTRATION.............................................................. 7
ADMINISTRATION SECURITY..................................................... 7
ADMINISTRATION AVIATION..................................................... 8
ADMINISTRATION TRAVEL....................................................... 8
SCHEDULE IV................................................................. 9
AUDIT....................................................................... 9
SCHEDULE V..................................................................10
OFFICE OF THE CHIEF INFORMATION OFFICER.....................................10
SCHEDULE VI.................................................................12
EMPLOYEE ADMINISTRATION.....................................................12
SCHEDULE VII................................................................16
FINANCE: CONTROLLER OF EUROPE, AMERICAS, & ASIA PACIFIC.....................16
SCHEDULE VIII...............................................................17
LEGAL.......................................................................17
SCHEDULE IX.................................................................19
GLOBAL PURCHASING GROUP.....................................................19
SCHEDULE X..................................................................20
REAL ESTATE.................................................................20
SCHEDULE XI.................................................................21
SHARED FINANCIAL SERVICES...................................................21
SCHEDULE XII................................................................22
EMPLOYEE RELATIONS..........................................................22
SCHEDULE XIII...............................................................23
IB Services.................................................................23
MANDATORY SERVICES
SCHEDULE I
TAX ADMINISTRATION AND TAX RELATED SERVICES
DESCRIPTION OF SERVICE: Tax Administration and Tax Related Services include tax
research, tax planning, and tax return preparation in compliance with tax
statutes and regulations. All tax services are a Mandatory service. The
following tasks are Mandatory services to be provided to USI:
. Domestic Compliance
. Domestic Audit & Federal Audit
. State and Local Tax
. Sales Tax Compliance
. Use Tax Compliance
. Business Licenses Compliance
. State and Local Tax-Audits
. State and Local Tax-Reporting & Planning
. Property Tax and Compliance
. Property Tax Audit
. International Compliance
. Federal Planning
. International Planning
PRICE BASIS: These tasks are a combination of use-based and fixed prices as
indicated in the schedule below.
2
DESCRIPTION METHODOLOGY COSTS
------------------------------------------------------------------------------------------------------------------------------------
Domestic Compliance Flat rate: 1 person's fully loaded costs for domestic income and $80,000
franchise tax returns (Plus out of office expenses).
------------------------------------------------------------------------------------------------------------------------------------
Plus pass through direct costs for temporary workers and lawyers. Rate from $30 an hour for
temporary workers and $350 an
hour for lawyers.
------------------------------------------------------------------------------------------------------------------------------------
Domestic & Federal Audit Flat rate per year plus out of office expenses. Cost basis assumes $45,000 per audited tax year
slightly less than one person at fully loaded costs. (Plus out of
office expenses).
------------------------------------------------------------------------------------------------------------------------------------
Plus pass through direct costs for temporary workers and lawyers. Rates ($30 an hour for temps and
$350 an hour for lawyers)
------------------------------------------------------------------------------------------------------------------------------------
International Compliance Average hourly rate of $70 (Plus out of office expenses). Hourly rate of $70 (Estimated
expenses of $136,000)
Pass through rates based on per country international rate quotes
from major accounting firm which EDS uses. $50 an hour to $450 an hour
------------------------------------------------------------------------------------------------------------------------------------
State & Local Tax-Sales, Flat rate to file returns for sales, use, and business licenses $40,000
Use, and Business Compliance provided they do not exceed 600 in total per year (plus out of
office expenses).
------------------------------------------------------------------------------------------------------------------------------------
Pass through charges will be charged if the returns are completed $60,000 to $150,000 per year
by an external party. The estimate for 1,000 returns (pure
compliance-basic review) is $60,000 to $150,000 per year.
------------------------------------------------------------------------------------------------------------------------------------
State & Local Tax Property Flat rate for property tax returns and payments provided that $40,000
Tax Compliance and Audit combined they do not exceed 600 "filings". (Plus out of office
expenses).
------------------------------------------------------------------------------------------------------------------------------------
Pass through expenses at an Hourly rate of $100 to $200
hourly rate
------------------------------------------------------------------------------------------------------------------------------------
State and Local Tax Audits Part of the state audits. Cost is based on 10 hours a month at $70 $ 8,400
an hour. Additional hours will be billed by the hour.
------------------------------------------------------------------------------------------------------------------------------------
State and Local Tax Involves reviewing financial data and business activity to $ 4,200
Reporting and Planning determine EDS tax positions. Cost based on 5 hours per month at
$70 per hour. Additional hours will be billed by the hour.
------------------------------------------------------------------------------------------------------------------------------------
International Planning Involves reviewing financial data and business activity to $15,000
determine EDS tax positions. Cost based on 5 hours per month at
$70 per hour. Additional hours will be billed by the hour.
------------------------------------------------------------------------------------------------------------------------------------
Federal Planning Involves reviewing financial data and business activity to $10,000
determine EDS tax positions. Cost based on 5 hours per month at
$70 per hour. Additional hours will be billed by the hour.
------------------------------------------------------------------------------------------------------------------------------------
Tax Support - Shared $50,000
Financial Services
------------------------------------------------------------------------------------------------------------------------------------
3
The above amounts reflect estimated charges for 1998 based on 1997 services
rendered to USI. Embedded in the estimates is a critical assumption that USI
will be on EDS Systems (i.e. General Ledger, Accounts Receivable, Accounts
Payable, Fixed Assets, etc.) and will have access to other information (i.e.
taxability decisions in BTS and the On-Line Tax Manual). All internal estimates
are at cost. To the extent that USI shall not be on EDS Systems, these costs
will be revised to reflect any actual change in cost to EDS of providing these
services on different systems.
The monthly invoiced amount to USI will be based on the amounts as outlined in
the above schedule. The Tax SU may subcontract when necessary and all costs of
subcontracting will be "passed-through" at EDS' cost to USI.
The charges for Tax Administration and Tax related Services will be invoiced
monthly during the calendar year and the fixed amount will not vary if any one
or more of the use-based tasks are discontinued.
The annual cost to provide the mandatory tax services is the sum of the fixed
amount, the usage at the hourly rate, pass through costs, and any out of pocket
expense. The estimated costs for tax administration and tax related costs for
1998 are $439,400, excluding out of office expenses and some pass through costs.
4
SCHEDULE II
TREASURY SUPPORT
DESCRIPTION OF SERVICE: The EDS Treasury SU shall provide USI centralized
treasury support services. These are substantially the same treasury support
services currently provided to other EDS SU's. The tasks to be performed by the
EDS Treasury SU for USI consist of the following:
A. Cash Management /Bank Account Services
. All USI bank accounts will be managed by EDS Treasury, except as may
be agreed by the Treasurer of EDS and the Chief Financial Officer of
USI.
. Accounts will be established with EDS' major cash management banks to
facilitate intercompany transactions and minimize costs.
. USI will be charged for all direct costs such as banking and wire
transfer fees. Any incremental fees billed centrally to EDS will be
rebilled to USI.
B. Corporate Investment Management
. All excess funds will be invested with EDS at a rate of LIBID minus
.50%. U.S. investing will be provided by EDS and international
investing will be provided by EDS Finance plc. LIBID shall equal LIBOR
(defined below) minus 0.125%.
. Any investing of USI funds with third parties will be performed by EDS
and USI and will be charged for all direct costs associated with the
transaction.
C. Financing
. Pursuant to the terms of a separate Credit Agreement entered into
between EDS and USI concurrently with the execution of this Agreement,
EDS will provide all funding at a rate of LIBOR (the Official British
Bankers' Association one month LIBOR Fixings at 11:00 a.m. London
time, as reported on Bloomberg) plus .50%. U.S. funding will be
provided by EDS and international funding will be provided by EDS
Finance plc.
. Any third party financing (including equipment leasing) will be
arranged by EDS and USI will be charged for all direct costs
associated with the financing transaction(s).
D. Foreign Exchange
. Hedging - Any xxxxxx will be provided by EDS International Treasury
and will be done using internal forwards which will be charged to USI
at the market rate (direct cost) that EDS has incurred for the hedge.
. Foreign Currency Purchases/Sales - Any purchases/sales of a foreign
currency made for/to a USI entity will be managed by EDS International
Treasury and will be charged at the market rate (direct cost) incurred
by EDS in executing the purchase/sale.
PRICE BASIS: The cost to USI for the services described in A. through D. above
shall equal any third-party costs incurred by EDS in connection with such
services. USI will not be responsible for general overhead and personnel costs
of EDS for such services.
E. Insurance Risk Management
5
. Corporate Risk Management will assist USI in the negotiation of
insurance policies to support USI's global operations.
. EDS will provide coverage to USI under the following insurance
policies and any extensions thereof. With respect to countries where
USI has operations but EDS does not, no risk management services or
policies will be provided to USI.
PREMIUM ALLOCATION SCHEDULE:
----------------------------------------------------------------------------------------------------------------------
PREMIUM ALLOCATIONS
----------------------------------------------------------------------------------------------------------------------
POLICY EFFECTIVE DATE EXPOSURE BASE
----------------------------------------------------------------------------------------------------------------------
US
----------------------------------------------------------------------------------------------------------------------
Errors & Omissions 1/1/98-1/1/99 Revenue as % of total EDS revenue
----------------------------------------------------------------------------------------------------------------------
Aviation Products Liability 6/1/97-6/1/98 Aviation revenue as % of total EDS aviation
revenue
----------------------------------------------------------------------------------------------------------------------
All Risk Property 6/1/97-6/1/98 Property Values
----------------------------------------------------------------------------------------------------------------------
Crime/Employee Dishonesty 6/1/97-6/1/00 Revenue as % of total EDS revenue
----------------------------------------------------------------------------------------------------------------------
Directors & Officers Liability 6/1/97-6/1/00 Revenue as % of total EDS revenue
----------------------------------------------------------------------------------------------------------------------
Fiduciary Liability 6/1/97-6/1/98 $2,000 per year
----------------------------------------------------------------------------------------------------------------------
General & Products Liability 9/1/97-9/1/98 Revenue as % of total EDS revenue
----------------------------------------------------------------------------------------------------------------------
Auto Liability 9/1/97-9/1/98 # of vehicles ($304 per vehicle in 1998)
----------------------------------------------------------------------------------------------------------------------
Auto Physical Damage 9/1/97-9/1/98 # of vehicles ($400 per vehicle in 1998)
----------------------------------------------------------------------------------------------------------------------
Excess Liability 9/1/97-9/1/98 Based on ratio of USI's general & products
liability and auto liability premiums to those
of EDS
----------------------------------------------------------------------------------------------------------------------
Special Crime 9/30/97-9/30/98 $3,000 per year
----------------------------------------------------------------------------------------------------------------------
Int'l Property Difference in Conditions 6/1/97-6/1/98 Property Values
----------------------------------------------------------------------------------------------------------------------
INTL. COVERAGE'S
----------------------------------------------------------------------------------------------------------------------
All Risk Property 6/1/97-6/1/98 Property Values
----------------------------------------------------------------------------------------------------------------------
Auto, General & Products Liability 9/1/97-9/1/98 Various
----------------------------------------------------------------------------------------------------------------------
PRICE BASIS: The premiums payable by USI are set forth above with respect to
Special Crime and Fiduciary policies and with respect to all others will be
allocated according to the exposure base indicated above. The charges will be
invoiced annually in advance at each policy renewal date. The estimated cost
for 1998 is expected to be $160,000.
6
OPTIONAL SERVICES
SCHEDULE III
ADMINISTRATION
--------------
DESCRIPTION OF SERVICE: The services performed by the EDS-Administration SU
will consist of the following*:
. Administration-Security
. Administration-Aviation
. Administration-Travel
* The EDS Administration SU may also perform CAS Administration Services.
However, such services will be considered IB Services and not governed by the
terms set forth in this Schedule.
ADMINISTRATION - SECURITY
-------------------------
The EDS Administration-Security SU will provide the following services and
associated tasks to USI:
. Data security services
. Assign password ID's
. Maintain password ID's
. Provide and control access to EDS systems including the firewall
and EDSNet.
. Physical security services for space occupied at EDS' Plano
headquarters
. Provide security guards
. Provide locks and cameras
. Provide access control
. Provide fire detection systems
. Background Investigations and Drug Screening Services
. Provide an investigation background for new hires and existing
employees
. Provide random drug testing
PRICE BASIS-: The foregoing tasks will be charged at the rates as indicated on
the schedule below:
7
---------------------------------------------------------------------------------------------------------------
SERVICES DESCRIPTION CHARGE BASIS RATE UNIT
---------------------------------------------------------------------------------------------------------------
Data Security Assign & maintain password Ids Monthly Charge per Logon.
---------------------------------------------------------------------------------------------------------------
Provide and Control
access to EDS systems
whether it be on the
firewall or EDSNET.
---------------------------------------------------------------------------------------------------------------
Network Logon ID 0.50 ID
---------------------------------------------------------------------------------------------------------------
Logon ID to access a line 0.95 Application
item on a users menu.
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Physical Security Provide security guards, Monthly Charge Per SQ. FT of
locks, cameras, access leased space at EDS' Plano 0.11 Sq. Ft.
control, and fire detection headquarters
systems.
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Investigation Services for prospective and Flat rate per person screened
and Drug existing employees (both in the U.S.
Screenings services).
---------------------------------------------------------------------------------------------------------------
Background Investigation -
U.S. only $33.00 Inquiry
---------------------------------------------------------------------------------------------------------------
Drug Screening - U.S., $61.00 Screen
Canada, and Mexico
---------------------------------------------------------------------------------------------------------------
PRICE BASIS: The tasks to be performed are use-based. The monthly invoiced
amount will be the product of the EDS Administration Security rates and the
volume of products used. The costs will be invoiced monthly. Estimated costs
for 1998 are $50,000.
ADMINISTRATION AVIATION
-----------------------
EDS Administrative Aviation provides private air transportation for executives
to conduct EDS business.
PRICE BASIS: The rate charged to USI will be on a per flight hour to be
determined prior to travel. The rate will be reviewed on an annual basis. The
rate reflects the costs of EDS Aviation and will be invoiced on a usage basis.
Estimated costs for 1998 are $50,000.
ADMINISTRATION TRAVEL
---------------------
EDS Administration Travel will provide the task of providing all business travel
coordination, including air travel, hotel reservations, and automotive rental
reservations, to USI.
PRICE BASIS: The charge for providing these services to USI will be the per
transaction rate charged to EDS by its third party travel coordinator, which
rate will be the same rate charged to other EDS business units. The charge
includes the price of the airfare, car rental, or hotel charge. This charge
will be offset by the commission that EDS receives from the airline, hotel, or
car rental company, which commissions will be given back to USI as a credit in
the billing process. The tasks to be performed are use-based. The monthly
invoiced amount will be the product of the EDS Travel rate and the number of
transactions.
8
SCHEDULE IV
AUDIT
The external audit of USI will be conducted by EDS' independent auditors,
currently KPMG Peat Marwick LLP. Audit services may include, but are not
limited to, the following services:
. Audit of USI's year end consolidated financial statements for filings
with the Securities Exchange Commission (SEC),
. Statutory audits of the various foreign legal entities that are part
of USI
. Review of quarterly and other filings with the SEC.
USI and EDS will be jointly responsible for engaging the external auditors' and
negotiating the fees for audit work. The engagement of independent certified
public accountants is, however, subject to approval by the Audit Committee of
USI's Board of Directors (once such committee is established) based upon the
recommendations of management. EDS and USI will negotiate fees with such
accountants in a timely manner to ensure that such fees are communicated to the
Audit Committee of EDS' Board of Directors within the required time. In
addition, USI will formally communicate to EDS a summary of actual audit fees
incurred on an annual basis along with explanations for variances from
previously negotiated amounts as well as fees paid for accounting, tax, and
management advisory services.
PRICE BASIS: It is anticipated that the costs for the above services for all
audit work performed domestically and internationally will be billed directly to
USI by the external auditors. To the extent that EDS processes payables for USI
in foreign locations, external audit fees will be paid by EDS and charged to USI
at the amounts identified on the xxxxxxxx. In the event that audit fees for EDS
and USI are submitted on the same billing and such billing contains out-of-
pocket expenses which are not specifically identifiable to EDS or USI, such
expenses will be allocated to each party in direct proportion to their audit
fee.
9
SCHEDULE V
OFFICE OF THE CHIEF INFORMATION OFFICER
DESCRIPTION OF SERVICES: The tasks to be performed by the Office of the Chief
Information Officer (CIO) SU will consist of the following:
. Ensure the operations of production cycles and on-line availability
. Correct production problems
. Make systems modifications to meet requirements from entities external
to EDS such as known International, Federal, State and local statutory
requirements or regulations.
. Support the audit of corporate systems
. Support disaster recovery activities to related corporate systems.
. Perform run-time improvements
PRICE BASIS: The above tasks will be charged according to the following
schedule:
10
SYSTEM CHARGES FOR USI
----------------------
-----------------------------------------------------------------------------------------------------------------
SYSTEM/FUNCTION DESCRIPTION 1998 COST
-----------------------------------------------------------------------------------------------------------------
PRODUCTION SUPPORT ('000)
-----------------------------------------------------------------------------------------------------------------
CORPORATE PEOPLE SYSTEMS
-----------------------------------------------------------------------------------------------------------------
CAS Tech Support Corp Admin System Support $17.8
-----------------------------------------------------------------------------------------------------------------
Travel Travel System $5.9
-----------------------------------------------------------------------------------------------------------------
Real Estate Real Estate System $4.0
-----------------------------------------------------------------------------------------------------------------
EARS Workflow European SAP Workflow $9.9
-----------------------------------------------------------------------------------------------------------------
Payroll Payroll System $23.8
-----------------------------------------------------------------------------------------------------------------
Employee Admin - Other Employee Benefits System $9.9
-----------------------------------------------------------------------------------------------------------------
Employee Admin - Relocation Relocation System $2.0
-----------------------------------------------------------------------------------------------------------------
ED WEB Prod Support/Coordination All Employee Development $13.9
-----------------------------------------------------------------------------------------------------------------
Compensation/People Info Compensation Info System $11.9
-----------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE PEOPLE SYSTEMS $99.1
-----------------------------------------------------------------------------------------------------------------
FINANCIAL SYSTEMS
-----------------------------------------------------------------------------------------------------------------
Financial Acctg/AR/GCC/Billing Financial Systems $50.9
-----------------------------------------------------------------------------------------------------------------
TOTAL FINANCIAL SYSTEMS $50.9
-----------------------------------------------------------------------------------------------------------------
PURCHASING SYSTEMS
-----------------------------------------------------------------------------------------------------------------
Inventory Fixed Assets Systems $4.8
-----------------------------------------------------------------------------------------------------------------
Payment/Asset Mgmt Vendor Payment/Asset Mgmt Systems $6.7
-----------------------------------------------------------------------------------------------------------------
Management Reporting Management Reporting Systems $12.4
-----------------------------------------------------------------------------------------------------------------
GPG Production Global Purchasing Systems $14.3
-----------------------------------------------------------------------------------------------------------------
Data Warehouse Other Purchasing Systems $12.4
-----------------------------------------------------------------------------------------------------------------
GPG WEB Other Purchasing Systems $1.0
-----------------------------------------------------------------------------------------------------------------
TOTAL PURCHASING SYSTEMS $51.6
-----------------------------------------------------------------------------------------------------------------
OTHER SYSTEM/FUNCTIONS
-----------------------------------------------------------------------------------------------------------------
Security Information Security $16.8
-----------------------------------------------------------------------------------------------------------------
Client Server Applications Support of Lan/Wan Servers $21.2
-----------------------------------------------------------------------------------------------------------------
Corporate People Systems - Intl $14.3
-----------------------------------------------------------------------------------------------------------------
Financial Systems - Europe $39.7
-----------------------------------------------------------------------------------------------------------------
Mid Range Support Support of the above Production Systems $89.5
-----------------------------------------------------------------------------------------------------------------
Year 2000 Project Y2k related expense for all EDS internal used $107.8
systems.
-----------------------------------------------------------------------------------------------------------------
SAP Mexico System, Application, Products $15.4
-----------------------------------------------------------------------------------------------------------------
TAC Technical Assistance Center Helpdesk $20.7
-----------------------------------------------------------------------------------------------------------------
IT Planning Information Technology Planning $10.1
-----------------------------------------------------------------------------------------------------------------
CIO Office of the CIO $60.6
-----------------------------------------------------------------------------------------------------------------
TOTAL OTHER SYSTEM/FUNCTIONS $396.1
-----------------------------------------------------------------------------------------------------------------
TOTAL $597.7
-----------------------------------------------------------------------------------------------------------------
PRICE BASIS: The tasks to be performed are fixed rates but were based on a
variable factor of headcount. The monthly invoiced amount will be the product
of the Office of the CIO SU rates per system as denoted on the above schedule.
11
SCHEDULE VI
EMPLOYEE ADMINISTRATION
DESCRIPTION OF SERVICES: The EDS Employee Administration SU renders employee
administration related services. The information contained below is divided
into the following regions; United States, Europe, Asia Pacific, South and
Central America, Canada, and Mexico. The functions supported by the Employee
Administration SU are not the same around the world. In some countries,
Employee Administration will have functions that may be included in another SU
within the United States such as labor relations. The assumption in the rates
outlined below is that all worldwide USI employees will stay on EDS human
resource systems, benefits, and programs. To the extent that USI shall not be
on EDS' systems, these costs will be revised to reflect any actual change in
cost to EDS of providing these services on different systems.
UNITED STATES
-------------
The services provided to USI in the United States will be based on four main
components.
The first component is the plan costs (as opposed to the administrative costs to
run the plans). These costs are IB Services and will be billed directly through
the local financial or human resource systems to the FIDs that have employees.
The costs include governmental taxes and benefits including pension benefits.
The second component of the United States pricing methodology is the
administrative costs to run the benefits and services not included in the Health
Plan outlined above. The following benefits and services will be provided to
the extent they are offered to other EDS employees and will be charged to USI on
a monthly basis. The monthly rate per person for providing these tasks to USI
will be $30.06 per person.
. Payroll
. Lifekey Facilities and Programs
. Recognition Services
. Dependent Care Voucher and Referral Program
. Length of Service Award Program
. Employee Discount Programs
. Health Spending Account Programs
. Plano and Xxxxxxx Mailroom and Switchboard
. Retirement Plan
. Unemployment Processing
. Deferred Compensation Plan
. Workers' Compensation Program
. Transition/Acquisition/New Business Support
. Employee Handbook Expense
. Stock Purchase Plan
. Benefit Development
. PerformanceShare Program
The third component of the United States pricing methodology is the
administrative costs for the relocation program. USI will be charged when a
relocation is requested. The rates are broken down by homeowner and non-
homeowner and the benefits given below.
$244 Non-homeowners: This includes counseling regarding the
approved benefits, processing of all expense reports,
arranging the van line services, and tax assistance
reporting.
12
$600 Homeowner Closing Services: In addition to above this
will include counseling with the employee regarding the
marketing of their home and administering the paperwork
to handle the closing of the home.
$1,400 Homeowner Purchase of Former Home: In addition to above
this will include reviewing appraisals and inspections
on the home, making an offer to purchase the home, and
marketing the home if it comes into the relocation
inventory.
Each US relocation will receive at least the non-homeowner services and may also
receive the homeowner closing services and homeowner purchase of former home.
The fourth component of the United States pricing methodology is the
administrative costs for the expatriate program. USI will be charged when a
expatriate assignment is requested. The monthly rates would be charged for each
employee on an expatriate assignment until the employee returns to their home
country. The monthly rate will be $70.92 per person.
EUROPE
------
The pricing methodology in Europe is based on two components. These costs are IB
Services and will be billed directly through the local financial or human
resource systems to the FIDs that have employees. The costs include
governmental taxes and benefits including pension benefits.
The second component of the European pricing methodology is the administrative
costs of the Human Resource departments in each country. This will be billed as
a monthly rate per person. Each country will provide the following services to
the extent offered to other EDS employees in that country.
. Staffing
. Employee Communication
. Transition/Acquisition/New Business Support
. Country Specific Education
. English as a Second Language Training
. Benefits Processing
. Leadership Training
. Travel Services
. Payroll Services
. EARS Support
. Labor Relations
. Expatriate Administration
. Compensation Administration
The monthly per person rate for performing these tasks for USI is $93.10.
ASIA PACIFIC
------------
The pricing methodology in the Asia Pacific region is based on two components.
The first component is the plan costs (as opposed to the administrative costs to
run the plans). These costs are IB Services and will be billed directly through
the local financial or human resource systems to the FIDs that have employees.
The costs include governmental taxes and benefits including pension benefits.
The second component of the Asia Pacific regional pricing methodology is the
administrative costs of the Human Resource departments in each country. This
will be billed as a monthly rate per person. Each country will provide the
following services to the extent offered to other EDS employees in that country.
13
. Staffing
. Employee Communications
. Country Specific Education
. Transition/Acquisition/New Business Support
. English as a Second Language Training
. Benefits Processing
. Leadership Training
. Payroll Services
. Compensation Administration
. Labor Relations
. Expatriate Administration
The monthly per person rate for providing these tasks to USI will be $120.32.
SOUTH AND CENTRAL AMERICA
-------------------------
The pricing methodology in the South and Central America region is based on two
components.
The first component is the plan costs (as opposed to the administrative costs to
run the plans). These costs are IB Services and will be billed directly through
the local financial or human resource systems to the FIDs that have employees.
The costs include governmental taxes and benefits including pension benefits.
The second component of the South and Central America regional pricing
methodology is the administrative costs of the Human Resource departments in
each country. This will be billed as a monthly rate per person. Each country
will provide the following services to the extent offered to other EDS employees
in that country.
. Staffing
. Employee Communications
. Transition/Acquisition/New Business Support
. Benefits Processing
. Compensation Administration
. Country Specific Education
. Payroll Services
. English as a Second Language Training
. Leadership Training
. Labor Relations
. Expatriate Administration
The monthly per person rate for providing these tasks to USI is $79.14.
CANADA
------
The pricing methodology for Canada is based on two components.
The first component is the plan costs (as opposed to the administrative costs to
run the plans). These costs are IB Services and will be billed directly through
the local financial or human resource systems to the FIDs that have employees.
The costs include governmental taxes and benefits including pension benefits.
The second component of the Canada pricing methodology is the administrative
costs of the Human Resource department in Canada. This will be billed as a
monthly rate per person. Canada Human Resources will provide the following
services to the extent offered to other EDS employees within Canada:
14
. Staffing
. Employee Communications
. Transition/Acquisition/New Business Support
. Country Specific Education
. Leadership Training
. Expatriate Administration
. Benefits Processing
. Payroll Service
. Labor Relations
. Compensation Administrator
The monthly per person rate for providing these tasks to USI will be $89.65.
MEXICO
------
The billing methodology for Mexico is based on two components.
The first component is the plan costs (as opposed to the administrative costs to
run the plans). These costs are IB Services and will be billed directly through
the local financial or human resource systems to the FIDs that have employees.
The costs include governmental taxes and benefits including pension benefits.
The second component of the Mexico pricing methodology is the administrative
costs of the Human Resource department in Mexico. This will be billed as a
monthly rate per person. Mexico Human Resources will provide the following
services to the extent offered to other EDS employees within Mexico:
. Staffing
. Labor Relations
. Transition/Acquisition/New Business Support
. Country Specific Education
. Benefits Processing
. Leadership Training
. Compensation Administration
. Expatriate Administration
The monthly per person rate for providing these tasks to USI is $81.66. This
rate does not include Corporate Apartments, Physical Security, and Facility
Services which will be retained by the EDS Mexico SU.
A summary of the rates for Employee Administration are as follows:
SUMMARY MONTHLY RATE
------- ------------
Employee Administration - Europe $ 93.10 per person
Employee Administration - US $ 30.06 per person
Employee Administration - Asia Pacific $120.32 per person
Employee Administration - South & Central America $ 79.14 per person
Employee Administration - Canada $ 89.65 per person
Employee Administration - Mexico $ 81.66 per person
PRICE BASIS: Each of the tasks described above will be performed on a per
person basis. The price is based on EDS Employee Administration costs. The
estimated 1998 costs for these tasks are $1,279,200.
15
SCHEDULE VII
FINANCE: CONTROLLER OF EUROPE, AMERICAS, & ASIA PACIFIC
DESCRIPTION OF SERVICES:
1) The Controller organization will in the countries in which USI operates
provide accounting services to specified USI entities, which will be comprised
of the following: .
Generally, maintenance of proper books of account and records, in accordance
with local law and accounting requirements, including
. Regular and timely Balance Sheet reconciliations for centrally
controlled accounts (i.e Cash, Accounts Receivable-Billed, Payroll,
Fixed Assets Control Accounts etc). USI financial staff have the
responsibility to provide EDS staff with regular, adequate, and timely
backup and account reconciliations for "Operations account balances"
(such as Accrued Revenue, Accrued Expenses, etc). EDS staff will have
final responsibility for maintaining proper books of account.
. Reporting local currency results in accordance with US GAAP into the
EDS Corporate Reporting records
. Provides USI appropriate access to all of the EDS accounting and
reporting systems
. Adequate documentation, where agreed, to support xxxxxxxx made to USI
for services provided under this section of the agreement
2) EDS will, in all counties in which USI operates, provide additional
services known as " Shared Financial Services for Europe, Americas and Asia
Pacific" comprising the following:
. Accounts Receivable Support (Billing support, maintaining customer
accounts, collections)
. Maintenance of Fixed Asset Records
. Accounts Payable Support (Recording and payment of vendor invoices and
maintaining vendor accounts)
. Paying USI employees' salaries and related payments on time and in
accordance with local law, based on information provided by USI
management.
. Preparing and filing of local sales and social security tax returns
(for example, VAT and payroll taxes), on time and in accordance with
local law.
. Preparation and filing of annual statutory financial statements, in
accordance with local law
Note: USI staff will be responsible for providing all information required
for these services to be performed in a timely manner, including, for
example, approval authority levels, salary data, and billing data. USI
staff will be responsible for approving vendor invoices, customer
credit memos, and employee payments of any kind.
Note: Where today the preparation of local tax returns and/or statutory
financial statements is not carried out by EDS staff, USI will be
responsible for the additional cost of such preparation.
PRICE BASIS: The costs for 1998 for these services will be $850,000 collectively
for Europe, Asia Pacific and the Americas. The charge will be invoiced monthly
during the calendar year. The 1999 costs will be determined based, among other
matters, on accounting systems to be used. EDS will not support the MSA
accounting and related systems in 1999. Any change in accounting systems used
to provide the above services may result in a change in the cost to provide such
services.
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SCHEDULE VIII
LEGAL
DESCRIPTION OF SERVICES: Tasks will consist of the rendering of professional
legal services for matters in the listed below. The delivery of services, or the
withdrawal of any of member of the EDS Legal Affairs professional staff from the
delivery of services under this provision, as well as the price for services, is
in all cases subject to the professional and ethical standards imposed on
individuals engaged in the practice of law in the jurisdictions where services
are rendered.
1. Legal advice and consulting in the following practice areas on matters
concerning or related to the sale and delivery of USI's products and
services:
. Commercial Transaction Law, limited to:
New Business Development
Customer Contract Formation
Customer Contract Performance
. Corporate Law, limited to:
Mergers and Acquisitions
Real Estate
Corporate and Securities Law Compliance
Equipment Finance and Equipment Leasing
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act compliance
International transactions
. Import and Export Law, limited to
Import of product, data, and intellectual property
Export of product, data, intellectual property
. Intellectual Property Law, limited to
Patent Review and Application
Copyright
Product Licensing
. Commercial Litigation, limited to
Pre-litigation advice and consultation
. Employment and Labor Law, limited to
Pre-litigation advice and consultation
Advice and consultation regarding other practice areas may be provided on
an "as available basis" at the sole discretion of EDS' Legal Affairs
division. The foregoing services are limited to advice and consultation.
It is not intended that these services will extend to representation of USI
beyond such advice and consultation of USI in connection with transactional
matters, such as mergers, acquisitions, dispositions, joint ventures or
commercial contracting, litigation or governmental proceedings or
investigations, financing transactions, or the establishment or amendment
of benefit plans.
2. Selection, retention, and oversight of outside counsel when a request is
subcontracted to outside counsel. Legal advice and consultation in the
foregoing practice areas may be subcontracted by EDS Legal Affairs as it
deems necessary.
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3. Selection retention and oversight of outside counsel when the legal
services requested or required are outside the scope of the practice areas
described above.
4. Corporate secretarial services for USI and any subsidiaries incorporated in
the U.S., limited to:
Administration of minute books
State corporate qualifications, withdrawals, name changes and assumed
name filings.
Outside counsel shall be retained at the discretion EDS Legal Affairs
considering the nature, practice area, complexity, and schedule for the legal
services requested or needed by USI.
USI shall designate a limited number of executives, not to exceed three, who
shall be authorized to request the services described on this Schedule, and EDS
Legal Affairs shall designate a point of contact for USI in each subject matter
area of service described on this Schedule.
PRICE BASIS: The price for the foregoing services described in 1 through 3
above shall be $175,000 per year, which hall be prorated and billed in 12 equal
monthly amounts. Such rate is based on 1,500 hours of professional consultation
and advice from EDS Legal Affairs staff, including hours spent in supervision of
outside counsel, plus an estimate for corporate secretarial services. EDS Legal
Affairs shall not be obligated to provide services in excess of 1,500 hours per
year.
Fees and other costs related to the services provided by outside counsel shall
be the sole responsibility of USI and shall billed by the provider to USI and
paid by USI direct to the provider.
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SCHEDULE IX
GLOBAL PURCHASING GROUP
DESCRIPTION OF SERVICES: The services to be performed by EDS Global Purchasing
Group will consist of the following:
. Management of supplier relationships.
. Maintenance of day to day operations and processes.
. Strategically source the number and geographic capabilities of
suppliers for all commodities and services for EDS and its customers.
. Lead purchasing with best practice processes and technology.
. Provide volume based discounts.
. Negotiate purchasing agreements.
. Staffing for new business.
PRICE BASIS: These tasks will be billed on both a fixed price and usage based
rate. The fixed price rate for 1998 will equal $210,600 (determined based on 2
FTE's at a cost of $65,000 per FTE ($130,000) and a fee of .2% of USI's 1997
expenses ($80,600)). The usage based rate will equal $3.90 per purchase order
(based on an estimated 2,557 purchase orders per month) the usage based
component of the 1998 charge for purchasing services would equal $119,668.
Based on such estimated usage-based charges, estimated 1998 costs would equal
$330,268.
The foregoing rates are based on EDS Global Purchasing Group costs. The charges
will be invoiced monthly during the calendar year.
Third Party License Agreements: During 1998, USI will pay EDS $100,000 per year
as consideration for the usage of any products under EDS' License Agreement with
Computer Associates Inc. Future costs beyond 1998 will be determined by EDS and
USI based on USI's usage of products under that License Agreement. For other
third party license agreements, to the extent USI utilizes any products
thereunder USI and EDS will agree upon the price to be paid by USI to EDS based
on USI's usage and the market price of the product.
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SCHEDULE X
REAL ESTATE
DESCRIPTION OF SERVICES: EDS Corporate Real Estate will provide Project
Management, Proposal Support, Contract Closedown, Due Diligence, Interior
Design, Facility Management, Engineering, Lease Audit, and Technical Facility
Design services to USI:
The tasks to be performed by EDS Corporate Real Estate will consist of the
following:
. Provide comprehensive services to locate, lease, and outfit space
. Provide real estate project management from identifying project to
move in
. Provide information necessary to support business proposals
. Provide support to close facilities
. Conduct research and analysis of real estate documents and issues to
assist in making decisions regarding potential acquisitions involving
lease or owned facilities
. Establish standard and layouts for optimum space utilization based on
account needs
. Coordinate the acquisition, installation, rehabilitation, and disposal
of all furniture
. Provide building maintenance and repair, building engineering,
janitorial, warehousing support, consulting, vending and food services
for occupancy pools
. Provide consulting services related to analysis of soils, structures,
environmental issues, hazardous materials, power and a/c requirements
and assessment of new technology in the construction industry
. Provide overall lease administration
. Review landlord operating expenses to ensure compliance with lease
agreement
. Review all existing and new contracts to ensure insurance requirements
are being met
. Review existing utility rates and negotiate with local utilities for
maximum cost savings
PRICE BASIS: The tasks to be performed are usage-based. The monthly invoiced
amount will be the product of the EDS Corporate Real Estate's hourly rate of $50
and the billable hours required to perform the tasks described above. The
charges for the Corporate Real Estate Service will be invoiced monthly.
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SCHEDULE XI
SHARED FINANCIAL SERVICES - US ONLY
DESCRIPTION OF SERVICES: EDS Shared Financial Services will provide the
following services in the United States:
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SERVICES PROVIDED TO USI
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EMPLOYEE EXPENSE/ADVANCE Payment of employee expense reports and advances. Control of accounting
records and monthly close activities. Providing help desk assistance and
fulfillment of record retention requirements.
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PURCHASE ORDER PAYMENT Payment of PO based transactions for services/equipment provided by vendors.
The control of accounting records, capital project expenditures and monthly
close activities. Providing help desk assistance and fulfillment of record
retention requirements.
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SUNDRY INVOICE PAYMENT The payment of non-purchase order based transactions for services or equipment
provided by vendors. The control of accounting records and monthly close
activities. Providing help desk assistance and fulfillment of record
retention requirements.
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ASSET MANAGEMENT Capital Assets: Set up and maintenance of items meeting capital asset
criteria. The control of accounting records and monthly close activities.
Providing help desk assistance and fulfillment of record retention
requirements.
INVENTORY MANAGEMENT: The tracking of non-resale inventory items and the
reconciliation of physical inventory to inventory records.
RENT AND LEASE MAINTENANCE ITEM MANAGEMENT: The tracking and maintenance of
records for rented and leased items with maintenance agreements.
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ACCOUNTS RECEIVABLE The recording and monitoring of customer receivables. The control of
accounting records and monthly close activities. Providing help desk
assistance and fulfillment of record retention requirements.
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COLLECTIONS The activities associated with the investigation and collection of past due
and aging accounts receivables.
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PRICE BASIS: The rates for performing the tasks to USI are shown in the
following schedule.
-----------------------------------------------------------------------------------------------------------
PROCESS 1998 COST PER UNIT CURRENT USI
USAGE
-----------------------------------------------------------------------------------------------------------
Asset Management $0.24 Active Asset 5,868
-----------------------------------------------------------------------------------------------------------
PO Payment (1)
-----------------------------------------------------------------------------------------------------------
Sundry Payment $1.48 Payment 474
-----------------------------------------------------------------------------------------------------------
Expense Report Payment $2.13 Expense Report 1,000
-----------------------------------------------------------------------------------------------------------
Receivables $2.82 Customer Invoice 4,800
-----------------------------------------------------------------------------------------------------------
Collections $4.39 Past Due Invoice 2,500
-----------------------------------------------------------------------------------------------------------
(1) Payments for purchase orders will be governed under the purchasing services
provided pursuant to Schedule IX
PRICE BASIS: The tasks to be performed are usage-based. The monthly invoiced
amount will be the product of the EDS Shared Financial Services rates and the
volume of the tasks performed. The usage based services will be invoiced
monthly. In 1998, the estimated costs for these services is $345,000.
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SCHEDULE XII
EMPLOYEE RELATIONS
Employee Relations will provide the following services to USI:
. Develop and submit government reporting to include the VETS 100, EEO
1s, and the Affirmative Action Plans (AAPs)
. Employee Relations shall provide consulting on AAP, Wage and Hour ,
and EEO compliance.
. Employee Relations shall provide support with charges of
discrimination or related governmental audits.
PRICE BASIS: The charge for the above services will be $1,000 per month, plus
costs of any travel related expenses incurred in support of such services.
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SCHEDULE XIII
IB SERVICES
Mantime and Infrastructure Services:
The following services represent mantime and infrastructure services provided to
USI by EDS. These services are project oriented and are initiated at the field
level to meet specific project needs or to leverage EDS systems and/or
expertise. Rates and terms for these engagements will be established and
maintained at the field level.
Mantime
. Technical Project Support Technical Resources for Unigraphics and
IMAN customer projects
. Operations Support of St. Louis Data Center and
Client server support
. Industry Services Support Technical Support of Commercial Sales
activities
Infrastructure & Communications
. US LAN connectivity & management for St.
Louis office and EDS*LINK backbone USI
will continue to have interconnects
between the USI private network and the
corporate network.
. Non US WAN/LAN connectivity & management for
USI's non-US offices. EDS is providing
EDS*LINK backbone and EDS*LAN network
connectivity to these offices.
. Systems Use of EDS Purchasing system (RADS,
PICS) and EDS Administrative Electronic
Forms and Email system (Officevision)
Employee Administration:
The costs outlined below assume that all worldwide USI employees will stay on
EDS human resource systems, benefits, and programs.
Retirement Plan A monthly charge of 3.5% of the yearly
earnings of the employees for the
Retirement Plan.
Health Plan A monthly charge of $300 per person will
be charged directly to the FID that
receives the employee's salary via the
payroll system. This charge includes the
corporate cost for Medical, Dental, Life
Insurance, Personal Accident Insurance,
Disability Insurance, the Employee
Assistance Program, and the Adoption
Assistance Program.
Payroll Taxes Charges for FICA, FUTA, and SUTA will be
accessed by the payroll system to each
FID that has employees based on their
salary and location.
Stock Purchase An amount equal to 15% of the fair
market price of EDS stock when purchased
by USI employees through the Stock
Purchase Plan will be charged via
Intercompany xxxx on a monthly basis.
The amount will depend upon the stock
price and the employee participation in
the plan.
Relocation Program The administrative costs are outlined in
Schedule VI above and will be a per
relocation rate.
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Expatriate Program The actual costs associated with an
expatriate employee based on the package
given by the employee's leader will be
charged directly to the appropriate FID.
This includes US employees going on
assignment outside the US and vice
versa. The costs include the salary,
benefits, and taxes for the employee as
well as the tax return preparation for
US and in-country governments of $2,600
to $3,000 per expatriate. THE
ADMINISTRATIVE COSTS AND THE MONTHLY
CHARGES PER PERSON ARE OUTLINED IN
SCHEDULE VI.
PerformanceShare USI employees who currently hold a
PerformanceShare may continue to hold
such benefit in accordance with the
terms of that plan (however, they may
not be eligible for any future grants).
The employee FICA taxes associated with
the W-2 earnings created due to the
difference between the xxxxx xxxxx and
the exercise price per share will be
charged at a corporate level as each
employee exercises their stock options.
The expense for USI employees will be
borne by EDS.
Other Any compensation (including, without
limitation, salary, bonus or equity
incentive compensation) paid by EDS to
USI employees on behalf of USI shall be
treated as an IB Service and billed to
USI.
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